FHA Changes On Collection Accounts Over $1000

FHA Changes On Collection Accounts Over $1000

For the latest changes regarding FHA MI, Collections and much more, call or email Mike King with azmortgageinfo or visit us at www.azmortgageinfo.com

With the announcement of Mortgagee Letter 2012-3 dated February 28^th, 2012 there are some significant underwriting changes regarding self-employed borrowers, disputed accounts and identity-of-interest (non-arms length) transactions. Click here for the entire mortgagee letter.

The changes will be effective with case numbers assigned on or after APRIL 1^st 2012. This is important to you because it can affect your FHA prequalification if you are shopping for a home. A Case number cannot be assigned until the buyer has an active loan application and a property under contract.

The main section of this letter that may be concern to you: The old guideline stated that FHA does not require that collection accounts be paid off as a condition of mortgage approval. However, court ordered judgments must be paid off. The new guidelines state the following:

• If the aggregate dollar amount of disputed accounts exceeds $1000, the disputed accounts must be resolved. Essentially the disputed accounts must be paid in full at or before closing or payment arrangements with minimum 3 months on time payments must be verified. (Disputed accounts as a result of identity theft, credit card theft or unauthorized use can be excluded from the $1000 limit if the borrower provides documentation (a police report is an example)).

• If the aggregate total of collection accounts exceeds $1000, ALL collection accounts must be resolved. These accounts must be paid in full at or before closing or payment arrangements with a minimum of 3 months on time payments must be verified:
  • If the total outstanding balance of all collection accounts is less than $1000 the borrower is not required to pay off the accounts
  • FHA continues to require all judgments to be paid off (exceptions to this may be made if borrower has agreement with the creditor to make regular payments and he/she provides documentation 3 months on time payments have been made).

How can this affect you?

Currently you may have been a prequalified borrower that has open collection accounts that exceed $1000. If you are not under contract and the lender has not ordered the case number by 4-1-12 you will be required to pay all of them off or make payment arrangements and prove 3 months on time payments before closing.

Your FHA and Complete Mortgage Professional Mike King and azmortgageinfo.

FHA Changing Fee's

Planning to use an FHA-backed mortgage for your next home loan? You might want to get your application in gear today.

Beginning next week, the Federal Housing Administration (FHA) is changing the way it charges mortgage insurance to U.S. homeowners. For the fourth time since 2010, FHA mortgage insurance premiums are rising for all FHA-backed homeowners.

For FHA Case Numbers assigned on, or after, Monday, April 9, 2012, there are two planned changes.

First, FHA Upfront Mortgage Insurance Premiums (UFMIP) will increase by 75 basis points to 1.75%, or $1,750 per $100,000 borrowed. Upfront Mortgage Insurance Premium is paid at closing, and typically added to an FHA borrower’s loan size.

The current UFMIP rate is 1.000 percent.

Second, annual FHA mortgage insurance premiums are rising. All new FHA-backed loans will be subject to a 10 basis point increase in annual mortgage insurance premiums, costing homeowners an extra $100 per $100,000 borrowed per year.

The new FHA annual mortgage insurance premium schedule follows :

• 15-year loan term, loan-to-value > 90% : 0.60% MIP per year
• 15-year loan term, loan-to-value <= 90% : 0.35% MIP per year
• 15-year loan term, loan-to-value <= 78% : 0.00% MIP per year
• 30-year loan term, loan-to-value > 95% : 1.25% MIP per year
• 30-year loan term, loan-to-value <= 95% : 1.20% MIP per year

In addition, for loans above $625,500, beginning with FHA Case Numbers assigned on, or after, June 11, 2012, there will be an additional 25 basis point increase in annual MIP.

To calculate your monthly MIP obligation as a FHA homeowners, multiply your starting loan size by your insurance rate from the list above, then divide by 12.

Note that the FHA mortgage insurance changes apply to new FHA Case Numbers only. If you have an FHA mortgage approval in-process, or an existing FHA home loan, you are not subject to the new MIP schedule. To avoid paying the FHA’s new MIP schedule, therefore, begin your FHA mortgage application today.

Once your FHA Case Number is assigned, you’re locked in to today’s lower premiums.

