Archive for the 'Industry Updates' Category
Published by Alex Manessis and Russ Schreier of Samuel Scott Financial Group
When I tell friends that I work for a mortgage bank and that business is doing well, they sometimes look at me as if I were crazy. Everything they hear about the industry seems to be negative, whether it is more foreclosures, decrease in property values, and most frequently how difficult it is to receive a home loan. They assume that one must have absolutely perfect credit, sizeable down payments to decrease the loan-to-value (LTV), and a sizeable and steady salary to qualify for a loan.
The reality of the situation is that you don’t need all of these things to qualify for a loan. Yes, they are important pieces of the puzzle and you do need to meet some requirements, but loans are readily available for those who are organized and cooperative.
Now without giving a full history lesson on the bursting of the real estate bubble here is the back story. In the mid-2000s too many loans were given out to those who were at a high risk of defaulting. When Fannie Mae and Freddie Mac purchased large pools (mortgage backed securities or MBS) of these mortgages and then the homeowners became delinquent on payments, these companies lost billions of dollars. In response these companies took a look at the loans they held and determined which files contained misrepresentation. These loans were then forced to be bought back by the companies who originated them, called a “repurchase”. The average home loan in San Diego County over the last 4 years has been valued in the range of $250,000 to $350,000. If a small mortgage company had to repurchase a few loans from Fannie/Freddie, they quickly found themselves out of business. The surviving firms tightened restrictions to make the possibility of a repurchase a remote one. Four years later these restrictions have been loosened, mainly in order to get people once again to invest in a home and to jumpstart both the housing market and the economy of the nation as a whole. However, people still assume that is difficult to obtain a loan, mainly because of all the paperwork.
In the aftermath of the housing crisis many mortgage lenders developed underwriting procedures that specified what exactly was needed for an applicant to qualify for a loan. Banks issuing the loans were looking for not only good credit, employment, and a down payment, but also were looking for lots of documentation to back the loan. The mortgage advisors job is to match a potential borrower with specific underwriting guidelines so that they can qualify for a loan. In order to do this without putting the future of the company at risk they will request a variety of documents that verify that you actually qualify the specific loan that you are to receive. It is their security blanket, if Fannie Mae or Freddie Mac comes knocking several years down the road with a loan file that became delinquent, this gives the originator proof that the proper guidelines were followed and that there was no material misrepresentation, preempting a repurchase.
This may have you wondering, which documents mortgage advisors need in order to properly match a borrower with a loan. To start in the qualification process a mortgage advisor will often request the potential borrowers two most recent monthly paystubs, the previous two years of Federal Tax returns, and two months of bank statements. This is not to say that these are the only documents that are needed, but these are ones that will be needed to kick off the process of receiving a loan. I know personally if someone asked to track down all of these documents I might have to go digging through the drawers of my desk, but they are essential to qualifying you for a loan. The statistics show that all the paperwork actually benefit the borrower as well as no one wants to foreclose on their home. Of loans issued in 2007 before the underwriting guidelines were strengthened 22% of loans sold to Fannie and Freddie defaulted within the next 18 months. Of the loans issued in 2009 and purchased by one of the government sponsored enterprises, only 2% defaulted in that same 18 month time frame.
We all know that the process of applying for a loan, especially in this environment can frightening if you do not have a professional mortgage advisor on your side. Here are some tips to take away from this if you are looking to purchase a home and are seeking a loan.
- Keep all your financial records, and if possible keep them organized. It makes the process go much faster if the mortgage advisor has all the information up front.
- If the advisor requests for more documentation, it is only to aid you.
- Your mortgage advisor will need to go through many of your financial records to verify and document your information. Be prepared to answer questions regarding where money came from, where you are employed, and other such background questions.
- The process may seem daunting, but the mortgage advisor is there to help you. If you have questions regarding how the process works they will be happy to explain it too you. After all the decision to purchase a home is often the largest financial decision a person will make in their lifetime.
