Bring Your Spouse To the Refinance Closing!

Mortgage rates continue to hover near historic lows and virtually everyone is refinancing.  This is a friendly reminder to make sure everyone comes to closing.  This includes a spouse who does not own the property.

Wisconsin has an antiquated law that requires all spouses to sign any “conveyance” of  a married person’s “homestead.”  A mortgage is a conveyance because it conveys to the bank the right to take the property if the borrower ever defaults on their loan.

This law is not part of Wisconsin’s Marital Property Act.  Rather, it is in the statute that addresses the formal requirements to convey rights and title in real estate.  Some of those requirements are obvious:  identify the parties; identify the land, sign the document.   There is also a requirement that all spouses must sign if the property is the married person’s homestead.  This is true even if only one spouse owns the property.

This means that Jane Doe, the sole owner of her home, cannot mortgage her property without the signature of her husband.

There is an important exception for purchases where the entire mortgage is being used to fund the purchase (a “Purchase Money Mortgage”).  When buying and mortgaging, only the spouse who will be on the deed needs to sign.  When Jane Doe buys property without Jack, her spouse does not need to sign the purchase money mortgage.

We often here the complaint:  Why does my husband need to sign, he doesn’t own the property and didn’t sign the mortgage when I bought the property.  Wisconsin’s “homestead statute” is clear that non-titled spouses must sign any deed or mortgage on the homestead/residence except for the original mortgage when they purchased. If the non-titles spouse fails to sign, the Mortgage will not be valid.

If you are married and refinancing you personal residence, make sure your spouse comes to closing.

If you have questions about refinancing, the answer is very likely “do it!”  Rates are historically low.  You can also call us for referrals to a great lender.

Read Full Post »

Digital Closings Are Here!

We can close many transactions digitally from the comfort and safety of your home.

In response to the coronavirus/Covid-19 pandemic, the State and our underwriters have passed emergency rules to allow digital closings and remote notarization!

We will be able to accommodate almost all sellers and many buyers with “Remote Online Notaries,” (RON).  This will allow for fully remote, digital closings without the need to leave home.

Buyers with a loan will need their lender approval to conduct a fully digital closing.  Lenders have many considerations and challenges, including investors, underwriters, mortgage insurance, and legal issues. Some may not be able to offer this service right away and others may allow only some documents to be signed digitally.

Homestead currently uses Notarycam and is trained and setting up Pavaso – two nationally recognized, approved platforms.  We “host” closings with a certified, remote-online notary.  The Wisconsin DFI has temporarily allowed Wisconsin notaries to also become online notaries (without the need for including an out-of-state notary) and our team is also adding this service.

Please contact us if you wish to close remotely and we can determine whether this is an option and coordinate with you.  

 

Read Full Post »

Time to Refinance?

Is it time to refinance your mortgage?  Probably!

The rate on a 30-Year Mortgage has steadily dropped from already low rates. Although rates can vary by region and lender, the national average has dropped from  nearly 4.5% to under 3.5% over the last 6 months.

The drop in mortgage rates corresponds with a recent drop in the 10-Year Treasury Bond.  The market for these bonds does not directly effect mortgage rates, but it is good indicator of their direction.  In fact, movement of the 10-Year Treasury Bonds almost exactly mirrors movement of 30-Year Mortgage rates over the past 5 years:

As of February 24, 2020, the yield on the 10-Year Treasury bonds were near record lows.

Does this suggest record low mortgage rates?

Yes!  The current mortgage rates are already near record lows.

Will mortgages rates drop further (don’t they drop when the bonds drop)?

Not Necessarily.  Mortgage rates are not directly effected by bond rates — there are many factors that determine mortgage rates.  And, a drop in bond rates may reflect market conditions that are already “baked in” to current mortgage rates.

The recent precipitous drop in bonds may be largely a reaction to the coronavirus, and fears of its effects on the global economy.  Yet, those fears and the current bond yields at least hint at a continuation of low rates, if not a drop in rates.

Disclaimer – if we could predict where mortgage rates will go, we would be on a tropical beach, not writing this blog.  Rates could go up or down. Mortgage rates are already CRAZY LOW and its probably time to refinance if you haven’t already!

