The chief economist for NAR has recently sighted that contract failure rates have hit a staggering 33%, up from 18% the prior month. NAR claims the main reason for this is due to declined mortgage applications and appraised values.
This is not making any sense to us as lending guidelines continue to open up making it easier for buyers to qualify for home loans.
- Down Payment requirement down to 20% for Jumbo Loans
- Down Payment requirement down to 3% for Conventional Loans
- Credit Score requirements lowered to 620
- Many conventional loans only require a Drive-By Appraisal
- Purchase Transactions have priority and are flying through Underwriting
This is great news heading into 2012 with expanding loan options. Purchase Agreements are falling apart for a number of different reasons. Call us if we can help your buyer understand what needs to be done to get their loan clear to close. Or call us if we can help you understand what the lender is telling your buyer.
Do you agree with NAR’s findings? Comment below, we would love to hear your thoughts!
Posts tagged UNDERWRITERS
PA Fallout? We can help!
Purchasing an Investment Property
Investment properties (buying a home with the intent to lease to a tenant) are at all time highs, taking up 20% of all purchase transactions in the last 12 months. Big reason for this is that in today’s environment, the home will cash flow immediately.
Most investors are purchasing properties for $100,000 or less and paying cash for these. Here is what you need to know if you are looking to finance an investment property.
- Residential Mortgage Transactions only apply to 1-4 Unit Properties
- Lenders are typically requiring a 25% down payment
- 10% down payment options available on Fannie Mae HopePath Properties
- Non-Homestead property taxes are about 33% higher than that of a primary residence
- Tighter Underwriting requirements – Need more money in the bank after closing
We have a few years experience owning investment properties, and many more years financing these properties in Michigan. Housing affordability is at all time record levels and interest rates are near historic lows, so now is a great time to be an investor. Call us with questions!
Approval process issues – Road blocks
The approval process isn’t difficult as long as your paying attention to the details. Here are what we see underwriters questioning everyday.
- Internet printouts in place of actual bank statements: These often to not show account numbers and names
- We need all pages of statements (Yes, including the irrelevant last page)
- Large, non-payroll deposits need to be explained and documented
(Such as a $500 savings deposit)- Earnest money deposits must clear your account to get credit at closing – Be sure your realtor deposits your check ASAP to expedite clearing your account
- Include ALL schedules & pages when providing tax returns
(Not just first 2 pages of 1040)- Page 2 of 1040 needs to be signed
- Be sure your drivers license is NOT expired!
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