Credit Unions are Hassle Incorporated

The US Government has not made life easier on anyone with their meddling in laws governing the creation of mortgages for people buying homes.  The upshot of the laws has been that - as seems to be the case everywhere - mortgage people have to do more, be responsible for more, and be personally liable for more.

Processing of mortgages at credit unions is particularly adversely affected by these laws.  The reason is that credit union loan officers do not work on commission! 

You might think this is a good idea.  You might think "Why should I pay $3000 for a loan at a mortgage bank, when I can pay $650 for a loan at a credit union?"  That's a fair question, let's answer it!

First, consider that over the course of a 30 year loan, the $3000 you pay for a mortgage professional to do your loan is $8.33/month.  The $650 you pay a paper shuffler is $1.80/month.

When you hire someone to work for you, do you check their resume, or check their online ratings, or at least do a comparison of the prices they charge?  Lots of people do all three.  Many people take into consideration the type of job they want done, and find the services that they think will produce the desired outcome for the minimum amount of money.

So to begin with, when you hire someone to do your loan for you, you need to think about what type of person you are hiring to help you with the biggest purchase you are ever likely to make.  The results of this decision will bind you for the next 30 years.  So you should take into account the reputation of the company and the individual that you will entrust with all of your financial information.

Do you really want a $2.70/hour paper shuffler to do your mortgage?  That's what a $650 loan origination fee buys you!  $650 divided by 30 days divided by 8 hours/day.  And you can't call them on the evenings, weekends, or holidays. Files just sit there if they are on vacation, because there is no one else to handle them.  These people can make the same amount flipping burgers with a lot less hassle.  They do not have reviews that are available to the public.  There is a chance that your loan officer was just moved to mortgages from the auto financing department.

Would you rather have a $12.50/hour professional handle your loan?  That is $3000 divided by 30 days divided by 8 hours/day.   With a professional, you will have 24 hour a day access on weekends and holidays.  They have a team of professionals working with them to take up the slack if they are sick or take a vacation.  These people are driven to make your life run as smooth as possible, because your comments on their review will be available on the internet.  Mortgage processing is all these people do.  There is a good chance that mortgage processing is all they have ever done, and they know it backwards and forwards.

If you are one of those people who always take the cheapest way, and don't mind the hassle, lack of communication and lack of concern for your situation, then a credit union mortgage might be for you.

If you want professional care, and appreciate smooth processing and the anticipation of any problems so they can be fixed now instead of being a crisis later, you might want to consider this type of professional for your mortgage.


#RealEstate #Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman

HOAs Are Pretty Nice Now

Not so long ago, Home Owner Associations (HOAs) prevented people from flying the flag, putting solar electric on the roof, parking in the driveway, and a whole host of other rules.   From the beginning, HOAs were a good concept, but seemed to be modeled after some high-rise apartment in New York, not the personal freedom concept that people embrace in Arizona.

HOAs are no longer allowed to fine you for leaving your trash can out too long, or for debris that accumulates as you are trimming trees and shrubs.  The only thing that they can now fine you for, is not paying your HOA dues.

Most HOA dues in the Phoenix for single family subdivisions are between $45 and $65 per month.  The amount of the dues depends on how much the HOA has to maintain, how many households there are in the HOA, and whoever the HOA board decides to hire.

When I bough the house that I am currently living in, HOAs were a new concept.  They regulated just about everything from the number of trees that you must have in your front yard to what colors you could paint your house, and whether you could park on the street over night.  For the most part, the rules didn't bother me, and I would get an occasional nasty-gram telling me about the construction debris left in my yard (I used a brick to prop open a gate, and forgot to put the brick behind the gate when I was done) or that I left a trash can out too long.  No big deal.

Now HOAs are "paper tigers" since the Arizona legislature has taken all their teeth by not allowing them to fine you for anything except not paying dues.

Meanwhile, I live in a community with large park areas where children play ball, nice shaded walking paths, and a nice community where the condition of your home is regulated by the peer pressure from the neighbors, just like in the old days.

I like it!


#RealEstate #Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman

Phoenix Market Growing Stonger!

How can I say that the Phoenix market is getting stronger?  After all, Sales are down this year from last, Mortgage rates are creeping up and Obtaining a mortgage is difficult.  The graph above is what gives me hope.

Please note that Q2 in of each of the past 4 years has had the greatest number of sales annually.  Look at how the dark blue bars - representing "Normal" sales - has increased while the number of Foreclosure Sales (represented by the red bars) is practically down to nothing!  This means that our market is now being "powered" by people selling their homes.  It is no longer dependent upon the banks!

This also explains why values are going up, even though total sales are down.

Next is what amounts to a political "sound bite".  It is true information, but taken without a complete understanding of the encompassing environment, it doesn't tell the whole story.

From the Cromford Report - Friday June 20 - The annual sales rate is an interesting measure because using a full year eliminates the seasonal effects and allows us to detect whether demand is growing or declining. For the major types of homes on ARMLS we see the following changes in the annual sales rate comparing Greater Phoenix for June 20, 2014 with June 20, 2013.

• single family detached - down 13% from 73,512 to 64,147
• townhouse - down 8% from 5,789 to 5,312
• apartment style - down 9% from 4,119 to 3,742
• patio home - down 11% from 1,331 to 1,191
• gemini / twin - flat at 608 both years
• mobile home - up 6% from 1,614 to 1,717

We see that attached homes have fallen less than detached homes and that mobile homes are in higher demand than last year.


#RealEstate #Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman

Summer Market Outlook - Market Improving!

At the beginning of the year, people were wringing their hands with the sudden influx of homes onto the market, and an apparent lack of buyers.  Fears were that there would be another sudden downturn in the market because of overstock, and that the "buyer's market" would force prices lower as sellers were forced to compete with each other.  Given the information that we had at the time, and after having survived since 2004, it was not an unreasonable prediction.

