Home Buying Home Ownership Mortgages + Lending

Green Your Home With a Loan.

Fannie Mae announced HomeStyle Energy mortgage program last year, to help borrowers finance energy and water upgrades to make their home more energy efficient when buying or refinancing a home. The loan makes buyer-owners eligible to receive up to 15% of the as-completed appraised value of the home/condo to use for energy efficient upgrades. An “energy report” prepared by a local qualified energy assessor to verify the upgrades is required. Without a report, borrowers can still finance up to $3,500 in water efficiency improvements. Learn more at

Mortgages + Lending

5 Mortgage Lending Myths.

Myth # 1: You won’t be approved.
The requirements to buy a home may not be a tight as you think they are. Some terms have been relaxed. Talk to a reputable loan officer before ruling yourself out.
Myth # 2: Talking to a lender can wait.
Don’t leave talking to a mortgage professional until after you have chosen a home, as there are things (such as that in #3 and #4) that should be done before you start looking.
Myth # 3: You can find out about and fix your credit later.
Check your credit before starting the mortgage and home buying process, because it may be too late during it.
Myth # 4: Being “pre-qualified” is sufficient.
Pre-qualification is typically an estimate by a mortgage professional of what you can afford based on your self-stated income. To actually get a loan you need to be pre-approved. Pre-approval includes pulling your credit and accumulating other documentation necessary to establish that you should be able to get a loan up to a stated amount.
Myth # 5: You need to have a 20% down payment.
There are other options for some borrowers. FHA has a 3.5% program, and Fannie Mae and Freddie Mac have also have a program for lower income borrowers. Ask your lender representative, or email me at for a referral to someone I trust.


Mortgages + Lending

Getting a Loan could get Ugly

Rumblings from the loan industry are that loans could be much harder to get in the future. Restrictions are being imposed upon government related loans, which are big part of current financing. Nationally, Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA) buy or insure approximately 97% of residential mortgages.

FHA loans are important to sales of homes in the $50,000 to $350,000 price range. In the greater Phoenix area in March, approximately 30% of the loans made between $100,000 to $250,000 were FHA loans. Most of the buyers using FHA loans cannot satisfy the requirements for a conventional loan, so without an FHA loan, they would not be able to buy. So any significant change to the terms of FHA loans will reduce the amount of buyers and consequently the total of homes sold.

Despite their importance, the federal government has proposed Fannie Mae and Freddie Mac be phased out. The problem is that these government-sponsored entities have recently incurred huge losses, requiring more than $150 billion in taxpayer help so far. The proposal also calls for a more limited role for the FHA, which insures loans with low down payments.

According to an article in The New York Times ( – “A Plan to Phase Out Fannie Mae and Freddie Mac”), consumers could see higher borrowing costs as early as this year. Should Fannie and Freddie be phased out in any considerable way, industry experts believe that the 30-year fixed-rate mortgage will likely become harder to find and more expensive. Even if not phased out in the near future, the proposal calls for an increase to a 10% minimum down payment for all Fannie and Freddie loans (up from the current 3.5%).

More negative impact is expected from the Dodd-Frank Wall Street Reform and Consumer Protection Act. Dodd-Frank contains a risk retention rule in Section 941 that requires mortgage originators to retain a certain number of loans in their portfolio when the down payment is less than 20%. In other words, they can’t sell all of the loans they originate, but must “share the risk” by retaining a number of low down payment loans. The National Association of Realtors opposes the 20% requirement, and has warned that the law may “exclude hundreds of thousands of buyers from home ownership.” (Realtors® Oppose High Down Payment Requirement for Qualified Residential Mortgage Exemption;

Dodd Frank also has additional underwriting requirements, specifies certain prohibited loan features, and adds servicing requirements related to loss mitigation. As a result, there could be fewer lenders willing or able to compete in this marketplace, and less available loans from those that remain. More regulation and less competition for your loan will inevitably mean higher, and potentially unaffordable, loan costs.

So there are excellent reasons to not put off a home purchase. You also might not want to delay selling your existing home, because the new laws will result in less eligible buyers for your property. Let us know if you have any lending questions or need help buying or selling your home.

