“QUESTIONS & ANSWERS: HOW TO HAVE A SMOOTH REAL ESTATE CLOSING UNDER NEW TRID ‘KNOW BEFORE YOU OWE’ GUIDELINES”
HIGHLIGHTS FROM THE REAL ESTATE MORTGAGE SHOPPE 10-10-15
Welcome! Thank you for connecting to the Real Estate Mortgage Shoppe where we offer solutions to your real estate scenarios. I hope the information on our blog posts gives you something that you can use or that can save you some money.
If you are looking for information or help in areas that do not seem to be covered on this blog posts or my other posts, please feel free to call me at (901) 482-0354 or email me at jo@192.232.195.219 OR CONNECT AT www.JoGarner.com
MARKET NEWS
LOOK BACK MEMPHIS TRIVIA CONTEST
QUESTIONS ANSWERED BY TOM KING, BILL KING COMPANY
QUESTIONS ANSWERED BY JO GARNER, MORTGAGE LOAN OFFICER
REAL ESTATE TIP OF THE WEEK
ANNOUNCEMENTS
Good morning Memphis! Good morning across the country on internet radio. You’re on Real Estate Mortgage Shoppe. I’m your host, Jo Garner, Mortgage Loan Officer. Connect with me at www.JoGarner.com. If you are in the Mid-South area or in any of the 50 states in our great nation, make the call to me and let’s talk. I really do want to talk with you personally. Today our topic is “QUESTIONS & ANSWERS: HOW TO HAVE A SMOOTH REAL ESTATE CLOSING UNDER NEW TRID ‘KNOW BEFORE YOU OWE’ GUIDELINES.” Call us on the air right now Saturday October 10th, 2015 by calling the studio 901 535-9732 with your questions or comments on any real estate or real estate lending topic.
Sitting across the coffee table from me is Tom King, appraiser with Bill King Company. (Jo) I’ve been a mortgage loan officer for 25 years and I have never seen so many far reaching changes in the real estate lending business than I have seen just within the last 5 years. My job as a mortgage loan officer is to do everything I can to pave the way for my client to have the smoothest and quickest closing possible and still remain under the stricter lending guidelines. Over the next several minutes we are going to cover some of the changes that will have the biggest impact on the homebuyer and the home seller.
But before we launch into talking about the changes and how to work within the new guidelines, let’s look at some market news. Mortgage rates remained relatively quiet today following a bit of a hike earlier in the week. But here is the silver lining in the cloud—mortgage rates are still lower than they were back in September. It is still a great opportunity to buy a house or refinance one. The best rate quotes are around 3.875% to 4% on the conventional 30 yr fixed rate with no points. The 15 year rates were around the low to mid 3’s. If you want to compare some financing scenarios on your home purchase or refinance, you might be pleasantly surprised at the amount you can save with the lower rate and payment. As we say a lot on this show MAKE YOUR PLAN. WORK YOUR PLAN. IF THE DEAL WORKS FOR YOU TODAY, DO IT TODAY. Let’s talk about the details of your real estate transaction off the air. Call and talk with me personally at (901) 482-0354 or you can connect with me at www.JoGarner.com
(Jo) One of the first questions I hear people ask is What is this new lending regulation all about? The ‘Know Before You Owe’ rule was put in place by the Consumer Financial Protection Bureau to make sure that borrowers get to review the official terms on their loan with a mandated wait time in place to give them more time to review it so they truly “Know Before They sign the closing papers and Owe on the mortgage. The consumer should get to see their initial loan application disclosures 3 days after they do the official loan application with the property address confirmed. There are other mandatory wait periods set throughout the process like after the appraisal arrives and once the loan is approved and the final numbers needed for closing are disclosed –instead of closing the same day or the next day after getting the amount needed to bring to closing, the borrower now is required to wait an additional 3 business days before closing which is really more like 7 days if the paperwork is delivered via regular postal system instead of electronically using email.
The advantage to this regulation for homebuyers is that they can get more firm numbers if they want to shop lenders and they have a lot more time to review the paperwork than before.
The disadvantage to homebuyers AND sellers is that there are mandatory wait periods built into the process that can cause delays if borrowers are slow delivering their paperwork or if, for instance, buyer or seller stalls the process due to required repairs from the appraiser.
Another reason that may cause a delay, for example, is if the income or asset documentation does not support the amount the borrower told the lender originally and is actually much less, requiring the lender to wait for additional documentation from employers, CPAs or banks to get more information.
