The news is out: Bankrate.com did a survey of 2013 Closing Costs and learned that in most states they have risen 6% over 2012 costs. Loan origination fees jumped the most – going up 8.4%.

Why? Is it really costing lenders more to close a loan, or is this opportunism at work?

For the most part, we believe it’s opportunism. With deflated home prices and mortgage interest rates at their lowest in decades, more people purchased homes and more homeowners decided to refinance. Lenders didn’t need to compete for customers because customers were in abundance. So they raised their rates, just because they could.

Lenders also know that as interest rates and home prices rise, fewer will buy and even fewer will refinance.  Thus, they’ve decided to make as much as they can now. To quote an old saw: they’re “Making hay while the sun shines.”

Some lenders, however, are blaming the new government regulations. They say that the cost of compliance is enormous. They have to bring on more staff just to make sure that they don’t break any rules.

Our thought is that we’ve been given fair warning and plenty of time to learn the regulations. By 2014, every loan officer should know how to comply.

But perhaps that’s the crux of the problem. Banks and huge mortgage companies need a large staff of loan originators – and employees come and go. Many of their employees are not seasoned loan officers and don’t have the experience necessary to understand and comply with the new regulations. Thus, those companies must train others to oversee their work and keep them in compliance.

The new regulations don’t go into effect until 2014, but they’re starting months ahead of time in order to have their systems running smoothly before the deadlines. Meanwhile, they’re charging higher closing costs to offset the expense.

Here at Homewood Mortgage, LLC – the Mike Clover Group, we have a different attitude.

We don’t believe in charging extra “just because we can,” and we don’t need to hire compliance officers to oversee our work.

We prefer to earn a fair return on the work we do – and we prefer to become a client’s lender for the long term. We want our clients to feel confident that we’ll find them the best loan at the best price – whether it’s this year, or five years from now. We also want them to feel safe in sending their family and friends to us.

In addition… we’re seasoned home mortgage professionals who can read and understand the new regulations – and remain in compliance.

Call us – and see how little it can cost to close a loan on a home anywhere in Texas. 

Mike Clover
Mortgage Banker
www.mikeclover.com

A new battle is heating up in Congress, as lawmakers debate the demise of Fannie Mae and Freddie Mac. These government-controlled mortgage guarantee giants either own or guarantee nearly half of all U.S. mortgages – including nearly 90% of all new mortgages.

Because they buy mortgages from lenders, package them as bonds, guarantee them against default, and sell them to investors, the banks that make mortgage loans are freed from risk and have more money to lend to more home buyers.

And that, many believe, is the reason behind the financial crisis. Fannie and Freddie relaxed their standards and guaranteed high-interest loans to high-risk borrowers. They also allowed banks to grant loans at extremely low “teaser” rates in order to qualify low-income borrowers. And of course those borrowers could not continue to pay once their interest rates re-set.

You may remember that at the height of the crisis, American taxpayers bailed out Fannie and Freddie to the tune of $187 billion dollars. Although they have since been profitable and have, in fact, repaid $132 billion, lawmakers believe it’s time to reduce taxpayer risk by moving mortgage lending back to the private sector.

So they all agree – but left and right have different ideas about how to go about it. House Republicans favor a plan that would nearly eliminate government involvement in the mortgage industry. They want to let the free market rule. However, they do want the FHA to continue insuring loans for first-time and lower-income borrowers.

They believe the resulting competition and innovation in the private sector will be a boon to consumers who will benefit from more choices.

Senate Democrats favor a scaled back but continued government role in backstopping the mortgage market. They believe government involvement stabilizes the housing market.

Under either plan, financial experts say we can expect higher payments for homebuyers. We might also expect higher down payments and tougher credit score requirements.

My own opinion on these plans is mixed. In most cases I prefer less government involvement in our lives. However, government guarantees do make home mortgages available to more people.

What I’d really like is for our lawmakers to spend time considering the possible intended and unintended consequences of any proposed changes – well before making any of those changes. This is a step they have failed to take in the past – and the housing industry has suffered for it.

Whatever is decided, we can expect the battle to rage for months or years before resolution. So today, rates are still low and requirements are still reasonable.

If you’re looking for a new home or want to refinance your present home anywhere in Texas, get in touch. We offer low rates and low fees – and we close our loans within 30 days.

