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New Regulatory Changes Help More Borrowers Qualify

August 13, 2017 / Tom Bonetto

I have some good news for those looking to get a mortgage in the near future — as 20% of U.S. consumers could see their credit score increase this fall.

Credit Changes

The nation’s three major credit rating agencies, Equifax, TransUnion, and Experian, will drop tax liens and civil judgments from some consumers’ profiles if the information isn’t complete.

Because of the combination of these two dramatic changes, many potential borrowers that did not qualify for a home loan might now be eligible under these new regulations.

These credit bureaus will also be restricted from including medical debt collections. If the debt isn’t at least six-months old or if the medical debt was eventually paid by insurance, it can’t be listed.

The reason is that medical debts, unlike that of credit charges, are unplanned and doctors and hospitals have no standard formula for when they send unpaid debts to collection.

Debt-to-Income Changes

In addition to the FICO changes, mortgage titans Fannie Mae and Freddie Mac are allowing borrowers to have higher levels of debt and still qualify for a home loan. Both are raising their debt-to-income ratio limit to 50 percent of pretax income from 45 percent. That is designed to help those with high levels of student debt.

This move by the mortgage leaders will dramatically increase the number of people who will now be able to qualify for a home loan. Most industry experts agree that this is a welcomed and much needed change for millennials and first-time homebuyers.

If you have been considering a home purchase or refinance, now is a great time to take a look at it.

Contact me to find out if these changes might benefit you or someone you know!

The Great Hitting Debate – Ground Balls or Fly Balls

August 6, 2017 / Tom Bonetto

As I’ve mentioned before, one of my favorite reads is Justin Dedman’s “Hitting Mental” blog – he has great content for players looking to better themselves at the plate.

He’s recently written about the current ground ball versus fly ball debate – and has shed a little clarity on it. I highly recommend you view his entire post here….

Dedman states, “there are so many mis-teaches in hitting, and coaching players to hit predominantly ground balls is one of them.”

“Nor should we ONLY practice hitting fly balls….and it isn’t OK to strike out a billion times. Let’s get this straight.”

He calls this micro-management at its worst. Teaching players to simply make sure they put the ball in play exhibits a lack of trust in their ability, or in our ability to understand hitting and teach it the proper way.

The Data

Justin shows that most college baseball statistical programs log all extra base hits as line drives. In programs like Statcrew and Dakstats, fly balls are outs.

For example, all hits are categorized in college as only line drives or ground balls. Justin states that “this is absolutely asinine. This epitomizes much of the statistical confusion at lower levels.”

He goes on to say that MLB gets it right. Their stat programs note that HRs can be both fly balls and line drives. MLB’s excellence in statistical analysis, data and measurement are second to none.

With that said, Major League Baseball does have the financial capacity to create highly sensitive visual analysis by computers as well as real, live human beings track every pitch and evaluate each contact.

Dedman’s scorecard

We all know that every ball hit comes off of the bat at a different angle. Dedman continues “At Lee University, we call these angles ‘ball flights’, and we grade and value each ball flight separately, giving our hitters great perspective on what they hit, and what we want them to hit.”

Here’s his breakdown:

We encourage our hitters to hit 5’s, 6’s, and 7’s. When you hit a barrel in practice, we track it as a 567. To hit a ball at these ball flights requires certain approaches, timing and contact points to be made.

A “1” flight is a ball hit sharply into the ground, first bouncing near home plate. A “9” is the equal, but opposite angle, hit straight up into the air.

A “4” flight is a hard contact that bounces in the back infield dirt. A “5” is perfectly squared up and cuts straight through the air. A “6” has backspin and “extra-base energy” (lots of doubles and triples here). Most HR’s are “7” flight, though our strongest players can crush an “8” flight and have it sail out of the yard.

567’s win. They require aggressiveness in approach and swing.

Our weaker hitters, who have exit velocities typically between 80 and 90, have ball flight identities of 456. They can crush a “7” and not have the same success. Sitting there hitting “7” flights all day is a bad idea when you don’t possess the bat speed or strength to create distance on the baseball.

