Category Archives: Mortgage Loans

Kansas City Mortgage Lending, Kansas City Home Loans, Kansas City Mortgage Loans

Freddie Mac Foreclosure Listings In The Kansas City Metro Area Now Included In HomeSteps Winter Promotion

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Checking The Pulse Of The Kansas City Real Estate Market

The HomeSteps Winter Sales Promotion that we’ve seen during past winters on Freddie Mac foreclosure listings is making a return to both Kansas and Missouri. HomeSteps announced that they are adding the states of Kansas and Missouri, along with Kentucky, Oregon, Washington and Alaska to the list of states already enjoying the program’s benefits. These six states brings to 33 the total number of states included in the HomeSteps promotion the next couple of months.

Details of the HomeSteps program includes Freddie Mac paying up to 3% of the Kansas City home buyer’s closing costs plus providing a two-year home warranty through the HomeProtect limited home warranty plan. The HomeSteps benefits are not offered to investors, so the home buyer has to be moving into the home to qualify. The offer is good for a limited time so if you’re ready to buy a home, check with us to see if the offer is still in effect. Here’s a link to start searching the available Freddie Mac homes for sale in your preferred area of the Kansas City metro area.


Posted by Jason Brown

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Plan For At Least A 3.5% Down Payment And 580 Credit Score To Buy A Kansas City Home

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Checking The Pulse Of The Kansas City Real Estate Market

Guidelines definitely vary from lender to lender but a typical baseline for securing a home loan will be having at least a 3.5% down payment and a 580 minimum credit score. FHA loans require a 3.5% down payment and conventional loans (i.e. loans backed by Fannie Mae and Freddie Mac) require a 5% down payment. A typical FHA loan requires a credit score of at least 580, however home buyers with at least a 500 credit score can obtain a FHA loan IF they have a 10% down payment. Most conventional loans will require a minimum 660 credit score.


The maximum loan FHA will allow varies from one U.S. county to another and to buy a home in Kansas City, Johnson County Kansas, Overland Park and the surrounding metro area, the maximum FHA loan permitted is $271,050. The maximum Fannie Mae conventional loan is $625,500, with loans over $417,000 being subject to more stringent loan requirements than homes below $417,000. At this time, both FHA loans and conventional loans allow a seller to pay up to 3% of a buyer’s allowable closing costs. But with today’s crazy markets, the rules are changing by the day…

The rules may have changed by the time you read this post. It’s a lot for even a seasoned Kansas City real estate agent to stay on top of, so take my advice and contact a knowledgeable LOCAL lender/loan officer who can guide you through the mortgage loan process. Need a great recommendation? This is one of the important aspects of the real estate process we help Kansas City home buyers with on a daily basis. Getting with a great loan officer is more important than ever because the rate of loans not closing is increasing across the U.S. and overlooking the smallest of details can doom your real estate transaction.

Posted by Jason Brown

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Getting Pre-Approved Before Shopping For An Overland Park Home Is More Important Than Ever

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Checking The Pulse Of The Kansas City Real Estate Market

Even with a solid down payment and good credit scores, home buyers are being grilled by mortgage lenders before their home loan are finalized. If you haven’t purchase a home in Kansas City, Johnson County Kansas, Overland Park or the surrounding area the past couple of years, the process is sure to be unlike the process you last went through. Liar loans, among many other “creative financing” tactics, have become a thing of the past.

If you are credit score challenged, you may not get that loan. If you do, there’s a good chance you’re going to have to jump through some hoops and wait to hear if you qualify to purchase an area home. This is why Kansas City Realtors won’t start working with a buyer until the buyer has gotten Pre-Approved with a quality local lender. Thinking of working with that online loan officer/company who competed for your business? Not if you work with my group. The last two home buyers who were Pre-Approved through companies like that ended up getting turned down for their loan AFTER we went under contract. Those lenders whipped out weak pre-approval letter without doing any legit research into those buyers qualifications.

So you can see that, not only is it critical that you get Pre-Approved, but you should do so with a loan officer who has an actual office here locally. A lender who knows our market and has a reputation to uphold is much more likely to do their due diligence in providing a valid Pre-Approval letter to home buyers. Thinking about making an offer on one of our listings and doing it without submitting a legitimate Pre-Approval letter? We advise our sellers to not consider any offer that doesn’t come in with a Pre-Approval letter where the lender has run the buyer’s credit and verified the buyer’s income and debt ratios.


Posted by Jason Brown

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There’s More To Choosing A Kansas City Mortgage Lender Than The Interest Rate Being Quoted

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Checking The Pulse Of The Kansas City Real Estate Market

Are you considering buying a home in Kansas City, Johnson County Kansas, Overland Park or in the surrounding area? If you are, one of the first things you should start checking on are today’s mortgage interest rates. The lower the interest rates available, the lower your mortgage payments will be… or the more home you’ll be able to afford. 30-year fixed rate loans are the most common loans made today and you can check how today’s rates are looking here at BankRate.com, Yahoo and CNN Money. 

