First Home Guy Launches Video Series for First Time Home Buyers

The First Home Guy has recently started adding video tips and information for first time home buyers on www.firsthomeguy.com He will be updating these video tips on a weekly basis as well as answering questions from first time home buyers. This site serves home buyers from all over the US including Minnesota first time home buyers. The First Home Guy will also have guest speakers from time to time from the real estate and mortgage industries who will also be providing short videos and blog posts to help insure that first time home buyers have a good experience and end up with a great home.

Guaranteed Rural Housing Program in Minnesota

Minnesota home buyers can still buy a home in Minnesota with no down payment. It is offered through the USDA and applies to people buying homes in rural Minnesota. See list of areas below. The Guaranteed Rural Housing (GRH) loan program is a government insured single-family home loan program for low-to-moderate income borrowers looking to purchase a home in a rural development area. This program is an excellent option to offer Minnesota borrowers who aren't able to make a significant down payment on a home. It is an affordable way to achieve the dream of home ownership by helping them get into an affordable Minnesota Mortgage with no down payment and a very favorable Minnesota mortgage rate.

The circle around the Twin Cities where it is available is Goodhue County, Rice County, Northfield, Randolph, Western half of Carver County, Leseur, Sibley County, Elko, New Prague, Belle Plaine, Norwood, Cologne, Waconia, Mayer, Watertown, Delano, Buffalo, Monticello, Big Lake, Zimmerman, Isanti County, and all of Chisago County except Wyoming. Any property further out is qualified except St. Cloud, Duluth, Hibbing, Rochester, and Mankato.

For help finding a Minnesota real estate agent, visit www.Agentopolis.com and if you are looking for a web site where you can see Minnesota real estate, homes for sale and MLS listings, visit www.mlsmaps.com For First Time Home Buyer Information, visit www.firsthomeguide.com information

The $700 Billion Bailout and Buying a Home

In case you haven't heard, seller fund down payment assistance officially ended on Tuesday, September 30th. Thanks to the wisdom of our government, the same brain trust that wants us to get behind a t $700 billion bailout of their crooked buddies on Wall Street. The implications will be far and wide and the trouble with the current proposed bailout is that it is coming before the full effects of the canceled seller funded down payment program will be realized by the housing markets.

Here is what's going to happen; The government is going to pass their pork ridden $700 billion bail out, in about 6-12 months home sales will have dropped off by another 20%, this will drive home values down further and faster than any of the geniuses at the government foretasted, there will be a new round of foreclosures, more bank failures, (after the $700 billion bailout that was supposed to save us) and in order to avoid another "economic Pearl Harbor" the government will need about another $500 billion dollars to bail us out again. Catastrophic! We did it to ourselves, I think it's time our country bit the bullet, let the whole thing more quickly run it's course, and then we can all get on with our lives and making a living.

That's the bad news. The good news is there are plenty of homes for sale and great deals to be had, so if you are actually looking for a place to live, raise a family and become part of a community, this is a great time to buy a home. If you are trying to sell a home you purchased in the past 2 years, you'll either want to wait out the storm or get ready to drop your price. This isn't true in every city and neighborhood as there are still pockets of strong housing values, usually associated with great school districts and highly desirable suburbs and neighborhoods.

The other good news is that there still is and always will be mortgage available for people to buy homes, as long as they have great, yes GREAT credit, in spite of what you have been hearing in the news lately about the credit crunch.

Happy House Hunting.

New FHA Loan Limits have little affect on Minnesota Home Buyers

As part of President Bush's economic stimulus package, FHA loan limits will change across the country. The new loan amounts vary by state and county so in order to find out exactly how you may be affected, you can go directly to the FHA Mortgage Limit s page. As you will see, most counties FHA mortgage limit is $271,050 but a few counties like Hennepin, Anoka, Carver, Chisago, Dakota, and Isanti have FHA mortgage limits of $365,000 as they tend to have more expensive homes than some of the more rural counties. These loan limit numbers are for single family homes, there are different fha loan limits for multi-family homes. These fha loan limits were last revised on March 5th, 2008.

If you are looking for homes in Minnesota or any other state and you want to see all the homes available at the new loan limit, visit www.mlsmaps.com to see a list of all mls listings for free.

Minnesota First Time Home Buyers Lose a Big Down Payment Assistance Program

Many Minnesota first time home buyers will not be able to purchase their first home after October 1st, 2008 as the government slipped something into the recent housing bill that will kill the current seller funded down payment assistance programs that occur through non-profits like Nehemiah.

While the government is supposed to be helping the housing market and making it easier to get home financing, the did a complete 180 degree turn on the issue of down payment assistance. According to the National Association of Realtors, 45% of first time home buyers need some type of down payment assistance. If the number were only 25%, imagine what will happen to the already battered housing market on October 2nd. If roughly 25% of home buyers leave the market, home prices will go down even further and faster. Inventory of mls listings is already at levels that make it difficult to quickly sell a home or sell a home at what it was once worth. These new changes are really going to wreak havoc on the housing industry over the winter but in the end, maybe we needed to get back to the days when there was no such thing as buying a home with nothing down. Who knows? Time will tell.