The solutions to prevent as many delays as possible is to use email to get documents back and forth to the lender instead of snail mail. Get your supporting documents to the lender as soon as they require them and do not wait a week—try to have them to the lender within 24 hours when asked for them.
If you are buying a house but it depends on your selling YOUR house and the person buying your house has to sell THEIR house first and everyone has to close on the same day, there are multiple chances that someone down that domino line is going to get delayed on their closing which could delay YOUR closing too. Have more than one option for moving day. Maybe you want to arrange as plan B to have your furniture and stuff loaded onto a POD that can be stored and unpacked later when your closing day finally comes—whenever it comes.
Tom, what changes do YOU see that can affect homebuyers and sellers?
2nd segment after 9:15 break: It’s time for the Look Back Memphis Trivia Contest. The Look Back Memphis Trivia Contest is brought to you by Memphis notable historian, Jimmy Ogle www.jimmyogle.com,. Jimmy Ogle offers free historic walking tours in downtown Memphis. To get his spring and fall schedule, go to www.jimmyogle.com . our Look Back Memphis Trivia Contest is sponsored by John and Jennifer Lawhon of Lawhon Landscape (901) 754-7474 the Lawhon’s can help you plan your landscaping even if you’re on a budget –even if you have a BIG, BIG project. The Lawhons are giving away a $25 gift card to the first person with the correct trivia answer. If you know the answer to one of our trivia questions, call us at 901 535 WREC 901 535-9732.
Our Trivia Question: WHO AM I?
Garner # 61 10/09/15
Wyeth Chandler
Question: I am the first alumni of the University of Memphis to be elected Mayor of the City of Memphis. Who am I?
Hint: The name of the University of Memphis has changed over the years, so I may have graduated from West Tennessee Normal School, West Tennessee Teachers College, Memphis State College, or Memphis State University.
Hint: I was known to have a humorous “radio relationship” with a local radio disk jockey.
Hint: I was a part of a “four Mayors in one year” parade in Memphis.
Final Hint: I became a Judge in 1982 – Congratulations to Mayor-elect, Jim Strickland!
Answer: Wyeth Chandler served as mayor of Memphis, Tennessee from 1972 to 1982. He was the adopted son of former Memphis mayor and U.S. Representative Walter Chandler. Chandler succeeded the controversial Henry Loeb, who battled local sanitation workers during a strike that brought Martin Luther King, Jr. to Memphis in April 1968. This violence-ridden episode in the city’s history resulted in King’s death by assassin James Earl Ray on April 4. Chandler spent much of his tenure dealing with the economic and social fallout from the strike and the killing, as the incidents gave the city a bad name among business and charitable interests for some years.
Chandler was mayor at the time of Elvis Presley’s death in 1977, and during the police and firemen’s strike the following year. Some Memphians criticized his administration as too “status quo”, but he was undeniably popular, winning three consecutive elections. After resigning from office to accept a judgeship appointment from the Governor of Tennessee, Lamar Alexander, Chandler was succeeded by two interim mayors: first by J.O. Patterson, Jr. (the first-ever African-American to serve in the office), then by Wallace Madewell. The next regularly-elected mayor was Richard Hackett, who served from 1983 until 1991.
“Yes Sir, Mr. Dees” was his favorite quote in radio DJ Rick Dees (of # 1 Disco Duck fame), and often re-used as an insert during many of Dees’ funny episodes over the air – “YAS SIGHER, MR. DEES!”
Last Week: Liberty Bowl Memorial Stadium. Opened as Memphis Memorial Stadium on September 18, 1965 with a football game between Ole Miss and Memphis State University, the stadium has witnessed numerous football games and concerts over the past 50 years. In 1965, the first AutoZone Liberty Bowl game in Memphis was played between Ole Miss and Auburn and the stadium’s name was changed to Liberty Bowl Memorial Stadium in 1977. Legendary Paul “Bear” Bryant coached his last game in the 1982 Liberty Bowl. Two Heisman Trophy winners have played in the Memphis Liberty Bowl game, Doug Flutie of Boston College and Bo Jackson of Auburn.Although not having a powerhouse football program, the University of Memphis is currently enjoying an eleven game winning streak, the fourth longest current streak in the NCAA. The Tigers are now 4-0 to start the season, the first time since 1961. The stadium seats 61,008 fans.
