Mortgage Loans = Late, Late, Late Closings

As a listing agent it is so frustrating to be at the mercy of the lender that the buyer has selected in a transaction.  Lately, the number of escrows that have had delayed closings is steadily rising because the buyer's lender does not have the loan documents to title in time.  I wish that lenders had late document delivery tracked like the airline industry.  I think if the public could see the track records of the mortgage loan industry, they would make wiser selections.

I think the processors, underwriters, loan officers should call the sellers and buyers directly if they realize  loan docs are going to be delivered to title late.  If they could hear and feel the angst they cause the buyers and sellers, the mortgage employees would try harder and work to anticipate any processing problems.  In almost every case, the late documents cause the seller to lose money on the sale and the poor seller does not even have a say in who the buyer selects as the lender.  In my 13 years of real estate, I do not recall any loan officer calling my seller to apologize for their inefficient service and for the extra costs incurred by the seller due to loan docs being delivered late to title.

The mortgage industry's reputation took quite a hit over the past 5 years. At this point, they should be trying to build up buyer and seller confidence.  However,  I am afraid that the frequent late closings caused by the lenders are a sign that they are once again sliding into the great abyss.

I Signed a Quit Claim Deed. Do I Still Owe the Debt?

QUESTION: My significant other and I are separating and have signed a quit claim deed on the property. Now I discovered that my "other" is falling behind on the payments and the bank is contacting me. Am I responsible even though I signed the quit claim deed and my name is off the title?

Yes. The note or promise to pay the lender and the title are 2 separate documents. If your name is on the note, you are responsible for the repayment... even if your name has been removed from the title.

A quitclaim deed is the simplest way that one person (the grantor) can transfer property, such as a house, to another person (the grantee). It is often used among family members to remove or change someone's name from the property title. While the concept is simple and straightforward — relinquishing all ownership claims to a particular property — it's also important to note what a quitclaim can't do.

In renouncing the claim, the grantor makes no guarantee of promise that the property is free of debt. Another important distinction is that the grantor makes no promise that no one else claims to own the property. The quitclaim deed says, in effect, that the grantor is signing over whatever ownership he or she may have in the property. It does not even guarantee that the grantor has any ownership interest at all.

Providing all parties are in agreement, a quitclaim is a convenient way to establish title without the time and expense of litigation. A simple form is filled out, taken to a notary, and signed and stamped, making it legally binding. The document is then photocopied, distributed to all parties, and then filed at the local land records office.

Some title companies are reluctant to insure the title when a quitclaim deed was used to transfer title. They might recommend use of a warranty deed. A warranty deed conveys full title to the property and warrants that title against defects (sometimes referred to as a "cloud"), such as tax liens, legal judgments and unpaid debts. For this reason, warranty deeds are often used between buyers and sellers of property.

Do you have a question? Write us at marydrefs@cox.net or call us at 623-694-0354.

The Latest Trend in Countertops........

Granite remains one of the most popular counter top materials in Arizona kitchens and baths, in spite of being one of the most expensive choices on the market. Homeowners love its colors and the many dramatic grain and vein patterns that can be found all in the same slab. Granite is mined in quarries all over the world, including India, Italy, Brazil and Peru.

It’s a substance that does need to be handled with special care and is a bit tricky to install as a replacement for existing counters.

Although granite can handle heat pretty well, you should place hot pans on a trivet or cutting board when you take them off the stove instead of directly on your counter top. Use only mild, neutral cleaners on granite; use nothing with ammonia in it.

Granite is also a porous material and will be sealed by the installer after it is put into your kitchen. But you have to seal it regularly with costly sealers – maybe every six months. If you let that seal wear off, granite can stain when an acidic liquid like red wine gets spilled on it. You can’t leave a slice of lemon on a granite counter top overnight, or you could end up with a big hole in finish of the granite. Edges and corners of granite counters can chip and need repairs.

