UPDATE: April 2009 - Easy come, easy go - According to Justin McHood, Mortgages for Canadian Citizens: G-O-N-E!

We now have financing available for Canadian citizens who want to buy a second home in Arizona. I haven’t been to Canada recently, but someone told me that it can get awfully cold up there during certain times of the year. What better way to thaw-out than buy an Arizona home like Anthem at Merrill Ranch in Florence where you can pretty-much-wear-shorts-every-day-in-January if you want?

Anthem at Merrill Ranch will bring spectacular amenities and a small-town feel where you can truly live, work, and play.  The Big Splash Water Park, 60 acre community park featuring an outdoor amphitheater and catch and release lake, a bustling 43,000 square-foot community center, and world renowned Poston Butte Golf Club and 18 Hole Championship Golf Course, operated by Troon Golf are just a few of the amenities that will be located virtually in your backyard.

Starting about 6 months ago, lenders were pulling out of financing these loans, but we are starting to see some of them come back now. Not a lot of lenders,mind you — but at least one!

Mortgages For Canadian Citizens: Guidelines

• Must be a second home
• Will loan up to 75% loan-to-value
• International credit report required
• Verification of mortgage on primary residence
• Last 2 pay stubs and 2 years of T4’s required
• 2 months bank statements
• Drivers license and copy of passport
• If self employed, last two years of Canadian tax returns along with a profit/loss statement and balance sheet.

Simply put, this is pretty much a full documentation loan for people with good credit. The interest rate on this 30 year fixed rate loan currently is 6.25% with a 3 year 1% hard prepay penalty. This means that if you refinance or sell the home inside of one year, the lender will charge a 1% fee. The interest rate changes from time to time, but not every day.

Is now the time for an Arizona refinance?

Yes.

And here are just a few reasons why.

Arizona Refinance Reason #1: Interest rates are low and probably won’t move much lower.

Because of the actions taken by the US government over the last few months, interest rates are lower now than they have been in generations. Will they go significantly lower? Probably not. What is happening now is that the lending institutions are using interest rates as a way to control volume. They already have more loans than their operations staff can handle (some lenders are on 45 day turn times right now) and when this happens, they use interest rates as a way to slow down the volume of loans they are getting.

Arizona Refinance Reason #2: Guidelines are tough and probably only going to get tougher.

In the last couple of weeks, we have seen 2 major guideline changes: first, lenders are now requiring a 620 mid score for all FHA loans (Arizona FHA streamline and Arizona VA streamline loan programs included) and second, FHA issued a new rule allowing up to 85% cash out for an FHA refinance, down from 95% previously. In the last 12 months, guidelines have become significantly tougher – and I don’t think we have seen the last of tightening guidelines.

Arizona Refinance Reason #3: The Obama Refinance is now available.

Lenders are now taking applications for the “Obama refinance” – aka “the underwater refinance” plan. This plan is now in place where you can refinance your home even if you owe (slightly) more than it is worth. True, many people in Arizona who want to do an Arizona refinance probably won’t be eligible for this plan because they are 20-50% upside-down, but it will help a few.

Will the environment for refinancing get better in the future?

Maybe, but don’t count on it.

For the last few years, one of the most popular Arizona FHA loan programs was the Arizona FHA 95% cash out loan. This loan program would allow eligible homeowners to get up to 95% of their homes value in cash to be used for pretty much any reason they wanted (pay off bills, home improvements, vacations… you name it).

For any Arizona FHA mortgage loans where the FHA case number is dated April 1, 2009 or later, the maximum cash out allowed has been lowered to 85% of appraised value. Details were released a few days ago in the official FHA Mortgagee Letter 2009-08 (it opens as a Word document).

A few highlights of the new FHA 85% cash out program include:

• It is officially on a “temporary basis” until HUD has a chance to analyze and review it’s portfolio and the housing market. That said, I would expect this to be in place for quite a while.
• The property must have been owned by the borrower for at least 12 months in order to qualify for 85% of the appraised value. If owned less than 12 months, the maximum loan is the lesser of 85% of the appraised value or the sales price.
• A second appraisal is required if the loan amount is higher that $417,000 and the property is in an area of declining values.
• Three and Four unit properties must still pass the self sufficiency test in order to be eligible.
• You must be current on your mortgage – delinquent borrowers are not eligible for the 85% cash out program.

Many people have been expecting this change – so it didn’t really come as a surprise. There is starting to be talk about the FHA insurance fund having financial problems with the amount of money in the insurance fund and the amount of money being paid out in claims (or projected to be paid out) — and this is just one way that FHA is attempting to reduce their exposure to these possible future claims.

Arizona FHA guidelines are getting tougher.

If you are interested in getting an Arizona FHA loan, most lenders are now requiring that you have a minimum of a 620 mid credit score. For many people who are currently in an Arizona FHA loan and are thinking of refinancing by taking advantage of the Arizona FHA streamline program, the mid credit score requirement of 620 will pose a problem.

Up until last week, if you wanted to participate in the FHA streamline program to lower your interest rate without having to completely re-qualify for a new loan, you would be able to do an FHA streamline and as long as you had made your mortgage payment on time for the last 12 months, your credit score didn’t matter.

Now, your credit score matters.

If you are interested in getting an FHA loan, but you have a mid credit score that is lower than 620, it doesn’t mean that you are completely “out” – it just means that you will need to do a little work to get your score higher than 620 before a lender will lend you money.

Fortunately, for people who may be in this boat and have a credit score that needs a little bit of help, we have programs available to help them improve their credit in the shortest possible time.

Arizona VA loan guidelines are getting tougher.

