I360 CG BLOG

AFFECTING THE MORTGAGE INDUSTRY? NEW LAWS 2022

Thu, 12 Jun 2025 18:09:01 GMT

It’s important to stay up to date on the ever-changing landscape that is the mortgage industry. It’s possible that the newest laws passed by congress, Fannie Mae, and Freddie Mac could affect those looking to get a mortgage, or refinance in the coming months. We’ve put together all the latest on the newest and upcoming mortgage laws affecting the industry.

Additional due diligence for condo buyers

If you’re looking at buying a condo that is 20 years or older, you may have to jump through a few extra hoops before signing the final loan docs.

Conventional loan buyers will have to go through an additional due diligence process that includes obtaining answers on safety, soundness, structural integrity, and habitability of condos from the condo association before the loan can be processed.

If you’re looking at a condo this spring, it’s best to get prepared now. While this extra due diligence step is a pain, it’s in your and your lenders best interest. This extra due diligence step was born out of the devastation of recent condo building collapses in the U.S.

New fees for vacation home financing and high-balance loans

If you thought 2022 was the year for. A second home, vacation home or jumbo upgrade, it may still be but you’re going to be looking at additional fees.

Upfront fees for these types of loans are expected to increase between 1.125 percent to 3.875 percent. Fannie Mae and Freddie Mac explain that these increases in the second home market are to keep first-time homeownership rates low and facilitate equitable and affordable housing.

You can still buy down these increases with points just like you can buy down an interest rate. This rate increase comes as we saw the housing market skyrocket and borrowers take on additional debt to compete in this hot market.

Self-employed borrowers rejoice – loosened regulations

Thanks to the pandemic, the number of freelanced workers has increased. The good news keeps on coming because lending criteria has relaxed for self-employed borrowers. The COVID-19 pandemic saw an increase in requirements for self-employed borrowers. If you’re a freelancer, you no longer need to provide year-to-date profit and loss statements and three months of bank statements.

We’re back to the good old days of using tax returns to show income! If you’ve been waiting to buy a home because you’re a self-employed borrower, now is the time!

In the past, borrowers had to show creditworthiness through any number of on time loan payments including credit cards, first mortgage loans, car loans and more. The strict creditworthiness requirement affected many buyers that did not have credit cards, mortgage loans, or car loans.

Now your mortgage loan provider can use a verification tool to check bank deposits for on-time rental payments, and other creditworthiness information. Say goodbye to mounds and mounds of paperwork proving you pay your loans on time!

DO YOU REALLY NEED A REAL ESTATE AGENT?

Tue, 14 Jun 2022 18:19:33 GMT

The real estate agent that you’re working with to buy your home should be your advocate. You want to ensure that they are aware of all risks and benefits associated with the property you’re looking to buy. There is a major benefit in having a good real estate agent because they can ultimately help you make money on the purchase of your home in the long run. If your agent shows you homes where you could add an additional bedroom or bathroom or they show a property where you could finish the basement, they’re helping you gain equity in the property.

On the flip side of that, if they don't understand your search area and they show you a home that is overpriced and they suggest that you go in over the true value of that home, you’re losing money on the transaction. It’s important to work with someone that you trust to guide you through the process and help you make decisions that will help your bottom line, not hurt it.

Here are some tips for choosing the correct agent for you:

1. Find someone that is relatable and that you get along with. You’re going to be spending a lot of time talking and working with this person so it’s important that you get along and will work together nicely. It’s suggested that you interview at least 3 or 4 agents before making a decision and signing any agreements. Trust, chemistry, and experience are key factors to take into consideration during your interview process.

2. Referrals from friends and family who have used certain agents can be great, but it’s still important to interview these individuals. Someone who worked great with your brother might not necessarily be the best choice for you.

3. Finding an agent that feels passionately about helping you buy or sell your home is the person you want to hire. Finding that person who has the drive and love for their job and helping their clients will close deals faster and at more favorable prices.

4. Sometimes when searching for an agent, you will interview someone who tells you exactly what you want to hear. That’s great at the moment but when it comes down to buying or selling, you need someone who will be honest with you about the risk and reward.

Real estate is hardly ever cut and dry so it’s important to choose someone who will assist in setting your expectations from the beginning so that you’re prepared for what is to come.

5. Work history is also very important when choosing an agent. Do they currently have 10 homes that have been sitting on the market for over 100 days? Or no clients under contract on new homes? Those might be a few red flags to look out for because they indicate that this agent might be pricing their listings too high or they might not have the ability to assess offer prices and terms for their clients.

THE INS AND OUTS OF FINANCING A 2ND HOME

Mon, 23 May 2022 20:34:54 GMT

Step 1 – Decide How You’re Going to Use the Second Home

Your down payment requirements and loan types will differ depending on what you plan to use your second property for. For example, do you plan to use it as a vacation home, secondary residence, or full-time rental property?

A vacation home or secondary residence may qualify for a conventional home loan. When qualifying for a second conventional loan, the process is much like your first mortgage except you will be required to put down 10 percent.

If you are purchasing the home to use as an investment property or full-time rental, you won’t qualify for certain loan types such as FHA or VA loans. You will also be required to put down a larger down payment than a vacation home or secondary residence. In addition, you may have to meet stricter debt to income ration requirements.

All hope is not lost though! You can still qualify for a vacation home or secondary residence if you plan to rent the home out on apps like Airbnb. Typically, you must occupy the home for some portion of the year, and the home must be a one-unit home that can be used year-round.

We can help you figure out what loan type you qualify for.

Step 2 – Save For Your Down Payment

There are multiple ways to complete this step. You can save the traditional way and put away a portion of your paycheck every month. You can also use the equity in your primary home to fund the down payment of your second home. There are multiple programs available such as:

· Cash out refinance: A cash out refinance allows borrowers to borrow up to 80% of their home’s current value. The only caveat with this option is that your primary home’s monthly payment will increase.

· HELOC: A HELOC, otherwise known as a Home Equity Li ne of Credit. This avenue differs from a cash out refinance because you are not refinancing your primary home’s mortgage. This is a good option if current interest rates are higher than your primary home mortgage interest rate. The last thing you want to do is refinance to a higher interest rate!

Step 3 – Work on Your DTI and Credit Score

As we’ve discussed previously in this article, you will need to meet stricter standards to qualify for a second mortgage. Your credit score will likely need to be around 725 and your DTI below 36 percent.

If you are don’t currently me et these requirements, you can work to make your consumer loan payments on time and eliminate as much revolving debt as possible.

Step 4 – Get A Pre-approval

Once you’ve decided how you’re going to use your second home and how you’re going to finance it, it’s time to get a preapproval. You’ll want a pre-approval before even looking at homes to ensure you’re able to put in an offer when the second home of your dreams pops up on the market.

This pre-approval will be much like your primary residence pre-approval. Make sure to get all your financial documents in order and work closely with us to fill in any gaps in your financial or work history.

Remember: be honest, don’t try to use a primary mortgage for a second home. It will be found out, and it is illegal! We are here to help you through the process as seamlessly as possible. Being honest, upfront, about wanting to qualify for a second home will only help you move through the process quicker.

