Home Loan Archives - Page 13 of 24

A Case for Condos

Written by on October 1, 2018. Posted in Home Loan. Leave a Comment

Condos with Priority Lending LLC

In one of my high school English classes, I was taught the difference between “denotative” and “connotative” definitions of words. Let’s use the word “pig” as our example. The denotative definition of pig is its actual definition: a four-legged creature from which we obtain, among other things, that food of the gods we know as bacon. The connotative definition is broader and relates to what the word evokes by way of feeling or image. For example, “pig” could evoke an image of someone who eats too much or has horrible housekeeping habits (two people with whom you might be reticent to share your bacon). In other words, it’s sort of like fact (denotative) versus feeling (connotative).

The word “condo” evokes all sorts of different images and opinions depending on the person and her/his walk of life. To some, the word calls to mind a place where a single guy with a cheesy mustache lives with sports memorabilia and questionable art on the walls where he holds weekend parties for similarly minded cheesy mustache guys and women who like that sort of thing. To others, a condo evokes memories of a beach side retreat where your neighbors go and have invited you for a weekend where your son got stung by a jellyfish and your daughter got a raging sunburn. And to many of us in the real estate/mortgage world, “condo” means a lot of not-so-pleasant things that are less preferable than walking on broken glass, drinking bleach, or pouring lemon juice into an open wound. We’ll come back to this.

Perfect Time To Look At Condos

Available inventory is already at low levels, which is making it very hard for people to buy a home, especially their first one. Add to that the fact building materials are more scarce (read: getting more expensive) because of the recent hurricanes and their devastation, you’re facing a reality that a traditional single-family residence is becoming harder to obtain. Now is a very good time to look at condos. For those of you who are already well versed in how to navigate a condo sale, you can either stop reading here with the new-found knowledge of the difference between a denotative and connotative definition (you’re welcome) or stick around because I have good news for you. For those of you who just felt physically ill at my pronouncement, I promise the same good news for you, too. And for those of you who have no idea what I’m talking about concerning the pitfalls of condo sales, stick with me here and continue your life of ignorance and bliss.

As I mentioned earlier, many find the selling and financing of a condo to be below a tonsillectomy on the fun scale, and there’s good reason for that: there seems to be an endless number of boxes that have to be checked and certifications cleared to close the transaction. While that’s still true for some condos, what would you do if your lender could provide you with a list of properties that are already approved and don’t have to go through that long and laborious box-checking process? Suddenly, in my opinion, it would make selling a $230,000 condo just as attractive as selling a $230,000 single-family residence (which may or may not exist in an area where your client would want to live). And in case you missed my less-than-subtle hint, we CAN provide such a list and package. One more point in the case for condos: the fastest-growing demographic in home sales is single women – they’re outpacing single men by almost 2 to 1 in home purchases – and these same women are showing a preference for a condo over a single-family residence. That will definitely improve those mustache-heavy parties, right?

If you need anymore help get in contact with us today at Priority Lending Mortgage.

Wait is a Four-Letter Word

Written by on September 24, 2018. Posted in Home Loan. Leave a Comment

Over 88 years ago, on April 18, 1930 for the 8:45 p.m. news broadcast, the BBC’s news reader came on the radio and had nothing to communicate. He had been handed a script that he was to read – “There is no news” – so he read exactly that. Following those four brief words, piano music was played for the rest of the 15-minute segment before returning to broadcasting from Queen’s Hall in Langham Place, London, where the Wagner opera Parsifal was being performed. Simpler times!

Whether you view it like the kid who learned how to make crude sounds with his hand and armpit that you found funny in third grade for three or four days before it got old or like the latest flu that will pass in less than a week, the news comes in cycles that burn out after a while and we turn our attention to something else. One of those news cycles near and dear to our hearts in the real estate/mortgage world, of course, concerns millennials and why they’re holding off on buying their first homes. I realize that news cycle has run its course, and it was more than a few cycles back, but this is my newsletter, so I’ve decided to bring it back. Humor me. I promise it’ll be better than armpit sounds and far easier to take than a flu.

After a lot of virtual and literal hand wringing, the pundits told us that there were many reasons millennials were holding off on making their first home purchase. One of the chart toppers was student loan debt. Another one that ranked right up there with student loan debt was an unsure job market. Without a doubt, those are two major considerations/reasons that will affect ANY home purchase, especially a first one, so please don’t think I’m making fun of them, because I’m not. My particular favorite, though, is sort of a catch-all reason that is both declarative and ethereal at the same time: the Baby Boomers ruined the economy! Now, with this one, I am gonna make a little fun of it – just a little. Using “the Baby Boomers ruined the economy” as the reason for not buying a home is like Jerry Jones, owner of the Dallas Cowboys, saying ticket sales have fallen because the paper companies are gouging him on paper prices. In other words, it’s a general answer that doesn’t REALLY answer the question.

As that particular news cycle about millennials and home sales began to burn out, nothing too definitive was ever revealed –much like most episodes of the evening news – so our attention was drawn elsewhere. When this happened, the smarter agents and mortgage professionals put some lotion on their hands (for the wringing, not the armpit thing) and decided to focus on other ways to find prospective home buyers. One of the most effective focuses I’ve seen lately is down-payment-assistance programs. Hear me out!

