Mortgage and Real Estate Blog

The real estate market today is one of the toughest in recent history. A large number of foreclosed homes on the market is marking it tough on the traditional home seller. While every market is different, most areas have seen about a 10% drop. The mortgage industry has tighten lending, with a virtual elimination of all non-traditional financing and zero down type options. Most programs today require 3% to 5% down and good credit.

Traditional sellers have the upper hand and an easier time in most cases in the "condition of the property" category versus a foreclosure, but it is still very tough when the banks are liquidating foreclosed properties, and the prices they are giving some of them away at.

So, what is a seller and buyer to do? How does a seller sell and a buyer buy in today's market?

First, understand that because of the large volume of foreclosed properties, it is a great time to be a buyer, whether you are a move-up buyer or a first-time buyer.

For sellers, now is not the time to try and sell your own property. You need the help of a FULL-TIME, experienced Realtor to help guide you through the process. Buyers need the same help to guide them through the maze of properties, both traditional and bank-owned. Having a good agent is extremely important. Take some time to interview your Realtor. How long have they been in business? How many sales have they completed? How many buyers have they helped? Can you get references? Don't just pick your agent from an open house, or use your sisters best friend who got her license last month.

For move-up buyers, you may have to give in to a lower than you like selling price, but you should reap a nice reward on any new home you buy. This is especially true if you are moving from the low $200k to the mid $300k range, as homes that were selling in the $400k range are now in the $350k. Therefore, even if you have to give up a little on your current sale price, you should more than make up for it on the buy side. Remember, a house priced right, and realistic, will sell even in today's market right away. Furthermore, with today's standard fixed rates hovering around 6%, you can still lock in historically great rates!

For first-time buyers, it is a great time to find aggressively priced homes, whether it is a bank-owned foreclosure, or a motivated traditional seller. Not all buyers are ready, or want to tackle "AS IS" foreclosures, so be sure to be honest with yourself about what you are doing to avoid a potential disaster down the road. Today's prices are again extremely affordable in the first-time buyer starter home category. Even though most zero down programs are no longer available, with proper negotiation, you can get the seller to pay most, if not all of your closing costs.  This means you can buy a $150k home for just $4500 out-of-pocket. With programs like FHA, the entire down payment can be a gift from family members, or community assistance programs. That is how it was always done prior to about 1999... and somehow people bought houses then, so don't sit back waiting. NOW is the time to buy!

Finally, one of the first things you should do is get pre-approved with a quality lender who will discuss with you your qualifying ability and program options in today's market. Someone who has the knowledge, expertise, and full range of programs (like FHA) to bring you to a successful no surprises closing. This is never the guy on the internet posting the lowest rate, or at the call center of the big bank. A word of caution. If you are shopping for a lender based on rate, be prepared to get screwed. Be sure to read these informative articles for more information: "Rate Shopping - How to do it right", and "Lender Shopping - How to do it right".

No matter what your real estate needs are, buying or selling, with the proper guidance of full-time professional Realtor and Loan Officer, you should be able to have your dreams come true.

(C) 2008 - Joe Metzler - http://www.joemetzler.com/

Modernizing the FHA: They aren't going the right way!  CONGRESS - Just leave it alone!  

Measures in the bill would overhaul the Federal Housing Administration's loan insurance program, which helps homebuyers with weak credit or little cash get an affordable mortgage.

The changes proposed in the bipartisan bill would raise the FHA loan limits from 95% of an area's median home price to 110%. But in high-cost areas, the FHA loan limit may not exceed $550,000.

Under the bipartisan economic stimulus package passed in February, the cap for FHA loans in high-cost areas was temporarily raised to $729,950.

 The Senate package also calls for FHA loan down payment requirements be raised to 3.5% from 3%.

For clarity, FHA currently has a minimum down payment of 2.25%. BUT, FHA requires the buyer put at least 3% of the purchase price into the transaction.  So if a buyer is paying all their own closing costs, their out-of-pocket is 2.25% plus their closing costs. If the seller or a grant program is paying their closing costs, the down payment is still only 2.25%, but they MUST put at least 3% into the deal.

