What is trended credit now being used by Fannie Mae on conventional underwriting and how do you look your best when you are trying to get approved for a mortgage. Tom King will be covering some recent trends he is seeing in the real estate appraisal regulations and what you need to know about this when you are entering into a real estate transaction.
Thank you for stopping by to visit with us at Real Estate Mortgage Shoppe. What are the real estate and lending trends that interest YOU? Let’s talk! Let’s put some numbers in the calculator and see what will benefit you BEST!
To Your Success,
Jo Garner, Mortgage Expert, Mortgage Loan Officer (901) 482-0354
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Good morning, Memphis! Welcome to our listeners across the 50 states! You’re on Real Estate Mortgage Shoppe. I’m your host, Jo Garner, Mortgage Loan Officer. You can connect with me at www.JoGarner.com. Our general topic is WHAT IS TRENDED CREDIT & THE NEW REAL ESTATE APPRAISAL TRENDS? HOW TO PREPARE AND WHAT TO EXPECT. If you have a question or comment and you’re on Twitter, make them to #JoGarner or call me directly off the show at (901) 482-0354. You can call us while we are live at (901) 535-9732 or outside the Memphis area (800) 474-9732 Today is October 8, 2016.
In this episode of Real Estate Mortgage Shoppe I will be answering your questions about what is trended credit now being used by Fannie Mae on conventional underwriting and how to look your best when you are trying to get approved for a mortgage. Tom King will be covering some recent trends he is seeing in the real estate appraisal regulations and what you need to know about this when you are entering into a real estate transaction.
The perfect person to tell us what is trending with real estate appraisals is Tom King, appraiser with Bill King Company. Tom is celebrating over 40 years in the appraisal business and you can call him for appraising a home for you on a cash deal, divorce settlement, estate appraisal and more. Tom, most of our regular listeners know you, but tell our new listeners a little bit about yourself. <Tom introduces himself—about 1 min>
(Jo) The mortgage market started a new trend this week with rates inching up even more to around a 3 month high, which is still really low, by the way. 30YR FIXED – 3.5-3.625% FHA/VA – 3.5% to 3.625%; 15 YEAR FIXED – 2.75-3.25%, Call me and let’s talk about the 100% Physician Loan. But if you are thinking about buying a home or refinancing one that you already own, don’t be afraid of change. Look around because you might be able to find an even better deal than you thought possible just because you looked at more than just your one original plan. I had a borrower come in to refinance her current mortgage on the same program she has always used, but a regulation change made us relook at it from a different angle and she ended up switching to a different program, saving her about $40 to $50 per month and over $4,000 in equity on her house.
Her situation and others kind of reminds me of a story told of Proctor and Gamble back in 1879. Their best-selling product was candles. But Thomas Edison invented the light bulb, creating a trend that made Proctor and Gamble’s candle business start withering toward bankruptcy. But, as chance would have it, Proctor and Gamble had been carefully watching the natural trends. As a result, they came up with a marvelous invention called “floating soap.” In 1879 lots of people did their bathing in the Ohio River and other murky water places where sinking soap was an extreme inconvenience. People really liked soap that didn’t sink. Consequently, Ivory Soap became a best seller in Ohio and eventually across the entire country. When YOU see times and methods change, look for the opportunities to make things better. Call me and let’s find the best mortgage scenario for what you are planning to do on a home purchase or refinance. Let’s look at the current mortgage regulation and trended credit situation and plan the best way make you look your best. You can call me after this show at (901) 482-0354 (901) 482-0354 or email me at Jo@JoGarner.com But you have to talk with me personally so I can work with you personally. You can also connect with me at www.JoGarner.com. MAKE YOUR PLAN, LET’S WORK YOUR PLAN. IF THE DEAL WORKS FOR YOU TODAY, DO IT TODAY!
