MN Mortgage Matters

Housing Crisis Forecasted to End 2012

On Tuesday, Capital Economics announced that they expect the housing crisis to end in 2012. What makes them feel so confident? Loosening credit by banks.

Currently, the average credit score for a new approved loan is 700, a figure that was much lower prior to the crisis, but has been the norm for the past year. However, banks are now lending 82% loan-to-value ratios, rather than the low 74% they were lending in 2010. This is one of the clearest signs that point to the stabilization of mortgage lending and the improvement of mortgage credit conditions.

If you want to see if your credit qualifies you for a mortgage, click here.

8 Tips Towards Purchasing An Investment Home in MN

It’s known that buying a home can be a secure option to invest in. And lately, many are taking advantage of today’s low rates and home prices to buy investment homes.

If you’re thinking about getting another property, keep in mind the following 8 tips to make sure your home purchase goes with the greatest of ease. And of course, call your Guaranteed Rate loan officer to make sure you qualify!

1. Location
Make sure you invest in the best location you can afford. This will determine how much you’ll earn on your house, whether you’re renting it out or holding onto it to sell at a later time.
2. Control How Much You Fix Up
If you’re planning on making your investment home a rental, those renters will give your home some wear and tear, so don’t go crazy when fixing it up. Just stick with simple, light, bright and clean units to please possible tenants.
3. Be Prepared with Cash on Hand
4. Think Long Term
By planning to keep the home long term, you’ll be able to ride out any swings the housing market might throw your way over the years.
5. Consider All Options
Decide what you’re going to use the property for. Is it a vacation home, condo for your child in college or are you going to rent it out? Once you figure this out, consider what type of property would be best for your needs.
6. Calculate Cost of Ownership
Make sure you factor in all the expenses of owning and managing a home. Click here to help calculate what you can afford.
7. View a Property’s Potential
When viewing properties, make sure you see what the property can be, not what it is right now. With a little imagination, you could find yourself with a great deal and property!
8. Familiarize Yourself with Landlord Rights and Potential Tenants

Obama Proposes New Plan to Save Homeowners More Money

Last night, during Obama’s State of the Union address, Obama proposed a plan to collect fees from large banks, in order to help fund more refinancings for underwater mortgagers. While the details were few, this could still have a potential impact on the financial services industry.

Obama mentioned that the new plan, hoping to save homeowners an average of $3000 a year, could be paid for through fees paid by banks. This alone is a strong indicator that the administration is still considering what essentially amounts to a tax to recover funds from the large financial institutions that received aid during the bail out.

In addition, Obama also proposed the expansion of the Department of Justice investigations into the misdeeds that led to the mortgage crisis and adding new crackdowns on financial fraud.

We’ll continue to update you as these proposals make new progress.

Credit Scores vs. Neighborhood Watch

The Federal Housing Administration is requesting lenders to relax their credit score minimums. Currently the average credit score on an FHA-insured mortgage is 700. If lenders allow a lower credit score to qualify for a FHA loan, more borrowers would be able to own a home.

However, lenders are requesting that FHA change their lender/monitoring system known as Neighborhood Watch. Developed in the 1990s to protect low to moderate income communities from predatory FHA lenders, the Neighborhood Watch compares a lender’s performance to average default rates for all FHA loans. If lenders have a high default and claim rate, then the lender will receive an audit from the FHA which can lead to indemnification demands for actual and future loan losses.

FHA is considering their options for putting changes towards the Neighborhood Watch to help lenders supply FHA loans to more borrowers.

Find out if you qualify for a FHA loan by clicking here.

Home Buyers Feeling More Confident

With 4.61 million existing-home sales completed in December, this 5% increase since November means that consumers are feeling more confident in the economy and moving forward with home purchases. With continually low mortgage rates, job growth and bargain home prices, the housing market is seeing a steady recovery as it enters into 2012. The American dream of owning a home seems to still be in high demand, but has been pent-up the last couple years and now those new homebuyers are ready to become homeowners. As the job market continues to grow, we’ll also see the home market growing.

Get a no-obligation mortgage quote and see what all the fuss is about.

Positive Economic Indicators

Rates inched up last week after positive domestic and international economic news. We saw initial jobless claims fall to the lowest level in nearly 4 years, while showing minimal inflation risk with nearly no increase in the Consumer and Producer Price Indices. Abroad, investors seem to be reacting positively to Greece debt restructuring talks along with speculation that positive steps will be made to quell the overall European sovereign debt crisis. With improved sentiment among investors, mortgage and treasury rates have been inching upward the last several days. But, the government continues to buy a relatively constant amount of U.S. Treasuries and mortgage-backed securities, which continues to propel a very low rate environment.

Positive news was released from the housing sector last week, showing sales of existing homes growing for the third consecutive month (at a rate of 5%). With housing sales up, the level of unsold inventory continues to decline (to the lowest level in seven years) which is a hopeful sign for the housing market for 2012. Keep an eye on New Home Sales figures being released Thursday, which are expected to show modest growth as well.

With last week being the first in many where we saw mortgage rates bottom out and slightly increase, it will be important to look for news on the European economic resolution, as well as this week’s U.S. economic indicators, to determine where rates are headed.

The Federal Reserve meets tomorrow and is expected to outline longer term plans for rates in its announcement on Wed. Depending on when the Fed sees upward pressure on rates, we could see an impact to mortgage rates after the announcement. GDP will also be released on Friday with an expected fourth quarter growth of ~3%. If actual GDP is reported lower, you could see rates fall to close the week. If we continue to see positive economic indicators, you could see more investment flow into equities which could put upward pressure on mortgage rates.

