This document provides information about navigating changes in the mortgage industry. It discusses how stated income loans are no longer allowed and self-employed borrowers need 24 months of income documentation. It also notes that credit scores are more important in determining rates now. New regulations have eliminated negative amortization loans and appraisals must now be ordered through an automated system. The document provides an overview of refinancing options and available loan products like FHA, VA, jumbo, and renovation loans. It also answers common questions about qualifying after foreclosure or bankruptcy.

1. Navigating a Changing MortgageNavigating a Changing Mortgage
IndustryIndustry
Sheila Mitchell, Realtor

2. Edge Home Finance
• Direct Brokers Saves Time, Money, and
Stress
• Local Company Based In Edina, MN
• Best Service
• I have over 25 years experience as a Loan
Officer

3. Mortgage Industry Changes for Self-employed
Borrowers
• Stated loans are a thing of the past for self-employed
borrowers
• Most lenders require a twenty four month average that is
not decreasing plus a YTD P&L
There have been many changes in the lending business.

4. RATE = CREDIT
• Quoting rates now requires credit scores,
appraisal, monthly income and monthly
debts to determine your rate
• This makes your credit scores very
important

5. NEW REGULATIONS
• Stated income loans are a thing of the past
• Self employed borrowers are having a hard time qualifying
• Negative-Amortization have also been eliminated
• Appraisals are required to be ordered through a random automated system.
They are more expensive, slower, less accurate due to non-area of
expertise
• It’s more difficult to quote rates. We need an appraisal, credit, and income
for loan to value
• Net Tangible Benefits threshold must be met to refinance your home.
• Credit has become much more important in pricing
• Construction loans now require a minimum of 20% down. The end loan may
require less

6. Thinking about Refinancing?
• Don’t miss out while rates are
still low
• Lower your monthly payment
• Convert your ARM to a fixed
rate mortgage
• Cash out to consolidate your
debt
• Shorten the term of your
mortgage
• Cash out for home
improvements

7. BENEFITS
• We must show that the borrower has Net
Tangible Benefits showing why it is in the
best interest of the borrower to do the loan
if it is a refinance

8. Home is where your heart is..

9. Quiz Time!
• WHAT PERCENTAGE OF AMERICANS
OWN THEIR OWN HOME?
• A) 74.2%
• B) 67.4%
• C) 63.5%
• D) 80.3%

10. The Answer Is…
It has gone down by approximately 8% since
the peak in 2007
There is significant pent-up demand
Over 1 million people matriculate each year
C. 63.5%

11. There are some tax benefits for the home owner. You will get a form
1098 for mortgage interest deductions on your schedule A. If you are in
a 25% tax bracket, it’s like Uncle Sam paying approximately 25% of your
mortgage interest

12. Available Loan Products
Which product is right for you?

13. Lender–Paid Mortgage Insurance
• If you put less than 20% down, you have
the option of lender-paid Mortgage
Insurance with good credit
• Implications:
– Generally this means lower payments
– Also potentially a larger tax deduction
• Security on no payment shock sometimes
associated with a HELOC

14. PURCHASE LOANS
REFINANCE LOANS
CASH OUT LOANS
FHA LOANS/203K RENOVATION LOANS
CONSTRUCTION/PERM LOANS
VA LOANS
RURAL LOANS
HARP LOANS
HECM
JUMBO
COMMERCIAL
HELOC

15. HARP-Home Affordable Refinance Program
• If your home is owned now by Fannie or Freddie and closed before 5-31-2009 and
owned by Fannie Mae or Freddie Mac, you may be able to refinance through the
HARP program.
• Your loan needs to be greater than 80% LTV (or you could use a different program).
• I am able to look up who owns your loan with some basic information.
• If you have no mortgage insurance now, you will not have it after you refinance.
• If you do have mortgage insurance now, it will not change.
• You can’t pay off a second or a HELOC with your new HARP loan.
• You must be current with your mortgage payments now.
• You may not have any mortgage late payments in the last 12 months.
• This program ends 12-31-2016.
• Fannie Mae max LTV 125%
• Freddie MAC max LTV 105%
• PROGRAM HAS BEEN EXTENDED THROUGH 2016!

16. FHA- Federal Housing Administration
First time home buyer
•Purchase
– Minimum of 3.5% down or into transaction – may be a gift from a
relative
•Upfront PMI
– 1.75%
– About $1,750 on a $100,000 loan
•Monthly PMI
– .85%
– Cost about $71/month on $100,000 loan
•Seller may contribute up to 3% toward CC Pre-paid taxes and
insurance, and escrows
•Maximum FHA loan Hennepin County $326,600 SFR

17. FHA STREAMLINE
• Perfect 12 month payment history required
• 210 day waiting period between refinances
• Loan must “have purpose”, i.e. reduce payment by at least 5%
(Principle + Interest + PMI)
• Upfront PMI will drop from 1% to .1%.
• PMI will be cut from 1.15% to .55%
• Must have closed by May 31, 2009 to be eligible
• No appraisal needed
• Not necessary to have verified:
– Employment
– Income
– Credit score
• May not:
– Increase loan amount to cover closing costs.
– Take cash out to pay other bills (Max $500 cash out allowed)

18. Building a New Home? I’m the Expert to Call!

19. • Must have 20% cash up front
front
• Two closings
• Rate depends on LTV,
credit, other risk
• Usually Prime plus 2-3% for construction loan
• Interest only during construction phase
• Construction loan pays off other loans and takes title.
With additions, the current loan may stay in place
• Appraise plans and specs and sworn construction
statement
• Second appraisal review when home is complete
CONSTRUCTION LOANS

20. Your Condo Experts
• Edge Home Finance offers:
– Dedicated, seasoned, full time condo staff
– In-house approvals: 2 day turn time!
– Full FHA project approvals
– Non-Warrantable Condo options
– Limited review option for Jumbo Loans
– New conversions

21. JUMBO
• Up to 10 million
• Very competitive Fixed, ARM and Interest only options
• One loan to 90% LTV purchase, maximum $750,000 (NO PMI)
• LTV < 85%; All down payment may be from gift funds
• 90 days off MLS no hit to rate
• Rate and Term Refinance ARMs 90% LTV or CLTV to $750,000
• $1,000,000 to 80% LTV / 90% CLTV
• $1,500,000 to 70% LTV /90% CLTV
• $2,000,000 to 65% LTV
• First position HELOCs to$350,000
(Fixed or ARM)
• NO PMI on any program
• 660 – 679 Jumbo programs to
$900,000
• Primary or personal second homes
to $1,000,000
• Non-permanent residents acceptable
• Available Nationwide

22. Construction Loan Requirements
• Required to have 20% upfront. May use equity in land
if owned more than 12 mo.- may use appraised value
• Must prequalify for the end loan
• Construction lender and end loan lender may be
different
• Construction loan terms up to twelve months.
• Must use licensed builder
• Will need plans and specs
• Will need signed sworn construction statement
• May have end loan financing that is up to 96.5%

23. How Long Do I Wait To Buy?
• Foreclosure to…
– FHA 3 years
– VA 2 years
– USDA 3 years
– FNMA/FREDDIE 7
years
– JUMBO 7 years
• Short Sale to…
• FHA 3 Years
• VA 2 Years
• USDA 3 Years
• FNMA/FREDDIE 7 Years 81-
90%LTV
• FNMA/FREDDIE 2 Years <
80%LTV
FNMA/FREDDIE 7 Years >
90%LTV
• Jumbo 7 Years

24. How Long Do I Wait To Buy?
 Chapter 7 Bankruptcy
to…
– FHA 2years
– VA 2years
– USDA 3 years
– FNMA/FREDDIE 4 years
– JUMBO 7 years
Chapter 13 Bankruptcy
to…
–FHA 1 year
–VA 1 year
–USDA 1 year
–FNMA/FREDDIE 2 years
–JUMBO 7 years

25. We offer VA Loans
• A great advantage is that you may borrow the
entire purchase price of your home.
• No down payment is required.
• We are an excellent VA lender.
• Extremely competitive rates
• Knowledgeable staff
• Will need original DD-214 and Eligibility
Certificate

26. Lock “n” Roll
PURCHASES
•Get pre-approved and locked on
great rates while you are still
house hunting.
•All property and occupancy
types.
•Conventional fixed rates, 15, 20,
& 30
NEW CONSTRUUCTION
•Locks for 55, 70, or 85 days.
•Allows you to renegotiate if rates
go down.
•Conforming, FHA & VA

