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Are you looking to buy a house and are having trouble saving the money for your closing costs or down payment?

There is a nonprofit company in Denver who will give you $4 for every $1 you put into their savings plan. You have to be in the plan for 6 months prior to receiving the benefit, so plan ahead.

What this means is if you max out their allowable amount, you will contribute $1,000 and they will match it with $4,000 towards money to buy a house. For a total of $5,000 you have to put towards the costs of buying a home. The program has been around for some time, but has a drop dead date of August 2010 (when you have to have used the money by).

Add that to the first time buyer credit of $7,500 by the federal government and you can make a home purchase quite a bit easier to obtain.

To find out more let me know!

Ray

rwilliams@summit-mortgage.com or 303.779.0591 ext 101

As we all know the day after the failed vote on the bailout plan in congress, there is a huge push to get this back in front of congress for passage. The Dow dropped 777 points in it's largest single day drop. There is concern about our retirement funds. mutual fund guarantees, credit or lack there of. So I wanted to give you a spin on the bailout bill and how it would affect mortgages.

Mortgages are packaged into Mortgage Backed Securities and resold on the open markets. One problem that has existed is the banks have been tight on credit because of bad mortgages and illiquid positions on these securities. Part of the proposed bailout is for the government to insure these mortgage backed securities. What that would do immediately is to allow the big banks to immediately free up capital to relieve the chokehold they are feeling right now. This would then help with mortgage financing and banks would potentially start back down the road of relinquishing the tightened lending guidelines.

For example~ fannie mae has always had a position that if you were buying an investment property and had good credit and low debt, you were eligible to put down 10% on that rental home. Coming here soon you will be required to put 15% down minimally. 

However~ You can still buy a home with FHA and put 3% down and with rates at around 6% right now (yes in today's financial market) it is a great loan in today's financial markets.

You can also qualify for the $7,500 first time buyer credit if you are buying your first home.

So while the financial markets are in tough shape. Make sure to learn as much as possible to understand what the bailout means and how we need it.

Ray

303.779.0591 ext 101

More and more even the likes of FHA which hasn't changes lending guidelines in almost 60 years, has added a couple key changes to pay attention too.

As of 9/19/2008, if you are moving out of your place and making it a rental you pretty much can count on needing to be able to qualify with that house payment, and the one you are about to buy. It used to work out where you could use 75% of the new lease on the house you were moving out of and turning into a rental home.

However, FHA, like Fannie/ Freddie has found that many people were moving out of their homes, to then in turn let the other house go into foreclosure, after they were able to buy the new one and get moved in. As a result if you read earlier in my posts, I mentioned when Fannie Mae made these changes.

The net effect is IF you change jobs or are transferred from your current job (and it is not recognized as a reasonable commute) and it forces you to move, you may be eligible to use that rental income (off house you are moving out of). OR if you have 25% equity in the house you are moving out of then you can use the rental income to offset your debt.

COMING SOON~

Effective January 1,2009 you will be required to make a 3.5% down payment when using FHA to buy your home. This goes up from the current 3% they require now.

Meaning if you are buying a place at $220,000 you will be required to make a $7,700 ($220,000 x .035) down payment. Seller concessions towards your closing costs will still be allowed to 6% of your purchase price.

If you are thinking of buying soon, let me know so we can make sure you are on the right track to home ownership~

Ray 303.779.0591 ext 101

Yesterday after the fed meeting ended, it was determined that the fed funds rate would stay at 2% for the time being. As soon as the traders got a whisper that AIG was going to receive a loan to avoid filing bankruptcy the stock market rallied. This sent mortgage backed securities spiraling downward and led to lenders sucking the juice out of the lower rates. With that we went from seeing rates in the mid 5% range to 6% in one short afternoon.

Today stocks are under pressure and a band aid has been put over the nation's largest insurer's broken bones. At a 2 year pay back what turns out to be around 11.31% interest to the government, it is a steep price to pay for the insurance giant. Although it would have had a huge international problem on the markets if they had to file for bankruptcy.

Keep a lookout for rates as this wild and crazy ride continues to go on!

