Underwriting Guidelines have changed quite a bit and it keeps changing. A few of the major changes are Debt-to-Income Ratio, how long credit documents are good for, use of retirement, stock and bonds as assets, credit score minimum, and verification of employments.
Below is an example of how this will affect the borrower:
· Debt-to-Income Ratio – A Debt to Income Ratio is calculated based on the amount of gross income in relation to the amount of monthly debt obligation (credit card bill, car payment… etc). Previously lenders were allowed to go rather high on the ratio. Up to about 55% debt to income ratio. The new change is 45%. How will this affect the borrower? The borrower will be qualified for a lower loan amount.
· Credit documents – Credit documents such as the credit report will go from 120 days to 90 days. This means you’ll have to updated your information to the lender as it will only be good for 90 days.
· Assets – Lenders were able to use 100% of the fund in stock and mutual accounts and 70% for retirement fund. Now, they are only allowed to use 70% for stock and mutual fund accounts and 60% for retirement. If you are planning on using funds from either account to show proof that you have enough cash for closing cost, you’ll have to make sure that there is more than enough or cash out on it and transfer it to a savings account (which the lender can use 100% of the fund).
· Credit Score – Minimum credit score is 620. Make sure FICO scores are high. The higher the score the better.
· Verification of Employment – Make sure that there are no furloughs or projected furloughs (unless they have been account for at the beginning of the loan process). The stability of your job is very important so make sure everything stated on your loan application can be verified.
More changes will be announced in the next few months. For more information, please call Linda Le, Loan Officer at 808-561-5943 Stay tune for more…
Friday, November 13, 2009
Wednesday, November 11, 2009
The Tax Credit is Back!
First Time Home Buyers---it really is YOUR time to buy a home! And just to remind you that a first time home buyer is defined as not having owned a home for three years. So, if you’ve owned a home before, but have been renting for the past three or more years, you are considered a FIRST TIME home buyer!!
The deadline for the purchase of that home has now been extended, and expanded! You can still get that $8,000 tax credit if you close on your home by July 1, 2010. You must have an accepted contract on or before April 30, 2010. This gives you 61 days in which to close the contract. Not a lot of time in this day and age. Because of all the people who are trying to take advantage of this tax credit, the lenders, appraisers, and all the other people who need to process your transaction are overloaded.
Also, the income limits the new tax credit has placed on first time home buyers have been expanded. The limit was $75,000 for a single person, $150,000 for a married couple. That limit is now $125,000 for a single person, and $225,000 for a married couple.
In addition, where there was no restriction on the cost of that new home, now it cannot be greater than $800,000.
So, first time home buyers, get out there and find a property. I would love to help you find something. Please call me. Tiare Dutcher 808-753-5327.
The deadline for the purchase of that home has now been extended, and expanded! You can still get that $8,000 tax credit if you close on your home by July 1, 2010. You must have an accepted contract on or before April 30, 2010. This gives you 61 days in which to close the contract. Not a lot of time in this day and age. Because of all the people who are trying to take advantage of this tax credit, the lenders, appraisers, and all the other people who need to process your transaction are overloaded.
Also, the income limits the new tax credit has placed on first time home buyers have been expanded. The limit was $75,000 for a single person, $150,000 for a married couple. That limit is now $125,000 for a single person, and $225,000 for a married couple.
In addition, where there was no restriction on the cost of that new home, now it cannot be greater than $800,000.
So, first time home buyers, get out there and find a property. I would love to help you find something. Please call me. Tiare Dutcher 808-753-5327.
Tuesday, November 10, 2009
Uncovering a Best Buy Property!
There are number of ways to determine if a property is a best buy. As previously mentioned there are three popular approaches: 1.) for investors, rental property that yields a positive cash flow with minimal down payment. 2.) Property where the asking price is substantially below like kind homes that have sold within the last six months. 3.) Property where the quality or condition is above average, in a highly sought after area, in a neighborhood where the inventory for sale is relatively nonexistent and are selling at or below market value.The following is an example of the first approach. In Waikiki, Oahu there is a unique category of property called condo-hotels. These are hotels where the rooms in most cases are privately owned and leased back to the hotel or to a management company. However, some find it more profitable to manage the units themselves. Some of the more affordable and attractive buys are studio or one bed room units that have full kitchens.
