Good news for "short sale" owners

At the end of the year, the President signed in new legislation....I have to admit with all the news is has been hard to figure out what has been written into law. I decided over the next few posts that I would share what I have learned in hopes it will help those who currently face the "short sale" prospect.

A "short sale" is the effort by a Realtor to sell someone's property who is facing foreclosure. Prior to the bank or mortgage company auctioning the property, the property is marketed, and the Realtor works with the mortgagor to accept less than what is owed on the property. This remedy is being used a lot nowadays because of the number of adjusting loans and the property values in Orlando not rising to allow for re-financing.

In many cases, the house ends up being sold for $25,000 to $50,000 less than what is owed. In the past, the amount that was forgiven by the bank in the "short sale," but a 1099 was filed, and the amount was attributed as "income."

Yes, it is hard to imagine, but if the loan cannot be paid, how did the government expect them to pay taxes on the forgiven amount? But I digress.

Law was inacted that eliminates the tax until January 1, 2010. The law is retroactive to January 1, 2007.

If you have any questions about short sales, or the options you can have with a mortgage company when you cannot continue to make the payments, please e-mail me at www.audreybutlerhomes.com or contact me at the numbers provided.

Weekly mortgage rate update from Mickey, 02.05.08

Here is the weekly update from Mickey Carlton, Mortgage guru:

Weekly Interest Rate Update for 2/05/08:

Mortgage interest rates have been relatively calm for the last few days. We are improving today. Currently, borrowers can expect to obtain 30 yr fixed rate financing without discount points on conforming loan amounts (<$417,000) in a range from 5.5% to 6.25%. Actual rate will depend upon loan size and the individual borrower's creditworthiness.

If you have any questions, contact me at: www.audreybutlerhomes.com

thank you!

Countrywide is saved

It has been said by many experts familiar with the mortgage market that Bank of America has prevented Countrywide from impending bankruptcy (Check out my last blog entry on my concern about the company). The bank announced that they would be purchasing Countrywide with 4 billion in stock.

Although it does not have much effect on the average home buyer, it does possibly prevent further downfall of the mortgage market. May 2008 see the market stabilize, and purchasers with good credit scores enter back into the home buying market.

If you are interested in buying this year, be sure to check out my website: www.audreybutlerhomes.com

Is Countrywide in trouble?

Amid rumors on Wall Street, it looks like Countrywide could be in trouble. I had a friend predict that the company would not be in business by the summer of 2008.....unfortunately, she may be right.

I believe part of the problem started when they refused to work with their clients. Many got into a fix when their loans readjusted. I know that they have investors to answer to, but what was wrong with readjusting their loans, either out a few extra years, or earning a little less so someone could stay in their home?

Make sure when you are working with a Realtor that they are able to help you understand what kind of loan you are getting into when you buy a house. I had some clients a couple of months ago that wanted a loan, but with their credit they interest rate would have been unreal. I recommended that they wait about a year and repair their credit, before trying to purchase a home. No need to cause additional stress.....

If you are interested in talking about your credit situation, I can put you in touch with some great people, with no obligation. E-mail me at audrey@audreybutlerhomes.com

Under 740? Ask for an improved credit score for Christmas

With all the subprime loan problems that have hit this country this year, (see my earlier blog entries) we are starting to see new guidelines for obtaining a home loan. My friend, Mickey Carlton wrote me about one of the changes that we will see in the next few weeks. To understand what he shares below, I'll explain a little about the home loan process.

When you go to a company to get a home loan, they are considered the primary mortgage market. After closing your loan, they are usually sold to the secondary mortgage market, including Fannie Mae and Freddie Mac. When they put out new guidelines, everyone has to follow them, or they cannot sell their loan. Given that background for those of you who are new to the market, here are Mickey's words:

Historically, an approval by Fannie Mae or Freddie Mac's proprietary software meant that a borrower qualified for "good rates" regardless of his or her credit scores. The computer software considered the scores along with loan amount, income and employment history, and liquid assets. An approval obtained by the 640 credit score applicant was as marketable as an approval by a 740 credit score applicant.

This is no longer true. The agencies are changing their pricing models on loans delivered after March 1, 2008. A loan that closes in January might not make it to the agency until March so most banks are already adjusting their pricing. In the very near future, buyers are going to be priced depending upon their credit scores. Lower scored borrowers may be priced out of the Fannie/Freddie market even if they qualify for a Fannie/Freddie program. The answer, in many cases, will be FHA. There are no more subprime loans and Fannie/Freddie is making it harder on the marginal borrowers to obtain a "good" rate.

Bottom line: you need a credit score of 740 or higher for a good interest rate loan. If you have a few "dings" in your credit, contact me at http://www.audreybutlerhomes.com/ and I can connect you to someone who can provide guidance to help you.

Use your mortgage consultant as a coach

The other day I was reading through some material from a Mortgage Specialist, Mickey Carlton. He wrote about how the best athletes in the world have coach---in a like manner, your family needs a financial "coach"----a trusted financial planner and mortgage expert that can assist you in coordinating your mortgage in light of your investment and retirement plans.

Many times people just try and get off the phone as quickly as possible when dealing with a mortgage broker. Use someone you trust, and disclose the needed facts so your true picture can be taken into consideration. You are making such a large investment, it is best to consider all the financial plans for your family and future.

http://www.audreybutlerhomes.com/

Housing forecast for 2008 looking up

The National Association of Realtors is forecasting an improvement in the mortgage market, which could result in more buyers in early 2008. I don't know if they are telling Realtors like me this news to cheer me up (I'm actually already cheerful; I really enjoy my work...), but the vice president of research for the association says that nationally the housing market for this year is the 5th highest for existing home sales.