<Tom makes short comments here—the appraisal trends he is seeing in the Memphis market >
(Jo) Today we’re talking about trends. The big news in conventional mortgage financing through Fannie Mae, one of the biggest purchasers of mortgage debt, is their regulation change to using a trended credit report instead of the “one-moment-in-time-snap-shot” credit report used for decades by the mortgage lenders. Some people have asked, “What IS trended credit?” The way your credit was evaluated before was like a snapshot—just that moment in time showing your payment history on each account. It showed number of late payments or past due payments and the owed balance ratio to total credit limit on your revolving accounts. Very simple. Trended credit data, on the other hand, shows a clearer picture of just how much you are paying on your revolving balances every month. Are you using the card to earn reward points? Are you paying off the whole entire balance each month or just paying the minimum payment each month? Later in the show, I will share with you how to determine if you are going to look really good on this new model of credit reporting or if you might need to make some changes in the way you use credit lines. So stay tuned for that.
Tom King with Bill King Company, as an experienced and very busy real estate appraiser, what are some of the trends and regulation changes you are seeing from FHA and other loan programs that are affecting the appraisal process? Tom talks about he mortgage firewall and the stricter appraisal guidelines FHA put in place last September and how it affects someone about to do a real estate transaction.
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[2nd segment after 9:15 break: Our Look Back Memphis Trivia Contest is brought to you by notable Memphis historian, Jimmy Ogle. Jimmy Ogle offers free historic walking tours downtown in the spring and fall. For information about Jimmy Ogle, go to www.JimmyOgle.com . The 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 if you have a BIG, BIG project or a smaller project . The Lawhons are giving away a $25 gift card to the question, call us at 901 535 WREC 901 535-9732.]
Garner # 91 10/08/16
TRIVIA ANSWER: Piggly Wiggly
TRIVIA HINTS: Question: My name comes from a train ride in Indiana in the early 1910s. Who am I?
Hint: Although I opened in Memphis in 1916, my company headquarters are now in Keene, New Hampshire.
Hint: My first address was 79 Jefferson Avenue (between Front Street and Main Street).
Hint: My creation change the way a whole industry in America was transformed!
Final Hint: My owner also built a famous building in Memphis that later became a museum.
Answer: Piggly Wiggly. Piggly Wiggly was the first true self-service grocery store. It was founded on September 6, 1916, at 79 Jefferson Avenue in Memphis, Tennessee, by Clarence Saunders. A replica of the original store has been constructed in the Memphis Pink Palace Museum and Planetarium, a mansion that Saunders built as his private residence, which was later sold to the city. At the time of its founding, grocery stores did not allow their customers to gather their own goods. Instead, a customer would give a list of items to a clerk, who would then go through the store himself, gathering them. Like full-service gas stations, this created a greater cost, therefore higher prices. Piggly Wiggly introduced the innovation of allowing customers to go through the store, gathering their own goods. This cut costs, allowing for lower prices. Others were initially experimenting with this format as well, which initially came to be known as a “grocerteria”, reminding people of cafeterias, another relatively new, self-service idea.
Piggly Wiggly Corporation secured the self-service format and issued franchises to hundreds of grocery retailers for the operation of its stores. The concept of the “self-serving store” was patented[6] by Saunders in 1917. Customers at Piggly Wiggly entered the store through a turnstile and walked through four aisles to view the store’s 605 items sold in packages and organized into departments. The customers selected merchandise as they continued through the maze to the cashier. Instantly, packaging and brand recognition became important to companies and consumers. The original Piggly Wiggly Store, Memphis, Tennessee
Piggly Wiggly was the first to: provide checkout stands, price mark every item in the store and provide shopping carts for customers, starting in the year 1937 in Oklahoma.
Jimmy Ogle gives free outdoor walking tours on the sidewalks and parks in Downtown Memphis during the Spring and Autumn of each year, with the next being the Judge D’Army Bailey County Courthouse Tour (indoors): one Thursday each month at 12:00 noon – the next being Thursday, October 20. The first Overton Square Walking Tour is 4:30 p.m. on Sunday, October 23 at the Tower Courtyard Stage. Go to jimmyogle.com for more information.
