Real Estate Agents

Apache is functioning normally

Compliance, CRM, LOS, Servicing, Workflow, Internal Audit Products; Non-QM and Jumbo News

<meta name="smartbanner:author" content="We now have a native iPhone
and Android app.
Download the NEW APP”>


This website requires Javascrip to run properly.

Compliance, CRM, LOS, Servicing, Workflow, Internal Audit Products; Non-QM and Jumbo News

By:
Rob Chrisman

Tue, Dec 5 2023, 11:33 AM

My cat Myrtle doesn’t have a lot of rizz, and there are those that will argue that no cat has any charisma whatsoever. But plenty of marketing people do, or can create it, and even if you’re not in marketing, there are some clever marketing people out there. Creative minds as well, and if you’re looking for a Christmas present, here are the “best inventions of 2023” per Time Magazine. There is also cleverness and creativeness in the modular home manufacturing industry, probably far outpacing the ability of state and local government to issue permits. Meanwhile, lenders are facing a winter trying to figure out if they are in the “Survive until ‘25” camp or the “Grow more in ‘24” mindset? The credit industry is reeling as lenders grapple with soft versus hard pulls, renegotiating pricing, and bundled deals. And for some reason LO comp continues to be unsettled: dual comp, MLOs as real estate agents, transferring pipeline data when changing jobs, different fee structures within the same state, and so on. (Today’s podcast can be found here, and this week’s is sponsored by nCino, makers of the nCino Mortgage Suite for the modern mortgage lender. nCino Mortgage Suite’s three core products, nCino Mortgage, nCino Incentive Compensation, and nCino Mortgage Analytics, unite the people, systems, and stages of the mortgage process. Hear an interview with Mayer Brown LLP’s Holly Spencer Bunting on RESPA happenings and how the industry can get to better regulation.)

Lender and Broker Products, and Services

Out with the old; in with the new! One of the things we most look forward to in December (besides the holidays, of course!) is the opportunity to envision and plan for a great future. We’ve curated a killer panel of industry execs who will share best practices and their favorite secrets to help you usher in 2024 at the highest possible note. TrustEngine’s Dave Savage hosts Dustin Owen of Waterstone Mortgage and Brian Covey of Revolution Mortgage in “Chaos to Clarity”, a sure-to-be deliciously juicy webinar that will inspire and energize you to end 2023 with a bang and move powerfully into the new year. Register now to save your seat!

What’s an internal audit anyway and do you need one? An internal audit acts as a third line of defense for your mortgage operation. It provides comprehensive assurance based on the highest level of independence and objectivity to evaluate the effectiveness of management’s internal controls. This function should advise your mortgage operation on plans to achieve the company’s strategic, operational, financial and compliance goals. An effective internal audit should go far beyond just checking a compliance box; it should be an integral part of protecting your company. If you want to ensure you’re adhering to regulatory requirements and demonstrating good faith business practices, a Richey May internal audit is a good fit. If you’re looking to be Fannie Mae approved in the future or want to maintain your approved status, it’s required. If you’re unsure whether you need an internal audit, ask one of Richey May’s experts today or learn more here.

“Is it a challenge getting what was promised out of your current subservicer? New regulations are always moving the compliance goal posts and your customers are craving the newest technology and high-quality customer experience to meet their needs. After all, aren’t those the reasons you contracted with them? Perhaps it’s time for a change. Come meet Servbank at the MBA Servicing Solutions 2023 and let us show you how our cutting-edge, fully transparent and award-winning servicing platform (SIME), combined with our family of caring Customer Care reps, will protect your company from regulatory misses and keep your customers loyal by delivering a superior experience every time. If your current subservicer promised to make life easier for you, but continues to miss the mark, now is the time to partner with Servbank, the nation’s only fintech bank subservicer, who can meet your unique needs. Stop by booth #601, or schedule a meeting with Servbank.”

Right in time for the holidays, Floify has launched Floify Broker Edition, a one-stop lending platform that makes it easy for brokers to manage loans in one place. Wrapped in Floify’s famously sleek interface, Floify Broker Edition is packed with magical features that save precious time and money, such as automated mortgage call reporting, dual AUS functionality, and PPE and wholesaler integrations. Just like Santa’s elves, automated workflows advance loans behind the scenes so brokers can spend more time spreading the joy of homeownership and less time pushing paper. Treat yourself (and your borrowers!) this holiday season with a lending platform that’s a joy to use. Experience the magic of Floify Broker Edition firsthand and book a demo today.

Take advantage of more opportunities by adjusting your business to match the market. Recently, lenders who could quickly scale their home equity products were able to capitalize on the increased demand. Are you maximizing home equity lending in your system of record? Encompass® by ICE Mortgage Technology® is the only solution on the market that can be easily configured without any development efforts to support a user’s unique products and workflows for each of their channels, including retail, consumer direct, HELOC, wholesale and correspondent. This means you can quickly react to market changes and manage your business in your own way. Click here to read our recent blog that shares strategies to maximize your home equity lending business and how Encompass makes it easy.

A borrower’s servicing experience is only as good as the back-office environment that supports it, which is only as good as the technology that powers it. That’s why ICE is actively moving servicing forward through digitizing the consumer experience and streamlining back-office operations. The mortgage technology experts at ICE understand that effective servicing solutions are built from the “outside in”, designing with the customer in mind and working until the same level of convenience is brought to those working behind the scenes. Read the new blog from Sandra Madigan, Chief Digital Officer at ICE Mortgage Technology, to see how ICE is engineering with empathy, and helping people achieve and maintain the dream of homeownership.

In Naples, people hurl plates, appliances and even furniture out of their windows on New Year’s Eve to symbolize making room for the new. If your LOS has been causing you strife, take a cue from the Neapolitans and chuck it out the window. Dark Matter Technologies is here to help you usher in a more prosperous 2024 with its Empower LOS. A fully cloud-based system, Empower brings your tech ecosystem together in one place and intelligently orchestrates delightful borrower experiences and efficient loan production. Schedule a demo with the Dark Matter team to learn how Empower can elevate your business in the year ahead.

Two things come to mind when looking for strategies to help LOs today. First, understand home buyers in the context of uncertainty in the market today. Get back to basics of why homeownership still makes sense: pride of ownership, building equity for the future, and a better environment for their family to live and grow. Next, be able to articulate good solid strategies to make home buying more affordable, both down payment strategies and ARMs to lower payments. It’s also important to understand buyer’s bias against ARMs and counter with common sense arguments. Usherpa, the #1 ranked mortgage CRM in customer satisfaction and loyalty, is offering these FREE printable handouts with informational scripts to use when talking with your homebuyers and valuable resources you can easily send them about ARMs.

ActiveComply is thrilled to introduce a brand-new product, WebCompass™, to discover and manage your websites for branding, compliance, and accessibility. The same power as SocialShield™ for Social Media but now for website and brand compliance. With WebCompass™ you can discover and monitor company and employee websites & web pages, protect your brand with website content scans and compliance tracking, uncover rogue or unauthorized websites, and streamline reporting demands during regulatory examinations. Sign up today for a demo and the first 25 customers will receive a discount. ActiveComply cloud-based solutions help highly regulated industries confidently manage their social media and website compliance and virtual inspections.