Take a Second Look at Quartz

If you’re thinking about replacing your countertops, another popular material that deserves your attention is quartz, a synthetic that can look like stone. It’s an engineered, man-made product that combines 90 percent ground quartz bound together with a 10 percent mixture of resins, polymers and pigments.

Sometimes quartz comes sold under brand names like Silestone, Cambria, and Caesarstone. These choices include a wide range of colors and styles. Quartz can also be made into many shapes to create a more dramatic touch in your kitchen.

It wears just as well if not better than granite and doesn’t have to be sealed like granite. In fact quartz had higher ratings in tests done by Consumer Reports. But you can’t use harsh chemicals or abrasive materials on quartz either. Quartz does cost just about the same as granite and sometimes slightly more.

Other materials to investigate as well include marble, solid surfaces like Corian, slate, paper, recycled glass, bamboo, concrete, plastic laminate, or butcher block!

Question from Homeowner:
"Mary, I am concerned by the sudden increase in homes for sale in Wigwam Creek North?  Will he have another sudden drop in the market like we did in the past?"
Hi Homeowner,
I saw your question regarding the Wigwam Creek market so I ran the numbers.
Currently 18 homes are for sale in Wigwam Creek North. When I sift thru the taxes on these homes, I can see that 12 of these owners bought the house as an investment when the prices were lower. These owners are trying to make a substantial profit. The 6 remaining owners are trying to break even or minimize their loss.
In the past 30 days, 5 homes have closed escrow in Wigwam Creek North. This means we have 3.6 months of inventory in Wigwam Creek North. This indicates the area is still in a seller's market. As we move closer to the 6 month of inventory mark, the seller has less and less bargaining power. Around the 6-7 month inventory level we consider it a balanced market.
Why have more homes come on the market? The price per sq ft in the surrounding communities, as well as in Wigwam Creek North, has been steadily rising. Those investors which may have over extended themselves, may now be looking to sell off some of their inventory because they are happy with the current profit margin.
As prices rise, houses will also stay on the market longer because the pool of buyer lessens. We have had tremendous growth in the number of sales and the rise in home values in the last year in the west valley. Goodyear sold the highest number of homes in the valley in the last quarter. Investors are seeing the wave and wish to take the ride. With the increase in the volume of sales, we have not seen a drop in value and we do not expect one. This is due to the number of new residents moving to the valley due to our economic growth. Home builders that suspended building for years, are now finishing out the communities they started. We are seeing an explosion of growth once again in the west valley.
Mary Drefs
Keller Williams Realty Professional Partners

Is It Cheaper to BUY Real Estate or RENT Real Estate ????

Currently it is 35% Cheaper to BUY than to RENT in the U.S., according to Trulia's Chief Economist, Jed Kelko.

This statistic is based on:

1) the Buyer staying in the house for at least 7 years so closing costs are spread over these years.
2) a national average of 4.8% mortgage interest rate.
3) the Buyer itemizes his/her tax deduction and deducts mortgage interest.

Last year it was 45% cheaper to Buy than to Rent in the US because the average mortgage interest rate was lower at 3.75%.

For Rents to be cheaper than Buying Real Estate, the mortgage interest rates would need to reach 10.5%.

Even though prices and mortgage interest rates are expected to rise again next year, it will still take a long time before we reach an average 10.5% interest rate in the U.S.

So, if Buying is a possibility and you plan to stay in one area for at least 7 years, the best economic decision would be to BUY Real Estate.

Want specific pricing information? Contact our Buyer Specialist, Mike Drefs, at 623-693-1505.

Will the Government Slowdown Affect Your Real Estate Deal?

FHA and VA are the most commonly affected programs as they are funded by the government. However, there is no change to the ability to complete VA or FHA loans due to the government shut down. Both departments will continue to operate and since most of what is needed is automatic, there should be little noticed as a result of the shutdown.

• Word of Caution – if the file has a “hair” on it or is difficult and an UW needs to speak to a live FHA person or get a specific answer from FHA – this is where it could take a bit longer. Normally they return calls and answer questions in 24-48 hours, with the shutdown and running a “skeleton” crew for FHA, then plan for longer time.
• I would give the deals an extra week or so to close if the government shutdown continues longer than the next few days.

What' s REALLY Happening in West Valley Real Estate...

Currently we have 2.5 months worth of inventory in the west valley. This means that if no more homes come up on the market and buyers keep buying at the same pace, there will be no more homes to buy in 2.5 months. However, real estate is not static and more homes are consistently being added to our "For Sale" list. (We have 2 great new listings today!)

This 2.5 months benchmark DOES indicate that we are in a seller's market. Because of this lower inventory, sellers are able to push the pricing ceiling. However, sellers must always keep their eyes on the actual sold prices in their area if the house needs to be appraised. We have seen quite a few sellers reach for the stars when pricing their homes only to have the values corrected when the appraisal results arrive.

Mortgage Interest rates dropped slightly last week. Even if interest rates rise slightly, there is a silver lining. Historically, when interest rates have risen, more loan programs were created and more buyers were able to buy. The number of loan programs available affects the number of real estate sales more than a rise in interest rates. So sellers should not fret if rates do increase.

REAL ESTATE BUYERS !!! PAY ATTENTION!!!! IMPORTANT NEWS !!!

REAL ESTATE MORTGAGE RATES FELL YESTERDAY and Real Estate stocks rallied because the Federal Reserve announced it would continue to buy US Treasury Securities and mortgage backed securities. Both have kept mortgage rates well below historical norms for the past few years.

 Back in May, the Federal Reserve began "hinting" about a taper of asset purchases and mortgage interest rates rose. This put the brakes on the housing recovery and resulted in a sluggish summer for real estate. If interest rates retreat to where they were at the beginning of 2013, mortgage refinances and purchases will rebound again.

 IF YOU ARE A BUYER, mortgage rates are expected to drop over the next several weeks. NOW is the time to pull the trigger! For more information, contact our Buyer Specialist, Mike Drefs, at 623-693-1505! He can put you in touch with an excellent loan officer who will determine your current mortgage or refi rate.

Phx Area Home Prices....... A Look Ahead to 2014 ...

Part of our job as Realtors is to always be looking at market statistics, reading predictions from experts and forming an educated opinion on where the real estate in our market is headed. Many of the headsline you read regarding real estate is written on a national level. The market in California and Arizona typically starts the wave that slowly moves across the country. So, the national market statistics you are reading is usually old news for us here in the Phoenix area. So, here in a brief summary is what we are closely watching: 1) In Maricopa County jobs are growing faster than new home starts. Normally this would cause a housing price surge. However, because there are still vacant homes in the area and many residents are taking lower wage jobs, the new workers will most likely be renting or purchasing existing smaller homes. This current job surge is not likely to significantly raise housing prices. 2) Mortgage Interest Rates are expected to keep rising. Interest rates will slowly rise up incrementally, but just a small hike in an interest rate can make a significant increase in your mortgage payment. This means that as the interest rates rise, buyers may have to lower their maximum price in searching for homes. The rising interest rates should also slow rising home values because buyers will be purchasing lower priced homes. 3) Builders are readying plots of land for lots of building in 2014. The new home builders who were sitting on the sidelines for the past 4 years, are now gearing up to build again in 2014. You may have already seen some stalled new communities building again and closing out. As these new homes come up on the market, there will be more competition for the resale homes. So, we are expecting to see resale inventory rise. This increase in inventory will also slow the rising home values. As a side note, it appears the builders are a bit more relaxed when it comes to qualifying new buyers for home loans. As we stated in a previously, please be aware that if you go to a new home builder to purchase a home and do not have a realtor accompany you, you are going in unrepresented. If all goes smoothly, all will be fine. But, if you encounter any glitch in the home buying or building process, please be aware that the new home agent represents the builder and the builder only. They do not have your best interest at heart. Call our Buyer Specialist, Mike Drefs, at 623-693-1505 and we will make sure you get the fair deal you deserve and he will help smooth your path should you have problems with the building process. Mike must be with you on your FIRST trip to the new home community.

Investor, Investor... Where Are You?

We are seeing a decrease in the number of offers from real estate investors.
Why?
The type of real estate investor in AZ is changing.
1) The get rich quick investor, known to most as a flipper, has moved on to greener pastures in other states.  Just as vultures migrate, so does the flipper. They have moved on to states that are promising higher returns on investment, such as Florida and Texas. 
2) The new investor in AZ is buying and holding.  This investor is seeking more stability.  This investor is tracking where people are moving, where job markets and growing and where home prices are most stable.   AZ's job market is growing and AZ prices are still relatively low so investors are still buying rental properties.

While the fast acting flipper investors did help heal the AZ real estate market, the new breed of investor will sustain it.

Real estate continues to be America's second favorite investment....second only to cash.  With prices low and mortgage rates also historically low, it is an excellent time to invest in rental properties in AZ and to re-enter the real estate market if you have been watching from the sidelines.

Phoenix Real Estate Forecast.... PARTLY SUNNY!

According to the experts of the National Association of Realtors, NAR, the strength of the national real estate recovery remains in question. Here in Arizona, our housing prices are still reacting to an inadequate supply of homes for sale. However, the NAR is concerned that the pace of recovery will slow due to difficulty in obtaining housing due to weak income growth and greater lending restrictions.

According to the Bureau of Labor Statistics, the unemployment rate fell to 7.4% in July, but more importantly, average hourly earnings and average weekly hours worked decreased. The unemployment rate is actually closer to 15% if we add in those workers who are underemployed.

For the 1st time since November 2012, home listing prices decreased nationally from June '13 to July '13. Rising mortgage rates, growing inventory and declining investor demand lead to this dip in prices. However, looking at the bigger picture, asking prices are still strong rising 11% from July '12 to July '13. In addition, the NAR reports that the housing affordability index showed housing is still very affordable.

Looking at RENTS for July '13, Trulia reported an increase of 3.9% in rental rates from July 2012 to July 2013 nationally.. However, like home sale pricing, rental rates also seem to be leveling.

So, if you were waiting for home prices to level off before putting your home on the market, now is the time. And, if you are a buyer, now is the time to take advantage of the historically low mortgage interest rates.

Why Do Home Values in Some Phoenix Area Communities Seem to Be Decreasing??

Currently in many real estate sales, Fannie Mae and Freddie Mac,the leaders in the lending industry, are trying to demand approx. 20% over market price on the homes they are selling nationwide. They are attempting to drive prices up.

In other areas of the country where they are in the pit of the distressed market, with low values, this 20% tactic is fine. However, in our area which is the #1 recovery area in the US and where values have miraculously risen, this 20% tactic artificially drives the values even higher. The higher home value is OK if a cash buyer is willing to pay the inflated value, but if the buyer needs a loan, usually the buyer's lender will see the artificial high price, value the house lower than list price and in many cases, Fannie Mae will have to lower their expectations(and the contract price!).

Because the Phoenix area prices rose quickly and our area is no longer viewed as an "extreme" bargain area, many of the cash investors have left for Florida, Nebraska and Iowa. This leaves the bulk of our sales to the buyers that waited patiently and who need loans. So we are seeing the slight downward price corrections on the distressed properties at the time of the buyer's appraisal more and more.

In a few communities that are attracting many FHA buyers, there may appear to be a slight decrease in home values. Many of today's buyers are the "boomerang buyers" i.e buyers that experienced a short sale or foreclosure in the past 3-5 years and are now getting back into the market. An FHA loan is usually their first choice because of the relaxed standards and the low down payment. These FHA friendly neighborhoods are not necessarily declining in desirability, but simply going through a valuation correction. Usually these corrections are short lived... less than 6 months... because our market is so healthy and we have swift sales.