THE MORTGAGE BREAKDOWN

Mon, 25 Apr 2022 19:24:17 GMT

If you’re buying or refinancing a home, it’s important to know the different loan types that exist so you’re best prepared for what to expect. There are four main loan types that all have specific qualification criteria. These four loan types include conventional, FHA, VA, and USDA and each loan type has its pros and cons that we will walkthrough below.

The most common mortgage type is a conventional mortgage and which is a loan that is not backed by the government and is used when the buyer doesn’t meet the criteria for an FHA, VA, or USDA loan. Within a conventional mortgage, you can choose either a fixed rate or adjustable rate, also known as an ARM. The safer of the two options is a fixed-rate mortgage because this loan type ensures that you have the same interest rate on the first and last day of holding the loan. The riskier option is an ARM because you have a fixed rate for a particular period of time and then the rate can and likely will adjust based on the market.

In terms of down payments with a conventional loan, you’re able to put as low as 5% down, but if you put any less than 20% down on the purchase of your home you will be required to pay private mortgage insurance, also known as PMI. This is a monthly payment that protects the bank if you default on your loan. To get rid of PMI, you will need to reach a minimum of 20% or a maximum of 22% equity in your home.

The most common fixed-rate conventional loans have 15-year and 30-year terms but you could have a mortgage for 10, 15, 20, or 30 years at your fixed rate. A 30-year fixed-rate loan is the most common loan type amongst homeowners today because this loan allows you to have lower payments than a shorter-term loan and the interest rate is the same on day 1 as it will be on day 10,950. Nerd Wallet reported that the major pros associated with a 30-year fixed-rate loan include predictability, ease of qualification, increased tax deductions, and ultimately the ability to afford more houses per payment. Some of the cons associated with a 30-year fixed-rate mortgage include a danger of overborrowing, higher interest rates, and slower growth in equity.

The most popular loan type associated with financing is a 15-year fixed-rate mortgage. Your interest rate is set for the life of the loan but you’ll likely see a lower interest rate than with the 30-year fixed option. Nerd wallet reported that the pros associated with this loan type include a shorter path to full ownership and faster equity while the major con would be a larger monthly payment.

If you’ve chosen an adjustable-rate mortgage, it’s important to realize that the rates could be lower than a fixed rate now, but there is a high likelihood that rates will increase as your loan progresses. For example, you decide on a 5/1 ARM for 15 years, the first number is the length of time, in years, that you will hold the initial rate and the second number is how frequently an increase could occur for the remainder of the loan. This means that for the first 5 years you will hold the rate you initially locked in and then every year for the next 10 years, your rate will increase. The 5/1 ARM is common along with the 5/5 ARM which means that the rate will hold for the first 5 years and adjust every five years after that. Ultimately, this loan type benefits people that don’t want to have a mortgage long or if they think interest rates are going to go down. With the interest rates so low right now, I would not suggest an ARM because the market won't be like this forever and ARM rates follow the market.

Next, we have an FHA loan which stands for the Federal Housing Administration because the rates are insured by the federal government. This is a loan type allows buyers to put down as low as 3.5% to secure the home and the major benefits with this loan type is that you don’t have to put much money down, you’re likely to qualify with a lower credit score, and you can have a higher debt to income ratio. This loan type is not only for first time home buyers, this program can actually be used for any buyer but the goal is that you will only need to use this program on your first home as it sets up the buyer to succeed. The major con associated with FHA loans is that you will have to pay PMI until you reach 20% equity.

A VA or Veterans Affairs loan is backed by the Department of Veteran’s Affairs and allows veterans to purchase a home with no money down and no private mortgage insurance. You will need to work with an approved VA mortgage lender but this is a great program to allow veterans to get on their feet and purchase a home once they leave active duty. The borrower will have to pay a VA funding fee but which is written into your monthly payments.

A USDA loan is backed by the Department of Agriculture and it is a program that allows income-qualified individuals to purchase a home in rural and some suburban areas for no money down. There are income limits and value caps within this program but if you qualify and purchase a fixer-upper, there are home improvement loans and grants available to assist.

The two last mortgage types are not often used which include jumbo loans and interest-only mortgages. A jumbo mortgage would be for a buyer who is purchasing a large dollar value home. This loan type has fixed and adjustable-rate options, required at least 10% down, and required a credit score of over 700. In 2021, the jumbo loan limit was increased to $548,240, as reported by Nerd Wallet (https://www.nerdwallet.com/article/mortgages/jumbo-loan-limits). And interest only loans are for someone who can put down more than 10% on the home, have a credit score over 700, and a low debt-to-income ratio. This loan type usually has an adjustable rate and is for 10 years. Throughout those 10 years, you will only pay interest on the loan, no principal. Once the 10 years are up, you will make amortized payments to pay off the principal. This loan type is best for an individual that has a high monthly cash flow, increasing income, or large cash savings.

When you initiate your conversation with us, it’s important to know what loan type you’re interested in seeing numbers for. Much of your decision will be made by your credit score, income, debt-to-income ratio, and down payment, but it’s crucial for you to feel comfortable in your choice so it’s important to do the homework.

MORTGAGE INTEREST RATES ARE ON THE RISE

Tue, 12 Apr 2022 19:45:03 GMT

Everyone is talking about the rising interest rates, but not many know what that means for them or their mortgage. We’re going to breakdown why interest rates are rising, what that means for you, and what you can do about it.

During COVID we saw the lowest interest rates we’ve seen in many years. Some of the lucky ones received interest rates as low or lower than 2.5 percent on their refinance, or new mortgage loan. With mortgage rates on the rise, the market is panicking but that doesn’t mean you need to panic.

What are interest rates and why are they rising?

Interest rates are the cost of borrowing money. An interest rate accompanies any loan that you take out. A lender assesses an intere st rate based on how risky it is to lend to you. Your payment history, credit history, and more factor into your riskiness. Changing interest rates are affected by many factors, and one of those factors is the government.

The federal reserve sets and controls the federal funds rate. The federal funds rate impacts the prime rate and the secured overnight financing rate. You’re probably asking yourself what this has to do with you? Well, when the federal reserve raises the federal funds rate, it becomes more expensive for banks and lenders to borrow; that cost is passed on to the customer.

For example, Forbes put together a great example of how this affects mortgages. If the Fed raises interest rates by 1 percent, the bank will likely raise the rate for a 30-year fixed mortgage to 4.5 percent. Remember, banks and lenders must make money too so if they are charged more to access funds, they need to raise the rates they charge customers to make the same profit.

So, a family shopping for a $300,000 home loan would pay a total of $547,000 over the life of the loan with a monthly payment of $1,520. If the fed had not raised rates and the bank kept their mortgage rate at 3.5% the family would pay $485,000 over the life of the loan with a monthly payment of $1,340.

The big question is, why is the fed raising rates and making home buying more expensive? The fed raises rates for a variety of reasons including to slow the effects of inflation. We are battling a record level of inflation in the US due to the COVID-19 pandemic, and supply and demand issues.

To cut that down, the fed raises rates to make it a little harder to borrow money. This isn’t all bad for you though! Yes, it will be harder to get a home loan, and the cost of an average home is a little more expensive but let’s get into why this may be good news for you.

