Growing up in Utah was all I ever knew, that is until I got to live in many great places, like Nottingham England; New York City; Maui, Hawaii; Denver, Colorado and Albuquerque, New Mexico! And when it came time to finally settle down, I chose Utah again! What a great place to experience the outdoors, be involved in the community and raise a family. I have gotten to know the best neighborhoods, things to do and places to see - all while working on my craft as a professional Realtor® - so if you are looking for a great place and a great experience, I love to put my skills to work for you! Thanks for keeping me in mind!
- I'll work hard to be your Utah Realtor!
The Fannie Mae and Freddie Mac loan limits are adjusted annually to keep up with cost of living but with the appreciation experienced in many markets, it may not be enough. When the conforming loan limit is not enough, qualified buyers can turn to a jumbo loan.
The maximum loan limit on conforming, conventional loans for 2022 is $625,000 for a single-family home but is increased up to $937,500 for designated high price areas. The underwriting guidelines for conforming loans are consistent with regards to things like minimum down payment, private mortgage insurance, debt-to-income ratio, minimum credit score and cash reserves required.
Jumbo loans are loans more than the FNMA maximum limits and are considered non-conforming loans. This allows lenders to set their own requirements on maximum loan amount, minimum required credit score, maximum debt-to-income ratio, and minimum down payment.
The rates paid on the jumbo loans may be the same as conforming loan rates. It might sound logical that a larger loan would have more risk and therefore, be priced higher. Lenders do not sell jumbo loans to FNMA which saves them the guarantee fee normally required. This makes the jumbo loan more profitable. Borrowers are encouraged to shop the rates.
A minimum credit score of 700 will probably be required together with a debt-to-income ratio below 45%. While many borrowers seeking a jumbo may be putting 20% down, it is possible to find a lender who may only require 10% down payment. Lenders may be more lenient with regards to mortgage insurance.
Lenders may also require six to twelve months of cash reserves due to the increased risk of the larger loan amount.
It is a common practice for banks to make jumbo loans to attract other business that the borrower might be able to influence like company, corporate, or investment accounts.
With the rapid appreciation that homes have had in the last two years, most homeowners have equity. A common way to release part of the equity is to cash-out refinance but some homeowners may not be eligible currently.
This type of loan replaces the current mortgage by paying it off and an additional amount of cash for the owner. Generally, lenders will consider a new mortgage up to a total of 80% of the current value.
Typically, the rate on a cash-out refinance will be slightly higher than a traditional purchase money mortgage. As is in any lending situation, the rate depends on the borrower’s credit and income. The best interest rates are available to borrowers with higher credit scores, usually over 740.
Loan-to-value can affect the rate a borrower pays also. A 70% loan-to-value mortgage could be expected to have a lower interest rate than an 80% LTV because there is a larger amount of equity remaining in the property and therefore, less risk for the lender.
There are no restrictions on how the owner can use the money. It can be used for home improvements, consolidating debt, other consumer needs or for investment.
Eligibility Requirements as found in FNMA Selling Guide B2-1.3-03 Cash-Out Refinance Transactions
“Cash-out refinance transactions must meet the following requirements:
The transaction must be used to pay off existing mortgages by obtaining a new first mortgage secured by the same property or be a new mortgage on a property that does not have a mortgage lien against it.
Properties that were listed for sale must have been taken off the market on or before the disbursement date of the new mortgage loan.
The property must have been purchased (or acquired) by the borrower at least six months prior to the disbursement date of the new mortgage loan except for the following:
There is no waiting period if the lender documents that the borrower acquired the property through an inheritance or was legally awarded the property (divorce, separation, or dissolution of a domestic partnership).
The delayed financing requirements are met. See Delayed Financing Exception below.
If the property was owned prior to closing by a limited liability corporation (LLC) that is majority-owned or controlled by the borrower(s), the time it was held by the LLC may be counted towards meeting the borrower’s six-month ownership requirement. (In order to close the refinance transaction, ownership must be transferred out of the LLC and into the name of the individual borrower(s). See B 2-2-01, General Borrower Eligibility Requirements (07/28/2015) for additional details.)
If the property was owned prior to closing by an inter-vivos revocable trust, the time held by the trust may be counted towards meeting the borrower’s six-month ownership requirement if the borrower is the primary beneficiary of the trust.
For DU loan case files, if the DTI ratio exceeds 45%, six months reserves is required.”
Let me know if I can be of any help! Sincerely, Gary
A successful home sale, considered by many owners, is to maximize their proceeds in the shortest time with the least inconveniences. Just because it is a seller’s market doesn’t mean that homeowners can shortcut some of the steps that make it happen and they certainly need to avoid commonly made mistakes.
Pricing too high
Low inventory and high demand have contributed to the rising prices of homes. NAR reports that the median sales price is up 17.8% in the past year and CoreLogic recently released data that July set new record growth of 18% year over year. This might give sellers a false sense of security about overpricing their home
Pricing a home too high initially can limit activity, attract the wrong buyers and ultimately, cause the home to realize a lower price than optimum. There is an interesting dynamic that takes place when there is a shortage of homes to show, and a new home hits the market. Buyers, who have been in the market but not purchased yet, will rush out to see the home. They are familiar with what homes are selling for and possibly, have even lost bids on one or more.
These savvy buyers expect certain amenities based on the price of the home. They can tell if a home is priced right or not.
Failure to do Market Preparation
There are people who will buy a home that is not pristine and does not have everything in good working order, but they usually will not pay top dollar for the home. They recognize the money that needs to be spent and will adjust the price accordingly.
To command the highest price, the home needs to be spotlessly clean with everything working as it should be. The home needs to be depersonalized to appeal to the broadest group of people. The clutter needs to be removed so it isn’t distracting or give the impression that the rooms, counters, or closets are small.
It is important to evaluate if painting is necessary along with replacing floor covering, appliances and/or light fixtures.
Thinking the agent doesn’t matter
Market time is down to 17 days and 89% of homes are sold within a month. These statistics might be used to rationalize that an agent is not currently playing an important role in the home but that would be a mistake.
Nine out of ten homeowners use an agent, and the four most important reasons were to help sell the home within a specific timeframe, help price the home competitively, help seller market the home to potential buyers and help the seller find ways to fix up home to sell it for more money.
Being present during showings
It may not be convenient, but sellers should try to leave the home when it is being shown. Buyers like to look at the home freely and ask questions or point out things to their agent. Sellers may have the best of intentions, but they have not established rapport with the buyer and don’t really know what is causing the questions.
Not letting your agent negotiate for you
The role the agent plays as third-party negotiator is one of the most important things an agent does for a seller. It begins long before buyers even make an offer. The protocol is for the buyer’s agent to go to the listing agent with the question and if necessary, they can ask you and get back to the buyer’s agent.
Buyers and sellers have inherently different objectives. Sellers want the highest price and buyers want to pay the least. Sellers want the terms of the contract in their favor and the buyers want them to favor them. Buyers want lots of contingencies to let them out of the contract and sellers want the fewest possible contingencies. Sellers want the most earnest money and buyers want to put up the least possible.
Agents are skilled at negotiation not only because of training but also experience. Sellers’ experience is usually limited to personal transactions separated by years in frequency. Agents see multiple transactions in their daily business and can guide people through difficult areas.
Not responding to offers in a timely manner
Normally, an offer can be withdrawn, at any time, up until the point that it is accepted. The expression a bird in the hand is worth two in the bush reminds us that the offer you have is real and the ones in the bush, may never come to fruition.
A common situation occurs when there is large amount of activity on the home and an offer comes in quickly. Instead of negotiating on that offer, the sellers wait to see if any better ones are received. By waiting, the seller runs the risk of the buyer changing their mind.
Alternatively, in the same situation described, the seller may decide to put the home on the market on Saturday morning and let prospective buyers know that they will be deciding on all offers received over the weekend on Sunday evening.
Your agent is a valuable part of selling a home who can offer advice, bring perspective to the transaction, and suggest different ways to help you achieve your goals. Once you have the right agent, everything else will start to fall into place.
Let me know if I can be of any help! Sincerely, Gary
Some homeowners feel like they may as well throw a dart against the wall to decide whether to move or not. Other people might invoke a process attributed to Benjamin Franklin. Supposedly, to evaluate the options and bring clarity to the choice, this American founding father would list all the reasons for and against the decision on a sheet of paper. After reducing it to writing, the choice would appear either by obvious majority or practicality.
Buying a home is an emotional decision but selling a home can be also. Separating the rationale from the emotion can make decisions seem obvious but they may still not be crystal clear.
There is an inventory shortage that caused prices to rise and market time to shorten. In many active markets there is less than 30-days’ supply of homes for sale which is half of what was available a year ago. This will make it easier to sell and maximize the proceeds from your current home.
69% of economists who participated in the first quarter 2021 Zillow Home Price Expectations survey believe home inventory will begin to grow in the second half of this year or the first half of 2022.
Mortgage rates are near record lows which will keep payments at a minimum. With the inflation rate in the United States expected to be between 2-3%, many borrowers consider that it balances with the mortgage rate to be an effective zero percent.
“Consumers are facing much higher home prices, rising mortgage rates, and falling affordability, however, buyers are still actively in the market,” said Lawrence Yun, NAR’s chief economist. “At least half of the adult population has received a COVID-19 vaccination, according to reports, and recent housing starts and job creation data show encouraging dynamics of more supply and strong demand in the housing sector.”
The pandemic has allowed many buyers have the flexibility to work from home for now and in some situations, permanently. That opens new location possibilities options that would not have existed if they had to commute to work daily. Economists believe that the increased preference to work remotely will be a permanent shift even if it is only a part of the work week.
This provides opportunities for homeowners to relocate in an area that doesn’t have the high demand that their current area does and could benefit from more affordable housing for the replacement while possibly, maximizing the sales price of their current home.
Good information specific to your needs is essential to making good decisions. Explore the possibilities with your real estate agent. They can provide facts about the sale and purchase of another home. Once you have the facts, you may use the Ben Franklin Balance Sheet to help you with your decision.
For generations, people have begun their homeowner experience with a “starter” home. Part of the logic may be that by beginning with a smaller home, they can learn what it takes to run the home and discover some of the unexpected costs that come along with it. A slightly longer view into the future could suggest a different strategy.
As of March 4, 2021, the average 30-year mortgage rate according to Freddie Mac was 3.02%; up .37% from the week of January 7th this year. At the same time, in 2020, the rate was 3.29% and in 2019, it was 4.41%. That is a difference of 28 and 139 basis points.
The principal and interest payment on a $300,000 mortgage would have been $236 higher two-years ago and $44 more one-year ago. Today’s low mortgage rates are saving buyers lots of interest especially when you factor in the median tenure for sellers is approximately ten years. Even though prices have increased over the last two years, some people may be able to afford more now with the lower rates.
Anticipating the future wants and needs now may present some opportunities for preparing for the inevitable. By purchasing a larger home today, a buyer can lock in today’s low rates and prices to allow themselves room to grow without the expenses of moving.
Each time you sell and purchase a home, there are expenses associated with each side of the transaction. Purchase costs could be 1.5 to 3% while sales expenses could easily be 2.5 times that much. These expenses lower the value of your equity.
Instead of looking at the low mortgage rates as generating a savings from the payment you might normally have to make, consider it an opportunity to purchase more home that will possibly meet your needs for a longer time while eliminating the cost of selling and purchasing in the transition.
Let me know if you have any questions or if I can help you find your next home or Investment!
Mortgage insurance benefits the lender if a borrower with less than a 20% down payment defaults on their loan. Most conventional mortgages greater than 80% and all FHA loans require the borrower to have this coverage.
