Lately, I have seen quite a few loans “struggle” to get approved for one reason or another. I have been reminded that many people just aren’t aware of how some of their seemingly unrelated decisions can impact whether or not they get approved for a loan.
And there nothing worse than thinking that you will be approved for a loan only to find out that a lender won’t approve you for __________ reason.
Here are just a few things that I have seen happen recently that helped people get denied for a loan. Some of these, the loan officer was able to “fix” and get the person approved - and some of them just won’t get approved now.
With turn times on loans probably averaging about 30 days right now (as quick as 10 and as long as probably 60 days) there is plenty of time to “make or break” your loan approval right now.
Rule #1: Don’t Quit Your Job
Seems like common sense, but many people think that switching jobs — especially if it is for more money — won’t impact their approval.
Wrong.
If you think you *have* to quit your job, make sure you talk to your loan officer how it will impact your approval.
Rule #2: If It Doesn’t Fit In A Shopping Cart, Don’t Buy It
Don’t buy anything new that is bigger than you can fit in a shopping cart — and no, not the super-size flatbed shopping carts at Costco or Home Depot.
No big screen TVs. No new cars. No boats. No motorcycles.
The “shopping cart” rule of thumb is because the “bigger” the item it is, the more common it is to see people finance the “thing” and financing will impact your credit score and debt to income ratios - usually not for the better.
And no, big screens don’t fit in shopping carts for those of you who were wondering.
Rule #3: Don’t Hide It
Make sure you disclose child support or alimony. If you pay these, make sure your loan officer knows and it is disclosed in your application. I saw it missed recently and the deal is “iffy” now at best.
I know, I know - you are probably thinking that I have been hanging out with Captian Obvious too much by taking the time to write these things down - but you might be surprised to see how many times I have had the conversation with someone about how big screen TV’s don’t fit in shopping carts.
Phoenix Mortgage Rates July 3 2009
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HVCC
HVCC seems to be de-railing quite a few transactions lately. Buyer wants to buy a house. Seller wants to sell a house. Buyer and seller agree to a price. Appraiser says house is worth fifty thousand dollars less than what buyer and seller agree on.
Now what?
Well, either the deal falls apart or buyer has to be able to bring an “extra” 50,000 in cash to closing becasue you can’t finance it.
I have been looking and looking for someone who had something positive to say about the new HVCC rules, but so far I haven’t really found anyone in the business who says “it is working”. However, I have seen quite a few petitions being circulated to get HVCC overturned.
8000 Tax Credit Monetization
I am still searching for a way that first time home buyers can “monetize” the first time home buyer tax credit here in Arizona. Today, I at least found a lender who will allow it to happen:
Wholesale lender Taylor Bean Whitaker, has sent this note out to the clients about the first-time home buyer credit: “HUD recently released Mortgagee Letter 2009-15 regarding the use of the First-Time Home buyer Tax Credit. The program provides up to $8000 tax credit to qualified first-time home buyers. Although the program allows certain entities covered by Section 528 of the National Housing Act to use their current authority to offer tax credit advances with second liens, TB&W will not provide the second lien. The Second Lien must be provided by an FHA approved non-profit agency or Federal, State, or Local government agency or instrumentality. Use and approval of the first-time home buyer tax credit is the responsibility of the entity providing the secondary financing. All documentation must be submitted to the entity providing the secondary financing. TB&W will only approve the use of the secondary financing being provided by the approved entity. TB&W will begin to accept this type of secondary financing immediately.”
(h/t Rob Chrisman)
I guess finding a lender who will allow this to happen is the first step — now we just need to find an organization who is actually helping people turn their tax credit into funds that can help cover closing costs.
Arizona Mortgage Rates
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A report from the front lines: make sure you know what HVCC is and how it may impact your appraisal of your home.
The Phoenix market is active - active to the point where many people are seeing that they are putting multiple bids on a home and they end up “bidding” on multiple homes before an offer gets accepted.
I try hard not to smile when I hear stories where agents are driving 100 miles 3, 4 or even more times before an offer is finally accepted in these bidding wars.
