Category Archives: Market News

New TRID Updates and How They Affect You

WHY THE CHANGE?

The new TILA-RESPA Integrated Disclosure rule (TRID) rules and forms took effect October 3, 2015. You may have heard of the new rules, however, I’ve taken some time to clarify a few questions and ways that the new regulations will affect both buyer and lender. This new rule is meant to simplify and clarify. The TRID updates are an attempt to improve and correct possible flaws with the current regulations. Starkey Mortgage can assist with this process which will make for a smooth buying process.

THE NEW RULES

To begin with, there are two new forms that are much more user-friendly than their predecessors. They are the Loan Estimate and Closing Disclosure forms, which are replacing four different forms from two government agencies. The form layouts are easier to understand, and you might find that they simply look better. They also make comparison shopping loans easier on the borrower.

Another change is the timing of the closing and the delivery date requirements. Borrowers will now be able to review the Closing Disclosure for at least three days prior to closing. In addition, the title company will need to send their fees to the lender well enough in advance of closing to allow the lender to meet the new delivery date requirements. The seller will receive this Closing Disclosure at or before closing. This prevents the deal from changing at the last minute, while giving buyers more time to review the paperwork before reaching the settlement table.

HOW IT AFFECTS LENDERS

Lenders will likely have a lengthier process to undergo than in prior years. They are now responsible for the Closing Disclosure instead of the title company. Internally, they will need to allow for more time in order to have the required forms submitted on deadline. While the new regulations lay more responsibilities on the lender, they benefit all involved in the long run.

HOW IT AFFECTS YOU

The National Association of Realtors is also recommending that Realtors add 15 days to the normal closing time frame to account for these changes. As a buyer, your quoted closing time may increase, but you will likely benefit from this extra time.

Any inspections or repairs will need to be handled earlier in the process than before the new updates. The goal here is to reduce any last-minute complications. So while the burden is increased on the lender, you the buyer can greatly benefit from the new regulations.

HOW I CAN HELP

Our team of professionals can help you navigate the TRID maze and come out a winner on the other side. Though the process has changed, our concierge customer service has not. Our experts understand the ins and outs of these new rules, and want to help you feel confident in your home purchase. For more FAQs, please visit: http://www.realtor.org/law-and-ethics/faqs-tila/respa-integrated-disclosure-trid-rule.

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September Housing Starts Rise

Housing starts for September were at a seasonally adjusted rate of 658,000. A 15% increase from the August estimate of 572,000. This 15% increase represents the fastest growth pace in 17 months. Housing starts were led by multi-dwelling units, but does offer a glimmer of hope for the sluggish housing market.

As you can see in this chart, September is the current high for 2011, with the low occurring in February with 518,000 housing starts.

Click Here for My Featured Chart.

FHA maximum mortgage limits to be reduced

 

FHA loans in Florida
FHA loans in Florida

Sometimes people think that FHA is an acronym that means first time homebuyer. The Federal Housing Authority (FHA) loan isn’t just for first time homebuyers.  In fact, you can have multiple FHA loans.  It is required that you plan to reside in the home as your primary residence though.  It’s conceivable under certain conditions that you could rent your current home with an FHA loan already in place and relocate to another home and get another FHA loan, having two FHA loans at the same time.  “FHA” does not mean “first time homebuyer”.

The FHA, administered by the Department of Housing and Urban Development (HUD), places limits on the mortgage amounts in various counties.  I guess HUD doesn’t want to be financing homes for the rich and famous buying their mega mansion.  They want to finance homes for the common folks like me! HUD changes their limits as prices fluctuate.  The limit is going down this time which seems bad, but it’s because homes are so much more affordable now, and that’s a good thing!

My primary area of business is Okaloosa County,Florida.  The limit in Okaloosa County is reducing from $312,500 to $271,050.  To check the loan limit in your area, click the HUD logo above.  It’s important to note that this change affects loans registered (not necessarily closed) with FHA on or after Oct 1, 2011.  So if you’re working out a purchase agreement in this price range that isn’t going to close for several weeks or months, that’s ok so long as your lender (me, of course) gets it registered with FHA before Oct 1.

How can I help you or your friends?

Read below for reduced VA Funding Fee!

VA loan in Niceville Florida

VA loans in Niceville Florida

Have you served our country by serving in the military, reserve, or National Guard?  If so, your benefits are about to get better, and I think that’s great!  The VA mortgage loan is a fantastic tool for financing a home.  In fact, if a home buyer doesn’t want to make a down payment, their options are limited to a Veterans Administration (VA) loan (if they’re eligible), a Rural Housing Loan (only available in some parts of the country), or some niche types of loans with limited availability in some localities.

While VA loans are excellent they aren’t free, and cost a little more if you’re using it for a subsequent home purchase.  In fact, if you close on a subsequent VA mortgage this month, your VA Funding Fee will be 3.3% of the loan amount if you don’t make a down payment!  Fear not, it gets better!!

If you close your VA loan on the 1st of October 2011 (or more realistically the 3rd since the 1st is a Saturday) or after, your Funding Fee will reduce from 3.3% to 2.8%!  That’s a savings of .5% of the loan amount, ($1,250 on a $250,000 purchase!!).  If, after reading this, you decide to delay your closing a couple of days to save .5%, I’d be happy to let you take me to lunch!  🙂

Here is an abbreviated table for the VA Funding Fee:

VA Guaranteed Loans – Loan Fee Structure

loans closed on or after October 1, 2011

(abbreviated table)

First Time Use
Down Payment:  Less than 5%  Between 5% and 10%  At least 10%

1.40%

0.75%

0.50%

Second and Subsequent Use
Down Payment:   Less than 5%  Between 5% and 10%  At least 10%

2.80%

0.75%

0.50%

To see the full table, and the release from the Veterans Administration, click here.

