Rising Rates & Affordability: “How Much Can You Finance with $960/Month?”

March 15, 2017

As rates rise, affordability dwindles.  If you want more home for the same monthly payment, acting before rate rise further may be a direct path to success.

Each example here shows the principal and interest payment for a 30-year, fixed-rate loan.

1) Loan of $200,000 – Interest rate: 4.00% / 4.25% APR – Payment = $955

2) Loan of $180,000 – Interest rate: 5.00% / 5.27% APR – Payment = $966

3) Loan of $160,000 – Interest rate of 6.00% / 6.29% APR – Payment = $959

It’s pretty amazing that a rate increase of just 2% can impact affordability by as much as $40,000.  Rates have been artificially low for some time now due to Fed intervention.  As this stimulus is removed, the usual result is the rates to rise.  Rates have already started rising just in expectation of a change in Feb policy.

Act NOW to buy the house you desire without the risk of losing your opportunity to lock-in these amazing low rates.  I can help you or those you know get a low interest rate loan before further increases go into effect.

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On Our Own

November 9, 2016
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Belinda and me enjoying a late summer beach trip.

I am beginning to understand that vacations can be grouped into at least three different categories – especially for those of us with large families!  There were the vacations you took BEFORE kids during those early years of your marriage, the vacations you took WITH the kids and finally, those you have taken (or will take) AFTER your kids are gone – or are too busy to take with you!

For the two of us, we are now entering into the third phase of our vacations.  We started having kids over 30 years ago and I can count on one hand the trips we have taken without any kids during these years.  We’ve taken some great trips with our kids to beaches, mountains, national parks, historic cities and sites and amusement parks.  Most of those trips where designed to keep kids happy, entertained, fed, well-rested and healthy.  They have been fast paced, jam-packed and expensive – even when we tried to cut costs.

Our kids tell amusing stories to each other and their friends about “sneaking” into hotel and resort rooms 2 or 3 at a time because a few places where we stayed were not designed for a family of 5 kids under the age of 10 – just so we could all stay in the same room or condo.  Other stories include when their little sister actually slept in a make-shift “bed” in the bathtub during one trip because there were not enough beds for all five girls!  (Please don’t report us to the authorities!)

This year’s “Short Family Vacation” was actually planned during a time when we thought several of our girls would be able to join us at a beach-side location where several of them had expressed an interest in visiting again.  However, when it got closer to the designated week for our vacation only one of our grown daughters and her roommate were able to join us – and for only a couple of days.  Although slightly disappointing to us, we realize that our new reality is that our girls have moved out (except for our youngest who is a busy college senior) and are now very engaged with their lives and their time-off from work and family responsibilities may not coincide with our “Short Family Vacations”.

Similarly, I’ve heard others relate housing needs to these three vacation categories – BEFORE kids (starter homes), WITH kids (that house with all of those bedrooms and bathrooms and a big back yard) and AFTER the kids have moved out (the house with the master bedroom on the main floor and a much smaller yard!).  Many people who are changing their housing needs require the home loan services I provide.

As you or those you know find themselves starting-out, scaling-up or scaling-down I am able to be the experienced and trusted “Dream Maker, Problem Solver” to provide the tailor-made home loan solutions – so that no one in your family will find themselves sleeping in a bathtub!  Can I count on you to give my name to the next friend, neighbor, co-worker or family member who would benefit from my home loan expertise and hands-on customer care?


Tax Refund = Down Payment?

April 15, 2016

By Brian Short, CMC, CRMS, GMA

In my 18 years as a “Dream Maker, Problem Solver” mortgage professional, I have observed that one of the most disappointing set-backs for a new home buyer is the lack of down payment.  Often times, the prospective home buyer is already in the habit of using some of his or her monthly income for housing by paying rent to a landlord or a roommate, but rounding up several thousand dollars for a down payment can keep many from being qualified to buy a house.

With this being said, there are many loan programs which allow a buyer to buy a house with as little as 3% of the sales price for down payment and some where the down payment can be a gift from a close family member.  There are other loans where a buyer can buy a house with $0 down payment if the buy is a veteran or is buy a house in a rural area or in a city with less than 35,000 population with certain income restrictions.  Even with these very generous federal government home loan options, the lack of a down payment can be the hurdle which will keep a new home buyer from moving forward, especially if they are not currently home owners who are selling a home prior to buying their next home.

tax_refundMY APRIL 15th SOLUTION?   Use this year’s Federal Income Tax Refund for a down payment or for “seed money” to begin a down payment saving account to which a prospective home buy can add a portion each pay period.  It is timely that on this 2016 Tax Day we are reminded that many US workers will receive refunds of anywhere from a few hundred to several thousand dollars in the next few weeks and this money can be used to help BUILD WEALTH rather than buy things which are quickly consumed or used up.