Private mortgage insurance on conventional loans can range from 0.5% to 2.25% based on the loan-to-value and the credit worthiness of the borrower. A $350,000 mortgage would have a monthly mortgage insurance premium of $146 a month at the low-end of the scale and over $600 on the high-end.
You may request that your mortgage servicer cancel the PMI when the principal balance reaches 80% of the original value at the time the loan was made. You should have received a PMI disclosure form when you signed the mortgage documents stating the date. If you have made additional principal contributions, it will accelerate the date.
Other criteria considered to cancel the PMI on your loan is:
The request must be in writing.
You must be current on your payments with a good payment history.
The lender may ask that you certify there are no junior liens in effect.
If the lender is concerned that the value has declined, an appraisal may be required to show that it is eligible.
Conventional loans are supposed to remove the mortgage insurance when the unpaid balance is 78% of the original purchase price.
Another possibility is that the lender/servicer must end the PMI the month after you reach the midpoint of your loan’s amortization schedule. For a 30-year loan, it would be after the 180th payment was paid. The borrower must be current on the payments for the termination to occur.
With the rapid appreciation that many homes have enjoyed in recent years, homeowners may be able to refinance their home and if the new mortgage amount is less than 80% of the current appraised value, no mortgage insurance would be required.
The owner would incur the cost of refinancing but eliminate the cost of the mortgage insurance. To calculate the savings, subtract the new principal and interest payment from the old principal and interest with PMI. Then, divide the savings into the cost of refinancing to determine the number of months necessary to recapture the cost.
FHA loans have two types of mortgage insurance premium: up-front and monthly. For loans with FHA case numbers assigned on or after June 3 2013 with LTV% greater than 90%, the MIP will be paid for the entire term of the loan. If that is the case, refinancing on a conventional loan is the only way to eliminate the MIP. For loans with original LTV% less than 90%, the MIP is collected for 11 years until the balance is 78% of the original amount.
When buying a home, purchasers may not have enough resources for a large down payment. It is understandable to use the best mortgage available to buy the home. The next goal should be to manage the mortgage to lower the overall costs. In this article, we explored eliminating the private mortgage insurance.
Let me know if I can help or refer you to one of my Trusted Partners!
It seems like most homes have sprinkler systems and if they do, they have some form of controller to automatically turn the water on and off for the time and days you feel necessary. It seems like basic functionality and if it isn’t broken, you may not feel the need to replace it.
Today, there are so many smart home devices that are not only convenient, but they’ll end up saving you enough money to pay for the upgrade. There are different manufacturers, but you should at least consider the Rachio if for no other reason than the easy installation procedure.
The process is simple. Unplug the old controller and disconnect the wires being sure to label which wires went to which stations. Using the Rachio template, mark three spots on the wall, drill holes in the drywall, insert the anchors into the holes and screw the new controller to the wall.
This model has convenient wire connectors that do not require crimping a wire around a screw. It is quick and easy to put the numbered wires in the corresponding slot. The directions are simple and easy to follow. When complete, connect the power source and plug it into a wall socket.
Now, install the Rachio app to your phone and continue following the instructions to connect the controller to the Wi-Fi. In minutes, you’ll be sitting in a lawn chair making adjustments and seeing what it will do.
Some of the features you’ll find very convenient are the multiple schedules that can be created and easily switched from one to another. As you set up each zone, you can take a picture of the area and be able to identify with a glance which area you want when individually selecting one.
Another thing you might like is that when you’re trying to track down a broken head or just need to adjust it, you can turn on a zone from your phone while looking at the yard. When you identify which head is the culprit, turn the water off from your phone, make the adjustment or repair and turn the water back on to test it without having to go back and forth to wherever your controller is located.
Rachio will even monitor the weather to skip a scheduled cycle in case of rain, high wind or freezing temperatures. You could literally be anywhere in the world where you have an Internet connection and you’ll be able to adjust your watering cycle. This device really does save time and money while being fun to operate.