Three reasons why you shouldn’t let rising mortgage rates stop you from buying a home.

Reason #1: A less competitive market.

Higher interest rates mean people won’t be able to or willing to offer $20k, $30k, or $40k over the asking price of a home. If you’ve been waiting to enter the housing market or priced out, now may be the time to enter the market with interest rates on the rise.

Reason #2: You can refinance later.

These rate hikes won’t be around forever! You can always refinance when rates start to drop again. Your 4.5% interest rate doesn’t have to be your interest rate forever! If you can, use this time to enter the market and get your first home. You may be paying a higher monthly payment for a while, but if you can swing it; that monthly payment won’t be forever!

Reason #3: You can pay down your interest rate.

You can work with your lender to lock in a lower than standard rate and use some of your down payment or savings money to pay for a lower rate. If you can save an extra, few thousand dollars before you enter the housing market then you could purchase the interest rate that works for you. Your mortgage lender can help you with this process.

We hope this article about interest rates was helpful to you. Though the rate hike is scary and inconvenient, you can leverage this hike to work in your advantage. Ask us what options are available to you, and we will help get your financing in order before you even start looking at homes. If you have any questions, we are here to help!

APPRAISAL Q & A

Thu, 17 Mar 2022 19:26:42 GMT

Home sellers and homeowners all must go through the appraisal process. The appraisal process is one of the final steps before closing on your new home. Without it, your mortgage lender may not be able to process your loan. We’re going to discuss what an appraisal is, why it is important for receiving your home loan, and steps to take to make sure your appraisal goes smoothly. With this knowledge, you’ll be able to sail through to appraisal process with minimal worry and effort.

What is an appraisal?

A home appraisal estimates how much the home your purchasing is worth. You or your mortgage lender will send out a certified look over the home and research pricing of homes in the area. An appraiser will look at:

• the general condition of the home,

• the home’s location,

• the age of the home,

• how the home’s exterior looks,

• size of the home,

• any signs of damage like decay, water damage, mold, etc.,

• the home’s interior, any prior home improvements done by the seller,

• safety issues especially if you are using a VA or FHA loan to finance the home,

• anything that may affect the value of the home.

At the end of the day, the appraiser is there to help you and your mortgage lender determine the responsible and actual value of the home, so you and your lender aren’t overpaying for something just because the market is hot.

Why is an appraisal important?

An appraisal is important to make sure the home is worth what the seller is asking. Your lender will use the appraisal to finalize your loan.

For example, if you offer $500,000 and the home appraises for $450,000, your lender will only issue a loan for $450,000. You will need to come up with the extra $50,000 to close on your home at that price, or work with the seller and the seller’s agent to negotiate the home down to the appraised price of the home.

An appraisal is also important if you are refinancing your home or looking to take out an additional loan from the value of your house. During the refinancing process, the appraiser is looking to see if your home has increased in value from the price, you originally purchased it for. Your home can increase in value for several reasons such as improvements and new additions, or the location becoming more desirable. If you are starting the refinancing process, your lender will send out an appraiser.

Are home appraisals and inspections the same thing? [H2]

No! In fact, they are for very different. A home appraisal is specifically ordered by your lender and is required. A home inspection, while optional, is highly recommended and a home inspection helps you negotiate with the seller and understand the overall condition of the home.

A home inspection is very in-depth and identifies very specific issues, while a home appraisal is broad and looks for glaring issues that are noticeable to the eye.

How to make your home appraisal go smoothly [H2]

There is not much you can do as a buyer to prepare for a home inspection. Sellers or refinances can focus on a few major things to make sure their home inspection goes smoothly:

• Make any minor fixes: we just finished saying that an appraisal is rather broad but making finishing touches will increase the overall look and feel of your home.

• Update the curb appeal: the appraiser is focusing on what the outside looks just as much as what the inside looks like. Make sure your grass is cut, your home is power washed, and your landscaping looks its best on appraisal day.

• Make cosmetic upgrades if possible: patch paint, re-stain the deck, do anything you can to make your home look new and fresh.

• Keep a record of the improvements you’ve made since purchasing the home: the appraiser may consider the upgrades you’ve put in the home since owning it.

• Deep clean: a clean home comes across as fresh. You’ll want to make sure you’ve cleaned everything well before appraisal day.

If you follow these steps, we’re confident your appraisal day will go smoothly, and you will get the appraisal outcome you desire.

Don’t be afraid of the appraisal process, it is intended to protect you and your lender from investing in a property for more than it is worth. We hope this article will help ease your worries and help you understand the appraisal process and its purpose. If you still have questions, your lender can help!

2021 to 2022 REAL ESTATE MARKET

Mon, 14 Mar 2022 17:38:47 GMT

Even if you’re not looking to buy or sell a home, I’m sure you’ve heard how unsettled the housing market is right now. Bidding wars driving up housing prices, homes going under contract within days of hitting the market, buyers waving contingencies to secure a home, the list of crazy scenarios goes on and on. If you' re someone who doesn’t follow the markets ebbs and flows, it may appear that COVID-19 caused this entire situation but really, the market has been strengthening for the last few years and the pandemic was that final push that led to the madness.

The four key topics that control the housing market are, real-estate prices, housing affordability, interest rates, and inventory, all of which are correlational. Right now, interest rates are low which is driving up house affordability as well as putting a lot more buyers in the market, ultimately causing a decrease in inventory and increased real estate prices.

Interest rates have been a major factor controlling the market through 2020 and into 2021. Freddie Mac reported that interest rates have been declining since November of 2018 and they have continued to decline and hit record lows through 2020 and 2021. The three most popular loan types 30-year fixed, 15-year fixed, and 5-1 ARM, hit all-time lows in early January of 2021. Although rates have been on the rise since their January low point, they are still incredibly low in comparison to the 3-to-5-year average.

These incredibly low interest rates have a direct effect on housing affordability. Your monthly mortgage payment is made up of principal, interest, insurance, and taxes. The interest rate you lock in when entering a mortgage plays a crucial role in your monthly payment. The lower your interest rate, the more house you can afford. Homes are more affordable when interest rates are low because buyers have the ability to take on a larger monthly payment.

As interest rates remain low and homes become more affordable, inventory tends to decrease. In the first few months of 2021, there were 30 fewer homes for sale than in the first few months of 2020. So, what does that mean If you’re in the market to buy a house, you had better be on your toes because homes are selling quickly Reports from April 2021 show that homes are on the market for 20 days less than this time last year and the average home is only on the market for sale and pending for 43 days. From 2017 to 2019, the typical time a house was on the market was 61 days. In regards to geography, homes are moving most quickly in the Northeast, followed by the South, Midwest, then the West. Inventory is at record low numbers because homes are selling so fast. The number of homes on the market or pending is down 21.9% compared to April of 2020. With homes moving so quickly, buyers are willing to pay more for the homes that are available.

The current market is a high demand, low supply situation that is driving prices up to record highs. Realtor. com reported that the median national home price is currently 17.2% higher than it was last year, at 375,000. Larger metro areas have been hit even harder than the national average, with Austin, TX seeing a 40.6% increase in media n list prices compared to 2020.

