Nevada, Florida, California post top state foreclosure rates
Despite an 18 percent decrease in foreclosure activity from the previous month, Nevada continued to post the nation’s highest state foreclosure rate in April, with one in every 68 housing units receiving a foreclosure filing — more than five times the national average. The decrease in Nevada was driven largely by a 44 percent drop in bank repossessions from the previous month, although default notices also decreased from the previous month. Total foreclosure activity in Nevada was up 111 percent from April 2008.

A 37 percent month-over-month increase in foreclosure activity boosted Florida’s foreclosure rate to second highest among the states in April. One in every 135 Florida housing units received a foreclosure filing during the month, more than 2.7 times the national average. The monthly increase in Florida was driven by a spike in default notices and auction notices, but bank repossessions were down 7 percent from the previous month. Total foreclosure activity in Florida was up 75 percent from April 2008.

Foreclosure activity in California decreased 10 percent from the previous month, but the state still posted the nation’s third highest state foreclosure rate in April, with one in every 138 housing units receiving a foreclosure filing during the month. Total foreclosure activity in California was up 42 percent from April 2008.

Arizona posted the fourth highest state foreclosure rate, with one in every 164 housing units receiving a foreclosure filing in April, and Idaho posted the fifth highest state foreclosure rate, with one in every 255 housing units receiving a foreclosure filing in April.

Other states with foreclosure rates ranking among the nation’s 10 highest were Utah, Georgia, Illinois, Colorado and Ohio — although the foreclosure rates in Illinois, Colorado and Ohio were below the national average.

Top 10 states account for more than 75 percent of total U.S. foreclosure activity
The 10 states with the most properties with foreclosure filings in April accounted for more than 75 percent of the national total. California documented the highest total (96,560), followed by Florida (64,588), Nevada (16,266) and Arizona (16,245).

Foreclosure filings were reported on 13,647 Illinois properties in April, the nation’s fifth highest state total. Illinois foreclosure activity decreased 11 percent from the previous month but was still up 54 percent from April 2008. With one in every 384 housing units receiving a foreclosure filing, the state’s foreclosure rate ranked eighth highest in the country but was still below the national average.

Other states with totals among the 10 highest in the country were Ohio (12,324), Georgia (11,521), Texas (11,314), Michigan (10,830) and Virginia (6,254).

Las Vegas continues to post top metro foreclosure rate
Foreclosure filings were reported on 14,073 Las Vegas properties in April, a 20 percent decrease from the previous month, but the city continued to post the highest foreclosure rate among metro areas with a population of at least 200,000. One in every 56 Las Vegas housing units received a foreclosure filing during the month — nearly seven times the national average.

The Cape Coral-Fort Myers, Fla., metro area documented the second highest foreclosure rate in April, with one in every 57 housing units receiving a foreclosure filing during the month. Foreclosure activity increased 31 percent from the previous month in Cape-Coral-Fort Myers. Two other Florida metro areas also documented foreclosure rates in the top 10: Miami at No. 9 and Orlando at No. 10

With one in every 65 housing units receiving a foreclosure filing, Merced, Calif., posted the nation’s third highest metro foreclosure rate. Five other California metro areas also documented foreclosure rates in the top 10: Modesto at No. 4, Riverside-San Bernardino at No. 5, Bakersfield at No. 6, Vallejo-Fairfield at No. 7, and Stockton at No. 8.

For the investors, it seems many of them are paying cash – because until recently, there wasn’t very many programs available for investors and Fannie Mae has limited the number of properties that you could own to 4. Well, now two things have changed:

1. There is a new Fannie Mae program called the Fannie Mae HomeStyle loan program that can be used by investors who want to buy homes in need of a little repair work.

Highlights of the Fannie Mae HomeStyle Loan:

The HomeStyle Renovation mortgage program allows borrowers to combine the cost of the home with the costs for renovation or remodeling.

At closing, all funds for renovation will be escrowed in an interest-bearing account. After all renovation work is complete, any remaining funds in the escrow account will be used to pay down the principal balance of the mortgage.

Fannie Mae HomeStyle Renovation Loan Highlights:

• Up to 95% LTV (see LTV matrix below)
• Renovation funds escrowed in an interest bearing account
• Soft costs (architectural services, engineering, permit fees, etc.) may be financed
• Loans are underwritten to FNMA guidelines

HomeStyle Renovation Loan LTV Requirements:

• Primary Residence – Up to 95% LTV
• Second Home – Up to 90% LTV
• Investment Property – Up to 75% LTV

HomeStyle Renovation Mortgage: More Information

Borrowers can basically do any repairs / renovation to the home that they want as long as the appraisal supports the value, the improvements are common for the area (pools, for example), the repairs can be completed within six months, and the repairs do not exceed 50% of the after improved appraised value.

Here’s a link to check counties http://eligibility.sc.egov.usd.gov .

Check with your lender and see if they offer this program-most of them do but never seem to mention it!

Buyer Qualifications Highlights

• No Down Payment
• 30 year fixed rate
• 102% LTV (100% plus 2% guarantee fee)
• Finance Closing Costs If Appraisal Is Higher Than Sales Contract
• No Mortgage Insurance
• No cash contribution required from borrower.
• Income Limits (by county)
• Unrestricted gifts, no need to document source.
• No Maximum Loan Amount
• No Cash Reserve Requirements

Property Qualification Highlights

 Existing Home
 New Construction
 New Manufactured Homes
 Modular Homes
 Condos & Town homes (Must be approved projects)

Prohibited Loan Purposes

• Co-signors not residing in the household
• In-ground swimming pools
• Construction draws
• Furniture and personal property
• Income producing property
• Non-essential buildings and land
• Previously occupied manufactured homes

Let me know if this was helpful information.

Types of Properties

• Primary Residence – Single family, 2-4 units (must occupy one unit) town homes, condos, manufactured homes, mobile homes and houseboats.
• New Construction – “Purchase Date” is the date the owner occupies the home (between Jan 1 and Nov. 30, 2009) Note: They could have owned land and are in the process of building.

Income Limits

• $75,000 Single Person (Partial Credit up to $95,000)
• $150,000 Married Couple (Partial Credit up to $170,000)
• Based on Adjusted Gross Income (AGI) line on IRS Form 1040, 1040A or 1040EZ

Amount of Credit

• 10% of Sales price
• Up to Maximum of $8000
• Partial Tax Credit if income exceeds $75,000 or $150,000

Repayment Tax Credit

• If sold within 3 years, the entire tax credit needs to be repaid! After 3 years, no repayment is due.

Buyers should check with a tax advisor on how it will affect their individual tax returns

Here’s a great program to help save home buyers in Today’s Real Estate Market…

An Energy Efficient Mortgage (EEM) is a mortgage that credits a home’s energy efficiency in the mortgage itself. EEMs give borrowers the opportunity to finance cost-effective, energy-saving measures as part of a single mortgage and stretch debt-to-income qualifying ratios on loans thereby allowing borrowers to qualify for a larger loan amount and a better, more energy-efficient home.

To get an EEM a borrower typically has to have a home energy rater conduct a home energy rating before financing is approved. This rating verifies for the lender that the home is energy-efficient.

EEMs are typically used to purchase a new home that is already energy efficient such as an ENERGY STAR qualified home. The term EEM is commonly used to refer to all types of energy mortgages including Energy Improvement Mortgages (EIMs), which are used to purchase existing homes that will have energy efficiency improvements made to them. EIMs allow borrowers to include the cost of energy-efficiency improvements to an existing home in the mortgage without increasing the down payment. EIMs allow the borrower to use the money saved in utility bills to finance energy improvements. Both EEMs and EIMs typically require a home energy rating to provide the lender with the estimated monthly energy savings and the value of the energy efficiency measures — known as the Energy Savings Value.

EEMs (and EIMs) are sponsored by federally insured mortgage programs (FHA and VA) and the conventional secondary mortgage market (Fannie Mae and Freddie Mac). Lenders can offer conventional EEMs, FHA EEMs, or VA EEMs.

Will Addo

Renovation Specialist

Wells Fargo Home Mortgage

404-375-7819

willis.addo@wellsfargo.com

• Review your existing loan terms and interest rate.
• Determine if your monthly payments are about to increase.
• Explore more attainable options with your current Lender
• Based on what you learn on lesson I decide if the time is right to refinance.

One key concern most people do not realize when Refinancing is the fact that traditionally they will refinance due to cash flow reasons and will not take in consideration their overall equity position and their factual total expenses throughout the life of the loan.

Keep on mind that most of the times when refinancing a loan most likely you are back to square 1 on your 30 year period. Realistically, when refinancing, you might want to look into a mortgage with a shorter term. For example, if you currently have a 30-year fixed rate loan, you might consider refinancing to a 10-, 15-, or 20-year loan which will lower the total amount of interest you will pay over the life of the loan and will let you to pay off your loan faster.

You might also want to switch an adjustable rate mortgage with high or no limits on interest rate increases to a fixed rate mortgage which provides the predictability of knowing exactly what your mortgage payment will be for the life of the loan. However, you have to ponder the fact that your monthly payment might go down but your loan payoff period might increase along with your total interest payments.

Unfortunately, most of the borrowers miss this point due to economic pressures or other reasons, but in the other hand the average period a household stays in their house is approximately 7 years and bottom-line free and clear equity ownership becomes a non issue.

To figure out whether it pays to refinance, you must calculate the total refinancing costs and answer the question that may help you decide: How many months will it take to break-even? You should consider refinancing if you plan to stay in your home for more than the time it takes to break-even.

