Not to be confused with the Forces of Darkness or The Force–though the definition may not be as far off as you might think–to “Countervail” is, according to Mr. Webster, “to exert force against an opposing and often bad or harmful force or influence”.

The Countervailing Forces I’m referring to are the interest rates of homes for sale. Specifically, we want to look at the quite low interest rates currently in play and the opposing force of “just slightly increased interest rates, like something as slight as 1/2 a percent”.

I know what some of you are thinking. Aren’t opposing forces supposed to be opposites? Extreme opposites, especially? Not necessarily.

Let me show you why even a small percentage is enough to separate the good, from the bad and the ugly.

On one side of the ledger are those who argue that home prices are going up. It’s true. I mean, I see how prices seem to be going up. What I don’t see is where inventory is coming into the market. What about Shadow Inventory, you say? There is no Shadow Inventory.

And anything that is added to the inventory of homes for sale is on the edges of town, out where home builders are going in. The point here is that these new homes are not in the sub-burbs.

On the other side of the ledger are those who stress that we don’t know how long interest rates will stay as low as they are right now.

Those are the two groups of people on either side of the fence. This is where the countervailing forces of interest rates–the rates now vs. the slightly increased rates of the future–comes in.

When the interest rate goes up even one-half of one percent, you lose a noteworthy amount of your home’s buying power. If you decide to wait and sell your house later, when the interest rates go up, the risk is that buyers will not be able to get the rate they are getting today.

Here’s a practical example of what I’m talking about:

•  Take a $200,000 home
• Bought with 4.5% interest
• With principal and interestThat’s $962/month in mortgage.

• That same home
• At 5% interest Is $1020/month.

Look at those two numbers. Imagine you’re the one looking to buy that home. See how the difference is significant in it’s impact on a buyer’s ability to buy your home?

If you’re the seller and that happens it may be harder to sell your home.

So when you see interest rates separated by 1/2 % and think, “Big deal.  I’d rather sell my home for even a half % more.  I’ll wait to sell”, remember this example of the countervailing forces.

Don’t fall for the bad and the ugly.
Be good and be smart.

Our go-to gal, Nova Home Loan’s Sr. Loan Officer, Jeannie Bolger,  mentioned Reverse Mortgage’s the other day and I thought you’d all appreciate some insight into them.

Like the name implies, a Reverse Mortgage is a product that allows you to convert some of your home’s equity, from all those mortgage payments you’ve been making over the years, into cash without the need to sell your home or pay additional monthly sums. The only point of entry is age: You must be 62 or older to be eligible for a reverse mortgage. And if the state of your credit is on the rocks because it has “issues”? Get this: no credit check required.

If you’re still reading, you’re eligible, you know someone who’s eligible, you’re not so far from being eligible, or I’m just a captivating blogger who you read because you know you’re gonna’ hear something good. Whatever the reasons, having extra money for home improvement, taking care of healthcare expenses, paying off your current mortgage, or adding to your retirement income are all common reasons why people apply for a Reverse Mortgage.

Word on the street, is that there are numerous restrictions on how someone who qualifies for a Reverse Mortgage can use the funds, but Jeannie Bolger gives us the facts:

“The senior can use the proceeds anyway that they wish with one exception: they cannot pay someone simply for advising them to get a reverse mortgage. Seniors can use the money for:

• Medical expenses
• Travel
• Pay property taxes or insurance
• Purchase an equity or long-term health coverage
• Large purchases (RV, a second home, etc.)
• Early inheritance distribution
• Normal household expenses
• In-home health care
• Home repair or improvement
• Eliminate an existing mortgage payment
• Anything you want or need

And according to the Department of Housing and Urban Development’s FAQ on Reverse Mortgages, “Unlike a traditional home equity loan or second mortgage, HECM borrowers do not have to repay the HECM loan until the borrowers no longer use the home as their principal residence or fail to meet the obligations of the mortgage.”

You can receive additional free information about reverse mortgages in general by contacting the National Council on Aging at (800) 510-0301 or   downloading their free booklet, Use Your Home to Stay at Home, a guide for older homeowners who need help now.

