Matching buyers with down-payment assistance

Inman News™, March 21, 2011
By BERNICE ROSS

Lack of a down payment is the No. 1 obstacle to home ownership. What most buyers don’t realize is that there are still hundreds of programs available to help them obtain a mortgage with less than 10 percent down.

I recently interviewed Rob Chrane of Down Payment Resource about an exciting new tool his company has created to assist buyers in obtaining down-payment assistance.

According to Chrane, many people are aware that there are FHA programs available to buyers who have low down payments. Most buyers, however, have come to the mistaken conclusion that it now takes at least 10 percent down to purchase if you use a conventional loan instead of an FHA loan.

Payment assistance comes in many forms. Down Payment Resource connects potential borrowers with available funding for down-payment assistance, fixed-rate mortgages, rehab loans, and more.

What makes this new program exciting is that the Down Payment Resource site works hand in hand with a multiple listing service (MLS) to do two things. First, while there are numerous federal programs available, few people realize how many state and local programs are available as well. These programs often have very different guidelines as well as loan limits.

Down Payment Resource aggregates all the programs for which a particular property would qualify based upon the location and nature of the program. The system then displays an icon on the MLS listing indicating that this particular property is available for down-payment assistance. Borrowers can click on the icon to see which programs are available.

Aggregating all of these programs and tying them to specific properties is a gargantuan task. The system works by linking to the agencies that administer the programs. These agencies maintain the current list of requirements as well as the lenders who offer the programs.

To illustrate, a house we chose at random from the program displayed eight different resources for potential homebuyers who might be seeking down-payment assistance.

Second, the program qualifies buyers as well. A prospective homebuyer completes a simple online form containing eight questions. The user can stay anonymous because the system doesn’t track any identifying information. Once the form is completed, the system informs the user about whether he will qualify as well as providing an offer for a REALTOR® and/or lender to contact him.

While this system is relatively new, the feedback from the MLS systems using it thus far has been very positive. The system is a huge lead-generation tool for agents and brokerages, as well as lending institutions.

The MLS systems that are currently using the system typically purchase it as part of the core services to link to their IDX feed. There is no charge to the agents. The links to the assistance programs are available on the MLS IDX feed and can be posted on the brokerage’s or the agent’s site as well.

There are numerous ways for agents to use the system. First, they can use it as a quick way for new buyers to identify the houses they will qualify for to purchase. This is different from anything in the past, as the system clearly identifies the specific properties that qualify and helps the buyer determine how much he can qualify to borrow. The benefit to the agent is that she doesn’t need to waste time showing properties that don’t qualify.

Agents using the system also have reported that it can be an extremely valuable tool for helping sellers be realistic about their pricing. The way to do this is by using the closing script that’s based upon the notion that “your house has to qualify.”

“Mr. and Mrs. Seller, you already know that in order to sell your house, you need a qualified buyer. Did you know that your house also has to qualify?”

This statement usually surprises most sellers. The normal course of action at this moment is to explain that because more than 90 percent of today’s buyers need a loan, their house has to qualify with a lender.

You introduce your comparative market analysis (CMA) by saying, “So let’s take a look at what properties are qualifying for in this area.”

If a number of properties in this area were eligible for down-payment assistance, it would be wise for the seller to price her property where she can reach the greatest number of potential buyers.

For example, assume that a seller would like to list her property at $300,000. At that price there may be only FHA financing available. On the other hand, if the seller lists her house at $295,000, there are two additional down-payment assistance programs available. Clearly, the best choice for the seller would be to list for a little less and broaden the number of potential buyers for the listing.

Chrane said that he expected a fair amount of pushback from real estate companies that have their own in-house lenders. Once these brokerages started working with the system, however, they realized not only could they generate buyer leads, but they could also generate mortgage leads.

This program exemplifies one of the best ways the MLS systems, brokerages, agents, lenders, and third-party vendors can work with federal, state and local programs to help more buyers achieve their dream of homeownership.

Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, trainer and author of the National Association of REALTORS®’ No. 1 best-seller, “Real Estate Dough: Your Recipe for Real Estate Success.” Hear Bernice’s five-minute daily real estate show, just named “new and notable” by iTunes, at www.RealEstateCoachRadio.com. You can contact her at Bernice [at] RealEstateCoach [dot] com or @BRoss on Twitter.

Call me if you want downpayment information or a referral to a great lender!
Jen McKinnon
Realtor / Investor / CDPE
AGENT REFERRAL NETWORK
The Minnesota Real Estate Team

612.384.1073
jen[at]MnRealEstateTeam[dot]com

How to Guide Your Clients on Appraisals

RISMEDIA, January 14, 2011—It’s easy to get confused and frustrated during the appraisal process when buying or selling a home. Because of this, the Appraisal Institute recently released tips for consumers, providing guidance for homeowners and buyers seeking to ensure their sales are completed in a timely manner.

