Utah Real Estate Survival Guide

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Archive for the tag “Buyers”

KeyBank’s Key Community Mortgage

Update on KeyBank’s 100% Financing Program:

In my last post about this topic, I referred to this as a “new” program. After meeting with Kristin Shields and Will Mullin, KeyBank Mortgage Advisor and Relationship Manager respectively, I know now that Key has had this program in place for +/- four years.

Disclaimer: The information that I am sharing here is NOT to promote KeyBank. As a professional REALTOR®, representing both buyers and sellers, it is my responsiblity to have a broad knowledge of available financing to achieve my client’s home ownership (or home sale) goals. Lender guidelines vary, the most significant of which is FICO score minimums. I have experienced some lender FICO requirements as high as 720. KeyBank’s 620 benchmark is extremely borrower friendly.

The 100% program is actually called the “Key Community Mortgage“. I entered the meeting a skeptic. I left a believer. And I can’t wait to share this incredible financing opportunity with my clients. No other lender that I am aware of is offering a truly obtainable community mortgage such as this. I was even able to get a glowing recommendation about the program from a title officer who I know and trust, who has successfully closed a Key Community Mortgage.

Meeting Summary

Question: Why is KeyBank offering this program? It seems too good to be true, or too good to last.
Answer: This is Key’s way of meeting federal requirements for community investment.

Question: What does this mean, realistically, in terms of purchase price and interest rate, for the borrower?
Answer: A $500 minimum investment, approximately .25% add on to the interest rate (example: yesterday’s rate was 5.25% = .25% over yesterday’s VA rate), and, based on income guidelines, works ideally on a purchase price up to $180,000.

Question: Are the funds available for this program limited, capped or budgeted?
Answer: NO

Cool Program Details

  • Minimum FICO score is 620. This is also true for their FHA and VA loans.
  • Income limits are based on Borrower’s Income only, not Household Income, which is problematic sometimes with Utah Housing Loans (another 100% option)
  • Income limits do not apply in Target Areas (refer to the program guide, pages 6-9, to determine tract income level of subject property and financing guidelines)
  • No First Time Homebuyer Requirement
  • No Mortgage Insurance, so the .25% rate add is a non-issue
  • Can be used to refinance at 90% CLTV
  • And, the coolest of the cool, is that each Key Community Mortgage is manually underwritten. Aha! A lender that realizes that a person, and their life, cannot simply be reduced to a three digit number and an underwriter guideline.
  • For More Information Contact:
    Kristin Shields, Mortgage Advisor
    Phone: 801-792-2625
    Fax: 216-370-9481
    Email: Kristin_Shields@KeyBank.com

    Tell Her You Read About the Program Here!


    Utilities are Not Required to be on for a VA Appraisal

    VA Appraisals and Utilities Update:

    According to VA Denver, the utilities, furnace, water heater, etc do not need to be on for a VA appraiser to complete the appraisal. Most lenders/underwriters, such as those at Wells Fargo and KeyBank, agree that they only require the property to meet VA guidelines, and do not have additional lending/underwriting layering. The appraiser is only required to note deficiencies if there is an obvious problem ie a red tagged furnace.

    This is great news if you happen to be working with a VA buyer on the purchase of a foreclosed or short sale home, especially during the winter. Most banks and home owners of vacant properties can and will arrange for the utilities to be on for the purpose of a home inspection, for a brief period of time. Coordinating schedules between utility providers, de-winterization, and home inspectors is generally doable, but throwing an appraiser’s schedule in to the mix is generally not.

    FHA appraisal guidelines are not as lenient. All utilities must be on and the furnace, water heater, etc must be demonstrably operational.

    VA Appraiser’s Handbook

    Key Bank Introduces New 100% Loan Product

    I’m looking forward to a luncheon at Key Bank on Thursday, December 16th, as they introduce their new 100% financing loan product. .25% rate add, no mortgage insurance, 620 FICO score with no lates in past 12 months, income cap at $51,000. No first time homebuyer restrictions.

    Hope this provides some of my clients with an option for financing that they wouldn’t otherwise have.

    This is a conventional program that seems to offer a borrower more flexible guidelines to meet than Utah Housing, or even the standard FHA loan. Debt ratio not to exceed 42%. There is a minimum borrower’s investment of $500, which could be in the form of the buyer’s earnest money deposit.

    Follow up to be posted.

    How to Buy in Today’s Buyer’s Market

    Buy like you’ll have to sell tomorrow.
    Avoid buying someone else’s mess.
    Buy with the future in mind.

    1. Buy like you’ll have to sell tomorrow … the formula is pretty straight forward.

    Part One: The cost of selling a home in today’s market is approximately 10.5% of the sales price. 6% real estate commission, .75% title fees, .75% tax proration and 3% seller assistance with the buyer’s closing costs.

    Part Two: The effect of the previous quarter’s appreciation or decline in market value, based on comparable homes in the neighborhood.

    Example: If the market value of similar homes in the neighborhood declined 2% in the previous quarter, you would ideally want to negotiate an ultimate sales price 12.5% under the CMA (comparative market analysis) prepared by your Realtor®. On a home where the CMA = $200,000, goal would be to purchase at $175,000 plus whatever you are asking the seller to pay for YOUR closing costs.

    Note that I did not refer to “list” price. The homes that are selling today are already priced below the median price of comparable homes actively listed.

    2. Avoid buying someone else’s mess … the stains on the carpet are only the tip of the iceberg

    I always tell my clients that what happens at the front door sets the tone for what to expect in the rest of the house. Even the “banks” have figured out that they simply cannot sell foreclosed properties as-is. That’s why the vast majority of Fannie Mae and Freddie Mac/Homesteps owned homes aren’t put back on the market until they have 1) fresh two or three tone paint 2) new floor coverings and 3) new appliances.

    Homebuyer’s Tip: Budget for three times the amount that you think you will need to get a “fixer upper” to the stage that you would be proud to live in. Trust me, you will discover hidden (expensive) defects in a home that has been, on the surface, neglected. There are very, very few “fixer uppers” that need only “cosmetic” repairs.

    3. Buy with the future in mind … never say never

    Yes, you will move again. Or, at least, prudence would dictate that you plan for the day that you may want to or need to. Here is a checklist of features and amenities that cannot be “repaired”, but matter for resale:

    ~ location, location, location
    ~ situs = view, exposure, street type, lot size
    ~ schools (even if you don’t have kids)
    ~ master bath – double sinks, private water closet
    ~ bedroom level laundry
    ~ square footage (size matters)


    FHA/VA Rates Jump Today

    For over a month, FHA and VA 30-year fixed mortgage rates have steadfastly held at 4%. Today, those rates jumped to 4.25%, most likely as fall out over the Fed’s $600 Billion Monetary Stimulus Plan initiated the day after the mid-term elections on Nov 2nd.

    As a VA buyer who purchased my first home back in the early ’80’s when the “discounted” VA rate was 12%, and getting ready to refinance my current VA loan at at a 3% 5/1 ARM, I believe that a 4.25% 30-year fixed rate is still kinda sorta really good 🙂

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