DO YOU HAVE A PAST CLIENT WITH A FHA MORTGAGE, HAVE THEM CALL ME TODAY AND LETS ATTEMPT TO SAVE THEM MONEY WITH A FHA STREAMLINE REFINANCE.

CALL ME AT 623-451-2261 OR MIKE@AZMORTGAGEINFO.COM

FHA STREAMLINE REFINANCE HELP

Do You Need an FHA Streamline Refinance?  Good NEWs, on my average deal my borrower will only come in with the normal mortgage payment.  I will normally cover all other fee's to include lender and title fees.  CALL OR EMAIL ME TODAY: 623-451-2261 OR mike@azmortgageinfo.com or visit me at www.azmortgageinfo.com

NO APPRAISAL REQURIED SO DON'T BE CONCERNED WITH HOME VALUE....

Income documentation for those other than wage earners and the self employed include the following:

FHA Streamline Refinance Income Documentation Requirements

Standard FHA Streamline Criteria

The following items are necessary to refinance:

• Seasoning – At the time of loan application, the borrower must have made at least 6 payments on the FHA-insured mortgage being refinanced.
• Mortgage Payment History Requirements. The following requirements must be met without exception:
  • Loans with a 12 month payment history: 0×30 lates in the previous 12 months.
  • Mortgages with less than 12 months payment history: the borrower must have made all payments within the month payment is due.
• Net Tangible Benefit (NTB) Requirements: A net tangible benefit for the borrower must apply defined as one of the following:
  • Reduction in the total mortgage payment (PITIA) AND ALL SUBORDINATE LIENS = The new total mortgage payment must be 5% lower
    than the current total mortgage payment on the loan being refinanced. This requirement is only applicable when refinancing from a Fixed
    Rate to Fixed Rate, a GPM to Fixed Rate, a 203k to 203b and a 235 to 203b.
  • Refinancing from an ARM to a fixed rate mortgage =
    • The interest rate on the new fixed must not be greater than 2 percentage points above the current rate on a 1-year ARM.
    • For hybrid ARMs, the total mortgage payment on the new fixed rate mortgage may not increase by more than 20%

Who do you know right now that is in need of refinancing a FHA loan? Call for a free mortgage analysis.

FHA Increasing Fee's

HARP 2.0

Why haven't you heard from me about HARP 2.0?

Well, simply becuase there isn't much to really talk about yet.  The government touted its Home Affordable Refinance Program (HARP) as a way to get the crumbling housing market on the road to a quick recovery and provide much-needed relief to struggling homeowners. Launched in March 2009, HAMP was supposed to help millions of homeowners get out from mortgages that were worth more than the house-- but to date, critics say it has fallen short of expectations. Now the government has refined the program, known as HARP 2.0, in an effort to assist the millions that need a lower mortgage bill.

Folks are talking about HARP 2.0, but I, for one, am not convinced anyone knows quite what to say - but HARP 2.0 rolls on. Matt Lind with STRATMOR writes, "Based on three HARP 2 workshops STRATMOR has recently conducted with lenders, it appears that large aggregators have not yet decided whether or not to purchase HARP 2 loans originated by their correspondents, including loans that they (the aggregators) are currently servicing. Despite a tremendous surge of HARP 2 inquiries from existing borrowers, the attitude of some aggregators seems to be that their existing borrowers --- especially those with high LTV loans --- will have no other place to go and so "we'll get to them when we get to them." If this attitude persists, then non-servicing correspondents --- especially those lenders without Agency approvals -- will be faced with few outlets into which to deliver HARP 2 loans; in effect, making HARP 2 a "big servicer" refinance program. With purchase originations remaining anemic, this could make 2012-2013 unnecessarily tough years for mid-size and smaller lenders, who otherwise could use readily available data base marketing services to receive timely and cost-effective HARP 2-eligble leads if they had outlets for HARP 2 loans. We think, however, that the large lenders will likely succumb to external pressures to open up HARP 2 originations to their wholesale channels. Making their existing, good payment-history borrowers wait months before starting an in-house refinance will delay such borrowers the substantial payment reductions of a HARP 2 refinance and both draw and deserve public criticism."

