Investment Mortgage Guy

Have you always thought about buying investment properties?  Attend this FREE one and a half hour seminar. There is no charge at all, no contracts you sign with us, no consultation fees, no hidden agenda. This seminar is an excellent opportunity for you to learn more about our process and meet a team of investment real estate professionals that can guide through the finding, financing, buying, renting and owning your first investment property.

Register for the seminar by filling out this quick seminar registration form or call 952-808-2820 for more information.

We are close to half way through 2009 and we have seen rates lower than they have been in a long time. Many homeowners have been able to take advantage of rates in the 4% range.  Lenders are busy again all over the country.  The concerns for refinancing today are different than those of previous refinance booms. The number one question people ask me today is, “who are you selling my mortgage to?” The fear of a lender failing has never been more top of mind and many of my clients are very concerned about being in the hands of the next bank to go under.   A few years ago, people really didn’t care who their mortgage was with and even the lenders themselves, traded paper (which is your mortgage) back and forth like it was going out of style.

Many of my clients have a particular lender they would prefer to have their mortgage with long-term either because they have other accounts there or have always had their mortgage there in the past and they are comfortable with it. The problem is that if they were to go direct to there favorite mortgage lender, they are running 60 to 90 days to complete a refinance right now.  Some banks are so busy right now they won’t return your call even if your willing to wait. Lenders are way under staffed for their work load but are afraid to hire more people in this economy. The problem with that is they won’t lock you in until 30 days before closing. With rates as volatile as they are right now, you could lose out on a great rate waiting for your lender of choice to get your loan closed.

At Cornerstone Mortgage, we underwrite and fund all of our loans but sell most of them to other banks. We have relationships with Wells Fargo, US Bank, Citi, Bank of America, Chase, GMAC and several others. Our business model allows us to close your refinance in 30 days or less and we can sell directly to the lender of your choice.  You truly can have your cake and eat it too!

For more information on how this works, give me a call at 952-808-2820.

Rob Bonahoom

Morgage Coach

Starting May 1st, Fannie Mae and Freddie Mac will be implementing a new Home Value Code of Conduct (HVCC) policy on all appraisals. Back on March 3rd, 2008 Fannie Mae announced that it had entered into an agreement with the Office of Federal Housing Enterprise Oversight (OFHEO) and the New York Attorney General adopting the HVCC. The HVCC was adopted to help reinforce the independence of the appraisal process as well as to enhance the overall integrity and confidence in the national housing finance system. All mortgage lenders thoughout the United States will be required to abide by this new policy. Federally chartered banks already implemented this policy in 2008.

Basically this new policy means that loan orginators like myself will no longer be allowed to choose which appraiser we will use to complete an appraisal and the appraiser will no longer be given a “target value” that needs to be hit.  This could mean that a borrower may have to spend up to $650 (for a duplex appraisal) only to find out that the value is too low for him to refinance.  In the past, “comp checks” were used by loan officers to help a borrower get a fairly accurate idea of the value of their property before spending any money on a refinance. This new law will prohibit the abilty to do comp checks.

To view a full copy of this policy click below:

NEW HVCC CODE

The mortgage industry continues to tighten guidelines in order to give investors (on Wall Street) more confidence in the quaility of the loans being written. Have they gone too far this time or do you feel this is a good integrity check for appraised values?

Rob Bonahoom

Mortgage Coach

Beginning April 4th, 2009, Fannie Mae is allowing borrowers who currently have a Fannie Mae backed mortgage to refinance their investment property even if there is no equity in their property. This is great news! Especially if you have a current adjustable rate mortgage and you want to get it locked at a great low rate. Here are some of the program highlights:

* 1 to 4 Units

* Rate and Term refinanced only.  (No Cash out)

* Your loan must currently be backed by Fannie Mae (Contact your servicer or go to Fannie Mae’s website)

* Fixed 15 years or 30 years are available

* If your loan currently has mortgage insurance, it has to be originated though your current servicer.

* Income requirements: One Pay stub (if W-2 employee) or One Years Tax Returns (If Self Employed)

* No limit on the number of mortgages you currently have

* No mortgage lates for the last 12 months

Some tips -

You can’t be upside down on your property. (You owe more than the property is worth)

If you need help determining if you qualify for this program, please fill out an application on line at

Check Here to See if You Fit the Obama Plan

I continue to be impressed by the government and their desire to try new things to help our economy.

Happy Investing!