Learn more at  http://money.cnn.com/2008/04/02/news/economy/housing_bipartisan_draft/index.htm?postversion=2008040311

NEW APPRAISAL GUIDELINES 

FACT SHEET

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FACT SHEET Listed below are key provisions of the March 3, 2008, agreement between Fannie Mae/Freddie Mac, the New York Attorney General’s office, and the Office of Federal Housing Enterprise Oversight (OFHEO). The Appraisal Institute requests feedback from members on the agreement and the new Code of Conduct to help identify problems and solutions to be advanced in our official comment letter. Please submit your comments no later than March 31 to appraisalcomments@appraisalinstitute.org. HOME VALUE PROTECTION PROGRAM AND COOPERATION AGREEMENT  Fannie Mae/Freddie Mac have agreed to adopt a Home Valuation Protection Code of Conduct (below) establishing requirements governing appraisal selection, solicitation, compensation, conflicts of interest, and corporate independence, among other things. Fannie Mae/Freddie Mac will adopt requirements contained in the Code and make appropriate changes to their Seller Guides. The effective date of the changes will be January 1, 2009. The parties to the agreement will establish the Independent Valuation Protection Institute (“the Institute”), an independent entity governed by a board of directors, to monitor and study this area. The board of directors of the Institute must be approved by both the Attorney General and OFHEO, and the Institute may be affiliated with an existing academic, professional association and/or industry organization. The Institute will establish a complaint hotline for consumers, and appraisers will be able to contact the Institute if they believe their independence has been threatened in any way. The Institute will mediate complaints or forward complaints to federal or state regulators or state and federal law enforcement agencies for possible investigation or prosecution. The Institute shall report publicly on the results of its activities to the Attorney General of New York and OFHEO on a bi-annual basis. The agreement requires Fannie Mae/Freddie Mac to provide an opportunity to comment on the new Code of Conduct, agree to review the comments in good faith, and consider any amendments to the Code to avoid any unforeseen consequences. Fannie Mae/Freddie Mac opened the comment period on March 14, and it is scheduled to run through the end of April. HOME VALUATION CODE OF CONDUCT No employee, director, officer, or agent of the lender, independent contractor, appraisal management company, or partner on behalf of the lender, shall influence or attempt to influence the development of an appraisal report. Withholding payment is considered improper influence of an appraiser.
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 Requesting a pre-determined value is considered improper influence of an appraiser. Providing to an appraiser a desired value for a subject property or a proposed or target amount to be loaned to the borrower is considered improper. The lender or any third-party specifically authorized by the lender shall be responsible for selecting, retaining, and providing for payment of all compensation to the appraiser. The lender will not accept any appraisal report completed by an appraiser selected, retained, or compensated in any manner by any other third party (including mortgage brokers and real estate agents). Loan production staff of the lender are forbidden from participating in appraisal selection, review and management functions. Lenders shall not utilize any appraisal report prepared by an appraiser employed by: o the lender, o an affiliate of the lender, o an entity that is owned by the lender, o an entity that owns the lender, o a real estate “settlement services” provider (as defined by RESPA), or o an entity that is owned, in whole or in part, by a “settlement services” provider. The lender shall provide the borrower with a copy of the appraisal report immediately upon completion and no less than three days prior to the closing of the loan. The lender will establish a telephone hotline and an e-mail address to receive any complaints from appraisers or other entities concerning the improper influence or attempted improper influence of appraisers. The lender shall quality-control test, by use of additional appraisals, the appraisals or valuations that are used by the lender, including the results of automated valuation models, broker’s price opinions or “desktop” evaluations. For More Information and To download full copies of the agreement and the accompanying Code of Conduct, visit www.appraisalinstitute.org/cuomofanniefreddie.