As of today I have not heard of any investors funding the HARP 2.0 mortgage loans but I will continue to watch this, hope and pray that a program will be available to help all the conforming mortgage borrowers with a refinance program.  Visit me at www.azmortgageinfo.com

As always if I can help you in any way please feel free to contact me at mike@azmortgageinfo.com.

FHA Raising FEE's Again....

The Federal Housing Administration (FHA) announced that it is increasing both upfront and annual premiums for its insured single family loans. An increase of 0.10 percent in the annual premium mandated by the Temporary Payroll Tax Cut Continuation Act of 2011 will be effective for all loans written after April 1. In addition, FHA is exercising its statutory authority to raise other fees for the specific purpose of strengthening FHA's Mutual Mortgage Insurance Fund (MMI).

The upfront premium for all loans will also increase by 0.75 percent on April 1. The upfront premium will thus increase from 1 percent to 1.75 percent of the base loan amount regardless of the amortization term or loan-to-value ratio of the loan. FHA will continue to permit financing of this charge into the mortgage. Finally, on June 1 an additional increase of 0.25 percent will be imposed on FHA-insured loans with principal balances over $625,000 bringing the total hike in those large loan fees to 0.35 percent.

Acting FHA Commissioner Carol Galante said, "After careful analysis of the market and the health of the MMI fund, we have determined that it is appropriate to increase mortgage insurance premiums in order to help protect our capital reserves and to continue encouraging the return of private capital to the housing market. These modest increases are one of several measures we are taking towards meeting the Congressionally mandated two percent reserve threshold, while allowing FHA to remain a valuable option for low- to moderate-income borrowers."

FHA estimates that the premium changes will, in the aggregate, add more than $1 billion to the MIF based on the current volume projections through Fiscal 2013. The increase to the upfront premium will cost new borrowers an average of approximately $5 more per month. The agency said in its announcement that the increases were marginal and affordable for nearly all homebuyers who would qualify for a new mortgage loan.

Details of the rate increases will be published in a Mortgagee Letter to FHA-approved lenders. Borrowers already in an FHA-insured mortgage or Home Equity Conversion Mortgage (HECM) will not be impacted by the pricing changes announced today nor will borrowers in special loan programs which will be outlined in FHA's forthcoming Mortgagee Letter.

Visit us at www.azmortgageinfo today.

Quick Reference Guide for Lending

The FHA Programs For Homeowners In Need â€" But Can They Help?

With the White House’s announcement of several new programs with struggling homeowners in mind, the FHA has a number of housing initiatives to implement over the next few years. Along with a new refi program that seeks to help out underwater non-FHA borrowers, a broad-based REO-to-Rental project has been announced, which will be headed by the FHFA, HUD and Treasury. The latter is the result of the Administration asking for feedback on last year’s RFI process, which should be politically advantageous.  So as I continue to monitor these changes I ask myself with investors fund the programs that FHA say they will do???  Not seeing this yet, but Mike King and azmortgageinfo always stay tuned to new programs, investors and ways to help home owners and buyers.  So if you need help with a mortgage or just questions visit us at www.azmortgageinfo.com or email Mike at mike@azmortgageinfo.com.  Lets read more:

The task ahead is enormous, however, and many lawmakers and industry professionals are unsure if the FHA is up to yet another challenge of this scale. It would mean taking on riskier borrowers, which raises the question of Congress authorizing the Administration to increase LTV caps, how OMB will “score” the proposal, and if new bank fees and higher premium revenue would compensate for the added cost. Cost would be a key factor here, as the White house has stressed that any housing-related programs it may implement will not add to the deficit. Adding to the uncertainty is the FHA’s actuarial soundness, which has taken a significant hit from three consecutive years of declining home prices.

At any rate, the specifics of any program remain uncertain, and the mortgage industry will continue to monitor the progress of legislation. Certainly the FHA has come under scrutiny by having an under-capitalized insurance fund, and many feel that the agency is not being held accountable under the same rules and regulations that others agencies, and private companies, are forced to adhere to.

FHA Flips Can Be Done Learn More....