Ray

Late last week as I sat at my desk working through my day I received an interesting phone call from a client (single mom) who is needing to refinance her mortgage before her rate adjusts. She wasn't always a client of mine. She had actually called in off the internet last year, but after a long conversation, at that time, we uncovered that she had a prepayment penalty on her mortgage, and shouldn't refinance her home until this fall. That meant that if we had paid off her mortgage last September she would have had 6 months of interest added to her loan. So we linked back up this month as her prepayment penalty is set to expire.

We have been working together for a week or so to get her loan approval finalized so she can have a nice secure fixed rate mortgage. But late last week she called and I could tell she was upset. She preceded to tell me that she was told by a Countrywide loan officer (who called her after we ordered her payoff), that she wouldn't be able to get her loan approved. That when her loan got to underwriting it would be denied because of her debt ratios. That the broker she was working with would mislead her.

This was hard to hear coming from a single mom who has placed so much trust in my ability to help her out. As the conversation progressed I reinforced to her about how in my office we actually pre-underwrite the mortgages. Meaning that the mortgage files are ran through the underwriting engines that are used to approve mortgages. Underwriters are actually in place to sign off on compliance conditions to make sure the mortgage will be purchased on the secondary market.

So at the point that the Countrywide loan officer had tried to scare my client, was solely because he didn't know what he was talking about. First if you read anything on here, you know I am a mortgage banker not a broker. Maybe he isn't empowered at Countrywide to underwrite files before they are sent to underwriters, maybe he doesn't know how to calculate debt ratios. Or maybe he wouldn't take the time to investigate the potential value of her home to make sure the house will appraise for enough to allow her to refinance. Whatever the case, after the client and I talked she felt better knowing that we had an approval for her loan even before the underwriter had the file. At the point underwriter's review your loan documents, they don't deny your loans unless you can't supply the items (referred to as conditions) needed for compliance aspects of mortgages.

Flashing back to my single mom (client) we are only waiting on a supporting document from her, which will be here in the next day or so, and her loan will be scheduled for her to close on the new mortgage.

The moral of the story is to make sure you ask the right questions when interviewing your potential mortgage consultant. Make sure to check out my page The Truth to learn more about what to think and most importantly, what questions to ask when looking for your next mortgage consultant.

Ray Williams

Branch Manager , Summit Denver 2

rwilliams@summit-mortgage.com , 303-779-0591 x101

WOW! This weekend the government (treasury department) guaranteed a $250 billion open ended line to fund all fannie mae and freddie mac mortgage bonds.

What a historic expansion of government. After pimco (largest buyer of bonds) voiced concerns and said they would no longer buy mortgage bonds, this raised concerns in the capital markets. Other foreign governments were speaking along those lines as well. That would have meant bad new for mortgages! This is a result of Fannie Mae and Freddie Mac becoming too big for their britches.

They own or insure over 45% of mortgages in the United States.

This move by the government can be likened to the bailout during the savings and loan crisis. The hopes from our side is that this on a short term outlook will help mortgage rates drop, substantially this week. For a short-term bailout this was a critically important move by our government.

On a long-term note, this will help to shrink Freddie and Fannie over time. This will cause big banks and institutions to buy mortgage backed securities (mortgages). This allows the current market chaos to continue, but builds a floor for things to not get worse and should help to put a floor in places where needed. This will cause things to remain tight from a lending standpoint as they are now. 

Conforming loans will stay put, and not go away. Banks (investors) will actually put money into these now safer mortgage backed securities and help the lost investor appetite here and abroad for our mortgages. With this the government will have more control over fees and costs for mortgages.

Yes, we still have a tight credit market, and tougher lending guidelines. But here in Colorado if you follow my blogs, foreclosures are starting to slow.

Enough of the techie jargon! What does this mean to all of us who own homes with rates in the mid to high 6% range, or those buying houses right now????

This will in the short-term mortgage rates staying lower, even in the mid to upper 5% range. If you need to refinance or are looking to buy make sure you take advantage of this and add to that the first time buyer credit to make nice assistance with a slower economy when buying your next home. I can attest that I did lock in my first client this week at 5.5% on her new mortgage rate. But call me to talk about your situation.

Sincerely,

Ray

Summit Mortgage

Branch Manager

303-779-0591

rwilliams@summit-mortgage.com

So many people are looking into credit repair after foreclosures, bankruptcies, divorces, medical bills.... You name it! With tough times being seen by many of our neighbors right now, odds are that if not you then someone very close to you needs credit repair.