10 Reasons You Need a Buyer’s Agent

Due to the age of the internet, you may think you’re able to find your dream home without the help of a realtor. However, here are ten reasons why you still need a buyer’s agent:

1. Convenient: Researching and scheduling showings can consume a lot of your time. Why not let someone who does it for their job do it?
2. Market Knowledge: Realtors understand the market, making it easier for them to find the best home at the right price for you.
3. Insider Knowledge: Not only do they know the market, they also have access to know what homes aren’t on the market, but looking for buyers.
4. Identify Your Needs: You probably have a ton of things you’re looking for in a home. Realtors are able to rein you in and prioritize your needs so it’s not impossible to find your dream home!
5. Access to Comps and Sales Information: Knowing what other houses similar to yours sold for will come in useful when you start submitting offers.
6. Professional Negotiation: Speaking of making offers, it can be a very scary and daunting experience! Realtors have done this many times and will help make it easier on you.
7. Mitigater of Emotions: Buying a house is very emotional. A realtor will remove any emotions associated with the sale and get you your home at a great price!
8. Professional Connections: to get to the closing table, you have to go through a lot of professionals. A realtor already knows and has worked with these professionals, so you won’t have to take extra time to find your own.
9. Knowledge of Industry Standards, Legalities and Writing a Contract: Do you know the rules to all of these? Enough said.
10. And if the top nine reasons didn’t convince you yet, then this one definitely will: A buyer’s agent is free! The agent is paid by the seller through commission. So you really have no reason NOT to use a buyer agent.

Did we miss any reasons you use a buyer’s agent? Let us know!

Real Estate Markets to Watch in 2012

As we start the New Year, everyone is trying to predict what 2012 will bring. With the real estate market having a tough couple of years, many wonder, will it begin to pick up this year?

According to annual forecasts for market health, most anticipate that the housing recovery will continue as it has been: slowly gaining steam across the nation, but still very localized.

So which locations are expected to pick up the most in 2012? Here is a list of the top 10 markets to consider in 2012, in no particular order:

1. Austin, TX
2. Washington, D.C.
3. Orlando, FL
4. Rochester, NY
5. Houston, TX
6. Chicago, IL
7. Suburbs of Boston, MA
8. Santa Fe, NM
9. Bremerton, WA
10. San Jose, CA

What makes these areas stand out from the rest of the nation? They all have three things in common: steady job growth, construction and stable home prices.

Does your city make the list? Do you think there’s an area that the survey missed?

What is a Jumbo Mortgage?

When you’re beginning the mortgage process, you may start coming across many terms you’re not familiar with. At Guaranteed Rate, we know educating our customers is one of the most important parts of helping them obtain a loan.

Today we wanted to break down what a Jumbo mortgage is and if it’s a loan option for you.

A jumbo loan is a mortgage with a loan limit exceeding the conforming loan limits. This is $417,000 in most areas, but in more expensive places, it can be as high as $729,750. These limits have been set by the Office of Federal Housing Enterprise Oversight or OFHEO and any loan over these limits are not eligible to be purchased by Fannie Mae or Freddie Mac.

If you’re looking to get a loan over these limits, you won’t have to worry about having fewer options. Jumbo mortgages are available in fixed or ARM, same as conventional mortgages. You can also choose to have the loan be standard or interest-only if you desire. For more information on jumbo mortgage options, click here.

A jumbo loan is a great option if home prices in your area tend to be high, not leaving you many other options due to the high-value real estate. In addition, if you have a large salary, but haven’t saved enough money up to bring your loan amount down to conventional limits, then a jumbo mortgage could be the answer for you, if you feel comfortable with the larger monthly payments.

Other benefits of a jumbo mortgage include building credit quickly and if you’re looking for a great option for long-term financing. If you want to discuss your mortgage options further, contact one of our expert loan officers who would be happy to help you.

Or see how much you can afford here.

Six Tips for a Good Appraisal

When getting approved for a loan, usually your home or the home you’re purchasing will need to be appraised by an appraiser.

An appraisal is a detailed report that looks at the condition of the house, the neighborhood and compares them to similar houses in the area. An appraisal can make or break a loan and is a very crucial part of the loan process.

Here are six tips to make sure you optimize your appraisal experience to help you secure your loan and your home:

1. Research: Gather information about comparable homes and their selling prices in the neighborhood. This will help you get an estimate of what you can expect your appraisal to come in at.
2. Record: If there have been any improvements or changes made to the house, keep a record of it. This can include new windows, doors or a finished basement. All these can become helpful for your appraisal.
3. Prepare: Act like the home is being put up for sale. Make sure it’s clean and appealing. Complete any maintenance that is needed, including paint touch-ups, yard trimming, etc.
4. Access: Allow the appraiser full access of your home. If they aren’t able to see the entire house, the appraisal may not be approved by the bank and the appraiser will have to come back.
5. Inform: Let the appraiser know of the improvements done to the home that you previously recorded. Also let them know of any comparable homes you know about through your research. If a home came in lower than the price you’re looking for, mention why your home is different.
6. Hope: Besides any preparations you made, the appraisal is pretty much out of your hands and you can only hope for the best. It will take the appraiser a few days to complete the final report.

The better prepared you are, the better the appraisal experience will be for you!