The Federal Housing Administration’s HECM reverse mortgage eligibility guidelines require that you:

• Be a homeowner 62 years of age or older
• Own your home outright
•         or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan,
• You must live in the home.
• Your home must be a single family home or a 2-4 unit home with one unit occupied by the borrower. (HUD-approved condominiums and manufactured homes that meet FHA requirements are also eligible.)
• You are also required to receive consumer information free or at very low cost from a HECM counselor prior to obtaining the loan.
• You can find a HECM counselor online or by phoning (800) 569-4287.

The difference between a reverse mortgage and a home equity loan.

“With a second mortgage, or a home equity line of credit, borrowers must have adequate   income to qualify for the loan, and they make monthly payments on the principal and interest.  A reverse mortgage is different, because it pays you – there are no monthly principal and interest payments.  With a reverse mortgage, you are required to pay real estate taxes, utilities, and hazard and flood insurance premiums.”

~ HUD

The Federal Trade Commission (FTC), the nation’s consumer protection agency, wants you to understand how reverse mortgages work, the types of reverse mortgages available, and how to get the best deal. See this link and Get the Facts before Cashing in on Home Equtiy

See Jeannie Bolger, Sr. Loan Officer for your direct connection to a Reverse Mortgage.

Licensed Mortgage Consultant #194387
Nova Home Loans
2850 E. Camelback Road, #270
Phoenix, AZ 85016
602-550-8674  Mobile
602-385-4812  Office
602-464-7322  Direct Fax
jeannie.bolger@novahomeloans.com
http://www.novahomeloans.com/jeannie.bolger

According to our friend Jeannie Bolger, Sr. Loan Officer for Nova Home Loans:

Back in April the Federal Housing Administration announced they were going to change the requirements for all FHA buyers with $1000 or more in collections–anyone with unsettled, unpaid, or unresolved disputes–must be paid in full.  The requirement was scheduled to start this Sunday, July 1st. But as of HUD’s June 15 Mortgagee Letter, they have rescinded the requirement.

What was the new July 1 requirement going to mean to home buyers who plan to use low-down-payment FHA financing, other than making it more difficult for everyone to get FHA loans? For one, it was going to complicate the process of qualifying for an FHA loan. (As if borrowers did already have enough problems with approval delays!). It would have likely reduced the qualifying amounts.

Unfortunately, many lenders wrongly pre-approve borrowers because the loan officer wasn’t paying close enough attention to things like these new, often overlooked collections requirements. This leads to borrowers getting denied on purchasing a home while they are still in escrow. Which means their earnest money is in danger of being lost.

All because of something most people are unaware  of that’s tucked away in their national credit bureau files: Medical bills, old student loans, retail purchases, any debts reported as unpaid. It wouldn’t have mattered if these debts were incorrectly reported to collection agencies, or if the borrower had currently high credit scores and income.

“Fortunately, these new collections requirements have been rescinded. The current guidelines are as follows”,  said Jennie Bolger.

Collections:

Manually Underwritten Loans

Collections indicate a borrower’s regard for credit obligations, and must be considered in the creditworthiness analysis. The lender must document reasons for approving a mortgage when the borrower has collection accounts. The borrower must explain, in writing, all collections. FHA does not require that collection accounts be paid off as a condition of mortgage approval.

TOTAL Scorecard Accept/Approve Recommendation

Collection accounts trigger neither an explanation requirement nor a hypothetical monthly payment to be used in qualifying borrowers. The presence of collection accounts in the borrower’s credit history already result in lowering the credit bureau scores used in TOTAL and, thus, no further information need be provided by the borrower.

Disputed Accounts:

TOTAL Scorecard Accept/Approve Recommendation

If the credit report reveals that the borrower is disputing any credit accounts or public records, the loan must be downgraded to a manual underwriting review by a DE underwriter–

–unless any of the following circumstances apply to the disputed account:

o It has a zero balance

o It’s marked as “paid in full” or “resolved”

o It’s less than $500 and more than 24-months old

Nova Home Loans has a Credit Services Department that can—for free–assist you with any Collection, Charge-off, Disputed Account and Judgment questions; and help you get your FHA/HUD loan approved.

