Where Do I Go From Here?

January 12, 2016

You may be aware that I am the father of five very amazing daughters!  My wife and I often joke about what we missed during the 80’s and 90’s because for nearly 20 years, beginning in 1984, we were very busy with little girls. Part of living in a very active, colorful and energetic household of little girls was watching, singing, playing, dressing up like and reading Disney princess musicals.  The Little Mermaid, Aladdin, Cinderella, Snow White, Beauty and the Beast, Mulan and Pocahontas were all danced to, dreamed about, reenacted and sung with vigor around the Short house during those memorable years.

One of the songs which comes out of those years is a song sung in Pocahontas II by the daughter of the Indian chief entitled “Where Do I Go From Here?”  This song is sung in the movie as Pocahontas encounters a crossroads and she is reflecting on what she has heard from many in her life as she contemplates her next move.  The chorus in this song is this:SIGNPOST_3-253

“But where do I go from here?
So many voices ringing in my ear.
Which is the voice that I was meant to hear?
How will I know?
Where do I go from here?”

Many who are contemplating an upcoming home purchase must feel the same way!  Radio and TV Ads, direct mail, social media, neighbors, brothers-in-law – they ALL freely offer their advice, even when NOT asked!  They are sure, from their experience,  who should be called, what should be required, where one should look, and how long it should take!  However, their experiences are generally very limited to their own few transactions and in light of their own unique circumstances.

What many “would-be, well-intentioned” advisers don’t tell you is that they have a very limited experience in the process of buying (or refinancing) a house.  The TRUTH is that many of the national loan program guidelines are changing often and individual companies often have their own overlaying restrictions which are added to the federal government-mandated qualifying guidelines.

Most honest Realtors, Real Estate Attorneys, insurance agents, home builders, financial planners and CPA’s will admit that keeping up with home loan requirements is not part of their daily or weekly routine and therefore the borrower should wisely start their home buying (or refinancing) process by contacting a nationally certified, state licensed, experienced mortgage professional who has the information and attention to keep the unique needs of the borrower at the forefront of the available financing options being considered.

In answering the wanna-be, home buyer (or homeowner who desires to refinance their home loan) when asking, “Where Do I Go From Here?”,  I recommend contacting a local, experienced mortgage professional who can be reached and trusted to help the borrower reach their goals.  How can I help you?

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Millennials are (finally) moving out of mom’s basement. Why should you care?

March 27, 2015

Have you noticed that many Millennials are slower to leave home than previous generations?


The oldest in the age group, generally considered those born between the early 1980s and the late 1990s, launched careers during the recession. Jobs were scarce, earnings were stagnant, and as a generation, they accumulated record amounts of student debt. Many simply couldn’t afford to leave home.


And that slowed household formation and demand for housing.

 


Here’s the good news: Recent economic reports show a steady shift toward more jobs and increased wage growth. Millennials may leave home soon after all.


What could that mean for the housing market? Well, as demand increases, supply could fall and prices could rise further.


And what could this mean for you?

Thinking of moving? Sellers may have a good opportunity to sell quickly and at a good price. Buyers may want to shop early before prices increase more.

Planning to stay put? Home values will likely increase as demand increases. If so, you may rest comfortably knowing the equity in your home is growing.

 

If you or someone you know is considering a change, please let me know. I’ll be happy to help.



Professional Mortgage Moment – Licensed?

January 11, 2012

by Brian Short, CMC, CRMS, GMA

Tennessee Mortgage Professional, Brian Short, outlines why it is essential for home loan mortgage borrowers to utilize the services of a state licensed mortgage professional to secure their home mortgage.


Beyond the Media – National Home Values

April 4, 2011

 

The housing market still faces many challenges. High unemployment, foreclosures and other distress sales are keeping negative pressure on prices. This of course is good news if you are looking to buy as low rates and lower prices have brought affordability to record levels.

How Affordable? -Since 1963, it has cost an average of approximately 43% of ‘per capita’ or individual income to finance the cost of a median priced home (20% down payment and prevailing 30 year fixed rate mortgage). Right now, it’s only about half of that cost at approximately 22%.

Are you holding off on a purchase for fear that prices might fall further? – Chances are that some sellers might be thinking the same thing. If you’re smart about it, you can use that as an advantage to strike the best possible deal on a home today for once sellers believe that prices have bottomed or are going back up, your advantage will be gone.

 Rates are low today, who knows about tomorrow? – Gambling on the expectation of a lower price tomorrow at the risk of higher rates can cost much more in the long run than locking in a sure thing today. Ex. $200,000 30 Yr. fixed loan @ 5% = $1073/mo. today vs. $180,000 @ 7% = $1197 per month later.

Own, Rent or Borrow – One way or another, a home is something we all need every day. The numbers here tell the story and it’s no secret that values have fallen, yet over time, that’s not the case. As you can see by the chart, values over the last 10 years show very healthy appreciation. Can you say the same thing about stocks over the same period?