Many financial advisers still consider Real Estate to be a very secure and cost effective way to build wealth and invest for the future.  Who do you know who needs to contact me for help on how to find their down payment solutions for their home purchase?  I can show those you know who dream of home ownership or of buying their NEXT dream home how to move forward in this current maze of home loan options!


The 5 Steps You Must Take in the Next 2 Months if You Plan to Buy a House This Year!

January 21, 2016

We are now three weeks into the new year.  Energy levels depleted by the holidays have begun to return.  You may have already blown most of your New Year’s Resolutions.  The college football bowls are finished up.  You’re back into your work and family routine.  Downton Abbey is back on PBS and in between “snow days” you’re beginning to make your Super Bowl plans.  What better time to begin to think about your needs and desires for a new home in 2016?!?

I have worked with hundreds of home buyers over the past 18 years as a nationally certified, state licensed mortgage professional and I have found some who have made great preparations to enter into the largest single purchase they will ever make in their lives and I have also met some who are woefully unprepared.  Those who prepare well generally experience a much smoother process and avoid being hit with additional fees for extensions and delays.  If the right steps are taken BEFORE you actually go out to look for a house the new home buyer will find the process manageable, systematic and successful.  Those who rush into a home purchase contract with a seller and Realtors without taking these steps will generally experience an immense amount of stress, confusion and unnecessary pressure from everyone involved in the process – and will be tempted to give up after spending $1,000 – $2,000 of their hard earned and saved money.

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Follow these 5 simple steps to ensure that your home buying process is a success in 2016 and in the future.

What can a prospective home buyer do now to prepare for their upcoming home purchase later this year?  Here are the steps I would recommend:

  1. Get your tax returns for the past 2 years finished and get copies ready to pass off.  Your mortgage professional will be required to submit your completed tax returns and W-2’s for the past 2 years to the underwriter who will approve your loan.  Borrowers who have not completed their taxes or can’t find their returns will delay the underwriting process.  The Loan Processor who will take your file from your mortgage originator and prepare it for underwriting will need to verify the tax returns you submit as the same as what was submitted to the IRS.  This takes a few days and will cause additional delays if your tax returns are not prepared correctly and available to be submitted when you have an accepted offer to buy a house.
  2. Locate and provide your pay stubs for the past 30 days.  It is required for any loan to show that the buyer has the ability to repay the new loan.  You must show a consistent and reliable income stream from somewhere.  Most borrowers can do this with pay stubs from a company where they work.  If the buyer is self-employed it is still possible to do this with tax returns and a year-to-date Profit and Loss statement.  Find your pay stubs if they are on a HR website with your company and begin downloading them each pay period so you have them available to pass off to your originator or his assistant.  Again, this information will be verified by the Processor to make sure that the employer agrees with the information that is found on the pay stub.
  3. Locate and provide your bank statements and all retirement account statements for the past 2 months.  I find is amazing when I hear a borrower tell me that their bank “doesn’t do bank statements any more” when in reality they just don’t know how to navigate within the online banking website of the bank where they have been a customer for many years.  Take the time, now, too find, print or download bank statements every month and save them to a folder on your computer or in your home office cabinet so you will have the bank statements required to get your loan approved.  You will need at least 2 months of statements and in some cases you might need 12 months of statements to show rent payment or the receipt of child support or some other income source you desire to use to help you qualify for your new loan.
  4. Talk to a licensed mortgage professional to help you explore you loan options early.  There aren’t as many loan programs available to a home buyer as there were back before the Credit Crash of 2008 but there still are many options and most mortgage companies will be able to offer many of the same programs.  Banks will generally have fewer options but they also can offer many options to a prospective home buyer.  Your licensed mortgage professional will evaluate the documents we listed above and help you explore which home loan option would be best suited for you.  Some programs are only available for first-time home buyers.  Some programs are only available for those wishing to buy a house outside the city limits or in certain counties.  An experienced, licensed professional will keep up with the ongoing changes in the program requirements and be able to help the new home buyer know what needs to be done in preparation for approval for best loan fit and where the buyer should be looking to find their next home to purchase.
  5. Prepare your down payment and cash required to close your loan.  After talking to your licensed mortgage professional the prospective home buyer will have a good feel for how much cash and down payment will be required – if any.  Some loans allow for the seller to pay for the buyer’s closing costs and require NO DOWN PAYMENT!  Even if no down payment is required, many programs will require the buyer to show that they have 2-3 months of house payments in the bank – just in case the bottom falls out regarding a job or extended health issue.  It is important for the borrower to demonstrate to the underwriter that they know how to manage a checking and savings account and that there are no recent overdrafts on their bank statements.  Get control of your banking accounts and manage your cash flow so it will be easy to prove to the mortgage underwriter that you are now ready to take on a new house payment for the next 30 years and that you can make this payment on time, every time.

