Bronx FHA mortgage – Page 3

Appraisal came in SHORT. WHAT NOW?

In the end, the motivations of all parties to make the deal happen and close the transaction rule the day. Those motivations drive everyone to find a solution and get the deal closed. Or not.

Wow, 27+ years as a Mortgage Banker! I have seen the occasional short appraisal! I started in November 1989 because I wanted to become a Homeowner so I chose a path which would get me there: Mortgage Professional.

Times were tough back in that market. Interest rates were high and property values had dropped dramatically. The employment picture for many Americans wasn’t very promising. There were a lot of foreclosures and homeowners had a hard time refinancing their mortgages due to lost equity. Sounds very similar to our recent post-meltdown market with the exception of the interest rates (11% in 1989!!!).

I received a valuable part of my education early on in my career as I dealt with purchase transactions where the appraisal came in for less than the purchase price. Buyers, Sellers and their respective Realtors are all “IN IT TO WIN IT” and make the deal happen.

I carry that education with me to this day when my HomeBuyer clients ask me at application time, “What happens if the appraisal comes in for less than the Purchase Price?” I know many HomeBuyers may think it’s a NO-BRAINER: the Seller will automatically reduce the price. But that is NOT the case right out of the gate. Here’s what I learned all those years ago about appraisals that come in short:

When the bank appraisal comes in for less than the contract price

there are FOUR ways to proceed with the transaction.

The Purchaser comes up with the difference in cash. If the appraisal is less than the Purchase price, the Seller basically assumes the Purchaser wishes to buy the house according to the terms of the contract, including the agreed upon Purchase Price. Therefore, the Seller assumes the Purchaser will come up with the cash necessary to complete the transaction.
The Purchaser and the Seller meet in the middle. The Purchaser comes up with some cash but the Seller also agrees to reduce the price enough to meet the Purchaser somewhere “in the middle.” Both sides want to complete the transaction and so they work it out. This is compromise at its best.
The Seller reduces the Purchase Price to equal the Appraised value. This is the least likely scenario, but not an impossible one. Sellers often want to complete the purchase transaction on the original terms of the contract, including the price. But a determined Purchaser working with a great Realtor, by digging in and working hard to negotiate can often make it happen.
Nothing happens and the deal is cancelled. The Purchaser either cannot or will not come up with the extra cash and the Seller refuses to reduce the price completely or even a little bit to meet the Purchaser. In this case the transaction is cancelled, the Down Payment is returned, and everyone goes home unhappy. The Purchaser has to begin all over again and the Seller has to put the house on the market and try to find a new Purchaser.

In the end, the motivations of all parties to make the deal happen and close the transaction rule the day. Those motivations drive everyone to find a solution and get the deal closed. Or not.

Do you have questions? Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Happy House Hunting!

Weekend House Hunting

Spend a few minutes with your Saturday morning coffee and tcurranmortgage.com preparing to visit Open Houses, FSBO’s and real estate offices.

I know it’s cold outside, but the weather this weekend is shaping up to be incredibly mild in comparison to our very nasty winter so far, you might even say this weekend will be “Spring-like!”

Thus a good weekend to get out there House Hunting!

Here then some links to previous posts First Time Buyers need before hitting the streets looking for a home. Spend a few minutes with your Saturday morning coffee and tcurranmortgage.com preparing to visit Open Houses, FSBO’s and real estate offices.

Buying a home is not about “investing!” It’s about owning a piece of the rock and those intangible benefits of homeownership!

Learn from others’ mistakes: BUY A HOME YOU CAN AFFORD! All those crazy people buying houses during the “BOOM” over-stretched their housing budgets. Know what you can afford and Use A Blanket That’s Big Enough!

I learned early in my career as a Mortgage Banker: It’s All About The Monthly Payment.

Okay, now that you are ready to hit the pavement shopping for a home, you’ll need some insight so you can get the house you want at the price you’re willing to pay:

How do you guess what the house is worth? Use your Personal Market Value “Divining Rod!”

Don’t be put off by the List Prices! EVERYTHING is negotiable! Asking Prices Don’t Matter To Realistic Buyers. (That would be YOU!!!)