One Less Provider of Minnesota Mortgages

The number of lenders providing Minnesota mortgages dropped by 1 this week as Wachovia reported a second quarter loss of $8.9 billion dollars and announced it will be exiting the wholesale mortgage business and slashing 6,350 jobs.

What this means for people looking for a Minnesota mortgage is there will be less competition for their business. The problem with fewer competitors in a free market like ours is the few remaining providers are able to start increase their mortgage rates without fear of one of many competitors coming in and offering a lower mortgage rate.

Still, the best thing to do when looking for a Minnesota mortgage or a Minneapolis mortgage is contact a Mortgage Broker as even with all the lenders closing their doors recently, brokers like Metropolitan Financial Mortgage Company have over 50 lenders they can go to when shopping for the best rate for their clients.

No Money for a Down Payment is Second Biggest Obstacle to Buying a Home

According a Harris Interactive poll, the second biggest barrier to buying a home is coming up with the down payment. Roughly 28% of those surveyed gave this as their reason for not buying a home. 28%, think about it, if HUD has there way and is able to eliminate the down payment assistance program, 28% fewer first time home buyers will be able to buy their first home next year. This translates into roughly 28% fewer sellers will have a buyer for their home so they can move up.

If you're thinking about buying your first home in the near future and you have little or no money for a down payment, let your voice be heard by visiting SupportHomeOwnership.com to drum up public support for the programs. This Web site includes a form for submitting a letter to federal and state lawmakers. Don't leave it up to the "other guys" take action and reserve your right to the American dream, homeownership.

Fortunately first time home buyers in Minnesota can still qualify for a Minnesota FHA loan and Minnesota down payment assistance.

Incidentally, the biggest barrier to buying a home in the Harris poll was high home prices.

Minnesota Mortgage Loan Landscape Is About To Change

Minnesota Mortgage Loans are about to change, again. The Feds, reacting to the Fannie Mae and Freddie Mac Crisis and the fall of IndyMac Bank, are coming out with yet another set of rules which will govern who qualifies for a Minnesota mortgage and who will not.

Ben Bernanke, the Fed Chairman and his colleagues at the Central Bank approved a plan Monday that would crack down on questionable lending practices in an effort to protect many of the riskiest "subprime" borrowers -- people with tarnished credit histories or low incomes. Here is a list of some of the proposed changes taken from an AP article today (follow link for complete article http://biz.yahoo.com/ap/080714/fed_mortgage_crisis.html);

-- bar lenders from making loans without proof of a borrower's income.

-- require lenders to make sure risky borrowers set aside money to pay for taxes and insurance.

-- restrict lenders from penalizing risky borrowers who pay loans off early. Such "prepayment" penalties are banned if the payment can change during the initial four years of the mortgage. In other cases, a penalty can't be imposed in the first two years of the mortgage.

-- prohibit lenders from making a loan without considering a borrower's ability to repay a home loan from sources other than the home's value. The borrower need not have to prove that the lender engaged in a "pattern or practice" for this to be deemed a violation. That should make it easier for borrowers to lodge a complaint.

While these are good rules, it's always sad when our government has to step in and put controls on a free market because as consumers, we don't appear to be smart enough to manage things on our own. Stay tuned as we follow these developments and how they will affect people looking for a Minnesota Mortgage.

Minnesota mortgage rate and Payment calculations

I have been getting a few requests lately for a table showing the mortgage payment per $1,000 of mortgage debt for different interest rates. The table below is for 15, 20 and 30 year mortgages with a 1/8% change between interest rates. If you have any questions about this information or you would like to use our online mortgage calculator, please visit www.firsthomeguide.com. If you would like access to millions of homes for sale and mls listings all over the country, visit www.mlsmaps.com.

Monthly mortgage payment per $1,000 of mortgage

% Rate	15 Year	20 Year	30 Year
4.625	$ 7.71	$ 6.39	$ 5.14
4.75	$ 7.78	$ 6.46	$ 5.22
4.875	$ 7.84	$ 6.53	$ 5.29
5	$ 7.91	$ 6.60	$ 5.37
5.125	$ 7.97	$ 6.67	$ 5.44
5.25	$ 8.04	$ 6.74	$ 5.52
5.375	$ 8.10	$ 6.81	$ 5.60
5.5	$ 8.17	$ 6.88	$ 5.68
5.625	$ 8.24	$ 6.95	$ 5.76
5.75	$ 8.30	$ 7.02	$ 5.84
5.875	$ 8.37	$ 7.09	$ 5.92
6	$ 8.44	$ 7.16	$ 6.00
6.125	$ 8.51	$ 7.24	$ 6.08
6.25	$ 8.57	$ 7.31	$ 6.16
6.375	$ 8.64	$ 7.38	$ 6.24
6.5	$ 8.71	$ 7.46	$ 6.32
6.625	$ 8.78	$ 7.53	$ 6.40
6.75	$ 8.85	$ 7.60	$ 6.49
6.875	$ 8.92	$ 7.68	$ 6.57
7	$ 8.99	$ 7.75	$ 6.65
7.125	$ 9.06	$ 7.83	$ 6.74
7.25	$ 9.13	$ 7.90	$ 6.82
7.375	$ 9.20	$ 7.98	$ 6.91
7.5	$ 9.27	$ 8.06	$ 6.99
7.625	$ 9.34	$ 8.13	$ 7.08
7.75	$ 9.41	$ 8.21	$ 7.16
7.875	$ 9.48	$ 8.29	$ 7.25
8	$ 9.56	$ 8.36	$ 7.34

As always, feel free to call me with any questions, Ken Horst, at 612-251-8237.

