The year of the First Time Minnesota Home Buyer?
I should have added if you plan on staying in the home for over seven plus years and have a considerable amount of money to put down. This will be the year of the first time home buyer in Minnesota and the Twin Cities area. But you are definitely going to have to have close to flawless credit. Interest rates that are low will provide once in a lifetime buying opportunities for first time home buyers.
The outlook however still looks to be a bit on the shaky side, but optimism remains strong for some sort of stabilization in the second half. The biggest hurdle to overcome will be the job market because as everybody knows, No Job = No Home.
Didn’t Lower Rates Get Us Here
Yes and no, lower rates are great for first time home buyers that can handle the monthly payments. Recently lower rates have sorta thrown the housing market some sort of a temporary lifeline. Mortgage rates have been close to 50 year lows and no better time then now. It should also be known than just because you have good credit doesn’t necessarily mean that you are the right candidate to own a home.
One thing that has certainly come back into reach for first time home buyers in Minneapolis or St. Paul has definitely been the affordability of homes that have been at the lowest since 2004. Good for first time home buyers who may have been pushed out of the market back in the day.
What Will First Time Home Buyers Buy
Unfortunately this doesn’t bold well for the higher end homes of the market, sorry maybe next year. A part of me wants to think that first time home buyers will use much of their allocated money for a down payment, they will need to look at ‘turnkey’ properties that are ready to move in. Because of this little shift, sellers will have to recognize this and be willing to negotiate a fair market value.
Homes that distressed or bank owned foreclosures sometimes require a lot of work just to make them livable. More fixes means more out of pocket expenses to bring the property up to par.
I don’t believe townhomes will be to popular mainly because entry level single family homes will come back into reach for many buyers that are entering the market.
Are Loan Modifications Working?
There has been a lot going on lately especially with the current outlook of mortgage rates falling. Another big thing that has been gaining steam has been mortgage loan modifications. I read a great article on why it is so difficult to modify a loan and it is probably the best one seen yet.
Most people are unaware of who has control of their mortgage. The fact is, there might be hundreds and it is hard for people to find the point of contact to renegotiate the loan. Mortgages are bought and sold in the secondary market, bundled up into packages and sold in the bond market to investors, the lender may not own a specific mortgage. So it is not just banks that have to take a loss, it is investors and many are unwilling to do so because of ladder that has to be climbed to get approval from each one.
Recent articles have said that up to 50% of loan modifications performed this year are re-defaulting. It seems that good money is being thrown after bad.
What is A Loan Modification
When different terms are negotiated with the lender or loan servicer on the mortgage to change the original terms of the contract.
Factors that influence a loan modification all depends on the loan servicer who is handling the modification. If you don’t contact the lender, they will never work with you. There is a huge chunk of borrowers who never contact the lender, it never ceases to amaze me. Can’t get anything done if contact hasn’t been made.
A loan modification can change one of a few things
- Reduction in the Interest Rate (Temporary or Long Term)
- Forgiveness on Principal
- Wrap payments on the backend of the loan.
You will need a hardship letter that spills everything, this is your chance so let the lender hear it. You will have to have missed up to three payments and not on purpose either, along with showing that you can make payments if you are lucky enough to get a modification at this point. Proof on income earned along with monthly budget reports will have to be submitted. Being responsive is one of the most important things that can be done when working on modifying the terms of the mortgage.
So who to contact
Be careful in the company you choose to work with first off if you need to do a loan modification. Never pay an upfront fee for work to be performed. Although these are trying times for many individuals or families, there are always people out there that are trying to make a buck off people’s situations.
The Minnesota Department of Commerce just had a press release warning consumers about using unlicensed mortgage originators or companies. Actually they advise you to contact the loan servicer first or contact the Minnesota Homeownership Center. Which is a non-profit organization that is free of charge that offers a network of providers in Minnesota.
Not Enough
Unfortunately not enough is being done and there is little legislation in affect. Lenders have to protect their investors profits and maybe, just maybe one of these bailouts that graces the television almost every day will focus on loan modifications that actually work. 
Should You Buy Now?