Rob Bonahoom

Mortgage Coach

On April 13, Jeff Scislow, Attorney at Law Matt Engel and myself with be taking about the New Obama plan “Making Home’s Affordable” program. We will be sharing tips on how to modify your loan, when you should just file bankruptcy and when a shortsale might be appropriate.

If you are interested in attending, please give me a call for registration at 952-808-2820.

In Mathew 6:19, Jesus states “Stop storing up for yourselves treasures on earth, where moths and rust destroy and where thieves break in and steal. For many, this statement begs the question, should I not be saving for my retirement?  In my opinion, this statement is not as much a call to never save again but is a warning that storing up treasures here on earth is very short-term thinking.  First, I do believe the bible is clear that we are to be good stewards with our money and are called to invest it and save it wisely. (See the parable of the talents Mathew 25: 14-30). I think Jesus is trying to convey two major points here in this passage. First, you can’t take it with you.  I believe that through faith in Jesus Christ we will have eternal life, thus the 100 or so years we spend here in earth is a drop in the bucket. It’s a like the blink of eye. None of us, I believe will be able to take our earthly possessions with us into heaven. If you were on a vacation in a foreign land and given expensive gifts but you were not allowed to bring anything back with you on the plane,  what would you do? You may consider sending the items on ahead in the mail. This is what Jesus is trying to tell us, none of our possessions can come with us when we die, but there are ways to store up our treasures in heaven (or send things on ahead).  One way to do so is to be big givers. I believe that those who give in the greatest proportion of their income are storing up for themselves treasures in heaven. The second point I think Jesus is trying to make is to not put all your hope in your treasures on earth. This last year of our economy has proven to be a tough one. Many people that thought they were set for retirement found themsleves in a very tough predicament. Several lost their retirement completely. (though various Ponzi schemes). I believe that no matter how secure you believe your retirement or future to be, it can always be lost. Putting your hope (or faith) in this, is not how you are supposed to live. Your faith (and hope) has to be focused  on your eternal life in Christ. 

In conclusion, don’t quit saving or stop planning for retirement, but place your hope firmly in the Lord and let him guide you path. Below is a chapter in the bible that perfectly describes this:

Psalm 49

For the director of music. Of the Sons of Korah. A psalm.

 ¹ Hear this, all you peoples;
       listen, all who live in this world,

 ² both low and high,
       rich and poor alike:

 ³ My mouth will speak words of wisdom;
       the utterance from my heart will give understanding.

 ⁴ I will turn my ear to a proverb;
       with the harp I will expound my riddle:

 ⁵ Why should I fear when evil days come,
       when wicked deceivers surround me-

 ⁶ those who trust in their wealth
       and boast of their great riches?

 ⁷ No man can redeem the life of another
       or give to God a ransom for him-

 ⁸ the ransom for a life is costly,
       no payment is ever enough-

 ⁹ that he should live on forever
       and not see decay.

 ¹⁰ For all can see that wise men die;
       the foolish and the senseless alike perish
       and leave their wealth to others. 

 ¹¹ Their tombs will remain their houses  forever,
       their dwellings for endless generations, though they had named lands after themselves.

¹² But man,   despite his riches, does not endure;  he is like the beasts that perish.

¹³ This is the fate of those who trust in themselves,
       and of their followers, who approve their sayings.
       Selah  

¹⁴ Like sheep they are destined for the grave, 
       and death will feed on them.
       The upright will rule over them in the morning;
       their forms will decay in the grave,  
       far from their princely mansions.

 ¹⁵ But God will redeem my life from the grave;
       he will surely take me to himself.
       Selah

 ¹⁶ Do not be overawed when a man grows rich,
       when the splendor of his house increases;

 ¹⁷ for he will take nothing with him when he dies,
       his splendor will not descend with him.

 ¹⁸ Though while he lived he counted himself blessed—
       and men praise you when you prosper-

 ¹⁹ he will join the generation of his fathers,
       who will never see the light of life .

 ²⁰ A man who has riches without understanding
       is like the beasts that perish.

Rob Bonahoom

Mortgage Coach

I continue to be impressed at Fannie Mae’s willingness to find creative ways to get more real estate investors into more investment properties in an effort to stimulate our suffering housing market.

Fannie Mae has created a new investment property financing program called Fannie Mae Home Path. This program allows the real estate investor to purchase properties owned and backed by Fannie Mae (properties that are bank owned by Fannie Mae due to a previous foreclosure)  at a 10% down payment with no appraisals or mortgage insurance required. 