I hate sounding like a negative person all the time on this blog, but that does not consider the individual market in central Florida. However, there has been a reduction in new home building, which can help stabilize the market.

All in all, this could be good news for current sellers, and will hopefully result in the pent-up demand leading to action in the next couple of months.

To learn more, check out my website at audreybutlerhomes.com

Concerned you won't get a mortgage?

I have been talking to friends, and many are concerned that they would not qualify for a loan, due to the recent news of mortgage companies closing. Yes, approximately 120 mortgage companies closed, but there are many other companies still providing loan money for qualified purchasers. They are also continuing to refinance current homeowners.

The type of loan that created this problem, as I discussed a while back, is the sub-prime loan. It may be harder to qualify for a loan today, but many of the sub-prime loans had a high interest ARM. Qualifying for a loan with difficult credit only resulted in greater cost, meaning that many homeowners got into a house, but can no longer afford the mortgage payment.

If you have good credit, money in the bank, and a desire to purchase a home, you are a good candidate to apply for a 30 year fixed mortgage with a good interest rate. Last week, the interest rate ranged from 6.625% to 7.125% without having to pay points. An individual borrower's rate will depend upon loan size and creditworthiness.

Unsure of your creditworthiness? Call me, and I will be glad to provide the name of some very reputable mortgage brokers and bankers.

weekly interest rate comment from Mickey Carlton

The mortgage market is changing rapidly! In applying for a mortgage, your situation can change weekly. It is important to watch the numbers....Here is the weekly report from Mickey Carlton:

Mortgage interest rates have experienced an interesting few days. Conforming fixed rate loans (less than $417K) have declined about an eight since last week. These loans can be obtained for a range of 6.5% to 7% without discount points. The actual rate depends upon loan size and the creditworthiness of the borrower. Non-conforming rates that would include jumbos (over $417K) and niche products such as No Income Verification and Option Arms have skyrocketed in price. Fixed rate jumbos, for example, are now priced at least 1% higher than conforming fixed rate loans. One of my option arm programs increased 3.625 discount points in price last week. These increases are caused by the withdrawal of funding from increasingly nervous Wall Street investment bankers.

Weekly mortgage rate quote

Today is Tuesday, the date I receive a weekly quote update from my friend Mickey Carlton, a mortgage specialist (you can learn more about him on my website: audreybutlerhomes.com).

This week, he says:

"Mortgage interest rates have been pushed higher by a combination of tension over the Iranian/British hostage issue, shortages in oil refinery capacity and last week's red-hot employment figures as released by the Labor Department. Borrowers are now paying 6.25% to 6.625% for thirty-year fixed rate mortgages without points. Specific rates are determined by loan size and the borrower's creditworthiness."

Thanks, Mickey!

A mortgage that sounds to good to be true?

If your inbox is anything like mine, I get about 5 requests a day for a mortgage or to refinance my home. Also, almost every website I visit has an ad for a loan product that says I can buy a $500,000 house for about $10.00 a month.....OK, it's not $10, but it might as well say that for the chance you have of getting that kind of deal. I don't care if you have an 800 credit score (the highest available)----you'll end up paying for these incredible offers in the end.

Don't jeopardize your credit---get these offers checked out. You can contact me at audrey@audreybutlerhomes.com, or contact one of the loan officers I have listed on my website. If you don't feel comfortable contacting one of us, you can educate yourself at:

http://www.federalreserve.gov/consumers.htm. They offer pamphlets explaining all the terms, and offering sound advice on what to expect from different loan packages.

Know the risks before you sign the bottom line!

Weekly mortgage interest rates 3.6.07

Depending on one's credit history and amount of the loan, thirty-year fixed rates are in the range of 6% to 6.5% this week.

Don't get caught in the foreclosure wave

When the real estate market was booming these last several years, lenders often ignored borrowers' credit problems because the property values were rising. Now, with the downturn, lenders are looking at borrowers who are paying late.

According to the Christian Science Monitor, that means 2.2 million people are facing foreclosure and could lose their homes.

The majority of these loans are called subprime---meaning that the loans are for people who do not qualify for prime market rates because of blemished or limited credit. Wikipedia.com says that about 25% of the population falls into this category---they have a credit rating below 700.

In 1995, only 5% of mortgages were subprime. Today, Wall Street estimates it is about 18 to 24%.

I'm all for home ownership for everyone, but one needs wise when purchasing a home. With subprime loans come higher interest rates and a greater risk of losing your house. There may be a short-term gain of a new home, but it could cause greater credit problems down the line if you are unable to make the payment. Also, if you are able to improve your credit prior to your purchase, you could qualify for a better interest rate.

In response to this major problem, Freddie Mac said on February 28th it will stop buying subprime adjustable-rate mortgages and will require more borrowers to prove they earn the income they disclose on their loan applications. Unfortunately, this may be too late for many.

Current interest rates, 2.20.07

I got an e-mail from my friend, Mickey Carlton this week. He has a mortgage brokerage, and this is his update from Tuesday:

"Last week's address by the Fed chairman to the joint banking committee had a positive effect on interest rates. Thirty year fixed mortgages can be obtained for 6.125% to 6.5% (no discount points) depending upon loan size and the creditworthiness of the borrower....more and more borrowers are selecting interest only loans that provide for lower mortgage payments and therefore greater cash flow. Borrowers use the cash flow for other investment purposes. The interest only option is just that, an option. The borrower is free to pay down the principle at any time if his or her investment or income circumstances change."