Summer home sales in Boise, Idaho are smoking hot!

the Independence day weekend marks the mid point for summer sales for most of us. Boise’s 2015 sales season has been very hot from the early spring.  Unlike 2014, when we had a prolonged, colder winter, people seemed to be ready to start shopping in February.

Earlier on, in the start of the season, we say several homes sold at or above asking price.  Many others, have come back over the appraised value and some people still bought.  In most cases, a cancellation or re-negotiating  of the sales price happened.

Other interesting fact, the local real estate appraisers are factoring the “Production Builder penalty” into their valuations.  Without naming any specific names, we have several builders in the Treasure Valley who build hundreds of homes a year, typically in their own subdivisions.  If they build for less than “Custom Home Builders”, the value a home owner is going to be compared to other homes built by that builder.  They could be as much as $20/foot or more less than a custom home of the same size and finishes.  This has led to some upset realtors and home owner’s but its something to consider when buying or building a new home.

Realtors I work with are reporting multiple offers on newly listed homes in a matter of days if not the first day a home is listed on the local MLS.

As a result of our hot market, I am seeing longer times to appraise a home.  Loan underwriting times are getting longer as well as more home purchase loans are submitted.  FYI, Fairway Independent Mortgage Corporation underwriting times are about 5 business days right now.  Most loans are getting finished within 30 days of application.

Another trend I am seeing is people relocating from California, Nevada, and other states to the Boise area.  Many times they are retirees with pensions and cash from the sale of their previous home.  They can pay cash and close in a couple of days if they wish.  This may not be the best use of that lump sum, the HECM for Purchase Loan enables borrowers 62 or up to put up a fraction of the price of the new home and a reverse mortgage, or HECM, will cover the rest.  Expect to put down half and the Reverse Mortgage covers the rest.  Save the rest of your cash for getting outdoor and enjoying what Idaho has to offer.

Mortgage interest rates are still low.  They have moved up about .5% on a 30 year fixed rate loan from the low 3’s to the upper 3’s and low 4 percent rates as of today.  The “experts” keep saying rates are going to go up in the future, but so far they are holding at historically low rates.  You could be regretting not getting a home if you had the chance in summer of 2015 and didn’t.

 

Home values in the treasure valley, still a lot of “underwater” home owners

We still need a few more good years to get back to positive equities in the Treasure Valley.  At least, its not 2010 anymore….

What are the new rules for Reverse Mortgages on April 27th 2015?

The Home Equity Conversion Mortgage, aka Reverse Mortgage will have new requirements after the 27th of April, 2015.

The borrower seeking a HECM will have to undergo a financial assessment done as a part of the process.  If the borrower is deemed to be incapable of handling the ongoing responsibilities of the loan, ie property taxes and insurance, a portion of the loan will be set aside to cover property taxes and insurance.

The most common way Reverse Mortgage borrowers get in trouble late is being unable to pay their insurance and taxes.  Defaulting on those items can put them into default and eventually foreclosure.

If a borrower has a good credit payment history and sufficient income, they can probably handle the property taxes and insurance.  If they are lacking income or have a history of delinquent payments, then it’s probably a good idea to set aside some of the funds to cover these future expenses.

Now, if you are currently in process of getting a reverse mortgage, this will not apply to you.  Anyone who starts an application after the 26th, the new rules will apply.

 

Veterans Administration Loans for Zero Down Payment borrowers

One of the many benefits available to honorably discharged veterans is the VA Home Loan Benefit.

Basically, it will allow you to buy a home with ZERO DOWN PAYMENT and get a low-interest rate at the same time.  Normally, if you put less money down, you would expect to pay more in rate than someone with a larger down payment but this is not the case with a VA home loan.

Right now, we can get qualified veterans 30 year interest rates in the mid 3 percent range.  This equals $4.49 per thousand borrowed in a monthly payment.  A $100,000 loan would have a payment of $449 per month not including taxes and insurance.  At this rate, buying a home certainly costs less than rent in the Boise area.

How does the Veterans Administration offer this?  First of all, the loan is not from the government but instead its secured by the VA.  The loan is made by lenders to the borrowers according to the VA loan program.

If  XYZ Bank makes a loan to a veteran and later the veteran goes into foreclosure, the bank takes the initial loss.  The VA pays the bank for the defaulted loan, making them whole and takes the house back as collateral for the money lost.

This might seem risky, but the VA loan guidelines are written in such a way as to encourage responsible lending and not letting veterans get over indebted.  Furthermore, Veterans by nature of their service, have demonstrated the ability to follow the rules and generally don’t go into default nearly as much as other home buyers.

How does one qualify for a VA loan?  Its easy, you call your local lender and ask for a VA loan specialist.  If you don’t have one, I can be reached at 861-7579.  They determine quickly if you qualify and can give you an estimate of the payment on the home you are looking at.  You don’t need your original certificate of eligibility, instead, the lender will retrieve it directly from the VA.

 

Why aren’t more renters buying?