FHA Flips can be done you just need to understand HOW!

FHA flips and what you need to know

Click here to see the original waiver.

This means that buyers may use FHA financing to purchase a home that was previously purchased by the seller within the past 90 days. Before this waiver an FHA purchaser was required to wait until the seller had owned the property for at least 90 days.

Summary of the waiver:

All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction. The lender is looking for the following:

Seller holds title to the property

LLC’s, corporations or trusts that are serving as sellers were established in accordance to the law

NO pattern of previous flipping as evidenced by multiple title transfer in the last 12 months (this is a big one to look out for)

Property was marketed open and fair

In cases where the sales price of the property is 20% or more above the seller’s acquisition cost, the waiver will only apply if the lender follows these criteria:

Justify the increase with supporting documentation and/or a second appraisal (2^nd appraisal cannot be paid for by the borrower)

A property inspection must be ordered by the lender and the inspector can’t have an interest in the property or relationship with the seller. The cost can be passed onto the borrower at closing.

The property inspection will be reviewed by the Mortgage Underwriter and repairs may be requested. (Underwriter is primarily looking for health and safety issues)

Please note that if the sales price of the property is less than 20% above the seller’s acquisition cost the above does not apply.

If you need help or would like a Free mortgage Pre-Qualificatio please contact Mike King and azmortgageinfo.

Arizona Home Buyers can still use FHA loans on flipped homes

Arizona Home Buyers can still use FHA loans on recently flipped homes. HUD has confirmed that they have extended the FHA anti-flipping waiver for another year. Homes that have been purchased less than 90 days ago and are on the market for sale are eligible for FHA financing until December 12th 2012. Just be sure to ask the seller to pay for 1 appraisal and the buyer will have to pay for one, two appraisals required for most lenders.

This anti-flipping waiver has been a big hit for Arizona home buyers, allowing them to purchase homes that were recently acquired by investors and individuals at the court steps through the foreclosure process.

If you should have any questions please feel free to contact Mike King and azmortgageinfo.

Here is the HUD release if you wish to read it.

Now Is The Time To Buy A New Home

Will your home gain value over the next 12 months? Nobody can know for sure, of course, but should recent housing trends continue, there’s concrete cause for optimism. The Phoenix metro area is a very strong, growing sector in the "Places to live" catagory.


The housing economy has suffered since 2007, knocking home values down nearly 20% nationwide. And while some areas have fared better as compared to others but, in general, home values are down. Phoenix metro area was hit very hard but at the same time we are rebounding very fast, prices are acutally moving up again in many areas.

Mortgage rates are down, too, and that’s good news for buyers in Arizona. The combination of low rates and low prices has led home affordability to an all-time high. Now is the time to buy your next new home for sure..

Some other notes to include :

There are more buyers out looking for homes today, which leads to more sales

The housing market is expected to get gradually better, month-by-month, in 2012

Foreclosures will continue to be a big part of the housing market, but are slowing.

With housing supplies shrinking, buyers throughout AZ may find their best “deals” today — before the Spring Buying Season begins in February.

However, we can’t forget that housing markets are local — not national. Each town and neighborhood has its own market drivers and prices where you live may have already started to climb. So get started today with a free mortgage pre-qualification by azmortgageinfo.com and Mike King.

For accurate, up-to-date data on the housing market, talk with a local real estate agent.

Phoenix Housing Market

Recent reports say foreclosures are declining in metro Phoenix and large numbers of homes are selling.

But many homeowners feel trapped in houses they can't sell.

Some real-estate agents can't find enough new listings to keep up with demand from buyers.

But others say there aren't enough buyers, and homes are selling too slowly.

The housing market in metro Phoenix may never have been as confusing as it is today.

Nearly five years after the beginning of the housing crash, the region's market has fractured into countless different niches.

Each niche is defined by who's selling, what kind of home is for sale and where the home is located.

And each niche has become a market of its own.

Some - such as the market for small central Phoenix foreclosure homes being sold at auction - are booming, with prices rising and a huge demand from buyers.

Others - for example, traditional resales of newer large family homes in some neighborhoods in the far west or southeast Valley - have ground to a halt, where homes seemingly won't sell at any price.