If you are currently have an Arizona VA loan and want to participate in the Arizona VA streamline program (aka the VA IRRL program), lenders are requiring that you have a mid credit score of at least 620. If you are thinking about trying to qualify for an Arizona VA loan, you must also have a mid credit score of at least 620.

The minimum credit score of 620 requirement for all Arizona VA loans is regardless of what the Automated Underwriting System says about the file – in other words, there really isn’t a way around it.

In order to qualify for an Arizona VA loan, you will need to provide the underwriter with a copy of your credit report – or you can also provide only a mortgage report and score only, many lenders will accept this as well.

Will it change in the future?

I think it is safe to say that this requirement will probably change… but I can’t say whether it is going to get tougher or easier to get an Arizona VA loan and how soon it will change.

My guess is that if you are reading this, you are at least considering doing something that involves your mortgage. The purpose of this post is to talk about just a few of the ways that you can use Twitter to shop for a mortgage to make sure that you are working with a solid loan officer and getting a great “deal” on your mortgage. Here is just a few ways that  you can leverage Twitter when shopping for a mortgage: Listen to what is generally being said about mortgages. Use search.twitter.com and search a few “mortgage” keywords. Try searching for words like “mortgage” or “loan officer” and see who is saying what about mortgages. The search.twitter.com feature will show you all kinds of “mortgage related” discussions being had - from short rants about loan officers or short endorsements of loan officers to loan officers talking about clients or loan officers talking about their personal lives to people commenting on “problems with subprime mortgages”. Listen to what a particular loan officer is saying. Once you have searched on the word “mortgage” or a general mortgage related term, you can pretty easily identify who is a consumer talking about a mortgage and who is a loan officer who is talking about mortgage related topics. Loan officers just generally have a way of standing out once you know what to look for. Some loan officers might give out information about specific mortgage quotes they are working on or some loan officers might be commenting on the mortgage bond market  throughout the day - but no matter how they try to hide it… you can spot a “mortgage person” a mile away when you start looking for them and listen to what they talk about. Listen to what people are saying about a particular loan officer. Thinking of working with a loan officer that you “found” on Twitter? You can easily find out what people are saying about him - both good and bad. One of the nice (and scary) things about Twitter is that it allows people to say pretty much anything as long as they do it in 140 characters or less. Is it possible that a loan officer that you are considering after submitting a mortgage quote turns out to be “less-than-the-ideal-type-of-loan-officer-that-you-want-to-work-with” when you see the results of your Twitter search? Of course it is. It is also possible to find out that your original second choice of a loan officer to work with might vault to the top of the list based on what people are talking about or what he is talking about on Twitter. Announce that you are “interested in a mortgage” using Twitter. I haven’t done this, but I wonder what would happen if you actually went in to twitter and said something like “I need help with a mortgage”. Try it! After you have filled out your information for a mortgage quote of course - there is little use just talking about a mortgage randomly unless you can get very specific about your particular situation and there is no better place on the web right here on Zillow. I bet within a relatively short period of time, you have at least one conversation going about “mortgage-related” stuff. In my opinion, using Twitter would be a complementary way to shop for a mortgage along with Zillow’s Mortgage Marketplace. If you first filled out your information on Zillow, you can easily use search.twitter.com to learn more about lenders who may be submitting bids for your loan. Want to double-check the feedback that you see on Zillow about a particular lender or maybe you are just not sure if you believe that a particular loan officer really gives great service and has low rates? See what people are saying about them on Twitter just by searching on their Twitter handle. Not on Twitter yet? Hurry, before everyone else beats you there. This post was originally posted on Zillow’s Mortgages Unzipped - and was reposted here at the request of someone who thought it may be helpful to spread the word about “another productive way to use Twitter!”

Are mortgage rates going to go higher?

Yes.

I just can’t predict exactly when they will be going higher nor can I see exactly how high they will go – but I think it is safe to say that the range that we see mortgage rates at right now (4.5 – 5.5%) is probably near the bottom.

Expect Mortgage Rates To Go Higher

Right now, the US government is the main (and pretty much only) buyer of mortgage backed securities – and they are only buying FHA/VA and “conventional” loans (not any jumbo loans).  If mortgage rates are going to go any lower, it will be because something changes and private banks start buying mortgage backed securities and they have the staff to handle the volume if rates drop.

But I don’t really see anything potentially happening where banks will all of the sudden want to step in and start buying mortgage backed securities any time soon – and in the off-chance that it happens, currently mortgage lenders are not staffed for a large increase in loan volume (turn times at one lender we use are currently 45 days!).

The quick translation of this means that you can reasonably expect more of the same when it comes to interest rates… until… inflation starts to kick in.

And with the massive amount of money that the US Government has printed already over the last 12 months and with only more to come – it doesn’t take a PhD in economics to know that the value of the dollar is going to go down and inflation will pick up.

When will inflation start to show? I don’t know when – but I can probably safely say that it will at some point in the not too distant future. So if you are thinking about buying a home – now is a great time. Interest rates are low and prices are low. True, either one (or both) of these factors could go lower – but the risks of higher interest rates in the future seem to far outweigh the possibility that either prices or interest rates could go lower.

Arizona Mortgage Rates For March 24 2009

Yesterday, the Fed announced that they would buy up to $1.2 Trillion worth of mortgage backed securities and long term treasuries – which should result in lower rates in the short term. I also expect it to result in higher rates in the longer term (possibly much higher) as inflation kicks in – although the smartest guys in the room don’t seem to think that inflation poses that big of a threat:

“In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued…” the Fed said in a release.

“Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.”

Well, I am glad that I am not the one faced with task of solving these problems, but from everything I can tell – here is what it all means in plain English:

In the short term, mortgage rates will go lower.

After the “short term” low-rate period?

Look-out.

Phoenix Arizona Mortgage Rates March 19 2009