Your MN Mortgage Mom's Blog

Just purchasing a home and it needs a few repairs?  Or perhaps you are already a homeowner in need of funds to "fix up" your castle?

Either way, you may want to stay away from the sometimes expensive rehab loans and look to the State as a wonderful alternative.

The State of MN offers a very attractive program for your home improvement projects for MN residents. 

 Appropriately called the "Fix Up Fund".

Here are the highlights:

• Household income at or below $96,500
• Property must be owner-occupied
• You can hire a contractor or do the work yourself
• Up to a 20 year term
• Loan amounts up to $35,000
• Most repairs that will improve the efficiency of your home are okay...no swimming pools, please!
• Whoa!  And those who complete the improvements may be eligible for a rebate, up to 35% of the cost of repairs.  Nice!

The best part is the rates are VERY low...currently at 5.99%!

For more information, contact a sponsoring lender today.

Amidst the rising foreclosures in our country, the Federal Housing Administration has seen dramatic losses and its reserves have fallen below Congressional required levels. 

In response, FHA is raising fees and tightening lending standards in an effort to bring more revenue to the agency and continue to keep FHA loans available to YOU, the consumer. 

If you are waiting to purchase a home during the Spring/Summer market, you will be amongst the borrowers affected by the new changes.  It may be time to get off the fence now, instead of later! 

Although specific dates have not yet been announced, here is a snapshot of the upcoming guidelines:

Raise the UFMIP (up front mortgage insurance premium) to 2.25%.  Right now, that premium is 1.75%.  We will still be allowed to "roll" the premium into the loan, but this increase will absolutely increase the total loan/payments that the home buyer is approved upon.  This change is scheduled for this spring.

FHA is also seeking legislative authority to increase the annual premium (currently .55%)...More to come on that, as all of this continues to unfold.

Reduce allowable seller paid closing costs from 6% down to 3%.  If you are a first-time home buyer who is "cash strapped", this could be a significant blow to your ability to purchase a home.  This change is scheduled for early summer.

So what is The MN Mortgage Mom's recipe for success?  Don't wait!  If you have the means and ability to purchase a home, do it now!

Mortgage Client:  "I'm confused.  I don't understand.  None of this makes sense.  This paper does not even give me the numbers I need to know."

Loan Officer: "Why, Mr. and Mrs. Mortgage Client, you are absolutely correct...all this confusion compliments of our wonderful government and their ivory tower."

Could government just leave well enough alone?  Yes, the MN Mortgage Mom is on a rant!

As of January 1, 2010, the newly overhauled Good Faith Estimate (GFE) and HUD-1 Settlement statement went into effect.  And boy, what a confusing mess it is!

Last week, I met with a new client who has bought and sold real estate several times. This client is very well informed and experienced. As we were going through the mortgage documents, we came upon the new GFE. I began going through it when my client said, "Excuse my profanity, but what is this s**t?" I explained to him the changes, compliments of our wonderful government and their ivory tower. He expressed, "This is a joke. Is there any way I can get the old document?"

First, who other than the government can take a 1 page, detailed document of all fees and turn it into a 3 page bundled up mess??

To make matters worse, it does nothing to help the mortgage consumer understand some fundamental and critical numbers:

• 
  Cash-to-Close--There is no indication whatsoever on the new GFE as to how much money will be required from the borrower to bring to closing. Huh?
• 
  Total Monthly Payment--Ummm, yes, most borrowers want to know what their total payment is. Gotta look for it on another mortgage document!
• 
  Seller Paid Closing Costs--For those who are purchasing a home, it is nice to see how seller paid closing costs paid on behalf of the borrower/buyer will affect their bottom line cash needed at closing. You guessed it! Not on the GFE anymore! Gotta look for it on another mortgage document again.
• 
  Details--Many of my clients are very detail oriented. They want to know exactly what they are spending their money on. Rightfully so! The new GFE takes all of that away. Now fees are BUNDLED. Great for the lender, not so great for the consumer.

Here's my point. I am not ranting because this has just made my job more difficult. It has, but I will get used to it very quickly. I am used to constant change, being in the industry as long as I have. However, my point is these new forms do nothing to provide clarity to the consumer in a concise, easily documented fashion. Sure, these numbers can be found elsewhere in other mortgage documents, but GEEZ! At the consumer's expense in the growing sea of mortgage confusion?

All of this, compliments of our wonderful government and their ivory tower.