Luckily (at least so far) those predictions have not come true, and we are getting ever closer to a "Normal Market"!

Here is a quick run-down:

• Home values are still appreciating between 5% and 15% both month-over-month and annually.  The 20% appreciation we saw in 2012 and 2013 is mediating - not crashing.
• The number of foreclosures is down to 2001 levels.  Adjusted for the population increase since then, this actually represents a number 21% below 2001 levels
• The monthly supply of homes is near 3 months from nearly 5 months earlier this year
• The number of sales is currently around 5000 fewer that 2012, and about 2500 fewer than last year.  Not surprising given that you can't buy a house you can live in for pocket change any more.
• Median sales prices are hovering around the $175,000 range.  They were a bit higher at the end of 2013 - inching over $180,000 a couple times, but all-in-all have been stable for the past 9 months.

We shall see what the rest of the summer brings - remembering that summer is a typically slack time in the sales cycle.  If housing values remain in their current range, and we have the continual flow of properties onto the market as in the past couple months, we will hopefully have an even finish to the market this year.

Solar Energy - Not So Sunny - Final Edition

Final part in this series - I wanted to make sure I got it right.

In parts 1 - 4 earlier in this blog, I have revealed pitfalls of owning Solar Electric.  Here is the last one, and maybe the most important one.

First, if you think you really need to have solar, make sure you plan for the future load that it will have to carry, and not the current load.  Remember the people with the teen aged children?

Next, if you think you really need to have solar, check to see what the requirements are to transfer it to another person.  Chances are good you will sell your house in the next 20 years.

Finally - and this is the topic of the new post - if you are leasing a system, make sure you put as little money down as possible.  Why?  Because a leased solar system is like any other leased system in your home.  It adds absolutely no value to the home!

That's right!  You are told that you "invest" in a solar lease, but you get no return!  Solar Companies, and even your friends and neighbors will use the term "invest" with reference to leasing a solar system.  Do you "invest" in a car lease?  An investment has a positive cash flow return - Solar Leases Do Not.  With a solar lease, you spend less money, but you get no return.

Leasing a solar system and pointing to the savings is the same as leasing a hybrid car and pointing to the gas mileage - you spend $30,000 saving 2 cents a mile.


#RealEstate #Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman

Buyer Disclosures - What they don't tell you!

It just isn't right that Buyers don't have to disclose to Sellers items that can materially affect a sales transaction, just like Seller must make disclosures to Buyers.

Sellers deserve some security other than just the Earnest Money deposit and the promise of someone to buy their house.  Sellers put way too much on the line when they agree to sell, and relinquish nearly all control of the transaction to the lender and the buyer.  The Seller has a huge stake in the transaction, especially if they are relying on the proceeds of a transaction to own another home.

Buyers should have to disclose things like:

1. Whether or not they are in the middle of a divorce or annulment
2. Whether their job takes them out of town on a regular basis
3. Whether they have owned a home in the past
4. What their motivation is for buying the home they have made an offer on
5. If they are asking for concessions, how much do they really have in reserve
6. Do they or their spouse or children have any medical problems that can drain the reserve
7. How long they have been looking for a home
8. How long they have been with the current Realtor looking for a home
9. What their current job status is - how long have they been there, who do they work for, what do they do, can they get the time off to sign papers
10. Do they have a decent automobile
11. Do you have the entire set of documents necessary for your lender to complete your loan

These might sound dumb, but I am going to start including them as a document for the buyer to provide answers for in all of my listings.

I am getting mighty tired of hearing bunk from a lender that "everything is fine" in a transaction until the lender is finally forced to admit that they cannot fund the loan!  Or, "we can't find the (almost) ex-wife/husband to sign a quit claim deed".

Sellers have rights too!

#RealEstate #Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman

Get the Government out of Lending!

#Government is at it again this year with bizarre regulations about hard-and-fast debt-to-income ratios, and with its legacy regulations about money laundering!!

I have a client who recently decided that instead of using the proceeds from the sale of a house for a down payment on a new house, he was going to use about $20,000 gifted from a member of his family for a portion of the down payment along with his own money.  You wouldn't believe the documentation required to use family funds because of the fear of money laundering!

Here is an excerpt from the letter from the lender on what he had to provide, just because he decided to get his down payment from a family member:

1.     Your signature on the attached letter explaining that your existing home is not yet sold

2.     The attached gift letter needs to be filled in and signed by you and your family member

a.     if the account their money is coming from is a joint account all family members need to sign the gift letter

b.    The line where it is asking the source of the gift funds means the account name and bank – for example:  Wells Fargo, Checking Acct #123456

3.     I am assuming the funds are being wired into your bank account – from this account we will need:

a.   Last Month's statement – all pages please

b.    An account history from the ending date of the last statement to current – we need to see the funds from your parents are now in your account

4.     From your family member we need a 30 day account history showing the gift funds coming out of their account

a.     The account history printout must show their name on it and the account number

b.    If the account history does not include name and account number please include a copy of the most recent statement (all pages) and we can connect the statement to the history.

So this make the lender a jerk - all lenders are jerks, right?   Wrong - this is all required because of government regulations!  The government is afraid of money laundering!

So let's see...  If I were a drug lord, and tried to launder $20,000 at a time through paying a portion of a down payment on a house, I would have to buy 50 houses to launder 1 million dollars.  Then, I couldn't get the money back out until the houses were sold, so then I would have to sell 50 houses to get the money back.  So if the $500 billion dollar drug trade were to use this scheme to launder money, then the drug trade would be buying 25 million homes a year!  How absurd is that?

#RealEstate #Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman