The Double Comma Club

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Lower Interest Rates Have More Benefits Than You Realize

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Interest rates are at an all-time low which means a lower monthly payment. But how much? If you are thinking of purchasing a home for $400,000 with 15% down at 4.25%, between taxes, mortgage interest, insurance, and principal, your monthly payment would be around $2,125. BUT that same home purchased at 3.25%, that would lower your payment to about $1,900. What are you going to do with that saved $225/month? If you put that saving BACK into your home, you'd pay off your mortgage 6 years earlier. This would also save you $41,000 in interest. Listen to the rest of this 3-minute tip to get more information.

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The Market is Rebounding

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The economy is finding it's footing as people move from safer at home to back to work.. as restaurants and stores begin to open and some sort of new normal takes shape. Real estate is bouncing back with a resurgence in demand and opportunities ... even in this "recession". The nation as a whole is suffering shortages, and demand is ramping up so prices are going up and up! Key indicators suggested before pandemic there would be higher demand, but because unemployment has skyrocketed, the market dropped in April. But get the full story here.

 

Nicole Rueth
The Rueth Team of Fairway Independent Mortgage Corporation
750 W Hampden Avenue, Suite 500 Englewood, CO 80110
303-214-6393 www.TheRuethTeam.com

Forbearance Waiting Period Issue Solved Through FHFA

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Forbearance GREAT News for Your Clients.  You've heard me talking about how brutal the consequences were for taking a forbearance. It was something the designers of the Cares Act did not foresee. It took FHFA 6 weeks to figure it out. But they finally did. Listen to find out how the 12-month waiting period just got reduced to zero or three months and a quick summary of the four options for exiting a forbearance and their timing updates.

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What you weren’t told would be the results of that forbearance that was so easy to get.

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Forbearance .. how to get in, get out, and the 12 month waiting period There have been more questions than answers when it comes to forbearance. Banks and servicers are making it oddly easy to get into forbearance making it seem like even if you don't need it, it's the right thing to do. But is it? It can affect your ability to get a lower interest rate or purchase a home for 12 months, locking you OUT of the market. Parents, sellers.. I'm talking to you as well. There are consequences the Cares Act did not think through. Listen to find out how to get in, get out, and more about the 12 month waiting period!

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The Resiliency of Real Estate - It’s not back to business as usual yet.

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The numbers are stacked against us yet we keep charging forward. Real estate agents celebrated last night when Governor Polis announced they could do showings starting on Monday the 27th. Is it back to business as usual? Not even close. Take a look at these numbers

  • Fannie Mae's Home Purchase Sentiments is down 11.7% to its lowest level since December 2016 - University of Michigan's Consumer Confidence Index was 101 in February, 89.1 in March and 71 in April.. down to its lowest level since 2009
  • NAR surveyed its members and 90% of them noted home buyer interest is down. 44% of them said the drop was more than 50%
  • MBA Purchase applications are down 35%
  • Unemployment is up to 17% based on last week's jobless numbers and will probably be over 20% when we get the updated number on Thursday
  • And finally, homeowners taking advantage of the forbearance plan is up to 2.9 million homes or 5.5% of the originations.

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FHFA is Gonna “Wait and See” if Servicers Need Liquidity.

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FHFA Director Mike Calabria, said today that they were going to "pause" on setting up any kind of liquidity facility for conventional loans. Unlike Ginnie Mae, which last week, set up a liquidity facility for government-backed loans...FHA, VA, USDA loans. Ginnie Mae said they were going to help support the Servicers of these loans to pay investors, property tax, homeowners insurance and mortgage insurance for borrowers who couldn't make their payment

Typically, Servicers are able to handle changes in the market and handle a situation where a small percentage of borrowers don't make their payment. But, they are NOT able to withstand the magnitude of borrowers seeking Forbearance. if 25% of all mortgage holders take advantage of Forbearance, that could cost the Servicers up to $25 BILLION a month. No Servicer is set up to handle that massive amount of liquidity needs to satisfy investors, property tax and homeowners insurance.

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FHA is NOT Dead; Forbearance is NOT Forgiveness

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FHA is NOT Dead; Forbearance is NOT Forgiveness, and this Market of the Moment is all about Liquidity

After spending hours reading the 880-page Stimulus Package that rolled out on Friday; as well as the Ginnie Mae Letter proposing a Pass-Through Assistance Program (PTAP) I have come to a few conclusions. Let's start with FHA. FHA is NOT Dead! I have heard too many rumors around this from lenders and Realtors alike. Just as many other loan products, FHA has to change in this environment but it is not going away. FHA loans with FICO scores under 660 have historically high default rates. Add to that our current mortgage forbearance environment with homeowners out of work; Servicers are not able to continue paying investors (as they are required to do by Ginnie Mae) when they have no money coming in (i.e. no mortgage payment revenue). This servicer crunch is the essence of the Ginnie Mae letter setting up a PTAP. The relief this provides is to be determined. So in the meantime, lenders and servicers have to protect themselves by shrinking the credit box.. i.e. higher credit scores and lower debt to income ratios. Second, Forbearance is NOT Forgiveness; it also isn't deferment.

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Your Questions Answered Forbearance, Rates, Fannie and Freddie

This episode followed the first portion of the new Agent Ignite Coffee Talk series on Friday mornings. This week questions poured in including these topics:

Forbearance, Unemployment claims, HELOC rates, FHA loans, investor rates, furloughed limitations in qualifying, COVID-19 addendums, rate locks, jumbo loans. Listen to this episode of The Double Comma Club.

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Pausing - State Trumps County and the Damien Cox Letter

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Did you get the LOUD mobile alert this morning reminding you the state is on lockdown? Sorry, what I meant was Stay at Home. On Monday Denver Mayor announced the City and County of Denver was on Stay at Home status. Essential workforce added Realtors, Marijuana and Alcohol within hours.. Colorado's shortest prohibition... and somewhat of a interesting pairing??? Additional counties followed suit the next day. Then on Wednesday, Governor Polis changed directions and put the whole state in a Stay at Home position. Is he wrong? I don't think so. But State trumps County.. there's no play on words there... seriously. Right now, financial services are essential.. notaries, banks, lenders. But not Realtors... at least not yet.

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3 Options to Increase Liquidity NOW

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Here are three options you can choose from RIGHT NOW to increase your liquidity, and your cash on hand using your home.

  1. Do a cash-out refinance. Yes, a cash-out refinance might have a higher interest rate; but when used as a financial strategy, that does not matter. What if you could pay off all other debts and/or add cash to your savings account right now. Equity in your home is illiquid, locked up and not serving you. If we could instead convert equity to cash to pay off debts, we could save hundreds, if not thousands, of dollars a month. If rates continue to be low, and I feel strongly they will, we can then do a refinance in six months to lower your payment and secure your financial future.
  2. Get a HELOC. A HELOC is a Home Equity Line Of Credit. This is a second loan that sits on top of your current first mortgage. It is typically a variable interest rate and acts like a line of credit you can draw from. You can get a HELOC on a primary home, second home or investment. There are several second lenders who are no longer originating. Don't worry! There are others who are, and I have the list. Feel free to reach out, I can provide the best referral options.
  3. Request a Mortgage Forbearance. This needs to be requested through your Servicer.. the company you write your checks to each month. Forbearance allows you, the borrower, to apply for a pause in mortgage payments without the risk of negative credit reporting and foreclosure proceedings. The length of time available will be determined by the duration of this crisis.

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