Let’s say you have an awesome weekend and lo and behold you find a great house in a great location at a price reasonably close to what you’re willing to pay! WOW! Now it’s time to hunker down and negotiate. Cast aside your fear of rejection through preparedness. Prepared Buyers WIN negotiations by showing a Seller how serious they are!!! Follow these FIVE Steps to Get YOUR HOME THIS WEEKEND!
Five Steps To Making An Offer To Buy A Home

Good luck, enjoy the weather, have fun and Happy House Hunting!

5 Steps To Making An Offer To Buy A Home

When you take these formal steps you are demonstrating to everyone involved in the transaction just how serious a Buyer you are. You will set yourself apart from “the crowd” when you follow my method.

There is a deliberate process to making an offer. I include step-by-step instructions on how this works. My instructions will help you get the house you want, even if you are dealing with a difficult Seller, a Bank-Owned property, or if you are competing against another Buyer for the same house.

I have seen these methods work many times over with my clients over my almost 28 year career as a mortgage professional.

My basic methodology here is one of making your Offer a very formal proceeding. When you take these formal steps you are demonstrating to everyone involved in the transaction just how serious a Buyer you are. You will set yourself apart from the crowd. I have seen this method work time and time again for my Homebuyer clients.

5 Steps To Making An Offer:

STEP 1. Always make offers in writing. Yes, it is absolutely true that offers can be presented verbally. Don’t do that. Put your offer in writing every time. Even if you are in a situation where you and the Seller are sending counter offers back and forth, every new offer should be in writing.

When your offer is in writing, you come across to the Seller as serious. Think about it, anyone who is taking the time to go in to the real estate office and sign the form is serious about buying a home.

Include the following into your written offer:

* The amount of your “earnest money deposit” or “good faith deposit.” That is the amount of money you’ll put into escrow with the Seller’s attorney upon signing the contract of sale.
* The amount of your mortgage financing. Of course you’ll back this up with a prequalification letter, but you must include the amount of your mortgage in the offer.
* Items included in the sale. If the appliances and the chandelier in the dining room are to be included in the sale, make sure they are written in to the offer. This shows the homeowner you were paying attention when you inspected the home and asked, “What’s included in the sale?”
* Attorney Information: the name and complete contact information for your attorney.
* Anticipated contract date. Always make this date within 48 hours of your offer. Present the assumption the Seller will accept your offer and immediately forward a contract to your attorney.

Again, this demonstrates to the Seller how serious you are. You are in effect saying, “I am so serious about buying this home I want to sign the contract immediately!” Imagine how many other Buyers out there are delaying things like signing the contract (and potentially changing their minds).

* Anticipated closing date. This is an interesting point for the offer. I always recommend putting the closing date for an offer within thirty days of the contract. The fact is most closings take place within 60 days of contract, and your attorney will most likely change that date in the contract, but if your offer says “thirty days,” once again you demonstrate how serious you are about buying the home.

STEP 2. Prequalification letter. Your mortgage professional should be available to fax a prequalification letter within hours of your making your offer; even on Saturdays or Thursday evenings.

STEP 3. Mortgage pro phone call. I think a phone call from your mortgage professional to the Listing Agent is a home run. When the Listing Agent hears from the mortgage person directly how eminently qualified you are, imagine how that raises your profile in the mind of the agent and the Seller!

STEP 4. Home Inspection ready to go. When you sign your offer, be sure to tell your Realtor that you’ve already spoken with your Home Inspector and you can have the inspection done tomorrow. Whoa, that’s really the mark of a serious Buyer!

STEP 5. Get ready with your counteroffer. If you offered less than the asking price, then you need be prepared with your counter offer if the Seller either declines or counters your opening offer. All of the steps above should be repeated with the new price replacing the original number. Organization and swift responses rule the day! Oh, you may not want to counter offer. That’s okay, too.

Close-up shot of keys in the lock of open door. One key is in lock another hanging on the ring — Unlock the door to homeownership with this method

Do you have questions? Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

I welcome Comments for all my blog entries. I will be happy to review and approve all legitimate comments provided by readers of tcurranmortgage.com. If you wish to Comment on any entry, please do so and I will quickly review and approve.

Good luck and Happy House Hunting!

