Remember, this month also has Thanksgiving at the end of the month. So figure from Wednesday, November 25 through to Monday, November 30, there will be no closings. Lenders will be closed on Thanksgiving and a lot of title companies will close early on Wednesday and not open again till Monday to Tuesday. The title companies can only close so many loans in one day.

With that being said, Knightlines Mortgage Services, LLC has the ability to close a new home loan purchase in under two weeks. And our title company that we recommend will work past normal business hours to get your loan closed before the deadline.

Call us today at 352.308.7219 to get your loan package moving forward and to be one step closer to putting an extra $8,000 in your pocket.

DO/DU is Fannie Mae’s automatic underwriting system.  When an application is taken, it is run through this pre-determined set of criteria to determine a borrower’s eligibility for a new mortgage loan.  The problem is that these criteria do not take into consideration other compensating factors.

Why America needs to go back to manually underwritten loans and not a computer generated decision?  Here are two examples that have happened in the past week of why America needs to go back to manual underwriting of mortgage loans.

Scenario 1: The borrower has a credit score of 740.  Is putting down 10-20% of the purchase price.  The debt-to-income (all monthly debts plus PITI) is 20%.  Has been on the job for 3 months, but in the same line of work for 20 years.  His new job has a higher salary then his previous employer.  These are all things that under a common sense, manually underwritten loan would have me saying congratulations.

FNMA’s DO/DU denied the loan.  Why?  Because he had a mortgage credit late of 30 days.  Why did he have a mortgage credit late?  Because his previous employer laid everyone off.  If was not his fault, he did what he could to stay on top of his payments till he could find a new job.  In his quest to find a new job, he had to relocate to where the job would hire him.  He sold his house without having to do a short sale and moved to the new area.  Now, he cannot buy despite that credit mortgage late.  It is a pity that the bank will not even  take a look at this to argue an exception because FNMA is not allowing exceptions.

Scenario 2:  This is very similar to scenario 1, but instead of a  mortgage late there was a bankruptcy approximately 3 years ago.  This time last year, no problem.  Now, it has to be 4 years, no exceptions.  Never mind the fact that he has 20% down, or a credit score in the 700s, or a very low debt-to-income ratio, or many years on the job.

A trained underwriter would see that the bankruptcy was actually stemming from a divorce to handle the debt accrued during the marriage.  It was not that payments could be made.  It was to get him from being responsible for debt that his ex-wife got him into by being on joint accounts.

Going back to manual underwrites opens many doors for many people that are qualified borrowers, but are getting the door slammed in their face because a computer cannot look at the big picture.  Plus, if we go back to manual underwrites, lenders would need to hire more underwriters (a boost in employment), they would close more loans, and more money would be back in the economy.  By letting a computer decide, there are no jobs, there are no common sense decisions being made, and there is no help to the economy.

Perhaps, we should take the same voice that we all hold for the medical reform and shout it out at reforming the mortgage industry and going back to good old traditional manual underwriting.

The topics that are covered under MDIA include:

1. New Fee Restrictions: Mortgage originators cannot collect any fees (other than a reasonable fee for a credit report) until the borrower has RECEIVED the early disclosures, EG Truth-in-Lending (TIL).
2. Expanded Covered Loan: TIL disclosure is required for all loans secured by a dwelling (including non-owner occupied homes) and is not limited to just purchase money transactions.
3. Expanded Timing Requirement: Loan closings must be a minimum of seven (7) business days after the early TIL disclosures have been provided.
4. Re-disclosure Requirement: Should the Annual Percentage Rate (APR) change occur that makes the APR from the early disclosures inaccurate beyond a certain tolerance, then a new disclosure with the revised APR must be provided.  Along with the new disclosure, a loan must wait an additional 3 days from when the disclosure was provided before it can close.
5. New Notice Requirement: There has been new language added in the disclosures for the Fed Box: “You are not required to complete this agreement merely because you have received these disclosures or signed a loan application.”

I will be doing some subsection posts on these topics, as there is more to them than just these short descriptions that have been provided.  If these new laws are not adhered to, then a closing that was to take place on a certain date will have to be postponed causing a seller to have to postpone their plans of what could have been a simultaneous closing.  And you can see the snowball effect that this will cause.

Let’s start with the biggest issue that will affect lenders to greatest degree.  By the end of the year, all loan originators will be required to be licensed by the State of Florida.  This means that going to the bank and sitting down with the account executive to apply for you new mortgage loan (whether it be a purchase or refinance) will be a thing of the past.

Now, you are probably going to have to make an appointment with a mortgage specialist that is licensed by the state to come in apply.  So much for convenience…  And then, add on to the fact that this one person is not only responsible for your mortgage loan application, but everyone else that has applied.  In a few days time, this person will be spending more time on the phone dealing with issues then with applications.  Yes, there will be a support team behind this person, but those that are used to dealing with the bank are also used to the customer service that they get by dealing with their account executive.

When is this non-sense going to end.  Now do not get me wrong, I would love for people to leave their bank to come us Knightlines.  After all, 9 times out of 10 our rates are better.   Our closing costs are comparable.  And we can give the attention to detail customer service.  But I do not want it because the government is forcing people to have to seek alternate means.   Whether it be a direct intention or an indirect one, like this.

If the government is going to interfere, I would rather be for the person that has a 750 credit, 10% debt-to-income ratio, and 20% down payment and cannot get a mortgage loan because of a mortgage late in the past year due to losing his job, which has been replaced with a better, higher paying job.  This is what needs to be fixed and looked, not a matter of licensing when they are already under the license of the lender.

And this one change is not even the worst of it.  Stay tuned for more updates that have or will go into effect by the end of this year.

Over the next couple days to weeks, we will post on what is new with the mortgage industry and what specific items have transpired in the State of Florida.

While you are waiting for these posts to be released, I will give you an update on mortgage rates.  Monday’s rates were a small step up from the 4.875% closing rate on Friday.  Today, the market is in a frenzy.  At 12PM EST, there have already been two rate adjustments.  Both of them have been in the upward direction.  Currently, rates for a 30 year fixed are sitting the in the mid-5% range.  Several lenders have stopped the option to fax in rate locks due to the volatility of the market and are only accepting online locks.

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Located on the southeastern tip of Florida, Miami’s sandy beaches and tropical weather attracts thousands of tourists and vacationers every year. Although Florida does not contain naturally occurring asbestos, the substance still made its way to a large portion of the state. When on the path to home buying or seeking mortgage solutions, there are many things to consider.

Homes built before 1980 may still contain asbestos, a fibrous
mineral used through the majority of the 20th century. Asbestos can still appear in piping, insulation, flooring and roofing. Asbestos
exposure is easily prevented by taking simple precautions. There are many green, eco-friendly materials that replace the need for asbestos and can reduce energy costs annually.

Asbestos Tips

Asbestos made its name because of its resistance to fire and heat
properties. Improper insulation was used in millions of homes and while it is safe when enclosed or in good condition, deteriorated asbestos can cause a slew of health problems, such as mesothelioma. The increasing rate of asbestos-related diseases has resulted in mesothelioma lawyer firms advocating and protecting victim rights for their unjust illness. Manufacturers were aware of the health hazards involved with asbestos but repressed this evidence from the public.

If you locate any suspected asbestos, most experts advise to leave it alone. If you are having home renovations, performed, do not panic. In most cases, the best action is no action in regards to asbestos. However, if removal is necessary, it must be performed by a licensed abatement contractor who is trained and licensed to deal with hazardous
materials.

Florida Going GREEN

Implementing green methods of building can have positive environmental, health and economic benefits. These include:

-          Conservation of natural resources

-          Enhance air quality and protect ecosystems

-          Energy sustainability

-          Increase property value

-          Improve quality of life

-          Improvement of pulmonary and cardiac health

-          Reduce waste

Environmental efficiency is on the rise because of technology and green sustainable methods progressing rapidly.  Not only will these methods produce a healthier lifestyle, it will save you money! The Department of Energy concluded that cooling and heating counts for up to 50-70 percent of all energy used in the average home in the U.S. In today’s state, this philosophy can also save natural resources.

Environmentally sustainable insulations are made from recycled materials including cellulose, polyurethane foam and cotton fiber. Cotton fiber is made from recycled batted material and treated to be fireproof. A water based spray polyurethane foam, lcynene features no toxic components. The implementation of these eco-friendly products can reduce annual energy costs in the household by 25 percent annually.

