Da ADR BLOG

Save Thousands in Home Energy Costs in 2013, Explained by Andy May, the Mortgage Expert, and Sid Moye of Energy Control Applications, Inc. Go Green, Go ADRMortgage.com

The Triangle is experiencing the front-end of the resurgence in home sales. One of the primary reasons for this change is JUMBO pricing on mortgages. At ADRMortgage.com mortgage expert, Andy May, has access to dozens of lenders that compete for jumbo product. We quoted someone 3.25% on a 30 year fixed VA Jumbo loan today - paying all closing costs  and then some. So, obviously the market is enabling people to buy bigger homes again.

As a result, home prices, sales, and activity in the Triangle are moving north. For example RRAR's Local Market Update indicates the following:

February 2013/2012 -

Listings up 10.3%

Closed  Sales up 9.8%

Median and Average Sales Price - up 4.6% and 2.2%

Dollar residential sales volume - up 12.5%

Days on Market - down 11% (to 119 days)

Most telling are the inventory levels. Consumers that had to sell have already done so. The stats that foreshadow a "sellers" market in the near future are the following two stats:

Inventory of Homes for Sale - Down 13% to 12,804 homes in the entire Triangle and

Months Supply of Inventory - Down 28% to a 6 month supply.

When supply reaches 3 months, it is an indication of a pure sellers market. At 6 months, it's a strong sellers market. And as history has shown, over 9 months represents a Buyers' market.

So, for those fence sitters, get ready for multiple offer properties when the spring home buyer season gets in full swing! And congrats to the Durham Bulls for winning their home opener. GO CANES! Support your local sports teams. Take care all.

Andy May

andymay@adrmortgage.com

Mortgage Expert, Andy May, Explains How to Relocate in Five Easy Steps

Before, during, and after steps to a successful 2013 Relocation - and what to look out for.

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andymay@adrmortgage.com

Relocate to Raleigh in style

Raleigh, NC (PRWEB) March 13, 2013

Tired, working all the time, not appreciated, wanting a change, need to gain more power, more knowledge? In 5 easy steps, mortgage expert, Andy May, shows how to make relocating easier and less stressful.

Step 1 - Buy versus rent. Rent if the job is iffy or another move is in store within 3 years. Buy if a neighborhood, family, security, safety, and stability are important. If buying - call a mortgage broker (http://www.adrmortgage.com) to find out what prequalification steps are necessary (the mortgage process is infinitely more complex now, and banks and credit unions have requirements that are as low as being 18 years old). Brokers are a substantially smarter decision by definition (tested, licensed, etc.). Also, the in-house Realtor/Unlicensed Loan Officer is usually the most expensive and least sound way to go. Prequalification will illustrate payment affordability. New housing developments carry the most re-sale price risk.

Step 2 - Determine a radius around the required work location (5 miles, 10 miles, etc.). Drive the distance during rush hour. Working from home? Airport needs? It's always a matter of location. Remember Single Family homes hold their value more than condos and townhomes.

Step 3 - Determine the best schools. Private versus public? Here is where the Realtor comes in. After you've been prequalified (don't pay to have this done - big banks sometimes charge for this), contact a Realtor. Realtors know the area schools and can provide data regarding graduation rates, scores, etc. Lynn Furr with Coldwell Banker is an excellent Raleigh, North Carolina Realtor. ADRMortgage.com provides a free school data set under the schools section.

Step 4 - Once the home is purchased, furniture and household items are acquired. ADRMortgage.com has discounts to Home Depot, Furnitureland South, and other great companies. The process can take as little as 21 days, but for the majority of people it's more like 30-45 days to move.

Step 5 - Stay in touch with a Realtor for great contacts regarding home repair work. Sid Moye, is an excellent example of how to save on electricity bills. Sid saved me over $12,000 in the last six years. "We install an electricity control and demand system that can pay for itself in several years," Sid Moye owner of Energy Control Apps.

That's it. Welcome home!

Get the most value out of a home sale or purchase by working with licensed professionals that have significant experience. You’ll be thankful you did. You can find additional information from Andy May, mortgage expert, at Andy May's blog. ADRMortgage.com was founded by Andy May in 2005. For additional information please go to http://www.adrmortgage.com or contact Andy May directly. License number 103418.