Non-QM, DSCR, Jumbo Broker and Correspondent Program News

Can we continue our same ad please: Long-term Rental or Vacation Rental? Visio Lending is the nation’s leader in Non-QM Investor DSCR loans for buy and hold SFR rentals with nearly a decade of experience and over $2.5 billion in originations. No-DTI, 30-year terms, rate buy downs, free 45-day rate locks; I/O and Sub-1 DSCR options available. Through our top-notch Broker Program, brokers are able to earn up to 2 points YSP, and 5 points total. Visio Brokers can count on a designated Account Executive and in-house processing.

PRMG offers several Non-QM resources such as product matrices, job aids, trainings, calculators, worksheets, and other information to assist with using Non-QM loan products. Access the TPO Non-QM Resources page for detailed information.

Angel Oak Mortgage Solutions announced the release of its Blended Rate Calculator, providing borrowers with a quick and straightforward tool to estimate potential loan scenarios.

In tandem with its Angel Oak Mortgage Closed End Second Loans program, the Blended rate calculator helps you show borrowers what their 1st and 2nd payments, as well as LTV and blended rates, will be for both mortgages. This tool enables borrowers to easily assess how they can tap into their home’s equity while retaining their first mortgage.

PHH Mortgage announced new products for Non-Agency offering as of November 28th. Go to the company library to view the information.

A Jumbo option designed to empower homebuyers in high-value markets to secure their dream homes. Explore the advantages of Plaza’s new Jumbo Champion loan program, featuring top-notch pricing, loan amounts up to $3 million, and eligibility for FICO scores starting from 720.

LendSure Mortgage Corp., a Non-QM wholesale lender, announced the launch of its new Profit & Loss (P&L) Loan Program offering “a simplified and user-friendly process for business owners seeking capital in a complex financial landscape.” LendSure’s P&L Loan Program is designed to cater to business owners and self-employed investors with fluctuating seasonal income or cash businesses. It eliminates the need for a self-employment questionnaire, simplifying and speeding up the application process and making it more convenient for borrowers to secure financing. “We aim to empower business owners, redefining industry standards and facilitating their path to financial success… The program offers two tiers of loan amounts, giving borrowers the choice to provide only P&L statements for loan amounts up to $1,000,000 or supply two months of bank statements with P&L statements for loan amounts up to $1,500,000. This flexibility enhances the broker-customer relationship by providing a straightforward, efficient solution for business owners. Reach out to LendSure for more information.

First time home buyer/ first time investors now have a chance to buy an investment property with no income. Hometown Equity Mortgage offers a Bridge for First time home buyers; up to 75 percent LTV on a purchase, no ratio DSCR product, NO VOR/VOM, allowed to live rent free. FICO down to 650, Flexible guidelines, 12-24 month I/O with no prepay or EPO.

HighTech Lending Wholesale is now offering Jumbo Reverse Mortgages the Platinum Reverse which comes in three variations: Maximum LTV Fixed Rate, Adjustable Rate with a Line of Credit, and Reduced LTV with a lower Fixed Rate. The minimum age for the Platinum is 55 in most states, but some require the borrower to be 60 or 62.

Capital Markets

First Community Mortgage has named Jeff Pancer to the new position of Executive Vice President, Capital Markets. Congratulations!

Markets finally paused recent optimism that has been riding on the assumption that the Fed will lower interest rates in 2024. Until yesterday, that optimism had fueled rallies in both stocks and bonds over the past few weeks, with investors continuing to overlook Fed rhetoric and bet on deep interest rate cuts next year. Fed Chair Powell on Friday reiterated that it is too early to consider cutting rates, and that the Federal Open Market Committee plans to keep policy restrictive for some time. Despite his stance, markets are still at odds with the Fed, pricing in the first rate cut as early as March and 125 basis points of rate cuts in total for 2024. Remember, sticky inflation can prevent the Fed from cutting.

The Fed is widely expected to leave rates unchanged for the third consecutive FOMC meeting next week, in what would be no change for the fourth out of the past five meetings. However, the post-meeting statement will likely continue to indicate that additional tightening is possible. The fear is that the Fed declaring victory too early while the economy is growing, and the labor market is tight is a risk if inflation spikes back up. The Fed has entered its blackout period ahead of the meeting, so we won’t get any more chatter from FOMC members until after the meeting. Additionally, there will be no Treasury note or bond auctions this week. This week will be dominated by the jobs report on Friday where expectations are for an improvement from October’s report: an increase of 180,000 jobs in November and no change in unemployment.

Today’s economic calendar has a lot of non-market moving releases: Redbook same store sales for the week ending December 2, final November S&P Global services PMI, expected to decline slightly, ISM non-manufacturing PMI for November, expected to tick up, and JOLTS job opening for October, supposedly sliding to 9.35 million from 9.55 million in September. We begin the day with Agency MBS prices better by .125-.250, the 10-year yielding 4.23 after closing yesterday at 4.29 percent, and the 2-year yield down to 4.52 as investors continue to believe, perhaps mistakenly, that the Fed is not only done raising rates but will come around to cutting them.

 Download our mobile app to get alerts for Rob Chrisman’s Commentary.

Source: mortgagenewsdaily.com

Apache is functioning normally

Lately, some mortgage lenders have pitched “buy now, refinance for free” offers to get more home buyers to take the plunge.

The thinking is mortgage rates will be lower in the near future. And when that time comes, you won’t have to pay any lender fees.

This can even sway the decision to buy a home, assuming you’re on the fence about renting vs. buying because it feels too expensive today.

These offers sound like a win-win for the home buyer, as they’ll get a lower interest rate and avoid potentially thousands in closing costs.

But there are quite a few issues with this line of thinking that are worth discussing.

Nobody Knows If Mortgage Rates Will Rise or Fall

Last I checked, mortgage rate predictions have been a tough game. Prior to early 2022, mortgage rates defied the forecasts.

While most expected them to rise, they hit fresh all-time lows and stayed at those levels for much longer than expected.

Then the Fed announced an end to it Quantitative Easing (QE) program and the start of Quantitative Tightening (QT), which sent shockwaves through the mortgage market.

Accompanied by 11 Fed rate hikes, the 30-year fixed surged from around 3% in January 2022 to as high as 8% in October 2023.

Once again, no one expected this, and most predictions called for improvements in 2023 after a rough 2022.

Instead, mortgage rates climbed even higher, leading to the lowest mortgage demand in decades.

People stopped buying homes and virtually nobody refinanced their mortgage. Even worse, existing owners won’t sell because they don’t want to lose their ultra-low interest rate.

This so-called mortgage rate lock-in effect has stifled inventory, which was already low to begin with.

It also partially explains why home prices remain so high, in spite of much more expensive mortgage rates. There’s no supply.

To entice buyers, some real estate agents and mortgage lenders have pitched the phrase, marry the house, date the rate.

The logic is you can still buy your forever home today, while mortgage rates are high. But refinance that pesky high mortgage rate once they fall again.

Problem is they haven’t fallen. And those predictions didn’t pan out. At least not yet.

Speaking of, take a look at the 2024 mortgage rate predictions if you think they’ll be of any use.

