VA Loan Misconceptions

July 3, 2017

As we near the 4th of July, I often think about our Veterans and their service to our country. 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 (e.g., Quicken) 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 26-30 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 and joyous 4th of July!!

Geoffrey Davis – Mortgage Loan Consultant 

NMLS #206192
First United Bank & Trust

D: 214-529-9622

F: 855-239-6079
6401 S. Custer Rd.

McKinney, TX 75070


Housing Leads Markets

June 27, 2017

With all the talk about the economy, and waiting to see how Trump policy plays out, it’s nice to see the housing market delivering strong numbers. Across the U.S., May became the 63rd straight month of yearly housing prices increases, with the median price of $252.8k, up 5.8% over a year ago. The median number of days a property was on the market also dropped to a new low of 27 days. On the Mortgage side, rates continue to stay low with seasonally adjusted application volume rising 0.6%. Lenders are still seeing good application volume, but the “affordability” factor is at play as buyers’ personal income growth (e.g., 2-4% annually) is typically not moving forward at the same pace as housing prices. At some point, the tension between rising prices and upward rates will cause the market to naturally settle back into a more typical level of price increases/appreciation.

Geoffrey Davis – Mortgage Loan Consultant 

NMLS #206192
First United Bank & Trust

D: 214-529-9622

F: 855-239-6079
6401 S. Custer Rd.

McKinney, TX 75070


Fed Seeks to Up Rates, Invest $ Outside of Bonds

June 19, 2017

If you missed my Wednesday note last week you may have heard noise about the Fed making some moves that will affect interest rates long-term. During their meeting last week, the Fed felt two things needed to happen next: SLOWLY raise rates and to stop reinvesting their bonds’ profits back into the bond market. What does this mean? Since 2008 the Fed has been investing in the bond market to drive the economy forward and while keeping rates low. Whenever those bonds “matured”, or came to the end of their term, the Fed has been reinvesting the profits back into the bond market. The Fed wants to redirect these profits back into other areas they believe will be more productive for the economy given its current strength.

This announcement received almost no reaction from the markets as this is exactly what investors expected. As a consumer, buyers should have felt little to zero impact because the markets had already adjusted rates in anticipation of this move. Given the strength U.S. Economy, the Fed is managing the natural tug-of-war between rates, battling inflation and economic growth. This is a much better position than having to pump Trillions of dollars in the economy to pull it out of a recession. The important take-away here is that this is going to be an extremely gradual shift and this move is an indicator of our economy’s health.

Geoffrey Davis – Mortgage Loan Consultant 

NMLS #206192

First United Bank & Trust

D: 214-529-9622

F: 855-239-6079

6401 S. Custer Rd.

McKinney, TX 75070


UPDATE; Fed Raised Overnight Fund Rate

June 14, 2017

Fed Bond Reinvestment: What does it mean?

Since November 2008 the Fed (aka Federal Reserve) has been investing monthly into the bond markets to drive forward the economy while keeping rates low. When those bonds mature (e.g., 15-, 30-year) the Fed has been reinvesting their profits back into bonds. At this week’s Fed meeting, the committee felt that economy was at the point that two things were ready to happen: bring rates up a .25 point and stop reinvesting the profits back into the bonds markets. I think this raises a couple of questions for most folks:

Q: Why would rates go up?

A: Rates would increase because our economy is healthy and that there is a natural tug-of-war between rates, our economy’s strength and battling inflation. Rates moving upwards is a natural progression when the economy is strong and I view it as a good sign that they feel that we’ve come to this place.

Q: Why are they going to stop reinvesting the profits back into Bonds?

A: They are changing their investment approach because the Fed balance sheet is heavier on bonds than it probably should be. We all know that being too heavily invested in one thing is not the best long term strategy and that it makese sense to diversify. If the economy no longer needs us to invest in bonds, let’s put our money in places that will further support and provide stability for the U.S. economy.

Q: When do you think this would happen?

A: The next Fed meeting is in September and I think their decisions will be based upon how the economy is performing at that time. I do believe they would like to bump rates another .25 point and begin unraveling their bond investments. This means that eventually rates will slowly move up but it will be gradual–not a painful rate hike that will shut down the housing market and make buyers cringe.

Geoffrey Davis – Mortgage Loan Consultant 

NMLS #206192
First United Bank & Trust

D: 214-529-9622

F: 855-239-6079
6401 S. Custer Rd.

McKinney, TX 75070


No Trump Collusion, Obstruction of Justices Relieves Investors

June 13, 2017

After all the ruckus, relief flooded the markets after former FBI Director Comey’s testimony last week around President Trump. The Dow Jones went up slightly while the NASDQ and S&P 500 traded lower. Overall the market remains steady with the Labor Department releasing positive numbers for the Job Openings Report (record high in April) and Initial Jobless Claims falling to the lowest rate since the early 1970s. Meanwhile, we are all gearing up to see what the Federal Reserve will do at this week’s meeting. It should be an interesting week…

Geoffrey Davis – Mortgage Loan Consultant 

NMLS #206192
First United Bank & Trust

D: 214-529-9622

F: 855-239-6079
6401 S. Custer Rd.

McKinney, TX 75070


Market Responds Favorably to Paris Exit

June 5, 2017

Investors saw Trump’s exit from the Paris Climate Accord as favorable to the business sector, which moved both stocks and bonds forward last Friday. Meanwhile, May employment numbers were “meh” as monthly job gains and payroll numbers hit below forecast. At least the unemployment rate fell to a 16-year low of 4.3% and the underemployment (those who work part-time but want full-time) fell to 8.4%. Overall, the economy continues to be steady but I think everyone is waiting to see if Trump can drive meaningful policies to support the U.S. economy.

Geoffrey Davis – Mortgage Loan Consultant 

NMLS #206192
First United Bank & Trust

D: 214-529-9622

F: 855-239-6079
6401 S. Custer Rd.

McKinney, TX 75070


Bicycle buying is easy!

June 4, 2017

PSA to parents
As the school years wraps – many of you might be heading out to pick up a new bicycle for your kid as they grow out of their old one. As a dad and a “bike guy” please head to a bike shop instead of a big box store this time.

I have been riding with my kids to school since kindergarten and the quality level of mass market bicycles is at an all time low. These big store bikes are less money – I get it but they are super heavy, have the lowest cost parts on them that break quickly and are assembled by a person with little to no training.

So yes, when you go to Richardson BikeMart (RBM) here is Frisco you are going to gasp at what a kids bike will cost you but they are worth every penny!! None of the RBM folks are on commission so when they talk with you about bikes, helmets and the rest – it is all for your benefit, not theirs.  

Their main bicycle lines are Specialized and Trek and as the kids grow, RBM will let you trade those bikes back in if you don’t want to deal with selling them in your own.

Kids need to experience the joy of riding a real bicycle!!!