In today’s market condo-hotels have unique financing issues. Due to various stigmas associated with transients and other uncertainties banks are reluctant to provide financing. As a result the prices for these types of purchases have dropped considerably. So in order to get into this lucrative market cash offers and seller financing is the order of the day. For those individuals who are able to maneuver in these waters it can be very rewarding. If you are interested in learning more about this unique market please feel free to contact Abron Toure at the Coldwell Banker, Waikiki Office my cell is 503 475 6872. Mahalo!
In today’s market condo-hotels have unique financing issues. Due to various stigmas associated with transients and other uncertainties banks are reluctant to provide financing. As a result the prices for these types of purchases have dropped considerably. So in order to get into this lucrative market cash offers and seller financing is the order of the day. For those individuals who are able to maneuver in these waters it can be very rewarding. If you are interested in learning more about this unique market please feel free to contact Abron Toure at the Coldwell Banker, Waikiki Office my cell is 503 475 6872. Mahalo!
Monday, November 9, 2009
Hawaii Real Estate Market Update
This past week was a good one for Hawaii real estate news.
The October Statistical Report showed the following positive factors for Oahu's real estate market:
281 Single Family Homes sold. This is up from 243 last October. This is the second consecutive month that home sales have improved vs prior year.
381 Condos sold. This is up from 316 last October. This is the third consecutive month that condo sales have improved vs prior year. This indicates a trend.
The median sales price for single family homes was $605,000. This was 15.6% under prior year's median price of $625,000.
The median sales price for condos was $295,000. This was 9.2% below prior year!
While unit sales out pace prior year, median sales prices are still going down and haven't quite levelled off yet. These indicators verify that this continues to be an EXCELLENT time for QUALIFIED BUYERS to purchase a home.
This along with the extension of the First Time Home Buyer credit to April and the expansion to include home owners that have lived in their homes for 5 of the past 7 years who are purchasing a home, adds more potential Buyers to the mix. This will create more impetus to positively effect the recovery of the residential real estate market.
If you're ready to take advantage of the new Extended and Expanded Home Buyer Tax Credit Program call Dwight Ellis at 808 351-1507.
Next week we'll discuss Days on Market, Months of Remaining Inventory and Neighborhoods to watch.
The October Statistical Report showed the following positive factors for Oahu's real estate market:
281 Single Family Homes sold. This is up from 243 last October. This is the second consecutive month that home sales have improved vs prior year.
381 Condos sold. This is up from 316 last October. This is the third consecutive month that condo sales have improved vs prior year. This indicates a trend.
The median sales price for single family homes was $605,000. This was 15.6% under prior year's median price of $625,000.
The median sales price for condos was $295,000. This was 9.2% below prior year!
While unit sales out pace prior year, median sales prices are still going down and haven't quite levelled off yet. These indicators verify that this continues to be an EXCELLENT time for QUALIFIED BUYERS to purchase a home.
This along with the extension of the First Time Home Buyer credit to April and the expansion to include home owners that have lived in their homes for 5 of the past 7 years who are purchasing a home, adds more potential Buyers to the mix. This will create more impetus to positively effect the recovery of the residential real estate market.
If you're ready to take advantage of the new Extended and Expanded Home Buyer Tax Credit Program call Dwight Ellis at 808 351-1507.
Next week we'll discuss Days on Market, Months of Remaining Inventory and Neighborhoods to watch.
Friday, November 6, 2009
Luxury & Lifestyle on Oahu!!
In past blogs I’ve discussed the value in today’s luxury market in Hawaii and the quality of architecture and design found in Hawaii’s luxury real estate market. But good values and quality can be found all over around the world. It’s the lifestyle that attracts the wealthy to Hawaii. With well over 30 Beach Parks, the island of Oahu is surrounded by some of the cleanest, whitest sand beaches in the world as well as exceptionally warm, clear, blue water. Along with a temperate climate year round Oahu is the perfect place to enjoy paddle boarding, surfing, kayaking, or outrigger canoeing. With as much beach frontage as Oahu offers it’s easy to find quiet secluded beaches. Oahu is also privileged enough to be the home of Lanikai Beach which is annually ranked as one of the best beaches in the world.