Mortgage Rates Are About 1% Below Their Recent Peak

Over the past month and change, the 30-year fixed has come down about one percentage point.

It surpassed 8% in mid-October before falling precipitously, thanks to favorable economic data.

Several reports hinted at possible weakness in the economy, pushing bond yields down from their recent highs while mortgage rates followed.

At the same time, the Fed is expected to cut rates several times in 2024 as the economy cools.

The thought is inflation has peaked, and restrictive monetary policy can ease somewhat.

This is all good news for mortgage rates, which tend to fall when inflation is low, or when the economy is showing signs of weakness.

But there’s still no guarantee mortgage rates will come down. Nor is there a guarantee they’ll fall by an amount necessary to make a refinance worthwhile.

I don’t subscribe to a refinance rule of thumb, but generally you’d want an interest rate at least 1% below your current rate for it to be worth it.

Once you factor in the closing costs, you’ll need to realize some decent monthly payment savings to make it worthwhile. And to break even on those upfront costs.

These Refinance for Free Later Deals Have Some Issues

  • Will mortgage rates fall enough in the future to make the refinance work?
  • Will this lender still be in business and agree to the terms of the deal?
  • Will anything change that limits your ability to refinance (credit score, property value, etc.)
  • What if a different lender has a lower rate in the future?
  • Could this type of offer pressure you into buying a home today if you’re unsure or not ready?

To make a refinance more compelling, or at least easier to pencil, some mortgage lenders are offering a free one in the future if you use them for a home purchase loan.

It seems like a no-brainer. Why not take them up on the deal, right? Well, there are myriad issues with these types of offers.

For one, you have to use the same lender twice. And you have to use the lender offering the free refinance deal to begin with.

So their “refinance for free” deal might stop you from shopping your rate with other banks, lenders, brokers, etc.

The next problem is this lender might not even be in business once it comes time to refinance. Trust me, many lenders have closed their doors as business has dried up.

And if you do use them again in the future, you’ll need to hope they have the lowest rate compared to other lenders. What are the chances of that?

Then there is the pesky issue of mortgage rates. Remember, nobody is very good at predicting them.

Sure, they could drop. But they might not. Or they may not fall enough to make the refinance worthwhile.

At the same time, you’ll need to qualify for the refinance. What if home prices fall between now and then, and you’ve got negative equity to deal with?

Or something else comes up that limits your ability to refinance? Perhaps a lower FICO score, a gap in employment, etc.

Ultimately, you’re probably better off going with the lowest combination of rate and fees you come across today.

And if and when the time comes to refinance in the future, do the same exact thing. Look for the best deal in front of you.

There are simply too many variables and unknowns to bank on a free refinance in the future.

Source: thetruthaboutmortgage.com

Apache is functioning normally

Many people want to buy a home but think it isn’t possible because they don’t have money to put toward a down payment. Traditionally, lenders require a 20% down payment toward your mortgage.

But a 20% down payment adds up to a lot of money. For example, if you plan to purchase a $150,000 home, you’d need to come up with a $30,000 down payment. Many people cannot afford this, but fortunately, the 20% rule is a lot less common than you might think.

Is a buying a house with no money down possible?

The National Association of Realtors (NAR) reports that 39% of non-owners believe they need a 20% down payment or more and 22% believe they need a 10% to 14% down payment.

But neither of these are true. Many mortgage lenders will let you buy a home by putting down as little as 3%. And some lenders will let you skip the down payment altogether.

NAR also found that 61% of first-time homebuyers made a down payment between zero and 6%. So, it’s safe to say that a 20% down payment isn’t the standard anymore. But unfortunately, many consumers choose not to pursue homeownership because they believe this down payment myth.

Weighing the Pros and Cons of No Down Payment Mortgages

Is there any reason to aim for 20% down when most home buyers buy with a down payment less than 20%? If you can afford it, yes, the 20% rule is still a wise choice.

The more money you put toward your mortgage, the less debt you’ll have to repay and the less your monthly payment will be. Plus, there are several drawbacks to putting down less than 20%:

  • Less favorable rates: If you pay less than 20%, lenders will probably see you as a risky investment. And they will take this into consideration when calculating your mortgage rates. In general, you can expect to pay a higher interest rate if you put down a smaller down payment.
  • Higher closing costs: Closing costs are based on the size of your mortgage. So, the smaller your down payment is, the higher your closing costs will be. However, you may be able to get around this if you live in a state where it’s typical for the seller to pay the closing costs.
  • Private mortgage insurance (PMI): Private mortgage insurance is a type of mortgage insurance designed for borrowers who make a down payment lower than 20%. It protects your mortgage lender in case you end up defaulting on your loan.

PMI can cost as much as 1% of your total monthly mortgage payment. So for a $150,000 mortgage, you’ll end up paying $150 per month.

However, this may not be that bad, especially if you have a less expensive mortgage. And once you reach 20% home equity, you can cancel your PMI and get rid of these extra payments.

Check Out Our Top Picks for 2023:

Best Mortgage Lenders

How to Buy a House With No Money Down

Fortunately, there are several lending programs that do not require a down payment. Here are five payment assistance programs that will help you buy a home with little to no down payment.

1. VA Loans

VA loans are a valuable option for eligible military veterans, active-duty service members, and certain surviving spouses. These government-backed loans offer several benefits, making homeownership more accessible and affordable through the use of a VA loan.

100% Financing and No Down Payment

One of the most significant advantages of VA loans is the 100% financing, meaning you won’t need to make a down payment when utilizing a VA loan. This can save borrowers a substantial amount of money upfront, making it easier to enter the housing market.

No Private Mortgage Insurance (PMI) Requirement

Unlike conventional loans that require PMI for down payments less than 20%, VA loans do not require PMI. This can save borrowers hundreds or even thousands of dollars per year in mortgage insurance premiums when using a VA loan.

VA Funding Fee

While VA loans offer numerous benefits, there is a one-time funding fee charged to help offset the costs of the program. The funding fee is 2.15% of the total loan amount for first-time users of VA loans and 3.3% for subsequent uses.

This fee can be financed into the VA loan, reducing the out-of-pocket expenses for the borrower. In some cases, borrowers may be exempt from the funding fee, such as those with service-connected disabilities.

Certificate of Eligibility

To apply for a VA loan, borrowers need to obtain a Certificate of Eligibility (COE) from the Department of Veterans Affairs. The COE verifies the borrower’s eligibility for the VA loan program based on their military service or, in some cases, the service of their spouse. The COE can be requested online through the Department of Veterans Affairs website, by mail, or through an approved lender.

Additional Benefits

VA loans also offer competitive interest rates, more lenient credit requirements, and flexible underwriting guidelines compared to conventional loans. Additionally, there are no prepayment penalties, allowing borrowers to pay off their VA loans early without incurring additional fees.

2. Navy Federal Credit Union

Navy Federal Credit Union’s loan program is similar to what the VA offers. It offers a zero down mortgage and no mortgage insurance. And Navy Federal’s funding fee is only 1.75%.

Navy Federal offers a 30-year loan and a 30-year jumbo loan. 30-year loans have a loan limit of $424,100 while jumbo loans are available up to $1 million. However, you will have to be a Navy Federal member to qualify.