– N. Mark Kramoltz © 2015

Mortgages + Lending

Borrow Now and Save!

Mortgage rates in 2010 were the lowest in six decades. Will they stay low, or will they rise, making the purchase of a home more expensive in 2011?

In November of 2010, the 4.17 percent interest rate was the lowest since Freddie Mac began tracking rates in 1971, and the lowest since World War II, according to Weiss Research, a financial analysis and publishing firm ( Rates in December did rise, fluctuating around 4.83 percent.

According to the Realty Times, last week the U.S. weekly average mortgage interest rate was 4.86% for a 30 year-fixed loan, but has dropped to 4.77% this week. So rates, although fluctuating, have inched up in 2011.

Still, borrowing costs are still very affordable, compared with the rates of 6 percent to 8 percent over most of this decade. To get an idea of how good things are right now, you can look at a table of historical rates available from Freddie Mac at

The historically low rates may continue. The chief economist of Freddie Mac wrote in an annual trend forecast on December 6 that “while some rise in fixed-rates is expected, 30-year fixed-rate loans are likely to remain below 5 percent” throughout 2011.

But most other experts expect rates to rise at a greater rate. HSH Associates, an independent publisher of mortgage and consumer loan information, stated that with 2010’s historically low rates, interest rates have nowhere to go but up ( In addition, the Mortgage Bankers’ Association, a trade group, predicted that 30-year fixed rates will inch up to 5.1 percent by the end of 2011 and reach 5.7 percent in 2012 (

The recent and sustained increase in interest rates indicates that consumers can expect to incur higher borrowing expenses later in the year. Home prices are also expected to rise this year. As a result, if you plan to buy a home in the Phoenix metropolitan area this year, you should do it sooner rather than later.

– N. Mark Kramoltz © 2015

Mortgages + Lending

Is a Reverse Mortgage Right for You?

A reverse mortgage usually pays a lump sum and is not used to acquire a property. Because these characteristics differ from the type of loan used to buy a home that we are all used to, it has been given the “reverse” moniker.

Typically a reverse mortgage borrower uses the equity in the home to meet obligations the owner is unable to pay due to a lack of cash flow. The amount of the loan is based on the equity or the value in the borrower’s home. No payments are made, and traditionally the loan becomes due and payable in full upon the happening of certain events; most often the death of the home owner, but also if the dwelling is sold, or the borrower ceases to occupy the dwelling as a principal dwelling.

As a result, this type of loan is a niche product, only suitable for a select group of homeowners. But some mortgage brokers discovered how lucrative these loans were, and they encouraged their use when a reverse mortgage was not the right choice for the particular borrower. Other problems included hard sell tactics, high costs and undisclosed costs.

Unfortunately these abuses have given reverse mortgages a bad name. However, Arizona recently enacted various new provisions regulating the origination of reverse mortgages. These statutes should eliminate the lack of advice and disclosure which made it difficult for borrowers to evaluate whether a reverse mortgage was right for them.

The terms of the loans are minimally regulated. It is their creation by the “originator,” that are dictated, by a series of disclosure requirements applicable throughout the reverse mortgage origination process.

Prior to accepting a final reverse mortgage application or assessing any fees, a loan originator must: (1) provide the borrower with a list of at least five housing counseling agencies, including two that can provide counseling by telephone; and (2) receive certification that the borrower has received counseling. These requirements try to ensure that if the originator fails to assist the borrowers in determining whether is suitable, someone else will.

The new provisions also require that at least 10 days prior to closing, the originator provide a statement informing the borrower that the borrower’s liability is limited under the reverse mortgage (it is non-recourse), and explaining the borrower’s rights, obligations, and remedies as well as all conditions requiring satisfaction of the loan obligation.

Prior to entering into a reverse mortgage, an originator must disclose: (1) all costs charged by the originator, including costs of other services that are related to the reverse mortgage, but not required in order to obtain the reverse mortgage (e.g., estate planning, financial advice, etc.), clearly identifying which charges are required in order to obtain the reverse mortgage and which charges are not; (2) all terms and provisions regarding insurance, repairs, alterations, payment of taxes, default reserve, delinquency charges, foreclosure proceedings, anticipation of maturity, and any additional second liens; and (3) the projected total cost of the reverse mortgage, based on the projected total future loan balance for at least two projected loan terms, including the cost for a short-term mortgage, and the cost for a loan term equaling the borrower’s actuarial life expectancy.