Each mortgage loan that is available to Eustis borrowers has its own unique set of guidelines and characteristics.  In general though, they have the same basic ground rules: must have a job, must have credit (Good to Excellent), and must be able to afford the mortgage payment.

It is from these main ground rules that lenders and programs deviate into the individual programs that are offered. ( To avoid a long, drawn out post, we will cover the individual programs in more detail in separate posts.)  Here is basic list and summary of the programs that are available to potential mortgage loan borrowers:

• USDA 100% Guaranteed – 100% Financing, Seller can credit up to 6% of purchase price towards closing costs, not credit score driven, schooling can be used in lieu of work history, no Mortgage Insurance, must meet income limit guidelines
• HomePath – 97% Financing, Seller can credit up to 6% of purchase price towards closing costs, need a 660 credit score to obtain 97% (580 credit scores maxes at 80%), no Mortgage Insurance, no Appraisal
• FHA – 96.5% Financing, Seller can credit up to 3% of purchase price towards closing costs, not credit score driven, Mortgage Insurance needed if over 80%, strict appraisal guidelines
• Conventional – 90% Financing, Seller can credit up to 3% of purchase price towards closing costs, needs at least a 580 credit score, Mortgage Insurance if over 80%

And should a foreign national want to vacation here in Eustis, there is even financing available for them.  So, as you can see, Eustis, Florida offers a homebuyer many options in finding the perfect home and getting the best financing to meet their needs.  And just a heads up when shopping for that new home, most Realtors will want a buyer to pre-approved or pre-qualified for a mortgage before they schedule a showing.  Click here to begin the application process and get your pre-approval/pre-qualification today.

Stay tuned for Part 3 where we will discuss insuring your new home.

In this first part, we are going to be covering the real estate side of buying a home.  The first thing that one should consider when purchasing their new home is where in Eustis they want to live: in a community, in the country, in town, near downtown, etc.  There is, despite the cities perceived small size, a large diversity in real estate locations.

The city even has elevations to chose from despite the misconception of Florida being flat.  You can opt for a home at the top of a hill looking out over a lake, or you can have a home at the bottom of the hill on the lake.   These are all possible locations that one can find when shopping for their new home.

Besides location, pricing has a large range.  Some homes can be purchased for less than $100,000 while others can reach well over $1,000,000.  Part 2 (Mortgages) will go into more detail on determining what value of home a potential buyer/borrower will qualify for when shopping for their new home.

The third thing that one should take heed of when buying is the age of the home.  Eustis is an older city (over 125 years old), and as such has old buildings and homes.  Driving down some of the side streets of downtown Eustis will show the historic styles of the area.  Move out from there and you find the traditional “Florida Cracker Box,” a concrete block rectangular style home popular in the mid-20th century.  Move out a little more and you get into the real estate boom houses that were built between 2000-2007.

So as you can see, when shopping for that dream home in Eustis, Florida, you have lots of options available.  To help narrow down your choices and to aid with the buying of the home, a Realtor will become your best friend.  There are several long standing and reputable Real Estate companies in the Eustis area.  For a list of these companies or for a recommendation on Realtors, please feel free to contact us.

As we mentioned earlier, our next part will cover mortgages.  Just like your options in finding a home, you have options on financing your new home.  Stay tuned for Part 2 to roll out next week.

PS. Photos of newly listed homes will be posted under our Real Estate Listings/Residential Listings category.  This section will be coming shortly.

The $30 million is split amongst the counties of Florida.  Each county then distributes the money based on city/area.  In most areas, this will mean that less than 10 first time homebuyers in any given city/area will receive an advance on their $8000 tax credit to use towards the purchase of a new home today.

If you are one of the lucky few to get the $8000 advance to use towards down payment, mortgage loan closing costs, or pre-pays associated with the purchase, here is what you need to know:

1. First-time home buyers this year are eligible for a federal income tax credit of up to $8,000 if their income generally is $75,000 or less for single taxpayers and $150,000 for married couples.
2. Anyone who hasn’t purchased a home in the past three years qualifies as a first-time home buyer.
3. Rather than let home buyers wait until 2009 tax returns are filed next April, Florida legislators decided to advance the $8,000 in an interest-free loan.
4. Buyers have to agree to file for the tax credit and to repay the money within 18 months.

