RATE UPDATE: Rates have been inching up over the last several days as investors have been selling bonds. Draghi - European Central Bank president - assured countries in the European Union that he would do everything possible to get the economy on the right track. This is perhaps the major driver behind the sell-off in bonds, though we have also had some good economic news over the last week and a half an that's never good for bonds. The silver lining is that bonds are currently oversold so if we get some bad news on the jobless claims front tomorrow, we may see a nice little bounce as investors decide to buy. Conversely, if the news is neutral or good as far as jobless claims (both initial and continuing) are concerned then the current ceiling for rates may become the new floor.
Self-directed Solo 401k and Roth IRA, a great way to invest for retirement: If you are working hard to save for retirement, it's important that you are aware of some tools that may make a huge difference regarding your success. I just recorded a video with Bryan Granthem of Mojave Capital and it has some great information including one tip that if you don't take advantage of it could cost you $1.44 million or more. Here is the video on tax planning and investing.
The video is 20 minutes but it's jam-packed with valuable information. You may also want to check out episode 3 of How to Avoid the Most Common and Costly Mortgage Mistakes which gives some great information on investing as well. I will be publishing a couple of related videos that I recorded with Bryan in the very near future so keep your eye out for them.
Please feel free to give your thoughts and feedback and subscribe to my YouTube channel so that you can get notified when I post new content. If you have friends that are also trying to prepare for retirement (it's never too early or too late), please share this post and the video with them. Make it a great day.
Wednesday, September 10, 2014
Thursday, August 21, 2014
Changes to FNMA and FHA...for the better?
As we try to navigate through the waters of the housing recovery without drowning, we've seen many changes to the various loan programs and most of those changes haven't made it easier to get a mortgage. The most recent change by FNMA falls into this category where they eliminated the option to put 20% in order to qualify for a conventional mortgage two years out of a short sale. This means that if you had a short sale and want to use a conventional loan to finance the purchase of your home, you will now need to wait four years - at which time you can put down as little as 5% assuming you meet the other conventional guidelines.
There is some good news from FNMA. People who had a foreclosure used to have to wait 7 years in order to qualify for conventional financing EVEN if the mortgage was discharged through a bankruptcy. For those who have declared bankruptcy and included the mortgage among the debts that were discharged, FNMA will now use the 4 year waiting period from the bankruptcy rather than the 7 year waiting period from the foreclosure to determine when a borrower can qualify to buy a home with conventional financing. This is especially good considering the fact that foreclosures after a bankruptcy can take months or even a year or two (sometimes more) which means the 7 year foreclosure clock would start long after the BK clock. Conventional borrowers everywhere can rejoice.
So What the HAWK is FHA up to?
Word on the street is that FHA is releasing the HAWK (Homebuyers Armed With Knowledge) program sometime in the fall. This program will provide a financial benefit to borrowers who take a 6 hour class prior to the loan closing and an additional benefit if they take a 1 hour post-closing class. For those who take the 6 hour class, the up-front mortgage insurance premium will be reduced to 1.25% from 1.75% and the annual mortgage insurance premium will be reduced by 10 basis points from 1.35% to 1.25%. If you take the 1 hour post closing class, the annual mortgage insurance premium is reduced another 15 basis points to 1.10% for a total of a 25 basis point reduction. This program is for 1st time home buyers - i.e. people who haven't owned a home in the last 3 years.
I'll let you know when the HAWK program is released. Please subscribe to the blog so that you can get timely updates like these. Please also like The Wunderli Team Facebook page for regular updates on the mortgage bond market. My YouTube channel has videos on a variety of mortgage topics that will benefit Realtors and borrowers alike. Please check out and subscribe to The Wunderli Team YouTube channel. Feel free to comment and share.