Please call Jeannie Bolger, Sr. Loan Officer for assistance. 

Jeannie Bolger, Sr. Loan Officer

Licensed Mortgage Consultant #194387
Nova Home Loans
2850 E. Camelback Road, #270
Phoenix, AZ 85016
602-550-8674  Mobile
602-385-4812  Office
602-464-7322  Direct Fax
jeannie.bolger@novahomeloans.com

First, a quote from our resident expert, Sr. Loan Officer of Nova Home Loans, Jeannie Bolger:

Effective June 11, 2012–for  any FHA note that was endorsed by HUD on or before May 31^st, 2009–qualifies for reduced MIP on a Streamline Refinance (No Appraisal).  Upfront MIP goes to .01% and Annual MIP will be .55%. Current upfront MIP is 1.75% and the Annual is 1.25%. HUGE SAVINGS.

What? You don’t speak Klingon or Mortgagease?

This may help.

The Federal Housing Administration (FHA) is a branch of the Department of Housing and Urban Development (HUD). The FHA was developed during the Great Depression as as an effort to stimulate the real estate housing market. The main purpose of the FHA is to encourage home ownership in the United States. To accomplish this, the FHA insures mortgages against the default of borrowers. 

Do you have a current FHA loan (note) that was endorsed (or closed) by HUD prior to May 31, 2009? If so, your FHA loan qualifies for a significant reduction in your upfront Mortgage Insurance Premium (MIP; an insurance policy that compensates lenders/investors for losses in the event of a defaulted mortgage loan) on a Streamline Refinance (No Appraisal).

The current upfront MIP is 1.75%. Let’s say your FHA Streamline Refinance of your home is for a new $100,000 mortgage. The FHA will charge you $1,750 upfront on the mortgage insurance premium (MIP). You pay this at closing and the $1,750 payment  automatically rolls  into your new loan balance.

On June 11, the new upfront MIP will be  .01%  This is a HUGE SAVINGS. Using the $100,000 new mortgage example above, you would only pay $1 !

Also beginning June 11, 2012, the FHA will reduce it’s 1.25% annual MIP ($1,250) to just .55 % for certain FHA borrowers (or $550)–more than a 50% savings!

This is one way that FHA can make a real difference to help homeowners who are doing the right thing, paying their bills on time and want to take advantage of today’s low interest rates. By significantly reducing costs for these borrowers, we can make certain they cut their monthly mortgage burden which will benefit the housing market and the broader economy in the process,” said Federal Housing (FHA) Commissioner, Carol Galante. Read the full HUD Press Release here.

Read Jeannie Bolger’s quote at the top of this post, again, and you’ll be amazed at how much Klingon Mortgagease you speak!

REMEMBER: For home loans endorsed by HUD before May 31, 2009

PLEASE NOTE: Loan application may be started prior to June 11^th, but FHA case # must be ordered after June 11^th, 2012 to qualify for program and reduced MIP.

Call Jeannie Bolger, Sr. Loan Officer Nova Home Loans, for more information:  (602) 550-8674

[Photo: Images_of_Money]

Every so often I like to do a reminder on credit. It’s kinda important, ya know.

So, your credit score, also called a FICO score, is a number based on the information in your credit file that shows how likely you are to pay a loan back on time. You’ll want your number to be higher, rather than lower, because that show’s you’re  less risky (not to be confused with risqué).

Consumers with scores above 700 are usually charged pretty low rates, but those with scores above 760 are charged the lowest rates. So, what should you do if you have less than stellar credit? Jeannie Bolger at Nova Home Loans has come to the rescue with some of her top tips for improving your credit score.

PAY YOUR BILLS ON TIME
According to Jeannie, “The best way to raise your credit score is to develop a positive history of using credit to outweigh the old, bad credit history.”  If you’ve made any late payments, establishing or re-establishing a good track record of making timely payments will raise your score.

KEEP YOUR BALANCES LOW
Jeannie also suggests that you keep your current credit card balance at 30% or less than the maximum credit limit. High outstanding debt can affect your score and maxing out your credit cards could lower your average score by as much as 70 points.

