Where are the buyers!?

July 17, 2018

Mortgage Market Review, as of 07.17.18

Today Fed Chairman Jerome Powell gave his semi-annual testimony to the Senate Banking Committee.  Reading from pre-prepared notes he believes the best path is for further Fed Rate Hikes.  That could be 1 in September and maybe 1 more in December? He spoke of low unemployment and the economy growing at a solid pace.  Let’s agree that the Fed moving their rates up caused our mortgage rates to go up – but it was not a straight line, it was gradual and are still historically low.  I don’t believe rates going up is the reason for the market slow down we are having, well, not the main reason.

 

So Where are the Buyers?

Today I took a look at Realtor.com and checked-out listings in my area. Is it me or does there seem to be a large amount of pre-existing homes near the $600k mark? Even decent listings at $450/500k mark appear to be sitting. What’s driving this? Are there just less buyers? Are builders attracting all the buyers with their “no updates required” homes? Have Sellers priced their existing homes too high for the market? Or, were the last few years of activity really driven by the corporate relocations into DFW–essentially a blip?

I’d love to know because home ownership is still affordable with rates sitting under 5% which is in the historically low range, big time. Let me know your thoughts!

What’s the “Slow Down” ?

-Less Buyers

-New Builds Preferred

-Existing Home Pricing

-Slowing Economy

-Interest Rates

Geoffrey Davis

Frisco Mortgage Loan Officer

NMLS #206192

geoffrey.davis@Movement.com

Cell: 214-529-9622

6801 Gaylord Parkway #202

Frisco, TX 75034

 

      


Do you pay your Mortgage??

July 10, 2018

Mortgage Market Review, as of 07.10.18

How closely do you follow our National Delinquency Rates on mortgage loans?  Well I think if we did, we would have a sense of pride – as they are way low! Real-estate to me is a partnership; A Realtor finding the client the right priced home, the Frisco Mortgage Guy, me, finding them the right loan and our clients staying employed and making their mortgage payments! The Trinity! Are you seeing that with your clients, good job stability, even changing jobs before they have the next lined up?  I am and that tells me our employment confidence is up there!

 

My Tenants Need a House…

My tenants have been looking for a house in Frisco and just missed-out on one they really liked in Shaddock Creek. While they are working with a Realtor from their Toyota relocation, I’m hoping these qualified buyers could be a fit for one of your upcoming listings. They can close in 30 days and have all their financing in order…they’re ready to buy, no home to sell and cash in the bank!!

Here’s what they’re looking for….

*At least 4 bedrooms

*3-Car Garage

*Pool

*Small play area in backyard for their little ones for a playhouse, sandbox

*Ideally, covered area in backyard so they can watch kids swim without roasting in sun

*At least partially updated (e.g., no wallpaper, no original carpet if 15+ years old, dated colors)

*$525-675k range

Please let me know what you have coming that I might share with them!

Thanks, and have a great week!!!

p.s. Speaking of rentals, a friend has one available in the Addison area, $1400 a month and pet friendly, here is her link: https://www.trulia.com/p/tx/dallas/5626-preston-oaks-rd-45c-dallas-tx-75254–2066635568

Geoffrey Davis

Frisco Mortgage Loan Officer

NMLS #206192

geoffrey.davis@Movement.com

Cell: 214-529-9622

6801 Gaylord Parkway #202

Frisco, TX 75034

 

      


PMI vs MLI?