Additional protections in the new statutes include prohibitions on cross-selling – the practice of inducing borrowers to agree to buy an annuity, an investment or long-term care insurance before the closing of the reverse mortgage.

Thanks to the new law, reverse mortgage customers are required to give their informed consent to the terms of the loan. Since those terms are complicated and unfamiliar to most borrowers, it is absolutely essential to understand what they are in order to determine whether a reverse mortgage is suitable and affordable. Now the only practical limitation to greater use of these loans is the lack of equity many home owners have in their residences in the metropolitan Phoenix area.

We can assist a careful analysis of your needs. If you would like us to help determine whether a reverse mortgage makes sense for you, you can reach me at 480 675-0112, or through our website at or

– N. Mark Kramoltz © 2015

Mortgages + Lending Real Estate Facts & Figures

By the Numbers – Your Real Estate Update

First, the good news. Rates on 30 year mortgages matched the lowest level in decades by falling to 4.32%. According to Freddie Mac, this is the lowest rate since 1971. The rate on 15-year fixed loans fell to 3.75%, the lowest since records began in 1991.

The 15-year rate is particularly good news, because the 15-year term will result in a big interest saving and allow you to build equity faster. If you are buying a home or refinancing, I recommend you lower your cost of borrowing by seeing if you can afford the payments under a 15-year loan. You will be pleasantly surprised at how quickly the loan is paid down due to the shorter term.

Other good news comes is that nationally the number of contracts to buy homes in August rose for the second straight month.

Here in Arizona, the news isn’t as good. The median price of all resale homes sold dropped further from this year’s high of $135,000 in April to $122,000 for August. June was $133,000 and July’s median number was $129,000. Recently foreclosed homes were the poorest performers, indicating that fewer investors are willing to pick up those homes. The median price of metropolitan Phoenix area condos fell from $65,000 from $77,000.

But its not all bad. The affordability of homes and condos has never been better. If you can’t afford to buy now, you probably don’t have a job! Everybody else should give home ownership a try. Don’t wait until prices and interest rates rise when you might not be able to afford it.

Other good news is that the Arizona legislature passed a bill that prevents resale fees – a sum paid to a developer when you sell your new build. Often that sum equals a one or more percent of the sales price. Preventing developers from getting into your wallet is good as it will increase your net when you sell.

Finally, Bank of America has joined four other major lenders in delaying starting or completing foreclosures, although B of A is the only lender to do it nationwide. Errors in the foreclosure process are said to be the reason. Some of the blame has been place on “robo-signers,” people who sign hundreds of foreclosure documents a day without reviewing their contents.

I’m thinking the fact that about 20 percent of the home loans Bank of America services are delinquent also has something to do with the moratorium; lenders just don’t want to take back more homes. Nationwide, more than 300,000 homes were foreclosed on in the U.S. in August, and more than 2,000,000 homes are said to be in the inventory of lenders in the U.S.

That lenders are not in a hurry to start or complete foreclosures can also be seen in figures which show that the average foreclosed borrower has not made a payment in 18 months. This is great if you are short of funds, as you can live for free for an extended period of time, which may allow you put money down on another home if you can overcome the credit issues.

One alternative to obtaining the standard loan is a “rent to own” arrangement. Owners of some properties are offering this alternative to buyers with poor credit. You can build “equity” by application of the rent to amounts required to close. Give us a call if you would like to find out how SimplySOLD can help you find these type of properties. You can reach me at 480 675-0112, through our website at or

– N. Mark Kramoltz © 2015

Mortgages + Lending

Can you get a Loan after a Foreclosure or Short Sale?

Short sales are a fact of life in Arizona residential real estate. A short sale is defined as the sale of a property, resulting in a payoff of less than the total amount owed, in lieu of a foreclosure or to permit a sale. If you are the next metro Phoenix homeowner to “short sale” your home, you will be in good company; short sales have averaged just over 20% of residential sales in 2010 (21% in May).