Read Full Post »

Mortgage Rates And The Market

Up, Up, and Away

Rates on the Rise, But Sales Remain HOT

Mortgage rates spiked over the last two weeks. In fact, since the end of April, the average rate on a 30-year fixed rate mortgage increased by nearly 25%.

Pressure From The Fed Kept Rates Low

The Fed had helped keep mortgage rates low through a bond purchase program called Quantitative Easing (QE for short). But, recent announcements by Fed Chairman Ben Bernanke signaling a slow down or end to QE spooked the market.

Mortgage rates jumped and have continued to rise since those announcements.

Real Estate Market Continues Hot Streak

Despite rising rates, the real estate market remains hot. Realtors continue to be overwhelmed with activity and many sellers are seeing multiple offers near or at asking price.  Homestead’s numbers are no different. After an incredible year of growth in 2012, we have seen a 30% year over year increase in closings. And, despite the jump in interest rates from April to June, our new orders have not slowed.

Homestead’s growth is both a function of a strong market and of our strong commitment and passion to making the closing process easier for our customers and clients. Our values of caring, empathy, flexibility, loyalty and a hands-on, education based approach have cemented a loyal following of Realtors and do-it-yourself sellers.

Read Full Post »

Mortgage Rates, QE, and Wonky Talk

Mortgage Rates Shot Up This Week

Mortgage rates shot up this week and many are wondering why and what’s next. Homestead Title is going wonky today and dabbling in the guessing game of mortgage rates.

Bonds and Mortgage Rates

Mortgage Rates tend to follow long term bonds and, specifically, the 10 year Treasury Bond market. As bond yields increase, mortgage rates go up. And, sure enough, bond yields rose this week. But, most economists believe there is a much stronger force at play that has kept interest rates low. It is called the Fed and its program of Quantitative Easing.

Quantitative Easing Explained

The Federal Reserve has ways of influencing the economy. Its primary tool is to lower the interest rate charged to banks for inter-bank lending. By lowering the cost of money they hope Banks will borrow more, lend more freely, and spur economic growth.

Over the past 4 years, the Fed lowered rates to nearly zero, yet banks still weren’t lending enough and the economy wasn’t growing fast enough. In fact, banks were borrowing this cheap money and using it to buy safe bonds that paid a small return. Unable to lower the cost of money, the Fed sought to influence the quantity of money (hence the term Quantitative Easing). They pumped cash into the economy by buying up the same bonds and safe investments that banks were buying. This lowered the yields on bonds and indirectly lowered mortgage rates.

And sure enough, people borrowed. This spring has seen a surge in the real estate market and low interest rates have surely played a role.

Why Did Rates Rise Suddenly This Week?

When the Fed talks, the markets listen. On May 22, Federal Reserve Chairman Ben Bernanke suggested that the Fed might slow down or stop Quantitative Easing sooner than expected. The markets and banks reacted strongly (some would say they overreacted) and mortgage rates spiked.

What Will Happen Next

We’re a Title Company, not fortune tellers. If we could accurately predict the economy, we’d be on a beach in the Caribbean. But we can report what other’s are saying. Many economists think this is still a volatile market and rates will drop back down. It is hard to imagine rates dropping back to the historic lows of the last year, but we never imagined that was possible in the first place. Rates are still well below 4%, which is a screaming deal by comparison to rates over the last 50 years.

Read Full Post »

Closing Cost Credits

Closing Cost Credits – Buyer Beware!

A simple contract term can cause so much confusion:

“Seller shall provide buyer with a closing cost credit of $3,000 at closing.”

Closing cost credits are often used to help buyers cover their costs or to address contract issues prior to closing. When Buyer’s and Sellers agree on this credit, everyone should be happy. Unfortunately, it is not that simple.

The buyer’s lender must approve all closing credits and they must appear on the HUD-1 Settlement Statement. Problems arise when lenders reject these credits.

Contract Language and Communication

Realtors must draft good contract language and communicate with their Buyers. First, Realtors may provide for a “closing cost and prepaid” credit. Lenders will only allow credits up to the amount of the Buyer’s actual closing costs. Including “prepaids” allows many lenders to increase the allowable credits to include prepaid mortgage interest and tax escrows. Realtors should also avoid excessively large closing cost credits. In Dane County, for instance, it is unusual for closing costs to exceed $3,500. A closing cost credit of $8,000 is virtually certain to be denied. It is also important to communicate with your Buyers and warn them that the closing cost credit requires lender approval. Prepare them for the possibility that the credit may be limited or even rejected.