Andy May and ADRMortgage.com introduce streamlined purchase process for 2013

Some of the bigger banks can take up to 5 months to close. ADRMortgage.com introduces new streamlined purchase process.

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andymay@adrmortgage.com

Speed to closing is what our client demands. With an all-electronic signature platform adrmortgage.com has knocked the ball out of the park on speed.

Raleigh, NC (PRWEB) March 06, 2013

The current mortgage process is broken. 18 year olds helping consumers navigate the enormous changes that have occured over the last year is not a good strategy (that is currently one of the few requirements to be a loan officer at a bank or credit union). Hire a mortgage expert when purchasing a home and reduce risk.

ADRMortgage.com has created a unique proprietary system to streamline purchases for consumers of all types (FHA, VA, USDA, GSE, first time homebuyers, move up buyers, etc.). While some lenders assign an 18 year old to assist the consumer, at ADRMortgage.com a licensed fiduciary is assigned immediately to the consumer. ADRMortgage.com then assigns a processor and a client service rep. Three people, with a significantly higher set of standards than an 18 year old.

The ADRMortgage.com process eliminates the myriad number of (bank) people that present client rates and options, almost all of whom are unlicensed loan officers. Clients are usually shuffled from one 18 year old to another at a bank. With ADRMortgage.com the client is pre-approved prior to looking for a home, by a licensed loan officer. Clients receive weekly calls and status report emails and usually close within 30 days (and as little as 21). This is from start to finish. We don't over-promise like a lot of banks. At ADRMortgage.com we count the first point of contact. A few lenders claim that they can close in 45 days, but they don't count the first 2 weeks of contact. ADRMortgage.com licensed professionals search rates on your behalf. Since we are a mortgage broker, we are not beholden to one bank's rates and programs (think about the Option ARM, and the myriad other programs that big banks pushed onto their clients).

So, when thinking about the mortgage process, choose a professional, licensed, fiduciary. Choose ADRMortgage.com. Clients rate ADRMortgage.com with 97% Happiness. Get the most value out of your home purchase by working with licensed professionals that have significant experience. You’ll be thankful you did. You can find additional information from Andy May, mortgage expert, at Andy May's blog. ADRMortgage.com was founded by Andy May in 2005. For additional information please go to http://www.adrmortgage.com or contact Andy May directly. License number 103418 and 88010.

Being a first time homebuyer is stressful, there's no two ways about it. All the experts - and so little knowledge. Other articles by Andy May, the mortgage expert, have discussed the fact that 90%+ of "loan officers" only need be 18 years old. A new home buyer should be very leary of poor advice from their bank or credit union 18 year old. Hiring a licensed professional will prohibit the following bank tricks:

1) No Prepayment Penalities (it's illegal for brokers to slide these in, but not banks and credit unions);

2) Charging both Points and YSP (yield spread) - it's illegal for brokers to do both, but banks and credit unions almost always do;

3) Charging more than 3% in fees - brokers rarely if ever charge the high fees that are more common at banks and credit unions;

4) Changing the rate, fee, or terms of the loan shortly before closing is a big no-no.

Pick a licensed professional and be a smarter consumer. The top three strategies for a new home buyer are as follows:

Strategy number one - Maximize your credit scores with a broker

Go to http://www.adrmortgage.com and understand credit scores. A 760 or higher is solid gold. 740 or higher and you'll still receive the best rates, but sometimes rates tick up a little. Below 680 - banishment to FHA and it's attendant higher MIP (mortgage insurance premiums). Call a local broker to get a real credit report. There are over 30 different types of reports, and only 1 type of mortgage credit report (RMCR) - so invest your time getting the real one, and don't be fooled by free credit reports, free is foolhardy;

Strategy number two - Right Size Your Loan

Do not put 20% down unless you are flush with cash. According to Diego Quintero, owner of fsrei.net and a licensed loan officer, "many consumers think that they have to purchase higher-cost bank mortgage insurance product (the type that goes into a captive reinsurance arrangement - and costs about double what a broker charges)." (September 14th, 2012 - http://www.fsrei.net). That large downpayment will only save about .25% in the interest rate for 15 or 10% down payments and about .5% for a 5% down payment. Why bother to be cash poor and risk a missed mortgage payment over $40/month/$100,000 of debt? Consumers need a licensed professional to advise them of the myriad options available to minimize risk. Remember, the mortgage insurance is required to leverage above 80% loan-to-value - but the consumer should find the lowest cost option (ask a mortgage broker).