For the past 6 years over 60% of my customers have used VA loans. Consider me your VA lending expert!

How can I help you or your friends?

Aren’t you glad you earned V.A. eligibility?

For those of you with V.A. eligibility, let me say thank you.  There is no way to get V.A. eligibility without serving our country, and for that I am grateful to you!  If you have that eligibility you are fortunate indeed.  I came across a situation the other day that highlighted the benefit of a V.A. loan that I think everyone should hear.

“Gerald” called the other day.  He makes a lot of money, near $12,000 a month with his military retirement income, and his current defense contractor income.  However, his credit score isn’t very good.  In fact, it’s about 635, well below the national average. 

If Gerald wanted to buy a home using “conventional” financing he would have to put at least 20% down because no mortgage insurance company would approve him for mortgage insurance with his credit score.  And in addition because of the Loan Level Price Adjustments associated with conventional financing his interest rate would be nearly 5.625% for a 30 year fixed rate.  Ah, but Gerald has V.A. eligibility!!

Gerald can buy the same house with absolutely no down payment, and no mortgage insurance.  Even his V.A. “Funding Fee” is waived because he has a slight service connected disability.   And his interest rate is only about 5.125% on a V.A. loan!

So let’s review his situation:   $400,000 purchase price.
Conventional: $80,000 down payment, 5.625%  and a principal and interest payment of $1,842  -or-
V.A.: $0 down,  5.125% and a principal and interest payment of $2,177. That’s just over $200 more per month to finance $80,000 more!  Gerald, aren’t you glad you earned your V.A. eligibility?

For more on V.A. underwriting and my ideas to fix lending see my post entitled: “Mortgage Solutions using V.A. lending as our guide” by clicking here.

Mortgage Solutions using V.A. lending as our guide

V.A. Loans, those guaranteed by the Veterans Administration, work.  That’s the short of it. See the graph of seriously delinquent mortgages by loan type:

Note the blue line for VA loans.  See how those have been the best performing loans in the industry at least since 2005 through the 3rd quarter of 2010?  Guess what?  V.A. loans do not require any down payment whatsoever!  In fact, V.A. loans are a lot like the sub-prime loans of 2004-2007!

You see, V.A. loans do not require a down payment.  V.A. loans do not have a minimum credit score in order to be financed.  V.A. borrowers can have a bankruptcy discharged within the past 2 years.  In fact, sellers can even pay down a veterans debt in order to help the veteran qualify.  These are very flexible loans.   Perhaps the move to require larger down payments and higher credit scores isn’t the answer.  Maybe improving our loan performance has more to do with underwriting practices.  You see, a VA underwrite is different from the others.  Let me explain how I would fix the nation’s lending problems by detailing some of how a VA loan is underwritten.

1) Let’s consider why a person’s credit score is low instead of only looking at the numerical score.  If the story makes sense and/or if reasons for negative credit can be proven to be beyond the borrower’s control, let’s proceed to an approval.

2) Let’s consider how much money the borrower will have to spend after his or her home maintenance, social security, and state and federal taxes are paid.  And then, let’s consider how many people are in the household.  If they have residual income of a certain amount after the above is considered, let’s move forward with an approval.

3) Let’s have all appraisers selected by one single entity just like V.A. appraisers are selected.  Let’s not farm out our appraisals to the lowest bidder.  Let’s not use appraiser’s who are outside of the subject property market area.  And let’s make all appraisals also include an assessment of the property condition.  If the local appraiser being paid a fair wage, selected via a random process, gives a satisfactory condition report and a substantiated opinion of value that supports our purchase price, let’s move forward with an approval.

I have closed hundreds of V.A. loans, and the experience has taught me a lot.  In fact, I consider myself to be somewhat of a V.A. expert, and I’ve always thought V.A. underwriting just made more sense than conventional or FHA underwriting.  I don’t suppose I have all the answers, but when I see data like that in the chart above it makes me think that perhaps we should learn from the data and then make decisions instead of the other way around.

If you, or someone you know needs a V.A. loan, contact me via the link above my picture.  I’d love to put my experience to work for you!

A very happy new year indeed!

“You’re generally better off sticking with what you know” This time, I’ll agree with Donald Trump! 
 
In July while managing a branch for a locally owned mortgage lender the company I was working for was suddenly unable to fund mortgage loans.  Faced with a decision, I decided to pursue a career as a Realtor.  What was I thinking??  That is hard (and often thankless) work!  I never appreciated the effort a Realtor must put forth until I attempted the same.  Needless to say, I have a new respect for successful Realtors.
 
While is was a struggling Realtor, a management position became available with a large mortgage lender and I will happily return to mortgage lending beginning January 3rd.  My primary objective is to provide mortgage loans for people who want to purchase or refinance a home; but I will also be managing other Mortgage Loan Officers in Niceville and Destin, Florida.
 
Since late 2008 I have been publishing my own newsletter and maintaining a website with resources, links, tools, and a blog.  This is my first experience working for a large company with it’s associated compliance requirements.  In order to continue to provide timely information and resources without worrying about compliance I have decided to avoid any direct references to my employer on this website or in my newsletters moving forward.  
 
I encourage you to peruse this website viewing the tools, links, or former newsletters!  You may also call me using my phone number in the picture above.
I hope you too, have a very happy new year!