FHA in the New York Times

The New York Times presented a brief piece about FHA insured loans.

I attended the grand opening of the Hamilton Lofts development in Harlem last week. The developer and sponsor of this brand new condominium project, Romy Goldman, has done an exceptional job: the finishes, the thoughtfulness and attention to every detail are very impressive. More impressive still is Romy’s understanding of the nuances of financing for her potential buyers, especially with regards to FHA Insured Financing. She had the condominium approved by HUD to allow her potential Buyers to purchase using the FHA program. On the entire island of Manhattan there were only 7 other approved condominiums for FHA financing. Romy was definitely ahead of the curve: her project is the eighth approved condo in Manhattan.

The New York Times presented a brief piece about FHA this past Sunday; they interviewed Romy Goldman and included her thoughts on FHA in the article.

My favorite quote from the article, “According to Meg Burns, the F.H.A.’s director of single-family program development, these loans actually perform very well. “That’s kind of a shock to most people because we serve borrowers with riskier profiles,” she said. “But we have pretty stringent underwriting standards. You have to have sufficient verifiable income and employment to make your mortgage payments.” YAY FHA!!!

Here’s the article: FHA Loans Help Sales

FHA Insurance is NOT PMI!!!

Realtors and clients will call FHA loans, or the attendant insurance premiums, “PMI.” “Trevor, what is the monthly PMI on that FHA loan?” The two programs are different.

A brief primer on the difference between FHA Mortgage Insurance and its pale imitator: PMI or Private Mortgage Insurance.

The FHA mortgage insurance program has been around since 1934. This program was created under President Franklin Roosevelt’s New Deal to help turn a nation of renters into a nation of homeowners. Back then, the rental rate was 70%, and FHA was instrumental in turning that around.

What the FHA or Federal Housing Administration does is it provides insurance for Lenders against foreclosure. When an FHA loan goes bad, the FHA steps in, reimburses the Lender and takes the house in foreclosure. Anytime you see “HUD Homes For Sale” those are FHA loans that went bad.

FHA has been absent for most of the “boom” years due to the limitations on loan amounts for any given geographic area. These loan limitations are set through an act of Congress and are—by law—a percentage of the median price and the FNMA limit in a given area. FHA was absent for most of the past ten years due to the low limit on lending. For example, in the NY Metro region, the limit for a single family home was $362,000 (approx.). The fact is, during those crazy times, you couldn’t find a single family home priced in the New York market unless you went very far afield, indeed, usually to a distant suburb.

As part of the 2008 stimulus package, Congress increased the permanent FHA limit to $625,000 (approx) for a single family home. As part of President Obama’s 2009 stimulus package, that limit has been further increased to $729,250 through December 31st, 2009. These numbers are not only more reasonable for our market place, but open up the FHA mortgage opportunity to so many more homebuyers.

FHA is, in my opinion, the “miracle loan.” The Underwriting criteria, as set forth by FHA, is much more flexible than Conventional or Fannie Mae guidelines. FHA requires a purchaser or homeowner (in a refinance) to pay mortgage insurance regardless of the size of the downpayment. In my humble opinion, this is a small price to pay for the excellent flexibility afforded by FHA guidelines, and the opportunity for homeownership opened up to so many more families.

PMI, or Private Mortgage Insurance, is the corporate, non-public version of mortgage insurance. PMI companies came into existence to fill the gap left by the FHA loan limits. For Conventional, or Fannie Mae/Freddie Mac loans, when a purchaser makes a downpayment of less than 20%, the Lender requires the purchaser to buy Private Mortgage Insurance to protect the Lender’s (riskier) investment.

Often, Realtors and clients will call FHA loans, or the attendant insurance premiums, “PMI.” “Trevor, what is the monthly PMI on that FHA loan?” The two programs are different. The FHA insurance is actually called, “MIP” for Mortgage Insurance Premium. There are two MIP’s when obtaining and FHA Insured mortgage loan.

The first is the Upfront Mortgage Insurance Premium, or UFMIP. This is typically 1.75% of the loan amount and is most often financed on top of the mortgage loan you need to purchase or refinance your home.