3. USDA Loans

If you’re looking to move to a rural area, you might qualify for a USDA loan. The United States Department of Agriculture Housing Program was designed to aid rural development and is aimed at low-income families. USDA loans offer 100% financing with low interest rates.

Here are the eligibility requirements you must meet to qualify for a USDA loan:

  • When buying a home it must be within the USDA’s boundaries: Although this loan targets rural areas, some suburban areas may still qualify. You can look at this map on the U.S. Department of Agriculture’s website to see if your location falls within the USDA’s geographical boundaries.
  • Your household income can’t exceed a certain threshold: This applies to everyone living in the household, even if they won’t be listed on the mortgage. For instance, if you have a parent living with you who collects Social Security, this counts toward the gross income of all members of a household. The maximum household income varies by state and county so you can find out if you qualify here.

See also: Best Home Loans for Low-Income Borrowers

4. Lease-Option

A lease-option (also known as rent-to-own) allows you to rent a home with the option to buy it at a predetermined price after a certain period. A portion of your monthly rent may be applied toward the purchase price or down payment. This can be a solid option if you need more time to save for a down payment or improve your credit.

5. Seller Financing

In some cases, the seller may be willing to finance the property for you, allowing you to purchase the home without a traditional mortgage. This arrangement typically requires a contract outlining the terms of the loan, including the interest rate, payment schedule, and any potential penalties.

Seller financing can be a viable option if you have a strong relationship with the seller or if the seller is having difficulty selling the property.

6. Crowdfunding

Crowdfunding is a method where you raise money from multiple individuals, typically through online platforms. You can set up a campaign to raise funds for your down payment or even the entire purchase price. This method may work best if you have a strong network of friends, family, and supporters who are willing to contribute to your home-buying goal.

7. Shared Equity Agreements

Shared equity agreements involve partnering with an investor who provides a portion or all of the down payment in exchange for a percentage of ownership in the property. When the property is sold or refinanced, the investor receives a return on their investment based on the agreed-upon share of equity. This can be an attractive option if you can’t afford a down payment but are willing to share future appreciation in the home’s value.

8. Housing Assistance Programs

There are numerous local, state, and federal housing assistance programs that offer grants, low-interest loans, or other forms of financial support to help eligible individuals purchase a home with no money down. These programs often have specific requirements, such as income limits, property location, or first-time homebuyer status. Be sure to research and apply for any programs for which you might be eligible.

Low Down Payment Loans

If you’re unable to buy a house with no money down but can afford a small down payment, consider these low down payment options that can help make homeownership more accessible.

1. 97% LTV mortgages

97% LTV mortgages is a loan program that is offered to first-time homebuyers by Fannie Mae and Freddie Mac. They require a 3% minimum down payment and private mortgage insurance.

Here are the guidelines for the program:

  • You’ll need a credit score of at least 680
  • One of the borrowers must be a first-time homeowner
  • Manufactured housing isn’t permitted
  • Gifts, grants, and other funds may be used toward the down payment

2. Federal Housing Administration (FHA) Loans

The Federal Housing Administration (FHA) was established in 1934 to reduce the requirements to qualify for a mortgage. This government-backed mortgage program offers flexible requirements, making it an attractive option for first-time homebuyers.

Here are the guidelines you’ll need to meet to qualify for an FHA loan:

Credit Score Requirements

The minimum credit score required to qualify for an FHA loan is 500. The specific down payment requirements depend on your credit score:

  • If your credit score is between 500 and 579, you’ll need to make a 10% down payment.
  • If your credit score is 580 or higher, you’ll have to make a 3.5% down payment.

Seller Contributions

FHA loans allow sellers to contribute up to 6% of the closing costs. This can help reduce the upfront costs for the buyer and make it easier to afford the purchase.

Mortgage Insurance Requirements

Mortgage insurance is required for an FHA loan, protecting the lender in case the borrower defaults on the loan. However, once you build 20% equity in the home, you can refinance to a conventional loan to eliminate the mortgage insurance requirement.

Debt-to-Income Ratios

FHA loans accept high debt-to-income (DTI) ratios, allowing borrowers with significant existing debt to still qualify for a mortgage. The FHA typically requires a maximum DTI of 43%, but exceptions can be made for borrowers with compensating factors, such as substantial savings or a history of making large payments on time.

3. HomeReady Mortgage

The HomeReady mortgage is a Fannie Mae program designed for low-to-moderate-income borrowers. It requires a down payment as low as 3% and offers flexible underwriting guidelines, making it an attractive option for first-time homebuyers or those with limited credit history.

4. Home Possible Mortgage

Similar to the HomeReady mortgage, the Home Possible mortgage is a Freddie Mac program that allows for a down payment as low as 3%. It is designed to help low-to-moderate-income borrowers achieve homeownership and offers flexible underwriting guidelines.

5. State and Local Homebuyer Assistance Programs

Many state and local governments offer homebuyer and down payment assistance programs that provide grants or low-interest loans to help cover down payment and closing costs. These programs typically have income and property location requirements, so be sure to research and apply for any programs for which you might be eligible in your area.

Each of these low down payment mortgage options has its own set of eligibility requirements and potential benefits. Be sure to research and compare these options to determine which one best aligns with your financial situation and home-buying goals.

Preparing for Homeownership

Before jumping into the home buying process, it’s essential to prepare yourself financially and mentally. This section covers tips for improving credit scores, creating a budget, and managing debt to make the home buying process smoother.

Credit Score Improvement Tips

Improving your credit score involves checking your credit report for errors and disputing any inaccuracies. Ensure that you pay your bills on time and reduce outstanding debt as much as possible. Keep credit card balances low, avoid opening new credit accounts, and consider requesting a credit limit increase without increasing your spending.

Creating a Budget

Creating a budget requires tracking your income and expenses to understand your spending habits better. Categorize your expenses and set realistic limits for each category. Allocate funds for saving and investing, including a down payment and emergency fund, and regularly review and adjust your budget as needed.

Managing Debt

Managing your debt effectively involves prioritizing high-interest debt and paying more than the minimum payment. Consider debt consolidation or refinancing options to secure a lower interest rate. Avoid taking on new debt before applying for a mortgage and create a debt repayment plan that you can stick to.

Understanding the Total Cost of Homeownership

Understanding the total cost of homeownership means factoring in property taxes, insurance, maintenance, and utility costs. Estimate homeowners association (HOA) fees if applicable and consider the costs of furnishing and updating the home. Prepare for potential increases in expenses over time, such as property tax hikes.

How to Choose the Right Mortgage Option

With various mortgage options available, it’s crucial to select the one that suits your financial needs and long-term goals. This section discusses factors to consider when choosing a mortgage, such as loan term, interest rates, and mortgage insurance.

Fixed-Rate vs. Adjustable-Rate Mortgages

Fixed-rate mortgages have a consistent interest rate for the loan’s duration, providing stability and predictable monthly payments. In contrast, adjustable-rate mortgages (ARMs) have an initial fixed-rate period followed by periodic rate adjustments, which may result in lower initial payments but potential rate increases over time.