In our market, Boise Idaho, the cost of renting a house is more than the cost of a mortgage for a similar home. It would seem that everyone would be buying a home.

The Wall Street Journal did a survey on why, and here it is:

http://realestate.msn.com/blogs/post–why-more-renters-arent-buying

The top three reasons are directly related to our economy and job market, not worries about values dropping or other reasons.

What do you think? Comment below:

New Home Loan qualifications and bank overdrafts

New changes to mortgages in 2014 require a lender to judge the borrowers ability to repay.  I like to think that we did prior to this, but when new laws are passed, they always generate new guidelines that supersede the past methods of qualifying borrowers for a home mortgage.

In the past, the presence of overdraft fees in a borrowers bank accounts were left to the discretion on the underwriter.  Now, they are considered a negative factor in judging a borrowers ability to repay the home loan.  Even transfers from a line of credit when done to prevent an overdraft are considered a negative factor in the borrowers ability to repay their home mortgage payment.

Overdraft and Transfer fees can add up to a significant amount of fees in a month.  This in effects becomes a regular monthly debt which can at the least increase your Debt to Income to the point you don’t qualify.  Even if it’s not much, it’s an unnecessary fee that you don’t need to be paying.

What if you have them?  It might be possible to ignore them if  you have a few months of zero overdraft fees or credit line transfer fees.  How to address that if you do have them showing on your bank statements?  It’s sometimes possible to prove to the underwriter that you have changed your ways.  Pre purchasing and budget counseling certificates can prove you have. A letter explaining specific steps you have taken to better manage your money will probably be required as well.

It is definetly more complicated to qualif for a home loan these days, but with proper planning and the willininess to do what it takes, you can get qualified for your next home mortgage.

If you’re in Idaho, and you have questions or want me to look at your situation, call or request a loan pre-qualification at my site.

 

 

New Changes to the FHA Home Equity Conversion Mortgage, aka Reverse Mortgage. Great News for non borrowing spouses!

New rules go into effect on new Reverse Mortgages originated after August 4th that protect a non-borrowing spouse from foreclosure.

One of the criticisms of the Home Equity Conversion Mortgage is when a younger spouse, who cannot be on the loan if they are less than 62 years of age, looses their older spouse, the loan becomes due and payable.  Many times they are not able to qualify for a new refinance loan, and the home eventually gets foreclosed upon.

Recent case-law has established that the non borrowing spouses cannot be foreclosed upon, so HUD has written new guidelines that prevent the non borrowing spouse from facing foreclosure.

As a result, HUD has published new principal limit factor tables that run from ages 18-90 that give an approximate percentage that a married couple could borrow using a Reverse Mortgage.

The new principal limits are based on the age of the youngest spouse, generally.  This has the effect of lowering the amount that a Reverse Mortgage can provide but protects the younger, non borrowing spouse.

I think it’s a pretty good and fair tradeoff.  The Home Equity Conversion Mortgage is a life changing program for those who choose it but was a potential housing nightmare for non borrowing spouses prior to August 4th.

There are requirements on the non borrowing spouse, too many for a single post, but generally if they continue to live in the home as their primary residence, pay the taxes and insurance and maintain the property, they can stay in the home.

If you have questions about the Home Equity Conversion Mortgage, aka Reverse Mortgage, feel free to contact me and I can answer any questions for you as well as run custom quotes for your individual situation.

 

How to increase your credit score, FAST!

Outstanding credit card balances can impact a large portion of your total credit score.

Look at the available credit line vs what you owe.

If you have accounts that are being utilized over 50%, pay them down to under this amount.

If you are actually over the available balance, pay that down first.

The credit card companies usually report new data every month, and that will impact your next credit score when factored into the overall credit report.

 

Got a credit Question, ask below!

 

USDA increases its mortgage insurance fees in October

The Rural Development loan program offered through the US Department of Agriculture is increasing its monthly mortgage insurance fees starting 10/01/2014.

Right now, the Rural Development loan program charges a monthly mortgage insurance fee equal to .4% of the loan amount per year.  This will increase to .5% starting 10/01/2014.

What is the difference in payment?  On a $135,000 loan the monthly mortgage insurance goes from $45.00 per month to $56.30 per month.  This may not sound like much, but it wasn’t that long ago that RD loans didn’t have a monthly mortgage insurance fee.

RD loans in addition, still have the 2% up front Mortgage Insurance, called a “funding fee” that is typically financed on top of the loan.  That would be an extra $2700 added to the above mentioned $135,000 loan, a typical loan size for the RD eligible areas such as Star, Middleton, Kuna, Idaho.

To qualify for the additional $56 per month, a borrower would need to earn an extra $130.23 per month.

Are there alternatives to using the USDA’s Rural Development loan?  Yes, there are.  To determine if they are the best loan program for your situation, you need to call a local lender you trust and discuss your mortgage needs.

Should you not have a lender, you can always call me at 861-7579 and I will go over your individual situation and find the best mortgage program for your needs.

Selling by Owner is not all that’s its cracked up to be.

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