Avoiding Lender Rejection of Credits

Many Realtors or attorneys include provisions that reduce the purchase price by the amount of any rejected credits. Beware: this can cause delays and the need to re-underwrite a loan. The seller may also credit “prepaid” items to increase the allowable credits. Check with the lender prior to drafting the “closing cost and prepaid credit” provision to make sure it is acceptable. The best practice is to avoid closing cost credits that exceed actual closing costs.

Most importantly, if a lender rejects a credit, there are certain things that are not acceptable:

• Do NOT have the Seller write a personal check to the Buyer at closing
  
• Do NOT ask the title company to write a check to the buyer, and reduce the seller’s proceeds by that amount.
  
• Do NOT have the Realtors write a check to the Buyers.
  

Each of these “solutions” may constitute loan fraud. It is never worth risking a Realtor’s license or an attorney’s practice to assist or instruct their clients in the commission of loan fraud (no matter how unlikely it may seem that there would be any real consequences).

This information is provided by attorney Pete Zarov. This is not intended to constitute legal advice and should not be relied upon in place of individualized legal advice. For more real estate tips, check out Homestead Title’s blog.

Read Full Post »

2011 December Home Sales Report – Wisconsin REALTORS® Association

2011 December Home Sales Report – Wisconsin REALTORS® Association.

Read Full Post »

Is it worth the time and money to refinance?

Many people have media-fatigue when it comes to interest rates. It seems like 10 straight years of constant chatter that “interest rates are near historic lows.” Once again, the news, radio ads, and constant phone calls are imploring people to refinance because “rates are at or near historic lows.” Many people shrug this off and ignore it, happy with their already “historically low” interest rate. This can be a mistake. The reality is that, with a dragging economy, mortgage rates have once again dropped.

Rates ARE at Historic Lows!

Interest rates are indeed at historic lows and, for most people, it makes economic sense to refinance. At this time last year, consumers heard the same drumbeat about low rates. And the news was all true – rates were at historic lows, with 30 year rates at about 4.5%. Today, many banks are offering rates of 3.85% on a 30 Year mortgage. Once again, rates have hit record lows. But many home owners just don’t believe the hype.

Lender and Realtors will tell you that there is no better time to borrow or buy. From the standpoint of interest rates, this certainly appears accurate. Indeed, even if a homeowner purchased or refinanced this summer, it can still make perfect financial sense to refinance again. With interest rates almost a full point (ten basis points in lending terms) lower than early summer, a homeowner with a $225,000 mortgage can save over $130 per month. And, a first time homebuyer has incredible purchase power, with the combination of lower home values and incredibly low interest rates.

Is an ARM an Option?

It is hard to believe that mortgage rates could go any lower. Of course, we’ve all been saying this for 10 years. Still, most people would say it is crazy to pass on locking in on a 30 year mortgage at rates in the 3’s. Then again, how many people own the same house for more than 30 years? Most people move before the end of 10 years. Indeed, it is very common to move every 5-7 years. If you know that you will not be in the same house 4 or 5 years from now (your kids will be in college, your family will outgrow the house, your already thinking of a move), then an adjustable rate loan (an ARM) could be an incredible cost savings. Some banks are offering 5-Year Adjustable Rate Loans at 3.2% or lower. Using the same example above, a homeowner with a 5% interest rate might save $235 per month for the next 3-5 years.

The Challenges of Refinancing

There are challenges to refinancing. Of course, there is the paperwork and time. And there is also the increased standards and scrutiny. Gone are the days when a poor credit score could be overlooked. And gone are the days of easy appraisals. With housing values near or below levels seen 8-10 years ago, many homes simply don’t appraise for enough to support a new loan. For homeowners with decent credit and a lot of equity in their homes, these are not insurmountable hurdles. And, any homeowner thinking of refinancing should work with their lender and never assume they simply won’t qualify.