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QUESTIONS ANSWERED BY TOM KING:
1. Talk about the mortgage/appraiser firewall
2. What are some of the 9-2015 FHA changes that are affecting the FHA real estate appraisals and the costs of those appraisals?
3. What kind of value trends are you seeing Memphis and the Mid-South?
4. What are some of the comparable sales you would NOT use in determining value on a home for a mortgage company?
5. What kind of needed repairs do you recommend be repaired before closing on a house and what are examples of some repair or spruce up items that would normally NOT be required to be completed before closing?
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QUESTIONS ANSWERED BY JO GARNER:
1. What is trended credit? (covered in first part of the show)
2. Why is trended credit suddenly top news if you’re trying to get a preapproved for a mortgage?
A. Fannie Mae, one of the largest buyers of mortgage loans in the nation, just released their updated underwriting software which incorporates a more detailed review of the borrower’s credit when evaluating risk factors on the borrower to determine if the borrower is an acceptable risk or not. The use of trended credit is like watching a moving film of how the borrower uses revolving credit like his credit card use. Before lenders just looked at a “moment-in-time” snapshot of the borrower’s balances owed ratio to total credit limits, payment history and the name and type of creditors owed and the number of accounts. But now, on conventional loans, Fannie Mae is looking at the habits of the borrower. For instance, does he pay off all of his credit card balances each month or does he just make minimum payments? It goes into even more detail to better determine if the borrower is a good credit risk or not.
1. How much impact with trended credit have on the conventional home buying and refinancing for borrowers? Trended Credit is so new, there isn’t a lot of statistics built up to see how it affects the borrower vs the old way of evaluating credit. Trended credit is only set up to look in detail at the habits of how the borrower uses his revolving accounts, like credit cards over the last 24 month history. Fannie Mae modeling and prediction experts are saying it may only make little as a 1% difference in the loan approval vs the loan not being approved. Good Credit scores(like 700 to 800) are still weighted heavily on the loan approval decision. Another really big factor is the amount of down payment or how much money you can show available in case of emergencies–.and coming in last on the priority list below credit and money is having an acceptable gross income-to-debt ratio (usually minimum required payments on credit cards, car loans, personal loans, payroll deducted loans, student loans added with the proposed house note with taxes and insurance and any association fees or mortgage insurance added divided by your gross income equals the income-to-debt ratio. )
2. What are the 6 different types of borrowers that trended credit reveals? There tends to be at least 6 types revolving credit borrowers. The trended credit information reveals who’s who. So, the question is who are YOU?
Transactor— Pays off the entire balance on her credit card each month.
Revolver — Only makes the minimum payment on his credit card balances and builds up bigger balances owed over time.
Rate surfer — It’s all about the rate with these guys. They transfer balances from one account to another like a hot potato, seeking a better rate, making the minimum or no payments toward the balances.
Consolidator — These borrowers like to transfer multiple credit card balances to one credit card or gets a consolidation loan
Non-activator — This borrower really doesn’t borrow much. He opens credit cards, yet rarely ever uses them
Seasonal user — This borrower only uses her credit cards during certain seasons like vacation season and Christmas for instance.
3. How do you make yourself look your best for the mortgage underwriter on the trended credit model?
To look your best you probably want to keep your owed balances under 30% of your total credit limit in order to keep your credit scores as high as possible and pay your bills on time. Stay away from making only the minimum payments on your revolving accounts each month. According to the information coming out from Fannie Mae, you want to make MORE than the minimum, even consider paying off the whole balance each month and then borrowing throughout the month again.