Location is one traditional factor in a home's value that still holds true. But in this market, its effect can be extreme. A seller in one neighborhood might receive 10 offers, while the owner of a similar house 5 miles away won't receive any.

In a market this splintered, once-reliable measurements just don't provide enough information for buyers or sellers.

One reliable measure of real-estate activity was the number of homes for sale. Traditionally, 20,000 to 25,000 homes on the market at any given time was considered normal. More than that meant an oversupply, and sellers might have trouble attracting buyers. Fewer meant a limited supply, a seller's market with rising prices.

As the housing market crashed, too many homes had been built. The region's inventory soared to more than 60,000 homes for sale in 2007, and prices plunged.

Today, according to the online real- estate publication the Cromford Report, listings in metro Phoenix are at 27,400 and falling - traditionally, a sure sign of rising demand and rising prices to follow.

But agents and analysts see the same thing many homeowners feel. While some homes are selling easily, others simply won't.

"Phoenix's housing market is a mixed bag now," said Marcus Fleming, manager with the real-estate brokerage Redfin Phoenix. "There's a new normal for the market, but it's a weird one."

Who's selling

One factor that has a big effect on home sales is the nature of the seller.

To understand, consider just how much things have changed in the past decade.

In June 2001, there were about 10,000 home sales, according to the Information Market, a Phoenix firm that analyzes real-estate data. Of that total:

- 7,300 were regular resales between a homeowner and a buyer.

- 2,700 were new-home purchases.

- 82 houses sold at foreclosure auctions.

- One home was sold by Fannie Mae, the federal mortgage giant that backs lenders and takes over those homes when borrowers default.

Ten years later, during June 2011, there were just over 11,000 home sales in metro Phoenix. But the variety of sales was far wider:

- 3,684 were regular resales between a homeowner and a buyer.

- 540 were new-home purchases.

- 1,350 homes sold at foreclosure auctions on the Maricopa County courthouse steps.

- 1,255 houses were sold by lenders that foreclosed on them.

- 2,183 houses were sold by Fannie Mae and Freddie Mac.

- 1,822 homes were sold in short sales, in which lenders agree to let a homeowner sell for less than what is owed on the loan.

- 401 homes were sold by the federal departments of Veterans Affairs and Housing and Urban Development.

Because all of these kinds of home sales work in different ways, the market overall becomes more complicated.

Different categories

The different splinters in the market have each begun to work in their own ways, real-estate market watchers say. Some parts see a lot of sales but low prices; others, the opposite.

- Traditional resales: Fewer of these happen because of competition from cheaper foreclosures and short sales. The ones that sell best are in popular neighborhoods with good schools, near freeways and shopping centers. But the percentage of foreclosure homes listed for sale in metro Phoenix has dropped by 5 percent in the past year, so regular sellers have less competition and might soon find it more easy to sell.

- New-home sales: Homebuilding has slowed to a crawl in metro Phoenix as the market continues to sell the many houses built on speculation during the boom years. Even with low land prices, it's still hard for homebuilders to compete with the prices of foreclosure houses that were built less than five years ago.

- Foreclosure auctions: These have become very popular, and a large volume of homes sell at metro Phoenix trustee auction each month. But homes sell at auction for lower prices, and that makes the market's overall average sales price lower.

- Fannie Mae and Freddie Mac: Homes owned by these entities now dominate the metro area's market. But the agencies often change their policies on appraising, maintaining, renting and selling their houses, so some buyers and real-estate agents steer clear of the hassles of these deals.

"The government's role in the housing market is making things more confusing and bringing down prices," said Mary Gomez, a real-estate agent with RE/MAX Renaissance Realty.

- Short sales: This type of sale was rare a decade ago. Banks were reluctant to agree to them in the early part of the crash, but they have now become common. Because they're not a foreclosure sale, but also are not a traditional sale, the value of a short-sale transaction skews the overall market in ways that are hard to measure.

The bottom line: Today's market is complicated and can't be summed up as simply as in years past.

"Everyone is trying to figure out Phoenix's housing market now, but there's no one set of data that truly tells the story. All the regular models for tracking the market are broken now," said Tom Ruff of the Information Market. "There is not just one market in metro Phoenix anymore."