Minnesota First Time Home Buyers Flock to First Home Guide

Minnesota first time home buyers have been coming to www.firsthomeguide.com in droves lately motivated by falling home prices and low interest rates. Here is a list of some of the terms Minnesota first time homebuyers were typing into the search engines to find First Home Guide, Minnesota's premier first time home buyer resource and property search.

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First time home buyers from around the US also found www.mlsmaps.com very useful for helping them find homes and MLS listings in there local areas.

Minnesota Mortgage Rate Update for June 13th

Minnesota mortgage rates have moved up significantly over the past two weeks. Below is a day by day history of 30 year fixed Minnesota mortgage rates for the week ending Friday, June 13th.
Monday = 6.375% apr = 6.623%
Tuesday, = 6.375% apr = 6.623%
Wednesday = 6.375% apr = 6.623%
Thursday = 6.50% apr = 6.746%
Friday = 6.625% apr = 6.937%

These Minnesota mortgage rates are brought to you by Metropolitan Financial Mortgage Company, a Minnesota mortgage broker in Richfield and represent the rates from one of our mortgage lenders.

For a current Minnesota mortgage rate quote, call Ken Horst at 612-251-8237

To see all the mls listings in Minnesota and in 230 other cities in the US, visit www.mlsmaps.com

Minnesota Mortgage Brokers Numbers Dwindling

A recent article on StarTribune.com highlighted the plight of the yellow bellied Blue Jay and other rare breeds of life including the Minnesota Mortgage Broker. Acorrding to the article, the number of Minnesota mortgage brokers have dropped from 4,000 in 2007 to 1,319 today. Sightings are down for both of these but it appears that the Minnesota Mortgage Broker is still more prevalent.

Whew! Thank God for that because I am a Minnesota mortgage broker and the thought of extinction makes me nervous. After all, who else would work tirelessly to find their clients the lowest rates on mortgages or discount closing costs? Who else would be able to shop for the best rate from a list of lenders including Countrywide and Wells Fargo? Who else answers their phone what seems like 24 hours a day to answer questions from clients, Realtors, first time home buyers and other interested parties. Who else runs their business like an owner knowing they are 100% responsible for the results and making sure they have put together a team of professionals who can contribute to the goal of exceeding client expectations so as to keep their small business healthy and be able to offer mortgages at more competitive rates and costs than some of the countries biggest lenders?

So what exactly did Minnesota do for people looking for a mortgage? They made it easier for the honest, hardworking small Minnesota Mortgage Broker to be found by running out all the crooks, there by protecting the People of Minnesota from evil doers in the mortgage industry. It's funny to me how the larger percentage of Minnesota home owners and home buyers were able to sniff out and avoid these crooks without any government intervention. It's also good to know that with or without Minnesota's effort to save the people, even though they did it after the horse was out of the barn, the good people on Wall Street and investors all over the world had already taken care of a majority of the mortgage debacle by refusing to buy certain types of risky mortgages.

Thanks Minnesota and thanks to all the home owners and home buyers in Minnesota who have trusted me with their mortgage transactions over the past 6 years.

Down Payment Assistance for Minnesota First Time Home Buyers

We have had a lot of interest recently from Minnesota first time home buyers inquiring about down payment assistance programs like the Nehemiah program, so we have scheduled a free online seminar where we will explain how the down payment assistance program works and how to find out if you qualify. Simply click on the link below to register.

Down Payment Assistance Programs In Minnesota

Join us for a Webinar on May 31 Space is limited. Reserve your Webinar seat now at: https://www2.gotomeeting.com/register/453570788 Learn about Down Payment Assistance programs available to Minnesota Home Buyers Title: Down Payment Assistance Programs In Minnesota Date: Saturday, May 31, 2008 Time: 11:00 AM - 11:30 AM CDT System Requirements PC-based attendees Required: Windows® 2000, XP Home, XP Pro, 2003 Server, Vista Macintosh®-based attendees Required: Mac OS® X 10.3.9 (Panther®) or newer

More Restrictions for Nontraditional Minnesota Mortgages

It's getting even tougher to get a mortgage in Minnesota and everywhere else in the country as Freddie Mac, one of two government sponsored enterprises that buys mortgages on the secondary market, pools them, and sells them as mortgage-backed securities to investors on the open market, said as of August 8th, 2008 it will restrict financing for a number of different types of mortgages. Additionally, some of the major providers of Private Mortgage insurance including Genworth Financial, PMI Group, and MGIC will also be tightening the standards on borrowers who want mortgages and don't have 20% for a down payment, or 20% equity in their home if they are refinancing. Here is a list of just some of the loan scenarios that will be tough if not impossible to obtain;

• Cash-out refinancing
• Loans to borrowers without full documentation of income, also know as stated income or limited doc loans.
• Mortgages for some second home purchases.
• Loans for investment properties where the investor already owns at least three other rental properties.
• Mortgages to borrowers with nontraditional credit because they don't have enough traditional credit items on their credit report.
• ARMs where the mortgage will adjust within five years.

