Denise’s Home Buying Tip #2

The Mortgage process-What NOT to do:

Mortgage rates are at an all time low.  With interest rates in t he low to mid 4%, you’d think buyers would be flooding the market.  Although the real estate market in Tucson does seem to be leveling off, buyers who are in the process of buying a home need to avoid doing anything that could jeopordize the loan approval process.  Gary Keller, in his book, “Shift” makes the following recommendations:

1. Don’t change your employment status

2. Don’t make any major purchases (cars, furniture, home  theater, vacations, etc.)

3. Don’t increase your credit card debt or miss any payments.

4. Don’t change bank accounts or make undisclosed large deposits.

5.Don’t apply for a credit card, co-sign a loan or make a credit inquiry.

6. Don’t spend money you have set aside for closing –not any, not ever.

7. Don’t delay in providing all paperwork asked for by the mortgage company.

I realize many potential homebuyers are concerned about how the economy can affect their ability to buy a home.  Just remember that homeownership is a long term investment in your future, and one of the most important ones you can make. There is a “Buyer Strength” phenomenon occurring right now which is driven by historically low interest rates and a large inventory of affordably priced homes on the market.

These days, many families who aspire to become homeowners are taking a “wait-and-see” approach, trying to buy at the “bottom” of the market. The problem with trying to time the market is that you can’t time the market. Again, conditions in our Tucson Real Estate Market, Luxury or otherwise, today are very favorable for home buyers; housing affordability has improved, and mortgage rates are, again, near historic lows.

It’s time for Tucson Homebuyers to get off the fence and take advantage of the fantastic real estate opportunities available today.

Denise McCreary

First Magnus and RESPA: If it looks like a duck and acts like a duck…

The Department of Housing and Urban Delvelopment reported on July 14 that now bankrupt First Magnus violated the Real Estate Settlement Procedures Act by providing incentives to lenders for making certain FHA insured loans.  HUD reports that First Magnus paid $58,571 in incentives from 2003 to 2006 to seven brokers for 169 FHA insured loans totaling 24 million.  The report recommended that HUD pursue administrative actions against the owners and management of First Magnus, in addition to other sanctions. 

The law, known as RESPA, is designed to protect consumers from paying undisclosed costs in real estate transactions.  Under RESPA, it is  illegal for a mortgage lender to give or accept any fee, kickback, or anything of value, to anyone–real estate agents, mortgage brokers, escrow companies–involved in a real estate settlement.  This can be very serious; HUD has the right to pursue fines, cease and desist order, and there can even be criminal charges levied. 

First Magnus, a mortgage company with a national presence, suddenly collapsed last August, and left 5,500 employees without paychecks and numerous other creditors unpaid.  Inspite of this,  former First Magnus chief operating officer Karl F.W. Young is reopening another mortgage company, StoneWater Mortgage, at the same location on Wilmot Road previously occupied by First Magnus.  He stated that “First Magnus did not believe the program to be a violation of RESPA.”  Interesting…

At the time of the First Magnus collapse, I can recall feeling sorry for the company’s demise.  Then the stories began circulating in the real estate community about the employees being stiffed by the owners.  It sounded too similar to reports of other big corporations such as Enron going belly up and leaving their own people holding the bag.  Now we learn that these deadbeats are opening up under a different name.  I would hope that Mr. Young will make good with the past before he creates another mess for our community.  Unless this happens, I won’t be sending any of my clients his way.

Denise