A recent article in the New York Times thinks you should. The piece touches on possibly missed opportunities if individuals or families wait to buy later. What’s even more cool is the article talks with a Minneapolis couple who purchased a home in Lowry Hill.
Reasons to Buy a Home Now
- $7,500 Tax Credit
- Interest rates falling
- It’s Winter, sellers more willing than ever.
- If your credit is stellar and debt is minimum, don’t miss on low fixed 30 year mortgages
Plan to stick around for awhile, in the time frame of at least 7-10 years. If you are looking for a short term commodity, fuhgettaboutit. Housing never was and should have never been looked at a get rich quick scheme. It’s time to move back to the way it was.
Creative Financing to Sell Your Twin Cities Home
photo credit: TheTruthAbout…
Sea of homes for sale
Trying to sell your home in the Twin Cities and finding a myriad of sale signs, many are especially if you have a lot of bank owned homes around the area. Lenders are being almost ruthless these days trying to unload inventory by discounting homes by as much as 30% in some areas. It’s important to know your options when it comes to selling your home in case a buyer finds your home and needs a little creative financing.
Creative financing is alive and well again these days, it was once popular back in the 80’s and 90’s when interest rates are so high. It is different this time around because interest rates are historically low and might go even lower, but financing for some remains a problem.
What is Creative Financing
Is a way to to overcome affordability options when it comes to providing buyers different ways to purchase a home. It is a way to provide the buyer, seller and lender to the table that might be a little bit different than the traditional way. Creative financing can be overlooked by most and to be quite honest is often misunderstood.
All players have to be on the same page to try and determine what financing options will work best for the transaction. Sellers are most interested in bottom line, buyers are most interested in monthly payments and affordability and lenders want minimal default along with interest rate that will let them profit.
So what are they
Here are some examples in creative financing for sellers in what sellers can do to help out in the transaction.
- Seller Contributions is probably the most basic form of creative financing. It includes options like paying for buyers closing cost or a down payment. Sellers can typically contribute up to 3% for closing costs and 3% of sales price for a down payment. These percentage can vary depending on the lenders, down payments, etc. One thing to note is contributing to the down payment or closing costs, it might affect the appraisal and then other options might need to be looked at.
- Seller Funded Permanent Buydown buys down the interest rate for the buyer over the entire life of the loan. Even though interest rates remain low this is still important negotiating tool because the savings over the life of the loan is significant in interest payments.
- Seller Funded Temporary Buydown buys down the interest rate for the buyer for the first couple of years of the loan.
- Owner Financing a great option if you own your home outright but understandably that most homeowners don’t like to play the role of the bank. The big upside is that the seller can turn their equity into a nice little return on investment because they are collecting a monthly payment. It is attractive to buyers for a few reason, interest rates might be lower, they might have less than stellar credit and can’t get a loan but have money. Something might have happened in the past where they are still repairing credit and it would be up to the seller to determine credit worthiness.
- Contract for Deed is essentially the same as owner financing except that ownership of the property does not convey to the new owner until the entire price is paid in full.
Some different options to get you over the hump when it comes to finding and securing a buyer for you home that is other than traditional.
Slideshow of the current financial crisis
Had to share this when I saw it. A little slideshow of what led up to the current financial crisis.
[h/t] AgentGenius
Will there be 4.5% interest rates in the Twin Cities soon?
In an effort to lift home sales and possibly values again, an article over at the Wall Street Journal today claims the Treasury is in talks with Fannie Mae and Freddie Mac to encourage banks to write mortgage loans at 4.5% fixed interest rate over 30 years. This of course would be temporary. The plan is apparently in talks and who knows if it would even happen.
Interest rates on mortgages in the Twin Cities lately have been hovering as low as 5 3/8 - 5 3/4 for buyers with solid credit.
It’s important to point out if this happened, only home buyers would be able to grab this low interest rate. If you are looking for a refinance then it appears that is tough luck.
But all things aside, the free market sets the rates for mortgage so without seeing any details from the Treasury it’s hard to see how this is going to get accomplished. To actually lower rates, mortgage backed securities have to be risen for investors to purchase and so far there just isn’t a demand for them.