Inventory has actually been fairly low over the last few years and the pandemic has only worsened the situation. Redfin reported that nearly two thirds of buyers faced a bidding war in the month of March 2021. Even some sellers received over eighty offers within just a few days of listing their home. There is hope for buyers as we continue to move into 2022 because experts are reporting that through the rest of 2021 and into 2022, inventory is expected to grow.
There are a few factors that will assist with the housing market as we move more into 2022. The foreclosure moratorium ended at the end of June. In early 2020, the federal government stepped in to ensure that Americans could stay in their homes during the global pandemic. On February 16, 2021, President Joe Biden extended the Foreclosure Mortarium, banning foreclosures and mortgage forbearance options for anyone holding an FHA, VA, or USDA loan. This extension protected homeowners until June 30, 2021, which was originally set to expire on March 31, 2021, now allowing mortgage holders to pause payments for a total of 18 months. Current mortgage data, reported by CNBC shows that 2.1 million homeowners have suspended their mortgage payments and an additional 1.18 million homeowners are at least 90 days behind on their mortgage payments. In 2021, foreclosures are down 80 which means there will be an inevitable flood of foreclosures on the market.

Buyers are going to extreme measures to secure a home in this crazy market. Many buyers are waiving contingencies, leasing back the home they purchase, and even paying cash. Many buyers in this market are not in the situation to do any of these, especially millennials who are just now entering the market for their first home. Ultimately, this is one of the toughest markets that we've seen in the history of real estate, but the hope is that by the end of the year there will be more inventory while interest rates remain low.

READY TO BUY A HOME?

Wed, 16 Feb 2022 23:53:51 GMT

Buying a home can be so incredibly exciting and nerve-wracking at the same time. It is a major commitment, one that you’re likely taking on for 15 to 30 years, depending on the term of your loan, so it’s important to be sure that you’re ready to take on this task.

Prior to buying your first home, you’re more than likely already paying rent so the payments might not be too much of an adjustment. Shoot, your mortgage payments might even be less than your current rent so if that’s the case, you’re already off to a good start. With that being said, the biggest shock when switching from renting to owning is that you are now responsible for preventative maintenance and fixes to every aspect of the home. If your refrigerator stops working while you’re renting, your landlord is responsible for the fix. If you own the property, it’s now your responsibility, on top of keeping up with mortgage payments. This is why financial stability is so important when walking into the homeownership.

There are a few different factors to take into consideration when deciding if you’re ready for homeownership. First, are you mentally prepared to make a 15-to-30-year commitment? This is a massive hurdle but once you’ve decided that it’s time to get the ball rolling, you will need to get in touch with a lender. This is where the real work begins because if the bank is going to lend you enough money to purchase your home, they want to ensure that you’re financially secure enough for that commitment. The bank will dig into your work history, pay stubs, debt-to-income ratio, credit, and funds available to close as these are the major factors that will help them determine the likelihood that you will pay back your loan on time.

Do you have a stable job with a steady income? Is there anything that could affect this income? It’s crucial to ensure that you will have financial stability through the life of your loan because if you get behind on payments, you may not be able to catch back up. Your potential lender will be looking for 2 years of W2s so it’s important to have at least two years of work history under your belt.

If you’re in sales and paid on commission or you’re a small business owner, getting loan approval will likely be more difficult because of your “unsteady income.” For someone in these situations, it’s suggested that you have 8 to 12 months of income to show the bank so they know that you’re prepared to pay back the loan on time. This may seem like an unrealistic figure but it’s important to have liquidity when proving to the bank that they can trust you with their money.

Next, it’s important to have your debt-to-income ratio under control. Your lender will calculate this value by taking the sum of all your monthly debt and dividing it by your gross income. Some lenders will use your net income but using your gross income will provide a better representation of the true debt to income ratio. From a gross income basis, the bank will expect this number is under 36%.

Next, how is your credit? Credit is a factor that is taken into consideration anytime you’re hoping to borrow money and the better credit score you have, the better interest rate you’re going to end up with. The interest rate you have will control your monthly payments and ultimately determine how much house you can afford. If your credit score is not above 580 before speaking to a lender, it’s time to work on fixing this number because below 580, you don't qualify for a mortgage .

In terms of improving your cre dit score, it is made up of five different factors which include payment history, the amount owed, length of credit history, types of credit, and new credit. These five factors hold different weights to your overall score and your payment history makes up the largest portion of the calculation at 35%. Next, the amount owed is weighted at 30%. For there, the weight drops for the next three factors. Length of credit history is weighted at 15% while types of credit and new credit are weighted at 10% each.

Along with paystubs and W2s, the bank will also ask for a record of all assets you have available. They will ask to see current statements for your 401k, investments, and bank accounts to be sure that if you lose your job or fall behind on your loan, there are assets you can utilize to make payments.

The last factor that will go into your lender approval is how much money you have available for your down payment. When closing on your home, you will be required to pay a down payment which can range from 0 to 20% of the total loan, depending on the loan type. You will also be required to pay closing costs on the home which are usually about 3 to 4% of the loan cost. Unfortunately, closing costs don't go to the loan, they're just the fee associated with transferring the home to you. If you’re applying for a USDA or VA loan, you can put as low as 0% down and just pay closing costs. For FHA loans you will need a minimum of 3.5% to put down with closing costs. And conventional loans require a minimum of 5% down and closing costs. If you don’t have the funds to pay for both the required down payment and closing costs, the bank won’t be willing to lend you the funds for the remainder of the loan.

Ultimately, when deciding if you’re ready to buy a home, it’s crucial to ensure that you have a down payment, funds for closing costs, other savings available, a steady job with consistent wages, a debt-to-income ratio below 36%, and a credit score above 580.

Remember, be sure to visit a few different banks to determine what their rates and options are. Once you’ve checked with 3-4 different banks to see who provides the best rates, it’s time to get pre-approved. The bank will let you know how much you’re approved for as well as provide a pre-approval letter so that you can start looking at homes and possibly get under contract fast.

NEW CONFORMING LOAN LIMITS

183:738413916 (Deana Devereaux) — Wed, 08 Dec 2021 21:47:02 GMT

Yep! You read that right. In 2022, buyers seeking a conforming loan can qualify for a federally backed mortgage of up to $647,200 for single family properties in most states. This increase by the fed signals a strong economy and increased buying power in the new year. If you’re new to the home loan process, you may be wondering why this is so important and, perhaps, wondering what a conforming loan is. Don’t worry, our team is going to break it down for you so you can go into the new year and home buying process strong.

What is a conforming loan?

A conforming loan is a standard home loan with certain conditions and criteria that make it eligible for backing by the federal government’s Fannie mae and Freddie mac programs. These loans are less risky for lenders because the federal government buys them on the secondary mortgage market, and packages them into securities to sell to investors.

Say what? Secondary mortgage market?

That’s a thing! After your lender processes a loan, typically the loan is sold to another company.

Sometimes, the mortgage company that originated your loan will stay your servicer. That means the company that you pay your monthly payment too is the same person who originator your loan. Other times, a company will buy the right to service your loan or will buy your loan as a security. If your servicer changes, you’ll receive all the information in the mail!

