Club Chaos Agents - All Things Hollish, Wacked, and Jacked

 

Buying a home can sometimes be stressful when you have so many different people giving you advice. It shouldn't matter if you use FHA loans, VA loans, USDA loans, or conventional loans for your financing. Keep in mind, you hold the power in your own hands, with the help of professionals. Just be wise in your decisions.

Just recently, there has been news of FHA Loans raising the monthly mortgage insurance (MMI), known in the conventional world as PMI, private mortgage insurance. The concept is the same, but the monthly percentages vary for each type of mortgage depending on the down payment and credit scores. Here is the recent article : The FHA monthly mortgage insurance increases and the upfront mortgage insurance.

 

 

 

Just the other day, a realtor made this comment in regards to the FHA monthly mortgage insurance being raised by the end of this year.

The realtor stated : "I guess we're just going to have to start encouraging our clients to save up for the down payment like we used to do years ago.  After all, it worked."

In my opinion, we just can't compare the last few years to years such as 2005, 2000, or even 1995. The economy was totally different and we are facing more unemployment issues than ever before. People just can't pull cash out of the hat like they use to. Sure, we can say that they can save it, but how long would that take?

My point that I wanted to talk about is that if the FHA monthly mortgage insurance increased $167 extra a month, that another $10,000 down would not do as much as one would think. I am sticking with the $200,000 mortgage example that was used in the original post.  Let's continue this....

 

 

 

This is another topic of discussion, but a borrower needs to have in mind what monthly mortgage payment they are comfortable with prior to shopping for a mortgage or even shopping for a new home. Not what they can max out to, which some loans officers care more about.

So, your mortgage payment is $167 more a month with the higher mortgage insurance. If you put an extra $10,000 down on the mortgage, your payment would only drop $54 a month. Again, another $10,000 down would only decrease your monthly mortgage payment by $54 a month, using a rate of 5.00% ona $190,000 mortgage.  

I have to say, with today's economy, cash is king. I wrote this 3 part series, CASH is KING and the differences with different down payments.

 

 

 

Summary : Overall, you really need a good professional loan officer that will ask you the correct answers, talk about your goals, and get the borrower to focus on the mortgage payment, not the interest rate. As mentioned, I am a stickler when it comes to the first question asked of the borrower. That question is... "Borrower, what monthly mortgage payment would you be comfortable with, not to exceed?"  Not, let's see what the highest purchase price that I can qualify you for.  Again.. mortgage payment should be key. The interest rate just makes your payment. You live with the payment, not the interest rate.

 

• I need my quick fix, please pass that 4.5% rate over here. (please don't be disturbed about the first picture. Just trying to make a point.)
  

 

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- FHA Loans - USDA Loans - VA Loans -

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- Conventional Loans - 203 k loans -

- FHA Home Loans - Mortgages -

 

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For more information on FHA loans, please go to this link. The FHA Expert

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors

 

Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc

 

 

In a perfect world, every seller and or realtor would love to have a very good buyer that is pre-qualified properly when placing an offer on their property.  But what about the property itself?  Let's dig into this a little deeper.

When I pre-qualify a borrower, I ask at least 10 to 12 important questions which usually covers all of the basics. How should a realtor treat a seller when selling their home?  Do they just ask them a few basic questions and maybe pull up the tax records? Isn't there a phrase used by some that buyers are liars?  Okay, maybe not lying, but what about withholding information or misleading?  Can't sellers do the same?  I think so and I think it's the job of the listing agent to pre-qualify their seller a little more in-depth than what might be on the surface.

Now, I am not a realtor, so I don't know exactly what the protocol is and what questions are answered.  Or what kind of research goes into the property when listing the property. But I can say this from experience, in some cases I don't think the correct questions are being asked.

 

 

 

List of Questions

 

As mentioned, there are a set of questions that I ask every borrower when I pre-qualify them. These questions generally cover all possible issues that could take place during the buying process, hence why I ask these questions upfront.

Just recently I had a few buyers run into problems when trying to purchase a new home, but that these issues didn't appear until later on in the process.  Examples :

   1. The buyer was buying a twin which was also a PUD. (planned unit development) At one time, the seller converted the twin into a condo, which there are now 2 units. They actually got a lawyer involved and had a master deed drawn up. So now you actually have a property that is a PUD/condo. This type of property is rare and is more seen along some shorelines for a specific reason.

      Solution : As a listing agent, maybe have in their set of questions asking if they had ever legally changed or converted the property into another type of property.  If you searched the tax records, it was listed as a PUD and the appraiser stated that it was a PUD.  We didn't find out about the condo issue until title came back. Now you have a potential issue and not to get into details, it killed this specific deal at the end because we need to approve the condo as a FHA loan, even though they were usuing USDA financing.

   2.  Illegal rooms or additions - This has happened more so in Florida because of the hurricanes. But I have seen this even in North Jersey to where a single family was converted into a duplex illegally. I have had a few deals in Florida to where the porch was converted into another room. Yet there were never any permits executed for this function or an inspection done after the fact.

      Solution : Maybe a realtor should always ask if any rooms have been added on or converted after they bought the property and if so, was it done properly and through the correct channels. Or for the fact that if they are selling a multi-family home, that it was done legally.

 

 

 

Summary :  Overall, I just think many of us need to be proactive and not just dwell on the buyer. I think specific questions should be asked on every property, no matter what you think or assume, or what you have found in your research from the tax records.  Especially making sure that conodos are approved for specific types of financing.  What have you seen out there or happen?  As a realtor, what kind of questions do you ask?

 

 

_____________________________________________________________________________________________________

 

                  

                                                                                                FOLLOW ME ON FACEBOOK

 

 

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages - 

- Conventional Loans - 203 k loans -

- FHA Home Loans - Mortgages -

 

Experience & Knowledge at its BEST !!!

 

 

_____________________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

 

 

Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc