Breaking News- Is a 640 credit score the new 620? A Must Read and A CALL TO ACTION!

As you know, I am committed to bring you the most- updated, must-know information on mortgage and industry changes. I have hesitated in sending the following news as it is not “set in stone” yet. However, in having conversations with many of our referring partners I think that we need to let you know the latest:

There are five major servicers in the Industry (along with a number of minor players). Typically in our market and the time we are in, the five major players set the rules and the rest follow suite. In the past few months two of the major servicers have increased the minimum FHA credit score from 620 to 640. As of Monday, Bank of America (obviously one of the five) announced that they, too, will increase to a minimum of 640 effective 10/4/2010. We have two of the major servicers still holding at 620 but our sources are telling us that they could go to 640 within the next few weeks.

What does it mean to you? Right now we are still at 620, but there is a very good possibility that 640 will become the new 620 in the weeks to come (and probably sooner than later) for FHA. So this is a Call To Action - Your current buyers that have lower credit scores (between 620-639) need to look at purchasing NOW. This change could take them out of the market in the near future to be able to purchase a home unless they can increase their credit scores to 640.

Get the word out, send this to your clients, call everyone you know- this IS Breaking News and we owe it to our buyers to let them know. With historically low interest rates, 620+ credit scores allowed, and great inventory- NOW is the time to purchase!

As always, I would love to hear from you this week and I am never too busy for your calls and questions! Simply contact me at 214-763-9192 or email me at mpotter@mckinneymg.com or mpotter@servicefirstmtg.com. Have a blessed rest of week! Remember that I am available on weekends for your prequals.

Source: Mark Potter - Service First Mortgage

What's New in New Housing Design?

Here are the products grabbing the attention of the home building and remodeling industries, according to Bill Millholland, executive vice president of sales and marketing at Case Design/Remodeling in Maryland, and Jamie Gibbs, a New York-based interior designer:

· Appliance Drawers. Small warming drawers, modest-sized dishwasher drawers for small loads, refrigerator drawers and microwave drawers.

· Counter-depth refrigerators. Some are only 24 inches deep.

· Motion-detecting faucets. Like you'd find in the restrooms of businesses.

· LED (light-emitting diode) lighting. These are used under cabinets and in ceiling fixtures as a longer-lasting, more efficient alternative to compact fluorescent lamps and incandescent bulbs.

· Electric heated floors. A nice touch in bathrooms.

· Showers with multiple heads and body sprays. Bathtubs are out.

Source: The Washington Post (09/25/2010)as posted on Realtormag.com - 9/28/10

Transform Your Property with Paint!

The best way to update a property is to paint it. It’s a job that many sellers can do themselves.

Here are six suggestions for making the work go quickly.

1. Move the furniture. Get as much furniture as possible out of the way, and then cover what’s left with plastic drop cloths held in place with masking tape.

2. Buy good paint. Top-quality latex interior paint will hide what’s underneath and make the job go faster.

3. Tape the edges. Taping the edges with painters tape will speed up the job and make the results more professional.

4. Work top down. Paint the ceiling first, then the walls, then the windows and trim and finally the baseboards. This will cut down on time spent repairing drips and splatter marks.

5. Cut in the corners. Applying a three-inch band of paint around the edges will allow you to fill in the middle with a paint roller.

6. Apply paint generously. Trying to stretch the paint won’t save sellers any money if they have to repaint.

Source: Paint Quality Institute (09/21/2010)as posted on Realtormag.com (9/22/10)

What's a Cramdown and How Does it Help Upside-down Homeowners?

The rising number of home repossessions could encourage Congress to pass cramdown legislation, something lenders fought vigorously and prevailed against when bankruptcy laws were reformed.

But the cramdown concept has been working successfully in Chapter 12 of the bankruptcy code, which affects farmland.

Cramdowns, or more properly “bifurcation,” divide the value of the debt between that which reflects the current appraised value of the property and that which is now unsecured because the underlying value has declined. The borrower is required to pay the secured portion of the loan and the remainder is treated as unsecured debt – and generally forgiven.

Economists for the Federal Reserve Bank of Cleveland wrote in a research paper that is getting a lot of attention that the negative effect of cramdowns in agricultural lending has been minor. Cramdowns succeed in keeping farmers on their properties and banks get what they would have gotten if they had foreclosed.

Source: Universal Syndicate: Lew Sichelman (09/19/2010)as posted on Realtormag.com

10 Reasons to Buy - Not Rent - a Home

Time magazine is being overly pessimistic in its recent cover piece that called into question the benefits of homeownership. In fact, now is a great time to buy. And, what's more, tomorrow will be a great time to own, because the fundamental strength of homeownership hasn't changed.

Why is now a great time to buy? Here are 10 reasons:

1. You can get a good deal. Prices are down 30 percent on average. They're at a level that makes sense for people's income.

2. Mortgages are cheap. At 4.3 percent on average for a 30-year fixed-rate mortgage, your costs to own are down by a fifth from two years ago.

3. You can save on taxes. When you add up the deductions for mortgage interest and others, the cost of owning can drop below renting for a comparable place.

4. It'll be yours. The one benefit to owning that never changes is that you can paint your walls orange if you want (generally speaking; there might be some community restrictions). How many landlords will let you do that?

5. You can get a better home. In some markets, it's simply the case that the nicest places are for-sale homes and condos.

6. It offers some inflation protection. Historically, appreciation over time outpaces inflation.

7. It's risk capital. If the economy picks up, you stand to benefit from that, even if you're goal is just to have a nice place to live.

8. It's forced savings. A part of your payment each month goes to equity.

9. There is a lot to choose from. There are some 4 million homes available today, about a year's supply. Now's the time to find something you like and get it.