The 12’ X 14’ metal, lighted flag on the roof of the west Press Box was first displayed in 1907 on the roof of The Commercial Appeal at Second and Court; moved to 495 Union Avenue when the CA moved there; and then donated to the City of Memphis in 1977 for the Liberty Bowl. It has 277 light bulbs (102 red, 112 white and only 45 blue, as the USA had only 45 states in 1907!), and is over 100 years old, has been on three different roof tops in Memphis, has electrical moving – and still works!!!! Jimmy Ogle gives free walking tours in Downtown Memphis during the Spring and Autumn, with the Autumn, 2015 tours with today (Saturday, October 10) being the first-ever “10-Hour Tour”, stepping off from Beale Street Landing at 10:10am, walking all thorough Downtown Memphis and the Riverfront, then winding up at Westy’s in the Pinch District at 8:00pm! The next TUESDAY TOUR is October 13 (Adams Avenue) with the next Bridge Walk being October 18. The next Riverfront Parks Tour being Sunday, October 25 (Beale Street Landing & Tom Lee Park). The Shelby County Courthouse Tour: Third Thursday each month at 12:00 noon – next is Thursday, October 22. Go to jimmyogle.com for the 2015 Autumn season schedule and locations.
QUESTIONS ANSWERED BY TOM KING:
1. Talk about the new FHA loan program changes related to appraisals and how it affects homebuyers and sellers.
QUESTIONS ANSWERED BY JO GARNER:
1. Let’s read some of the responses we’ve gotten online (Jo reads the comments she has gotten from 3 people)
2. 2. Besides TRID ‘Know Before You Owe,’ what are some of the changes happening with FHA and Fannie Mae?
Here are a few of the FHA changes that went into effect back in September-
Student loans-Underwriters will no longer be able to exclude student loan payments for FHA loans. Currently, student loan payments in deferral for at least the next 12 months can be excluded from debt ratios.
Gift funds-If down payment proceeds are gifted to the buyer, lenders will soon be required to obtain a bank statement from the donor’s account, as well as source any large deposits to the account in order to document that the donor’s funds came from an acceptable source.
30-day accounts -For 30-day accounts such as AMEX, mortgage companies will soon be required to verify the borrower paid the outstanding balance in full on every 30-day account each month for the past 12 months. 30-day accounts that are paid monthly will not be included in the borrower’s DTI. If the credit report reflects any late payments in the past 12 months, the lender must utilize 5 percent of the outstanding balance as the borrower’s monthly debt to be included in the debt ratios.
Authorized user accounts-Accounts for which the borrower is an authorized user will be included in a borrower’s DTI ratio unless the lender can document that the primary account holder has made all required payments on the account for the previous 12 months. If less than three payments have been required on the account in the previous 12 months, the payment amoBIG changes for FHA buyers coming soon! Review the changes below and give me a call or send a PM with questions!
Employment-If an employee has changed jobs more than three times in the previous 12 months or has changed lines of work, the lender must take additional steps to verify and document the stability of the borrower’s employment income. Gaps of employment greater than six months will require six months on the new job, regardless of what created the gap. Raising a family is no longer an acceptable reason for the gap.
3. What were some of the changes to the conventional Fannie Mae program?
4. Mainly the Fannie Mae changes eased up a little allowing the borrower who will occupy the home to have a non-occupying cosigner and be able to use the income. There were some changes made to allow exceptions to the maximum debt-to-income ratio rules with compensating factors.
5. Back to the Know Before You Owe Trid regulations—talk about the other restrictions related to when a borrower wants to get preapproved but doesn’t know yet which house he wants to buy…
Q&A from various social media outlets:
Q Ryan Byrne, closing attorney: Will the buyer and seller get separate closing disclosures? Will the buyer have the ability to see the sellers numbers (on page 3 of the new closing disclosure) and if so, will seller’s get the same opportunity?
Q Beverly Borwick, Fashion accessory designer:
My response to the new “Know Before You Owe” mortgage rules:
I don’t see how these “rules” will ease the buyer’s burden in any way. As I understand it, these revisions incorporated many man-hours at great financial expense. And then, the results will not be known in the near future, so property investors are not any more enlightened now that the changes are being implemented.
A potential homeowner makes an offer, and it is either accepted or rejected, or renegotiated. When you acquire a home loan, it already includes a Truth in Lending Statement. Even though interest is charged, the buyer has the benefit of the added deduction for interest. And property taxes will NEVER go away.