Anyways, back to the main point. Conforming loans are less risky because they are bought from your lender by the federal government. A conforming loan signals to the market that you, and your loan, are a very safe investment because of Fannie Mae and Freddie Mac’s intense underwriting procedures and stringent criteria to qualify for this type of loan.

When a loan meets the stringent requirements set out by the federal agencies, it is a conforming loan and will be purchased from your lender by the federal government on the secondary mortgage market.

When the federal government packages the loan and sells it as a security to investors, they guarantee to investors they the federal government will cover the investment if you default on your mortgage. This assuredness to securities investors has benefits for home buyers that we’ll discuss a little later.

What are the main criteria to qualify for a conforming loan?

That’s a great question. A lender can work with you to determine if you fit in the criteria to qualify for a conforming loan. Some of the main criteria used to classify a borrower’s loan as a conforming loan is:

● Credit score - usually above 740

● Debt to Income ratio - 45% or lower

● Home price, and - a whopping $970,800!

● Down payment amount - at least 20% down

These criteria are set by Fannie Mae and Freddie Mac. When you work with a lender they can help you determine if you qualify for a conforming loan.

What are the benefits of a conforming loan?

We said previously that the federal governments assuredness in your loan passes on benefits to home buyers, and we weren’t kidding. The biggest benefit of a conforming loan is it’s low interest rates. Low interest rates equal lower monthly payments!

So, what’s the big deal?

The big deal is that before, the home price for a conforming loan couldn’t exceed $548,250. As we’ve seen over the past year, home prices have continued the rise. Many borrowers in larger markets could not qualify for conforming loans if their purchase price exceed $548,250. 2022’s conforming loan limit is a 18 percent increase from 2021.

That’s a ton more buying power for qualified buyers! In more expensive areas like California, New York, Hawaii, and Washington DC the conforming loan limit is $970,800. A serious increase from $822,375.

All in all, the conforming loan limit for your area may be different. It is best to check with your lender on what the conforming loan limit for your area is.

Contact us today with any conforming loan questions.

Our team is poised and ready to assist you with all your conforming loan questions. We work hard to make sure all your questions are answered in a thoughtful and timely manner. We can’t wait to solve all your lending needs in the new year. Even if you are just thinking about the home buying process, getting your loan terms in order is the first step! Contact us today and we’ll get you squared away before the new year.

WHAT DO PROPERTY TAXES HAVE TO DO WITH YOUR MORTGAGE?

183:738413916 (Deana Devereaux) — Wed, 24 Nov 2021 23:17:07 GMT

Property taxes are the bane of every homeowner's existence. Whether you’re looking for your first home or you’re an experienced homeowner, you know that property taxes are a hot topic at least once a year. It’s important to plan for your property tax payments so they don’t take you by surprise, and your mortgage lender can help! Give us a call today and we can connect you with a property tax specialist.

What exactly are property taxes and why are they important?

Property taxes are assessed on every property owner by the city or municipality you live in. The municipality usually calculates the tax based on your property value, including your land. That means that if your property value has increased, so will your property taxes. Property taxes are important because they help pay for services in your community such as police, fire protection, education, and other public services.

When are property taxes assessed?

Property taxes are assessed January 1st of every year. When you’re purchasing a home, both the buyer and seller will be responsible for property taxes of the home at closing. The seller will pay a prorated amount from January 1st through the date of the house sale. The new buyer will pay the rest. If you’re buying a home this winter, it’s important to account for this payment in your closing costs.

Are property taxes a forever thing?

Yes! In fact, property taxes are the responsibility of the homeowner regardless of if you have a mortgage on the home or not. Property taxes are something you should plan for, for as long as you choose homeownership. Starting a budget now that accounts for yearly property tax payments will get you in the habit for saving for your property taxes.

Did you know that failure to pay property taxes can result in a default on your mortgage?

Many homeowners are unaware just how important paying your property taxes is. To ensure you don’t default on your mortgage through failure to pay property taxes, your mortgage lender can help. We can set up your mortgage payments to account for your yearly property tax payments. By including your estimated property tax payments in your monthly mortgage payment, you can rest assured that your property taxes will get paid on time.

When your mortgage is set up like this, your mortgage servicer will put your property tax payments in escrow for safe keeping. Then, when you receive your property tax notice, the escrow officer in charge of your property tax escrow account will assist you in paying your property taxes. Keep in mind, if your city sees an increase in property value, your taxes may increase more than what is allotted for in your monthly payment.

It is important to keep an eye on your real estate market, so this increase doesn’t come as a surprise. If you’re concerned, you can always talk to your mortgage servicer about increasing your monthly payment to account for any increases in your property taxes.

What if I’m already behind in property taxes?

Don’t fear! If you don’t have the funds upfront to keep your property taxes current, you may qualify for a property tax loan. Your mortgage officer can help you look at loans that will pay off your taxes, fees, and interest at relatively low interest rates. Contact us and we can get you connected with a property tax loan specialist.

Am I responsible for back taxes on my new property?

Yes, you are. If you bought a home from someone that let property taxes fall to the wayside, as soon as the title is in your name you’re responsible for the taxes. If you think this may be the case with the new home you’re buying, we can work with you to account for those extra property taxes and get you caught up.

Don’t put off your property taxes until the last minute. It is important to plan accordingly for this yearly payment. Not only is it important to keep on top of your property taxes because delinquent property taxes can hurt your credit score, but it’s important to ensure your mortgage stays in good standing. You don’t want to default because you didn’t budget for your property taxes this year. We can help you plan for your property taxes with every new home loan you acquire. We can’t wait to assist you in all your home loan and property tax needs. Any questions you may have, contact us today!

HOW TO FINANCE AN ADU WITH YOUR HOME EQUITY

183:738413916 (Deana Devereaux) — Thu, 14 Oct 2021 22:37:25 GMT

If you’ve been following along with the news at all, you might have heard that the nation is in a housing crisis. In response to this, many cities and states have relaxed zoning requirements to allow homeowners to build accessory dwelling units, more commonly known as ADUs, on their property.

ADUs not only help the housing crisis, ADUs can help homeowners by increasing income and raising their property values. Our team can help you leverage your home equity to build the ideal ADU in your backyard.

If you’re not convinced, here are just a few benefits of an ADU:

Rental Income.

One of the major benefits of an ADU is the additional income. In some cities, an ADU can generate up to $2,000 a month in rental income. That’s just for Airbnb! Depending on the location, city, and median long-term rental income in your area, you could stand to make even more.

Property value.

ADUs increase your property values by 24-34%. An ADU will increase the ROI on your home instantly. You will make back more than you spent building the ADU, no problem.

In-law quarters.

Some people are not into being a landlord, and that’s okay! If you’re looking to add property value AND provide visitors, family members, and even elderly relatives a place to stay; an ADU is a great option. An ADU can save you serious cash in long-term care costs if you may be taking care of an elderly family member in the future.

So, how do I finance an ADU?

Great question! Our team has helped hundreds of homeowners use their home equity to finance the construction of an ADU. An ADU can cost anywhere from $100,000 - $200,000 to construct. That’s some serious cash that most people don’t have just sitting around.