His conclusions

Justin continues, “our final misstep in the coaching puzzle is the type of linear hand path/lacking separation/pushing the barrel forward to ensure we make contact swing that coaches dis-empower their hitters with.”

“Hit the ball on the ground is a misnomer. I don’t care if you run a 6.5 60. Hitting 456s or 567’s will result in having an ability to drive in runners from first, create a higher slugging percentage, higher OPS, more runs created, and make a greater impact on the game.”

“We chart hitters on-field batting practices to ensure they have accountability and visual reference for what types of balls they are hitting on a consistent basis. We have a goal for each hitter to hit 40% of their batted balls within their identity (either 456 or 567).”

He also talks about hitters making in-game adjustments depending on outside factors. Windy day? Let’s focus on 456’s. He states, “hitting is all about adjustment making, as is coaching.”

I agree with Justin in teaching our hitters that hitting the right type of balls in the air. It’s clearly advantageous and is an adjustment that many programs can make.

Home Buyers Should Know These 5 Things for 2017-2018

August 6, 2017 / Tom Bonetto

There’s a lot of advice online for homebuyers these days. But, hey, who’s got the time to do all of that research. So I’ve selected five things prospective buyers should know about purchasing your house in the next 18 months.

The real estate market is getting more competitive by the day, due to limited inventory. On the other hand, mortgage qualifications have loosened a bit and rates are still near historic lows.

Home prices have risen steadily in recent years, and they continue to do so. Mortgage rates are expected to inch upward in the coming months. Most analysts are predicting a rate increase by the fed in the fall of 2017.

With those things in mind, let’s take a look at 5 key issues:

Mortgage rates are expected to slowly climb into 2018

The Federal Reserve will be reducing the amount of mortgage-backed securities in their portfolio relatively soon – and they have hinted at another rate increase or two over the next 6 months.

In its latest forecast, the Mortgage Banker’s Association economists predicted that the average rate for a 30-year fixed mortgage loan would rise to 4.5% by the fourth quarter of 2017. Looking beyond that, they expect 30-year loan rates to rise above 5% by around the middle of 2018.

With that said, these rates are still extraordinarily low compared to historical standards.

Home prices are rising

According to Zillow, the real estate information service, the median home value across the US has risen by over 7% in the last year – and many experts see that pace staying consistent. Most economists expect prices to rise by another 6% over the next 12 months, extending into the summer of 2018.

As a result, homebuyers will encounter higher housing costs than those who purchased over the last couple of years. So be sure to research the market ahead of time, work with the right real estate agent, and go into it with a realistic view of what you can afford.

Mortgage qualification is easier today

The mortgage industry has loosened up a bit over the last two or three years. Mortgage giants Fannie Mae and Freddie Mac have relaxed debt-to-income ratios. As a result, it’s slightly easier to qualify for a mortgage loan today than it was in the past.

For example, many first-time homebuyers think they must have 20% or more ready for a down payment. But that isn’t true at all. Today, there are mortgage programs available that allow for down payments as low as 3%, or even 0% if you’re military or live in rural areas.

Don’t make assumptions about your ability to qualify for a home loan. Reach out to me, and we’ll review your situation to determine if you’re a good candidate for a home loan.

Housing inventory is getting tighter

The reason why home prices are rising has to do with inventory – or the lack of it. It’s just supply and demand at work, really.

In most cities across the west, the current supply of homes is falling short of demand.

What does this mean to the homebuyer? It means you should be prepared for some competition, and be ready to move quickly when the right house comes along.

It’s a sellers market right now

Due to the lack of inventory, this will directly impact you as the buyer. In 2017, most of the major cities across the state are experiencing sellers’ market conditions. In short, there aren’t enough homes for sale to meet the current level of demand.

This is an important factor to remember when it comes time to make an offer and negotiate with sellers. This is where the right real estate agent can really help.

The reality is that current real estate market conditions favor sellers over buyers.

My opinion is that it isn’t worth your time to haggle with the seller over the small stuff. When you find a home that meets the majority of your criteria and falls within your budget, you should move quickly with a legitimate, competitive offer.

In conclusion

With that said, this is my reading on current trends in the real estate and mortgage marketplace. The continuation of rising home prices and more-than-likely mortgage rate increases makes a compelling argument for buying a home sooner rather than later.

As always, please do contact me for more, as it would be my privilege to help you!

Keys to a Fast Mortgage Approval – Have These 6 Items Ready

August 1, 2017 / Tom Bonetto

Before you get set to make that offer on your dream home, it’s vitally important to be qualified for that mortgage, if you will be financing the property.

With that in mind, there are a half-dozen necessary documents that you will need to prove your reliability to a mortgage lender.

Here are the documents you’ll want to make sure you have when the time comes for pre-qualification and approval.

Recent Paystubs

It can be more difficult to gain mortgage approval if you have inconsistent work history or are self-employed, so you’ll need to show 2 months of recent pay stubs to prove consistent employment.

Copy of Driver’s License and Social Security Card

Our underwriters will need to verify your identity against your credit report and other items.

Previous Tax Returns and/or W2s

In order to ensure the earnings information you’ve provided to the lender is correct, you’ll most likely need to provide your federal tax returns for the two years prior to your mortgage application. In addition, you may also be required to provide your W-2s as backup documentation.

Bank Statements

In order to identify where the down payment or closing costs are coming from, you’ll need to present bank or savings statements to show that you have the money necessary for the transaction. If you are planning on receiving a gift from parents or relatives for that down payment, you’ll need a letter to show where the funds are coming from and to show that the funds are, in fact, a gift.

Investment and Asset Statements

It’s certainly a good sign to the lender if you have a healthy balance in your checking and savings accounts, but you’ll also need to provide any statements for mutual funds and other investments. While they may not be necessary to prove financial soundness, they will help with approval if you have a lot of money saved.

A List Of Your Debts

This process might not be the most fun, but your lender will also want to know about any outstanding debts like auto loans, credit card payments or student loans. The majority will show on the credit report obtained by the lender, but don’t fail to tell your loan officer about all debt related issues.

The mortgage application and approval process isn’t easy, but it isn’t rocket science, either! Having the appropriate documentation and being upfront about your debts, you may be able to speed up the timeframe. If you’re currently looking at your mortgage options, don’t hesitate to contact me to find out more. It would be my pleasure to help!

Cash Out Refinances for Student Loans

July 31, 2017 / Tom Bonetto

Mortgage giant Fannie Mae has once again re-tooled some of their guidelines. This time it is regarding student loans and how they are treated in debt-to-income ratios for qualifying for a mortgage. This really is fantastic news.

It gets even better for homeowners who have student loans, as Fannie Mae is offering improved pricing on cash out refinances for paying off student loans.

The Big News

Effective immediately, Fannie Mae will waive the “loan level price adjustments” (LLPA), or rate increase adjustment, on cash-out refinances when student loan are being paid off. LLPA’s are intended to adjust for the “risk based” pricing and they directly impact mortgage rates.

Here’s a practical example: a cash out refinance with a loan to value of 80% and credit scores of 740 or higher, has a price adjustment of 0.875 points! This is typically factored into the cost of the rate. (you can click here for Fannie Mae’s LLPA matrix).

The lower your credit score, the higher the adjustment is because of the anticipated higher risk for the loan. Get this….if student loans are being paid off, the extra cost of the LLPA is waived!

The Specifics

In order to qualify for the new special student loan cash-out refinance, the following must take place:

at least one student loan must be paid off;
loan proceeds must be paid directly to the student loan servicers at closing;
only student loans that the borrower (home owner) is personally obligated are eligible;
student loan must be paid off in full with the proceeds from the refi. No partial payments are allowed;
property may not be listed for sale at the time of the transaction.

Homes in the California and Arizona area have appreciated at a solid rate over the last few years. Now may be a great opportunity to eliminate student loan debts…especially with the preferred lower mortgage rate! Please do contact me for more regarding this program.

The Lending Coach