AL and FL Mortgage News

In August 2021 we received a call from a couple stationed in Key West looking for a home with plenty of space for their kids to grow and roam.  With the ability to work remotely their vision was an estate type home located near a city on 5+ acres of outdoor space, 4 bedrooms for the kids, a home office, with a pool and near water of some kind.  After a quick preapproval they searched the coastlines and inland Florida and Alabama high and low leaving no possibilities off the table.  From 5 to100 acres of vacant timberland, $1.3 million dollar waterfront homes, fixer uppers of many shapes and sizes, barndominiums, and new construction the search became educational journey for all that unfolded in just over 8 months.  In April 2022 with the help of two highly skilled real estate agents they closed on a gem just under $675,000 in the southernmost tip of Ridge and Valley area of The Appalachian Mountains.  The location:  Odenville, Alabama.  But why Odenville?

For thousands of years this area was home to various Cherokee and Catawba tribes and remnants of its rich history are preserved and available to enjoy for free.  Before railways and roads were created, the two mountain ridges which run parallel to each other reach as far north as New York and were a major obstacle to passage for many European immigrants in the early days of America.  The valley with its various creeks, rivers and streams automatically became nature’s highway for a few hundred years.  Today the valley his home to this small community of friendly people who enjoy a slower pace of life and all the benefits of being surrounded by wildlife, huge forests, and all kinds of natural beauty just 40 miles outside of Birmingham off US Highway 441.  It is far enough away to remain unspoiled (for now), yet close enough to access the best of everything on your terms.  

During any season scenic driving, motorcycling, RVing, camping, hiking, fly fishing, paddle sports like canoeing and kayaking, biking, birding, and photography you need to visit.  Odenville is 100% surrounded by expansive lands with roads and access to trails (including horse trails) that can take you to remote creeks, waterfalls, overlooks, caves and just about everything you imagine.  Talladega National Park is less than 40 miles east and Bankhead National Park is 80 miles northwest.  Both are unique from one another in topography, extremely remote and rarely crowded, and understated for the nature lover.

The Coosa River, Lake Guntersville and The Tennessee River are all three home to world class bass fishing and major bass tournament events as well as light tackle and fly fishing for miles in the valley streams.  Large whitetail, turkey, quail, dove, pheasant hunting as well as sporting clay shooting can be found in every direction public lands as well as exquisite plantations such as Selwood or Farm Links.  If you visit Farm Links bring your golf clubs and also be sure to check out Greystone, two of the Robert Trent Jones trail stops of Ross Bridge and Oxmoor Valley or the newer Top Golf  facility in Birmingham. 

Odenville is home to The The Ford Mustang Museum of America and in close proximity to Barber Motorsports Museum and Park and Talladega National Speedway all three of which offer a surprising number of unique events, shows, and experiences on and off the various race tracks that range from hill climbs, vintage races and displays, motorcycle races, INDY Grand Prix, Nascar, and more.  For the shoppers among you several major shopping areas and outlet style hubs are just within 30 miles.  Trussville at Pinnacle, Grand River Leeds, The Summit as well many dozen boutiques and specialty stores are scattered throughout the small villages like Homewood and Mountain Brook of Greater Birmingham.  Antique and quality thrift stores can be found scattered in and around the region and online if you want to make a day out of it.

If you stay local know there is a Publix nearby and several farmer's markets to source local, organic produce in season.  On your way into or out of town sample the local area's best at The BBQ Stop in Pinson or Carpenetti’s (pizza).  If you are a foodie and you do venture into the metro you will find a high concentration of some of the very best food and drinks original to Alabama.  Casual notables are El Barrio (modern Mex) and Good People among the 5 local breweries.  If you seek fine dining establishments such Bottega (Italian) and Chez Fonfon (Classic French) come to mind as examples.  With the revitalization there are plenty of events day or night that everyone can enjoy. 

Travel to the Odenville area by air is simple with both Birmingham and Atlanta airports just 45 and 120 minutes away.  By car the area is 90 miles south of Huntsville via I-65, 125 miles southwest of Chattanooga on I-59, or 90 miles west of Atlanta metro on I-20.   We love this and many parts of our state and we encourage you to explore and experience just some of the beauty and the people you will find like this sweet family who now calls Alabama their home.