OPT OUT
Visit www.optoutprescreen.com to tell the three major credit bureaus (Experian, Equifax and TransUnion) to stop selling your credit history. You’ll be able to opt of “pre-approved” credit card offers for a period of five years or indefinitely.

GET A SECURED CREDIT CARD
A secured credit card (one that requires you to make a deposit against the card’s credit limit) is a great way to develop a positive credit history. Jeannie cautions that you should not max it out. Instead, maintain a very small balance each month and be sure that the card reports to all three credit bureaus.

GET IT IN WRITING
If you’re paying off an old collection or charge-off, speak to the creditor about removing derogatory information on your credit report in exchange for payment. And don’t forget to get it in writing.

Jeannie Bolger can be reached at Nova Home Loans at jeannieb@novahomeloans.com or (602) 550-8674

Many people think “I’ll make an offer on a home and figure out later how I’ll pay for it.” But if you want your offer to be taken seriously and if you want to avoid complications when you close on the home, you must get pre-qualified before you start looking.”

See the image below of the form, below.

Pre-qualification quick but very important as you get ready to make offers. And in this market, where houses are selling in days, you can’t NOT have that pre-qualification form ready.

Why? Because there are 3 people who will benefit from your preapproval: You, your Agent, and the seller from whom you eventually buy a home.

Prequalification serves two primary purposes:

• It demonstrates to both you (and to sellers) how much house you can afford.
• It gives you the purchasing power to make a legitimate offer. (In fact, many financial institutions will not accept an offer on a house without a pre-qualification letter.)

But the benefits continue.

A mortgage loan prequalification is simply an estimate of how much house you can afford and how much money a lender would be willing to loan you. The best time to get a prequalification is right at the beginning of your home buying process, before you even start looking at houses. Realtors also prefer that you have a prequalification letter before they start showing houses so they know the price range you have qualified for.

And, in the event you’re competing with multiple offers on your dream home, most sellers will consider offers with prequalification letters before those without. In this market, that’s extra handy. Last year at this time there were about 6,000 active properties, today their are only about 2,000.

The Prequalification process involves either sitting down with a lender or talking with one on the phone, and providing information on your income, assets, debts, and a potential down payment amount. The lender would then provide you with a ballpark figure in writing of how much he thinks you could afford to pay for a monthly mortgage. There is no cost involved and there is no commitment on either side. This estimate is just helpful in helping you figure out if buying a home is a viable option, and if so, what your price range would probably be.

So if you’re thinking of buying a home in downtown phoenix, Call Jeannie! She’ll help you with the whole process.

Or call me for more information about the market: 602-456-9388.

Over the years, brokers have gotten a bad wrap. I work with people everyday who want to go with big banks and credit unions for their loans (because they haven’t done anything wrong in the past few years, right?).

Just recently I had a client who went with a big credit union for her loan, and 7 days before close of escrow, they decided to pull the loan because the bank had issues with the HOA. Lucky for us, Jeanie Bolger from Nova Home loans came in and saved the day. I can’t tell you the number of times this happens.

Here is what I learn and I want to share with anybody who is thinking about finding a lender:

1. Big banks are just that BIG. They’ve got lots of red tape and work to get through everyday, before they even think about giving you a loan. On the other hand, a mortgage broker is a certified professional who seeks the best mortgage terms for you by accessing a network of lenders that includes major banks, trust companies, credit unions and finance companies.
2. Big banks and credit unions tend to be more conservative on loans. So, if you have something out of the ordinary going on, like a second property, a divorce or a spouse with bad credit, stay away from the big banks, especially.
3. Underwriters work fast with Brokers. Jeannie’s brokers are in the same office, so she can work with the underwriter to make sure everything they need and you need is in place. Jeannie can physically walk down a hall and ask an underwriter a question about a loan and get an answer right away. They can’t do that in the mega bureaucracies.

I recently worked with Lonna to find a home downtown. Lonna wanted to go with a credit union because they had given her pre-approval. One week from closing escrow, the credit union pulled the loan and we once again turned to Jeannie.