There are more restrictions coming every week from a number of different players including Freddie Mac, Fannie Mae, mortgage insurance companies and individual lenders who are changing or dropping loan programs as it becomes impossible to find buyers for these loans on the secondary market.

For more information on this topic, read Kenneth Harney at the StarTribune.com

Minnesota Mortgage Rates Update

Minnesota mortgage rates have moved up slightly over the past two weeks. Below is a day by day history of 30 year fixed Minnesota mortgage rates for the week ending Friday, April 25th.
Monday = 6.00% apr = 6.15%
Tuesday, = 6.00% apr = 6.15%
Wednesday = 6.00% apr = 6.15%
Thursday = 6.125% apr = 6.275%
Friday = 6.125% apr = 6.275%

These Minnesota mortgage rates are brought to you by Metropolitan Financial Mortgage Company, a Minnesota mortgage broker in Richfield.

For a current Minnesota mortgage rate quote, call Ken Horst at 612-251-8237

To see all the mls listings in Minnesota and in 230 other cities in the US, visit www.mlsmaps.com

Should I Escrow for Taxes and Insurance?

I received a call recently from a past client who was asking about her escrow for tax and insurance. She had been talking with a friend who suggested to her that she try to close the escrow account and pay her property taxes and hazard insurance separately on their own. Her friends biggest reason for this was her belief that the lender is earning interest on your money, instead of you. Here are a few of the reasons why I suggested that she was better off escrowing taxes and insurance;

1. Most lenders will charge a slightly (.125 - .25%) higher interest rate if you do not escrow. Some lenders will allow you to wave this if you have a large enough down payment, at least 20% down.

2. Your money earns interest in your escrow account for you not the lender. Granted it is not a lot of interest, but it is interest earnings in the right direction.

3. You'll never have to worry about some unexpected expense, medical, major auto, etc., wiping out your tax and insurance reserves and causing a delinquent property tax situation.

One of the big arguments against escrowing is that people feel they can invest those dollars and earn a higher rate of return than the lender. Unless you are a seasoned investor, this rarely plays out and the higher the interest rate you are trying to earn with your money, the greater the risk. In addition to that fact, we are not talking about a lot of money to invest for most of us as your escrow balance is capped at only 3 months worth of property taxes and 3 months worth of interest. Your taxes are paid every 6 months, which generally isn't enough time to make a killing in the stock market and your property insurance is paid every year but is usually under $1000, depending upon where you live and the replacement cost of your home, not a lot of money for your stock broker to play with.

So the bottom line is this, I recommend escrowing for most of my clients and I have always escrowed my own taxes and insurance. At a three month reserve cap, we are generally not talking about a lot of money and the amount of time you will need to manage that money and try to earn a better rate of return may not be worth the return, especially if your investment idea tanks and you end up losing your reserves in the market.

Nehemiah, FHA, and Minnesota Home Buyers

Minnesota Home Buyers, primarily those with moderate to low income, got a big break recently as a federal judge ruled that HUD did not adequately explained their decision to reverse a policy allowing seller-funded down-payment assistance on FHA-backed loans.

What this means for home buyers nationwide is that 100% home financing is still available through a combination of the FHA and down payment assistance (DPA) companies like Nehemiah. This was seen as a huge victory for home buyers but one that may not last forever as it appears as though HUD is not giving up on the rule change and wants to replace DPA programs with risk-based pricing, which HUD says will lower or eliminate down-payment requirements for some borrowers.

Here are some of the features of the Nehemiah program:

Gift funds up to 6% of the final contract sales towards your downpayment and/or closing costs
Gift funds for both first time and repeat homebuyers
(Nehemiah charges a nominal processing fee that may be paid by the seller, homebuyer, or lender.)
Gift funds for both new construction and resale homes
No repayment of gift money
No income or asset limits
No geographical restrictions

If you are a qualified homebuyer using an eligible loan program, such as an FHA loan, you may be able to move into your new home with zero cash out of pocket! The Nehemiah Program can help you become a homeowner!

For more information or to see if you qualify, call Ken Horst at 612-251-8237

Minnesota Mortgage Rate Update

Starting next Friday, March 7th, MN Mortgage Blog will be posting the "Minnesota Mortgage Rate Weekly Review". This will allow Minnesota home buyers and owners to see for themselves just how wildly interest rates have been fluctuating lately, and give you a better understanding of the rate trends so you can better determine the best time to lock in your rate whether for a refinance or to purchase a home in Minnesota.