To calculate your break-even point proceed as follows:

1) Look at your latest mortgage statement how much is your loan amount balance.

2) Add to the balance one month payment (PITI) plus $500.00 and this will become your estimated payoff balance.

3) Look at your loan note for any pre-payment penalty. The greatest deterrent to refinancing could be a prepayment penalty on your present mortgage. The practice of charging money for an early pay-off of the existing mortgage loan varies by type of lender, and type of loan. Laws in many states prohibit or limit mortgage prepayment penalties. The mortgage documents for your existing loan will state if there is a penalty for prepayment.

4) Check your Loan to Value (See lesson I for understanding how to calculate it) and make sure it is not higher than 90%. Otherwise, please be aware that in today’s market your refinancing chances are limited

5) Check the market refinancing interest rates and pick your desired rate (not necessarily assume that you are going to get it, but it would be part of the exercise to determine your refinancing options). A general rule states that if rates drop by two percentage points that was the time to refinance. However, it could pay off to refinance with only a one percent lower rate if you find a good deal on refinancing costs.

6) Calculate using any financial calculator (or my web site) how much would be your savings of the expected new payment using your payoff balance and your desired interest rate compared to your present one. This will become your Refinancing Monthly Savings.

7) Then proceed to calculate your Refinancing Closing Costs by multiplying your payoff balance by 0.895% and adding $2,000.00. Likewise, also remember to add your prepayment penalty (if any) to your refinancing closing costs. This will give you a Market Average Closing Costs for your new loan.

As a final step, divide your Market Average Closing Costs by your Refinancing Monthly Savings to obtain your Number of Months to Break Even.

For instance, if the total refinancing costs are $6,000, and your monthly savings on the new loan are $300, it will take you 6000/300=20 months to break-even. If you don’t plan on staying in the house that long, it won’t pay to refinance.

Refinancing costs: $4,500
Prepayment penalty: $1,500
Total of all fees on your new mortgage: $4,500+1,500=6,000
Monthly savings: $300
It will take you 6,000/300=20 month to break-even.

THREE SPECIAL CONSIDERATIONS:

1) There is NO FREE LUNCH. A no closing costs refinancing stands for a higher rate that will yield a higher profit used to subsidize your closing costs (lenders generally will charge a higher interest rate for this type of loan). When quoting a refinancing with your lender always ask for 2 quotations, one with closing costs and another without closing costs. Then calculate your actual break even point.

2) You can always add your closing costs to your new loan amount and pay nothing at closing. Please do not consider this case as a No Closing Costs refinancing. You are actually paying them by increasing your loan amount.

3) This exercise does not include the impact of pre-paid interest and escrows on your closing costs since traditionally escrows wash out with your existing ones and you still will have to pay interest on your loan depending on when it closes.

Once you have decided to refinance you should shop for a rate similarly you do when getting your first mortgage. Your existing lender may not have the best rates and programs. But bear in mind that the existing lender may waive the appraisal, title-search, and possibly credit report fees and there’s a good chance that you’ll get a better interest rate.

However, remember that a Second Opinion on your mortgage takes just a few minutes! It can pay to compare. Contact us at Wells Fargo for a free, no-obligation second opinion on your Good Faith Estimate. We may be able to provide reductions in interest rate and/or closing costs that even your present lender won’t do.

North American Mortgage Company has loans that do both. And you only have one set of paperwork to fill out. One set of loan approvals. One interest rate, throughout. Pick up the lumber and nails, and let’s start hammering!

203(k). A hard-to-find government loan that’s perfect for new home buyers. Low down payment (as little as three percent), and loan amounts up to 110 percent of the home’s after-improved value!

HomeStyle. Works similar to 203(k), but there are no restrictions to the type of home improvements you can make, such as luxury items. You can finance up to six months of mortgage payments during the renovation. And you can use up to 50 percent of the home’s after-improved value for improvements.

Take Advantage of Our Special NEA Home Financing Program

We offer great home financing benefits to NEA members

When you – or an immediate family member – are planning to purchase or refinance a home, consider the many advantages offered by Wells Fargo Home Mortgage, a leading national lender.

GREAT FEATURES AND AN NEA GET-AWAY

• Options - Gain access to a wide variety of home financing choices
• Selection - Purchase and refinance programs in conventional and jumbo loan amounts, including FHA, new construction and renovation loans, mortgages for investment properties and second homes, and combination 1st and 2nd mortgages to avoid private mortgage insurance
• Affordability - Slash costs with innovative No Money Down programs that offer qualified homebuyers up to 105% financing – so NO down payment
• Tap Into Your Equity - Access cash through your home ownership investment with a Home Equity Loan or Line of Credit¹
• Extra Offer - Celebrate the close of a new purchase mortgage or refinance loan with a complimentary 3-day/2-night “NEA Getaway” vacation² (transportation not included – see details below)