Strategy number three - Ask a licensed mortgage loan officer for a Realtor referral

Ask a licensed professional loan officer for the name of a Realtor - after getting a prequalification for an ideal loan size (don't go for the highest qualifying loan size).

The last strategy is the most important, because often times the Realtor will push an in-house unlicensed loan officer relationship over the financial health of the consumer. Contact a licensed mortgage broker first, and let them help select a Realtor. That's the best way to go, according to Andy May, owner of ADRMortgage.com and a highly educated and dedicated mortgage professional.

Get the most value out of your home purchase by working with licensed professionals that have significant experience. You’ll be thankful you did. You can find additional information from Andy May, mortgage expert, at Andy May's blog. ADRMortgage.com was founded by Andy May in 2005. For additional information please go to http://www.adrmortgage.com or contact Andy May directly. License number 103418 and 88010.

Licensed Loan Officer requirements at ADRMortgage.com -
1) Pass all state tests (pass rates rival those of the CPA exam, meaning these tests are not made for bank personnel - more would fail then pass);

2) Pass the Federal SAFE Act Test;

3) Fail 3 times and banned from the industry (from being a licensed loan officer, for 12 months);

4) Minimum credit score requirements (after all, the consumer has a minimum score requirement - shouldn't the consumer know they are dealing with a financially fit professional and not a 540 credit score bank employee?);

5) Thousands of dollars in fees to government agencies, and minimum reporting requirements, and a code of ethics;

6) The consumers' FIDUCIARY;

7) 3 years of minimum experience (for ownership) and education requirements;

8) Minimum networth requirements;

9) A perfect complaint record. 0 BBB complaints;

10) Well versed in 30 lender's programs, not just one bank.

Non-Broker (aka: Bank and Credit Union) requirements*

11) 18 years old.

• - some banks may have higher internal requirements, but these are the current requirements as of the writing of this article.

It's important to become acquainted with the requirements of bank and credit union loan officers under the SAFE Act and State Law. 18 years old is quite an achievement and with that requirement little to no Fiduciary role or assurances are provided from your 18 year old. Remember, ADRMortgage.com employs only licensed loan officers and does not employ 18 year olds. Do not be fooled that your 18 year old is registered (numbers only). Ask for a license number.

According to Diego Quintero(1) - "You may find that when you apply with the large institutions, your loan officer may not be licensed. The law does not mandate loan officer licensing for those who work for banks under a federal charter. Use your best judgment on who to trust."

Andy May owns ADRMortgage.com, and he is a licensed mortgage professional with 25 years of mortgage experience. License number 103418; 88010; Master Certified Mortgage Banker, MBA from Duke's Fuqua School of Business; and all around go-guy supporting many different charities and community services. http://www.adrmortgage.com

(1) - Diego Quintero - New Laws Require Licensing for Loan Officers. Published in Technorati - http://technorati.com/business/finance/article/new-laws-require-licensing-for-loan/

ADRMortgage.com Announces 2013 Mortgage Calculator

Changes in home appraisals can cost you tens of thousands of dollars

Appraisals are the life-blood of the mortgage industry, and the first place to start when thinking about refinancing or purchasing a home. Without an appraisal, you can’t get a purchase-mortgage (the Federal Government through Harp 2.0 allows, in certain instances, no appraisal on refinances).

To illustrate how appraisals can save or cost you tens of thousands of dollars, we take you to the Pinehurst NC market. In fact, let’s go bigger than that and take the entire County where Pinehurst resides, Moore County, and evaluate the effect of one appraisal on the housing market.