The second premium is the Monthly Mortgage Insurance Premium or MMIP. This premium is included with your monthly mortgage payment to your Lender. The premium is calculated based on a percentage value of the loan amount determined by the amount of your downpayment (and in recent history, your credit score, although that requirement has been cancelled). You will pay this monthly premium until your equity position in the home reaches 78% of the value at time of closing. It may be possible to eliminate FHA MMIP after 5 years of good payment history.

The UFMIP is included in your principal and interest payment for the life of the loan. If you sell the home or refinance into a non-FHA mortgage, you may be entitled to a refund of a portion of the UFMIP.

More information about FHA loans can be found at the FHA website.

Hope that helps!

Use a Blanket that’s Big Enough

People don’t want to get in over their heads with a mortgage payment they can’t afford.

Recent conversations with First Time Buyers have revealed a refreshing attitude amongst today’s home buyers: affordability. People don’t want to get in over their heads with a mortgage payment they can’t afford. I really like that. I have advocated exactly that concept with my clients for my entire career: buy a home you can afford.

During The Boom my words of advice in this regard fell on deaf ears. I would do then as I do now: calculate the mortgage payment and ask the client if this number fits the family budget. In other words, “Can you afford this?” Too often the answer would be “Yes” when I truly knew it should be a “No.” I tried to tell these folks to buy a cheaper house, buy a home they could afford so as not to lead to trouble down the line. I walked away from many of those situations because I just couldn’t reconcile the math and I wouldn’t be a party to a future financial disaster. I knew full well, as I left the room, that another mortgage “professional” would sit down with those clients and tell them what they wanted to hear, give them a truly bad mortgage, collect his commission check, and march off into the sunset leaving this family with a ticking time bomb.

I sat last night with a young couple shopping for a 2 family home. They make an excellent income and have excellent credit. They’re working with not a whole lot of cash (for New York) and so we’ve qualified them for an FHA Insured mortgage loan. They had an expression, “Use a blanket that’s big enough.” In other words, buy a home you can afford. It’s truly all about the monthly payment. If you can’t reconcile that number with your family’s budget, you’re either not ready to buy, or you should look for a less expensive home.

Even though this couple could afford a pretty hefty mortgage payment based on their income, they insist on shopping for a house that allows for a mortgage payment that leaves “breathing room” in their budget. This is good, sober thinking.

When you buy a home, you’re reaching for the stars to make the dream of homeownership come true. But reaching for the stars doesn’t mean you have to launch yourself into orbit. You can make that dream come true with an affordable mortgage payment if you are honest with yourself and realize that you really need to a “blanket that’s big enough.”

Makes sense to me, a blanket that’s big enough keeps you warm at night.

I welcome Comments for all my blog entries. I will be happy to review and approve all legitimate comments provided by readers of tcurranmortgage.com. I do not permit unfettered access to comments for obvious reasons: mortgage spammers and their ilk. If you wish to Comment on any entry, please do so and I will quickly review and approve. Thanks for reading tcurranmortgage.com. Hope that helps!

Mortgage Modification Murder: Homeowner Beware!!!

The lowlife mortgage modification scam artist has committed financial “murder.” The crook has taken not only this homeowner’s hard-earned cash, but caused the loss of a home and a substantial financial asset for the family.

I received a call yesterday at our office from a homeowner in Virginia. He was looking for some kind of FHA mortgage modification company and found us instead in his Google Search. Our company is not licensed in Virginia; neither do we do mortgage modifications. We just do plain old-fashioned mortgage originations, helping people buy homes and doing some refinance work, too.

I spent a few minutes with this gentleman on the phone cautioning him against mortgage modification fraudsters. I told him about the many scams being perpetrated by modification companies seeking to take money from unwitting homeowners while delivering zero satisfaction or assistance. I pointed him instead to the HUD.gov website to seek out a mortgage counsellor who might better assist him with his dilemma. I told him, too, that an attorney was probably his best option.

One of our Loan Officers told us of a man he met who is losing his home to foreclosure. A little over a year ago this man had a perfect mortgage payment history. For whatever reason, he decided he needed to modify his mortgage. He hired one of these mortgage modification murderers and paid thousands of dollars in fees to the fraudster. The crooked scam-artist told the man to stop paying his mortgage; upon the advice of his paid-professional-mortgage-modification-expert, the man did indeed cease paying his mortgage.