For questions, quotes or preapprovals about real estate finance, please contact us anytime. 

Posted by Devin Murray on June 24th, 2022 3:27 PM


Congratulations to our new customers on their successful purchase of this awesome historic home in Antique Row near Rosemary Square in West Palm Beach! Where else can you get authentic Spanish style architecture, airy rooms with high ceilings with tons of windows, hardwood floors, solid cypress exterior doors, a wood burning fireplace, and a secluded back yard with a detached garage? It certainly was not an easy find but we were able to work together with the agent and customer to get the property from application through clear to close in under 21 days. 

With everything this home is, the lifestyle that accompanies the location is one which words can not describe.  You could name just about any place in the country but you would not be able to find the variety of restaurants, world class shops, excellent fishing and other water sports, golf courses, live entertainment, post card vistas, and so much more located just within a handful of miles of this gem.  Unlike places further south, it is nowhere near as crowded and you can walk, bike, or Uber if you come without a car.  Access to the area is easy via WPBI airport, I-95, or the turnpike is a breeze making travel to and from a breeze. 

If you are considering traveling to Florida we would encourage you to explore areas like West Palm Beach to sample the large variety of experiences our home state has to offer beyond the theme parks.  We not only believe you would return but you might even want to know more about buying a place for as your second home or as an investment as this family did. 

To learn more about qualifying for any home purchase in Florida you can visit us online 24 hrs a day via our secure portal. 

If you want a hassle free mortgage quote hassle free mortgage quote click here no we will never sell anyone's information.

We are happy to answer questions which we can respond to quickly via email.

Posted by Devin Murray on June 6th, 2022 11:49 AM

The Uncomfortable Question(s):  Is a housing crash happening in late 2022 or maybe 2023? Are we in another 2006-2007 area right now? 

In the last 26 months I have spent countless nights and many hours researching data regarding this and related questions for my customers, my family, and anyone else who could potentially learn and benefit for current and future generations.  I will use this post as a beginning to cut right to the point but suggest the nature of highly misunderstood topics such as credit, income, wealth, money, assets, and liabilities among those who might believe otherwise.

Short, Partial Answer:  My answer is NO, not like we saw in 2008 and certainly not at all for the same reasons so it will not look the same. 

Quick background:  As a young banker in 2004, broker in 2005 in Florida I hated subprime lending and can count on one hand how few of those loans I ever begrudgingly wrote.  Much needed regulation to protect the consumer and the yes banks came about with Dodd-Frank circa 2009 after the mortgage fraud scheme was uncovered from Main St. to Wall St.  This and similar legislation created ATR (the ability to repay) and basically terminated subprime mostly.  For the savvy no non-QM didn’t take its place. 

Recent history:  In 2020 and in to 2021 we allowed our country to make decisions that violated our constitution, and our people weren’t paying attention to science or data because we allowed fear to prevail.  Our government began injecting trillions into the economy as stimulus without production which began the acceleration of inflation and this was modeled in most places (except India).  Around that same time our Federal Reserve Bank began loading their balance sheet with MBS and bonds propping up the rate market causing mortgage rates to drop below 3% for about 21 months.  But did we really need any of this?

Enter in Wall Street demonizing the oil and gas industry, ESG (you thought the Equifax algorithm was bad?), and politics related to pipelines to leases and what this all spells is not fundamentally fundamentally about a housing crash at all.   We had an opportunity to get access to super cheap mortgage money, housing prices went through the roof and we all received some stimulus money but are we paying attention to what this all really means?  

So what about housing?  I have made a business and career out of studying what other people do good and bad.  Without being in my industry you can do the same.  Follow the money.  I would suggest digging what actions companies like Blackrock and Vanguard have been doing since 2020, what rates they are borrowing at compared to consumer mortgage rates we at that time, and most importantly learn where does their money come from? The journals tell us home equity is at an all time high of $9 trillion but I would ask is that really good for you in all aspects.  Why or why not?  YouTube has a lifetime of quality answers if you steer clear of the legacy outlets.