Not all Fannie Mae bank owned properties will qualify. To find out if the property you are interested in purchasing is approved for the program, please go to 10% Down Fannie Mae List.

A similar program is likely to come out for Freddie Mac. I am excited to see the government continue open up more doors for the real estate investor. If you would like more information about this program, feel free to contact me at 952-808-2820.

Rob Bonahoom

Mortgage Coach

On March 4, the Obama administration released an outline of what they are calling the “The Making Home Affordable Program.” There are two parts to this plan. First, if you are current on your mortgage and have good credit, stable income and your loan is currently back by Fannie Mae or Freddie Mac, you will be able refinance your mortgage (no cash out allowed) with a new mortgage at current mortgage rates without any equity in your home. (As high as 105% of the value of your home)  Secondly, if your income has recently dropped, your interest rate recently increased or you have suffered a hardship that has increased your expenses (like medical bills), you may qualify for a loan modification. In this case, your loan servicer will review your income and can lower your interest rate as low as 2% and/or lower your pricinple balance to get your payment to 31% of your current gross income. All plans are designed to help owner occupied properties only.

I really like this new outline and I believe it will encourage banks to finally standardize their processes which should really help a lot of people save their home. Right now, participation by banks in this program is not mandatory but highly encouraged unless the lender received or is going to be receiving bailout funds from the government. (Then they have to participate)

To get a complete outline of the plan, you can view the website at:  Obama’s New Mortgage Plan

If you have further questions about your personal situation, you can call us at 952-808-2820 and as we start to learn which lenders are offering what, we will be happy to let you know.

Rob Bonahoom

Mortgage Coach

One of the biggest questions I get from real estate investors from week to week as an investment property mortgage coach is:  Can I pull cash out of my investment property?

I will come back to the answer of this question but first want to give you some back ground on investment property financing as a whole that I feel is important. About a  year ago, there was several options available nationally for the real estate investor for investment property financing. Since October of 2008, all mortgage backed securities another than Fannie Mae and Freddie Mac have left the market. Wall Street at this point, is not trading them. What that means to you is that the only national source you have for financing your investment property is Fannie Mae or Freddie Mac. Out side of that, your option would be to approach a local bank.

Fannie Mae and Freddie Mac require six months seasoning (meaning you have to have owned the property for at least six months) before you can refinance your property. After six months, you are allowed to use the appraised value of your property and borrow up to 75% of it.

Piggy backing on this question, I also get asked all the time from investors:  Can I get a second mortgage or line of credit on my investment property? At this point in time, I am not aware of any lender offering mortgages in second position of your investment property. The credit market has definately tightened.

This is a big problem for the real estate investor who has been using cash or a line of credit to purchase investment properties. Many of these investors relied heavily on quick refinances to keep themselves liquid and ready for the next oppportunity. My rehab loan program is a nice alternative to this. With my rehab loan program, an investor is able to finance both the purchase and rehabilitation of his investment property and then do a rate and term refinance with Fannie Mae (which still has no seasoning). To learn more about my rehab program select the other articles available on my blog or review the tab at the top of my website.

Have a great week!

Rob Bonahoom

Mortgage Coach

Fannie Mae makes an announcement today to raise the number of financed investment properties back to ten. Since October of 2008, Fannie Mae had lowered the number of financed investment properties a borrower could have to three. Starting again March 1st, 2009, the limit will go back up to 10 properties. This is BIG news to the real estate investor. I think we all knew that going down to three financed properties was too aggressive of a move. Fannie Mae sites it’s reason for the change as a means to help with the housing recovery effort. There will be however tighter guidelines and restrictions from the previous rules Below are the new guidelines for financed properties from number 5 thru 10.

* The minimum credit score goes to 720

* 75% LTV for a Purchase and 70% LTV on a Limited Cash Out for 1 unit properties

* 70% LTV for a Purchase or Limited Cash out on 2-4 unit properties

* No Bankruptcies or Foreclosures for 7 years

* No deliquencies within the last 12 months on any mortgages

* In order to count the rental income from other rental properties the investor has, a two year look back is required from the borrowers Federal income tax returns. 

*  6 months reserves will be required on each investment property that you own and the subject property.

This is awesome news and proves that Fannie Mae is truly committed to the real estate investor and fixing the housing crisis. If you would like more information please contact me at 952-808-2820.

Rob Bonahoom

Mortgage Coach