Mike Clover
Mortgage Banker
www.mikeclover.com

Dallas Morning news recently published a report indicating that the average cost of a $200,000 home loan in the U.S. ranged from a low of $2,119 in Wisconsin to a high of $2,919 in Hawaii. This figure excludes the cost of title insurance.

Texas came in at #13, with average costs of $2,468. In 2012, Texas ranked as 3^rd highest in the nation, with $2,434. Obviously, other states have been raising their loan fees.

The national average is $2,402.

Here in Texas, the costs included an average of $1,690 in fees for items such as underwriting, processing, attorney fees, warehousing, and in some cases – a fee to the mortgage broker for loan origination.  $778 were 3^rd party fees, such as the appraisal.

The Mike Clover Group at Homewood Mortgage thinks those fees are simply too high.

That’s why we cap our fees at a flat rate of $1,150 – to cover underwriting, processing, attorney fees, and warehousing. We do not charge an additional origination fee.

And that’s why, when you take out a Texas home mortgage loan with the Mike Clover Group, you’ll pay less than those borrowers in Wisconsin, with the lowest rates in the nation. And … no matter where you are in Texas, you’ll still get the personal service you’d expect from your neighborhood banker. Loans Now option is available, too.

In addition, we guarantee that your loan will close in 30 days or less.

We at Homewood Mortgage finance homes anywhere in Texas, so whether you are on the Gulf Coast, in West Texas or the Panhandle, or in Dallas, Houston, San Antonio, or Austin, we can save you time and money.

If you’re thinking of becoming a Texas homeowner, or if you simply want to refinance your existing mortgage, call us at 1-800-223-7409 or apply on line at http://www.mikeclover.com/

We finance:

• Jumbo Loans
• Conventional Loans
• FHA / VA loans
• Cash out home loans
• USDA loans
• Refinance Home Loans

Note* Depending upon the loan program you qualify for, some or all of your closing costs can either be financed into your loan or paid by the home seller.

Once we talk, we’ll be able to give you that information based on your credit history, the down payment funds available to you, and the type of home you wish to purchase. We work hard to match your needs with the loan that’s most beneficial to you.

Mike Clover
Mortgage Banker
www.mikeclover.com

Those of us who live here know that Texas has a lot to offer: great universities, sports teams, cultural and civic attractions, good weather more of the time than not, and friendly people. But… some other communities also offer similar benefits.

People are flocking to Texas for another reason – the money.

Here in Texas, the more you work, the more you can earn, save, and invest – because your money doesn’t get confiscated to pay State Income Tax. Compare that to California, where residents are now paying a whopping 13.3% State Income Tax.

For home buyers, that translates to more money available for home ownership, along with the confidence that the law of supply and demand will maintain their home’s value.

We’re also business friendly – putting few barriers between companies wanting to business and employees wanting to work. So naturally, businesses are happy to locate in Texas.

In fact, between 2001 and 2011, Texas increased private sector employment by 732,800 jobs – and they’re jobs with good pay scales. Since the official end of the recession in 2009, Texas has been responsible for almost one out of every two jobs created in the entire U.S.

For home buyers, that translates to even more confidence – the confidence that they won’t suddenly find themselves out of work with a mortgage payment to pay.

If you’re new to Texas and deciding whether to buy or rent, you should have only one concern: Choosing your community and your neighborhood within that community.

A local real estate professional can provide the information to help you make that choice. And meanwhile, we at Homewood Mortgage, LLC – the Mike Clover Group can get you pre-approved for your home mortgage loan.

Pre-approval will give home sellers assurance that you can actually purchase their home – and thus will increase the chance that your offer will be accepted.

Wherever you are in Texas, get in touch. We offer personal service, low rates and fees, and 30 day closings to homebuyers state-wide.

Mike Clover
Mortgage Banker
www.mikeclover.com

Several factors can prevent a mortgage loan from closing on time – or from closing at all. Those reasons include loss of a job or changing jobs, failing to pay bills on time, making application for a new credit card, or making a credit purchase that changes the borrowers’ credit scores.

But one reason stands out as the single most common. That’s the inability to document the source of the borrower’s assets.

Let me tell you a story from a few years ago when me and the wifey decided to consider investing in multi-family property units. It was hell then, and the process has only tightened and gotten harder now. Today, lenders require that every deposit on your bank statements be documented and verified. They want assurance that the money belongs to the you and that it was not borrowed from some other source – such as a family member who wouldn’t report the transaction to the credit bureaus.