Lonna loved working with her. “Jeannie answered all my questions immediately and spoke to me like she was trying to help. It feels like your being interrogated when your with a Credit Union, like you’re just a case number, but with a broker it was like they cared.” Once Jeannie took over, it only took two days from when the underwriter received the application to approval.

So, let me be clear: from the time we started to the time we close, Jeannie swooped in and got it all done within 5 days! Its gotta be a record!

So if you’re thinking of buying a home in downtown phoenix, use a broker. Heck, Call Jeannie!

Or call me for more information about the market: 602-456-9388.

Arizona is a beautiful place full of fantastic neighborhoods and if you’re moving here, you’ll probably need a little help deciding what community is right for you.

Jeannie Bolger and I have created a guide for new home buyers with links for information about schools and attractions for different parts of the valley.

This guide will be really handy for people moving in to phoenix neighborhoods or for companies to have on hand for their employees.

If you know of somebody thinking to move to Phoenix, or a company that is expanding in Arizona, please share this resource with them.

Download it here and keep it on hand in your office. Ken Clark’s Relocation Guide

Of course, Jeannie and I are just a phone call away if you need anything.

Credit can be confusing. It’s this strange, omnipresent score board of your financial decisions that determines whether you’re a smart financial risk for lenders. But don’t worry. Having a little knowledge on your side will make sure that you’re putting your best foot forward when it comes to raising your credit score.

Did you know that the credit score you may have purchased from one credit bureau isn’t necessarily the one that your mortgage lender, credit card issuer or auto loan originator will see? There are several different credit scores, even within the same credit bureau. Each of the three credit bureaus (Equifax, Experian and TransUnion) has its own proprietary credit score. 

Luckily, a few years ago Congress required that each of these three agencies to provide you with a free copy of your credit score once a year. Call 1.877.3322.8228 or visit their website to get your score. Hint: they will try to get you to pay for your score, but don’t buy that line. As a lender told me once, the most accurate scores you get when you buy a house are the ones the lender pulls as these are a good indicator of where you are.

Sick of getting preapproved credit cards. You can tell the credit bureau to stop selling your credit information by calling 888.567.8622

Speaking of credit cards, your credit score can be negatively impacted by a late credit card or loan payment, but it can also be affected by less obvious actions. If you close an old credit card account, you’ll reduce your available credit and shorten the length of your credit history, which can negatively affect your credit score. Additionally, applying for new credit can be beneficial to your credit score, but it can also decrease your credit score due to a hard inquiry. Make sure to keep your current credit balance less than 35% of your overall limit

Secure credit cards are a great way to build you credit because you deposit what you spend in advance. Just make sure they report to all three credit bureaus. MidFirst Bank is a great local option for these cards.

Please call Jeannie Bolger, Sr. Loan Officer for more information.

Or call me for more information about the market: 602-456-9388.

Over the last couple weeks I’ve seen the same thing happen over and over: houses on the market are in bidding wars within HOURS of coming on the market and they are getting offers well above asking price.

There is a very simple reason this is happening: inventory in Maricopa County has dropped by more than half since January of last year.

This graph should make this very clear. This is terrible news if you are a buyer, but great news if you are listing a property.

This situation is going to last until one or two things happen: (1) Home builders start building more homes and/or (2) people who have been waiting to list their homes put them on the market.

Either way, prices are getting ready to move up. I feel bad for the people last year who told me things like, “it is clear that the market is going to drop again in 2012 because (insert economic theory here).” We agents knew prices were going to go up in 2012 because we’ve been watching this data for a very long time.

Here’s another way to look at it. The “Days Inventory” is going down quickly, too. Another way to see this is if we took the number of houses in the inventory today and divided it by the number of sales every day, how many days would it take until there were zero properties lest to sell. This tells you how quickly things are selling. If you want to break that down further by price, it really tells you a story.

See those charts below. For now, if you are thinking of buying a home be ready to be aggressive in your offers. Give me a call at 602-456-9388 and I can give you more information. Interest rates are still at a historic low. You definitely don’t want to wait until BOTH interest rates AND prices are higher!

Source: The Cromford Report (www.cromfordreport.com)

Active Listings in 2011 and 2012