Ever Since the 30 year mortgage rate hit 5.00% for about an hour on January 23rd, I've had a ton of people call and email me asking me to keep an eye out for a certain rate that they are hoping and waiting for.

Starting next Friday we will also have a way for you to subscribe for our "MN Rate Watch". It's free and it's the best way to make sure you don't miss out on the next big rate drop as they seem to coming and going a lot faster these days. Stay Tuned!

Minnesota Mortgage rates closed Friday, February 29th as follows;

6.0% for a 30 year fixed mortgage (apr 6.43%)
5.25% for a 15 year fixed mortgage (apr 5.71%)

These rates are based on conforming standards regarding credit score, debt to income and loan to value ratios.

Call Ken Horst at Metropolitan Financial Mortgage Company at 612-251-8237 for more information or to get started.

The Death of 100% Financing in Minnesota

I attended a meeting today with an account rep from one of the biggest lenders in the country. She told us that in the very near future we can pretty much forget about 100% financing in Minnesota for a number of reasons;

1. These are some of the loans that investors are currently losing their butts on.
2. There are no longer any investors who want to buy these mortgages.
3. The mortgage insurance companies have decided not to write mortgage insurance over 95% in Minnesota.
4. The market for second mortgages up to 100% died awhile back as lenders who wrote these loans have really taken a beating lately with all the foreclosures and short sales.

Over the past few days it has been a mad scramble by Minnesota real estate agents, loan officers, lenders and everyone else involved in the transaction to quickly close as many 100% loans as we could before they are gone for good. The next few months will be very challenging for Realtors, Minnesota mortgage brokers and home buyers as we search for ways to get people into homes who have little or no money for a down payment.

Our only saving grace may be FHA financing where borrowers can still qualify for 97% financing and may also qualify for a down payment assistance (DPA) program of another 3% bringing the total financing to 100%. If you are thinking about buying a home this year and you have little or no money for a down payment, you'll want to move fast as this last hold out of 100% financing may not last for long.

Also, keep in mind that there are still plenty of great homes for sale in the Minneapolis metro area. You can see about 20,000+ of them at www.mnonlinemls.com

Declining markets in Minnesota

Recently I had a loan for a purchase pre-approved for a Minnesota mortgage by Fannie Mae for 100% financing. I called my lender rep and asked about "declining markets" and whether the county and city where my borrowers home was located was in a declining market. He said to the best of his knowledge. it was not. When we got our approval and moved on to the next step. Then the lender said that in fact the home was in a declining market and said we must cut our LTV (loan-to-value) to 95% and since it appeared that our borrower didn't have 5% funds sourced and seasoned, they denied the loan.

Get this, the appraisal, a rock solid appraisal I might add, came in at $219,000. The purchase agreement was for $198,000, approximately 10% below the appraised value. I asked my lender rep, "does declining markets refer to appraised value or loan to value?" He said he didn't know. I said, "well think about it, if the tag "declining markets" simply says that home prices in this area are going down and we are going to knock 5% out of the deal to cover our butt, than if you have a buyer who is buying a foreclosure or short sale in the area, and there is a solid appraisal which shows the value at 10% or greater than purchase price, wouldn't it make sense to allow 100% financing because the lender still has covered their butt and then some. The lender rep agreed that it made sense but wasn't sure if that is how it would go down.

Guess what? If lenders cry "declining market" all across the country and don't acknowledge the purchase of foreclosures and short sales well below the market to go through at 100% financing, we are all in for a rude awakening, especially the feds and our president because if you think the housing market and our economy is bad now, just wait until the few remaining buyers with good credit, good income and no money for a down payment get kicked to the curb.

In the end, I got the loan done at 100% but the future of 100% is not looking good and if it should go by the way side, get ready for another tough year in real estate.

How do I remove mortgage Insurance?

Removing mortgage insurance is something that can happen when the loan-to-value of your home mortgage reaches 80% or less. This happens as a result of two things, paying down principle and your house appreciating.

If you get to the point where you think your mortgage balance is less than 80% of the value of your home, you must call your mortgage company and ask them to remove your mortgage insurance. Mots companies will run an AVM or automated valuation model to determine the value of your home. AVMs are generally accurate but not always, so if the value comes in low and you get denied, you still have the option of ordering an appraisal.

With most if not all lenders you still have the right to hire an appraiser and get a professional assessment of value. If your appraiser comes back with the right value, you can submit that to your lender and ask them to remove the MI. They still reserve the right to review the appraisal. If after review your lender agrees with the appraised value, they will remove your mortgage insurance.

In my personal experience, my appraisal came in a few thousand low and as a result I spent $300 for nothing. With hindsight I would have told the appraiser what I needed for value and asked for a comp check. This is where they give you a good estimate of value based on recent sales of comparable homes in your area. If they come back with what you need, you order a full appraisal and send it to your lender. If the comp check comes up short, you don't order a full appraisal saving yourself a few hundred dollars.

Call your loan officer and ask them to do this for you as most mortgage loan officers will probably be using the same appraiser they used for your last appraisal and be able to get you a comp check at no charge.