Really, one appraisal? What effect does one appraisal have on a small market like Moore County (NC)? After-all Moore County has slightly less than 100 sales a month (through September 2012 about 750 homes were sold….). This one example will show you why it is vitally important to keep your wits about you when selling your home….or buying into a smaller market like Moore County (or coastal counties that have even fewer comps). (Warning: This example further illustrates the need for new beginnings in Federal Government housing policy making). Mortgage expert, Andy May, has written extensively on home price forecasting and was awarded the first mortgage related patent.

Ok, so you want to purchase a $300k+ home (but less than $400k). That means there are about 20 homes sold per month in Moore County (less in the low season, more in the summer), down from 100 per year over-all. If your price point is in the $25k range then you’ve got even fewer comps. So the time of year significantly effects your valuation.

In 2009 the federal government basically took full control of the appraisal industry (in 2009 the feds scrubbed the industry and added a new layer of “management”) – eliminating a competitive market place here for appraisers (no appraiser shopping, just a “rotary approach”). The first thing to remember is we now need 3 comps within the last 3 months, with most lenders also requiring a minimum of 2 current listings in order to get a marketable appraisal (no discount in value due to lack of market sales data). Andy May, the mortgage expert, has countless examples of appraisals good and bad.

So, in the example that I will use your buyer decides to find a problem with your home in the inspection process. While the appraisal came in 10% lower than you were expecting now you’ve got a buyer that has an inspector that finds a “water” or “other” problem with the home. This further reduces your value as it becomes a disclosure problem for you. Granted, there isn’t in fact a problem and you spend $5,000 proving it. But now you have to disclose to the next buyer (your findings and the current buyer’s “complaint” or documentation). You decide to bail and sell the home for $250k (you originally listed it at $350k – but dropped to $299k and so on….). You are out of the market and have sold your home for $250k ($100k less than what you were expecting). What about the next 3 months of comparables for future buyers? Yes, your home that you sold on the cheap comes up and represents a major comparable (comp) for your neighbors. Or does it?

The high and low comps are tossed out, so no worries here. We’ll just toss out this low comp and go with the next lowest comp …..unless this happens twice within 3 months (that’s a very distinct possibility). Now, homes start to depreciate rapidly as a result of two bad appraisals. This is what happens in smaller markets. How often? Even once is too much.

The effects from this situation are felt throughout the community. Mathematically, homes in smaller markets will continue to decrease in price due to the 2009 Federal Government housing policy on appraisals. Smaller market home prices are capped from going up – as only a cash buyer can likely pay more than the appraisal or purchase price (which-ever is lower).

In smaller markets where there aren’t enough comparables, chances are that you can’t get a loan in that community. Since the number of homes that have sold is minimal, lenders will not take a dated comparable (a comparable that is over the 3 months, 6 months, over even a year). These communities will continue to fall into decline and values will continue to erode.

So, resale of your property is highly dependent on the number of sales in your community. Be a smart consumer and don’t purchase where monthly sales volume is below 100 a month for your price range ($300-$400k in this scenario). Stay away until the federal government changes this poor housing policy. There will be some great deals, and always will be, until the feds change the appraisal policy. Until then – stay on the sidelines and rent in these smaller communities. You can always purchase when the policy changes. The unintended consequence of this housing policy is to encourage people to live and work in larger cities.

So, how can the consumer benefit from understanding the appraisal process? First, we’ll need to examine the way appraisals used to be done prior to Andrew Cuomo’s backing of the new appraisal process . The prior process used to take 24-96 hours to complete an appraisal (at a $350 cost). Lenders were allowed to communicate with appraisers and appraisers that didn’t meet the expectations of the lender had two ways they could handle the appraisal. The first was to make the number no matter what, and the second was to be professional and do the right thing.

Enter the federal government (2009), with the support of much lobbying by the big banks and special interest groups. Obviously, the federal government needed someone to blame, and the appraisers looked ripe. Forget about the 100% No-Doc Investor loans, the negative amortizing loans, the pick-a-payment option, the interest only loan, or the myriad disaster loan programs that lenders offered. And of course forget about the money trail (banks and the feds through Fannie and Freddie paid million dollar paydays to executives). The feds thought it best to blame asset values rather than fraud or bad loan programs. And thus was created, the new (and seriously flawed) appraisal system; which takes 1 to 3 weeks to complete (at a $425 or so cost).

