Mortgage Business, Real Estate News


November 24, 2015
This week is Thanksgiving week. It is the time of year that we are supposed to give thanks. Sure there is a lot more involved. We get together with family and friends and some of us get to watch football, plus, if we are lucky, we get to eat some nice juicy turkey. But we should not forget the part about giving thanks. Especially this year. Why?

Well, the recent tragedy in Paris tells us how fragile peace, safety and tranquility can be. Clearly we have our challenges in America. Some of them are economic and some are social. However, in many ways, they pale in comparison to what others face in the world. Yes, our economy is not where we would like it to be, but we have created well over 10 million jobs since the end of the recession and more are on the way. Certainly, we could use many more jobs even if their creation causes the Federal Reserve Board to raise interest rates.

Some are worried about what could happen if interest rates go higher. For those, we would like to offer a little history. From 1956 until 2011, a period of 55 years, rates on 30-year fixed loans never went below 5.0%. That is almost two generations. And the real estate markets did just fine over these decades. Now we are worried that 30-year fixed rates may rise to 4.25% or higher. The cost of money is a bargain today. And judging by the statistics, so is owning a home versus renting. For those of us who are homeowners, we should be thankful. For those of us who aspire to be, we should be thankful that we live in a land of opportunity. Now, let’s pass that turkey!

 The housing crisis was seven years ago and if you had a foreclosure or short sale, enough time may have passed for you to be eligible to buy a home again. However, these boomerang buyers do need to be prepared. Depending on what led you to be involved in a foreclosure or short sale, you may have some work to do to fix your credit and improve your financial situation. Lenders want to know if you’re in a financial position for homeownership, and experts are available to provide tips to help you prepare yourself. Each lender has their own approach to underwriting for borrowers. “[Lenders] view different circumstances for compensating factors,” says Michael Fratantoni, chief economist at the Mortgage Bankers Association. “It’s a different narrative when a borrower is in the position of not being able to pay versus someone who decided not to pay because they found themselves underwater.” Industry guidelines generally require borrowers with a short sale to wait four years from the date of discharge or dismissal before applying for a home loan again, while those with a foreclosure may have to wait up to seven years. This date is on your credit report. Borrowers with prior short sales may be eligible for a new home loan in two years if there were extenuating circumstances. Lenders will also want to see that you have a steady income. Source: Fox Business We can run your credit report for you if you are interested in seeing the key dates that might affect your timing with regard to purchasing again.New federal loan disclosure rules that were designed to help borrowers understand what they were signing at their home’s closing have had a bumpy rollout because of fighting in Congress and incompatible lending software, the Consumer Financial Protection Bureau’s director Richard Cordray admitted to lenders. “It has become apparent that the implementation process was not as smooth as we would have hoped,” he said about the rollout of the “Know Before You Owe” rule to an audience at the Mortgage Bankers Association’s annual convention in San Diego. The rule gives consumers three days to pore over the loan documents, perhaps with an attorney or other trusted adviser, before closing on the loan. The rule, which was set to go into effect in August but was delayed by two months because the industry wasn’t ready, is already being targeted for potentially slowing down home closings and requiring borrowers to pay more for the bank to hold an agreed-upon interest rate longer. This is called a loan lock, and for a fee it “locks in” an interest rate during the closing of a home sale. Before the rule went into effect, the typical loan lock was 30 days. But some lenders and brokers fear that now with the new rules increasing closing periods, a loan lock of 45 days or 60 days will be needed to keep the interest rate stable, raising the cost to the consumer. Source: Market Watch

 Real estate is America’s top investment choice, according to a Bankrate survey. The survey asks Americans what kind of investments made the most sense and 27 percent said they’d invest in property if they had a pool of spare cash. CDs and other cash investments – previously the top answer in Bankrate’s 2013 and 2014 surveys – came in second at 23 percent. Only 17 percent of survey respondents said they’d purchase stocks; 14 percent said gold and other precious metals; and 5 percent said bonds. “We’re not seeing the bunker mentality from individual investors to the same extent of the past few years,” says Greg McBride, CFA, Bankrate’s chief financial analyst. “But the preference for real estate over, say, the stock market, does beg the question of whether or not Americans are again viewing residential housing as a golden ticket.” Source:

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