The effects

That confusion makes it especially hard for homeowners and homesellers to know what their houses are worth.

Traditionally, a home's value could be estimated from its "comps," comparable sales of nearby homes. Those offered an idea of the going price in a neighborhood and the price per square foot.

Today, a regular home sells for $112 a square foot. A house sold through short sale goes for an average of $72 a square foot. A bank-owned, Freddie Mac or Fannie Mae home sells for $61.50 a square foot. And foreclosure homes selling at auction are averaging $57 a square foot.

"Comps for properties are inconsistent and can be confusing," said Jennifer Hillier, an agent with the Scottsdale office of West USA Realty. "People just don't know what to believe anymore."

Measures of the overall market are harder to trust, too. Currently, metro Phoenix's overall median sales price is $124,000. But because many of the homes sold are foreclosure auctions - in which low-priced homes are common - that number could be seen as low. Other homes may be worth far more. But few of those homes are selling, so they're not represented in the median price.

"Home sales activity is still very concentrated at the bottom end of the market," said housing analyst Mike Orr, who publishes the Cromford Report.

What's selling now

"Homes in central Phoenix area priced under $100,000 are moving like gangbusters with very few homes remaining on the market for long," Hillier said. "I believe this is because of the location to jobs and public transportation" and because the low prices mean investors get a reasonable return, in the form of rent, on their cash investment.

Market watchers also say three- to four-bedroom homes in suburban neighborhoods with good schools are also selling fast to both regular homeowners and investors who want to rent them out, often to families who have lost similar homes to foreclosure.

The region's less-expensive neighborhoods experienced the crash first, and now high-end housing areas are feeling more pain because there are fewer buyers who can afford those houses.

Sales of homes in the million-dollar range have definitely slowed, said Walt Danley of the Phoenix office of Christies' International Real Estate. He said there are cash buyers looking for deals in Paradise Valley and north Scottsdale, but those deals bring prices down.

Some million-dollar homes also go to foreclosure auctions. Recently, a house in Paradise Valley that sold for $3.5 million in 2005 sold at auction for about $1 million.

But there are still homes in Paradise Valley and other high-end neighborhoods selling for prices just 20 percent lower than they sold during the market's peak. Other neighborhoods are also beginning to see homes sell for pre-boom prices from 2003-04, despite the fact the metro area's median home price is back to 1999's level.

"The one indicator we can still count on is location," Ruff said. "Homes in the right areas will continue to sell for the highest prices."

So if you looking for a home in the Phx market stay calm, keep looking and put your highest and best pricing in from the start. Remember getting pre-qualificatied is the first step so pleaser visit Mike King and azmortgageinfo at www.azmortgageinfo or 623-451-2261.

Mortgage Rates Today

The newspaper is a bad place to research mortgage rates.

Mortgage Rates Require "Real-Time" Results

Mortgage markets -- like stock markets -- are fluid; bond prices changes all the time. So much so that mortgage rates are in constant flux, adjusting up to 5 times daily.

Mortgage rates change so quickly that the rates you see from your bank in the morning are rarely available by afternoon.

There's a reason they say "lock it, or lose it." Wait too long and that mortgage rate's gone. Sometimes forever.

As a consumer, being aware of how quickly mortgage rates can change simplifies shopping for them. Most times, he who has the most real-time information wins.

Click here for a FREE Pre-Qualification and todays mortgage rates.

Newspapers Ads Aren't "Real-Time"

Advertisements in printed format like the news paper, banners, road sign's and etc are nothing more than a sales pitch, something to get you to call. Rates change at any giving moment. Its common to see ad's placed in Newspaper and even the INTERNET that are nothing more than a "get the client to call".

Printed Rate quates just don't work period. They are not accual current rates and they have not been adjusted to each loan situation; example, LTV, Program, Down Payment, Credit Score, Property Type and so on.

Without all the information for the buyer and property there is no way for a lender musch less a print ad to make an accurate rate quotes.

Maybe you've experienced this first-hand.