What about my market?  The most abused word in media is “the housing market” so don’t pay that much attention when year hear it.   We give free valuation tools like a home value report to help people make decisions so it is impossible for me or the news to define your market or tell you what is going on there.  Email us an address and we will send you a report to help you understand more about your home, zero strings attached. 

Noteworthy trends:  Ultimately there is a net migration away from states like California and most the New England toward Texas, Tennessee, Florida and the Southeastern US primarily because those places are less free than others.  By that I mean legislation isn’t friendly to new construction, prices have been historically higher than the rest of the country, property and income taxes are higher, and ultimately the cost of living is much higher than other places.  If you look to areas within these states where living costs are lower, where jobs are and will continue to be, I suggest that these places will not feel the major impact of whatever is coming or with comparable severity and the inverse is true if stagflation continues.    

Market correction, small or large is inevitable.   It is no secret prices jumped basically everywhere nationwide and that needs to come back down to stay in pace with wages.  When it comes to “affordable housing” that battle will continue to be worse into 2024 if what economists say is true.  With the Fed’s actions of quantitative tightening from Jan-May 2022 and mortgage rates nearly doubling, supply is already rising at higher price points even in markets in Florida and Alabama which I monitor very closely.     

What next?  I wrap up my mess of an answer to say that it is most important that we stop, look across multiple generations and educate ourselves as to what is actually happening and ignore the fearmongering.  Let’s stop wanting to be entertained and pay attention to each other for the benefit of each other.  

Fact is you need a place to live and real estate and finance are a beautiful tool to build and protect wealth.  If you wait to be told it will be hindsight that tells you our economy is facing major issues and nobody is coming to rescue you financially.   You can sit on the sidelines, blame others, and choose not to participate OR together we can empower each other for the sole purpose of helping one another.  Without motivation of any financial gain, this is my purpose in this life.  You are smart and you can do anything.  Thank for reading along.  

Please subscribe to the blog, check out the Better Together vlog and as always let me know what questions you have.

All information contained herein is the opinion of the author and should not be construed as financial advice or any extension of credit.   

Posted by Devin Murray on May 24th, 2022 2:01 PM

For nearly 17 years now I have originated somewhere over $450,000,000 in mortgages on everything from $75,000 starter homes to over $1 million estates from California to Miami.  While every day is a new day I believe I have seen the best and worst situations imaginable.  Over the years I have taken all of these experiences and use that to inform each customer that calls me even if I never close their loan.  I have been blessed with so many incredible relationships and opportunities I feel that it is only right to share that same information with you and maybe help make your transaction the best it can possibly be.  I could do a Top 50 but here is my opinion of the Top 10 that come to mind.

  1. Nobody likes surprises so get pre-approved in advance and get your documents to your lender as soon as possible.  Even if you don’t use that lender have your credit, income, and assets verified first.  Ask about the experience of your originator once you get to know them.
  2. Ask the lender to provide you with a copy of your tri-merge credit report even if you must pay for it.  Typical cost is $40-50 just pay.  Know your middle score(s).  Credit Karma is nice and pulling your own scores is fine but more times than not, those are not accurate when it comes to mortgage financing.
  3. Know exactly the name of loan types you qualify for, what other options are out there, and why those other options don’t make sense. A natural discussion of rates, payment, and closing costs will ensue ask if not.
    1. Example 1: If you qualify for a conventional loan, it is a Freddie Mac or Fannie Mae loan
    2. Example 2: Why shouldn’t I get an FHA or USDA loan?
  4. Inquire about sub-programs or other options available
    1. Example 1: Home Ready and Home Possible are loan programs within conventional offerings that apply to people who do not own other properties
  5. Ask about what property types you can do other than a stick-built single-family home?
    1. Example 1: condos vs. duplexes vs. modular
  6. Hire an agent with rock-solid experience who really knows several markets within the area and one who listens to your needs first.  Once you narrow a few places down, witness what goes on in those areas for yourself.  Get in your car, get stuck in rush-hour traffic on purpose to see a worst case scenario.  Go walk the neighborhood and talk to your future neighbors.  See what they like/dislike about the area.
  7. Know the maximum seller concessions and seriously consider an offer with seller concessions.   Nine times out of ten, sellers are often more likely to give concessions over a price cut and this advantage gives you the options to keep savings in your pocket or put that additional money down.
  8. Ask your lender if they offer Custom Rate Locking, Lock-and-Shop Pricing, and To Be Determined Approvals.  All of these are highly customized mortgage features that will save your time and money and make your experience top notch.     
  9. Own your due diligence, do not let it own you.  When you make an offer, inspection contingencies are important but be realistic and know what to focus on. Be thinking about the roof, foundation, HVAC, plumbing, and electrical in that order and consider these major systems if you can get a showing before the offer is made. Usually sellers try to point out anything that has been recently updated.  Many home inspectors write up as many issues as they can find but that sometimes creates more confusion on something that can divert attention away from an much larger issue.  
  10. Set-up bi-weekly payments after closing.  If bi-weekly isn’t allowed ask your LO how to fix this with equivalent extra monthly principal contributions.  It is not top secret information but one extra payment each year can shave years off a 30 year note.
Posted by Devin Murray on February 21st, 2022 2:29 PM



