It seems any banks that are still doing home equity lines of credit (also known as a HELOC) have limited them to an 80% combined loan-to-value (LTV). This means that the existing 1st trust mortgage and any equity line cannot exceed 80% of the current appraised value. For example: Read the rest of this entry »
It used to be simple to get an FHA condo loan. Lenders could do an FHA “Spot Condo Approval”, which meant that the condo did not need to be on the FHA Approved Condo List, and all we lenders needed to do was verify that the condo met certain FHA requirements (51% owner occupancy, no litigation against the condo, no more than 10% of the unit owners behind in their condo fees, etc). Now the condo approval process is more centralized, and more complicated. Read the rest of this entry »
Getting a condo loan approved seems to get harder and harder each day. Below are the loan approval conditions I got on a recent loan submission for a condo purchase:
1. Buyer to get 20% HO6 dwelling coverage.
2. Statement from the property management company about the cleaning services in the condo’s budget. What type of cleaning services are they?
3. Statement from the appraiser on whether having no parking in the project has an effect on the value. Read the rest of this entry »
Has anyone else noticed that buying new investment real estate does not cash flow? At today’s prices, which are likely lower than in the last several years, you still seem unable to find real estate that can turn a profit as a rental property. I wonder why that is? Read the rest of this entry »
An HO-6 policy is the form used for a condominium insurance policy. This condo policy will provide for coverage on the interior walls, interior upgrades, and for personal property held within the dwelling.
How does this apply to mortgage finance? In 24 years of mortgage banking, I have never even heard of HO6 insurance. And that is because when underwriting a condo loan, the banks only cared to see that the dwelling was insured in case of damage. And in a condo, part of condo fees go towards the master umbrella policy, so the unit owner usually does not concern himself with getting dwelling coverage, because the master policy covers the reconstruction of their unit. But now, banks have new HO6 rules. This changed in the middle of 2009, and I have done 30-40 condo loans since then, and am just finding out now! Read the rest of this entry »
Interest rates remain low, and have been low, for years it seems like. Although a consumer may complain about getting 5.625% instead of 4.875%, rates have been in a very tight range for quite a long time. We have not had a rate with a ‘6′ in front of it for years. And I can remember when 6% was thought to be a very low rate!
Of course, the whole discussion of rates has to incorporate the price of what one is financing. Read the rest of this entry »
The statement that all real estate is local is shown to be true by taking a look at the Washington DC real estate market. This is the market I work the most in mortgage business, and I see the data first hand. Real estate prices seem to be holding up except for a few pockets in some neighborhoods on the edge. Condo sales, as an example, are way up, a 34% increase for 2009! Read the rest of this entry »
This blog post will definitely be educational, and does have a specific topic. However, it will end up sounding like more of a rant than anything! The topic for today’s blog post is a loan program called the “Refinance Plus.”
The Refinance Plus allows people to refinance who have less equity than when they bought the home. There are numerous guidelines that I will not bore you with, as I want to focus my rant/blog on one specific area of this loan program. Read the rest of this entry »
When you decide to sell your home you usually think you have a fairly good idea of what its worth, after all, you live in the neighborhood! Most of us schedule appointments with three local listing agents who we know, or we have been referred to, or maybe we have been getting their marketing material in the mail. Usually each Realtor will recommend a different sales price. Sometimes those prices are close together, but usually there is one or more Realtors who give you a much higher number, that excites you, and seems to agree with what you thought your place was worth. But, if this is the case, how is it that most homes seem to sit on the market for a long time, and end up getting the price dropped one or many times? Is it just due to a slow market? But even in a slow market won’t just about anything sell if its priced right? The problem is most of us are convinced our house is worth more than all of our neighbors, for varied reasons. Read the rest of this entry »
Happy new year to all! I want to close out the year 2009 with a few short thoughts and favorite quotes from people far smarter than me:
1. Never act on emotion, unless love is involved.
2. Get information from more than one source, and consider the source.
3. Buy a house as if you will live there a long time, you just may.
4. Big government has never solved any problem, big government only creates problems. Before the Civil War government in America was the highly decentralized, limited government established by the founding fathers. The Civil War (and further the New Deal) created the highly centralized state that America labors under today. The purpose of government was transformed from the defense of the individual, to the quest for an empire. Read the rest of this entry »