“System” is an under-statement, but it now works like this: Lenders can-not legally speak with appraisers. The appraiser works for the vendor management company. The vendor management company just acts as a go between for the lender and appraiser. The originator is not allowed to speak with the appraiser, in fact if they do the appraisal becomes null and void and the consumer is responsible for the additional cost for another appraiser. In this regard, the vendor management company takes their fee first and then the appraiser makes a minimum of 25% less than what they did five years ago for twice the work (appraisers actually made more money per appraisal in the 1980s then they do today). Out of business went all the independent appraisers. In came big business, bank holding companies, and a whole new layer of cost. The appraisal in a nutshell is now ordered randomly and the appraiser gets paid no matter what (regardless of service level or skill). In some cases, the appraiser doesn’t even have to complete the appraisal in order to charge the consumer (since the appraisal management company gets paid just for registering the order).

So looking back at the previous few statements – there is another hand in the kitty, the lender wants more work to be provided, and you have a frustrated appraiser making less money. Do you think that the appraiser is going to go the extra mile? Now there are solid appraisers out there that do take their job and license seriously, and if they accept an appraisal assignment, they accept it knowing what they are being paid. Which appraiser will you get?

With no repercussions for a low appraisal, and only legal risk for a high appraisal, many appraisers are simply low-balling appraisals. There are no repercussions for a low appraisal. In fact, the appraisal industry gets more appraisals when low appraisals are submitted (since the refinance consumer may get more appraisals before they get the number they want). Appraisers still get paid. If there is a complaint regarding an appraisal, it has to be based on methodology and not value. As a consumer, how would one know the ins and outs of an appraisal? Even after the appraisal report is received by the consumer, the appraiser cannot discuss the value.

So, with that as the back drop – what does it mean to me (the consumer)? Well, for one thing, you’ll want to make sure the appraiser doesn’t have a lot of complaints ….although there is no complaint system in place to check. You have to vet that appraiser when you speak with them over the phone. Are they fully licensed? How long have they been appraising? How long as a fully licensed appraiser? It can take up to five years to gain your appraisal license, serving as an apprentice until fully licensed. This is another reason to have a fiduciary (licensed loan officer) by your side. Banks and credit unions are not required to hire licensed loan officers (although many get registered, meaning they supply their name to the registration system). Still, 18 (years old) is the required minimum to sell mortgage loans at a bank or credit union. Who will you choose as your mortgage expert?

Get the most value out of your home sale or purchase by working with licensed professionals that have significant experience. You’ll be thankful you worked with a licensed professional.

October 2012

Raleigh Real Estate picking up

As many of you know, we are conservative in our fiscal views on housing. However, after seeing all the market trends we’re starting to feel better about the housing market. After three years of neglect, the federal government has introduced many new programs targeted at the fiscally troubled.

These programs often times don’t require an appraisal; don’t require the same income; and require no assets. While this is the same way we got into this mess, no-doc loans, it appears to be stabilizing the market for those most likely to default.

If you have good assets, a low Loan-to-Value, and great credit and income you’ll be subjected to the refinance requirements that are historically the toughest in a long time.

The one interesting aspect of qualifying for these “election year” refinance loans is that you must have had your loan sold to Freddie/Fannie prior to June 2009. Someone really has no idea how to fix the economy when they put that requirement in there. But that’s what you get when the federal government is the only lender for below $417,000 loan sizes.

If you are thinking about upgrading your home location or size, here’s some interesting data for you to consider:

August 2012 Year to Date Data in Wake County:

1) Home prices up 2.5% (Median)

2) Unit sales up 22% (8800 sales)

3) Percent of original list price received 94.6%

4) Days on market dropped 7 days to 114 days on market

5) Months of inventory is down 43% to 5 months of housing inventory on market

Case Schiller Weis Indices (Top 20 markets in the USA):

The top 20 markets in the US are priced where we were in August of 2003. So, while home prices are improving, we’re still far away from the peak of June 2006. That’s when home prices in the top 20 markets peaked. In general, home prices continue to decline across the US, as a result of poor policy, and a 100% control of the mortgage market from the federal government for below $417k loans.