Archive for the ‘Mortgages, Mortgage Rates, Refis, & Loan Limits’ Category

Bedford Mortgages & the Student Loan Phenomenon

All of a sudden last month Bedford readers might have come across a number of new articles dealing with the same topic: the problem young first time home buyers are encountering due to outstanding student loans.

The target group is the millennials—everyone born between the early 1980s and 2000s. If you are one of them, you are frequently reminded that there are millions and millions of you out there. And millions who also share the same student loan problem.

There are conflicting accounts of the precise size of the issue, but it seems that the average college graduate now carries somewhere between $30,000 – $50,000 in debt upon graduation. The Federal Reserve says that the amount of student debt has more than doubled since 2007, to something like $1.3 trillion, at this point!

Nobody would deny that this appears to be a roadblock to young adults contemplating applying for their first Bedford mortgage. Dealing with banks or any lending institutions for the first time always has the aura of stepping into alien territory. A major unknown is the detail known as the debt-to-income ratio.

Apparently many would-be first-time homebuyers who are thinking about qualifying for Bedford mortgages automatically assume that their own debt-to-income ratios disqualify them from consideration, even though that’s not necessarily the case. At least according to the folks at Equifax, the debt reporting company, that perception is at odds with the reality.

The debt-to-income ratio is the monthly dollar amount an individual must produce in order to service his or her combined debts in relation to their total income. It is not the total amount of debt (no matter how soberingly large that number might be). Rather, it’s the ratio between the cash in and cash out per month. That becomes a considerably less daunting proposition because it’s a measure that can be improved much more rapidly. A recent survey showed that most respondents assumed that they had to reduce their debt payments by more than $300 per month in order to qualify for a mortgage, but an actual analysis showed that the real number was most often less than $300—and sometimes as little as $150.

Qualifying for Bedford mortgages differs for everyone, so the takeaway for Bedford Millennials (as for every other first time home buyer) is that assumptions shouldn’t get in the way of real fact-finding. Give me a call if you’d like to get a broad view of today’s Bedford starter home offerings. It could be that you are closer to moving into a home of your than you think!

 

For Some Burlington Home Loan Applicants, a Surprise Boost

A few Burlington mortgage applicants may see a one-time favorable change in how they are viewed by home loan lending institutions. It’s a technical change that could amount to a significant difference in the results they get when they apply for Burlington home loans.

The first evidence of what the Washington Post calls “a surprise boost” will be triggered on Saturday, which marks the July 1 beginning of a changeover in the information gathered by the three national credit bureaus. Equifax, Experian, and TransUnion have been working with a number of states to handle an awkward technical problem: many states have outmoded computer reporting systems that result in “troubling error rates” in official public records.

Translation: they’re frequently outdated, scrambled, missing identity information—just plain wrong.

The data in question—tax liens and monetary damages from civil court judgments—has too often been the basis for depressed credit scores for unfortunate home loan applicants. And because some governmental agencies can be excruciatingly slow to respond to requests for corrections, when time is a factor (as it often is) those mistakes can be decisive. For any Burlington home loan applicant whose own credit score has suffered, it’s not an abstract problem.

As part of an initiative by the credit bureaus to increase the accuracy of their scoring, beginning in July they will purge the dubious information from their files and stop collecting it altogether. FICO estimates that between 12 and 14 million U.S. consumers have tax liens or judgments in their current files: they can expect an abrupt jump in their scores. Consumers with no other negatives in their files could see their FICO scores instantly jump by 40 points or more. The result could be better home loan offer terms as well as lower interest rates.

Inevitably, there is a downside. Those with legitimate judgments and tax liens against them will also show elevated scores, which could be misleading to loan companies and landlords who rely on the numbers to make informed risk evaluations. The size of the problem is expected to be limited, though, since most people with judgments and liens have other negatives in their files.

In case you are uncertain whether your own credit score might be affected, that probably means it’s been a while since you checked…and that’s never a good thing! Keeping on top of your credit reputation is certain to pay off in the long run, especially when the time comes to begin looking for your next Burlington home—which is also when you’ll want to give me a call!