I guess we will just have to wait and see…
Twin Cities Mortgage Rates Plummet
Late to the party but better late than never, the Federal Reserve announced yesterday that they were purchasing up to $600 billion in mortgage related debt, $500 billion going towards “direct obligations” in government sponsored enterprises (GSE) and mortgage backed securities (MBS) from Fannie Mae, Freddie Mac and Ginne Mae. This is widely seen as the first time that the Fed has tried to influence mortgage rates.
What this means for Twin Cities Home Buyers
Interest rates plummeted to lows that we haven’t seen in awhile. If this works and who knows if it will with the Fed buying up MBS, we might see lower interest rates. Twin Cities home buyers should have more buying power in thanks to mortgage rates dropping to 5.5%.
If you can afford to and have a higher interest rate, keep watching interest rates to see what they do. You may want to think about refinancing if you need to with an adjustable rate mortgage.
Smash the debt before you buy a Twin Cities house!
photo credit: Andres Rueda
Now more than ever
Especially for people that more willing and able to buy a home these days (you might be surprised by this), now more than ever by lenders. Paying off debt has always been smart money management, but one might argue that renting is never good as well.
Truthfully and honestly for buyers that have an interest in buying a home, it just makes sense to take care some debt. Throw some money at paying off debt and set some money aside for a down payment if you need to. Also, remember this though, taking care of debt might keep you out of the housing market a little bit longer.
Get Lower Interest Rates On Your Twin Cities Home
By getting rid of bad debt or credit card debt, not only can you have more buying power but more than likely you will get a lower interest rate to purchase. Interest rates have been hovering around 5.5% to 6.75% for highly qualified buyers. If you are unable to get a loan in this range, an interest rate increase of 1% can mean the difference of $1000’s of the life of the loan or a difference of $100 in monthly payments.
Tips to demo the debt
- Pay off more than the minimum. Yeah you might have to bite the bullet, but remember that credit card companies want you to pay off the minimum
- Keep a close eye out for the lower interest cards. Maybe snowball some credit card debt to the lower interest cards. Read the fine print to make sure you are able to this.
- Talk to your creditor, more than likely if you have a good payment history you could might be able to grab a lower interest rate. Just a short call can save some money.
- This is kind of extreme but you could borrower against your life insurance policy if the plan allows or your 401K (it’s not like the stock market is really cooperating at this time
By lowering or eliminating you debt, the better chances you have at buying a house or qualifying for a better mortgage.
Just in time for the holidays, Fannie & Freddie halt foreclosures
Both mortgage giants released similar statements earlier today asking their attorney’s and the companies that service their loans to stop everything on foreclosure proceedings. No more foreclosure sales during the time period of Novermber 26th through January 9th. The reason, to allow the new streamlined program that was announced on November 11th time to effect on December 15th.
Fannie Mae estimates that 10,000 people will be allowed to stay in there homes while Freddie Mac says about 6,000 homeowners will benefit. The new streamlined program on FHA loans will help borrowers who have missed three payments on their homes. The program is aimed at allowing borrowers obtain more affordable mortgages.
An excerpt from the Freddie Press Release:
“By working closely with FHFA and our servicers, Freddie Mac is on track to help three out of every five troubled borrowers with Freddie Mac-owned loans avoid foreclosure this year,” said Freddie Mac Chief Executive Officer David M. Moffett. “Today’s announcement builds on this momentum and provides a new measure of certainty to many of these families during the holidays.”
It is a temporary suspension on foreclosures to allow the 27th loan servicer part of Hope Now implement the new streamlined modification program.
Conforming Rate Loans will remain at $417K in Twin Cities
The Federal Housing Finance Agency announced that most areas of the country will remain at the conforming rate loan limit of $417k. This limit is the maximum amount that Fannie Mae and Freddie Mac can purchase loans for.
Some areas have higher loan limits based on median home prices and might vary based on loan limits in 2008.
Just because you are bored and want to find out what ALL counties in the US are at
-
Powered By
-
Find Me Here
-
-
-
-
-
-
Market Stats