Mortgage Insurance Calculator

Mortgage insurance has long been avoided with the 80/20 mortgage of late. These days it is getting harder and harder to find a lender that will offer a second mortgage up to 100% CLTV (combined loan to value) because in light of all the foreclosures, the companies holding the second mortgages are losing the most money.

One question that most loan officers struggle with when working with 100% financing is "What will my mortgage insurance payment be per month?" Worse yet, sometimes they forget to mention it as most of us loan officers have been writing 80/20 loans for the past five years.

To help loan officers and borrowers I have included a link in this blog for a mortgage insurance calculator. When loan officers and/or borrowers use this, everyone knows exactly what the MI will be.

To calculate your PMI ( private mortgage insurance ) payment follow this link, mortgage insurance calculator

Buying a foreclosure from Countrywide requires Countrywide loan approval

I'm not perfectly sure if it is true or not but I heard this week from a real estate agent that if anyone wants to make an offer on a foreclosure that is owned by Countrywide, they will need to be pre-approved by Countrywide for the mortgage.

What a great idea for Countrywide. This would allow them to maintain their gigantic servicing business by simply switching out non-performing borrowers with better qualified lower risk borrowers.

Fortunately Countrywide has a very good wholesale division which allows independent mortgage brokers like me to offer home buyers even lower rates than Countrywide itself.

If you are shopping for foreclosures in Minnesota and come across something you like that is owned by Countrywide, please give me a call, Ken Horst at 612-251-8237. I'll be able to get you approved quickly and at a very competitive rate.

Minnesota Mortgage Rates

Minnesota mortgage rates have continued to go down over the past few days and are now at;

5.5% for a 30 year fixed mortgage
4.875% for a 15 year fixed mortgage

On a $250,000 your payment would be $1,419.47 fixed for 30 years.

Call Ken Horst at Metropolitan Financial Mortgage Company at 612-251-8237 for more information or to get started.

List of FHA approved condo projects

OK, after a little more research and the help of a great Lakeville Real Estate Agent, I can now offer you this link as well. It is a link to the list of FHA approved condominium projects on the HUD site for all states. I highly recommend you check this list before you look at or make an offer on any condos if you are planning to use FHA financing. Remember you can always try a spot approval if your property is not on this list and/or be sure to check with the HOA Home owners Association to see if the approval is already in process. Good Luck!!

FHA Approved condominium projects

FHA Loans For Condos in Non-FHA Approved Projects

I'm in the middle of trying to get a loan done for a very qualified FHA candidate who is looking at condominiums. We have to go FHA as the borrower does not qualify for a conforming product. The home buyer has found a condo they are interested in but we have come to find out that the condo project is not already on the FHA approved project list.

Fortunately there is still a way to get these types of units done through the FHA. It's called "spot approval" and it is done on a unit by unit basis. The bottom line is the Home Owners Association must complete a Spot Approval questionnaire and if that comes back with all the right answers, you have a pretty good chance of getting the loan to go through. I have copied and pasted the guidelines and questions required for spot approval.

U. S. Department of Housing and Urban Development

Washington, D.C. 20410-8000

August 1, 1996

MORTGAGEE LETTER 96-41

TO:  ALL APPROVED MORTGAGEES

SUBJECT:  Single Family Loan Production - Condominium Units in

            Non-FHA Approved Projects; Mortgage Insurance

     On May 29, 1996, in 61 FR 26982, the Department issued a

final rule in the Federal Register, permitting the insurance of

mortgages on individual units in condominium projects that have

not been previously approved by the Department.  That final rule

established a "spot loan" procedure to provide home mortgage

insurance on individual units in condominium projects where there

is little likelihood that the project's homeowners association

would make the requisite changes to its legal documents (usually

to benefit one association member) to obtain FHA approval.  This

Mortgagee Letter provides further guidance on the use of these

spot loans.

     The Department's requirements for condominium projects are

set forth in 24 CFR 234.26 of the Code of Federal Regulations.

The spot loan provisions add a sub-section (i) to this section

and lists specific criteria that must be met.  The new spot loan

regulations also add a new section, 24 CFR 206.51, to the Home

Equity Conversion Mortgage (HECM) regulations.  The HECM program

incorporates by reference the project requirements set forth in

24 CFR 234.26(i).  Therefore, spot loans may be used under both

the Department's Section 234(c) and HECM programs.  Cooperatives

and planned unit developments (PUDS) are not eligible for spot

loans.

     The following requirements must be satisfied before a spot

loan is endorsed:

         The condominium project must be complete.  There should

     be no ongoing or anticipated addition of any units, common

     elements, and/or facilities.

         Control of the common areas of the project must have

been

     turned over to the unit owners association for at least one

     year.

                               -2-

         The owners association must provide evidence that the

     project has the appropriate hazard, liability and flood

     insurance.

         Individual units in the project must be owned in fee

     simple or be an eligible leasehold interest.  The project's

     legal documents must provide for undivided ownership of

     common areas by unit owners.  By virtue of this ownership,

     unit owners must have the right to use all facilities and

     unrestricted common elements.

