Anti-flipping rules attempt to slow the home buying process down in order to prevent fraud.

In the aftermath of the real estate melt-down, FHA imposed “anti-flipping” rules.  These rules were designed to slow the buy-then-sell process down and help catch or prevent fraud.

Basically, if you wanted to buy a home using FHA financing, the seller of that home would have to own it for a minimum of 90 days before you could make an offer on it.  FHA then loosened those guidelines so that if the seller of a property were a bank (i.e. foreclosure), the anti-flipping rule would be waived.  In February2010, in an attempt to help move excess inventory off the real estate market, FHA put a temporary suspension on the anti-flipping rule.  Essentially, someone could buy a home one day, then turn around and sell it the next day, even if the buyer was using FHA financing.

Not much has been said about “anti-flipping” in the conventional lending world.  Fannie Mae and Freddie Mac have never imposed a 90-day waiting period to avoid flipping.  However, many buyers are surprised to find out that some lenders and, more importantly, many mortgage insurance companies have often set their own rules.

Read the rest of this entry »

How soon can I get rid of my Mortgage Insurance?

For our long-time readers, you are aware that the rules in the mortgage and real estate industry are always changing.  Many of the policies and guidelines that were applied several years ago – or even several months ago – have now changed… and will continue to change.  This is the case with regards to the rules dictating the removal of monthly Mortgage Insurance.  The current guidelines are below: Read the rest of this entry »

We are proud of Papa Kovar (my papa-in-law)!

This story has absolutely nothing to do with mortgages or real estate, but it does have to do with a man in Maple Grove that I am very proud of, my papa-in-law,  Joseph “Papa” Kovar.

High Honor for Maple Grove Veteran (Play Video)

Maple Grove – Joseph Kovar was surrounded by laughter and hugs, prayer and song at the VFW of Hopkins on Saturday. The group had gathered to bestow a high honor upon the World War II veteran.

Kovar’s son recited aloud a letter from the consulate general of France in Chicago. He read, in part, “on the behalf of the people of France, that the president of the French Republic has named you knight of the Legion of Honor for your valorous action during World War II. My fellow countrymen will never forget your sacrifice.”

Kovar has felt the weight of a war medal before. He already bears a Purple Heart and a collection of other awards for his service in the U.S. Army Infantry in Europe from 1944 to 1946. Kovar arrived in Europe shortly after D–Day. His company met with German resistance and Kovar spent almost every day he was there in combat.

“They talk about giving your youth to France,” said Kovar, “I gave my hearing, my feet and my hand. Some people gave everything, so I feel like they gave a lot more than I did. So I’m honored today.”

France knights about 100 American veterans each year who served in France during World War II. Receiving the Legion of Honor was humbling and exciting for Kovar.

“When they honor you like this it’s hard to believe that it’s you getting it,” he told the crowd. “I just want you to know how elated I am. I’m walking on a cloud.”

Jennifer Anderson reporting
janderson@twelve.tv

Papa, we are so proud of you.  We love listening to all your war stories.  We will forever honor the actions and courage of you and your comrades.   Thank you.  Thank you.  Thank you.

“200,000 could lose out on the homebuyer tax credit”

This was the headline in today’s CNNMoney.com article.  Homebuyers that have a signed purchase agreement dated on or before April 30^th must close on their transaction by June 30^th in order to qualify for the homebuyer tax credit – $8,000 for first-time homebuyers, and $6,500 for repeat buyers.  The problem is many of the properties that are being purchased are either REO (aka. Bank-Owned Properties) or they are Short-Sales – where a seller is attempting to sell the home for less than what is owed.  Both of these types of transactions can take longer than expected.  If you don’t close by June 30^th, you get NOTHING!

Congress still working on a tax credit extension

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You are allowed to bring cash to the table when you refinance.

When you owe more on your home than what it’s worth, most people feel like they have very few options.  However, one alternative that most homeowners never consider is to actually bring cash to closing.  Though this may not be the most attractive choice, it’s one that could save you thousands interest over the life of your loan.

How much cash will I need?

Here’s an example of a real client:

• Amount Owed:  $210,000
• Value of Home:  $200,000
• Max Loan Amount:  $190,000
• Cash needed at closing:  $20,000 ($210,000-$190,000)

Though the amount of cash that you would need to bring will vary with every situation, it can often be worth it if you can get lower your interest rate significantly.

What are the benefits?

We were able lower this client’s monthly payment by about $660.00 per month.  This meant that in 31 months they would have saved enough to recoup the $20,000 needed at closing.  Since they were planning on living in their current home indefinitely, this particular loan scenario made sense for them.

Where will I get the cash?

In the meantime, I know what you’re thinking… “Where am I supposed to come up with $20,000?”  Again, keep in mind that these types of scenarios only make sense if three things are in play:

1. The new loan must have a significant financial benefit
2. You plan on living in the home long enough to “break even” on your costs
3. You must have access to the necessary cash

Personal loans from family and friends don’t always go as planned, so let’s leave that option as a last resort.  But let me ask you this, do you have a 401(k) or similar retirement account?  In many cases, you are able to take out a personal loan without having to pay taxes or penalties.  You can then use the monthly loan savings to aggressively pay back the personal loan.

As they say, there is more than one way to skin a cat, and there is absolutely no one-size-fits-all mortgage solution.  Since everyone situation is different, please give us a call so we can give you specific council that pertains directly to you.

FHA refinances allow you to borrow more!

Since the Federal Housing Administration (FHA) is subsidized by the U.S. taxpayers, they are willing to take on certain risks that private lender may not.  The traditional FHA 203(b) mortgage has two main advantages over most conventional loans:

• On a Rate/Term Refinance your Loan-to-Value (LTV) is allowed to be as high as 97.75%.  Most lenders will not exceed 95%.
• FHA currently has no limit on the Combined Loan-to-Value (CLTV), which means, if you have a first and a second mortgage, you can refinance the first with FHA and re-subordinate the second, regardless of CLTV.  Most conventional lenders will have much stricter guidelines. 

So, if you currently have a first and a second mortgage, and combined you owe more on your home than what it’s worth, FHA will allow you to refinance your first mortgage as long as the second mortgage remains in second lien position.  Keep in mind that is “market driven”.  If the current second mortgage does not agree to stay in second lien position – behind the new FHA mortgage – then you won’t be able to close on your new loan.

Here’s your “QuoteAction” of the day:

“Remember that not to be happy is not to be grateful.”
18th Century Poet, Elizabeth Carter

Your action for today is to be greatful for three things you have in your life.

Have an extraordinary day!

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Congress is considering an extension of the homebuyer tax credit.

The time that it takes to close on your home mortgage has continued to lengthen over the last several years.  There are many factors that contribute to this inconvenience including increased underwriting standards, banks overwhelmed with foreclosures and short-sales and government-imposed regulations.  Thankfully, it looks like Congress is aware of these common delays.

In The Wall Street Journal article: Congress Considers Tax-Credit Extension of Some Home Buyers, Nick Timiraos explains the need for extending the closing deadline of June 30^th:

“Congress last fall extended an $8,000 tax credit for first-time home buyers and added a smaller $6,500 credit for current homeowners who were buying a primary residence. To qualify for the credit, buyers had to sign purchase contracts by April 30 and must close on the transaction by June 30.

“But there are so many transactions in the pipeline that the companies responsible for handling the sales, including mortgage lenders, appraisers and title insurers and real-estate brokers, say the last-minute home-buying rush in April has created bottlenecks.

“On Thursday, Senate Majority Leader Harry Reid (D., Nev.) said he would back a measure to extend the June 30 closing date to Sept. 30 for buyers who had met the April contract deadline.”

This is good news for every qualified homebuyer that signed a purchase agreement on or before April 30, 2010.

When it’s time to sell your home, MARKETING can make all the difference!

This week I received my weekly Market Activity Report from the Minneapolis Area Association of Realtors.  It stated:

“As the weeks following the tax credit expiration unfold, buyer demand continues to slow.  The 600 purchase agreements signed for the week ending May 29 were 34.6 percent below the previous year — the fourth consecutive week of year-over-year decline in Pending Sales.”

It’s never a good thing when you find out your industry is 34.6% behind sales from the previous year, and that for four consecutive weeks there has been a year-over-year decline in Pending Sales.

Not only am I am a listing specialist, I am a self proclaimed control freak.  I want to move my sellers’ homes quickly — despite what the statistics are telling me.  I could easily give up and tell every home seller, “It’s a bad market,” and leave it at that.  As much as I want to control the real estate market, I just can’t.  What I can control is my MARKETING! Read the rest of this entry »

Streamline your refinance with a new FHA mortgage… without an appraisal!

The options you have in life are often determined by your current circumstances today.  When you owe more on your home than what it’s worth, the first question we need to sort out is, “What type of mortgage do you currently have?”  If the answer is, “FHA,” you’re in luck!!

If you currently have a mortgage through the Federal Housing Administration (FHA), you may be eligible for an FHA Streamline Refinance.  The best part about this program is that you can take advantage of lower interest rates even if you owe more on your home than what it’s worth.  So here are the basics:

• Existing mortgage must already be insured by FHA
• You must be current on your FHA mortgage
• Mortgage amount is limited to the remaining principal balance + finance mortgage insurance

With today’s low interest rate environment, lenders are often able to pay for all of your closing costs by giving you a slightly higher rate.

When you owe more on your home than what it’s worth.  FHA provides a great solution to lowing your payments.