Some deposits, such as automatic deposits of wages or social security checks, are automatically verified. But if you deposit your own paychecks, you need to be able to verify that source. If you sell something and deposit that money in your account, you need to have a copy of the bill of sale showing who gave you the money and why. Be sure to have your purchaser sign his or her name and include contact information.

If your loan type allows for the use of “gift monies” in your transactions, you need to show who gave you the gift. And more – the person who gave the gift may have to verify where they got the money.

Transfers from one account to another pose yet another problem. Often spouses have separate checking accounts, but pool their money into one account for loan purposes. That’s easy to document through your bank statements, but can become a problem when only one spouse is on the loan.

Since some loan programs require that 5% of the money for closing belong to the borrower, unless the borrower is listed on his or her spouse’s account, a gift from a spouse is treated like any other gift and reduces the balance that can be considered “the borrower’s own funds.” There are various such information that one needs to learn about when applying for loans. Find all the information that will help you on Mammoth Investor.

Sometimes there’s a good reason why only one spouse is making application for a mortgage loan – and why that spouse shouldn’t be on a joint account. If that’s the case, contributions by the other spouse to the “down payment fund” should be made at least 90 days prior to the loan, so that the funds can be considered “seasoned” and thus not subject to documentation.

When you want your loan to close on time, cooperate with your mortgage banker.

We don’t make the rules, but we do have to follow them. So provide all pages of the required bank statements, and provide the documentation to show where each and every deposit came from.

Begin keeping good records long before you choose the house you want to buy. Attach your deposit slip to each pay stub and any bills of sale. Store them with your bank statements for easy reference when you’re asked.  If you work in an industry that provides you with tip money, keep a record of the dates and amounts of tips for each day. Store that information with the deposit slips and bank statements as well. If you receive money from online sources, print and keep documentation of every receipt, and reference it to your deposits.

Mike Clover
Texas Mortgage Banker
www.mikeclover.com

Texas was one of the last States to enter the recession and is now leading the recovery. In fact, as of December 2012, there were more people employed in Texas than ever before – and there are more people. According to Census Bureau estimates, the population of Texas is growing by 1.5 to 2% per year.

All factors work together, and many economists credit Texas’ pro-business attitude and the lack of a state income tax on individuals for the low unemployment rates and population increases.

The supply of jobs and the increase in population is, of course, good news for the real estate industry, and for Texas home builders. As the supply of existing homes continues to dwindle, new housing starts are on the rise.

Texas has always led the way in housing starts, and the major markets in Texas (Austin, Dallas/Fort Worth, Houston, Rio Grande Valley and San Antonio) accounted for 9.15% of all starts in the U.S. even at the peak of the housing market in 2006.

That share jumped to 11.31% in 2012, and according to the Star-Telegram (http://www.star-telegram.com/2013/04/04/4751379/new-home-starts-on-the-rise-in.html) , starts in the first quarter of 2013 are up 35 percent from the same period of 2012.

Interestingly, within the top housing markets in Texas, there is almost an even split of activity between the publicly traded (54%) and private builders (46%) operating in Texas. DR Horton is the top builder, with 5,796 single-family homes started in 2012. This accounts for 10% of the starts in his favored markets.

A low supply of new and existing homes for sale, as well as a growing job market, is pushing home prices upward. For instance, according to CoreLogic, the price of non-distressed homes in Fort Worth-Arlington is up 8.8% in February 2013 over February 2012. In addition February was up 2.5% from January.

As of the end of March 2013, inventory levels in Dallas-Fort Worth were down more than 50% from levels at the end of 2008.

On a somewhat troubling note for those busy Texas home builders, the inventory of available building lots is also at the lowest level in five years.

What’s the message for would-be Texas homeowners? Be ready to act when you find your home.

• Get pre-approved before you go shopping – in order to give home sellers the assurance that you can back your offer with action.
• Don’t try to low-ball your offer – you’re very likely competing with other home buyers.
• Don’t ask for too many concessions.
• Consider purchasing a home while it is still under construction.

When you’re ready to find your home, give me a call at 800-223-7409. I’ll be happy to get you pre-approved and to find you the best possible rate and terms for your home mortgage.

Mike Clover
Texas Mortgage Banker
www.mikeclover.com

Understanding the how and why behind today’s bouncing mortgage interest rates almost requires a degree in economics.

It also requires understanding of how both the stock market and the big banks react to events affecting the global economy, news from the Fed, the monthly jobs reports, and changes in the gross national product.

Since all these factors are volatile, mortgage interest rates seem to be blowing about in the storm, and right now they’re riding on an updraft.

The latest panic comes from the Fed announcing that it might begin to curtail the purchase of Treasury bonds and Mortgage Backed Securities sooner than originally planned. This announcement has in turn caused investors to begin selling off Mortgage Backed Securities, causing prices to drop and mortgage interest rates to take a sharp and sudden rise.

Until the June meeting, lenders believed they had until 2014 to keep receiving these large influxes of cash. Now the “end date” could be as soon as September.

Much will ride on the July 5 jobs report. A drop in the unemployment rate will lead to higher mortgage interest rates, while greater unemployment could cause rates to dip yet again.

In a volatile market such as this one, borrowers must gamble. Should they let their rate float and hope that it will drop before closing, or should they lock the rate now because it could be higher by the time they’re ready to close?

Financial analysts can’t agree on what will happen next, but most agree that if you can lock your rate now, it’s probably a good idea. Yes, rates could take another dip. But if you’re being offered a lock on a rate that gives you an affordable house payment, taking it now will prevent the daily stress of watching rates buffeted about in the storm.

Constantine Floropoulos of Quontic Bank was quoted on Mortgage News Daily as saying: “…the table has been set for higher rates. Soup, salad, & appetizers are served, main course on its way….question is how is your digestive system?”

Instead of being upset at paying more than 4%, we should remember that while mortgage interest rates dipped and stayed below 4% between June 2012 and June 2013, today’s 4.375 – 4.5% is still a very favorable rate for borrowers. Those who were around in the 80’s remember rates that bounced from 10% all the way up to more than 16%. It wasn’t until 1992 that rates dropped to the 7’s, where they hovered for nearly 10 years. Even during the housing boom, when prices had skyrocketed, rates were in the 6’s.

Now prices are down and rates are still low. It’s a good time to buy a home in Texas.

Mike Clover
Mortgage Banker
www.mikeclover.com

While consumers across the nation hesitate in fear that the economy could worsen, causing home prices to drop once again, Texas homebuyers need not fear.

Jobs are the key to a healthy housing market, and Texas offers jobs.

According to Area Development Online, (http://www.areadevelopment.com/Gold-Shovel-Econdev-Awards/Q2-2013/Texas-Georgia-Alabama-Kansas-Gold-Shovel-2162511.shtml) Texas replaced all of its recession-hit jobs by December 2011. The state’s unemployment rate has been below the national average for more than 75 consecutive months, and by March 2013 had dropped to 6.4%.
At the same time, the gross domestic product in Texas was well ahead of the national growth rate, at 3.25% in 2012.

At a recent business event, Governor Rick Perry proclaimed that “Texas’ economy has become the envy of the nation.” That could have a lot to do with the 8,000 new jobs that have been created, thanks in large part to expansion in the energy sector, chemicals, and Internet Technology.

Texas is one of only 4 states to be awarded Area Development magazine’s “Gold Shovel” award. According to the magazine’s website, these annual awards are “a celebration of the kind of economic development success that should never be taken for granted.”

The other states honored with the “Gold Shovel” were Georgia, Alabama, and Kansas.

The Texas real estate market is hot, and the best way to have your offer accepted over others is to present a letter of pre-approval along with your offer.

We at Homewood Mortgage finance homes anywhere in Texas, and we promise low rates, low fees, and prompt service. So if you’re thinking of becoming a Texas homeowner, call us at 1-800-223-7409 or apply on line at http://www.mikeclover.com/ We’ll be glad to get you pre-approved and ready to submit that winning offer.

There’s no application fee, and no obligation.

P.S. If you’re not quite ready, select link to sign up for our weekly newsletter and rate updates.

Mike Clover
Texas Mortgage Banker
www.mikeclover.com

The Dodd-Frank Act, with its 2,000 plus pages, was signed into law on July 21, 2010 and touted as a consumer protection Act. In some ways that appears to be true. In others it appears to be a lender protection Act. We’re learning more as hundreds of pages of rules to implement the regulations are being written and released.

Title XIV of the Act, which covers the Qualified Mortgage Regulation and its accompanying Ability to Pay Rule, will go into effect on January 10, 2014. Lenders who write “Qualified Mortgages” will have some protection from liabilities and rules imposed elsewhere in the Act.