Mortgage Term: 15-Year vs. 30-Year

The mortgage term plays a crucial role in determining the overall cost of your mortgage. 15-year mortgages typically have lower interest rates and allow for faster equity buildup, but require higher monthly payments. 30-year mortgages offer lower monthly payments, but result in more interest paid over the loan’s lifetime.

Mortgage Insurance Considerations

PMI may be required for conventional loans with less than a 20% down payment. Loans backed by the federal government, such as FHA, VA, or USDA loans, may have different insurance requirements or fees.

Assessing Your Long-Term Goals

When choosing a mortgage option, consider how long you plan to live in the home and whether your financial situation or housing needs may change. Evaluate the potential for home value appreciation and the impact on your future financial goals.

Planning Your Next Steps

Assess Your Financial Situation

The amount of money you choose to put toward a down payment is a personal choice. If you feel ready for homeownership but know that a 20% down payment isn’t feasible for you, there are many options available to help you.

The best place to start is by looking at your monthly budget and seeing what you can realistically afford. Use a mortgage calculator to reverse engineer your goal and find your ideal home purchase. Consider factors like property taxes, insurance, and maintenance costs, as well as any debts you currently have.

Get Pre-Approved

Get pre-approved for a mortgage before you start house hunting. This will give you an idea of how much you can afford, and it will show sellers and real estate agents that you’re a serious buyer.

To get pre-approved, you’ll need to provide your lender with documentation such as pay stubs, bank statements, and tax returns. They’ll then assess your credit score and financial history to determine how much they’re willing to lend you.

Shop Around for the Best Mortgage

Shop around for the best mortgage rates and terms. Don’t just settle for the first lender you come across. Compare different lenders and loan programs to find the best fit for your financial situation. Look for competitive interest rates, low fees, and flexible repayment terms.

Work with a Knowledgeable Real Estate Agent

A good real estate agent can help you find a home that fits your needs and budget. They’ll also guide you through the home buying process, making it less stressful and ensuring you don’t make any costly mistakes.

Attend First-Time Homebuyer Classes

Consider attending first-time homebuyer classes or workshops. Many local organizations and government agencies offer educational resources for first-time homebuyers. These classes can help you understand the ins and outs of the home buying process and give you the knowledge you need to make informed decisions.

Save for Unexpected Expenses

Even if you’re able to buy a home with no money down, it’s a good idea to have some savings set aside for unexpected expenses. These might include moving costs, home repairs, or furnishing your new home.

Build an Emergency Fund

In addition to saving for unexpected expenses, it’s also important to have an emergency fund in place. This should be enough to cover three to six months’ worth of living expenses in case you lose your job or face another financial emergency.

Be Patient and Stay Disciplined

Home buying is a complex process, and it can take time to find the right home and secure financing. Stay focused on your goals, be disciplined with your spending, and remember that homeownership is a long-term investment.

Conclusion

Buying a home with no money down is possible, but it may not be the best choice for everyone. Consider your financial situation, your long-term goals, and the various mortgage options available to you before deciding on a zero down payment mortgage. With careful planning and preparation, you can make your dream of homeownership a reality, even if you don’t have a large down payment saved up.

Source: crediful.com

Apache is functioning normally

We’re writing today to address the unintended consequences that may result from the real estate agent commission dilemma stemming from recent lawsuits. As leaders of a non-profit, the Association of Independent Mortgage Experts (AIME), we advocate for over 65,000 wholesale mortgage brokers and homebuyers nationwide. There are multiple lawsuits challenging the prevailing structure of real estate agent commissions, and, as a result, there is no shortage of industry conversation on the topic.

Specifically, these lawsuits and surrounding conversations address the convention of sellers bearing the cost of commissions for both their agent and the buyer’s agent.

In this open letter, our discussion is deliberately narrow, centering exclusively on potential adverse impacts to the mortgage industry and borrowers that might arise if, as a result of this lawsuit, buyers find themselves compelled or expected to shoulder the cost of buyer agent commissions. Our analysis does not extend to the broader market ramifications, as such considerations fall outside our expertise.

Future homebuyers will undeniably feel the impact of this conversation for decades to come. As advocates for homebuyers, we feel it’s our responsibility to address the potential ripple effects for homebuyers nationwide.

The complexity of the home-buying ecosystem is vast. A single home purchase transaction involves buyers, sellers, real estate agents, mortgage lenders, settlement companies, appraisers, insurance companies, and court systems, to name a few. Modifying the operational dynamics of one component can send shockwaves throughout the entire system. Below, we shed light on the potential unintended consequences to mortgages and specific consumer groups should buyers be compelled to cover their agent’s commissions.

  1. Impact on military servicemembers and veterans

Foremost, this shift would adversely affect a group of individuals who’ve already given so much to our nation: our active-duty military servicemembers and veterans. VA Guidelines categorically prevent buyers from paying agent commissions (“VA Lender’s Handbook,” Chapter 8, Section 3, Subsection c). Consequently, should buyers be tasked with these fees, our military community would face the untenable choice of forgoing real estate agent representation or not availing their VA home benefit. Even in a scenario where paying agent commissions becomes a norm but isn’t mandatory, VA buyers stand to lose. Their offers — asking sellers to shoulder all commissions — might be overlooked in favor of more conventionally structured bids, especially in competitive markets.

  1. Impact to first-time homebuyers

Moreover, first-time homebuyers (FTHB), particularly those from marginalized communities, would encounter heightened barriers. With home prices and interest rates climbing steadily, the barrier to homeownership is already too high. While the minimum down payment for FTHB on conventional financing stands at 3%, bearing agent commissions would effectively double this threshold in many instances.

  1. Impact on the appraisal process

Incorporating inconsistent agent commission payment patterns — sometimes by buyers, other times by sellers — could compound complexities in the appraisal process. Determining property values involves analyzing several variables beyond just sale prices. Appraisers consider seller closing-cost credits, transaction nature, property conditions and more. Injecting “Who bore the buyer’s agent commission?” into this matrix, especially when such data isn’t currently available to appraisers, complicates matters further, destabilizing confidence in the value of the loan’s collateral.

  1. Impact on down payments

Down payment costs are already a source of concern for many potential homebuyers. With this potential impact on borrowers, their intended down payment could be adversely impacted. For example, a homebuyer intending to put down a 20% down payment may now only be able to afford to put down a 17% down payment, thus needing to incur Private Mortgage Insurance (PMI), which could raise their monthly mortgage payment significantly.

Change, though often inevitable, does not operate in isolation. A shift in one part of the ecosystem can trigger unintended consequences throughout the entire ecosystem and its inhabitants. This principle holds true both in nature and in real estate transactions. While some outcomes can be foreseen, where there is smoke, there is fire, and we can be fairly certain that there are additional, unforeseen ramifications that only become clear after the fact. The issues highlighted in this letter likely serve as the tip of the iceberg.

In conclusion, we emphasize our hope that the potential unintended consequences of such lawsuits — particularly those affecting our nation’s Veterans and underserved communities — will be thoughtfully considered and integrated into the wider conversation on this issue.

Katie Sweeney is Chairman and CEO of the Association of Independent Mortgage Experts (AIME) and Brendan McKay is President of Advocacy at AIME.

