ulcdivas.wordpress.com: Housesmart: The

August 26, 2011 § Leave a comment

ulcdivas.wordpress.com: Housesmart: The Benefits for Real Estate Agents: Housesmart is an employee benefits program that combines the expe… http://wp.me/p1vvTf-2o

Housesmart: The Benefits for Real Estate Agents

August 26, 2011 § Leave a comment

Housesmart is an employee benefits program that combines the expertise of real estate agents and Universal Lending loan officers throughout Colorado.   Through this program, employers are able to offer savings and education to their employees at no cost to the company.  Why do real estate agents want to be part of the Housesmart program?

No Upfront Costs

The most important question: what does this cost the real estate agent?  The program does not cost the agent any upfront costs.  There are no costs for impressions or click-through rate.  There are no costs for marketing materials or to enroll the agent and the agents’ team in the benefits program.  Where the cost comes in is after the sale has closed.  Once closed, the seller receives 17% of the commission back, which equals $170 per $1000 in commission.  The benefit to the agent is that this helps solidify the relationship between the agent and the seller, knowing that other agents do not offer this since it is part of their employee benefits program.  Additionally, the agent does not pay anything until the deal is closed, so if there are no referrals that come to fruition, then no money comes out of the agents’ pocket.

Advertise Listings

The Housesmart benefits program helps real estate agents establish additional online advertising presence through placement in the featured listings on the main website page.  This is visible by all employers and employees signed up as members, reaching thousands of people.  The featured listing allows agents to place photos and information about the property in an easily viewable area on the website.  Members are able to sort these listings by property type, size, state, and price. If someone is looking at the Housesmart benefits website, they are genuinely interested in selling or buying a house, this audience is a passive audience, but one whose click through rate is more likely to produce clients.

Benefits to Business Affiliates

Agents now have a way to support business affiliates and guide more clients to them.  As a preferred or specialty partner, businesses are given space to advertise the company and to offer a special discount to members.  Even members who are not in the market to buy or sell a house may browse the business partners for savings on interior design, blinds, insurance, etc.  There are many opportunities to utilize this as an added benefit in doing business with an agent signed up with Housesmart.

Generate Leads

Leads are the staple to any business.  Many leads from reputable companies are cold or lukewarm at best.  With Housesmart leads, agents can be assured these are warm to hot leads from people interested in buying or selling a home. These leads come to the agent from the loan originator who will have already contacted the potential client if they are interested in purchasing a home. This means the buyer will be prequalified before being directed to the agent.  Thus, the agent will have solid information regarding prince range at the time of the referral.

With these benefits, agents cannot go wrong signing up as part of the Housesmart program. For more information on the Housesmart program, or to sign up, contact Marilyn at 303-956-0060.

Increase Your Outreach through Facebook

August 5, 2011 § 1 Comment

I am an avid fan of Facebook. I understand there are plenty of people that may disagree with me, but Facebook is growing fast. According to the National Association of Realtors (NAR) the median age of homebuyers in 2010 was 39.  Per Digital Buzz, there were 206.2 million US Facebook users in 2010, accounting for over 70% of the US internet audience, plus with 30% of the Facebook population being 35 or older; it is a prime way to address this audience. If you don’t have a Facebook account, sign up. It’s free.  Take the time to interact with the interface and see all that you can do with it.  Not only can you update your current status, i.e. “I’m headed to my open house at ____ be sure to stop by,” but you can upload photos and videos of the listing at the same time.

There is debate about whether to do this on your personal Facebook account or to make a business page (which is linked to your personal account).  Facebook prefers that you set up a business page and post all relevant information about your business on
that particular page, instead of on a personal page.  This way, people who are interested in your business will get the updates and it won’t be similar to spam for others.  Additionally, Facebook could remove you if you are using your personal account specifically for business.  I like to integrate the use of my Facebook personal account with my business page. After I created my business page, I became a fan of it.  Fans of your business page will receive the updates you put on your page and so, by becoming a fan of your own page, any information you put on your business page will also be placed on your news feed.  This helps me to see how it comes
across to my fans.  I also occasionally put a business related post on my personal page along with the link to my business page.  Attach the link to your personal status and then add a catchy comment before submitting the link, i.e., “Looking for affordable housing in Aurora, CO? Become a fan of my business page for updates.”  You can also use your personal page to do a
soft sell by posting a funny photo or quote and then adding, “Remember, if you or anyone you know is looking for a new home contact me.”  These I limit to two a week, though it is a personal opinion.

Once you have your personal account and business page set up, what do you talk about?  People want to know that you have knowledge in your business; so, on your business page post updates that your clients, prospects, business partners and colleagues may be interested in.  Did you happen to read that the housing market in your area is getting better?   Was there a newscast about how you helped build a house with Habitat for Humanity? Perhaps your open house was a roaring success.  All of these are good status updates to your business page.  People also want to know you are more than just a business person. They want to know your hobbies, likes, dislikes, and what makes you smile.  On your personal page, post photos of the lake you fish at, your family, and that one photo of you in that goofy clown suit 3 years ago and don’t forget that video of your surprise 40th birthday
party.

Facebook Ads are another tool that can be utilized to increase your reach.  Facebook Ads are similar to Google Adwords, but utilize a different marketing technique.  While Google brings relevant ads to those searching specific topics and keywords, Facebook targets specific types of prospects.  With Google, you would pay to have an ad show up with the words Colorado Homes for Sale, while with Facebook you may want to target people between the ages of 18 and 45 in Denver, CO.  Both cost money; however, Google Adwords is dominated by many corporations, so your small business marketing dollars may not go as far with Google
Adwords, as with Facebook Ads.  One benefit with Facebook Ads is that you can market your Facebook business page,
where the potential client may “like” your page and will then be abreast of all the updates you place on your page, this means having continuous contact with them, instead of a onetime interaction with your website.   Both are viable ways to market business and should be considered in your marketing plan (you do have a marketing plan right?).

Facebook can take 15 minutes or a whole day. Be aware of how much time you are spending on it, whether too much or too little. It’s best to schedule a specific amount of time to have on Facebook, where you respond to messages, make comments on other people’s status, say happy birthday to others, etc.  If you have a mobile phone where you can download a Facebook application, I would suggest you do that and during the day make updates on your status. This makes it easy to tell people what is going on throughout your day, should you choose to share.

Since Facebook is growing astronomically, there is a benefit in using it. If you aren’t, your competition is.

Solving Problems Before They Occur: Obtaining the Right Documentation

July 28, 2011 § Leave a comment

During a loan application, clients are asked questions in order to determine their eligibility to receive a loan.  As a loan officer, it is essential to listen carefully and ask additional questions that could solve common problems on a loan before they occur.  Obtaining the right documentation in the beginning will allow for a smoother process for all parties involved.

1.        Divorce Decree & Separation Agreement

The 1003 Loan Application asks whether a client is married, unmarried or separated.  If a client has been divorced, no matter the length of time of the divorce, it is necessary to request the divorce decree and separation agreement.  How is this done since it is unlawful to ask if the client has been divorced? Regardless if the client marks married, unmarried, or separated, during every loan application appointment be sure to say, “If you have ever been divorced, I will need to have the divorce decree and separation agreement.”

 

The divorce decree and separation agreement indicate which party is responsible for liabilities incurred during that marriage.  If the client is listed on the liability, but the ex-spouse is indicated as responsible for payment of the liability it is possible that the liability will be excluded from the client’s debt.  This occurs as long as the ex-spouse has been paying the liability on time.

2.       Child Support, Alimony, Separate Maintenance  Documentation

There are two areas on the 1003 that talk about child support, alimony and separate maintenance.   If a client receives any of these as part of their income, they may list it under part V, Monthly Income and Combined Housing Expense Information.  The second area where a client may input that he/she pays child support, alimony, or separate maintenance is on question g in section VIII, Declarations.

 

If the client has either of these sections completed as noted above, be sure to request the court ordered documentation. In order to use the income for qualification, it’s necessary to determine if the income will be consistent for 3 years or more, the court ordered paperwork will show that information.  If there is a payment of any of these, the court order will determine the exact amount and how long it will continue.

3.       Letters of Explanation for Gaps in Employment or Housing

Often, loan officers find out later in the approval process that a client lived in a dwelling for 1 year and 10 months not a full 2 years.  The client may have estimated dates; especially, if filling an application online.  This also happens in the employment section.  It is best practice to be specific and ask “Did you live at this address for exactly 2 years, or was it less than that?  Do you know the exact dates?”  The same goes for determining employment.

 

Another best practice is to ask, “Do you have any gaps in employment over the last two years?” and “Are there any dates where you did not have housing or were living rent free?”  If there is a gap in employment or paid housing, request from the client a letter of explanation as to why this occurred and place it in the file for underwriting purposes.

 

Another way to determine if there is a gap in employment or housing is to request the client’s resume, which should have employment dates.  Compare the resume to the loan application to determine correct information.  W-2’s can help determine both employment and housing issues that may come up.  Do the W-2’s have the same address during the period of time noted on the loan application? If not, this may be an indication that there is a gap in housing.

4.       Last Two Months of Bank Statements

Bank statements indicate both expenses and income for a client.  If a client has a deposit listed on the bank statement that is not the normal payroll deposit, it must be documented through a letter of explanation.  If these deposits are not documented, they are not eligible to be used as part of the funds in the account.  This must be done for any and all deposits not previously accounted for, no matter the amount of the deposit.  It is a good idea to tell the client that if he/she will be making any deposits during the approval process, the client should take a copy of the deposit and note why the money was deposited.

 

If the bank statement indicates a Non-Sufficient Funds (NSF) occurrence, the client must write a letter saying why this occurred.  A NSF is considered derogatory credit to the underwriter and may affect loan approval in light of all other aspects of the file. It is best to request from the client several additional months of bank statements in order to prove that the NSF was an isolated event.

5.       Documentation of Gift Funds

Certain loans allow for gift funds to be used for the down payment.  These gift funds must be from a family member or someone where there is a strong established relationship. By documenting these gift funds accordingly, they can be utilized for the down payment.

Boost Home Buyers’ Purchasing Power with the Mortgage Credit Certificate

July 15, 2011 § Leave a comment

The Colorado Housing Finance Authority (CHFA) increases home buyers’ purchasing power through the Mortgage Credit Certificate (MCC) Program.  This program allows home buyers to claim up to 20% of the paid mortgage interest each year as a tax credit, while still allowing the other 80% as an itemized deduction.  There are two ways a home buyer can utilize this program.  The first is to take the credit when filing taxes. The second is to utilize it to boost the home buyers’ monthly income when qualifying for a purchase.

Example 1: On a $200,000 home purchase at a 5% interest rate, the home buyer will pay $10,000 a year in interest.  The MCC allows 20% of that interest, $2000, to be a tax credit at the end of the year.   This is a dollar for dollar tax credit. If at the end of the year, $2100 is due to the IRS, with this tax credit scenario, the amount owed to the IRS would reduce to $100.  Utilizing the MCC at the end of each year as a tax credit, the MCC can be used every year the owner occupies the house as a primary residence.

Example 2:  Using the same figures from example 1, the MCC would allow $2000 to boost monthly income when qualifying for a home purchase.  The $2000 is spread over 12 months which equals $166.67.  Since income is increased by this, the maximum mortgage payment can also be increased by the same amount. What does this mean for the home buyer?  By raising the qualifying payment by $166.67 per month, the client would be able to look at a house that is priced up to $33,000 more than without utilizing the MCC.  By using the MCC this way, a tax credit at the end of each year is not available.

Eligibility requirements are based on home prices, income levels and other aspects.  Please contact Marilyn Mottershaw to see if you or someone you know is eligible for the MCC program through CHFA

Credit Reports: The Trouble with Disputes

July 8, 2011 § Leave a comment

As a consumer, checking your credit report for errors is responsible. Disputing those errors, however, may lower the ability to get the best mortgage. One reason is two of the largest government housing financiers, Fannie Mae and Freddie Mac, realized that once a consumer disputed an item on the report, it was taken out of the total credit score, even if the dispute was not legitimate. The agencies discovered that people were abusing this to inflate their credit scores in order to get approved for loans.

What happens if there is a dispute on the credit report during the pre-approval process?

Typically, a loan originator will run a client’s information through automated pre-approval software.  This software will pre-approve a client with higher debt-to-income ratios, usually 50%.  However, if the system recognizes the comment “disputed by consumer” on the credit report, the file will be downgraded to a manual file.  This downgrade reduces the debt-to-income ratios. For an FHA home loan, it is reduced from 50% to 43%.  This means for every $1000 of income, $430 instead of $500 of it could go towards total debt (including the mortgage payment).  In the mortgage industry, 33% is the standard maximum mortgage payment-to-income ratio and 43% total debt (including mortgage)-to-income ratio.  However, once the automatic preapproval system came into the industry, the system looked at 50% of total debt-to-income ratio, not distinguishing between mortgage payment-to-income and total debt-to-income.  For clients, this could be a significant decrease in buying power because once the file is downgraded to a manual file the loan originator must utilize 33% as the maximum mortgage payment-to-income.

