WOW

I want to first take a moment to thank all the people who have helped me with this project. Each and every one of you has inspired me and been a tremendous resource to me. So again, THANK YOU!

A little over a year ago I made the commitment to start this blog and at that time I did it for a variety of reasons, but mostly I wanted to have a way to communicate to the people who had not met me, what I stood for in business. At that time I also wanted to raise my “google” ranking and was quite embarrassed that I was on page 16 for a racquetball tournament that I didn’t even win. So I took on this challenge of writing a blog as often as I could find the time and find something that I thought was worth sharing. I am not proud of each and every post, for as I read them again I see some of the flaws of my lack of writing skills and also I find that I may have let emotions get in the way of the point of the message. None the less, I have found personal satisfaction in writing this blog. My goals have been accomplished.

I now tell people who question what I stand for to read my blog. I direct potential clients, referral sources and even people that I am interviewing to take the time to stop by and read my postings. My “google” rank as of this minute is numbers 2, 3 and 9. There is an individual who has written a book against the war and at the moment he is #1. But I have a plan and I will usurp him at the top spot with your help. But more on that later! I have developed relationships with other bloggers who have helped me learn more about how to do this. Past clients and potential clients have found me on this blog and have contacted me for loans. Lastly, other industry professionals have read this and have commented to me their thoughts on my writings. It has made this a great conversation starter and another way to build relationships.

So how do we take over the number 1 position? All you have to do is visit this site weekly. Add me to your web browser as a live bookmark and click on the bookmark every once in a while. You could subscribe to the blog and then you will notifications when there is a new post. Please take the time to ask anyone you know to stop by this web blog. All they have to do is hit the page from any page they are viewing and that is good enough. If they choose to read the material, that will make it that much better. Educating the public about the mortgage industry is never a bad thing. Especially when there is so much bad information put out by the press and the “Dark Side”.

I appreciate you taking the time to visit today and please let me know if there is anything I can do to help you achieve your goals.

For questions or comments, please contact Chris Scheer at cscheer@cornerstonestl.com or 314.223.9824.

FHA is the King!

As previously mentioned, the new economic stimulus package has allowed HUD to raise its maximum loan amounts for FHA loans depending upon the county of the property. For those in the St. Louis, Missouri area, that means we now can do an FHA loan for up to $281,250. The previous amount was $213,750, so that is a huge jump, almost a 33% increase.

So who can take advantage of this? You could spend days googling FHA loans to get all kinds of information about the FHA insured loan so I won’t waste you time covering everything. What I will do now is touch on the opportunities that I think will make the most amount of practical use for the clients that I see on a daily basis.

1) First time homebuyers: With the end of the conventional 100% financing (see previous post) now more than ever this will be the product of choice for first time homebuyers who have little or no money down. FHA requires a 3% down payment; however those funds can be gifted to the borrower from a relative. The gift does not have to come all from the same relative either. You can get part from one parent, part from another parent or their siblings such as an aunt or uncle and then you can get more from another relative. Thus on the $289,950 purchase price that the borrower needs $8,750 for a down payment, they can get that from various relatives or at least the part that they have not saved up on their own. They can also borrow the money for a down payment, as long as the loan is secured and has a repayment period of at least 5 years. That payment counts against their debt to income ratio, but makes borrowing against a car, a boat, a certificate of deposit or a 401K an option for coming up with all or some of the down payment.

2) Refinance to get out of an 80/20 loan. The second mortgages on these loans were priced higher than the rate on the first. Many people regretted getting them, but because of the change in Conventional guidelines, they were not able to refinance the loans since they owed over 95% of the appraised value. On an FHA loan, we can refinance them at 97% loan to value if we are paying off liens on the property. A great way to get those people out of 2 mortgage payments and into one at a FIXED rate.

3) Refinance for cash out. Both Fannie and Freddie have made it darn near impossible to get approved for conventional cash out loan over 80% loan to value. First your FICO score has to be over 720 and then good luck getting mortgage insurance on the loan. With FHA we can go to 95% loan to value and thus help get people out of the credit card debt or other challenges that are overwhelming them. It will also allow people to borrow money to improve their property, which in the near future will be a key to helping people hold their property values.

These are just a few of the ways the FHA loan can be used. For comments or questions, please contact Chris Scheer at cscheer@cornerstonestl.com or 314.224.9824.

The End of 100%

In the ever changing landscape of lending, we had the latest and most significant change take place this past Monday. All of the Private Mortgage Insurance Companies announced that they would no longer issue mortgage insurance on any loan with a loan to value greater than 97%. On a side note I can remember when we could only do a 97% loan and then just one of the mortgage insurance companies said they would insure up to 100% and it was months before the others joined in when the LTV was going up, but now that the maximum LTV is going down, they are all are the same page and quick to make the move. Kind of like rats jumping off a sinking ship! But I digress! Now there are few instances that one of the companies will honor the 100% commitment but it is in such a limited scope that you have a better chance of winning tonight’s Powerball drawing than getting a 100% loan.

So why are they doing this? First of all they are all taking a bath financially in mortgage insurance claims on loans that are in default and foreclosure due to the current mortgage crisis. Some would argue that they have been making money hand over fist for years as their losses have been limited as the housing prices grew and mortgage rates were declining or low, but keep in mind that during that time that they had to fight to keep market share and revenues as the banks created the second mortgages that would go to 100% and in the industry it was common practice to do a first mortgage for 80% and the second for the remaining amount to avoid mortgage insurance. So let’s not rush to judgment on the profits of the mortgage insurance companies over the last 7 years. Secondly and more importantly, we are seeing house values in some areas decline. So if they did insure a loan that was a 100% loan in one of those areas and the house price has declined, they are now insuring for over 100% of the value of the house. How smart is that?

What does this leave us? Thanks to the stimulus package that was passed we know have higher FHA loan limits and in most cases the cost of the monthly mortgage insurance will be less on an FHA loan. Also, in the old days, before 100% financing, we did most loans using gifts, tax returns, SAVINGS, as a way to come up with the initial 3% for a down payment. Imagine that, you have to save some money to buy a house?

I will write more on the increase in the FHA loan limits and the opportunities that are presented by this later this week. For questions or comments on this please contact Chris Scheer at cscheer@cornerstonestl.com or 314.223.9824.