         The project's documents should not place any legal

     restrictions on conveyance.  Any provisions that seek to

     limit the free transferability of title is generally

     unacceptable.  Such restrictions include rights of first

     refusal and restrictive covenants.  Certain governmental or

     nonprofit programs designed to assist in the purchase or

     rental of low-or moderate-income housing are exempted from

     the restrictions on conveyance provisions.  The Department's

     policy on the free assumability and transferability of

     property is set forth in 24 CFR 234.66.

         At least 90% of the units in the project must have been

     sold.

         At least 51% of the units in the project must be owner-

     occupied.

         No single entity may own more than 10% of the units in a

     project.  "Entity" includes an individual partnership,

     corporation, limited liability company, limited liability

     partnership, joint venture, investor group or other natural

     or legal person qualified to hold an interest in real

     property.  The 10% restriction does not apply when the

     ownership of less than three units would disqualify an

     otherwise eligible project.

         The Department recognized that the 10% cap on the number

of

     units that may secure FHA insured mortgages in a given

     project can place a small regime at a disadvantage, since

     only a few units will invoke the limit. Accordingly, a two-

     tiered system was established.  For condominium projects

     having more than 30 units, no more than 10% of the units may

     have FHA insured loans at any given time.  Condominium

     projects consisting of 30 units or less, can have up to 20%

     of the units encumbered by FHA insured mortgages under the

     spot loan rule.

                               -3-

     Mortgage lenders underwriting spot loans must perform

sufficient investigation and analysis to certify that the

condominium project satisfies the eligibility criteria.  Under

the regulations, mortgage lenders may employ a wide range

of approaches to ascertain compliance with the spot loan

requirements.  Project developers, appraisers, owners,

associations, management companies and real estate brokers are

among the sources of information lenders may use.  To the extent

that the Department has information that can be of assistance, it

will provide mortgagees with that information.  However, it

remains the lender's responsibility to ensure the accuracy of the

information it relies upon in making its certification.

     Attachment 1 is a suggested checklist lenders may wish to

use in their underwriting analyses.  It reflects some key

considerations in assessing the eligibility of a project for spot

loans.

     The standard Direct Endorsement Underwriter Certifications

applicable to condominiums under standard loan programs and the

HECM program are not sufficient for spot loan applications.  Some

modification is needed.  Accordingly, the following certification

is added to the list of Direct Endorsement (DE) certifications in

Appendix 3 of Handbook 4000.4, Rev. 1, Ch. 1 and to the list of

Underwriter Certification (HECM) in Appendix 3A of Mortgagee

Letter 95-54 :

     ( ) The property is in a project that has not received

     prior approval by HUD but the requirements of 26 CFR

     234.26(i) are met.

     This certification requirement will be in effect for all

mortgages executed on or after 30 days from the date of this

Mortgagee Letter.  A similar statement may be used until the

requirement for a certification becomes effective.

     Local HUD Offices and Regional Processing Centers will

conduct random reviews of mortgage loans insured under the spot

loan program.  Mortgage Lenders demonstrating a pattern of abuse

will be subject to those enforcement mechanisms and sanctions

governing FHA mortgage insurance activity.

     The spot loan program is designed to relieve a burden on

homebuyers in successfully-operating, non-approved condominium

projects where FHA involvement is limited; it must not be used to

circumvent the general requirement that a condominium project be

approved before a mortgage on any unit in that project can be

endorsed for insurance.  As previously noted, the approval

requirements for condominium projects are found in 24 CFR 234.26,

(a)-(h).  Additional requirements are set forth in Chapter 11,

HUD Handbook 4150.1 Rev 1, entitled "Valuation Analysis for Home

                               -4-

Mortgage Insurance" and reiterated in HUD Handbook 4265.1 ,

entitled "Home Mortgage Insurance - Condominium Units - Section

234(c)".

     Questions regarding spot loans and condominium project

approvals should be directed to the Single Family Division of the

local HUD Office.

Sincerely yours,

Nicolas P. Retsinas

Assistant Secretary for Housing-

Federal Housing Commissioner

Attachment

        SUGGESTED CHECK LIST FOR SPOT LOAN APPROVALS

_______ 1.  The legal documents of the homeowners association

do not contain a right of first refusal or restrictive covenant.

_______ 2.  The unit is part of a condominium regime that

provides for common and undivided ownership of common areas by

unit owners.

_______ 3.  The project, including the common elements, and those

of any Master Association, are complete, and the project is not

subject to additional phasing or annexation.

______  4.  (a)  There are no special assessments pending.

______      (b)  No legal action is pending against the

condominium association, or its officers or directors.

______  5.  The common areas have been under the control of the

homeowners association for at least one year.

______  6.  At least 90 percent of the total units in the project

have been sold.  Verified by _________________________.

______  7.  At least 51 percent of the total units in the project

are owner-occupied.  Verified by ______________________.

______  8.  There are no adverse environmental factors affecting

the project as a whole or individual units .

______  9.  No single entity owns more than 10 percent of the

total units in the project.  Verified by ______________________.

______ 10.  The units in the project are owned in fee simple or

the units are held under a leasehold acceptable to FHA.

