Cheat Sheet Q&A:
The topic: Significant Change to eligibility for a mortgage after a distressed property situation
Bottom Line: Today’s topic was brought to me by the real estate pros I work with, the Treu Group. It’s extremely timely and important information you need to know if you’ve been through a short sale, a foreclosure, or a deed-in-lieu of foreclosure situation.
New rules are being imposed by Fannie Mae and Freddie Mac that will double the length of time you have to wait to be eligible for a conforming mortgage from 2 to 4 years if you’d been through one of the afore mentioned distressed property situations. Conforming loans are those that are under $417,000 in size. This accounts for about 70-80% of all originated mortgage loans.
The new rules will go into effect on August 16th. That means that from today you have exactly one month to start a process if you want one of these loans or you’ll have to wait for two years. Now you don’t have to close by the 16th but the loan application must have been accepted & you must be in process. I’m concerned that this will negatively impact many SFL would be homeowners that are in recovery mode following the fall out from the housing crisis. A lot can happen in another two years. Who knows what will happen with home prices, mortgage rates are almost certain to be higher, perhaps significantly so. I don’t like important decisions like home buying to be rushed decisions but the implications in this case might warrant speeding up your timeline to purchase if this applies to you. It is worth noting that:
- FHA loans shouldn’t be impacted
- VA loans (if an eligible service or former service member)
- Jumbo Loans won’t be impacted
So here’s the irony… If you’re eligible for a more sizeable loan (one over $417,000) you should still be able to obtain that loan because Fannie Mae and Freddie Mac aren’t backing those loans. Simply put – if you’ve been through a distressed property situation within the last four years and want to buy a home with financing within the next couple of years you need to seek a professional to see what exactly your situation is and what this will mean to you specifically.
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Surprise… What the definition of a first time home buyer is:
Bottom Line: Before I leave housing altogether… Here’s one that might be helpful to you if you have been renting in recent years. There are various different loan products, tax credits and other real-estate company related benefits that first time home buyers can take advantage of these days. Naturally you’d think that the definition of a first time home buyer is one who has never purchased a home and is doing so for the first time. That’s not the case though.
The actual definition accepted by the Government and industry is one who hasn’t owned a home for 3 or more years. So don’t overlook the opportunities that might exist for 1st timers.
Words to live by from Derek Jeter:
Bottom Line: So my first love was/is baseball. As a die hard Atlanta Braves fan I’m no fan of the New York Yankees. Like most who love the game of baseball though… I have enormous respect for Derek Jeter. That was before he made a statement in an interview with Fox prior to the All-Star game that was simple and extremely profound:
· “It doesn't take any talent to play hard”
I was watching it with Ashley and she immediately said what I was thinking. That applies to work too. It certainly does. My motto is: “Passion plus talent is Unstoppable”. The implication being that may people are talented in certain areas. Many people are passionate. It’s when the two are aliened that something special occurs. Enter in Jeter’s quote. It’s brilliant.
There will likely always be someone else who’s more talented or gifted than we are at whatever it is that we do in life. That doesn’t mean that they’ll work as hard as you. That might be the difference between being a hall of famer or just getting by. In a time of what appears to be questionable work ethic - Jeter’s words speak as loudly as his actions.
Great progress on jobs for veterans & good news for Florida:
Bottom Line: It’s well known that we’ve had an unfortunate, higher, rate of unemployment for veterans entering the workforce – than for the average American who hasn’t served. Many organizations have taken action to address this issue (our company sponsored program is the Show your Stripes initiative) and thankfully it’s working.
According to data from the Bureau of Labor Statistics over the past year:
- The average unemployment rate has been 7.4%
- The average unemployment rate for all veterans has been 6.6%
- The average unemployment rate for recent vets (post 9-11 vets) is 9%
To put this in perspective at the peak, right after the official end of the Great Recession, the unemployment rate for recent rates reached 28%. There’s still work to do with the recent rate still being higher than the average non-vet but it’s clear that the efforts being made by businesses and concerned Americans. Here another cool angle to this story. In terms of the states with the most opportunity for veterans, Florida ranks fourth in the country right behind Texas, Minnesota and Oklahoma.
You're never too old to start your own business - in fact you're more likely to be successful:
Bottom Line: Perception isn’t always reality. Generally I think most associate entrepreneurship with young people. That’s driven by many of the most successful and innovative companies in the modern era having fit that profile (Apple & Jobs, Microsoft & Gates, Facebook & Zuckerberg, etc.). That’s actually not the case though. According to research from the Kauffman Foundation in conjunction with DukeUniversity have found the following:
- The average age of the American Entrepreneur is 40
- The average age of an entrepreneur of a company with over $1 million in annual revenue is 39
- Those 55 or older are more than twice as likely to have a successful startup (one that last for more than two years) than a startup from a person 35 or younger
It does make sense that older professionals would have more life experience and wisdom to draw from generally. So go ahead and innovate! There isn’t an age limit & age could actually be to your advantage.