The landscape for second home financing is changing in 2022.  In certain markets where second homes are a large bit of the purchase business this impact is not all negative but we believe this will spell opportunity for those who were unable to buy in 2020 and 2021 as well as new opportunities for investors.  Tune in to our Better Together Vlog answer to Alisha Hileman's Question regarding second home down payment requirements.


Connect with Alisha Hileman - A Rockstar Reatlor on the AL and FL Gulf Coast - 4725 Main St. Ste F228 Orange Beach, AL 36561 - www.myagentalisha.com - 251-609-4434 Cell

Agents:

Send us your questions, help other pros get better.  We would love to spotlight who you are and what you do Questions@GulfStatesFinancial.com

Check out our Better Together YouTube Channel



Posted by Devin Murray on February 18th, 2022 12:23 PM

With mortgage rates approaching pre-2020 levels and the fed planning several rate hikes this year (4 maybe 5?), what can you do to help yourself or your clients capture the savings?

Despite what the giant retail lenders tell the public what exists and what does not, what we call lock and shop is the number one key.  Lock and shop allows a buyer to lock their interest rate at preapproval before they find a property for a minimum of 60 days or more.  This allows buyers to focus on making the best investment decision and reduces stress for the buyer and their selling agent.  This is not an industry norm as locks are typically associate the borrower and property (ask CMG, Rocket, Sebonic, etc they do not allow it).

If you have found a property know that advanced locks are not created equally.  Advanced locks are typically anything beyond 60 days but your customer should not pay a fee to exercise this option.  We can lock a rate on purchases and construction refinances for up to 180 days.  No up front fee, no gimmicks.

At the time when we lock-in a rate, we use exact rate pricing because it is the future and it empowers borrowers.  For the last several decades mortgage rates have been only been offered in 0.125% increments such as 2.875%, 3.0%, 3.125% but the mortgage market rates typically fall exactly on these figures.  Meaning “the interest rate market” in any given moment might be at 2.890% without discount or origination points but the old way of doing it would be to offer 3.0% with no points/no discount and offer 2.875 with points/discount.  Borrowers therefore have more choices with exact rate pricing to capture the savings of getting that rate versus being limited to a few options.  

Whenever a property goes under contract, we also utilized custom rate lock time intervals.  Much likes the decades old “rates on the eights” mentioned above, most lock-in periods allow for 30, 45, 60 days and borrowers choose a predefined interval to allow enough time for closing/funding.  So if a contract has 25 days remaining when the lock is performed borrower is forced to pay for another 5 days they don’t need in theory.  Custom lock timing, in combination with exact rate pricing, together create a hihgly customized lock the reflects exactly what the customer needs and nothing extra that they do not while passing the savings on to them.

In the name of saving money in an increasing rate environment, we can’t forget to emphasize custom loan terms.  Until recent years a borrower would opt for either a 15 or 30 year fixed term because 1) the rate savings is greater on the 15 year and 2) these are the only two options available.  As a result people avoid asking about different terms because they don’t want to be strapped to a higher payment on a 15 year loan to save annually on the note rate.  On every transaction (excluding construction to permanent) we offer any term a borrower might choose between 10-30 years.  The untold story is that there are often rate savings within these terms.  For example a 20 year term rate is typically less than a 30 year and is often more affordable than the 15 year.  Even if the rate is not lower a slightly lesser term, say a 27 year or 28 year compared to the 30 year will help them build equity faster without a small difference in the payment.

Retail lenders are going to take a massive hit in 2022, some say the worst in 40 years.  By design we as mortgage brokers we have access to wholesale interest rates across many outlets to shop not only the best rates but also to formulate the best solution for our customers.  We have roughly 10 funding lenders nationwide some of which we have had working relationships dating back to 2004.  If you have never used a highly qualified, reputable mortgage broker rates are just the start of how brokers are better than retail.  #BrokersAreBetter

If you or your client need to get preapproved and/or locked-in, visit our secure portal 24/7. 

If you want a free no hassle rate quote click here.

Do you have questions about something we mentioned here, email us email us anytime.

NMLS #836497

Equal Housing Lender


Posted by Devin Murray on February 2nd, 2022 12:56 PM

If you or your child are looking at colleges and universities in the near future or are enrolled now, student loans maybe be part of the equation.  Yes a degree significantly increases future income potential and financial stability over not having one and know we are big proponents of education.  As mentioned throughout previous posts owning a home also plays a massive role in building financial security and net worth dozens of times greater than those who rent.  There are smart ways to accomplish affording a good education and owning a home but the growing cost of education is fueling larger and larger student debt when impacts the latter.  Many do not understand that student debt negatively impacts how much house you can afford and in many cases prevents others from buying after graduation.  On statistic published by Bloomberg in MPA just days ago mentions 24% decline in homeownership among student borrowers aged 18-35 from 2009-2019.  In handling student loan debt and financing homes I hope to provide the basis for a different way of thinking for both parents and students.

A high school diploma does not stipulate that an 18 year old can financially provide for themselves in any way.  We can blame teachers and educators OR we could take on a greater responsibility.  I believe that if parents encouraged and maybe required their kids to first learn a trade before enrolling in a college or university we would immediately she a paradigm shift.  To quote Mike Rowe in a recent interview concerning jobs in 2022, for every five tradespeople that are retiring only two are replacing these jobs so the supply is decreasing meaning the demand by employers is extremely high.  Ideally students can spend time attending county or state community colleges to learn skills within a trade, get certified, and immediately have a way to feed themselves before they decide to leave the nest.   Trades are the single fastest way to immediately increase earning potential before they leave home and before they have the chance to incur any student debt.  (Examples are cosmetology, HVAC, electrician, plumbing, just to name a few.)  For others the military is a similar path to learn a trade (and yes life skills too) and I would agree far better for some.  If you want more information, Mike Rowe's Foundation trades is a very good starting point.   

The time it takes to get trade certifications is not 4 or even 2 years.  Since demand from employers is so high, being enrolled in one of these programs and being serious about work and earning money will easily land you a job making $15-18/hr.  By starting work first, students can get a taste of earning, spending, building credit, and the value of money before agreeing to incurring any student debt.  It enables students to get much needed job experience, explore opportunities in that field even if they don’t plan to continue long term and it would give them a way to pay for school day one.  Working in a trade field coupled with paying for classes while attending undoubtedly creates more skin in the game and students tend to learn more in that class, thereby improving the product itself.  As a society we must eliminate the stigma that is “blue-collar” jobs because you can earn far more money compared to many white-collar jobs.  Also having a trade and earning income and paying for school while in school versus incurring/deferring large sums of debt is a far better long term plan.   Being a slave to long term debt for a decade or more will pale in comparison to what kind of college experience you think you might have had. 

When you compare mortgages and student loans, the mortgage industry forces us to prove ATR which is your ability to repay your loan and I think this is a smart protection for our industry and the economy.  Colleges and universities have been increasing their tuition costs annually by double percentage points year over year and a student of any major can basically finance tuition, room, board, et. regardless of their declared major.  This means that a social worker who might earn $35,000 a year can finance $120,000+ and likely never be able to pay off their loan without some for of additional assistance like a second job/income or a spouse’s income.   This means student loans are granted to many knowing many will likely never repay in full and the government will still allow you to borrow.  There are many statistics which show a shrinking median income among student debtors and an increasing number of students borrowing each semester so it is my daily work experience that we have a bubble approaching fastly approaching $2 trillion that isn’t about homes or real estate.  

What if we started all of this early in high school and taught a course that echoes this?  If so maybe Chapter Three would be called “How To Shop for an Education.”  The underlying theme would be taking the same classes but earning the same credit at institutions across the street from big universities.  The vocabulary would begin with defining cost per credit hour and dual enrollment.  The day one homework assignment would be to find just how many classes you can take elsewhere nearby but still earn credit at the state school.  This would illustrate that bargains exist in education where you can offset the crazy high cost in pursuit of a degree.

I will close in saying, don’t believe the lie that you have finance the large burden of your education or that of your child(ren).  Your kids are crazy smart and unlike any other time in history, you can empower them in a short window of time to make better life decisions, incur less debt, and build equal or greater financial security faster and in a far less painful way.   You owe it to yourself and your kids to explore some for your sake, theirs, and future generations.  

Note: If you already have student loan debt and want to buy a home, do not be discouraged or feel as if it is too late for you.  We help people who owe on student loans almost every single day.   If you want to stop renting we can help you develop a plan on how to get there 100% for free, no strings attached.  Reach out to us today.

NMLS#836498

Posted by Devin Murray on January 24th, 2022 10:43 AM

Did you know that in the last five years over 600,000 people purchased homes for the exclusive purpose of earning short term rental income using apps like Airbnb and VRBO?  If that is you or maybe you converted a property into a short term rental, have you discussed with your CPA the best way to file your taxes to maximize your rental income and minimize your tax liability?   Each year we assist new and existing investors with a full portfolio analysis and people are often surprised by the results.  We know the ins and outs short term rentals and we offer a wide variety of solutions.  No hassles, no gimmicks, and we never sell your information.  

Call 888-269-8335 or email us to set up a time to discuss your scenario.

NMLS # 836498

Equal Housing Lender

#shorttermrentals


Posted by Devin Murray on January 11th, 2022 12:39 PM

We love helping people build new construction homes.  Unfortunately, most with a good game-plan never get started on their projects and it isn’t due to lack of financing.  Over the years we have witnessed the breakdown revolves around finding 1) what they are willing and able to build – (i.e. design, size, options), 2) who is the right person to build it, and 3) at what this means for a budget.  So what can you do to prevent this?

Traditional site-built construction (think where the work takes place) is a highly localized process so what one builder is willing and able to do is consistently different from one area to the next.  Also a building site (i.e. your lot/land) is rarely the same as the next person's.  People have different wants and needs so this is a perfect storm of just too many variables.  The good news is there are equal alternatives to site-built construction that can streamline a large this part of the equation.  While we have neglected addressing the topic in prior posts, today's subject is all about modular homes or what some call prefabricated homes.  Note: If you pictured a double wide, stay with me, that isn't the topic. 

After researching and financing these for others over several years I have discovered modular homes are the most underused, underrated, and misunderstood option in the southeast.   This is not true in the western and northeastern US.  The clearest path to understanding why you might consider modular starts with learning the modern capabilities/options they provide and what the product is (or is not).   It would seem there is popular belief that modular forces you to pick only a limited sized home, specific floor plan(s), or a very basic/boring design that looks out of place.  This is actually true for a few manufacturers that I would not recommend using but more capable modern modular home manufacturers offer a host of pre-existing plans of varying sizes from 900 sq ft+, fully customized routes and everything in between.   So if you don’t know your budget, you can start with simple plans based on your family size, basic options and add to your design or one of theirs.  Do you want 9’ or 10’ ceilings on a preexisting plan? No problem.  Do you want tile in all the bathrooms and granite countertops?   Check. 

Regardless of design, size and options a modular product is best understood if you examine the materials and the overall process compared to traditional construction.   Modular manufacturers use the exact same materials as those used in traditional construction and home is affixed to a permanent foundation.  So when the house is completed there is no way to tell it was modular or “stick built” (or sometimes called "site built").  Since this is the largest investment people make in their lives this matters because when an appraiser gives his valuation of the home when new or anytime in the future, modular homes appreciate no differently than traditional construction.  This is true because they differ in where they were built NOT how.  On the financing side Fannie, Freddie Mac, HUD, and the VA all acknowledge modular builds without distinguishing either so you or a future buyer should not be concerned. These are some of the exact reasons I convince people to reconsider not looking to mobile homes as a solution.

Choosing the right contractor will make or break your building experience and I tell people that almost daily  In traditional builds, a contractor or builder manages the project and his subcontractors (framers, roofers, plumbers, electricians, etc) build the house.  With modular the manufacturer designs and builds the home to 80-90% complete in modules (some use panels) in an indoor facility and they ship it to your site where a contractor or builder manages the site preparation, foundation, setting/securing the home to its foundation, completing power, water, and sewer connections and overall finishing of the house.  This process of pre-building the home in modules allows the manufacturer to focus on efficiency and quality control while giving a much more streamlined role to the builder or contractor (yes you still need one).  The best manufacturers know this and have a vested interest in who they allow (or will not allow) to install and finish the home properly.   In traditional construction you choose your builder and vetting them is your responsibility completely.  This is very risky and should not be understated.

In certain areas it is possible to design a modular home and get contractors to give you pricing on the finish work as described above.  You could in essence take those a set of home plans to a traditional builder as well as modular builder and quickly shop the cost and decide what option you think is best for you and your family.  You can use a construction to permanent product to build with modular which includes financing the land if needed.

Have questions about modular homes? 

Want to learn how to qualify for modular new construction?

We’d love to hear about your scenario. 

NMLS # 836498

Posted by Devin Murray on January 6th, 2022 4:09 PM

In previous posts we have discussed low and no down payment loan programs like VA and USDA but we have not discussed what assistance is available to help first time buyers with down payment and in some cases closing costs who are getting FHA or Conventional loans.  Our industry calls this form of assistance Down Payment Assistance or DPAs.  

Rather try to forge experts out of everyone, below is a set of steps you can take before getting a second education.  There is a great deal of variability and these are complicated but the proposed is based on real inquiries from multiple states, closed loans, and individuals and families who succeeded in becoming owners using DPAs.

Step 1: Preapproval First - The overwhelming majority of DPAs are classified as grants or loans that is closed behind/in conjunction with a Conventional, FHA, USDA, or VA first mortgage.  For that reason, it is best to get preapproved for one of these programs first to determine your options and capability since it is the first and majority of the funding you will need.  The key is get your income and credit qualified with the upfront understanding with the loan originator that the asset portion is not ready.  

  • If you don’t qualify now for the first mortgage now because of credit, a loan originator should help explain a path or plan to get you qualified down the road.  Don’t give up, be strong, persistence wins.
  • If you do qualify ask the originator and carefully note the following information: 
    1. your 3 credit scores are _______, _______, _______,
    2. the maximum estimated home price you qualify for: $__________________________
    3. down payment amount required at the max price and what percentage that equals:  $_______________ or ______________% of price
    4. estimated closing costs and prepaid items at that maximum price: $_______________

Step 2:  Define Your Total Asset Needs – With the preapproval as your main parameter the focus is on getting enough assets 1) for the down payment will be AND 2) closing costs and prepaids. This line is combined as cash to close on disclosures but know most DPAs, as their name indicates, allow funds to go towards down payment first and closing costs/prepaids second.  Some grants sole purpose is closing costs and prepaids.  Sellers and lenders can contribute to closing costs and prepaids but the primary focus is down payment.

You might have to go back and revisit some calculations with your LO and ask about acceptable sources of funds for closing.  Gift funds are one example.  In some states there are forms of assistance you can get BEFORE you buy where your federal tax liability is reduced and you can save prior to buying.  There are too many exceptions and examples to list here.

Step 3:  Geographic Flexibility – One of the most ignored topics for all buyers is having a firm understanding of your geographic preferences and flexibility.   What areas are you willing to buy in?   Going from big to small is there another county, city, or neighborhood?  Use the internet and bookmark specific example listings in your price range in those other cities and counties.   These are simply examples at this point.  This can take up an hour or two rather than going to hunt for properties with a realtor or driving around.