Monday, August 18, 2014
How to Avoid the Most Common and Costly Mortgage Mistakes
When getting a mortgage, most borrowers only think about what their payment is which is a function of loan amount, loan term, and interest rate. Many borrowers are sucked in by low quotes from unscrupulous loan officers who don't disclose what it would cost to get such a rate and by the time the borrower finds this out, it's usually too late, but that is a topic for another discussion. This post is about the very costly mistake that borrowers make when their main focus is on getting the lowest payment.
Getting the lowest payment possible means either buying the rate down (which may or may not be cost effective - proper analysis needs to be performed) or putting a large down payment, or both. In my YouTube video series under the same title (https://www.youtube.com/watch?v=K1dqI756MHU) I discuss the concept of opportunity cost and the kind of wealth that can be created if money is invested instead of put into the house to lower the loan amount and, thus, the mortgage payment. As part of this discussion, I also talk about the Rule of 72 and the time-value of money. The example I use in the video is a couple who is purchasing a $300,000 home and wants to put $150,000 down in order to get the lowest payment. As far as creating wealth is concerned (which is a big need when it comes to preparing for retirement), this couple could put down $60,000, avoid mortgage insurance because they would be putting 20% down, and invest the other $90,000 NOW - which is key for TVM (time-value of money). One other benefit that they will have is that they will have a liquid asset by doing it this way instead of transferring that money into an illiquid asset (the home).
Depending on what people invest in, there could be some great tax advantages as well (Roth IRA and IULs provide tax benefits vs. other investments). Additionally, a well diversified portfolio will help this couple grow their wealth and reach their retirement goals without incredible amounts of risk. Please watch the video for all of the details and remember that each situation is different. It's important for every client to know their specific numbers which is why I, as a Certified Mortgage Planner, have developed spreadsheets to help clients understand how the numbers would play out for their specific situation. What are your thoughts on the subject? Please comment and share. I'm happy to discuss any and all of the content of the video.
Getting the lowest payment possible means either buying the rate down (which may or may not be cost effective - proper analysis needs to be performed) or putting a large down payment, or both. In my YouTube video series under the same title (https://www.youtube.com/watch?v=K1dqI756MHU) I discuss the concept of opportunity cost and the kind of wealth that can be created if money is invested instead of put into the house to lower the loan amount and, thus, the mortgage payment. As part of this discussion, I also talk about the Rule of 72 and the time-value of money. The example I use in the video is a couple who is purchasing a $300,000 home and wants to put $150,000 down in order to get the lowest payment. As far as creating wealth is concerned (which is a big need when it comes to preparing for retirement), this couple could put down $60,000, avoid mortgage insurance because they would be putting 20% down, and invest the other $90,000 NOW - which is key for TVM (time-value of money). One other benefit that they will have is that they will have a liquid asset by doing it this way instead of transferring that money into an illiquid asset (the home).
Depending on what people invest in, there could be some great tax advantages as well (Roth IRA and IULs provide tax benefits vs. other investments). Additionally, a well diversified portfolio will help this couple grow their wealth and reach their retirement goals without incredible amounts of risk. Please watch the video for all of the details and remember that each situation is different. It's important for every client to know their specific numbers which is why I, as a Certified Mortgage Planner, have developed spreadsheets to help clients understand how the numbers would play out for their specific situation. What are your thoughts on the subject? Please comment and share. I'm happy to discuss any and all of the content of the video.
Friday, January 6, 2012
Myths regarding the FHA 203(k) Streamline
A couple of years ago my business partner and I were looking for a good niche to be the anchor for our business in addition to being able to help our Realtor partners build their business. We had just hired on with Alterra Home loans (November of 2009) who underwrites and funds the FHA 203(k) Streamline in-house so we thought that this would be a great program to market considering the many homes for sale that are either dated or are in need of some rehab / repair since so many of the homes being sold are short sales or REOs where there is probably some deferred maintenance or even bigger issues to resolve.