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

To contact the authors of this story:
Katie Sweeney, Brendan McKay: [email protected]

To contact the editor of this story:
Sarah Wheeler at [email protected]

Source: housingwire.com

Apache is functioning normally

Today’s guest, Christian Koenig, has perfected his system for converting paid leads from Zillow. On average, he spends $20k per month on real estate leads and converts at a rate that generates $40k in commissions—a $20k profit! Tune in for tips on getting the most out of Zillow leads, including which zip codes to purchase and where to start with your budget. Christian also shares his highest converting script and a simple strategy for maximizing your speed to lead.

Listen to today’s show and learn:

  • About Christian Koenig [2:02]
  • Christian’s start in real estate [3:02]
  • Christian’s thoughts on open houses [6:01]
  • Where Christian started with paid real estate leads [7:30]
  • Budgeting for buyer and seller leads [12:10]
  • Sustaining your ad spend for at least six months [14:20]
  • How to pick a zip code for Zillow leads [17:40]
  • Considerations to make before committing to Zillow leads [22:52]
  • The importance of consistent speed-to-lead practices [26:48]
  • How Christian increased his Zillow budget over time [28:32]
  • Where to cap your ad spend as a solo agent [33:42]
  • The two types of Zillow leads [35:56]
  • What Christian nets from Zillow leads right now [36:55]
  • Christian’s future plans for cold leads [39:42]
  • Tips for converting leads as soon as they come in [43:25]
  • A quick, simple script for setting appointments consistently [46:58]
  • Christian’s budget spreadsheet for real estate agents [51:05]
  • When doing everything on your own stops making sense [54:57]
  • Where to find and follow Christian Koenig [57:51]

Christian Koenig

North Philadelphia born and raised, on the BMX track is where Christian spent most of his days. All jokes aside, he is originally from North Philly and brought up in an entrepreneurial, hardworking household. Joining the United States Air Force at 18 sent Christian to Texas for basic training and then on to Langley Air Force Base in Hampton, VA for six years. He crewed F-22 Raptors for the 27th Fighter Squadron with some of the most talented mechanics he has ever met. Being a part of that team and seeing the process of bringing the first fifth generation fighter jet to combat ready status is something that Christian holds very close. He spent two of those six years as part of the USAF F-22 Demonstration Team traveling the world and showcasing Air Superiority at air shows to millions of spectators. His respect and dedication to serve those that came before him in the military drive him to excel each and every day.

After leaving the Air Force in 2012, Christian began working for a defense contractor on the west coast manufacturing explosives and assembling defense missiles. That led to a position within the quality control department and soon he was the lead inspector specializing in three-dimensional scanning technology for the company. Christian spent the next four years working closely with their research and development departments bringing in new technology to stay ahead of their competitors while increasing quality control. His dedication to craft and constant attention to detail lead in everything he does.

Christian was introduced to the amazing Idaho lifestyle in 2012. As an avid outdoorsman, there is, in his opinion, no better place to call home. Each season offers a unique way to enjoy the outdoors. Saving the best for last, Christian’s beautiful wife is the driving force in his life that keeps him grounded. They have two incredible children and spend their off hours keeping them entertained along with their German Shepherd, Ivy.

Related Links and Resources:

It might go without saying, but I’m going to say it anyway: We really value listeners like you. We’re constantly working to improve the show, so why not leave us a review? If you love the content and can’t stand the thought of missing the nuggets our Rockstar guests share every week, please subscribe; it’ll get you instant access to our latest episodes and is the best way to support your favorite real estate podcast. Have questions? Suggestions? Want to say hi? Shoot me a message via Twitter, Instagram, Facebook, or Email.

-Aaron Amuchastegui

Source: realestaterockstarsnetwork.com

Apache is functioning normally

Mortgage rates have risen to their highest levels in more than 20 years, making it harder to afford a home. And yet, out of necessity or desire, hundreds of thousands of people buy homes every month.

With the 30-year fixed rate topping 7%, NerdWallet asked real estate agents and mortgage loan officers for advice on how home buyers can stretch their homebuying dollars in this time of high interest rates. Here are nine tactics that they suggested.

1. Ask the seller to reduce the mortgage rate

Temporary mortgage rate buydowns have become commonplace since rates surged in early 2022. With a temporary rate buydown, the seller pays a portion of the buyer’s interest payments upfront. This reduces the house payments for the first one, two or three years of ownership.

“This is a common strategy for new-home builders, but it can also be used in the purchase of resale homes,” said John Bianchi, executive vice president for loanDepot. (All sources in this story commented via email.) “Negotiating a temporary buydown with the seller can help soften the blow of high interest rates, reducing your monthly payment for one to three years.”

In one typical setup, the seller’s payment effectively cuts the buyer’s interest rate by 2 percentage points in the first year, and by 1 percentage point in the second year. After that, the buyer pays the full interest rate. This is known as a 2-1 buydown.

Another option is to reduce the mortgage rate permanently, using discount points. One discount point equals 1% of the loan amount; each point typically reduces the interest rate by around 0.25 percentage point.

“Home buyers have an opportunity to get a seller to pay for these methods to lower their interest rate,” said Chuck Vander Stelt, a real estate agent in Valparaiso, Indiana. “Some home buyers should seriously consider offering a more generous price to the seller in exchange for a large closing cost concession and then use those funds to buy down the interest rate as much as possible.”

2. Use part of your down payment to pay down debt

When you apply for a mortgage, the lender considers your total debt payments for the house, car, student loans and credit cards. Sometimes it makes sense to divert some of your intended down payment money to cut the higher-rate debt first, said David Kuiper, vice president and senior mortgage banker for Dart Bank in western Michigan.

“While the mortgage payment will be slightly higher, the total debt/payments is lower, making the proposed purchase more affordable,” Kuiper said.

3. Use home buyer assistance programs

State and local governments sponsor an abundance of programs to make homes affordable for home buyers, especially first-timers. Some programs offer down payment assistance and help with closing costs. Others offer favorable interest rates or tax credits.

Details differ from state to state. Some programs are targeted to certain counties, cities or neighborhoods. Others are intended for specific groups of people, such as teachers, first responders or renters who live in public housing. Some programs have income limits.

4. Ask the seller to finance the purchase

You can give the seller an IOU for part of the home’s value and make monthly payments directly to the seller at an interest rate that’s lower than you could get from a bank. This arrangement is called “seller financing” and has its roots in the early 1980s, when mortgage rates zoomed as high as 18%.

You might wonder why a seller would agree to such a deal. “They will often do this in order to get the price they want,” said Janie Coffey, who leads the Coffey Team with eXp Realty in St. Augustine, Florida. The seller gets full price while you get a break on the interest rate.

Seller financing usually has an end date: Within three, five or 10 years, the buyer must get a mortgage from a lender to pay off the amount owed to the seller. Coffey explained that the type of seller open to this arrangement often has paid off the mortgage “and is OK to wait for their big payoff.”

Seller financing is complex. Use an experienced real estate attorney to draw up the contract.

5. Don’t wait for a rate you like better

“If the right house comes along and the payment is affordable (even if you don’t like the interest rate), you should buy the house,” Kuiper said.

You often hear that you should buy now and refinance someday, after interest rates fall. That’s not Kuiper’s point. His point was this: If mortgage rates fall, more buyers will rush into the market. They’ll make competitive offers and drive home prices higher, “essentially wiping out any advantage of the lower interest rate.”