Oahu also boasts some of the best golfing in the world with almost 40 golf courses across the island, with 4 private courses and 22 semi-private courses. There are also approximately 10 Country Clubs on the island of Oahu providing the perfect atmosphere for that business lunch or cold drink after a round of golf.
It’s no secret that Oahu also offers some of the finest dining, from George Mavrothalassitis to Sam Choy, Alan Wong, and a host of others to world renowned shopping in Waikiki and Ala Moana Mall.
With the perfect weather, access to almost any activity, and good food, Honolulu is ranked in the top 3 healthiest cities in the U.S. by SELF Magazine, AARP Magazine, and Men’s Fitness Magazine.
Oahu offers luxury properties in all areas of the island so you’re sure to find the perfect luxury property that easily allows for the perfect luxury lifestyle.
Call Mandy Berner, RA 808-286-5845
Oahu also boasts some of the best golfing in the world with almost 40 golf courses across the island, with 4 private courses and 22 semi-private courses. There are also approximately 10 Country Clubs on the island of Oahu providing the perfect atmosphere for that business lunch or cold drink after a round of golf.
It’s no secret that Oahu also offers some of the finest dining, from George Mavrothalassitis to Sam Choy, Alan Wong, and a host of others to world renowned shopping in Waikiki and Ala Moana Mall.
With the perfect weather, access to almost any activity, and good food, Honolulu is ranked in the top 3 healthiest cities in the U.S. by SELF Magazine, AARP Magazine, and Men’s Fitness Magazine.
Oahu offers luxury properties in all areas of the island so you’re sure to find the perfect luxury property that easily allows for the perfect luxury lifestyle.
Call Mandy Berner, RA 808-286-5845
Wednesday, November 4, 2009
Still Waiting to Buy?
First Time Home Buyers: If you haven’t already purchased your home, for one of these reasons…
you needed to improve your credit,
you just couldn’t find that home,
you needed to save a little more money for your closing costs
you may in luck, as far as the $8,000 first time home buyer credit goes…. The deadline of December 1 may be extended to April 30, 2010. Hopefully, we will find out sometime this week.
AND for those of you who aren’t first time home buyers, you may also be in luck with a tax credit of $6,500. The criteria if the bill is passed is as follows:
Did you purchase your home more than 5 years ago?
Are you living in that home?
Do you want to buy a more expensive home now?
Stay tuned for more information on the always exciting what’s-going-on-in-the-world-of-real-estate-news…. Or call Tiare Dutcher at 808-753-5327.
you needed to improve your credit,
you just couldn’t find that home,
you needed to save a little more money for your closing costs
you may in luck, as far as the $8,000 first time home buyer credit goes…. The deadline of December 1 may be extended to April 30, 2010. Hopefully, we will find out sometime this week.
AND for those of you who aren’t first time home buyers, you may also be in luck with a tax credit of $6,500. The criteria if the bill is passed is as follows:
Did you purchase your home more than 5 years ago?
Are you living in that home?
Do you want to buy a more expensive home now?
Stay tuned for more information on the always exciting what’s-going-on-in-the-world-of-real-estate-news…. Or call Tiare Dutcher at 808-753-5327.
Monday, November 2, 2009
Where will rates go?
Here is some timely mortgage info that may be of interest regarding the Treasury Auctions and the possible lack of demand for long term securities in the future having a negative impact on low interest rates.
Also, an interesting explanation of how Rate Locks work for Alan Zukerkorn of Hawaii Mortgage Co, Inc.
Subject: Newsletter for the Week Ending 10/30/09
Mortgage Market News for the week ending October 30, 2009Distributed to over 12,000 Hawaii Subscribers Every Friday
Compliments of Alan Zukerkorn Hawaii Mortgage Company Inc.
PHONE:(808) 988-6622
FAX:(808) 988-7722
www.hawaiimortgage.net
alan@hawaiimortgage.net
Events This Week:
GDP Increased
Inflation Steady
New Home Sales Down
Manufacturing Rose
Events Next Week:
Mon 11/2 ISM Manuf Pending Sales
Wed 11/4 Fed Meeting Treasury Announce ISM Services
Thur 11/5 Productivity
Fri 11/6 Employment
Record Auctions Produce Mixed Results
While daily volatility was high this week, mortgage rates ended just slightly lower than last week. The primary factors influencing mortgage rates were offsetting. The economic growth data released this week was stronger than expected, but inflation remained low. While the first two Treasury auctions produced impressive results, the final one was relatively weak.