 

Joan Parcewski — CRS, MRP, CSHP, SRES, CBR, LMC, Realtor & Notary
978-376-3978   JParcewski@LAERRealty.com    OR    JParcewski@gmail.com
LAER Realty Partners (22 offices – one team)
   
Licensed MA & NH  
  
Introductory Video  https://youtu.be/RrM4q17cjU0
Laer Realty Partners                  Joan_Parcewski (1 of 1)

Are you a healthcare professional? There is a loan program designed for you.

There are so many loan options on the market and it takes a mortgage professional to tell us about them.  Woods Real Estate stays close to its mortgage professionals to keep abreast of these options – incuding sometimes little know options – for our clients.

Here is a program from Leader Bank – sent to us by Kevin Buckley (kbuckley@leaderbank.com ) – Healthcare Professionals Home Loan Program

Eligible employers are

        *  Beth Israel Deaconess Medical Center

  • Boston Shriners Hospital
  • Brigham and Women’s Hospital
  • Cambridge Hospital / Cambridge Health Alliance
  • Boston Children’s Hospital
  • Dana Farber Cancer Institute
  • Harvard Pilgrim Health Care
  • Harvard Vanguard Medical Associates
  • Joslin Diabetes Center
  • McLean Hospital
  • Massachusetts Eye and Ear Infirmary
  • MGH / Partners Health Care System
  • MGH Institute of Health Professions
  • Massachusetts Mental Health Center
  • Medical, Academic and Scientific Community Org.
  • Mount Auburn Hospital
  • Spaulding Rehabilitation Hospital
  • The Center for Blood Research
  • The Schepens Eye Research Institute
  • Veterans Administration Boston Healthcare Systems

Terms and Conditions

 – Maximum loan amount of $1,200,000

– Property located in Commonwealth of Massachusetts

– Maximum CLTV of 90%
– Maximum debt to income ratio of 40%
– Minimum FICO of 720
– Eligible properties include single family primary residences and warrantable condos
– US Citizens and Permanent Residents only
– Must be employed by one of the institutions listed

If you work at one of these healthcare companies and meet these requirements, give Kevin Buckley a call

 

Joan Parcewski, Realtor and Notary, Woods Real Estate (veteran owned and family operated real estate agency)

MRP, SRES, GRI, CBR, GREEN, E-PRO, LMC, SFR, CDPE, CIAS

Joan@woodsre.com     O 978-262-9665      C 978-376-3978       http://www.JoanParcewski.com

 

 

 

 

Buyers Denied Loan, But Still Lose Deposit – A Reprint

The following is a reprint of James Haroutunian’s column that appeared in the Lowell Sun on February 11, 2012

A fellow real-estate lawyer who write the massrealestateblog.com brings attention to a recent appeals-court case that cost a couple their $31,000 deposit.  This case highlights the importance of proper contingency language in purchase-and-sale contracts.

These unfortunate buyers started off like everyone else.  Armed with a pre-approval letter, the buyers’ P&S contract contained a standard mortgage contingency.  It offered a refund of the deposit if the buyers were unable to get a mortgage loan.  A deadline was set and the buyers worked diligently with their lender to get a loan commitment.

These buyers were unique because they did not intend to sell their current home – essentially buying a second home.  When the lender analyzed the buyers debt-to-income ratios, it was determined they could not afford to carry both mortgage payments.

As a result, the lender required the buyers to “list their home for sale.”  When the buyers refused, the lender denied the loan.  Timely notice of the denial was provided, but the sellers refused to release the deposit.  The court determined the buyer’s refusal to list their current home for sale was unreasonable, and in violation of the “prevailing terms and conditions” portion of the mortgage-contingency clause.

Here the court found the lender’s condition reasonable, and the buyers’ refusal to list their home for sale unreasonable.  Thus the buyers LOST their $31,000 deposit.