July 3, 2018

Mortgage Market Review, as of 07.03.18 Our Mortgage rate view for today and this week is of a floating stance.  Below is a chart I follow and what it tells you is there were no huge spikes in our mortgage market since my last writing.  Steady as she goes!  Granted, as you have read posts from me before, that could change in an instant, like yesterday 3 Stacks Smoke & Tap House was open, and yet today they closed.  Things happen – call on me for that update!  Confusing Private Mortgage Insurance (PMI) with Mortgage Life Insurance   A good friend of my passed away this week, he was my age and had heart complications. It brought into sharp perspective the importance of understanding what kind of situation your beneficiaries would be in should something happen. I’ve seen many folks confuse Private Mortgage Insurance (PMI) with insurance that pays off the loan if the borrower passes (Mortgage Life Insurance). PMI is protection for the lender on loans with less than 20% down should they need to foreclose–not protection for the borrower. You’ve probably heard or seen this, but I wanted to make sure you have a clear understanding of each. Private Mortgage Insurance=Protection for LenderSeveral clients have lost loved ones and have had to work through all the financial components–including the mortgage. I’ve seen misconceptions where folks thought the Private Mortgage Insurance (PMI) was also a policy to pay-off the loan if something happened to the borrower. This is absolutely not the case. The PMI protects the lender should you not be to pay and go into foreclosure. Mortgage Life Insurance=Protection for BorrowerMortgage Life Insurance is centered around paying off the mortgage if something happens to the borrower. The upside of this product is that many policies also include provisions to pay-off the loan if the borrower was no longer able to work (e.g., permanently disabled, terminally ill). With a term Life Insurance policy, the beneficiaries don’t see a dime until the borrower passes and requires medical information/testing upfront. The downside to a Mortgage Life policy is that they tend to be more expensive and are less of a value as your loan principal is paid down. I am looking for referrals for reputable Mortgage Life agents to add to my team roster, so I can help my clients explore options. For years, Term Life Insurance has been my go-to recommendation. As I’ve researched Mortgage Life Insurance, it’s clear to me that these policies could be incredibly beneficial to certain clients who don’t want to pursue term life insurance (e.g., hassle with medical records/testing) but still want to protect their loved ones. So, let me know you who you recommend!! Geoffrey DavisFrisco Mortgage Loan OfficerNMLS #206192geoffrey.davis@Movement.comCell: 214-529-96226801 Gaylord Parkway #202Frisco, TX 75034       


Why are mortgage people moving?

June 26, 2018

Why Loan Officers are Changing Companies

 

A Realtor friend asked me why she keeps seeing all these Loan Officers (LOs) change companies. I see two primary drivers at play here: Volume and Market Compression.

1. Lower Volumes=Time to Look

The market is slower this year than it has been the last couple summers so LOs have enough time to look at other companies vs. just trying to work-through sheer volume. It’s time to validate that they’re still at the best company to serve their needs and that of their clients. So, bring on the free lunches and offers over coffee!

2. Market Compression=Slimming the Pack

Rates will continue to rise over the next 24 months, and when that happens, every LO wants to be in the strongest position to deliver on clients’ needs. This means everything from rate, ease of application, smooth internal processes and leadership to weather any real estate slump. While the U.S. Economy is strong, at some point “Winter is Coming” and every LO wants to be ready.

I view all this activity as completely normal given the market conditions. With the mortgage market continuing to change, I think it’s reasonable for LOs to make sure they’re in the best position to change with it.

Geoffrey Davis

Mortgage Loan Officer

NMLS #206192

geoffrey.davis@Movement.com

Cell: 214-529-9622

6801 Gaylord Parkway #202

Frisco, TX 75034


VA Loan Misconceptions!

May 24, 2018

sunset-flag-america-fields

As we near Memorial Day, I often think about our Veterans and their service to our country and those who gave their ultimate sacrifice. Most of you are familiar with the VA Loan product that is available to active/retired military and to others who serve (e.g., Reserves). Many sellers avoid accepting real estate contracts from buyers with VA Loans because the belief it will take longer, and the appraisal process will be tougher. Let’s explore that a bit more….

Belief #1: The Process Takes Longer

When I do VA Loans, the process takes the same amount of time as a conventional loan. National “Big Box” banks seem to take longer from what I hear…typically 45-60 days to close. I’m not sure why it takes them so long as the process is almost identical to conventional loans and VA guidelines are well defined. Long ago, before the days of credit modeling and data analysis, things might have taken longer but not in today’s data driven marketplace. Net-Net: The process doesn’t take any longer if you use the right lender. I close mine in 20 to 25 days.