27. Edge Home Finance
Renovation Lending
Sheila Mitchell

28. Renovation Loan Programs
 Low down payment – 3.5 %
 Minor/Cosmetic to Major/Structural
 From fixer’s to dream homes
 1-4 Units, mixed-use, condos, 5 to 4, 8 to 4
 Almost any kind of repair or renovation – from
habitability and heath & safety to upgrades and
improvements

29. Overview of a Renovation Loan
 We can finance just about any home in just about any
condition
 We can finance just about any repair or improvement into the
loan
 We finance homes and renovation funds based on the future
value of a property

30. FHA Renovation Loan Example
$407,000 - 110% of
Appraised Value
$370,000 -
Appraised Value
Renovations - $50,000
Purchase Price - $300,000
$350,000 Cost
- 12,250 3.5 % Req.
$337,750 Loan
Gifts allowed for 3.5% Statutory Requirements

31. Benefits of 203K Loans for Borrowers
 One mortgage for both the purchase and repair/update of home
 Low down payment – 3.5%
 Borrower often purchases home under value
 Borrower often gains “INSTANT EQUITY”
 Loan can be used for nearly any home repair/upgrade
 Borrower can upgrade home as desired

32. 203K Examples Of Improvements
 Cracked slabs
 Termite report findings
 Appliances
 Floors
 Plumbing and electrical systems
 Exterior and interior painting
 Roofs, gutters, and downspouts
 Heating, ventilation, and AC
 Room additions
 Repair of structural damage

33. What’s In It For You
 Close properties that cannot appraise
(i.e. damaged REOs) - $$$
 Close hard to sell properties - $$$
 Close client’s on dream home based on future renovations - $$$
You are paid at home closing NOT
when repairs/renovations are completed

34. WHAT IS THE AVERAGE MINNESOTA
HOME PRICE?
A) $190,000
B) $229,500
C) $203,000
D) $175,000

35. The Answer Is…
B. $229,500
It has been steadily climbing in the last few years on
average of 7%/year

36. Your Road Map to Success

37. EDGE HOME FINANCE

39. Re/Max Realtor that works for you

40. Vocabulary
Fair Market Value- estimate of how
much a specific home will sell for in
today’s market, taking into account
what similar homes in the area have
sold for
Seller’s Agent- that would be me!
the agent helping you sell your
property and helping you find the
next
Pre-approved Mortgage- a
statement or certificate from your
lender stating you qualify for a
mortgage for a certain amount
Staging- a strategy where a home is
purposely prepared so that it
appeals to potential buyers. May
involve cleaning, de-cluttering,
rearranging furniture, redecorating,
etc.
Survey- document that defines the
boundaries, measurements and
structures on your property
Offer- offer of purchase in writing
for a particular property
Conditional Offer- offer to purchase
with conditions such as satisfactory
home inspection or suitable
financing

41. Top Seven Reasons To Purchase A Home

42. Tax Benefits
The U.S. Tax Code allows you to deduct the
interest you pay on your mortgage, your property
taxes, and some of the costs involved in buying a
home.

43. Appreciation
Real Estate has had stable
growth since 1972. The
recent housing crisis,
although devastating to
many, shows values are
still up 7% on a cumulative
basis. The number of U.S.
households is expected to
rise 10% to 15% over the
next decade which will
create a continued
demand for housing.

44. Equity
Money paid for rent is
money that you will never
see again. Mortgage
payments let you build
equity ownership in your
home.

45. Savings
Building equity in your
home is a ready made
savings plan. When you
sell, the first $250,000 gain
does not get taxed as a
gain. It is $500,000 for a
married couple.

46. Predictability
Unlike rent, fixed rate
mortgage payments do not
rise over the years. Your
housing costs may actually
decline as you own the
home longer. However
keep in mind that property
taxes and insurance costs
may increase.

47. Freedom
The home is yours. You can decorate any way you
want and choose the types of upgrades and
amenities that appeal to your lifestyle.

48. Stability
Remaining in one
neighborhood for several
years allows you and your
family to build long lasting
relationships within the
community. It offers
children the benefit of
educational and social
continuity.