Sadly, if the issue were addressed upfront, simple language could have been added.  Stating that financing would not be conditional on the buyers’ listing or selling their current home may have lowered the “prevailing conditions” standard enough to save the buyers’ deposit

Attorney James Haroutunian practices real-estate law, estate planning and probate at 630 Boston Road, Billerica.  He invites questions at james@hlawoffice.com or by phone at 978-671-0711.  His blog is found at http://www.hlawoffice.com

 

Top 3 Ways to Turn a Seller Off – A Reprint

This reprint comes from Trulia.com.  It is right on when it comes to buyers. 

Buying and selling a home is a very personal and very emotional time – both from the perspective of the buyer and the seller.   Buyers – you really want to buy this house – make the best possible deal, get the most for your money.  Sellers – you want to seell this house –  make the most profit, get the most you can for all you have invested both financially and emotionally.  And keep in mind there is a market out there of similar homes that help both sides determine what is a fair price – Ultimately the price of each home sold in a neighborhood affects the market value price of the rest of the homes.  This is why foreclosures and short sales have an effect on other home values around them. 

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Buyers, if you want a home’s seller to play ball, best practice is to avoid these 3 pitfalls:

1. Unjustified, extreme lowball offers: It’s no secret that buyers have the upper hand in many markets right now. (To be clear, I said ‘many’ – not ‘every’ – your agent can help you understand what the dynamics are in your market.) But let’s be realistic, here. No seller can afford to give away their home at a price far below what it’s worth on today’s market. Lowballing a seller at a price far below the recent sales prices of similar homes in the neighborhood on the ‘let’s-take-a-stab’ plan, is highly likely to turn them off.  And that, in turn, will cause the seller to view your offer – and you – as disrespectful and wasteful of their time. Not only will they turn down your offer, but they may not even bother with a counteroffer, rendering your efforts at securing that particular home dead in the water. Buyers: Review the recent sale prices of similar homes in the neighborhood (aka “comps”) with your agent before you make your offer. Also, ask them to help you factor in other market data, like the average list price-to-sale price ratio and the average number of days neighborhood homes stay on the market. It’s all right to come in lower than asking, if the market data supports such an offer; just be sure your offer is based on reality – and not your fantastical hallucination about scoring the bargain of the millennium.

2. Buyer-side mortgage fails: Plenty of employed buyers with decent credit and cash in the bank have been turned down for a mortgage these past few years. That means buyers can’t assume (a) that they’ll be approved for the amount of loan they need to buy the house they want, or (b) that they’ll be approved for a loan at all. Your inability to get approved for a home loan can create all sorts of problems not just for you, but also for your home’s seller. The average seller’s  worst case scenario is that  they accept your offer only to find out a few weeks, or months, later that you can’t get the loan you need to close the deal. Buyers: It’s not overkill to start working with a mortgage professional as far as six months or a year in advance of starting your house hunt to get pre-approved for a loan. Make sure you get a clear understanding of the amount you qualify for, then work with your real estate agent from there to determine the price range you should house hunt in. And whatever you do – don’t buy a new car, open new credit cards or even change your line of work before your escrow closes, unless you consult closely with your mortgage professional before you make that move. Tip for Sellers: Work with your agent to vet buyers before you sign a contract. Factor in their down payment and earnest money deposit, and feel free to counteroffer these items, not just the offer price. It’s not overkill to have your agent contact the buyer’s mortgage broker to see how reliable the buyer’s pre-approval really is.

3. Bashing the seller’s home: Home bashing happens when buyers start bad-mouthing (aka “trash talking”) the place and/or the neighborhood in hopes of getting a lower asking price. Examples: pointing out all the foreclosures in the area, saying the house down the street just sold for much lower than the asking price on this house, saying you’ll need to rip out the entire kitchen before you even consider moving in – saying any of these things to a seller who happens to be at home during the showing or the inspection is probably one of the fastest ways to turn them all the way off. Buyers: Bad-mouthing a house or neighborhood won’t work to get you a lower price. Instead, it only serves to irritate the seller and motivate them to come up with all sorts of reasons why they shouldn’t sell their home to you! Remember: homes hold incredible emotional experiences for owners. Make an offer you’re comfortable with and keep the negative comments to yourself. If there are legitimate, factual reasons underlying your decision to make an offer at a price the seller might see as a lowball, ask your agent to respectfully communicate those facts to the seller’s agent.