To an individual who was borrowing money to buy a home back in the 80’s, the Ability to Pay Rule will look like a return to the past. Back then, banks wanted to be sure that a borrower could repay the debt before they lent money. Now, the government is insisting that they do so – with some exceptions.

Pursuant to the Ability to Pay Rule, lenders must consider and verify, at a minimum, the following eight underwriting standards:

1. Current income or assets
2. Current employment status
3. Credit history
4. The monthly payment for the mortgage
5. The monthly payments on any other loans associated with the property
6. The monthly payment for other mortgage related obligations (such as property taxes)
7. Other debt obligations
8. The monthly debt-to-income ratio or residual income the borrower would be taking on with the mortgage

It sounds just like the old rules that were thrown out the window in the years leading to the mortgage crisis.

The Act does contain some consumer protection provisions. For instance, it limits the amount lenders may charge for upfront points and fees, as well as for the discount points that lower the interest rate.

A borrower’s debt to income ratio will be capped at 43% of his or her pre-tax income. While some believe this to be an ill-advised provision with regard to high end homes and high income borrowers, part of the provision will protect mid to low income borrowers. That is the fact that this ratio can no longer be computed using payments based on a “Low introductory interest rate.” The borrower’s debt to income must be calculated using payments at the highest interest rate possible under the terms of the loan.

Thus, while a borrower may receive an initial low rate on an Adjustable Rate Mortgage, his qualification will be dependent upon the payment after the loan re-sets all the way to the interest rate cap.

Calculating ability to repay based on low teaser rates was one of the toxic loan features that put people into homes they couldn’t afford – and led to widespread foreclosures. Interest only periods, negative amortization, balloon payments, and loan terms over 30 years are also disallowed under the new regulations.

However, as some analysts are quick to point out, exceptions, exemptions, and loop holes do exist. America may not yet have seen an end to bad lending practices.

If you’re planning to purchase a home in Texas, get in touch. I’ll search out the best loan for you and your circumstances. Once I have you pre-approved, I’ll furnish you with a letter to submit with your home offer – increasing your chance of being the winning bidder in the hot Texas real estate market.

Mortgage loan pre-approval should be the first step in any home buying plan.

Mike Clover
Texas Mortgage Banker
www.mikeclover.com

The Dallas housing market is hot right now – and you’d think that Dallas real estate professionals would be thrilled. They would be, except for one slight problem: Too little inventory for too many buyers.

Agents report receiving 10 or even 20 offers on any new correctly priced listing. That’s extra work for listing agents as they help their clients sort through the listings to find the “highest and best” offer. And it’s sheer frustration for buyers’ agents.

Buyers’ agents report writing offer after offer for their clients, only to be rejected and have to start the search over again. And of course, the buyers themselves are doubly frustrated.

If you’re one of those frustrated buyers, you can increase your chances of having your offer accepted by following a few guidelines:

• Get pre-approved for your loan before you begin to search for a home. Carry that pre-approval letter with you so it can be submitted with your offer. Today’s sellers aren’t going to accept your offer if they aren’t certain you can follow through.
• If you’re buying with cash, keep your proof of funds handy for the same reason.
• Forget bargaining for a low price. Those days have passed. If your agent says the house is priced correctly, offer full price, or even a little more.
• Keep your offer “clean.” That means no frivolous contingencies such as 3rd party approval, waiting for a settlement, needing to sell your current house, etc.
• Don’t ask for anything that isn’t included. Do you want to give up the Dallas home of your dreams over a riding lawn mower?
• Don’t ask for seller concessions.
• Keep the time lines short for inspections.
• Set a closing date in accordance with the seller’s wishes. Most prefer to close quickly – but some need a longer closing date for personal reasons. Find out what they want and offer accordingly.
• See what else you can do to help the sellers. For instance, some may favor your offer over others if you’re willing to take the house with contents included. This is especially true if the house is part of an estate.

Remember that your offer includes both price and terms. In some cases, the terms will be more important than the price. So have your agent do a little research before you submit your offer.

If you’re thinking of buying a new home in Dallas, call me for pre-approval on your loan. You’ll not only increase your chance of having your offer accepted, you’ll know exactly how much you can spend on your new Dallas home.

Mike Clover
Texas Mortgage Banker
www.mikeclover.com