Choosing wisely (location, location, location, plus condition of structure and property) is critical – every time!
My personal experience and understanding:
Coastal property investing versus central U.S.: From growing up in the Midwest and eventually buying a home, to relocating to California, there was a much higher cost of living, especially in property purchases. Returning to the Midsouth, the much lower housing costs once again made sense! Property taxes have always been included. The paperwork has never been straightforward and easy for the layper
Q Gary Coleman (from Linkedin) Field REO Manager at Ditech Financial LLC, with expertise in Sales/Market Planning & Implementation
I personally don’t like the ‘cool off’ period. I don’t think it protects the consumer that much more, and it’s a pain for someone in my industry. Also, I think the audit fines are ridiculously high. I see both sides of the argument, but since I sell more homes than I buy I tend to lean more on the sales process.”
REAL ESTATE TIP OF THE WEEK:
ANNOUNCMENTS:
Announcements: Talk Shoppe offers free education and networking to anyone interested in real estate or business. This Wednesday October 14, 2015. Joe Rojas, title specialist and I are going to join up and talk about “How To Have A Smooth Real Estate Closing Under The New ‘Know Before You Owe’ Lending Guidelines.” Talk Shoppe meets at the University of Phoenix 65 Germantown Court 1st floor Cordova, TN 38018. For more information about Talk Shoppe, go to www.TalkShoppe.com
• To hear today’s podcast of Real Estate Mortgage Shoppe and others, go to www.JoGarner.com
Thank you to Nick Barnes of Test Video Studios, a free-lance videographer who specializes in editing and consumer level online broadcasting. Contact Nick at testvideostudios@gmail.com
“MAKE YOUR PLAN, WORK YOUR PLAN. IF THE DEAL WORKS FOR YOU TODAY, DO IT TODAY.”
QUOTE CORNER: “Your preparation for the real world is not in the answers you’ve learned, but in the questions you’ve learned how to ask yourself.”
― Bill Watterson
“Don’t ask questions that you don’t want the answer to.”
― John Henry Reese
______________________________________________________________________________
ABOUT TOM KING, APPRAISER WITH BILL KING COMPANY
Tom is a well- respected and sought after appraiser in Memphis, Tennessee. He is a second generation appraiser with 40 years experience. He has been elected to the Memphis Area Association of Realtors Board of Directors three times.
Tom is a certified residential appraiser in Tennessee. He have appraised over 20,000 homes in his career. A graduate from the University of Tennessee with a degree in real estate, Tom is also a Certified Relocation Professional (CRP). Tom also has vast experience in dealing with the county and state boards of equalization and in valuations of property for tax appeal purposes. (901) 487-6989
ABOUT JO GARNER-MORTGAGE LOAN OFFICER:
www.JoGarner.com (901) 482 0354 jo@192.232.195.219 twitter @jogarner
Jo Garner is a mortgage officer with extensive knowledge in tailoring mortgages to her customers who are refinancing or purchasing homes all over the country. She offers conventional, FHA, VA or other loan programs for refinancing and purchases.
Jo can help you look at rent vs buy, when it makes sense to refinance, how to get the best deal on your home purchase financing.
Jo Garner has been in the real estate/financing business for over 20 years. She got her start in Portland, Maine where she first began her real estate career. She received her real estate education from the University of Southern Maine and was personally mentored in San Diego, California by Robert G. Allen, author of Nothing Down, Creating Wealth and The Challenge.
On moving back to West Tennessee in 1987, she went into business buying and selling discounted owner-financed notes secured on real estate. In 1990 Jo went to work for a residential mortgage company and has been a mortgage loan officer for over 20 years. Her goal is to offer excellent, affordable service to her customers, tailoring the loan programs to the specific needs of her clients.
In addition to her work in the mortgage field, Jo Garner is the primary sponsor and founder of Talk Shoppe in Memphis. www.TalkShoppe.com She was also the editor of Power Shoppe, a free weekly e-zine designed for real estate professionals and others indirectly connected to the real estate industry and currently publishes on her blog www.JoGarner.com .
For real estate financing solutions, plug into Real Estate Mortgage Shoppe. You can find mortgage rates, FHA Streamline refinance with no out-of-pocket costs, and more.
PHOTO GALLERY FROM REAL ESTATE MORTGAGE SHOPPE 10-10-15