If you’ve been in your home for a few years, you may have built up $100,000 in home equity. There are ways to access that home equity without selling your home, and we can help!

Home Equity Loan

A Home Equity Loan is essentially taking out a second mortgage on your home. Instead of putting up cash for a down payment, you’re putting up the equity in your home as collateral.

If you don’t know how much equity is in your home, the first place to start is an appraisal. From there, our team will work with you to nail down the terms of your home equity loan. It is important to know that, because the Home Equity Loan is a second mortgage, you will incur closing costs and fees.

Home Equity Line of Credit

This option offers you a revolving line of credit against your home’s equity. With this option you’re likely looking at a higher interest rate, but you won’t have the obligation of a second mortgage or closing costs.

Your payment terms will vary with this option. One of our lenders can walk you through everything you need to know about HELOCs. We’re the experts after all!

Cash-out refinance

The cash-out refinance is a great option if you’re already looking to refinance your mortgage. In a cash-out refinance, we can refinance your home to lower your mortgage rate while also releasing some of the equity you’ve built up in the form of cash.

In a cash-out refinance you can only take out up to 80% of the current value of your home. Typically, your interest rate and payment amount will stay the same over the life of your loan.

Like a Home Equity Loan, you are still obligated to pay closing costs and fees, but they are rolled into your loan and aren’t paid out of pocket. If you have a mortgage with a high interest rate, this is a great option to consider.

Is using the equity in your home to build an ADU right for you?

This is a very personal decision, and only you know the answer to these questions! We can help you compare options and discuss what finance option is best for you. We work with all our borrowers to ensure they are fully knowledgeable and aware of the options available to them.

An ADU is a great investment for the future. Not only can it increase your cash flow, but it is a sure-fire way to increase your property values. Contact us today!

5 THINGS TO CONSIDER WHEN REFINANCING YOUR HOME IN 2021

183:738413916 (Deana Devereaux) — Wed, 15 Sep 2021 21:06:25 GMT

Home loan rates reached a record low during Covid-19, and they’ve stayed low. With low rates comes the topic of refinancing. In 2020, mortgage refinances accounted for most of the home loan originations in 2020. Homeowners should refinance before rates start to rise and life returns to normal. Rates are dropping again. A mortgage professional can help homeowners walk through the refinancing processes.

What’s new in the rates world?

This week has seen a mortgage rates drop to near their 52-week low. Because of COVID, we saw the lowest rates we’ve seen for mortgages, in years. As the economy started to stabilize and we went back to work, the rates rose a little bit. Now is your second chance to take advantage of rock bottom rates if you didn’t make the move during COVID.

This week the 30-year-fixed rate mortgage dropped to 3.04 percent. A year ago, the 30-year-fixed rate mortgage was 3.14 percent.

The difference could be a savings of hundreds of dollars every month depending on what your current mortgage rate is. Also, if you spent COVID paying off a ton of debt, you may qualify for a different, lower, interest rate than you did when you first purchased your home.

Refinancing is scary for homeowners because they aren’t exactly sure what to expect. We’ve put together a guide to help you through the refinancing process. We’ve also put together some things to think about when considering your refinance options.

Take advantage of these rates while they’re still extremely low! One of our mortgage professionals can answer any questions you have about the refinance process. For now, let’s get into what exactly a refinance is.

What is a refinance?

Homeowners refinance for a variety of reasons, including but not limited to lowering monthly payments, getting rid of principal and income insurance, paying off their homes faster, and much more. A mortgage refinance means a homeowner is taking out a second mortgage to replace their first mortgage.

The second mortgage usually has a lower interest rate or lower monthly payment. Another reason homeowners refinance is to access the equity in their homes. Often homeowners who have gained quite a bit of equity will refinance their existing home loan and receive the equity in their home in cash to do renovations or afford other necessities.

Refinancing is as complicated and as complex as obtaining the first mortgage. Here are some tips to consider when you are thinking about refinancing their homes.

5 things to consider when refinancing

1. Find a great loan consultant.

Loan consultants will find you the best rate for your scenario. Try Imagine 360 Consulting Group for your next loan!

2. Lock in an interest rate

Interest rates fluctuate all the time; when you find an interest rate you’re comfortable with, lock it in with your lender! Locking in an interest rate usually involves paying a fee, but it is nominal compared to the loan or closing costs. Your lender will assist you in locking in the rate.

3. Save for closing costs.

A refinance is like taking out a first mortgage, and there are closing costs and fees. Save for those now, so there are no surprises when it’s time to close on the loan.

4. Repair and polish any loose ends on your home’s interior or exterior

To refinance a home, homeowners will need to have their house appraised to prove its value to the lender. It is essential to polish up the home, including fixing any eyesores or cosmetic damage, to get the highest possible appraisal price.

5. Check your credit score, debt to income ratio and pay off any existing consumer finance loans or debts.

As previously discussed, a refinance like taking out the first mortgage. The higher a homeowner’s credit score and the lower a homeowner’s debt to income ratio, the better interest they will receive.

We can help homeowners through the mortgage refinance process.

These are just a few things to consider before refinancing a home loan. Refinancing is tricky; it is always best to consult with a mortgage professional when considering a refinance. Our team can help. We have years of professional mortgage experience and have assisted on hundreds of refinances. Contact us today for any questions you have about the refinancing process.

WHAT HOME LOAN IS RIGHT FOR YOU?

Wed, 18 Aug 2021 19:48:09 GMT

If you’re about to start the home buying process, you may be wondering where to start. The best place to start is a pre-approval from a reputable home loan company. What’s the point in looking at houses if you can’t immediately put an offer on one you like? Let’s face it, in this market homes are selling like hot cakes and buyers are at a serious disadvantage if they don’t get a pre-approval before looking at homes. When considering mortgage companies, you may be overwhelmed with all the different types of loan options available. We’re going to give you an overview of the different home loans available to you.

CONVENTIONAL

There are two types of conventional loans:

● Conforming : Conforming conventional loans fall within the maximum loan limits set by the Federal Housing Authority.

● Non-conforming : Non-conforming loans or jumbo loans exceed the maximum loan limits set by the FHA. Jumbo loans start at anywhere from $548,000 to $822,000 depending on the cost of living in the area.

Conventional loans typically require a 20% down payment. You can still get a conventional loan without a 20% down payment but you will be required to pay private mortgage insurance or PMI. PMI is added on to your monthly payment. It essentially acts as the bank's insurance policy that you will pay your loan.

If you can afford to put 20% down, then a conventional loan is a great option for the average home buyer.

ADJUSTABLE-RATE MORTGAGES

Different from fixed-rate mortgages, adjustable-rate mortgage’s interest rates fluctuate over the life of the loan. Many adjustable-rate mortgages have balloon payments after the first few years. What that means is that the interest is low for the first three or four years and then at year five, the interest rate skyrockets and so do your monthly payments. Adjustable-Rate Mortgages are good for someone who isn’t going to be in the home long-term. You can also refinance before the balloon payment to keep your monthly payments low.

FIXED-RATE MORTGAGES

Just as the name sounds, fixed rate mortgages are mortgages with interest rates that stay the same throughout the life of the loan. Loan terms on fixed-rate mortgages are typically 15 to 20 years long. The benefit of a fixed-rate mortgage is your monthly payments won’t change over the life of the loan.

The fixed-rate mortgage is a great option for someone who is planning to be in their home for many years and likes a predictable mortgage payment.

GOVERNMENT INSURED MORTGAGES

● FHA : FHA loans make home ownership possible for people who don’t have 20% down payment and/or don't have a stellar credit score. To qualify, you need at least a 580-credit score and a 3.5 percent down payment. FHA loans do require some up-front payment. The mortgage insurance premium is charged in two installments: one at closing and annually over the life of the loan.

● VA : If you’ve served in the military or are a family member of someone who has served in the military then you qualify for a VA loan. VA loans are great because they are low-interest and do not require a down payment or mortgage insurance. Oftentimes you can roll in your closing costs into a VA loan, too!

● USDA : The USDA loan program is designed for purchasing a home in a rural area. The USDA has promulgated a list of criteria that the home must meet in order to qualify as a rural area home.

A licensed mortgage lender can help you decide what loan works best for you. Each loan type has different requirements for eligibility, and each have their own specifications for the type and number of documents that are required. Approach the home loan process with an open mind, the mortgage lender is there to help guide you through the process. Here are some tips to help your pre-approval process go smoother:

● Gather all financial documents such as bank statements, pay stubs, and tax forms

● Don’t make any large purchases

● Don’t open new lines of credit

Your mortgage lender will need your full financial picture. The better prepared you are, the faster you’ll get pre-approved!

Remember, the sooner you are pre-approved the sooner you can start making offers on your dream home. Don’t wait to get pre-approved, you may lose out on the home of your dreams to a buyer who has already gone through the pre-approval process. One of our mortgage lenders is happy to help you through the pre-approval and home loan process. Contact us today for more information!

Covid-19 and the real estate market: 5 tips to help buyers win in a seller's market

Thu, 17 Jun 2021 01:20:35 GMT

This last year could be considered one of the strangest in our recent history. For months, we lived in uncertainty and chaos. We experienced history-making events seemingly every single day. Eventually, the world started to stabilize. We began to figure out how to do this whole pandemic thing. We got used to being at home, maybe even enjoyed being at home and spending more than a few hours a day with our families. One thing that didn't settle into a routine or return to normal was the real estate market. Since the pandemic, the real estate market has been booming. What once was a buyer's market is now a seller's market; homes are receiving countless offers before even going on the market, for tens of thousands over asking! What's going on, and how do buyers win in this market? We'll get into it.

What’s going on in this market:

Over the last year, home prices have risen by over 9%. Why? Classic supply and demand. Interest rates dropped to crazy low levels; they hit 2.65%! In addition to interest rates, COVID forbearance and reduced spending on travel and leisure allowed more first-time home buyers and buyers who were on the fence to enter the market. In fact, 2.38 million people or 14% of homebuyers in 2020 were new-home buyers. With an influx of new homebuyers, less homes are going on the market.

In addition to new-home buyers not having a home to sell, many people who would have put their home on the market, decided not to. Many factors contributed to potential sellers deciding against selling their home. During a pandemic, there was certainly a fear of strangers walking through the house. Some sellers decided to renovate instead of selling. Additionally, some potential sellers may have decided to stay in their homes and neighborhoods due to no longer having to commute.

In short, homes are scarce. Buyers are willing to offer as much as possible, waive inspections, waive appraisals and a whole gamut of things to make their offer stand out. So, how do you succeed in this market? What are some things buyers should do to make their offer stand out and win? We have a few suggestions for first-time homebuyers to consider when submitting offers.

1. Narrow down a list of essential features or things your future home needs to have.

In a seller’s market, homes go fast. Often, buyers won’t have time to schedule a showing before the house is under contract. It’s important to know your must-haves in a home so you and your realtor can focus your search and jump on a home as soon as it comes on the market.

2. Offer what you can upfront .

It's best not to lowball or bargain out of the gate. You are competing against multiple other buyers for the same home. The other buyers may appear more motivated because they’re offering their whole budget up front. If you’re uncomfortable offering your whole budget upfront, you can write in an escalation clause into your offer. An escalation clause says that you’re willing to up your offer by x amount if another offer comes in above yours. This is a great way to show a seller you’re serious without laying all your cards on the table.

3. Write a letter

Writing a letter to the sellers about your journey and what stood out to you about the home might help the seller choose your offer over other offers. After all, a home is very emotional to many people, and sellers are people too. Many want to make sure their home is loved, treated well, and going to someone they feel connected to.

4. Sweeten the deal with a rent-back or additional earnest money

Rent-backs: You can also make your offer stand by offering the sellers rent back. A rent-back allows the sellers to stay in your new home for a specified amount of days in exchange for per day rent payment to you. This can give sellers peace of mind. It’s important to remember that the sellers are also buyers in this market, and the sellers likely did not expect their home to sell so fast. A rent-back allows them extra time to find the right home and get their offer accepted.
Additional Earnest Money: You can sweeten your offer by providing more earnest money to the seller. Earnest money essentially is a deposit, a lot like a security deposit in a rental, except you don't get it back. Even sweeter, if you are 100% sure about the home, releasing the earnest money to the seller earlier than at close could help your offer stand out. This is especially true If the seller is money motivated; the opportunity for the seller to receive some funds before the close of the home might get your offer accepted over other offers.

1. Get your pre-approval and financing 100% ready.

There is nothing like losing out on a home because you're financing isn't in order. Financing is a crucial first step of the home buying process. Get your financing in order before you even think about putting an offer in on the house. You'll be better off for it!

Remember, it's a tough market out there. Don't get discouraged; the right home will come along!

STRAIGHT JACKET PLEASE: CLOSING DISCLOSURES, LOAN ESTIMATES AND SETTLEMENT STATEMENTS

Thu, 28 Jan 2021 01:54:31 GMT

I HAD to do a blog post on this. This subject is confusing so many borrowers that it is alarming!

Borrowers everywhere are like:

So, let us nail this down for ya’ right NOW.

What is a Closing Disclosure?

A Closing Disclosure, or “CD” is 5 pages that provide all final details about your mortgage loan. By regulation, you must receive the CD at least three business days before you close. It outlines all loan terms, payments, fees and closing costs.

What is a Loan Estimate?

A Loan Estimate, or “LE” was your former “Good Faith Estimate”, or “GFE”. The GFE’s went away and gave birth to the LE. Joy.

The LE is 3 pages that you receive no later than 3 days (by regulation) after you apply for a loan. It outlines your rate, payment, closing costs and other vital estimated loan details.

What is the difference between the CD and the LE?

Remember this: LE = Estimate. CD= Actual.

The LE is the initial estimated outline of your loan costs. Nothing has been locked in for you, yet. If you do not like the terms you see, you do not have to move forward. If you like what you see, then you will advise in moving forward. It is sort of like receiving an insurance quote.

It is your right to initially shop around. Just know, though, that a Lender is only required to honor the LE terms for 10 business days. Furthermore, rates change all the time. A rate you were quoted a week ago could go up or down.