The Appraisal Institute’s tips encourage homeowners and buyers to:

• Understand the role of appraisals.
• Make sure their lender hires a qualified appraiser (such as a designated SRA, SRPA or MAI member of the Appraisal Institute).
• Accompany the appraiser during the inspection of the property, if possible.
• Request a copy of the appraisal report from the lender.
• Examine the appraisal report and ask questions.
• Appeal the appraisal if appropriate.
• Ask the lender to order a second appraisal by a qualified and designated appraiser.
• File legitimate complaints with appropriate state board or professional appraisal organizations.

“Credible opinions of value can help to stabilize the real estate market,” said Appraisal Institute President Joseph C. Magdziarz, MAI, SRA. “Appraisals are especially important because they are an objective and unbiased source of information. Unlike others involved in real estate transactions, the appraiser is an independent professional who performs a service for a fee rather than for a commission.”

Magdziarz noted that normal declines in the real estate market have led to increased caution by lenders. That caution has led to delays in completing some real estate transactions.

“Appraisers today are doing the same thorough, fact-based research and analysis they have always done,” Magdziarz said. “Nothing has changed in that regard.”

Magdziarz added that appraisers have been wrongly accused of prolonging the nation’s real estate downturn by developing value opinions that are below proposed sale prices. Specifically, he said, they’ve been unfairly criticized for including comparable sales in the valuation process that provide opinions that are below the cost to build.

It serves neither the lender nor the consumer to enter into an upside-down mortgage, he noted. Some real estate agents, mortgage brokers and home builders have used the Home Valuation Code of Conduct and Interagency Appraisal and Evaluation Guidelines as a scapegoat for current declines in the real estate market caused by the weak economy and the general oversupply of homes in the market, Magdziarz said.

Looking to buy or sell? I’d be happy to talk further!
Jen McKinnon
AGENT REFERRAL NETWORK
The Minnesota Real Estate Team
612.384.1073
jen[at]MnRealEstateTeam[dot]com

By Paige Tepping

RISMEDIA, October 20, 2010–For many prospective buyers, the thought of going through the home-buying process is often filled with a lot of stress. From finding a qualified real estate agent, to narrowing down your choice of homes and then packing your belongings and moving across town can be an overwhelming process.

OpenSkyRealEstate.com offers the following tips to help you keep your cool as you begin the process of a buying a home.

-Buying a home is one of the biggest financial decisions you will make in your lifetime, and along with the finances come emotions. When you are choosing a real estate agent to work with, be patient and take the time you need to find an agent that you connect with. Finding a highly-skilled agent who fits with your personality is crucial.

-Every home buyer and seller is in a different situation, so it is important that you don’t compare your timeline and decisions to anyone else’s. As you make your way through the home buying process, remember that there is no right time to buy, just as there is no perfect time to sell. If you find a home that fits your needs, don’t let it slip out of your hands by waiting for interest rates to drop lower as you run the chance of losing out on the home of your dreams.

-It is natural to want to get opinions from those you trust before you make your final choice, but too much input will ultimately make the decision process much harder. Remember to focus on what your immediate wants and needs are so that everyone will be happy with the final decision.

-You probably aren’t going to find a home that is 100% perfect, so it is important to make a list that includes your top priorities that you can’t live without. Be sure to stick to the items on your list and let go of the minor things.

-Negotiation is an important part of the real estate buying process, but be sure you don’t take your negotiating too far. Trying to get an extra-low price or refusing to budge on your offer may cost you the home in the end. Successful negotiation depends on give and take, so make sure you are being fair in your requests.

-Don’t get too caught up in all the physical aspects of a home and forget about the more important issues. While the size of the rooms and the layout of the kitchen might not be exactly what you expected, be cognizant of issues such as noise level, location to amenities and other aspects that will have an impact on your day-to-day life.

-Getting approved for a mortgage should be taken care of well before you find a home and make an offer.

-Create a budget before you move into your new home and be sure to include maintenance and repair costs. Even if you buy a new home, there will be extra costs, so it is important to not come up short and let your new home deteriorate.

-After purchasing a home, a little buyer’s remorse is inevitable, but it will pass. Buying a home is a big financial commitment, but it also yields big benefits. If you are feeling remorseful after buying your home, remind yourself why you wanted to buy a home and what made you fall in love with your new property.

-When choosing a home, buy it because you love it. A home’s most important role is to serve as a comfortable, safe place to live, so don’t get bogged down with thinking about your home’s appreciation.

I’m here to help in the Twin Cities with your home buying adventure whether you are a first time home buyer or have purchased many homes!  Please call, email or tex anytime!

Jen McKinnon
Realtor. Investor. CDPE.
Agent Referral Network
The Minnesota Real Estate Team
612.384.1073
jen[at]MnRealEstateTeam.com

So, it sounds like 100% Loan To Value financing is back again (around Aug 16 2010).  Obviously, there are restrictions and you need to talk to a qualified lender to make sure this is the right mortgage product for you.  A couple of lenders I recommend are:

Cornerstone Mortgage (Rob Bonahoom) in Burnsville Minnesota

Bell Mortgage (Alec Grebis) in Bloomington Minnesota

Conventional 100% financing now available

680 minimum credit score

45% Debt-To-Income ratio or less

NO Mortgage ins needed with this program

Must be first time home buyer (not owning a home in the previous 3 years)

Up to 3% in seller paids allowed

Income limits of $83,900 a year for a family of 1-4 people

This program was just unveiled today and it sounds like lenders can not lock anyone in until August 16th so that gives you plenty of time to get out and find the perfect home!  Home inventory in the traditional first time buyer price range (under $200,000) is very high especially in the under $150,000 range.  Just a few months ago investors were going crazy buying up cheap bank owned houses (especially in North Minneapolis) and remodeling them.  Now, because the federal tax credit expired, these sellers are sitting on inventory that they want to sell fast!  Now, don’t get me wrong…it does not mean you can throw out low ball offers all day long, it just means that many of these houses are priced to sell!