There was no modification; no call was ever made the the Lender to negotiate on the homeowner’s behalf. Money was stolen from this man and his family; now they are losing their home to foreclosure. The lowlife scam artist has committed, IMHO, financial “murder.” The crook has taken not only this man’s hard-earned cash, but caused the loss of a home and a substantial financial asset. Disgusting.

Homeowners beware. Too many of you who I speak to or hear of are doing exactly what too many of you did during the boom years: you’re following a dangerous path, ignoring the advice of seasoned professionals, and you’re allowing yourselves to be duped out of your homes the same way many of you allowed yourselves to be duped into bad mortgage loans.

If you feel you need help modifying your mortgage, contact your Lender directly. If at first you don’t succeed, try, try, TRY again. If you don’t have the time for that because you are busy working hard to pay your mortgage and your bills, then hire an attorney. Pay your attorney a retainer fee and let a licensed legal professional work on your behalf. If you don’t have an attorney, get a referral from family or friends, or consult your local bar association. You can find local help here, on the American Bar Association website.

President Obama and Congress have provided Homeowners with an opportunity to refinance or modify as part of the 2009 Stimulus Package. Find United States Government help here: Making Home Affordable.

A list of HUD Approved mortgage counsellors can be found here: Foreclosure Avoidance Counselling

No Credit Does NOT Mean “Bad” Credit

No credit means just that: here’s a person who has no established credit history.

I heard it again tonight from a client who’s looking to buy his first home for his family: he thought because his wife had no credit that meant she had “bad” credit.

This is NOT TRUE. False. Fallacy. Myth. Mis-Information. Incorrect assumption. Bad Medicine (oh, wait, this blog is NOT “Dances With Wolves!” Scratch that last part)

If a person has no credit that just means the person has no credit score and no established credit history that a financial institution can use to determine credit-worthiness for approving a car loan, student loan, personal loan, credit card, line of credit, checking account, car insurance, or a mortgage loan. No credit means just that: here’s a person who has no established credit history.

Bad credit means just that: BAAAAADDDDD CREDIT!!! When a finance professional reviews a credit report with bad credit we encounter such things as charge-offs, collection accounts and judgments. Maybe the person owes money to a former landlord or a utility in the form of a judgment. Maybe the person had a checking overdraft account that went unpaid and ultimately wound up with a collection agency. Maybe the person borrowed a book from the library and never returned it thus racking up late charges eventually resulting in a collection account (yes, I’ve seen it), or, MAYBE the person didn’t show up for jury duty and has a judgment for a fee incurred as a penalty for not reporting to jury duty from the County Clerk’s office (I can’t believe I capitalized that for a person that sues people for not showing up for jury duty).

All of that stuff is what you can easily see is BAD CREDIT. It’s NOT “no credit.” There’s some form of credit in there and it’s bad. And it’s on the person’s credit report.

Those other folks—like my client’s wife—who don’t have any credit appearing (whether Good, Bad, or Ugly), those folks have NO CREDIT.

There’s a difference. And with FHA mortgages, a person with NO CREDIT has a chance of building an alternative credit profile and getting approved for an FHA Insured mortgage loan.

The person with BAD CREDIT (and no other credit) has less of a chance of getting approved for such a mortgage loan. Let’s say “zero” chance, and leave it at that.

But get that idea out of your head right now about No Credit meaning “Bad” credit.

Hope that helps!

They’re BACK. Mortgage Losers/Thieves/Lowlifes Return To the Industry

All those mortgage losers who put this industry and the economy in the toilet are returning to prey on consumers once again.

We’re seeing it. All those mortgage losers who put this industry and the economy in the toilet are returning to prey on consumers once again. They’re returning because opportunities abound to separate hard-working homeowners and homebuyers from their money.

We’re hearing of people getting back into the mortgage business after the long cold “winter” of 2007-2009 when business was hard to come by and only the brave and the bold stuck it out to continue hard-earned careers. These mortgage-professional-wannabees are coming back because low interest rates and a newfound sense of optimism are bringing buyers back and opening up homeowners’ minds to the idea of refinancing.