So, if you have seen homes valued slightly lower or are concerned that the values are not rising as quickly as they were in the beginning of the year in your community, don't fret. Phoenix is on a healthy path of recovery and we will continue to climb onwards and upwards!

The Scoop on Flipping in the Phoenix Market

Flipping (purchasing a distressed home, fixing it up and reselling it) has declined in the Phoenix area by 35%. This is because we have fewer distressed homes available in our market and our real estate prices are rising. This decline in flipping is a postive sign that our housing market is recovering.

We are, however, seeing flipping increases in other areas of the country. While Nevada and California are also seeing a decline in flipping, areas like Dayton Beach Florida, Palm Coast, Florida and Omaha, Nebraska are seeing a huge upswing in the number of flips. In some areas of Florida, they are reporting a whopping 85% return on their investment!

Mortgage Interest Rate Increase = Slow in Housing Appreciation

The housing market is coming back nicely. As sellers, we need to not be over exuberant when it comes to pricing. There is little doubt that house prices have appreciated over the last twelve months in most regions of the country. However, with both the inventory of homes for sale AND interest rates increasing, we have to be careful to not over judge what the market can bare.

 The rate of price appreciation may slow as rates and inventories increase. Investors will begin to slow their purchases and the first-time buyers expected to take their place may be working within a pre-set budget.

 Let’s look at an example: A young couple is looking for a home and have predetermined that their budget will only allow them to spend $1,000 a month on a mortgage. At today’s mortgage rate of 4.5%, they could afford a $200,000 mortgage ($1,013 principal & interest). However, if rates jump to 5%, they would have to lower their mortgage amount to $190,000 in order to keep their monthly payment where they need it ($1,020). At 5.5%, the mortgage would need to be no more than $180,000 ($1,022).

This decrease in buyers’ purchasing power will have an impact on home values going forward. We do not believe it will cause a decrease in prices. However, we do believe it will likely cause current rates of appreciation to slow.

Who's Responsible for Phoenix's Real Estate Miraculous Recovery ?

The latest article from Money Magazine explains who is responsible for the miraculous rebound in the Phoenix Housing Market. In Phoenix, we went from a glut of homes on the market to a seller's market in less than a year. Phoenicians did not rely on the government or Wall Street conglomerates to bail them out. We relied on "Mom and Pop" investors.

I would also like to add that savvy real estate agents and loan officers in the Phoenix area also helped us quickly move through a flooded market. By reaching out to investors in other states and in other countries, real estate agents showed buyers our tremendous potential and attracted them to invest in AZ.

We must also acknowledge that there are agents in the Phoenix area that lead the nation as Short Sale "pioneers". As short sale advisors to the major lenders, these agents helped the major banks revamp and refine the short sale process so that it became more efficient. They helped pave the way for the more efficient short sales process that is now available to the rest of the nation.

So kudos to the Phoenix area for pulling together and getting us out of crisis mode quickly. Between the realtors, investors and loan officers, we definitely have some of the best and brightest in the nation!

5 REASONS TO PLACE YOUR HOME ON THE MARKET NOW

1.) Demand Is High
Homes are selling at the fastest pace since November 2009 when the market spiked in response to the home buyer tax credit. The most recent Existing Home Sales Report by the National Association of Realtors (NAR) showed that monthly sales increased 9.7% over the same month last year. Total sales have been above year-ago levels for 22 consecutive months. There are buyers out there right now (buyer traffic is 31 percent stronger than a year ago) and they are serious about purchasing.

2.) Supply Is Beginning to Increase

Total housing inventory last month rose 11.9% to 2.16 million homes for sale. This represents a 5.2-month supply at the current sales pace, compared with 4.3 months in January. Many expect inventory to continue to rise as more sellers escape the shackles of negative equity. Selling now while demand is high and before supply increases may garner you your best price.