Remember a loan is not impossible to obtain anymore. As long as you meet the underwriting requirements, you will have an opportunity. In the mean time, work to improve your credit and start keeping all of your records. It will help you tremendously in the long run. If you have any questions about the loan process, or if you are ready to move ahead and purchase a home, please contact a mortgage advisor at Samuel Scott Financial Group.
Dee Emerson, Director of Relocation Mobility Solutions for Real Living Lifestyles Real Estate, has launched an exciting new “Lunch and Learn” program – with educational classes held on site at local San Diego businesses. These sessions will offer information to help facilitate an employee’s real estate wants and needs. Guest speakers will include representatives from escrow, title, lending, CPA and legal.
According to Emerson, “We developed this program to become more closely involved with our partners. By bringing these educational sessions directly to the business, we show how our Premier Service enables a smooth real estate transaction for both the employer and employee.” As Real Estate has so many aspects to it and can be confusing, Dee believes that by sharing her vast industry knowledge and experience it can help remove some of the stigmas about buying a home.
For a taste of what this program has to offer, contact Dee Emerson at [email protected] or 858.756-2865.
For the sixth straight month, the National Association of Homebuilders reports that homebuilder confidence is on the rise. The Housing Market Index climbed four points to 29 in February, the index’s highest reading since May 2007.
The Housing Market Index is now up 8 points in 8 weeks. The last time that happened was June 2003, a month during which the U.S. economy was regaining its footing, much like this month. It’s noteworthy that June 2003 marked the start of a 4-year bull run in the stock market that took equities up 54%.
The NAHB’s Housing Market Index itself is actually a composite reading. It’s the end-result of three separate surveys sent to home builders monthly.
The association’s questions are basic :
- How are market conditions for the sale of new homes today?
- How are market conditions for the sale of new homes in 6 months?
- How is prospective buyer foot traffic?
In February, builders reported marked improvement across all three areas. Builders report that current home sales climbed 5 points; that sales expectations for the next 6 months climbed 5 points; and that buyer foot traffic climbed 1 point.
Most notable of all of the statistics, though, is that the nation’s home builders report that there are now twice as many buyers setting foot inside model units as compared to just 6 months ago.
This data is supported by the monthly New Home Sales report which shows rising sales and a shrinking new home inventory.
Because of this, today’s new home buyers throughout California should expect fewer concessions from builders at the time of contract including fewer price breaks on a home and fewer free upgrades. Builders are optimistic for the future and, therefore, may be less willing to “make a deal”.
This spring may mark the best time of year to buy a new home. 60 days forward, it may be too late.
Hurry! Mark your calendar ‘busy’ from 1-5PM on Tuesday January 31st because you want to be at this one! Real Living Lifestyles Real Estate, the fastest growing and most innovative brokerage in San Diego, is kicking off the New Year with a special event.
Fantastic guest speakers to inform and inspire. Leslie Appleton Young, CAR Chief Economist, is well-known and respected for strategic planning and as public speaker. Harley E. Rouda Jr, President of Real Living will be here to share the excitement of Real Living and continued growth. Opportunities abound with interesting and always enjoyable breakout sessions.
YOUR presence makes a big difference! Considering joining an exciting and progressive team, then contact [email protected] or 760-931-6111 to reserve your seat.
Read more about the special break out sessions: http://rllifestyles.com/nynybreakouts/
Not a foreclosure or Short Sale.
Real Sellers. Real Motivated
Owners want out of Property Management
Extras and Upgrades Include:
- Travertine Floors throughout
- Stone Countertops in Kitchen & Baths
- Bathrooms have been Upgraded
- 2-master suites
- 2 1/2 bathrooms
- 1 bathroom in each bedroom plus 1/2 bath for guests
- vaulted ceilings
- southerly view from living room,kitchen & Dining Area
- gated beach access
- small intimate complex with only 30-units
- Short Walk to Del Mar Race Track and County Fairgrounds
- Near Cedros Design District, Restaurants and Entertainment:
- Brigantine restaurant
- Belly Up
- Fletcher Cove
- View other homes @ www.nickbednorz.com
- open this link to view MLS sheet Residential Client Full (All Pages)
- Click this link for virtual Tour
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