  • The main idea in knowing how flexible you are or are not is that DPAs eligibility can be restricted by county, city, and in many cases if a property lies within a census tract or not.
  • Most blogs and websites direct you to get in touch with “an approved lender” who deals with DPA.   What we disagree with is that those lists are highly outdated.  Hang on for just a bit though, this will save you time.

Step 4: DPA amounts – DPA can be combined with other forms assistance, gifts, seller contributions, etc but let’s assume you use only one kind and it is just for the down payment.  To that end know that in 2021 the average cap on a DPA funds per family in Alabama was $7,500 and in Florida the average is $10,000 with a few as high as $15,000.  Exceptions exist yes but it would be smart to compare these assistance caps and see if these are enough to cover it?  This is not a reason stop if a gap exists. 

Step 5: Credit requirements – While not exclusive, across 134 counties in AL and FL a 640 credit score is a very common requirement for DPAs.  In some instances, a 680 may be required if a conventional loan is being used.  By comparison you can qualify for an FHA loan with a 600 score, conventional 620.  If you are below 640 across the board it might be necessary to find out how you can get to that mark with your mortgage originator. improving your score does not always take a great deal of time and money as we mentioned previously.

Step 6: Income limits – Yes by definition DPA programs are designed to help “low to moderate income” first time buyers.  The numbers varies significantly but what does “low to moderate” even mean?

  • A major truth nugget is that DPAs coupled with FHA loans tend to be far more liberal when defining “moderate” as a significantly higher number income than Conventional DPAs.
  • For example: Statewide in Alabama the Step Up program, which is very popular, sets a statewide  FHA income limit is $130,600 and also has no geographic restrictions.  However, the Step Up for Conventional loans in a majority of census tracts in the major metro areas at the time of posting is $66,320 in Huntsville, in $60,080 Birmingham, and $59,440 in Orange Beach (using Freddie’s 80% AMI).  Note for conventional this decreases further as you travel to less populated areas.  So for FHA Step Up moderate is much more inclusive with respect to income.

These numbers fluctuate up and down.  Family size does increase income limits for certain DPA programs just as it does for USDA but not always.  Also if you think Florida would be more forgiving in this interpretation compared to Alabama think again. A one person household AMI in Miami-Dade County is lower than some figures I mentioned below in Alabama.

Step 7: Price Caps – Keeping in mind that the FHA loan limit in our lending area for a single family residence is $356,262 for 2022 and the conventional limit is $647,200.  This matters because in addition to income limits, purchase price caps exist that are below these limits depending on the property location.  While we won’t dive into target and non-target areas as one example in Alabama closing recently a property in a non-target area was capped on FHA approximately $301,000 which is about $56,000 beneath the limit.

  • Because of income restrictions on conventional DPA programs, maximum purchase price is likely going to be the limited by the income cap rather than the new $647,200.  While conventional limits tend to grow each year, Annual Median Income can and has fluctuated down as well as up.

Step 8: Time – It is no secret that many first time buyers without a large down payment were heavily marginalized earlier this year.  Many sources have cited they were outcompeted due to higher offers and people bringing 20%+ down which might be the prevailing reason.  When that slows down as it already has, inherently time related to being approved for a some DPAs is a real problem.

  • On a closing roughly two weeks ago, a SHIP program in Florida stated that processing for the program was taking 6 weeks after first loan approval and no exceptions would be given to that time frame.  Now we were able to actually help our borrower compete in a multiple offer situation but know it was a challenge because the standard norm in most places is 30 days.   
  • This is not a reason to not use a DPA just know an originator and areal estate agent’s skills can not be understated so choose wisely.  

Step 9: Which DPA for you?   Understanding the parameters, we recommend discussing these steps and DPAs with a skilled originator and deciding what path is best for you.  Know that brokers have access to many lender’s products and most often are excluded from “approved lenders” listed.   So we recommend you talk to a reputable mortgage broker in your state.

if you are in Florida or Alabama, tell us about your scenario or give us a call at 888-269-8335   We’d love to help answer your questions to help you plan and become a homeowner soon!!!! 

You can do it!

 

 







Posted by Devin Murray on December 9th, 2021 2:07 PM

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