To find out more about FHOP or to stake your claim for the $8000, contact your local SHIP office.  Click here to find your local SHIP office.  Oh, and one more thing, even though the program officially started on July 1, 2009, the cash is not there yet to make the loans to home buyers.

Should you not get the $8000 tax credit advance loan, do not worry.  100% USDA Guarantee Mortgage Loans are still in place and are still funding.  And 97% HomePath is still going strong.  Compare these two loans side-by-side.

What is HVCC? Quite simply it is government intervention that forces a total hands off involvement of the appraisal process in determining a property value for the purpose of financing.

Who is hurt by this? The Appraiser and the borrower.

The Appraiser:

1. Forced to join a management company that will collect up to 40% of the appraisal fee. Yes, that is right.  The appraiser will now lose almost 50% of his/her income by being forced to join in order to keep working.
2. Only targets appraisers.  Other valuation models, such as AVM (Automated Valuation Models) and BPO (Broker Price Opinions) are not affected.  This will lead lenders to accept these values (which are less accurate) due to the less restrictions.
3. No communication between the broker or lender or anyone else that stands to earn money from the deal.  Single handedly destroyed all relationships with these entities literally overnight.

Borrower:

1. If a new lender is needed, a new appraisal is needed.  In the past, the Broker could simply submit their appraisal to the new lender.
2. Increased time to fund loans.  Lenders and Brokers can no longer communicate with Appraisers to expedite orders, which means longer rate locks (IE Higher interest rates).
3. Forced to stick with current Lender even if not what they want because of increase fees to having to obtain a new appraisal.

And there is one big issue that surrounds this whole crazy plan… what is the property worth?  Well, now without the communication from the broker or lender, an appraiser is left to appraise the value of the property.  Sounds good in theory, but let’s look at reality.

Appraiser is given an order to appraiser property 123 Main Street, Anywhere, USA.  Appraiser is not told the loan amount or an estimated value on the property. (PROBLEM 1: IN THE PAST, AS A COURTESY, THE APPRAISER WOULD CONTACT THE BROKER TO SAY YES OR NO ON THE ESTIMATED VALUE BEFORE WASTING ANY ONE’S TIME OR MONEY.)  Appraiser determines value of property, but to keep in good favors with the management group and to avoid future legal actions for why they valued the property at $x.xx shaves several dollars off the top.  (PROBLEM 2: THE ORIGINAL VALUE MAY HAVE BEEN THE RIGHT NUMBER TO DO THE DEAL, BUT TO PROTECT THEMSELVES AGAINST A NOW UNKNOWN, THE DEAL IS DEAD.)

Real life scenario: Borrower wants to refinance house.  Eligible for RefiPlus, so we can go to 105% of the appraised value.  Appraisal was ordered.  Cost $400.  Original appraisal cost before HVCC $350.  (Appraiser needs to charge more because he has to pay someone now.)  We needed at a minimum $x.xx to make the deal fly, but appraiser does not know this.  Appraisal took over one week to obtain, when in the past took only 48 hours.  Appraisal is returned with a value of $10,000 less then $x.xx.  Deal is dead.  Borrower is out $400.  Broker is penalized by lender for fallout of locked loan.

Had this been pre-HVCC. The appraiser could have said it will be a tight deal on the value and let the borrower decide on whether to proceed.  Now, the borrower is out $400 and had no decision.  Pre-HVCC, the appraiser would have looked harder for comps to get the value that was needed just to keep the relationship with the broker/lender. (There is nothing wrong with this provided that the comps are there and justifiable.)  Pre-HVCC would have allowed the borrower to get a 15-21 day rate lock offering a lower interest rate, instead of a 30 day lock or floating the rate in the current volatile market.

HVCC is a big deal when it comes to financing your home.  It costs you, the borrower, more money.  It eliminates your options to shop with multiple lenders when using a broker, which means you might not be getting the best deal.  It is just all around bad news.

Help us help you in getting your rights back when financing your mortgage loan.  A moratorium is being requested for 18 months.  Should this happen or even if it does not, contact your state legislature to voice your opinion on the issue.  Or take the time to sign a petition against HVCC.