This year can be a year of amazing new beginnings and one where life-time accomplishments can be made.  However, without making the necessary preparations in advance, it could also be one of set-backs, disappointments, frustrations and failures.  Follow these steps above to make this year an unimaginable milestone for  well-deserved successes!

Brian Short is a nationally certified, state licensed, dream maker and problem solver who helps provide home loans with LeaderOne Financial Corp.  He can be reached HERE or by calling 615-302-0809.


HUD Proposes Lowering FHA Loan Limits in Middle Tennessee

May 31, 2011

Last Thursday, just before the long Memorial Day weekend marking the beginning of the 2011 summer, the US Department of Housing and Urban Development (HUD) released a 23 page proposal outlining loan limit decreases in 669 US counties – 13 of them in Tennessee and all of these located in middle Tennessee. 

Unless Congress prohibits these proposals, beginning October 1, 2011, each of these 13 counties, including Cannon, Cheatham, Davidson, Dickson, Hickman, Macon, Robertson, Rutherford, Smith, Sumner, Trousdale, Williamson, Wilson, will see their maximum FHA loan limit decrease $39,200 to a new lower maximum FHA loan limit of $393,300. 

Counties Affected by Possible Decrease in FHA Loan Limits for Loans

The current FHA maximum loan limit in these 13 counties was set at $432,500 in 2008 as a part of the Housing and Economic and Recovery Act during the waning days of the Bush administration in an attempt to stabilize the fragile housing and credit industries. 

This 9% decrease in FHA maximum loan limits in middle Tennessee will affect less than .5% of all of the FHA loans being originated in these middle Tennessee counties.  HUD decision to lower these maximum loan limits is an attempt to ward off the Republican critics in the US House of Representatives who are proposing changes to the FHA mortgage insurance program to limit the expansion of the risk of taxpayer supported programs in hope that private players and investors will re-enter the mortgage industry to replace what the Federal Government discontinues subsidizing.

Last year 32,126 FHA loans were closed in these 13 middle Tennessee counties and the new decrease in loan limits would have affected 138 of those transactions.  The argument could be made that Tennesseans borrowing more than $393,300 to buy or refinance a house would have been able to use other loan programs or that other non-government programs would be developed if FHA would move out of this particular high-end market.  Statistically, these higher-end mortgages have preformed much better than the lower-end mortgages but HUD would argue that these loans are not part of their stated mission to target “lower and middle-income borrowers” when they are using taxpayer money to operate a program insuring home mortgages at more than 150% higher than the Area Median House Price.

What is the expected outcome of such a move if Congress does not block these proposals for home buyers in Tennessee? 

Minimal.  Most first-time home buyers or home buyers with a scarred credit profile are not buying homes $400,000+ homes with only a 3.5% down payment as currently required by HUD for FHA insured loans. 

The initial potential panic caused by news reports of such proposals may cause a handful of buyers to get off the fence to get approved for their high-end FHA insured mortgage in order to beat the October 1, 2011 deadline but because so few Tennesseans will be affected by this proposal, only 138 in 2010, the Tennessee Congressional Delegation would likely not support any legislation thwarting efforts by HUD to continue to solidify the government supported mortgage insurance program – especially if these changes will affect only a few wealthy Tennessee home buyers.


FHA 203k Renovation Loan – 3 Real Estate CE Classes – Nashville – May 24-26

May 9, 2011

 

FREE Tennessee Real Estate Commission Approved CE Class (Course # 6657)
 
Three Convenient Locations to Choose From:
 
Tuesday, May 24th – 9:30 a.m.-12:30 p.m.
Office of Insphere Insurance Solutions
215 Centerview Drive Suite 100, Brentwood, TN 37027
 
Wednesday, May 25th – 1:00 p.m. – 4:00 p.m.
Rutherford county Chamber of Commerce
3050 Medical Center Parkway, Murfreesboro, TN 37129

Thursday, May 26th – 9:30 a.m. – 12:30 p.m.
The Hotel Preston
733 Briley Parkway, Nashville, TN 37217

 Class Sponsors: 

 

  • AmeriFirst Home Mortgage (NMLS #110139/TREC TN Sponsor #1528) &
    Nashville Title Insurance Corporation

  • Cordially invite you to attend a 3-hour Continuing Education Course (6657) entitled:
    FHA 203k Renovation Loan
  • Guest Trainer:
    Joseph P. Daly, GRI – FHA 203k Lending Manager
    AmeriFirst Home Mortgage
    Branch Office: 308 Seaboard Lane, Suite 108, Franklin, TN 37067

Grow your business and make more money by learning how 203k loans can help you move your “hard to sell” listings while giving your buyers an opportunity to borrow additional monies for repairs, upgrades, and other home improvements… based on the future-value of the property.

  • This TREC Approved Course (#6657) is being offered by TREC Approved Provider (#1528): AMERIFIRST HOME MORTGAGE. For more information regarding this class please contact: E-Mail: BShort@AmeriFirst.com or Call: 615-302-0809


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.