The Metzler Group at Great Rivers Mortgage bucks mortgage industry collapse by selling new Home Ownership Accelerator^® Loan. Introduced in the US in 2005, innovative all-in-one home loan combines personal checking with mortgage to help borrowers save thousands in interest payments.

Saint Paul, MN, April 1, 2008 - Fighting against the most challenging reversal in the mortgage market in decades, Great Rivers Mortgage has significantly expanded sales by focusing on the only growing loan product in America, the new Home Ownership Accelerator^® loan. Introduced just a few years ago in July 2005, the Accelerator loan has seen its popularity double in 2007 even as sales of traditional loan products have collapsed.

"We are very fortunate to have gotten certified to sell a loan program that actually is in tune with the new thinking in the marketplace," said Joe Metzler. "People can no longer count on appreciating home values to build equity, so they need a new solution.  The Accelerator provides it, building equity faster by accelerating the reduction of debt."  Metzler credits the Accelerator with bringing Great Rivers Mortgage through the current credit crunch "in much better shape than most mortgage brokers, many of whom have closed their doors."

The new loan is modeled on a popular Australian home loan program called the "all-in-one" loan that has a proven record of helping borrowers pay off their home loans years faster and save them thousands of dollars in interest payments.  This home financing tool works by combining a home loan and a full-service checking account. This innovation can produce large interest savings and loan payoffs in as little as half the time without changing the borrower's spending habits.  This product is timely because a large group of Americans, especially Baby Boomers, are realizing that they must stop extracting home equity and build it back up if they want to retire mortgage-free.

"The Home Ownership Accelerator is the first loan since the 15-year mortgage to help borrowers get done with their debt more quickly," said Joe Metzler. "For decades, the lending business has innovated new ways to make homes affordable to buy.  Now we finally offer more help to borrowers to better manage debt and get debt-free more quickly, if that is their financial goal," added Metzler, "or to manage their equity more effectively and efficiently if they are harvesting home equity for other financial projects."

Homeowners can access their funds to pay expenses just like they would with a checking account, using the unlimited checks, ATM/Visa point-of-sale card, and free online bill-pay that come with the account.  While the homeowner's funds are not being used, they keep the principal balance lower, thereby saving interest.  It essentially creates a higher effective return on those funds. A short film about how it works can be found on a special web site just for this new loan: (www.PayOffQuick.com)

"This is a huge win for homeowners," said Metzler. "Finally, here's an opportunity to shift the focus from simply minimizing payments to actually paying off efficiently, quickly, and with no change to lifestyle.  It's not magic.  It's simply takes the interest spread the banks had and gives it to the consumer." 

"This is the most revolutionary product to hit the U.S. mortgage industry in years," said (president of local mortgage broker association).  "The Home Ownership Accelerator offers consumers a unique opportunity to significantly reduce the amount of interest paid on their home loans without any change to their spending habits."

"It's not for everyone," said Doug Nesbit, National Sales & Marketing Director for CMG Mortgage, the developer of the Home Ownership Accelerator^® loan program.  "You need to have positive cash flow, very good credit, and be disciplined about your use of equity.  But for those people, the benefits can be amazing." 

The Home Ownership Accelerator is offered exclusively through mortgage brokers who have completed a mandatory certification course offered by CMG. The Home Ownership Accelerator^® is currently available in 40 states around the country.

Anyone who does NOT chose their mortgage company and broker carefully is doomed to struggle if they are advised to take out the wrong loan, and probably go-under when recession really hits! Allow Joe Metzler (http://www.joemetzler.com) to earn your trust and business.

Joseph Metzler
Metzler Mortgage Group at Great Rivers Mortgage
651-552-3681

joe@joemetzler.com
http://www.joemetzler.com/

Great Rivers Mortgage, is a partner with Mortgages Unlimited, a private, locally-owned company established in 1991, Mortgages Unlimited is one of the largest and fastest growing mortgage lenders in Minnesota. In fact, Mortgages Unlimited has closed well over $3 billion in residential mortgages!

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