49. Consider Location Work How will you get to work? Is public
transit nearby?
School Where will your kids go to school?
Is transit or bus service available? Will your
kids be able to walk to school?
Kids Where will your kids play and hang
out? Are there nearby playgrounds and
parks?
Neighbors Do the local homeowners
seem like the kind of people you’d like as
neighbors?
Shopping Where will you do your
weekly shopping?
Hobbies How far will you be from golf,
theater, or other hobbies?
As your REALTOR, I can help answer
these questions for you.
Sheila Mitchell
(612) 802-3978

50. You Are Ready To Sell?
Getting Your Home Ready
1. What is your first impression?
2. Is it bright?
3. Does it look and smell fresh and clean?
4. Does your home look dated?
5. Is your home cluttered and too full?
6. Is there soft upbeat music playing?
7. Warm cookies or small treat for your guests?

51. Re/Max
What Is Your Return
On Renovations?
Kitchens 85%
Bath 92%
Siding 85%
Windows 85%
Consult your Realtor about
getting the most value out
of every renovation dollar
you spend

52. Showings and Open House
Checklist
Eliminate Clutter
Keep, Donate, Throw Away
Remove Valuables and
Breakables
Be Hospitable
Have a Family Plan of Action
Make Cleaning Up and Making
Beds a Habit
Clean Out Garage, Attic,
Storage Areas, Closets

54. Give a nice clean look to the house
Remove any sign of family photos or heirlooms. Make space to
envision their own belongings in home
De-clutter the house and remove excess furniture
Clean up the outdoors with landscaping and washing exterior
surfaces
Open up the curtains and blinds to bring in natural light and use
brightest bulbs fixtures allow
Paint brightly colored rooms in neutral colors
Help the buyers to picture themselves in their new home
SIGHT

56. Taste
Place a bowl of snacks or a tray of juice out with
a note to the buyers saying “help yourself”
For those who love to cook, get taste and smell
down by baking cookies or brewing coffee
Just be sure to have cups, sugars and creamers
out

58. Avoid allergies of the buyers
Instead of using air fresheners and candles, go for a
natural aroma by opening windows
An apple with cinnamon and vanilla warming adds an
amazing smell
Clean bad odors from pets, smoking, and cooking
Adding flowers can bring a bright and fresh smell
Smell

60. Sound
Take a moment to sit in the house and listen
Creating a calming, upbeat environment helps
the buyers escape their busy lives
Use soft music, a water fountain or a fire in the
fireplace to create pleasing sounds

61. Soft Music

62. Touch
With buyers coming in and out, make sure that
the house is cleaned from top to bottom
Think about the environment of the house by
making sure that the temperature isn’t too hot
or cold

64. Intelligent Pricing
Your best chance of
selling your home is in
the first two weeks of
marketing
With a sign in the yard, MLS listing,
internet marketing, open houses,
broker’s caravan, ads and email
blasts to buyers, your home will get
immediate response
Consult with your agent and ask for
feedback. Perhaps you can do more
to make your home show at its best
The market can always change its
mind and give your home another
chance, but by then you’ve lost
precious time and perhaps allowed a
stigma to cloud your home’s value
Intelligent pricing isn’t about getting
the most for your home – it’s about
getting your home sold quickly at fair
market value

66. Tips for Pricing Your Home
Consider comparables – What
have other homes in your
neighborhood sold for recently?
How do they compare to yours in
terms of size, upkeep and amenities?
Consider competition – How
many other houses are for sale in
your area? Are you competing
against new homes?
Consider contingencies – Do
you have special concerns that
would affect the price you’ll receive?
For example, do you want to be able
to move in four months?
Get an appraisal – For a few
hundred dollars, a qualified
appraiser can give you an estimate
of your home’s value. Be sure to ask
for a market-value appraisal. Contact
www.appraisalinstitute.org or
ask me for assistance.
Ask a lender – it is important to
price in line with a lender’s
estimated value
Be accurate
Know what you will take
(Reprinted from REALTOR magazine copyright 2008)

67. Exterior Before and After

68. Living Room Before and After
Typically we can make due with the furniture you already own

69. Beautiful Staging Before and After

70. Inexpensive Kitchen Update Before & After

71. Cluttered Office to Nicely Staged Room

72. Just a Few Simple Accessories

73. Re/Max
Tops
The
List

75. Re/Max is the Market Leader

76. Powerful Negotiator
•Knowing the value of your
asset
•Understanding factors like
interest rates, closing costs
and closing dates
•Working with financing
options and down payments
•Guiding you through repair
issues, appraisals and
inspections
•Representing Your Best
Interests