10. Sooner or later the market will clear. The U.S. is expected to grow by another 100 million people in 40 years. They have to live somewhere. Demand will eventually outpace supply.

Is buying a home on your "to do" list? Give us a call! We have over 130 Realtors who would love to help you! Call 972-562-8883 or email mckinney@kw.com!

Source: Wall Street Journal, Brett Arends (9/16/10)as posted on Realtormag.com

Minimum Credit Scores Announced for FHA Loans

HUD has announced (PDF) that effective Oct. 4, 2010, borrowers with a credit score below 500 are not eligible for FHA-insured mortgage financing. Borrowers with a credit score between 500 and 579 are limited to 90 percent LTV, which requires a 10 percent down payment. Borrowers with a credit score of 580 or higher are eligible for maximum financing, which requires a minimum 3.5 percent down payment. Borrowers with nontraditional credit histories may be eligible for maximum financing.

Source: Lou Burns, Broker - Keller Williams Realty

Avoid Being Part of a Real Estate Scam!

With increasing reports of real estate scams worldwide, here are some ways recommended by fraud experts to avoid being caught up in sales fraud when the transaction involves an out-of-state buyer or seller.

· Ask everyone to prove that they are who they say they are. Have the out-of-state party provide a photocopy of their driver’s license or passport that has been notarized.

· Verify signatures. Compare the signature on the real estate contract to other signatures on their driver’s license, passport, the original sales contract, etc.

· Make sure the warranty deed hasn’t been altered. Get a copy of the original from the title company.

· You select the professionals. Require the out-of-town party to use a real estate professional, attorney, or title company of your choosing.

· Require a face-to-face meeting. The safest way to ensure that they are who they say they are is to require that they show up at closing.

Source: AOL Real Estate, Sheree R Curry (09/14/2010)as posted on Realtormag.com

More Luxury House Hunters May Buy!

Interest in luxury real estate is picking up, according to a survey for United Marketing, which found that the percentage of people with incomes greater than $306,000 a year who plan to buy homes has risen from 3 percent in 2008 to 11 percent this year.

Laurie Moore-Moore, CEO of The Institute for Luxury Home Marketing, said that while she doesn’t believe this market is booming, she is seeing sellers who are more realistic about prices and that is persuading affluent buyers to consider purchases.

"Luxury home buyers have been buying this summer," said Moore-Moore. "After waiting in the wings, many affluent buyers spent the summer shopping for value and snapping up trophy properties."

Source: UPI, Steve Cook (09/12/2010) as posted on Realtormag.com

Payback Begins for Recipients of First Tax Credit!

Borrowers who took advantage of the original 2008 home buyer tax credit must begin paying the credit back this year. The Inspector General for Tax Administration (TIGTA) says 950,000 owe money.

The required payments are amortized over 15 years – $500 per year. If the property is sold, the credit must be paid at closing.

The TIGTA says the IRS has the incorrect purchase date in its database for some taxpayers who took the original credit. These people may never be identified as owing money, it admits.

Source: Bankrate.com, Kay Bill (09/09/2010) - posted on Realtomag.com

New FHA Plan for Underwater Owners

The latest government program to help underwater borrowers debuted Tuesday.

Under the plan, the Federal Housing Administration permits lenders to choose which borrowers will participate from among their clientele. The idea is that there are some borrowers banks and investors want to get rid of because they are likely to default anyway.

To qualify, borrowers must be current on their mortgages and owe at least 15 percent more than their home’s current value. Lenders must agree to forgive at least 10 percent of the debt.

The government estimates that between 500,000 and 1.5 million borrowers will be helped, but analysts at Barclays Capital say they doubt whether the program will reach 300,000 borrowers.

Need more info? Call Mark Potter at Service First Mortgage! 972-763-9192

Source: Associated Press, Alan Zibel (09/07/2010) – article posted on Realtormag.com

IMPROVE YOUR CREDIT SCORE

Written By Carla Hill
Provided By Realty Times

Healthy credit scores have never been more important. As banks tighten their lending standards, it's important to have your score as high as possible.

A FICO score is a number, in general from 300 to 850, that is formulated from your payment history, including such things as amounts of money owed, length of your credit history, new credit accounts open, and how you have used your credit. Age, salary, race, education, and religion do not affect your score. You can't buy a good score; you can only build one over time by demonstrating that you are a responsible borrower.

To improve your credit score, start with these steps.

1. Pay your bills on time. This seems like a simple enough feat, but in hard economic times, more and more borrowers are finding themselves hard-pressed with the decision of what bill to pay. If you find yourself having a hard time paying bills, be sure to talk with the lender or company you owe. They may have programs or suggestions that will help you avoid having your bill sent to collections.

2. Don't let items go to collections. Once an item is sent to collections, your credit report will suffer. This ding will stay on your report for seven years.

3. Don't open other new credit lines when applying for a home loan. You may want the new car or living room set, but the home buying process is not the time to open multiple new accounts. This is a sure-fire way to temporarily reduce your credit score. If you do this before finalizing your mortgage, you many find yourself stuck with a higher interest rate.

4. Monitor your report on a regular basis for errors and cases of identity theft. Errors do happen. To get them corrected quickly, be sure to contact both the organization that provided the erroneous information, as well as the credit bureau. Identity theft happens. And it is your responsibility to identify it and address it!

5. Pay down credit cards. Carrying high balances on credit cards can severely affect your credit score. Think of it this way. If you have a grand total of $10,000 worth of credit limits available, but you owe $5,000 on all of your cards put together, you are using half of your available credit!

The best loans and mortgages are available to borrowers with FICO scores 700 and above. Experian, one of the major credit reporting agencies, reports that the average credit score is 693.

For a look at your credit report, visit the government sponsored site, myannualcreditreport.com. You may access your report three times a year free of charge.