For example: A client’s income is $3500.00 per month and the loan originator runs the client through the automated system. The client may be pre-approved for a 50% debt-to-income ratio. If the client pays $175 (5%) in other debt each month, the software’s pre-approval would allow a mortgage payment of $1575.00 (45%) per month.  Now, all else being the same but that client has a “dispute by consumer” on the credit report, the file is downgraded to a manual file, making the maximum mortgage payment 33% of the monthly income.  This means the client would now qualify for a mortgage payment of $1155.00 per month.  That is a $420 difference.  When looking for a house, in the first scenario a client would qualify for a $310,650 house.  In the second scenario, the client would qualify for a $227,810 house. That is a reduction of $82,840 in purchasing power just for the words “disputed by consumer” on a credit report.

What should be done with disputes currently on a credit report?

It’s important to make sure the dispute is accurate and all documentation for that dispute has been submitted to the credit bureau. If the dispute is legitimate, the information should be completely removed from the credit report.  If the bureau did not remove the information an additional letter requesting reasons why it has yet to be removed is suggested.   Another suggestion is to write a letter requesting the dispute be removed from the credit report, especially if it is realized that the information on the report is accurate.  Since credit reports can be difficult to read, some people may have disputed something legitimate because it was not recognized based on the limited information on the report. An example would be a cell phone bill from Verizon going to a collection agency.  The credit report may have the collection agency name with the amount of the debt, plus Verizon and the amount of the debt.  If one is not versed in reading credit reports, it would be easy to think that the both amounts were owned instead of just one.

There are many aspects to correcting a credit report, repairing credit and raising a credit score.  It is recommended to seek the advice of a professional, like a loan originator, to create a plan for credit repair.

For help in determining the right path for you or someone you know, feel free to contact Marilyn Mottershaw at 303-956-0060.

Potential Homes that Need Repair: The 203K Streamline Loan

July 1, 2011 § Leave a comment

Why consider a 203K Streamline loan?

When looking for a home, many people want to make improvements on potential purchases.  However, the
out-of-pocket costs to complete the desired improvements can place extra financial strain on the buyer, even if the repairs are minimal.  The 203K Streamline loan is a product that finances the cost of repairs and improvements along with the original purchase or refinanced loan amount.  This is a great opportunity for buyers to make the improvements needed and desired
without taking out another loan or using their liquid assets.

What types of repairs/improvements are allowed?

  • Repair/Replacement of roofs, gutters and downspouts
  • Repair/Replacement/Upgrade of existing HVAC systems
  • Repair/Replacement/Upgrade of plumbing and electrical systems
  • Repair/Replacement of flooring
  • Minor remodeling that does not include structural repairs
  • Painting, both exterior and interior
  • Weatherization
  • Purchasing and installation of appliances
  • Accessibility improvements for persons with disabilities
  • Lead-based pain stabilization or abatement of lead-based paint hazards
  • Repair/Replace/Add exterior decks, patios or porches
  • Basement finishing and remodeling without structural repairs
  • Basement waterproofing
  • Window/door replacements
  • Exterior wall re-siding
  • Septic system and/or well repair or replacement

How much money can be financed for the repairs and improvements?

For a 203K Streamline loan there is no minimum that can be financed, however the maximum is $35,000 which includes additional costs associated with the loan type.  Depending on the bank investor who purchases the loan, the maximum allowable mortgage ranges from 103% to 110% plus closing costs.  For repairs under $5,000 it may be a good idea to talk to your loan originator about setting up a repair escrow instead.

Who hires the contractors?

It is the responsibility of the borrower to hire the contractors.  Only one bid is required, but the contractors must be insured and licensed if a permit is required.  A maximum of three contractors can be utilized which includes retailers like Home Depot and Lowes.

How do the contractors get paid?

Checks are written out to both the contractor and the buyer to ensure that the buyer is happy with the work that is completed.  The repairs are paid in two payments. Depending on the bank investor the first payment may range from 35% to 50% of
the total cost of repairs.  The remaining payment occurs once work has been finished.

What are the costs of a 203K Streamline loan?

In addition to the normal FHA loan costs, a 203K Streamline loan may include:

  • A 2nd appraisal fee
  • Contractor and/or consultant fees
  • A slightly higher interest rate (generally 1/8% to 1/2% more than a normal FHA loan)

Can investors use this type of loan?

Though consideration is going into allowing investors to utilize this, as of July 1, 2011 investors are not eligible for this loan type.

How long does it take to close?

Once the property is under contract and the loan application has been completed, it is suggested to allow 45 days to close.  This may become shorter depending on the extent of repairs, number of contractors and the promptness of all parties involved
collecting paperwork.

 

Universal Lending Corporation has been in business for 30 years and is one of the largest 203K lenders in Colorado.  For more information on 203K Streamline loans contact Marilyn at 303-956-0060 or by email at mmottershaw@ulc.com

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