The Associated Press reported of a warning from Senator Charles Schumer about these mortgage losers. The Senator it seems is also aware of the return of these crooks looking to ripoff consumers. Read more HERE

More than ever when shopping for a mortgage the words “Buyer Beware” ring true. Look for those mortgage professionals with substantial experience and preferably those who you find through a referral from a friend or family member, or your tax professional or attorney. Searching the internet for a mortgage professional is, IMHO, a recipe for disaster. You’re likely to come across many alleged experts who only want to tell you what you want to hear just to get your business. Once they get you to the closing table, everything changes and you can watch your money evaporate from your wallet.

I’ve recently cautioned against working with non-FHA approved mortgage people. These are yet another class of mortgage lowlife who pretend they are allowed to originate FHA loans. Worse, they pretend to know “all about” FHA loans. I just spoke on the phone while writing this blog entry with a young man who told me how he encountered many such people who claimed they could approve him for an FHA loan on a Co-Op apartment purchase. He told me they all seemed very happy to want to separate him from his money for application fees and the like. He contacted me to ask about getting an FHA loan for a Co-Op. He seemed to know already that such a loan was not available, but thought it’s because FHA doesn’t insure Co-Op loans. In fact, FHA DOES indeed insure Co-Op loans (FHA is an insurance program; FHA doesn’t make the loan, they insure the Lender’s loan in the event of foreclosure). I explained this fact to him. The problem with FHA and Co-Op loans is there are no Lenders who provide such financing.

No conversation about mortgage lowlifes would be complete without a mention of those poor homeowners trying to do a loan modification. As I mentioned recently, there are many scams out there with alleged “loan modification experts” very willing to take thousands of dollars in fees from distressed homeowners while providing absolutely nothing in return: no modification, no saving of the house, nothing, nada, zilch. Many of these crooks are, in my opinion, former mortgage losers who have changed their crime tactics from putting unsuspecting people into terrible sub-prime loans. Now they seek to steal your money—and your home—by pretending to counsel you on modifying your loan. BUYER BEWARE.

If you truly feel you wish to modify your loan contact an attorney. Or do it yourself.

On a sidenote, I attended a job fair yesterday seeking to recruit salespeople for the company where I work. I met the recruiters from the FBI and asked them to please, “…hire more people today and arrest more mortgage brokers.” They laughed and asked what I do. “I’m a mortgage broker!” I replied. “Please, I’m serious,” I continued, “these people have destroyed my industry, please hire some good people today and go out and arrest more mortgage brokers.”

Postscript: To the young man who called for advice on FHA and the Co-Op loan: Thank you for your kind compliment about tcurranmortgage.com and thank you for stopping by to read my rantings!!!

Erica’s Mom is Harrassing Her to Buy A House!

My Mom is harrassing me to buy a house. She keeps telling me I have to get this $8,000 stimulus refund and I have to close this year!

I met with Erica this evening to prequalify her for a mortgage for a 2 family house she wants to buy in the Bronx. I gave my usual “tcurranmortgage” mini-homebuyer-seminar, not knowing when to shut up and stop talking (that’s why Gary set up this blog when he built my website four years ago; he knows me too well!) as usual.

Near to the end of our visit, I mentioned to Erica that Uncle Sam was going to send her a check for $8,000 for buying her first home this year. Erica responded by telling us, “Yes, I know. My Mom is harrassing me to buy a house. She keeps telling me I have to get this $8,000 and I have to close this year!”

WOW.

YAY to Erica’s Mom! YAY to President Obama and his 2009 Stimulus Package and the $8,000 Refundable Tax Credit!

Just FYI: the tax credit is a truly refundable credit of either $8,000 or 10% of the purchase price of the house (whichever is lower; in NY, that’s going to be the 8k!!!). You don’t have to wait until 2010 to get the cash in your wallet. You can file an amendment to your 2008 tax return and get the money this year. There are restrictions, so be sure to check out the IRS website HERE to verify. You can even download the appropriate filing schedule to bring to your tax professional to file the amendment. Get to it so you can heed Erica’s Mom’s haranguing: GO GET THE MONEY!!!

Thanks Erica for the inspiration for tonight’s blog.