All of this is to say, believe the hype. Interest rates ARE at historic lows and it IS a great time to buy or refinance. Don’t pass up an incredible opportunity to save money or buy the home of your dreams.

Homestead Title is not a lender and does not provide any loan products. We do provide incredible service and great rates for Wisconsin buyers, sellers, and home owners wishing to refinance their loans.

Read Full Post »

Foreclosures on Hold?

At least three major lenders have suspended foreclosures in nearly two dozen states, including Wisconsin. Allegations of misconduct and flawed practices in foreclosure lawsuits prompted GMAC, Bank of America, and JPMorgan Chase to put the brakes on foreclosures and halt post-foreclosure REO sales of properties in at least 23 states. Indeed, many title insurers have also suspended issuing title insurance policies for REO sales from these companies. Now, according to the New York Times, lawmakers in Washington and many states are calling for a freeze on all foreclosures. Foreclosure Furor Rises; Many Call for a Freeze, Oct 5, 2010.

At issue are flawed or false affidavits – sworn statements by the lenders’ employees who were to have reviewed the files for accuracy and correct documentation. Rather than actually review the files, these companies allegedly used “robo-signers” — employees who signed thousands of affidavits per month with no knowledge of the content and, in many cases, without even bothering to read the Affidavits.

Some Affidavits dealt with lost or missing assignment of mortgages. The bank that made the original loan often assigned or sold their loan to another bank. That bank, the new owner of the mortgage, must prove to the court that they have standing to file the foreclosure action; in other words, they are the proper party with an appropriate interest to foreclose.  They need to produce the original Assignment of Mortgage document as proof. During the hay-day of loose lending practices, many banks lost or even never had the original Assignment of Mortgage documents.

The solution: sign an affidavit that swears that the bank keeps original documents like this and the signer can’t find the original after a thorough search and investigation for the lost affidavit.

The problem: the person signing that affidavit allegedly never made a thorough investigation and has no knowledge of the file. How could he when he signed thousands every month.

In most foreclosures, the home owner never contests the foreclosure action because the homeowner had stopped paying many months earlier. These flawed affidavits usually present only procedural flaws, not real defenses on the merits. Thus, they likely only serve to slow the process and delay the inevitable.  In some cases, however, the injustice may rise beyond a lack of due process. 

No one knows the affect that this temporary moratorium will have on the real estate market or the foreclosure crisis. Yet, it certainly has created more risk and costs for lenders during the foreclosure process.  One affect may be to encourage lenders to seek foreclosure alternatives, such as short sales and deeds in lieu of foreclosure. Only time will tell.

Read Full Post »

Tax Deadline Extended… sort of

Congress Extends the Deadline to CLOSE

Last year, Congress passed a tax credit for first time homebuyers and many “long-time” homebuyers. This credit provided for two deadlines:

• Receive a binding offer to purchase on or before April 30, 2010
  
• Close the sale on or before June 30, 2010.
  

Lenders, title companies, and real estate professionals worked feverishly to close transactions before that June 30^th deadline. All the while congress was working (less feverishly, we are sure) to pass an extension of the bill.

Hours before it was set to expire, the Senate finally approved an extension to the June 30 closing deadline for the homebuyer tax credit, The move will give buyers who signed a purchase agreement by April 30 more time to close and still receive the tax credit of up to $8,000. Once signed by the President, the new deadline will be Sept. 30, 2010.

This extension will benefit those home-buyers who’s deals stalled or financing ran into trouble.  Many homebuyers could not close on short-sales or other distressed properties because of delays in lender approval.  The extension will be a welcome relief to those buyers.

Buyers, Realtors, and other professionals should be aware that this extension only affects home buyers who are in a binding contract that was signed before May 2010. It will not benefit those potential homebuyers who are still shopping for a home.
Interest Rates at Historic Lows

Nevertheless, today’s unprecedented interest rates may amount to a savings almost equal to the tax credit. Indeed, in January, a home-buyer might have locked in on a 30 Year Mortgage at 5.4%, a wonderfully low rate by historical standards. Today, that same 30 Year Mortgage might be at 4.6%. On a $200,000 mortgage, this amounts to a monthly savings of about $97.75 or $4,600 in just four years. While the tax credit might not be available for those still shopping for a home, the savings are still there.

Read Full Post »