We spoke to lots of Realtors as we began to visit every real estate office we knew of to get the word out and we got a lot of the same answers from all the Realtors we spoke with. They were all under the impression that the FHA 203(k) Streamline was 1) harder to qualify for than a regular FHA loan, 2) took much longer to close, 3) the rate is much higher and 4) problems with contractors. The first three issues are very easy to resolve since 1) the qualifying for an FHA 203(k) Streamline is exactly the same as a regular FHA loan - the guidelines are the same; 2) we are closing them in less than 30 days, in fact we have closed one in 21 days, another in 25 and most of them are closed in 25-30 days. It's really not that hard to get them closed in 30 days as long as there aren't any delays with the contractor getting the bids or with the appraiser doing the appraisal; 3) the rate is typically about .25% higher and depending on the yield curve it can be as much as .5% higher. In the end, that is relatively minor and it's much better than trying to finance the repairs with your credit card or depleting your savings.
The contractor issue is a bit more challenging since not everyone has a contractor they know and trust. In July of 2010, I received a call from a contractor who specialized in the FHA 203(k) Streamline and was building his business around this great opportunity. He had been a construction manager / superintendent for Pulte Homes for five years and had all the experience and contacts he needed to do a great job for people who were buying homes that needed to be remodeled. We asked around about him and we heard nothing but positive things from everyone we talked to. We then began to plan out what we could do to make this a great experience for the buyer in terms of a fast, on-time close and then expedient, high-quality work after the close so that the buyer could move in to their new home within one month after the close (in most cases). So far all of the clients who we have financed have chosen to use our preferred contractor and have been extremely happy with the results. Check out a couple of videos here: www.YouTube.com/thewunderliteam.
In Las Vegas, this is a very under-utilized program and one that I think can help Realtors attract more business by specializing in a program that will allow buyers to truly get the home they really want instead of settling for a turnkey home that isn't to the buyer's exact tastes. Homes that are listed for "Cash Only" can usually qualify for an FHA 203(k) Streamline loan which means that buyers using FHA financing now have more options and since many homes that aren't move-in ready tend to sit on the market for a while, prices of these homes are often more negotiable.
With only about 7-10 FHA 203(k) Streamline loans being done per month Las Vegas, the opportunity for Realtors to make this their niche is incredible. I'd love to get your thoughts / ideas / comments. Please feel free to share them in the comments section. If you have any questions, please feel free to call me at 702-812-1214.
A couple of years ago my business partner and I were looking for a good niche to be the anchor for our business in addition to being able to help our Realtor partners build their business. We had just hired on with Alterra Home loans (November of 2009) who underwrites and funds the FHA 203(k) Streamline in-house so we thought that this would be a great program to market considering the many homes for sale that are either dated or are in need of some rehab / repair since so many of the homes being sold are short sales or REOs where there is probably some deferred maintenance or even bigger issues to resolve.
We spoke to lots of Realtors as we began to visit every real estate office we knew of to get the word out and we got a lot of the same answers from all the Realtors we spoke with. They were all under the impression that the FHA 203(k) Streamline was 1) harder to qualify for than a regular FHA loan, 2) took much longer to close, 3) the rate is much higher and 4) problems with contractors. The first three issues are very easy to resolve since 1) the qualifying for an FHA 203(k) Streamline is exactly the same as a regular FHA loan - the guidelines are the same; 2) we are closing them in less than 30 days, in fact we have closed one in 21 days, another in 25 and most of them are closed in 25-30 days. It's really not that hard to get them closed in 30 days as long as there aren't any delays with the contractor getting the bids or with the appraiser doing the appraisal; 3) the rate is typically about .25% higher and depending on the yield curve it can be as much as .5% higher. In the end, that is relatively minor and it's much better than trying to finance the repairs with your credit card or depleting your savings.
The contractor issue is a bit more challenging since not everyone has a contractor they know and trust. In July of 2010, I received a call from a contractor who specialized in the FHA 203(k) Streamline and was building his business around this great opportunity. He had been a construction manager / superintendent for Pulte Homes for five years and had all the experience and contacts he needed to do a great job for people who were buying homes that needed to be remodeled. We asked around about him and we heard nothing but positive things from everyone we talked to. We then began to plan out what we could do to make this a great experience for the buyer in terms of a fast, on-time close and then expedient, high-quality work after the close so that the buyer could move in to their new home within one month after the close (in most cases). So far all of the clients who we have financed have chosen to use our preferred contractor and have been extremely happy with the results. Check out a couple of videos here: www.YouTube.com/thewunderliteam.