 We don’t get a history lesson in the news because the news is about the moment and the more dramatic the better. That’s what sells advertising and that’s how they get paid. For the rest of us, taking a rational, longer term view of things makes more sense. This is particularly true when it comes to a home, for this is something we are likely to own for many years rather than just moments.


The “New” Rules of Rapid Refinancing

May 23, 2009

By Brian Short, CMC, CRMS, GMA

Many of us who have “survived” in the mortgage business are very busy these days with folks who desire to refinance their homes.  With rates in the range from low 5% to high 4%  for a 30 year fixed for many borrowers, this is an ideal time to consider refinancing to lock in an historically low long-term interest rate on your house.  Maze

However, the rules have changed for many borrowers.  The days of no documentation, high loan-to-value, cash-out, debt consolidation mortgages have come to an end. 

Does that mean it is impossible to accomplish any of these goals in a relatively painless refinance process – absolutely not!  Just take heed of the new “Rules for Rapid Refinancing”:

1.  Get your documentation organized and copied for your mortgage professional.   Employed workers and self-employed business owners will all need to prove their income and their assets to qualify for a new low interest loan.  I remind my customers that they should keep the following documents for the following length of time – just to be safe.

     a. Pay Stubs – Keep these all year until you receive your W-2 and have completed your tax return for the year.

     b. Bank Statements – Keep these 5 years.  The IRS can audit you for the past 5 years.  It your responsibility to prove your case if you would be audited.

     c. Tax Returns and W-2’s – Keep these until you die.  Let your kids throw these away for you and be amazed at how little (or how much!) you made when they were kids.  You never know when you will be asked to document income, deductions, businesses, rental houses, etc.  File a copy away in a cabinet (and scan a copy to your hard-drive in case you need to e-mail a copy for your kid’s college financial aid application, etc.) each year.

2.  You will not be able to pull cash out of your house for more than 85% of appraised value.  If you owe more than 85% of your current appraised value then you will not be able to get any cash to consolidate debt, pay off other obligations or even make improvements to your house.  Trying to get cash out of your rental house will be nearly impossible unless you owe very little on the rental house.  Getting cash out of Real Estate is not something Fannie Mae and Freddie Mac (or FHA or VA) are too interested in doing in this economy.

Does this mean that you can’t refinance your house?  Absolutely not!  You can still lock in a lower rate, shorter term (go from a 30 yr to a 15 yr), longer term (go from a 15 yr to a 30 yr), switch from an adjustable rate to a fixed rate, or combine your 1st and 2nd mortgages into one mortgage payment with a lower payment or a payment which includes principle reduction.

3.  Use this time to focus on getting out of debt and limiting your purchases of “things” to those items you can pay for with cash.  Running up credit card debt and buying vehicles (cars, boats, motorcycles, RV’s, etc), furniture, appliances or TV’s with credit is generally not the way to get or keep your finances under control. 

4. Pay cash.  Use cash.  Save some cash.  Keep some financial margin in your life buy having some cash in the bank to carry for 3-6 months in case your job, your health, your spouse – fail to meet your expectations.  Having a good payment history on your current obligations will get you in the door if you need or want to refinance your house.

5. Anticipate the future – as much as possible.  One of my Dad’s famous sayings is: “No one will loan money to a poor man!”  Once you lose your job, get sick or hurt or get behind on your payments, you’re stuck.  Especially in this current market – the squeaky clean borrowers are getting good loans.  Don’t wait to lock in on historically low fixed interest rates if you don’t have one and could qualify.  Waiting might put you into one of those categories of people who can’t qualify for one.

Is this a great market for quick and painless refinancing – absolutely!  However, there are some new rules.  Some of you are saying, “these are not NEW rules!”   “These are the rules we all used to live by.”  I agree that these rules may be new to this current generation of borrowers but are really time-tested rules for ensuring financial success – even when much seems to be crashing in on those all around us.  Whether these rules are new or old stand-bys they are in place for now.  Knowing them and playing by them will make you a winner – even in this economy!  Now, let’s play!


Get Your House in Order – Before you Lose it!

January 30, 2009

By Brian Short, CMC, CRMS, GMA

The job losses reported last week were the topic of an article entitled, “A Litany Of Job Losses: When Will It End?” written by Linton Weeks  for NPR Online, “Read aloud the litany of lost jobs and it sounds like a funeral knell.

On Monday, Caterpillar construction equipment. 20,000 jobs. Gong … Pfizer pharmaceutical. 8,000. Gong … Sprint Nextel telecommunications. 8,000. Gong … Home Depot home improvement. 7,000. Gong … Texas Instruments computers. 3,400. Gong … General Motors automakers. 2,000 Gong …homedepot

On Tuesday: Corning glass. 3,500 jobs. Gong …

On Wednesday: Starbucks coffee. 6,700 jobs. Gong … AOL online. 700 jobs. Gong …

On Thursday: Ford Motor Co. 1,200 jobs. Gong … Eastman Kodak cameras. 3,500 plus. Gong … Also on Thursday the Labor Department reported that nearly 4.8 million people are on the unemployment benefit rolls, a historic high. Anyone who has glanced at the news in the past few days is not surprised.

You know the causes: mortgage shenanigans, housing values falling, construction paralyzed, credit market frozen. ”

This negative economic news causes even the most positive person to swallow hard and take a careful inventory of what might happen if the bottom would fall out their own life.  Some nay-sayers have even pulled out their notes from “dusty old” Y2K Prep Courses urging us to stock-pile dehydrated foods, water, gold and ammo – again. 

All of those ideas might be worthwhile to consider if things fall apart and the government can’t keep control of our typically orderly society.  However, what about your house and your finances in case “life as we know it” does not fall into complete shambles but continues to struggle month-by-month for next year or so as some have suggested.

Even our new President and his advisers have admitted that this economic recovery may take an additional 12-24months.  One good way to prepare for additional lay-offs and a continued down-turn in our economy is to get YOUR house in order. 

pink-slip1What if you lost YOUR job? 

What if YOUR needed cash for medical bills without your employer-paid insurance?

What if YOUR fuel went back up to the all-time high July 2008 prices and stayed because of an international crises in the Middle-East or if another “super-power wanna-be” decided to test this new President like that last guy was tested only 8 months into his first term?

Mortgage interest rates are at a nearly 30 year low and many of your neighbors, friends, co-workers and family members are still holding on to mortgage interest rates at 6%, 7%, 8% and higher because they’ve been convinced by the press (their brother-in-law!) that those of us in the mortgage industry have folded up our shops and have gone away.  This can not be further from the truth!

We are in the midst of a very strong refinance market because many who had adjustable mortgage interest rates are now refinancing to “fix” their rates. Others bought homes in the past couple of years and have been paying a higher interest rate but are now able to lower their monthly payments, consolidate their high interest credit card debt and lock in the peace of mind that a long term fixed rate mortgage in the low 5%’s would bring to their monthly budgets. 

Who do you know who needs to get their house in order before THEY get a “pink slip” and then have lost THEIR opportunity to qualify for an historically low interest rate on their most prized and stable asset – their house?

I can help nearly any homeowner with their refinance needs by putting a new low interest loan in place or giving them a plan for systematically preparing for the day for when they would qualify for that new loan or for their next home purchase. 

NOW is the time to prepare for what could be another of year of lay-offs and down-sizing.  And one way to prepare might be to re-work the mortgage in order to lower the term, the monthly payment or the total out-flow of cash from the monthly budget.  Help is now available even before any new “stimulus packages” are snookered through Congress!


A Formula for Recovery – Including Investors

December 1, 2008

By Brian Short, CMC, CRMS, GMA

California HomesIt was announced at the end of last week that the National Association of Realtors was asking the Department of Housing and Urban Development (HUD) to re-open the FHA 203(K) loan program to investors as a part of the formula for helping reverse the continued downward spiral of the US housing market. 

The FHA 203(K) loan is a government insured rehabilitation loan I have used to help home owners, either buy and rehab a home they plan to live in or to rehab the home they current live in.  Either way, it works much like a construction loan with up to 5 draws for major projects to improve the condition of a distressed or out-dated property.

The borrower would be required to qualify for the final loan amount including the costs of the buffalo-vacant-housesimprovements and the money is only released after the work is completed and inspected to meet whatever codes or requirements necessary.  The borrower is required to front the money for the repairs or use a contractor who will agree to be paid in stages as work progresses.

Improvements can be made from a long list of “qualified improvements” including updating kitchens, bathrooms, HVAC, electrical or plumbing systems, roof, windows, flooring, siding and even adding square footage by adding a master bedroom or bathroom.

One of the beauties of this loan is that the current mortgage must be rolled into the final loan so the borrower is left with only one final “all-inclusive” mortgage at a great FHA fixed rate. 

Names BreesHowever, in the late 90’s there were investors who were involved with some fraudulent deals with builders, appraisers and title companies who abused this program and HUD cut off all non-owner-occupants from using the FHA 203(K) loan.  This decision shut down a lot of investor rehab activity until the sub-prime market began to pick it back up about 5-6 years ago.  Two years ago, most of the non-owner-occupant rehab activity came to a crashing halt, once again, as the sub-prime programs evaporated and now, some neighborhoods are riddled with empty homes which have been vacant for several months and are in need of repair or normal improvements to ever get them sold.

Over the past 2 years appraisal standards have increased, property values have decreased and vacancy rates have increased.  All of this leads to the need of investors to be enticed back into the market with favorable loan programs to reward their willingness to take on part of the risk of getting the housing market back out of the ditch.

NAR has called for a three year window for investors to be allowed back into the FHA 203(K) loan sold_houseprograms.  I would echo their call but not put a 2 or 3 year limit in place at this point.  Let’s take this one year at a time and call for Congress to immediately allow the non-owner occupant to qualify for the FHA 203(K) loan without further penalty and renew this provision again for another year at the end of 2009, 2010 and 2011 if necessary until we see normal numbers come back for the housing market.  This plan is much better than a government bail-out plan and rewards those who are willing to take on risk with the rewards of profit to be made on investor houses they have repaired and updated to get off the market.