Remember, while interest rates are a critical part of the equation, there’s a lot of other details than need considered as well. Ask each lender what fees and costs are associated with the loan. Check with multiple lenders too and once you’ve determine what you deem to be a solid interest rate and fair fees, go to work in locating a local LOAN OFFICER who can get the job done. Dealing with an out-of-town loan officer GREATLY increases the likelihood of some sort of trouble with getting the loan closed on time — or closed at all in some cases. There’s something about having a local loan officer that you or your Kansas City Realtor has done business with in the past that keeps a transaction moving along smoothly.  

How do you know how much the loan you’re inquiring about will cost you? Ask for a Truth In Lending estimate that spells that information out. It will show the interest rate being quoted on that given day (remember that interest rates change daily) as well as any fees associated with the loan in question. 


Posted by Jason Brown

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Check Your Credit Score Today If You Want To Buy A Kansas City Home In The Future

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Checking The Pulse Of The Kansas City Real Estate Market

It’s often the last thing on a home buyer’s mind yet credit scores are a powerful aspect of buying a Kansas City home. I’ve seen borrowers with a 20% down payment and buying WELL below their means get turned down for a home loan because their credit scores stink… And if you think you can quickly fix issues with your credit, think again because I’ve never seen someone “fix” their credit score in just a couple of weeks time. It can take months to deal with errors and longer to deal with legitimate issues that have pushed a credit score down.


Being late on your monthly payments can kill a credit score and consider that credit scores are as much about a borrower’s responsibility as it is about their ability to make the payments.  A person who barely gets by but always makes their payments on time will surely have a better credit score than someone who makes twice as much but is often late with their payments. You can check out how your credit report is looking by getting a free, once-a-year, credit report check at  AnnualCreditScore.com. 

The formula for credit scores is more of an ancient Chinese secret than how Mr. Li got those shirts so clean in those 1970’s commercials, but the following are some frequent common denominators of people with 800 credit scores… 4 revolving accounts such as credit cards, 2 installment loans like a home loan or car loan, at least one active credit account that’s 10+ years old, having no revolving accounts that are more than 1/3 maxed out, not having a single late payment on any account the past 5 years and having less than 5 inquiries against your credit during the past year.


Posted by Jason Brown

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Will Mortgage Interest Rates Not Seen Since The 1970’s Get Kansas City Home Buyers Off The Fence?

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Checking The Pulse Of The Kansas City Real Estate Market

Mortgage rates have now hit 40 year lows but many Kansas City home buyers are remaining cautious. Freddie Mac reports that the average 30-year fixed rate loan nationally had an interest rate of 4.22 percent — mortgage rates we haven’t seen since 1971. Low mortgage interest rates allow many home buyers to get into a home with a lower monthly payment or to buy a home larger than they otherwise would have been able to purchase. Despite low mortgage interest rates that most of our parents have never even enjoyed, other economic concerns have home buyers weighing their options. 


My group has many buyers sitting on the sidelines due to an uneasy feeling about the economy, many specifically questioning whether they’ll have their job a year down the road to continue making their mortgage payments. These buyers are pre-approved for a home loan but even their increased purchasing power due to today’s low interest rates isn’t enough to get some of them off the fence.

To ensure our home buyers have the info they need to make an informed real estate decision, we go over the implications of rising or falling interest rates. A buyer who waits a year could theoretically purchase a home for 5% less (if home prices fall) but that could be completely counteracted if mortgage rates rise 0.5% during the same time. Interest rates have a powerful effect on home buyers and should always be one of the most important factors considered when buying a home a home (assuming a buyer isn’t paying cash for the home). 


Posted by Jason Brown

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What’s Next? 20% Down Payments To Secure A Conventional Loan When Buying A Kansas City Home?

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Checking The Pulse Of The Kansas City Real Estate Market

QRM stands for Qualified Residential Mortgage (QRM) and it will change the way mortgage lending is done should the proposed loan regulations be put into effect. Only home buyers who make a 20% down payment would be considered a “Qualified Residential Mortgage”. Since 85% of home buyers today can NOT make a 20% down payment, we’re talking about changes that would have very serious consequences on most home buyers ability to secure a home loan. I’ve seen some estimate it could mean THREE percent higher interest rates for the 85% of home buyers who do not have a 20% down payment. This could definitely be the straw that breaks the camels back.


Higher interest rates would lead to buyers purchasing smaller homes and forcing many who want to buy a home to instead rent. All of this will put downward pressure on home prices at time when we’re looking for ways to promote a real estate recovery. Also consider that mortgage lenders would be required to hold (not sell off) 5% of the non-QRM loans. Again, that’s an estimated 85% of loans made today. Many lenders sell off ALL their loans, so requiring lenders to hold 5% of these loans will lead many lenders to stop making these types of loans. The fewer lenders there are in the market place, the worse off consumers will be.

If some of the estimates I’ve seen are correct, these proposed changed would have eliminated 1/3 of home buyers we’ve seen in recent years. Imagine what that would have done to our housing market.  Going forward, the buyers who would still buy a home under the new guidelines will surely have to buy much smaller homes. That would hang many moderate and upper bracket homeowners/home sellers out to dry… which is the last thing the housing market needs. Fortunately multiple powerful groups are fighting these proposed changes. The groups include AFL-CIO, NAR, SEIU, NAACP and NAHB, among many others.


Posted by Jason Brown

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Lowering Of Conventional Loan Limits Should Have Minimal Effect On Kansas City Real Estate Market

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Checking The Pulse Of The Kansas City Real Estate Market

Fannie Mae is planning to be less involved in future upper bracket home purchases. Currently, most counties across the U.S., including all of our Kansas City metro counties, have a $417,000 maximum loan amount that Fannie Mae will back. This means if you need a $450,000 loan, you don’t qualify for a conventional loan backed by Fannie Mae and will need to search for a lender willing to deal with this price range loan. That would likely mean higher loan costs, a higher interest rate, etc. Since it doesn’t appear there will be any change to the $417,000 level, it appears our Kansas City real estate market is mostly insulated from the coming changes.

More expensive real estate markets across the country are sure to be effected however. During the mortgage lending crises of the past several years, Fannie Mae stepped in raising the maximum price on loans it would back. This was designed to help stabilize counties with the most fragile and expensive real estate markets (i.e. few lenders around who were willing to make loans on the homes). But now Fannie Mae is reeling things back in by lowering limits back closer to the lowest $417,000 figure. 

While Kansas City appears mostly insulated from these changes, any adverse affect on our delicate national real estate market threatens to have a trickle down effect.  With some reports indicating that national home prices have fallen back to 2002 levels, let’s hope the effects of these changes are minimal here in Kansas City, Johnson County Kansas, Overland Park and the surrounding areas.


Posted by Jason Brown

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Higher FHA Mortgage Payments For Kansas City Home Buyers Now In Effect

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Checking The Pulse Of The Kansas City Real Estate Market

The FHA changes we discussed back in February went into effect this week. This means higher mortgage insurance premiums on all FHA loans.  For example, Rick Woodruff with Metropolitan Mortgage explains this means a $33 higher monthly mortgage payment on a $163,000 home (with a 3.5% down payment). A Mortgage Insurance Premium (MIP) is the equivalent of Private Mortgage Insurance (PMI) seen on a typical conventional 15-year or 30-year fixed rate mortgage, where the borrower has less than 20% down payment (less than 20% equity in the home).

More than half of loans being provided today are FHA loans, so mortgage payments just got more expensive more a lot of potential home buyers. The increased fee is necessary to replenish the FHA’s cash reserves – so they can keep the FHA program afloat – and to meet the 2% minimum cash reserves that Congress mandates they have in cash on hand. This change only affects loans where the buyer goes under contract after today’s date. All buyers who went under contract yesterday or earlier and/or who already have a FHA loan in effect are unaffected by this change.


Posted by Jason A. Brown

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Kansas City Mortgage Interest Rates Fall For Third Straight Week

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Checking The Pulse Of The Kansas City Real Estate Market

Mortgage rates were inching higher around the new year but we’ve seen them in a downward trend recently and have actually seen rates drop for a third consecutive week. This is an amazing benefit to buying in today’s real estate market and it’s likely 20 years from now we’ll look back in amazement on the interests rates some of us were able to secure. If you’re considering buying a home, the average national 30-year fixed interest is hovering around 4.75%. Most experts believe interest rates will hold steady for at least the next few weeks.

This week I’ve received notifications from Bank of America advertising 30-year fixed rates at 4.625% and from Wells Fargo advertising 4.875%. Mortgage rates with most lenders change daily and some even update their quoted rates twice a day. So take any interest rate quote you see with a grain of salt because they probably will have changed – possibly up or down – by the time you contact the lender. When buying a home, contact your lender and lock in your rate. If you have a contract, you can lock in the current interest rate for free. If you’re just starting the Kansas City home buying process, you can often pay around $150 to lock in the current interest rate for 60 days. Once you’ve locked in your interest rate, it doesn’t matter if interest goes up during the lock period, because your rate is guaranteed.

Posted by Jason A. Brown

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