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REAL ESTATE TIP OF THE WEEK (1 to 1.5 minutes to share a real estate related money-saving or time-saving tip): Jo offers tip about the Special HARP refinance and special streamlines refinances with no required appraisal allow the homeowner to refinance with less expense and no worrying about the appraised value being high enough. Call me personally and lets work your numbers. (901) 482-0354 www.JoGarner.com
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ANNOUNCEMENTS:
Talk Shoppe offers free networking & education to anyone interested in real estate or in business. Talk Shoppe meets every Wednesday 9A-10A CT at the University of Phoenix 65 Germantown Center 1st floor Cordova, TN. This Wednesday, October 12th, 2016 Talk Shoppe presents: “Latest Technology and Tips For Cost-Effective Printing In A 3-D World” with Leah Anne Morse of Cartridge World of Collierville, TN www.cartridgeworld.com/Collierville (901) 853-3230 .
Talk Shoppe events are free thanks to advertisers like Kevin Yee of Save Energy Solutions, www.sesinfo.biz Stops Bad Air From Entering Through Leaky Duct Systems. (901) 492-1649.
And Talk Shoppe supporters like Talk Shoppe’s Chef Eric Meyers of EatatErics Food Truck because it’s tasty. www.eataterics.com
2. A shout out to Tamp and Tap Restaurant at 6070 Poplar Ave Memphis downstairs in the Evolve Bank building. The Matcha Green Tea Latte with Rachel’s special blend with almond milk and honey. You guys make me look FORWARD to tea time! www.tampandtap.com
3. SPECIAL NOTE: REAL ESTATE MORTGAGE SHOPPE RECOMMENDS THAT YOU CONSULT WITH A FINANCIAL, LEGAL OR OTHER CERTIFIED, LICENSED PROFESSIONAL BEFORE ACTING OR INVESTING ONI ANYTHING YOU HEAR OR SEE FROM THE CONTENT ON THIS SHOW OR BLOG POSTS. THE INFORMATION WE SHARE ON REAL ESTATE MORTGAGE SHOPPE IS GENERAL IN NATURE MEANT FOR GENERAL EDUCATIONAL PURPOSES ONLY.
4. FOR THIS PODCAST OF REAL ESTATE MORTGAGE SHOPPE AND MORE, GO TO JOGARNER.COM
5. Real Estate Mortgage Shoppe reminds you that you need to MAKE YOUR PLAN, WORK YOUR PLAN. IF THE DEAL WORKS FOR YOU TODAY, DO IT TODAY.
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QUOTE CORNER: Not sure who said this but it is attributed to Albert Einstein “Life is like riding a bicycle. To keep your balance, you must keep moving.”
Woodrow Wilson- If you want to make enemies, try to change something.”
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REJOINERS: 3 NAME, BUSINESS AND CONTACT INFO
1. PAT GOLDSTEIN, REALTOR CRYE-LEIKE MEMPHIS, TN (THE GOLD STANDARD IN REAL ESTATE ) (901) 606-2000
2. MARX STERBCOW, THE STERBCOW LAW FIRM NEW ORLEANS, LA
3. JANA CARDONA, EXECUTIVE DIRECTOR OF MID-SOUTH BUSINESS NETWORK INTERNATIONAL www.BNIMIDSOUTH.com
Transitional Music: Changes by David Bowie;The Muppets-Miss Piggy “Changes Made;” Pompeii Bastille; “Memphis” by Johnny Rivers for Look Back Memphis Trivia Contest
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ABOUT TOM KING:
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 has 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
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ABOUT JO GARNER-MORTGAGE LOAN OFFICER:
www.JoGarner.com (901) 482 0354 jo@192.232.195.219 twitter @jogarner
Jo describes her job description: “As a mortgage loan officer, my job is to give my client the benefits they want from their financing terms– listening to my client and determine what’s of the most value to THEM– What is their comfort level on a house payment, how much are they comfortable paying down, what type of financing do they need to get the house they want to buy or refinance. Different clients have different priorities in life—some are buying their first home with very little down payment funds. Some are recovering from medical challenges, divorces or preparing to send children to college and some are embarking on a long-term goal of buying properties to build rental income. Whatever their personal priorities are, my job is to put together a mortgage with comfortable terms that will help them achieve their goals.”
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