One reason to do a short sale is that it should have less impact on your ability to get credit in the future compared to a foreclosure. In an earlier blog I provided estimates of the effect of a short sale and a foreclosure on a credit score. Predictably a short sale had a lesser, negative effect on your credit score than a trustee’s sale according to Fair, Isaac & Co., the creator of the credit score system, although the amount of that effect is may change in the future.

But there is another reason a short sale may be advantageous over a foreclosure. A foreclosure will have the maximum negative effect on the ability of a borrower to quality for a loan insured by a governmental affiliated entity. Since the overwhelming amount of loans made are FHA, Fannie Mae and VA, this restriction could prevent a potential home buyer from getting a loan even if the credit score was otherwise sufficient.

Late last year HUD issued rules regarding the eligibility of a past short seller for a future new FHA-insured mortgage. Various criteria were established which allowed a former pre-foreclosure event borrower to receive a government insured loan under certain conditions – as opposed to the “no exception” blanket rule (for three years) that applied to borrowers with a foreclosed governmental loan.

Fannie Mae’s required “waiting period” for a borrower to be eligible for a mortgage loan after a short sale is changing to two years effective July 1, 2010. The waiting period begins on the completion date of the pre-foreclosure event, and its length may vary based on the maximum allowable loan to value ratios (LTV) and the occupancy of the property. The borrower must meet FNMA’s “extenuating circumstances” policy (such as the default being beyond the borrower’s control, which remains unchanged), with the new loan having a maximum LTV of 90%.

Fannie Mae also changed their requirements for reestablishing credit after a significant derogatory event. After a bankruptcy, foreclosure, deed-in-lieu of foreclosure, or pre-foreclosure or short sale, the borrower’s credit will be considered reestablished if the waiting period and the related requirements are met, the borrower meets certain credit score criteria, and has “traditional” credit.

More information on the government loan programs is available at and FICO and credit scoring guidance can be found at Fair Isaac’s website:

By the way, the May 2010 numbers showed that lender sales of property foreclosed upon were 37% of the residential sales for that month, leaving “normal” sales the majority of transactions at 42%.

At SimplySOLD we have the expertise to help you no matter what type of sale you need.

– N. Mark Kramoltz © 2015

Home Buying Mortgages + Lending

Gov’t Incentives will Expire Soon, so buy Now!

The government wants you to buy real estate. As a result, two programs are available to significantly reduce your acquisition costs. So in addition to the low prices, there 2 additional reasons to buy in the Phoenix area right now! But these opportunities expire soon, so you shouldn’t put off any planned investment in Phoenix area real estate.

The programs’ qualification requirements, dates and deadlines are different, so do your research and get the necessary help in order to be sure you qualify.

First is Fannie Mae’s new closing cost assistance program on purchases of their foreclosed upon houses. The reason for the program is said to be to stabilize communities and assist home buyers. I think the real reason is that they have too much foreclosed upon inventory. So this is like a sale, and we all love sales, right?

What Fannie Mae is offering is a 3.5% incentive for buyers who purchase and close on a Fannie Mae-owned home between January 28 and April 30, 2010. Buyers purchasing properties that close within this period may receive up to 3.5% of the final sales price for closing costs, the purchase of new Whirlpool® appliances (by Fannie Mae on the buyers behalf), or a mix of thereof at the buyer’s discretion, up to the maximum 3.5%.

To be eligible for this incentive the closing must occur before May 1, 2010, and Buyers must be owner-occupants (investors are excluded).

And don’t forget the additional “incentive” supplied by the tax credit. There is no requirement that existing homeowners sell their existing home to be eligible tax credit, so it applies to second or investment homes. For existing homeowners, the amount is $6,500 (“new” buyers get $8,000); but the homeowner must have lived in the home for 5 consecutive years out of the last 8. To qualify for the tax credit, the buyer must have signed a binding contract by April 30, 2010 and close on the home by June 30, 2010.