Get Your Mortgage Rates In Real-Time

Years ago, newspaper advertising was a fair way to reach consumers. Mortgage rates rarely changed and you could trust a rate from 5 days ago. Today, its simply impossible.

Rates change too often for that.

You have a lot of ways to research mortgage rates today. Reading the newspaper, however, is the worst among them. Call a local lender directly and get the most up to date information and service available. Dealing with a local lender can make all the difference for an on-time closing and a smooth transaction.

Call Mike King and AZMORTGAGEINFO TODAY....623-451-2261

Real Estate Market

If you are thinking of entering the real estate market, whether as a new buyer or after having taken a break, it’s important to understand some of the new developments that have occurred since the recent market upheaval and how you can use those changes to your advantage to make good choices and solid investments that are right for you and your financial goals.

Whether you’re looking to buy an investment property, second home or even a primary residence, there are some new property options that are well worth exploring. Three types of properties that have become very prevalent in today’s real estate market are short sales, foreclosures and REOs. If you’ve never had to deal with buying such a property, your initial reaction might be that the sale will be complicated or protracted, but that’s not necessarily the case.

However, lets not forget to get you pre-qualified by Mike King and azmortgageinfo first contact us a www.azmortgageinfo.com

The common thread for all these types of properties is that the lender has some level of involvement in the sale of the property, rather than just an individual owner. Because so many homeowners owe more than their home is worth or have been unable to keep up with their mortgage payments, it’s not surprising that more of these properties are being listed.

Let’s take a closer look at short sales, foreclosures and REOs to clear up any misconceptions and to demonstrate that these are every bit as solid an opportunity as any other home sale:

Short sales
In a short sale, a homeowner who has experienced some kind of financial hardship and cannot afford to pay the mortgage and the lender that sold them the mortgage enter into an agreement in which the home will be sold for less than the balance of the loan. This represents a good opportunity for the buyer, because the home will be more competitively priced.

Now, you might have heard that short sales are time-consuming and can end in frustration. That’s no longer the case in most instances, thanks to rules that went into effect under the Department of Treasury’s Home Affordable Foreclosure Alternatives Program (HAFA), which have streamlined the process.

In a short sale, you should work with an agent that has some expertise in short sales (the National Association of REALTORS® offers a special certification, in fact). I also have some great referrals that I have worked with for years, call me. You make your offer directly with the seller’s agent, who coordinates with the seller’s lender. Not long ago a short sale could drag on for months, leaving the buyer and seller in limbo while the lender took its time making decisions; new laws have significantly cut down on the wait time and many short sales are accomplished within a much shorter time frame now. The key is to make sure the seller has bank appoval done, this will speed up the process a ton.

Foreclosures
Foreclosure is a little more tricky. A home goes into foreclosure when the current owner defaults on his or her mortgage. The home can then go into a foreclosure auction, where it is possible to bid on the home. There is a minimum bid the lender is asking for. Winners must pay the full amount of the winning bid at auction. For a typical homebuyer, this is usually not a realistic scenario. Mike King and azmortgageinfo offer a court house step mortgage loan program just for this type of buyer visit me at www.azmortgageinfo.com and complete the pre-qualification section and we will get started.

Any unsold auction property reverts back to the lender and becomes an REO, or real-estate owned property, and the lender must find another way to sell it.

REOs
When a home is put up for sale in a foreclosure auction but is not sold, it becomes an REO. The lender repossesses it, owns it and needs to sell it. Often, REOs represent a good opportunity for prospective buyers, because lenders aren’t in the business of owning homes, so they are motivated to sell.

That said, remember that the lender is still in the game to get the most money it can for the property, and many lending institutions operate departments that oversee their REO properties and take offers on them. Typically, both the lender and the buyer are represented by real estate agents. The key here in the Phoenix metro area currently is make your best offer up front these homes are being sold quickly currently.

REOs are usually somewhat maintained, but can be rough around the edges and need some sizable repairs. This can have a bearing on price. While you will be able to conduct an inspection of the home as you would in any real estate transaction, REOs are often sold “as is,” so if the inspection uncovers costly necessary repairs, the terms of your offer might change.