3.) New Construction Is Coming Back

Over the last several years, most homeowners selling their home did not have to compete with a new construction project around the block. As the market is recovering, more and more builders are jumping back in. These ‘shiny’ new homes will again become competition as they are an attractive alternative for many purchasers.

4.) Interest Rates Are Rising

According to Freddie Mac’s Primary Mortgage Market Survey, interest rates for a 30-year mortgage have shot up to 3.98% which represents a jump of more than ½ point since the beginning of the year. Even those trying to be the voice of reason on this issue are projecting higher rates. For example, Polyana da Costa, senior mortgage analyst at Bankrate.com said:

“Rates are unlikely to keep going up so quickly and should remain below 5%.”

Whether you are moving up or moving down, your housing expense will be more a year from now if a mortgage is necessary to purchase your next home.

5.) It’s Time to Move On with Your Life

Look at the reason you are thinking about selling and decide whether it is worth waiting. Is the possibility of a few extra dollars more important than being with family; more important than your health; more important than having the freedom to go on with your life the way you think you should?

You already know the answers to the questions we just asked. You have the power to take back control of your situation by putting the house on the market today. The time may have come for you and your family to move on and start living the life you desire.

Another Housing Bubble On the Horizon???

Three Reasons there will NOT be another housing bubble:

1) Supply is being to increase nationally. A lack of inventory in AZ has created a market of multiple bids which caused our prices to rise. However, nationally the supply inventory has increased dramatically since January.

2) Demand will decrease in certain areas. Investors have been a large part of the AZ Real Estate scene over the last 2 years. As prices continue to rise, some of these investors will back off and investor sales will slow.

3) As mortgage rates increase, buyers will be able to afford less. The Mortgage Bankers Association, Fannie Mae and NAR have all projected an increase in mortgage rates over the next year. Buying power will decrease as borrowers can no longer afford the same price point and as monthly payments increase.

In summary, the time to Buy is NOW! Prices and mortgage rates are on the rise. Had a short sale or foreclosure recently and want to purchase? Give us a call and we will have a loan officer place you on a plan to home ownership.

Can A Leprechaun Buy a House in AZ???? (Courtesy of Diane Gerdes of the Mortgage Advantage)

Maybe. The Equal Credit Opportunity Act of 1974 prohibits discrimination in granting credit to individuals based on race, color, age, religion or national origin. Stature, mode of dress and jig dancing is not a reason to deny a home loan.

The guidelines state our small cloverleaf carrying friend establish residency with a lender-approved work visa. The types of documentation have changed so be sure to check with the bank or lender and follow their guidelines. Student and other limited visitation visas are not considered adequate documentation for mortgage financing. A green card (not just for the Irish) or permanent residence extends all of the same benefits as a U.S. Citizen when financing homes.

The Leprechaun must also build a credit history that spans two years with three credit lines. A good credit score is important in order to receive a competitive interest rate.

Unfortunately having a pot of gold does not qualify for down payment or closing costs, unless it has been put in a bank and seasoned for over 60 days. "At the end of the rainbow" is not an appropriate paper trail.

Work history is important. If Leprechauns follow the tradition of conducting mischief for profit, they will need a two year income history disclosed on American tax returns.

It's not easy being green or in real estate. That's why we have Guinness.

AZ Real Estate Update: SEE HOW YOUR CITY'S HOME PRICE INCREASED...

AZ Real Estate Update: SEE HOW YOUR CITY'S HOME PRICE INCREASED...: The Greater Phoenix Housing Report has been filed by Michael Orr, the Director of the Center for Real Estate Theory and Practice at ASU. ...

SEE HOW YOUR CITY'S HOME PRICE INCREASED...