Leasehold in file.

______ 11.  The owners association has adequate common area

insurance coverage.  General liability, replacement coverage,

etc. reflects the character, amenities and risks of the

particular development.  Flood and other insurances carried, when

applicable.

______ 12.  General maintenance level of common elements is

acceptable and there is no deferred maintenance, based on the

comments by the Appraiser and/or the pictures.

______ 13.  The owners association has a reserve plan and a

reserve fund, separate from the operating account, that is

adequate to prevent deferred maintenance.  The amount of the fund

is $_________ as of __________.

                               -2-

_______14.  (a)  For projects consisting of over 30 units, no

more than 10 percent of the total units are encumbered by FHA

insured mortgages.  Verified by ___________________.

_______     (b)  For projects consisting of 30 units or less, no

more than 20 percent of the total units are encumbered by FHA

insured mortgages.  Verified by _______________.

____________________________________     ________________________

       (Mortgagee)                           (Reviewer)

____________________________________     ________________________

       (Address)ss)                             (Title)

____________________________________     ________________________

                                             (Date)

__________________________________        _______________________

  (Condominium Project Name)                 (FHA case number)

__________________________________

  (Address)

__________________________________

_______________

How soon can I refinance if I just purchased my home?

This is another question that has been coming up more lately as people are buying homes and foreclosures at deeply discounted prices and want to know how fast they can tap into their equity and/or get rid of any mortgage insurance if the loan to value when they purchased was over 80%.

Recently I came across another Minnesota mortgage lender who offers a perfect solution to this problem. Historically most lenders would only allow a borrower to refinance a home they recently purchased by using the purchase price as the value for the new loan. After 12 months (the traditional seasoning requirements) the homeowner can get a new appraisal and tap into their equity and/or remove any PMI (private mortgage insurance). I can now offer Minnesota mortgage clients the ability to refinance their newly purchased homes right after the purchase using a new appraisal. There are a number of situations where this would make perfect sense.

One scenario is if you bought a deeply discounted home or foreclosure with little or no money down. These 100% mortgages are still readily available in the Minneapolis metro through Fannie Mae, Freddie Mac and FHA programs. For example you buy a foreclosed home with a purchase price of $124,000 with no money down so your loan to value is 100%. The home however appraises at $180,000. Your equity position based on the appraisal is 68% but because of how lenders use purchase price to determine loan to value, you end up with a slightly higher interest rate and having to pay mortgage insurance.

With our "no seasoning" requirements loan, you can now refinance that home within weeks of the purchase as either a rate and term, which means you finance the same amount as before with no cash out, or you could do a "cash out" refinance to tap into your instant equity. Either way, as long as you keep your new loan to value under 80%, you will benefit from a lower interest rate and no mortgage insurance.

Some things to keep in mind; you will have a closing costs again so you should go back to your original mortgage broker and ask them to do the new loan with no origination fee as they recently made a fair amount of money from your recent purchase.

The most important point for mortgage originators is to remember that many lenders will charge back your fees if your client refinances within a certain period of time, usually within 3-6 months. The bottom line is to work with your loan officer and plan for this scenario in the event that you are able to buy a home at an unbelievably low price and know you will want to refinance early to capitalize on your equity or lower your interest rate.

This option will be much more popular in the coming months as more homes go into foreclosure and banks are forced to lower prices even more because of the glut of homes on the market.

Can I refinance my home if it was recently for sale?

With the tough housing market we are currently facing, many home sellers have decided to take their home off the market in hopes that they can put it back on the market when things have turned around. One of the questions I have been getting more and more lately is, "can I refinance my home if it was listed for sale recently?"

There are a couple of different answers to this question as the answer depends on what you are trying to accomplish. If you just want to do a "rate and term" refinance, which allows you to roll in your closing costs but doesn't give you any cash out, the answer is yes. The best news is that now through one of our lenders, you can do this only one day after your home has been taken off the MLS (multiple listing service).

There are two main benefits to doing this, one, if you can get a lower interest rate, either fixed or adjustable if you still plan to sell your home within the next three years, you can lower your monthly payments. The second benefit is that with a refinance, depending on when you close, you won't have to make your mortgage payment for two months. While there are those who would say the benefits don't out weigh the costs (closing costs) depending upon the home owners situation, it may in fact make perfect sense.

Imagine if you have lowered the price on your home multiple times while it was on the market and have realized that in this market your home is currently worth 5-10% less than what you originally listed it for. If by waiting 1-3 years to put your home back on the market you are able to regain some if not all of that depreciation, your closing costs are more than covered in that short period of time and you got the benefit of lower payments during the waiting period. In addition, the two month skip in mortgage payment could be critical to home owners who need that extra money to get caught up, or to make improvements to their home to make it more saleable in the future.

The other situation that people are asking about is can they refinance their home after it's been on the market and take some cash out. The answer is yes but for most lenders, they will have to wait until their home has been off the market for at least 90 days. Again, while not all lenders offer this mortgage option, as a Minnesota mortgage broker we have at least one lender who is promoting it especially in light of the current housing market.