Perhaps the most important thing to keep in mind when it comes to short sales, foreclosures and REOs is that while they represent excellent home-buying opportunities, they are not fire sales. The sellers, whether the owner or the lender, want to get the most money possible for the property, so it is important to manage your expectations about what constitutes a good bargain.

As you can see, there’s nothing mysterious or hard to understand about these different types of properties in today’s real estate market. I’d love to answer any questions you might have about how these types of properties, and discuss how they can provide solid opportunities for anyone in the market.

Mike King at 623-451-2261 or 480-331-6847 or visit me online at www.azmortgageinfo.com.

Should I pay Cash or Finance My New Home?

Given current economic pressures, many people are trying to erase debt from their financial picture and focus on saving and safer investments. Americans are paying down their credit cards and cautiously borrowing money. Not surprisingly, paying down the home mortgage has become an attractive option for people in a financial position to do so. Call Mike King and azmortgageinfo and let's get some basic information on a mortgage and then decide.

However, paying off your mortgage isn’t necessarily something you always want to do. It turns out there are various considerations you should weigh to decide whether paying off your mortgage is the right move. Let’s take a look at some of the factors that could influence your decision:

Do you have other debt?
If you are still paying off a car or carrying credit card debt, then paying off your mortgage shouldn’t necessarily be your first concern. It all comes down to interest rates. Chances are your mortgage carries the lowest interest rate you have. Why prioritize paying off a loan at a much lower interest rate when you should be prioritizing paying off more expensive loans, such as credit cards?

Peace of mind.
For many, paying off the mortgage brings a psychological benefit. It’s true for many people that they are not happy when they owe money; it represents an insecure state of personal finances for them. That’s completely understandable, but curbing an emotional response to consider how you can best make your money work for you is probably the best way to go. For some, that could indeed be to pay off the mortgage. For others, it might make more sense to stick to the original term of the loan. The best rational outcome should ultimately prove the most psychologically satisfying.

Taxes.
If you pay off your loan early, you will lose the ability to write off the mortgage interest you have paid during the tax year. That can amount to a considerable deduction. However, don’t be oversold on this issue. If you don’t itemize your deductions, or are confident that you won’t be itemizing by the time you pay off your loan early, then this might not apply.*

Make sure to do the math.
As mentioned, your money should be working for you, so you need to take a moment and determine the most beneficial way to use your capital. Paying down your mortgage is one way, but can you get that money to perform better for you through investing? Whichever is the higher rate will be the strategy you want to pursue. Then again, you also need to factor in the taxes that will come into play if your investments pay off. How will capital gains taxes fit into the equation? Need mortgage number, visit me at www.azmortgageinfo.com.

Remember that your home is an investment.
The equity you place in your home will most likely pay you back quite well. While the real estate market has dips, it has been on an upward trend in the broader sense. Moreover, if you pay off your home, you’ve now eliminated a major expense from your retirement budget, which means you’ll need less money to retire. That said, you are sacrificing diversification and the ability to rapidly respond to new opportunities.

Inflation can work for you, believe it or not.
Working on the assumption that there will be inflation in the coming years, what you pay now as a mortgage payment will be relatively less in 10, 20 or 30 years. So if you pay off early, you lose the opportunity to have inflation actually work to your benefit for a change.

Putting yourself in a less secure situation with a lender.
It sounds counter-intuitive, but paying off a mortgage can actually hamper your flexibility to make your money work for you, because your money has gone to your lender, as opposed to an investment where it can work for you and from which you can draw income. In today’s employment landscape, that’s an important consideration. Mike King and azmortgageinfo will help you decided the best choice. Ever think about a reverse mortgage for my older clients?

As you can see, deciding whether or not to pay off your loan early is not a cut-and-dried decision by any stretch. It requires a long, careful look at the numbers and potential life scenarios to determine the smart play. For some it will be to pay off the loan early, and for others paying the loan off in its original term is the way to go.

If you’re considering paying off your loan early, I’d love to review all the considerations with you so that you can make the right decision for you. Simply contact me using the information on this message, and I’ll be happy to help you carefully consider the pros and cons. Visit me at www.azmortgageinfo or email me at mike@azmortgageinfo.com.

Have a great day.