In Las Vegas, this is a very under-utilized program and one that I think can help Realtors attract more business by specializing in a program that will allow buyers to truly get the home they really want instead of settling for a turnkey home that isn't to the buyer's exact tastes. Homes that are listed for "Cash Only" can usually qualify for an FHA 203(k) Streamline loan which means that buyers using FHA financing now have more options and since many homes that aren't move-in ready tend to sit on the market for a while, prices of these homes are often more negotiable.
With only about 7-10 FHA 203(k) Streamline loans being done per month Las Vegas, the opportunity for Realtors to make this their niche is incredible. I'd love to get your thoughts / ideas / comments. Please feel free to share them in the comments section. If you have any questions, please feel free to call me at 702-812-1214.
Realtors: Educate your buyers so that you are less likely to lose them...
I just got off the phone with a friend of mine who was a Realtor but got out of the business. He had one last deal he was working on and just found out that his client found a home online - Realtor.com. The client called the listing agent on the property and made an offer and completely cut my friend out of the loop.
While we were discussing this we were wondering if he thought he was going to save some money since only one agent would be involved. Of course, both my friend and I knew that the truth of the matter would be that he would not get proper representation going straight to the listing agent since she really represents the seller AND he would also not save any money since the listing agent would make the entire 6% commission that is paid by the SELLER - not the buyer.
My friend didn't say whether he had eductated the buyer about these things and I didn't want to ask in case he hadn't, but I did want to post this story so that any Realtor who reads this will see how important it is to educate your buyers. When I meet with clients, I always educate them about what loans they would qualify for and what their options are and which loan is the best loan for them relative the their stated goals - usually the lowest monthly payment. I also talk to them about other lenders from a perspective of where I have worked (big bank, broker, and mortgage bank) and the typical strategies of many loan officers to try to get business. I still lose a deal every now and then but of the few that I've lost, I've had a few come back to me after the fact and tell me they wish they had stayed with me because what I told them would happen ended up happening. Hopefully your clients will stay with you and get the benefit of your expertise and services and they are more likely to stick with you until the end if you educate them properly.
Have a great weekend. I'm available at 702-812-1214 if you have any lending questions or need a pre-approval for a client.
I just got off the phone with a friend of mine who was a Realtor but got out of the business. He had one last deal he was working on and just found out that his client found a home online - Realtor.com. The client called the listing agent on the property and made an offer and completely cut my friend out of the loop.
While we were discussing this we were wondering if he thought he was going to save some money since only one agent would be involved. Of course, both my friend and I knew that the truth of the matter would be that he would not get proper representation going straight to the listing agent since she really represents the seller AND he would also not save any money since the listing agent would make the entire 6% commission that is paid by the SELLER - not the buyer.
My friend didn't say whether he had eductated the buyer about these things and I didn't want to ask in case he hadn't, but I did want to post this story so that any Realtor who reads this will see how important it is to educate your buyers. When I meet with clients, I always educate them about what loans they would qualify for and what their options are and which loan is the best loan for them relative the their stated goals - usually the lowest monthly payment. I also talk to them about other lenders from a perspective of where I have worked (big bank, broker, and mortgage bank) and the typical strategies of many loan officers to try to get business. I still lose a deal every now and then but of the few that I've lost, I've had a few come back to me after the fact and tell me they wish they had stayed with me because what I told them would happen ended up happening. Hopefully your clients will stay with you and get the benefit of your expertise and services and they are more likely to stick with you until the end if you educate them properly.
Have a great weekend. I'm available at 702-812-1214 if you have any lending questions or need a pre-approval for a client.
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