You should get professional tax help if you plan to take advantage of the tax credit, because there are various eligibility requirements. For example, it is subject to income limits, $125,000 for single buyers and $225,000 for couples. In addition, the sale price of the home being purchased can’t exceed $800,000. Both of those limits need further investigation due to the possibility of different definitions of them, such as whether the limits are net or gross. You can read the eligibility instructions given by the IRS for the tax refund/credit form (number 5405) at

So here are two more reasons to do something now, because both programs expire either in May or June of 2010. And we can help you to get the property you want, so call 480 675-0112 or visit us at

– N. Mark Kramoltz © 2015

Foreclosures + Short Sales

Lenders Aren’t Moving REOs

In an earlier blog, I wrote about the inability of lenders that had completed foreclosures to timely put those homes back on the market. Under ordinary circumstances, a bank will put a “real estate owned” (or REO) home back on the market as soon as possible – often in 30 days. But only some of the many homes foreclosed on by the banks are being listed “for sale” in the Multiple Listing Service.

Real estate experts guessed that somewhere around 450,000 and 500,000 properties repossessed over the past year or so were not on the market. Fannie Mae and Freddie Mac confirmed last year that they were listing approximately 35 to 50% of the homes they own.

Recent reports from Fannie Mae appear to show a decrease in the number of foreclosed properties held. According to its most recent quarterly report, Fannie Mae acquired 98,428 homes through foreclosure during the first nine months of last year, and sold 89,691 REO properties during the same period. Looks like they are just about keeping up, right?

However, at the end of September 2009, Fannie Mae admitted that it still had 72,275 REO properties on its books, marking a 7% increase year-over-year numbers. So in reality in appears that this governmental related entity is falling behind in the processing and disposition of the homes it has acquired by foreclosure.

The delay in getting homes back in the system is especially apparent in localities where there are large numbers of “REOs” – such as our Phoenix/Scottsdale residential real estate market. And loans which end up foreclosed upon by small, non-Freddie Mac and Fannie Mae lenders are probably even more likely to be delayed due to their lack of adequate REO resources.

These time frames may increase due to the escalating rate of seriously delinquent single-family home loans. Fannie Mae’s monthly summary for November 2009 showed notable growth in seriously delinquent single-family home loans held or guaranteed by the company. Loans three or more months behind in payments or those in the foreclosure process soared to 4.98% in November 2009.

Obviously this increase will lead to more REO homes. And this also means that there will be continuing opportunities for buyers to purchase homes for cheap. If you are interested in exploring a purchase of a foreclosed home, let us know at to contact us or for more info.

– N. Mark Kramoltz © 2015

Real Estate Facts & Figures

New Real Estate Facts and Figures

Year end facts and figures concerning Arizona real estate:

Existing home sales showed a healthy gain in November – sales were the highest for that month since 2004! Experts say that was the result of a rush to close before the then expected end of the month expiration of the buyer tax credit (see my last month blog for more info on its extension). December’s sales are expected to be significantly lower.

Based on the latest available statistics, over 83% of Arizona households can afford a median priced home (A median price is in the middle of the range – half of the homes cost more, half less). Nationally 30% of home buyers in July were first timers. The enhanced affordability of homes explains why there have been so many sales to new buyers in the lower price ranges.

Another reason is for the uptick in sales is that interest rates on the benchmark 30-year, fixed-rate mortgage dipped to a 38-year low recently. Freddie Mac recently stated the average rate on a 30-year loan was 4.71% with an average 0.7 point, the lowest rate since the agency began its weekly tracking of long-term interest rates in 1971.

In Arizona, foreclosures have spread outward from the Phoenix area. Prescott foreclosures were up 77% in the third quarter. Great deals on second or vacation homes should be the result of the inevitable sales by the foreclosing lenders.

Home buyers have a lot of factors working in their favor right now – low interest rates, plenty of marked-down homes for sale, and an extended and expanded federal tax credit that will expire in the spring. But lending experts predict that interest rates will move higher over the next 30 to 45 days. Last year at this time, the average 30-year, fixed-rate mortgage was 5.53%.

SimplySold can help you take advantage of this market. Call or contact us at to find out how much you can afford in Phoenix, Scottsdale or elsewhere in Arizona. Don’t wait until the tax credit is gone for good.

– N. Mark Kramoltz © 2015