Demand was extremely strong for this week's 2-yr and 5-yr Treasury auctions, but it slacked off considerably for the 7-yr securities. When demand is low, higher yields are required to attract investors. I n addition, the Treasury is interested in shifting its issuance toward a greater percentage of longer-term securities relative to shorter-term securities to lock in currently low rates. For mortgage markets, though, a move in this direction would add to the supply of competing investments. The Fed is already in the process of winding down its purchases of mortgage-backed securities, removing demand from the market. Higher supply of long-term investments and lower demand would pressure mortgage rates higher.
Government influence on mortgage markets has been substantial. It has pushed mortgage rates to historically low levels and has made credit available where it might not be otherwise. Two important programs, the first-time homebuyer tax credit and the extended conforming loan limits, were set to expire soon. Fortunately, both programs received strong support from lawmakers this week and are likely to be extended.
Rate Lock 101
For the consumer, the interest rate for one’s loan is generally the single most important part of the loan scenario. At some point in the process, your rate must be locked in for a set period of time. This time period is known as the “Rate Lock Commitment Period”. A rate can be locked for as little as 7 days, and in some cases as long as 120 days. Once a consumer accepts a desired rate at a certain cost (points or no points), their interest rate is then locked for a specific number of days.
What is a rate lock? This question seems redundant after the simple explanation above, but I will try and make it very clear. A rate lock is a commitment for and between the lender AND borrower. Every time I talk to a consumer about locking in their rate I always get asked the same question: “Will the lender lower my rate during the rate lock period if rates drop?” I always reply with a smile and ask the question “Should the lender raise your rate during the rate lock period if rates rise?” A rate lock commitment is not a one way street. Most consumers incorrectly assume that a rate lock commitment is a lock against rates getting any higher than the rate committed to. It is not!
When a consumer has their loan rate locked, it sets off a chain of events. The lender makes a commitment to the investor that will eventually own your loan (the secondary market, i.e. Fannie Mae or Freddie Mac) - committing themselves to deliver a loan that meets underwriting guidelines in a specific period of time at a specific interest. In other words, your rate lock is connected from you all the way to Fannie and Freddie. If the lender fails to deliver the loan to the secondary Market on time, they get penalized a percentage of the loan amount. That is why if your loan does not close within your rate lock period, the lender will charge you an extension fee to cover the cost of late delivery to the investor.
Next week I will dive deeper into the issues of bogus rate locks, who should pay for a lock extension if one is needed, and what happened to the “free float down”.
Also Notable:
Continuing Jobless Claims fell to 5.8 million, the lowest level since March
The September Core PCE inflation index rose at a tame 1.3% annual rate
The Chicago PMI manufacturing index rose to the highest level in one year
The Fed purchased $18 billion in agency MBS during the week ending 10/28
Average 30 yr fixed rate:
Last week:
+0.01%
This week:
-0.05%
Stocks (weekly):
Dow:
9,800
-200
NASDAQ:
2,060
-100
Week Ahead
The biggest economic event next week will be the Fed meeting on Wednesday. While no change in rates is expected, the Fed may indicate future changes in monetary policy. The important Employment report will come out on Friday. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month. Early estimates are for a loss of about 165K jobs in October. In addition, the ISM Manufacturing index and Pending Home Sales will come out on Monday. ISM Services will be released on Wednesday. Productivity, Construction Spending, and Factory Orders will round out the busy schedule. The Treasury will announce the size of upcoming auctions on Wednesday as well.
All material Copyright © Hawaii Mortgage Company, Inc. & Ress No. 1, LTD and may not be reproduced without permission.
Also, an interesting explanation of how Rate Locks work for Alan Zukerkorn of Hawaii Mortgage Co, Inc.
Subject: Newsletter for the Week Ending 10/30/09
Mortgage Market News for the week ending October 30, 2009Distributed to over 12,000 Hawaii Subscribers Every Friday
Compliments of Alan Zukerkorn Hawaii Mortgage Company Inc.