The Greater Phoenix Housing Report has been filed by Michael Orr, the Director of the Center for Real Estate Theory and Practice at ASU. It is showing that the SIGNIFICANT ANNUAL PRICE INCREASE OVER THE LAST 12 MONTHS (Dec 2011 vs Dec 2012) has spread to the majority of the Phoenix area. Below is a summary of the monthly average price per square foot increase over the last 12 months.

How does your city compare???

 City %Change in Price/ Sq Ft

Tolleson 41%
Phoenix 39%
Glendale 38%
Avondale 34%
El Mirage 33%
Buckeye 29%
Peoria 28%
Goodyear 26%
Surprise 24%
Litchfield Park 23%
Sun City West 15%
Sun City 11%

 Only Paradise Valley saw a decrease in pricing. Paradise Valley's average price per square foot was down 16% over the past 12 months. Traditionally Paradise Valley has the highest pricing in the valley.

 Want to know how much your home is worth? Contact Mary Drefs at 623-694-0354.

"And the Award Goes To....."

"And the Award goes to.... the Buyers who get their information direct from the MLS."

If you are relying on such sites as Realtor.com, Zillow, or Trulia.com, etc.  to find new real estate listings for sale, please note that these sites do not add new listings until 48 hours AFTER the house is listed on the MLS. The house you are interested in may be under contract by the time you are receiving the information

Currently there are only 13,761 properties actively for sale in Maricopa County (Phoenix area) and 13,747 homes under contract. We currently have a 2.4 month supply of homes. This means that , if no new listings come up on the market and we continue to sell at this pace, we will have no more homes to sell in 2 1/2 months. There are very few homes for sale.  Yet, our prices here in the Phoenix area, as well as the mortgage interest rates, are still low. This means that buyers need to be aggressive in purchasing a property. Most offers come in on properties in the first 2 days the home is on the market.

For the most aggressive strategy in buying, you need to have info direct from the MLS.  You can get a leg up on the competition by contacting Mike Drefs at 623-693-1505.  He will customize a search for you and his service is FREE to Buyers. 

"And the Award goes to YOU for getting your information direct from the MLS."

FHA Buyers.. Put the Pedal to the Metal!

Hear ye, Hear ye!  All Buyers intending to utilize an FHA Loan for purchasing a home, it is best to get an FHA case number assigned as quick as possible.  All FHA case numbers assigned on or after 6/3/2013 the FHA will collect annual Mortgage Insurance Premiums(MIP) for the life of the loan. What does this mean?

Currently, FHA borrowers would MIP until they could prove they had at least 20% equity in their property.  Once they had an appraisal showing the 20% equity, the borrower could petition the lender to remove this additional monthly charge.  Now, the borrower will be paying the MIP for the life of the loan, which in most cases, is 30 years. 

In addition, MIP factors are changing so not only will FHA borrowers be paying MIP for a longer time, but also they will be paying higher amounts.  So, if you are on the fence about purchasing and were planning on using an FHA loan because of its low 3.5% down payment, you better hurry and get under contract soon.

Click Here for more information.

Why it Takes So Long For a Buyer to Get A Loan....

The lending industry has tightened its lending practices since the days when loans were given out like candy.

In 2005, loan underwriters who approve loans were paid on volume and would often underwrite 6-8 loans a day. With today's tighter compliance policies, underwriters can only underwrite 2-3 loans per day. In the past, a junior underwriter could sign off on minor conditions, such as verifying employment, etc. Now all conditions must go back to the main underwriter to be checked for compliance. This creates a large log jam of files for the underwriter and thus, causes delays in processing loans.

The final version of the 805 page "rule book" for qualifying mortgages was released by the government last Thursday. Now, if a bank goes outside the guidelines in processing a loan, the bank could forfeit their legal right to foreclose on the house. This means if a bank "bends the rules" in creating a loan, it is possible that a borrower could live in a house forever without ever having to make another mortgage payment. Consequently, lenders are being expecially careful in creating new home loans.