Although the driving 300 or 400 miles for a client seems to agitate agents, that isn’t the thing that they are complaining and worried about when they call me telling me they just got an offer accepted — they are worried about something else.
They are worried about the appraisal on the property.
Since HVCC rules were implemented in May, it seems to be a growing trend that many times a lender-owned appraisal is coming in lower than the contracted sales price and it results in “deal complications”. Read: if you want to buy the house, either the seller is going to have to come down in price or you are going to have to bring more money to close.
I could go on about HVCC and the technical aspects of why the appraisals seem to be “coming in low”, but I won’t bore you with those details because the truth is that many homeowners don’t pay that much attention to industry arguments like that.
But if you are thinking about buying a home, here is what you need to be aware of regarding HVCC.
If you are planning on financing your home with a conventional loan, your loan officer cannot speak with the appraiser and this can result in problems such as a “surprise” low appraisal that comes in 2 weeks late. It doesn’t always happen like that (low and late) but it has happened enough recently for me to write this post about it.
If you are planning on financing your home with a FHA loan, most lenders are allowing those appraisals to be ordered by the loan officer and I see fewer appraisal complications (low and late).
This does not mean that you should finance your home with an FHA loan “just so you don’t have appraisal issues” nor does it mean that you are going to run into “appraisal complications” if you finance your home with a conventional loan…
It is just something to be aware of and ask your Realtor and your loan officer about it.
The most helpful person in working with the appraisers today is your Realtor — there is no rules regarding them speaking with the appraisers and I am finding that the good Realtors are actually having some success when speaking with appraisers about a property.
Phoenix Arizona Mortgage Rates June 19 2009
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By far, one of the most popular questions I have gotten over the past week or so is:
“Is anyone actually doing the 8000 tax credit bridge loan where you can monetize the tax credit and use it for closing costs?”
And although I have searched, called around, asked everyone that I can think of…
I still haven’t found an organization that is doing this in Arizona yet.
Which means if you are in the process of buying a house and your loan officer is telling you something like “I am sorry, but there really isn’t an organization who is monetizing the 8000 tax credit right now…” he is most likely telling the truth.
Now.
One of the nice things about blogs is that many (smart) people read them and I have a hunch that some organization or lender out there is currently helping people monetize the 8000 tax credit and I just don’t know about it.
If you are aware of such an organization or lender, now is your chance to flex your smart muscles and share with the rest of us who that organization is! Just leave a comment — and if you are kind enough to share this with everyone, I will be sure to give you all kinds of credit on all kinds of publications as being on the cutting edge of breaking news of the 8000 tax credit monetization plan.
Until then, I will keep calling everyone I can think of trying to find an organization who is actually doing this for people in Arizona.
Arizona Mortgage Rates for June 12, 2009
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I have a few colleagues that know that this little real estate blog is actually hosted on a server within the confines of my own office. Having a blog on your own server is called “self hosted”, which for a real estate blog is actually quite rare (I might be slightly insane). I built and maintain the server for better and sometimes for worse. The better part is that I have complete and total control (I have issues with the word “no”). There isn’t anything that I can’t decide I want to put on the server, or allow the server to do. The worse part is that if there is ever a problem, the problem is always my fault or mine to fix. The buck starts and stops right here.
Last Thursday morning, at about 5am, APS decided to take the power down for my office building. We were told this would happen Tuesday night, but apparently I didn’t get the memo with the revised date. Of course, the server has a UPS (uninterrupted power supply), but it will only run so long, and unfortunately it wasn’t quite long enough for all of the servers and network equipment I have running in the office. As a result, the blog was offline for a couple of hours early Thursday morning.
Since there was some down time, I decided Thursday morning was as good a time as any to move the server to a better location. It had been housed in the server room at my office off Loop 101 & Bell Road in North Scottsdale. There’s nothing particularly wrong with that spot, but we only have a T1 network connection there, and at peak times, with the 20+ computer users surfing the web simultaneously, the server sometimes delivered pages a little slower than I would have liked.