Yes, past issues of this newsletter have centered around the reasons DPA programs aren’t the best thing for your clients, and all of those reasons still hold true. The reason, though, that I say it’s been wise for agents/LOs to focus on DPA programs is that they catch buyers’ attention. This is sort of like the weight-loss commercials that show an obese man with a 28” neck and a 48” waist in the before picture and the same man with a 28” waist and a 48” chest in the after picture with tiny writing that reads “results not typical”. No, I’m not suggesting a bait-and-switch scenario. I’m merely saying that talking about a DPA program gets the phone ringing because it causes people to wonder if a DPA program is right for them. Once the agents and LOs can get the people reaching out to them, they can start a conversation and get them what they REALLY need. Such an approach makes far more sense than waiting around to learn why someone is waiting around, wouldn’t you agree?

Only a Passport

Written by on September 14, 2018. Posted in Home Loan. Leave a Comment

Do you have a family member or friend from another country who wants to buy a home here in the United States? Now, the only thing they need to qualify is their passport.

No income verification. No reserves. Just 30% down and an international credit report or letter of good standing with their current financial institution.

This applies to second homes, non-owner occupied residences, and 1-4 unit properties.

This is not a guarantee of eligibility; simply a blog entry to let you know we have far more than the vanilla-flavored loan options.

Peace, Love & Tacos: A Homeowners’ Guide

Written by on September 10, 2018. Posted in Home Loan. Leave a Comment

Neighborhood Regret. While that sounds more like a name for an ‘80s cover band who plays the Starlight Lounge at your local Holiday Inn on Tuesday evenings, it’s a term I came across in a recent article about how homeowners feel about the areas in which they purchase their homes. Wakefield Research conducted a survey of 1,000 “Americans” (I’m honestly not sure if they asked to see proof of citizenship, but in today’s political climate, you never know), and 36% of homebuyers who recently moved regret the neighborhood in which they purchased. In that same survey, 77% don’t believe there’s a reliable way to find complete neighborhood information in order to find the perfect neighborhood. (I have news for them, there’s a 100% fact there’s no such thing as a “perfect” neighborhood, but I digress.)

The point that 36% of homebuyers regret their neighborhood choice isn’t all that surprising, right? What I did find interesting, though, was that the study indicated that both commute time and crime rate were big factors of consideration for the perfect neighborhood, but they tied for second at 37%. What topped the list as the most important consideration in the deciding factor for neighborhood choice at 48%? “Vibe”. Yes, you read that correctly. How in the name of all things holy and real-estate-related do you classify and quantify “vibe” in a neighborhood (peace, love, and a friendly HOA)? While I’m sort of shaking my head because you can’t objectively define “vibe”, I have to admit that I get what they mean at an instinctual level. Lack of social activity in an area, as well as street noise, frequent traffic, and lack of public transportation, were cited as reasons for homebuyer unhappiness. Here’s where it gets even weirder.

While buyers have said they want reliable sources of information on a neighborhood before purchasing a home, less than 40% searched for photos of other parts of the neighborhood. Also, even though safety ranked second on the list of items causing neighborhood regret, three quarters of homeowners did absolutely no research on crime statistics or police reports before purchasing and moving into their homes. Further, almost half of them never visited their potential new home at night before making that purchase and move. That’s sort of like going to McDonald’s and asking the pimply-faced teenager working the register to craft a list of dining options for you that will both help you lose weight and improve your complexion.

As we all know, while we as mortgage and real estate folks ever endeavor to provide buyers with facts and intelligence on which to base their choices, the purchase of a home is ultimately an emotional decision 99% of the time. This doesn’t mean that we should abandon our fact-based approach – in fact, we should probably double our efforts and take a cue from this study and compile a packet with neighborhood photos and safety statistics. Then, we might want to insist on taking them out to the neighborhood in the evening. If we’re lucky, we’ll roll up on a block party, and they’ll be serving street tacos – no one can regret tacos, right?

Invest in a Little Time Travel

Written by on September 4, 2018. Posted in Home Loan. Leave a Comment

Let’s start this week off with a little time travel and go back to July 1985. On July 3rd, the American classic “Back to the Future” was rolled out in theaters nationwide. The following week saw photos of Madonna in Playboy that left absolutely nothing to the imagination and Ronald Reagan’s colon that left many wishing they didn’t know THAT MUCH about the US President. In the midst of all that, Nolan Ryan became the first pitcher in Major League Baseball history to strike out 4,000 batters. In that same month, this advertisement (and MANY others like it) appeared:

“Rock Bottom Rates!” What?!! If someone were to come to me today for a mortgage, and I told them that I had a smokin’ deal on a 30-year fixed mortgage at 11.875%, they’d ask me what I was smoking. That’s absolutely insane, right? Well, not really. If we go back a little less than four years, to October 1981, we find that rates topped out at almost 18.5%, so a rate of 11.875% would definitely be viewed as a smokin’ deal.

In October of 1981, the average price of a home was $82,500. Assuming a 5% down payment, that gives us a loan amount of $78,375. At 18.5% on a 30-year fixed mortgage, you’re looking at a monthly payment (principal and interest) of about $1195. Adjusting for inflation, $1195 back in 1981 is equal to approximately $3413 today.

Using that same adjustment rate, a 1981 home at the price of $82,500 would equal one at the price of $235,669 today. So, if you were to purchase a home for $235,669 today with a 5% down payment, you’re looking at a loan amount of $223,885.50. At 5% on a 30-year fixed mortgage, you’re looking at a monthly payment (principal and interest) of about $1197 (that’s only $419 back in 1981).

While Ronald Reagan’s colon (cancer notwithstanding) and Madonna’s body certainly looked better and Nolan Ryan’s arm performed better back in 1985, things are DEFINITELY better in the here and now with interest rates and the housing market in general. And remember, a home is a much better investment than a DeLorean.

Category: Home Loan