Why would you do it? Everything we need that has to be financed (house, car, credit, home depot cards...) is paid back with interest. You want to make sure you have the highest score possible so you get the lowest rate possible. If you were getting ready to buy a house and through getting pre-approved were told your score needed improvement, or tried to buy a car and were told your score is too low. Maybe you took a new credit card and didn't understand why your rate was 14.99% for new purchases. This is when people start thinking of credit repair, or after a major life event like bankruptcy, divorce, major medical events and bills.

What to look out for? Many credit repair companies have popped up. I see them everywhere and am contacted by them weekly being in the industry and knowing I come across clients who need higher scores on a regular basis. Things to look out for when interviewing the credit repair company are:

1) Do they abide by the Credit Repair Organizations Act? This is a consumer credit protection act by the federal trade committee put out to protect us as consumers from unsavory people who try to steal our money and make false promises of credit repair.

2) Do you actually see results? Many things that need to be corrected on your credit report can be done so on your own with the advice of an experienced mortgage consultant. Recently, a client of ours now under contract to buy a house completed credit repair through their own actions and my advice and had their scores jump 100 points in 4 months and paid nothing but a few stamps and couple hours of their own time.

It is distinctively prohibited by the Credit Repair Organizations Act for these companies to make statements, advise, any misleading or untrue information to you. They also can't "charge or receive any money or valuable consideration for the performance of any service which the credit repair organization has agreed to preform for any consumer before such service is provided" according to the Federal Trade Commission. There also must be a written contract as well.

My advice~ Do your homework! When applying for a mortgage if you are told your scores are too low, make sure you are working with someone who will tell you what to do and track your progress to make sure you can buy someday. Take accountability for your past actions. If you have things to repay to get your credit in order, do so. Make sure you are using your credit. Too many times I see what I call "cash and carry" people who prefer to not use their credit, usually after a bad experience. If that is you, open up a card or two. You don't have to charge them to the max, but use them and keep your balances at under 30% of your limits. This is just one way to boost your score. You can also ask your creditors to boost your limits for a quick bump in scores.

If you need help with your scores and are looking to buy a home or need to refinance soon let me know~ We can put my advice to the test of that company that may mislead you, under deliver and over charge you.

Ray

rwilliams@summit-mortgage.com

You read that right! With the passing of the housing bill as a first time home buyer you may be eligible for a dollar for dollar tax credit up to $7,500 on your upcoming tax return. Even if you haven't owned in the last three years you may be eligible.

What it means is, say you file your taxes but between 4/9/2008 and 7/1/2009 have bought your first home. As you are filing taxes you can apply to receive the tax credit. It would go something like this. You are single and make under $75K or married and filing jointly make under $150K as your modified adjusted gross income. The house was greater then $75,000 in price and you are living in the house (not a rental).

If you were going to receive $300 in return from the federal return, you would actually receive $7,800 instead. Now there are a few things to note about this.

1) It is a 15 year interest free loan (not free money)

2) 2 years after getting the credit you have to start making equal installment repayments to cover a 15 year period ($7500 / 15 = $500 per year).

3) If you already have filed your 2008 taxes, you can do an amendment say if you bought in May 2009. That way you can get the amended return in and get the credit in the same time frame you bought.

4) If you sell your house, or even move out of it during this repayment period, you will have to potentially repay it immediately.

Now I am not a C.P.A at all but did get this information from this I.R.S directly. At this current time they haven't even written the I.R.S code to correspond to this part of the housing bill.

What do I think of it?

Well, if I were a first time buyer and was going to have to drain my savings to make a down payment. This would be a nice way to get that back, knowing a slush fund in the bank for emergencies is a huge sense of relief. If I were looking at it from an investment standpoint. I could take the $7,500 dollars and invest over 15 years and even at minimal returns have made money off the I.R.S' money, for once we win! If I bought a foreclosure from a bank that needed some TLC, as many are right now. I would be able to put that money back into my house and increase the value through capital improvements ($7,500 goes along way in a kitchen or bathrooms where you get the most bang for your buck on home improvements).

Of course if you have further questions or want to buy now and learn more about the tax credit shoot me an email or call~

Ray

Branch Manager~ Summit Denver

303.779.0591 x 101 rwilliams@summit-mortgage.com