My wife, Dr. Jan Belt, actually owns and runs Oxford Learning with locations in Scottsdale and Fountain Hills. The Fountain Hills location has a faster internet connection than my office, with the additional advantage that it has fewer computers there. Thus, overall, that location is vastly superior to this one in terms of available network bandwidth. Accordingly, it’s been a low priority, “wish list” task to move the blog server there one day. Given the unexpected down time, Thursday turned out to be that day.
Here’s the server in it’s new location:
As you can see, wire management isn’t one of my strengths. If you are curious, at this location, we also have a Windows Small Business 2003 server (the black box under the keyboard), which is the firewall to the center, handles email, security, and file storage/backup.
The Linux server (where this blog resides) is in that silver case in the foreground. For those super geeky among you, it’s a Xenon powered, fully redundant, rack mountable server, with 3 power supplies, hot swapping raid drives, and all the other cool things your mother warned you to stay away from. (You can look, just don’t touch.)
You’ll note this server room also houses various paints, copy paper, and tons of other things typically found in a storage closet.
With any luck, the server will be happy for a long time in its new home. FYI, my UPS at this location told me there was a short (5 second) outage Friday night. It also told me there had been 8 similar outages over the last 6 months. A UPS can handle 5-10 seconds just fine. Or even 15 minutes. It’s those 2+ hour power outages that are a killer…
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One of the most common questions I am asked is “are mortgage rates going up or going down?” And I usually reply with something like “yes”.
When you are shopping for a mortgage, rarely do you really have the time or patience to know what rates have done recently and what events are happening in the near future that may cause rates to rise or fall.
It almost makes you wish there was some kind of “rate watch” widget that could automatically contact you when rates dropped to the point that you selected.
Enter Zillow.
Zillow just announced that they have a new feature that they have a new Mortgage Rate Alert service that is completely free and will notify you when rates get to the level that you select. Now you don’t have to keep checking to see what rates are at, you can just be notified on a regular basis in an automatic fashion.
Once you get the alert saying “rates are at x%” then you know it is time to hurry up and lock if you already have your loan application in or to get started with the loan application process as soon as possible so you can lock that rate in.
One note: the Zillow rate alert is based off the average of what people are being quoted - not a particular quote. You can easily request a quote from multiple lenders using Zillows Mortgage Marketplace and may even be able to get a better rate!
Mortgage Rates June 5 2009
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Over the years, I’ve negotiated a few commercial leases. Almost as important as the price/sq ft discussion is the haggling over signage. Signage is naturally a big requirement for most businesses leasing space. Where can a sign be placed? How big can it be? Can the sign be colored and in the companies font? Can it be lit at night? Is it lit with halo lighting or are they colored letters? A great deal of time and effort is placed on signage. So much so, that I was stunned when I saw the recent painting of the buildings at the Target Center at Frank Lloyd Wright and Loop 101 in Scottsdale.
This Target Center is your normal strip mall with Target being the main anchor, followed closely by an Albertson’s grocery store. It used to be painted with some beige colors and was honestly a tad boring. Recently, they have attempted to give the center a face lift with some new desert colors. Sadly, I think they’ve failed miserably. I’ll explain:
Here’s the Blockbuster sign against it’s new yellow background:
That’s right, they painted it yellow, which works miserably with the yellow Blockbuster letters. My Photoshopping skills are probably a little too good, because the contrast here actually makes the sign look readable, but trust me…there are times of the day where all you see is a wall of yellow.
Perhaps you are thinking Blockbuster just got unlucky. Nope: Starbucks was equally affected:
That’s right…green paint for Starbucks. The green paint here matches the Starbucks green very, very well. I’m sure they are equally thrilled. Not to be left out, all of these business have red letter signs, to match perfectly with the new red paint:
It baffles me how the paint colors seem to have been chosen to make all of these business’s signs fade away into nothing. Even more curious, the same colors could have been used, but at different locations, so that none of the (current) businesses were adversely affected. Although, to be honest, red paint is probably always a bad idea in any location where a sign is likely to be used.
They aren’t done painting yet (you can just see a painter touching up the yellow trim on that last photo), but I’m already wondering when a new paint scheme will be arriving.
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