For more information about 2 beautifully remodeled homes in North Minneapolis, click on the links below – these houses are move in ready – just about everything is NEW (including most of the plumbing and electrical!).

3318 James Ave N Minneapolis

3842 Humboldt Ave N Minneapolis

Call or email me with any questions!

Jen McKinnon

Real Estate Agent / Investor

AGENT REFERRAL NETWORK

Member of the #1 MN Real Estate Team

612.384.1073

jen@mnrealestateteam[dot]com

The information below about a NEW ZERO Down financing program comes from The Minnesota Housing Finance Agency and more information will be coming soon!
This type of program could mean help for Twin Cities home buyers that are on the fence about buying their first home. From rumors I have heard, there will be income limits and credit requirements for this program (appears to also be geared for first time home buyers).
As always, check with your local mortgage lender to see if you qualify. I’ll post more information when I get updates. A couple of lenders that I like and that have access to these programs are:Alec Grebis with Bell Mortgage and Cornerstone Mortgage.

New Loan Product for the Minnesota Mortgage Program

Minnesota Housing will soon be offering Affordable Advantage, a loan product that helps serve low- and moderate-income borrowers. The product has flexible terms and is one of the few 100 % LTV products available in the market. The product is based on Fannie Mae’s Affordable Advantage™, an initiative developed exclusively for Housing Finance Agencies, including Minnesota Housing.

Contact me for more information or to start the home search process!
Jen McKinnon
Real Estate Agent / Investor
AGENT REFERRAL NETWORK
Member of The Minnesota Real Estate Team
jen[at]MnRealEstateTeam[dot]com
612.384.1073

So, you didn’t get into the real estate market in time to take advantage of the tax credit? Below is a great article from a newsletter I get from Ronny Loew at Waterstone Mortgage.

What’s More Important? Low Rates or Tax Credit
In a recent survey by Prudential Real Estate and Relocation Services, an overwhelming majority of those polled found that when factoring in either low interest rates or the tax credit, low rates were far more important in a decision to purchase a home now.

There’s a good reason for this statistic. For example, if you purchase a home for $300,000 and finance $270,000, and your interest rate for a 30-year fixed rate loan was 5.25% versus 4.75%, you would pay nearly $30,000 more over the term of the loan. This is a significant amount of money!

Since the Fed’s Mortgage Backed Securities purchase program ended on March 31, there has been much volatility and price swings in the markets. Rates overall are off their lows and are often quoted above 5.00% today with no points.

Looked at from another perspective, if prospective home buyers are waiting for home prices to decline a bit more before purchasing a home, but interest rates push higher towards 6.00% in the meantime, waiting could well cost those home buyers more money in the long run.

In fact, let’s say a home buyer delays a transaction but receives a $10,000 reduction off that $300,000 home. If, in the meantime, rates were to rise .75% to 6.00% and the buyer financed 90% of the purchase price, the amount of total payments over a 30-year term would be over $35,000 more than paying the $300,000 purchase price and the 5.25% interest rate.

The Twin Cities real estate market is still HOT and there are great homes at good prices – in ALL price ranges and all areas of the Twin Cities. Please call me to learn more about home buying!

Jen McKinnon
Realtor/Investor
AGENT REFERRAL NETWORK

612.384.1073
jen[at]MnRealEstateTeam[dot]com

I drove through an absolutely gorgeous, exclusive development in Wayzata Minnesota last weekend – just 15 minutes west of Downtown Minneapolis and biking distance to charming Downtown Wayzata!
This development is called Locust Hills of Wayzata and it is nothing short of spectacular.
This property was a former private estate with 70 acres on the shores of Grays Bay (Lake Minnetonka). It has been subdivided and now the European-style community encompasses woods, wetlands, lakefront, lagoon and walking trails along with 44 architecturally designed homes along with 3 estate lake homes on Gray’s Bay of Lake Minnetonka.

Currently there are lots available and there are specific builders that have been pre qualified to build but there is opportunity to bring your own favorite builder – they will just need to be approved by the developers.
By the sounds of it you can get a lot and home starting around $1.2 Million. There is an association that takes care of everything! Talk about maintenance free living! That’s so you can enjoy the Lake Minnetonka lifestyle and spend the summer days boating since private boat slips are provided for each resident of this exclusive neighborhood.

You have to see it to believe it! Please call me for more information.

Jen McKinnon
Realtor / Investor
Agent Referral Network

Member of The Minnesota Real Estate Team
jen[at]MnRealEstateTeam.com
612.384.1073