PHONE:(808) 988-6622
FAX:(808) 988-7722
www.hawaiimortgage.net
alan@hawaiimortgage.net
Events This Week:
GDP Increased
Inflation Steady
New Home Sales Down
Manufacturing Rose
Events Next Week:
Mon 11/2 ISM Manuf Pending Sales
Wed 11/4 Fed Meeting Treasury Announce ISM Services
Thur 11/5 Productivity
Fri 11/6 Employment
Record Auctions Produce Mixed Results
While daily volatility was high this week, mortgage rates ended just slightly lower than last week. The primary factors influencing mortgage rates were offsetting. The economic growth data released this week was stronger than expected, but inflation remained low. While the first two Treasury auctions produced impressive results, the final one was relatively weak.
Demand was extremely strong for this week's 2-yr and 5-yr Treasury auctions, but it slacked off considerably for the 7-yr securities. When demand is low, higher yields are required to attract investors. I n addition, the Treasury is interested in shifting its issuance toward a greater percentage of longer-term securities relative to shorter-term securities to lock in currently low rates. For mortgage markets, though, a move in this direction would add to the supply of competing investments. The Fed is already in the process of winding down its purchases of mortgage-backed securities, removing demand from the market. Higher supply of long-term investments and lower demand would pressure mortgage rates higher.
Government influence on mortgage markets has been substantial. It has pushed mortgage rates to historically low levels and has made credit available where it might not be otherwise. Two important programs, the first-time homebuyer tax credit and the extended conforming loan limits, were set to expire soon. Fortunately, both programs received strong support from lawmakers this week and are likely to be extended.
Rate Lock 101
For the consumer, the interest rate for one’s loan is generally the single most important part of the loan scenario. At some point in the process, your rate must be locked in for a set period of time. This time period is known as the “Rate Lock Commitment Period”. A rate can be locked for as little as 7 days, and in some cases as long as 120 days. Once a consumer accepts a desired rate at a certain cost (points or no points), their interest rate is then locked for a specific number of days.
What is a rate lock? This question seems redundant after the simple explanation above, but I will try and make it very clear. A rate lock is a commitment for and between the lender AND borrower. Every time I talk to a consumer about locking in their rate I always get asked the same question: “Will the lender lower my rate during the rate lock period if rates drop?” I always reply with a smile and ask the question “Should the lender raise your rate during the rate lock period if rates rise?” A rate lock commitment is not a one way street. Most consumers incorrectly assume that a rate lock commitment is a lock against rates getting any higher than the rate committed to. It is not!
When a consumer has their loan rate locked, it sets off a chain of events. The lender makes a commitment to the investor that will eventually own your loan (the secondary market, i.e. Fannie Mae or Freddie Mac) - committing themselves to deliver a loan that meets underwriting guidelines in a specific period of time at a specific interest. In other words, your rate lock is connected from you all the way to Fannie and Freddie. If the lender fails to deliver the loan to the secondary Market on time, they get penalized a percentage of the loan amount. That is why if your loan does not close within your rate lock period, the lender will charge you an extension fee to cover the cost of late delivery to the investor.
Next week I will dive deeper into the issues of bogus rate locks, who should pay for a lock extension if one is needed, and what happened to the “free float down”.
Also Notable:
Continuing Jobless Claims fell to 5.8 million, the lowest level since March
The September Core PCE inflation index rose at a tame 1.3% annual rate
The Chicago PMI manufacturing index rose to the highest level in one year
The Fed purchased $18 billion in agency MBS during the week ending 10/28
Average 30 yr fixed rate:
Last week:
+0.01%
This week:
-0.05%
Stocks (weekly):
Dow:
9,800
-200
NASDAQ:
2,060
-100
Week Ahead
The biggest economic event next week will be the Fed meeting on Wednesday. While no change in rates is expected, the Fed may indicate future changes in monetary policy. The important Employment report will come out on Friday. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month. Early estimates are for a loss of about 165K jobs in October. In addition, the ISM Manufacturing index and Pending Home Sales will come out on Monday. ISM Services will be released on Wednesday. Productivity, Construction Spending, and Factory Orders will round out the busy schedule. The Treasury will announce the size of upcoming auctions on Wednesday as well.
All material Copyright © Hawaii Mortgage Company, Inc. & Ress No. 1, LTD and may not be reproduced without permission.
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