6. Don’t get distracted by things you don’t need

Some sellers want flexibility about the closing date, would prefer the buyer to make repairs, and are scared of accepting an offer from a buyer who ends up failing to qualify for the mortgage.

Vander Stelt advises staying focused on price with these hassle-avoidant sellers, while being flexible on the rest of the offer on the house. “Do this by offering the best terms you can, including buying the home as-is, a closing date and possession that works best for the seller, and illustrating how strong of a candidate you are to get your mortgage approved,” he said.

You can demonstrate that you’re a strong mortgage candidate by showing a preapproval letter and by sharing financial information, such as account balances that prove you have the cash for the down payment.

7. Buy a house that needs work

Buying a fixer-upper is an old-fashioned, time-tested way to save money. “If you can be patient, it’s worth buying a home that needs work and slowly fixing it up over time or taking a renovation loan to acquire the home and do the work upfront,” said Brian Koss, regional sales director for Movement Mortgage, in Danvers, Massachusetts.

8. Build a house or buy a brand-new one

“Building a new home can provide more certainty around how long you will have to wait to move in, it can provide more cost certainty, and it can save you money in the short and long term by avoiding costly remodels, appliance repairs and unexpected repairs of older parts of the home,” said Jeffrey Ruben, president of WSFS Mortgage in the Greater Philadelphia area.

Buying a new home in a development has some of the same advantages. And today’s buyers have good reason to shop for new construction because there’s a shortage of existing homes for resale.

9. Rent out part of the house

Coffey suggested using an old strategy with a trendy name — house hacking — “buying a property like a duplex, where you live in one unit and rent out the other,” she said.

If you buy a duplex, triplex or quadplex, and you live in one unit, you can include the expected rental income for the others when qualifying for a loan. In some cases, you can qualify for a mortgage using expected rental income from an accessory dwelling unit, such as a basement apartment or a tiny house in the backyard.

If you buy a home today, you’re stuck with high mortgage rates for the time being. But by employing some creativity, you might find a way to afford homeownership.

Source: nerdwallet.com

Apache is functioning normally

Apache is functioning normally

Does retail sales experience translate to real estate? If the success of today’s guest, Landon Stone, is any indication, it certainly can! Landon’s team doubled their business in a market that’s down 40 percent. And his first year in the business, he closed 33 deals. Listen and learn how to start your real estate career with strong sales and how to scale your success with a team. Landon and Shelby also discuss FSBOs, expired listings, high-value clients, and more.

Listen to today’s show and learn:

  • Landon Stone’s transition from retail to real estate [2:19]
  • Landon on selling his first flip [6:03]
  • Why Landon decided to become a real estate agent [7:31]
  • How Landon closed 33 homes his first year in real estate [9:32]
  • The one goal to focus on when calling cold leads [13:28]
  • From FSBOs to expired listings [17:39]
  • How to get referrals and the conversations to have with cold leads [19:27]
  • Why Landon Stone almost quit real estate after a successful start [22:22]
  • Advice on starting a real estate team [26:37]
  • What Landon’s real estate team looks like now [28:27]
  • Winning business in a down market [33:00]
  • Determining your average ticket and increasing it [36:41]
  • Where to find high-value clients [38:16]
  • Resources for doing deals [41:06]
  • Landon’s advice for real estate agents [43:44]
  • Landon’s plans for growing his real estate business [49:36]
  • Where to find and follow Landon Stone [52:23]

Landon Stone

Landon Stone is BORO Realty Group’s CEO, Founder, & Team Leader! He’s driven & passionate about helping those around him make all the right moves! Landon, born and raised in Texas, relocated to the Greensboro, NC area after graduating from Texas Tech University. With a history of working in sales, the ambition of an entrepreneur, and a dream of designing a life to be proud of, Landon found himself starting his career in Real Estate. His mission is to advise his clients at a high level of expertise with a goal to help all of his clients build and maintain long-term wealth. As a General Contractor and Real Estate Investor, he adds an additional dimension of value being able to help clients make design and rehab decisions based on the value it brings to their properties. He strives to impress, push boundaries and help those around him grow into the people they desire.

Related Links and Resources:

It might go without saying, but I’m going to say it anyway: We really value listeners like you. We’re constantly working to improve the show, so why not leave us a review? If you love the content and can’t stand the thought of missing the nuggets our Rockstar guests share every week, please subscribe; it’ll get you instant access to our latest episodes and is the best way to support your favorite real estate podcast. Have questions? Suggestions? Want to say hi? Shoot me a message via Twitter, Instagram, Facebook, or Email.

-Aaron Amuchastegui

Source: realestaterockstarsnetwork.com

Apache is functioning normally

A typical 20% down payment on a home in a U.S. metropolitan area costs $80,250, based on the median price of a single-family home of $402,600 in the second quarter of 2023.  However, for many first-time homebuyers, the hurdle of making a substantial down payment can seem insurmountable and many can only put down 3-5%, or $12,078 – $20,130.

This is where down payment assistance programs can come into play, offering a lifeline to those aspiring to become homeowners. But, what are they exactly and how can we help our clients utilize them?

What are down payment assistance programs?

Down payment assistance programs (DPAs) are initiatives designed to help first-time homebuyers bridge the gap between their savings and the down payment required to purchase a home. These programs are typically offered by government agencies, nonprofit organizations and occasionally private entities. DPAs can take various forms, such as grants, loans or second mortgages, and they are typically tailored to meet the specific needs of the target demographic.

There are four main types of down payment assistance:

  • Grants: Gifted money that never has to be repaid.
  • Loans: Second mortgages that are paid monthly along with your primary mortgage.
  • Deferred loans: Second mortgages with deferred payments that only have to be paid when you move, sell or refinance.
  • Forgivable loans: Second mortgages that are forgiven over a set number of years (often five, but maybe up to 15 or 20). These only need to be repaid if you move, sell or refinance too early.

Examples of down payment assistance programs

The FHA offers low down payment loans to first-time homebuyers. With an FHA loan, borrowers can put down as little as 3.5% of the home’s purchase price. This low barrier to entry makes homeownership more achievable for those with limited savings.

Many states in the U.S. also offer their own DPA programs to assist local homebuyers. These programs can provide grants, low-interest loans or second mortgages to cover a portion of the down payment and closing costs. The specific details vary from state to state, but they generally aim to make homeownership more accessible.

Some local housing authorities and city governments provide down payment assistance to residents. For instance, the city of Denver has its “metroDPA” assistance program, which is currently helping people throughout the Front Range become homeowners. If you make up to $188,250 a year and have a credit score above 640, metroDPA can help with a home loan and down payment assistance to help you buy a home.

Nonprofit organizations like Habitat for Humanity have been instrumental in promoting homeownership among low-income individuals and families. They offer sweat equity programs and interest-free loans to help prospective homeowners achieve their dreams.

We all know that one of the most significant barriers to homeownership for first-time buyers is the initial down payment. Many people are eager to learn ways they can afford it but feel lost as they try to navigate the landscape of what to do next. 

This is where we as Realtors are ready to educate our buyers with information and help clients find the right path(s) to alleviate financial burdens by providing funds to cover a portion of the down payment. 