Belief #2:  The Appraisal Process is Tougher

From an outsider view, the appraisal guidelines do feel more stringent but not unreasonably so. What I find to be more of an issue is that once someone is approved as a VA Appraiser–it’s feels like a lifetime membership. This is very different from a more traditional bank panel where lenders actively monitor the quality of appraisers and their work.Net-Net: The issues with the appraisals are more centered getting the right appraiser and less about the appraisal standards.

Belief #3: VA Loans have more Seller Fees

There are a couple of specific things that pop up (e.g., pest inspection for things like termites, notary & recording fees) that are VA loan related but these tend to fairly small (Total of $100-300) in the scheme of things. All closing costs are buyer/seller negotiated just like in a conventional loan. Net-Net: The fees are slightly more than conventional loans, but we’re talking about a couple hundred dollars…not a couple thousand.

Have a safe Memorial weekend, enjoy the freedoms we have been blessed with!

Geoffrey Davis

Mortgage Loan Officer

NMLS #206192

geoffrey.davis@Movement.com

Cell: 214-529-9622

6801 Gaylord Parkway #202

Frisco, TX 75034

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Using Alimony/Child Support as Income

May 23, 2018

When you are looking at leveraging Alimony or Child Support as a source of income there are several thresholds clients will need to meet. First, they will need to provide a copy of the Divorce Decree (or any other legal document) outlining the payment structure. Next, they will be asked to provide proof that they have received at least six months of the full Alimony/Child Support payments. There can be no partial payments as this makes the income source “unstable.”  The above is the standard for a Conventional and Jumbo style mortgage loan, it is only 3 months received doing the loan as an FHA.

Finally, any support that is calculated as part of Income will need to continue for at least three years from the time of the mortgage application. This means that if a client has two children, one who is 12 yrs. old and another who is 17 yrs. old, then only the Child Support for the 12-yr. old can be counted as income if the Divorce Decree states support will end when children reach 18 years of age.

Geoffrey Davis

Mortgage Loan Officer

NMLS #206192

geoffrey.davis@Movement.com

Cell: 214-529-9622

6801 Gaylord Parkway #202

Frisco, TX 75034


Equity or Cash?

April 4, 2018

Use Cash-Out, HELOC Loans vs Bridge Loans?

 

 

Let’s face it. One of the worst parts of buying a new home is that clients often need to sell their existing home first. It’s a beating for them to keep it perpetually staged and makes their offer less desirable because they’ll have a contingency. Realtors and clients often ask me about Bridge Loans. I have a love/hate relationship with them because they’re risky which is exactly why so few lenders offer the product. They also come at a high rate and cost that then needs to be refinanced out of when that home sells, move costs. For the right client, with sound financial judgment in a stable economy, they can be a useful tool. If there’s a speed bump along the road, however, they can turn into a nightmare.

If you have clients who have been looking to buy a new home before their present one sells, they may want to consider pulling out equity. With the recent growth here in North DFW, homeowners often have a chunk of equity sitting there that could act as their next down payment. Leveraging a Home Equity Line of Credit (HELOC) and Cash-Out Loans, buyers can pull out any equity in their home as long as 20% remains unused. Here’s how they work:

Cash-Out Refinance

This is just like a regular refinance in that your client is starting a new loan with new terms. The difference is that you’re pulling out available equity up to the 80% mark. Loans today do not have Pre-payment penalties, but Fannie Mae does have what is called a buy back if the loan “pays off” too early. That has no impact on the consumer, but it is a good conversation for the lender and customer to have.

Home Equity Loan

Commonly referred to as a HELOC, this loan product allows buyers to borrow from themselves at a slightly higher rate than what you’d see on conventional financing. The big difference is that this is just a short-term loan much like a car loan AND you’re not starting a brand-new loan. Your client’s original mortgage stays in place.

In either scenario, your client could pay off their Home Equity loan or cash-out mortgage once their original home sells. Pulling out equity is a great way for clients to buy that next home without having to go through the hassle of selling their original home first. It’s their equity–they might as well use it!

Geoffrey Davis

Mortgage Loan Officer

NMLS #206192

geoffrey.davis@Movement.com

Cell: 214-529-9622

6801 Gaylord Parkway #202

Frisco, TX 75034