A Realtor will help you not make these mistakes.  Listen to their advice. 

MSNBC Reports Mortgage Rates Tumble to Record Low

This is great news for people wanting to refinance or buy a  home. 

 

Mortgage rates tumble to record low        

            Average on the 30-year home loan slides to 3.87 percent from 3.98 percent

30-year fixed mortgage rates chart

        The average rate on the 30-year fixed mortgage dropped to the lowest since records have been kept, creating a tempting target for people to refinance their homes.

Freddie Mac said Thursday the average rate on the 30-year fixed mortgage hit 3.87 percent, down from 3.98 percent the prior week. That’s below the previous record of 3.88 hit two weeks ago.

The average on the 15-year fixed mortgage fell to 3.14 percent, also a record low. Records for mortgage rates date back to the 1950s.

Mortgage rates tend to track the yield on the 10-year Treasury note, which fell below 1.9 percent this week.

Mortgage rates have hovered near 4 percent for the past three months, and have perhaps contributed to a slight improvement in the housing market. But many homeowners remain underwater and the pipeline of foreclosures continues to be huge, putting heavy pressure on housing prices.

High unemployment and scant wage gains have made it harder for many people to qualify for loans. Many don’t want to sink money into a home that they fear could lose value over the next few years.

Sales of previously occupied homes were dismal last year. New-home sales in 2011 were the worst on records going back half a century.

Builders are hopeful that the low rates could boost sales next year. But so far, they have had a minimal impact.

Mortgage applications have risen slightly over the past four weeks, according to the Mortgage Bankers Association. But they are coming off extremely low levels.

To calculate the average rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.

The average rates don’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for the 30-year loan rose to 0.8 from 0.7; the average on the 15-year fixed mortgage was unchanged at 0.8.

For the five-year adjustable loan, the average rate fell to 2.80 percent from 2.85 percent. The average on the one-year adjustable loan rose to 2.76 percent from 2.74 percent.

The average fee on the five-year adjustable loan rose was unchanged at 0.7; the average on the one-year adjustable

The Associated Press contributed to this report.

What is this Real Estate Jargon??

This information comes from the January 2012 Realtor magazine and was put together by Erica Christoffer.  This is great information for everyone (including the general public).  Trying to get thru all the jargon and making it easier to understand what is being said is important to everyone. 

Bank-owned /real estate–owned (REO):Properties that have been taken back by the lender during the legal foreclosure proceeding to become an asset of the lender bank.

Broker price opinion (BPO): When the estimated value of a property is determined by a real estate broker or firm based on property characteristics, appropriate comparable properties, and market analysis.

Deed-in-lieu (DIL) of foreclosure: When borrowers can no longer make their mortgage payments, a DIL transfers ownership of a property to the lender, allowing the home owner to avoid foreclosure.

Distressed property: A property that is under a foreclosure order (pre-foreclosure), has undergone the foreclosure process, and is now an REO, or is being marketed as a short sale.(See lender-mediated properties.) Historically, this has also referred to properties in dilapidated condition.

Distressed sellers: Home owners in default on their mortgage or at risk of becoming late on their mortgage payments, due to financial hardship.

Forbearance: A reduction or suspension of loan payments as agreed upon by the lender for a predetermined period of time.

Foreclosure: The legal process in which a lender takes possession of a property as a result of a mortgage default by the owner-borrower.

Home Affordable Foreclosure Alternatives (HAFA): A federal program for home owners who can no longer afford their mortgage.HAFA provides two options for transitioning out of a mortgage: a short sale or a deed-in-lieu of foreclosure. Eligibility requirements:

  • You live in the home or have lived there within the last 12 months.
  • You have a documented financial hardship.
  • You have not purchased a new house within the last 12 months.
  • Your first mortgage is less than $729,750.
  • You obtained your mortgage on or before January 1, 2009.
  • You must not have been convicted within the last 10 years of felony larceny, theft, fraud, forgery, money laundering, or tax evasion in connection with a mortgage or real estate transaction.

Home Affordable Modification Program (HAMP): A federal program that provides foreclosure-prevention initiatives to help borrowers in or at risk of default avoid foreclosure via loan modification or principal reduction to lower their monthly mortgage payments. The FHA and VA also offer HAMP programs for struggling home owners. See second-lien modification program. Eligibility requirements: • You obtained your mortgage on or before January 1, 2009. • You have a mortgage payment that is more than 31 percent of your monthly gross (pre-tax) income. • You owe up to $729,750 on your home. • You have a financial hardship and are either delinquent or in danger of falling behind. • You have sufficient documented income to support the modified payment. • You must not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.

Home Affordable Refinance Program (HARP): A federal program for mortgage borrowers who are current on their payments but having trouble acquiring traditional refinancing because the value of their home has declined. These borrowers are usually underwater, meaning they own more on their mortgage than what their home is currently worth. Eligibility requirements:

  • The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
  • The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
  • The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
  • The current loan-to-value (LTV) ratio must be greater than 80%.
  • The borrower must be current on the mortgage at the time of the refinance, with a good payment history in the past 12 months.

Insolvency: When a borrower does not have enough liquid assets to pay down a mortgage.

Lender-mediated properties: Homes that are in the pre-foreclosure process, are already bank-owned, or are subject to a lender-approved short sale.

Loan modification: Changes to the loan terms and conditions to reduce monthly payments for the borrower.

Portfolio loan:A loan or asset owned and controlled in-house by the lender itself.

Principal Reduction Alternative (PRA): A federal program for home owners who owe significantly more on their mortgage than what their home is currently worth. The program encourages non-GSE mortgage servicers and investors to reduce the principal loan amount. Eligibility requirements:

  • Your mortgage is not owned or guaranteed by Fannie Mae or Freddie Mac.
  • You owe more than your home is worth.
  • You occupy the house as your primary residence.
  • You obtained your mortgage on or before January 1, 2009.
  • Your mortgage payment is more than 31 percent of your gross (pre-tax) monthly income.
  • You owe up to $729,750 on your 1st mortgage.
  • You have a financial hardship and are either delinquent or in danger of falling behind.
  • You have sufficient, documented income to support the modified payment.
  • You must not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering, or tax evasion, in connection with a mortgage or real estate transaction.

Refinance: The replacement of a loan (mortgage) with a new loan at a lower interest rate and under different terms and conditions, often reducing monthly payments, the term of the loan, or the loan risk.

Second Lien Modification Program (2MP): A federal program for borrowers who have two mortgages on the same property and the first mortgage was permanently modified under HAMP. 2MP provides a modification or principal reduction on the second mortgage as well. Eligibility requirements:

  • Your first mortgage was modified under HAMP.
  • You must not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.
  • You have not missed three consecutive monthly payments on your HAMP modification.

Servicing agent: A lender or other entity that services a loan or asset on behalf of the investor that owns the loan. Often, the lender that originates the loan is neither the owner nor the servicer.

Shadow inventory:The cache of homes that have undergone the foreclosure process and are on the balance sheets of banks and GSEs but are not yet on the market for resale.

Short sale:A property transaction in which the lender or lenders agree to accept less than what is owed by the current home owner. Because the net proceeds from the sale are not enough to cover the sellers’ mortgage obligations, the difference is forgiven by the lender, or other arrangements are made with the lender to settle the remainder of the debt.

Workout sale: A situation in which the lender agrees not to move forward with foreclosure proceedings for a specific period of time, allowing the home owner to sell the property and pay off the loan.

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