Remind clients about demographics for DPAs

First, we educate clients that DPAs often target specific demographics, such as low-income families, veterans or those living in high-cost housing markets. By doing so, these programs broaden the pool of eligible homebuyers and ensure that homeownership is not solely reserved for the well-off. As a result, we should also set expectations for clients so they don’t assume they’ll have DPAs to rely on. 

Explain the different assistance programs available 

Another factor to guide clients on is that DPA programs provide assistance in the form of grants or forgivable loans, though these are harder to lock in. These funds do not need to be repaid if the homeowner stays in the property for a specified period, typically several years. This helps lower the overall cost of homeownership, making monthly mortgage payments more manageable. Be realistic with clients on whether this is a viable option for them and their current financial situation. 

Suggest credit counseling services

Educate clients on where to turn to for credit consulting. For so many, one medical bill or missed payment can take a hammer on credit scores. Clue clients in on places they can turn to in order to help improve their credit scores.

Find a housing counselor

Housing counselors throughout the country can provide advice on buying a home, renting, defaults, forbearances, foreclosures and credit issues. The counseling agencies on this list are approved by the U.S. Department of Housing and Urban Development (HUD) and they can offer independent advice, often at little or no cost to the client.

Over time, homeowners build equity as they pay down their mortgages and as property values appreciate. DPAs set first-time homebuyers on the path to wealth accumulation, enabling them to build a financial foundation for the future.

The resurgence of down payment assistance programs represents a ray of hope for first-time homebuyers, particularly those facing financial constraints. These programs play a pivotal role in reviving the dream of homeownership by reducing the initial financial barrier and making it more attainable for a diverse range of individuals and families.

By offering assistance in various forms, from government-backed loans to nonprofit grants, DPAs allow first-time homebuyers to step onto the property ladder. This not only benefits the homeowners themselves but also strengthens communities and fosters financial stability.

As the popularity of DPAs continues to grow, they hold the promise of expanding homeownership opportunities for countless individuals, ensuring that the American dream remains within reach for all those who aspire to call a house their home and ultimately build generation wealth.

Jessica Reinhardt is the 2022-2023 chair of the Denver Metro Association of Realtors.

Source: housingwire.com

Apache is functioning normally

Apache is functioning normally

Editor in Chief Sarah Wheeler sat down with Kenon Chen, executive vice president of strategy and growth at Clear Capital, to talk about appraisal modernization and how technology is just part of the solution.

Sarah Wheeler: What are some of the biggest challenges right now?

Kenon Chen: The challenge that’s in front of everyone continues to be the market itself, and then housing affordability. With mortgage rates continuing to remain high and home prices remaining high because of low supply, we’ve had another year of a reduced market. It’s difficult for lenders who don’t have a lot of extra cash to invest in making big changes right now — they need to stay focused on running their business in a smart way. But that’s why I think it’s really on solution providers like us to run ahead and create great opportunities that don’t require a lot of extra work and time and investment.

For us that means really simple APIs that are easy to integrate with, providing flexible options for how lenders can consume the products. That’s also making sure we’re partnering with the ecosystem to solve problems before the lender even asks for it and working with partners to make sure they can consume these products within the solutions they’re already using. That’s been a big part of the focus: getting the whole ecosystem to work together better so it doesn’t put all the onus on lenders to have to integrate a lot of different places to just get one solution together.

SW: How are appraisers adapting to some of these challenges, including new rules on valuations from the GSEs?

KC: Change is always hard. The GSEs implemented a number of policy changes that are an evolution from what appraisal has been for decades. So now we have multiple risk-based options: waivers, waiver plus property data, desktop appraisals, hybrid. Lenders and appraisal companies have a lot more menu options and their tech choices have to take them down the right path.

We’ve invested in the property data collection process and scaled it for a national level with mobile tech to capture all of the data right at the site. We’re using computer vision, AI, to capture the whole property into the space. We’re creating a digital twin and bringing the property into the digital realm, building a formation model and driving from that place as opposed to starting from a clipboard.

That’s required changes for everyone involved and we’ve been rolling that out as the market change happened at the same time. We see lenders really looking to the future and preparing for when volume returns — investing now to have a competitive edge in the future.

SW: How hard is it to change the way valuations are done at a fundamental level?

KC: Many lenders’ loan origination systems are really just providing a document repository and maybe some screens. But what ends up happening is that underwriters have to open up a lot of different documents, go to a lot of different sites. And one, that’s inefficient, but two, I think there’s something powerful about aggregating all the data first, running models on it, and then bringing back findings that focus underwriters where they need to look.

Most lenders’ loan origination systems are not designed to do that, for collateral especially. That’s been an area that’s a lot more PDF-based, because you have a PDF-based appraisal, you have a PDF base SSR. So that’s why we’ve invested a lot in a tool with an API that you can bring all your findings in at one place, as well as underwriting tools that put the right information in front of the right person at the right time. But all of that takes years of investment to create something that is really battle tested and can have proven results.

SW: Is the end goal of appraisal modernization to replace appraisers?

KC: The GSEs say all the time that they didn’t redesign these processes to replace appraisers, but to add more objectivity to the process, to create efficiencies in the process. Regardless of the tech used, there are human eyes reading, observing and looking at the data or a model, but starting with objective truth about the subject property is essential. And having a process that’s repeatable and standardized and consistent in every community — that’s where tech really helps.

We’ve been able to roll out standards through our mobile app that guides appraisers so that they’re grabbing the same data in the same way at every home. The evolution of mobile tech and AI and then greater connectivity when it comes to APIs to bring that data to people at their desks is what’s allowed us to approach this differently and do it at scale.

SW: Getting accurate square footage and floor plans has been a thorn in the side of the GSEs and agencies for years. Is that now solved?

KC: We went shopping for a solution back in 2016. There was a refi boom in Oregon and Colorado and appraisals were taking six weeks at the time. There was so much pain caused by elongated turn times — borrowers having to live In hotels when they were in between properties. We thought there has to be a better way.

Looking at the amount of time just driving, a time study showed appraisers were spending sometimes 30-40 hours a month just driving. Instead, we wanted to bring homes to the appraiser. We tried everything but we didn’t find anything that scaled to where anyone could do it with a mobile phone. Then we discovered CubiCasa and it actually worked. We had a partnership that led to acquiring the company. It’s now been adopted by real estate agents, brokers, photographers. We have about 30 Multiple Listing Services who have partnered with us as well.

MLSs want more accurate data and public records not always up to date. CubiCasa provides better data, shortening the days on market for the property. Consumers can really understand the property before they visit. It’s really rare that an app helps both the real estate process and the mortgage process and also makes secondary investors more comfortable. 

SW: What keeps you up at night?

KC: Tech is always changing. And the conversations around generative AI have captivated the industry because seeing how fast things are changing and how fast these new capabilities are coming is now a lot more visible. So it’s always necessary to innovate, but in a way where you’re not introducing risk into the system. For us, it’s always about innovating in a thoughtful way, not just to try the new thing for the sake of trying a new thing, but making sure it really will have the outcome, the benefits we’re looking for and that it can be really useful to our clients.

Source: housingwire.com