The CD is more of a complete document. You are IN THE LOAN, now, baby. You have already been underwritten, approved, and headed to closing if all else has checked out. It includes your locked-in rate, terms, and other costs. It includes fees that are more concrete, but still are not yet final. We will get into that in a second.

W hat is a Settlement Statement?

A Settlement Statement is your HUD-1 Form or Closing Statement. This is your Golden Ticket to the Wonka Factory! The Settlement Statement is the reason your CD numbers may still not be completely accurate.

This statement is given to you at closing and it breaks everything down accurately, to the penny. It will have things on it that neither your LE nor CD will have. This is because Escrow is communicating with everyone real-time on accurate costs, fees and payoffs until the loan is funded. The Lender is NOT doing that. The statement from Escrow will itemize all services and fees charged, including appraisal fees, loan origination costs, final payoffs, prepaid taxes, insurance, recording fees, other line items you may be paying off (if refinancing) etc.

If it is NOT on the Settlement Statement , then omg, you had better speak up, because SOMEBODY missed something somewhere!

Are you with me thus far?

Good. Now buckle up.

Are Closing Disclosures always correct?

HECK no.

A Lender can issue their CD to you with the costs they understand at one snapshot in time, but perhaps Escrow just received an UPDATED payoff demand for you on their end.

Well, the Lender did not, so the Lender would not have disclosed that NEW amount on your CD. The figures are going to be inevitably different on the Settlement, then on the CD. Escrow (or Title, if in such a state where Title handles everything) does not automatically send these kinds of changes to the Lender, because they are handling the finals. Why would they? See?

There WILL be differences in the amount of taxes collected, homeowner’s insurance premiums (as those vary by borrower, date, property, expiration/renewal dates and many other factors) prepaid interest, third-party costs and recording fees. The Lender does not control these varying line items. There is no way for them to know these figures ahead of time on the LE, or even the CD. Escrow handles these things on the Settlement Statement.

The Lender’s CD could show you receiving MORE money, or less money than you are going to receive. Please re-read that again. I want you to GRASP THIS. Again, the Lender’s CD is a snapshot in time. Escrow’s statement has more info than the CD. Escrow can even have more info than your actual LOAN DOCS you sign through your notary at closing. Oh yes! Escrow is REAL-TIME. The CD and loan docs are like TIVO. Escrow is like live news. Do we get this?

ESCROW will prepare the final Settlement Statement. Their statement WILL have your correct and final numbers. Escrow rules the roost…and they will compute all finals before any transaction finalizes. However, Escrow and Title are run by humans. There is no magic, here. Sometimes, humans make errors. If you see something wrong, or questionable, ALERT your loan officer and your title/escrow officers ASAP!!!

Borrowers always receive their CD’s before closing and completely LOSE IT.

“What in the Pitchfork Tarnation is THIS?!! This is NOT the cash out you promised me!”

No, it is not, dear…because Escrow has the FINAL NUMBERS. On that Settlement Statement is where you will see your actual cash out. Perhaps you did not make your current payment in lieu of closing, but your mortgage servicer added it onto the payoff. This made the payoff higher. There could be varying reasons. If in doubt about something; ask.

No matter what, folks, after docs and before funding, Escrow will BALANCE with the Lender. They will ensure all numbers match. Your numbers WILL be correct in the transaction at the end. You will receive all the goodness you have coming to you.

Always ask to see a Settlement Statement before closing. Do NOT just depend on the CD, or loan docs either, for accuracy.

YOUR RIGHTS:

You have EVERY RIGHT to ask all the questions you need to. You NEED TO understand what you are signing and to confirm that everything is correct.

If there are inconsistencies and errors in ANYTHING you receive concerning your loan, alert your loan officer YESTERDAY to have things fixed, so there are no surprises when you receive final loan docs to sign.

We are your CREATIVE funders, bringing a combined 30+ years of experience to the table. We know how to satisfy the underwriters…to creatively get your loan approved and approved the RIGHT way.

We also know how to navigate loan challenges and issues very well.

C all us today if you want to take advantage of the historically low rates available!

UNDERSTANDING RATES - BUCKLE UP!

Thu, 17 Dec 2020 01:18:04 GMT

Now is a GREAT time to refinance. You have been hearing all over the news, the internet and TV that rates are as low as 2% and you should refinance yesterday.

This is true…but NOT FOR ALL BORROWERS !!! That advertised 2% rate exists, but it MAY NOT BE FOR YOU!!! I think I need to state this again in a different way.

A merchant’s/advertiser’s job is to market the lowest possible rate to you, in order to draw you in, lock you in and benefit off of your situation. OF COURSE, you will see an ad for 2%, but did you bother to check the FINE PRINT? Those are the itty-bitty little words at the BOTTOM of that ad that states t his rate may or may NOT be for you.

It is no different than those countless real estate seminars that present you free tablets, with the storage availability of 2010, cookies, muffins and bland coffee and show you all of the millionaires that went through the program (mainly the owners you are paying the sign-up fees to – “You can do this, too, for $1,997 down!”) and they promise the WORLD…but when you read the fine print, it states that these results are not guaranteed and VARY .

Ladies and gents, I must break this down right now. We are getting a TON of Borrowers with their boxing gloves already on, ready to go a few rounds to defend the fact that THEY HEARD rates were 2% and they need that rate STAT.

This is how we feel about that:

The lowest advertised rate for a loan is usually for your LOWEST-RISK Borrowers. They are the types of borrowers that do full documentation, are living in the property (owner-occupied, no investment properties) have 780+ credit, need a LOW LTV (loan-to-value) of less than 40%, request a rate and term refinance (no cash out). Their loan amount, property, mortgage history, tradelines, clean title report, appraisal and everything else is SQUEAKY CLEAN. Even then, there may be an overall cost to get that 2% rate, and depending on the deal, there may be a credit.

When the file returns from Underwriting, the rate may be up to a 2.25% - 2.5%. There are SO many factors in determining rates for a Borrower that vary from day to day, loan to loan and borrower to borrower.

Rates change DAILY, several times per day, every few days, or some other random pattern. What we submit a rate in as, is different from when the rate is actually LOCKED. Heaven help us if pricing is higher when it is time to lock, because we then, must wait and ride the wave, until the rate (or rate costs) lower again.

Currently, appraisal turnaround times have been an ISSUE. Did I say that appraisals have been an issue? OMG! Appraisal Management Companies (AMC’s) have been slammed and backlogged, causing delays in appraisal turnaround times.

If your rate lock expires on 12/18, but the appraiser is not returning your appraisal until the 27 ^th , we must either extend the rate lock (at a cost to YOU at closing) or let it expire and work to re-lock the rate again at its new pricing (still at a cost to YOU at closing). Pricing could be better, the same, or worse. This dance is always about as fun as banging your shinbone into a coffee table at night, on the way to the kitchen.

So, there’s THAT.

Loan program guidelines change, as well. When the ill-fated COVID hit, lenders and investors were like:

And we were like:

Programs stopped completely (even in the middle of deals ready to close, rendering them DEAD) and guidelines changed almost WEEKLY.

Now, they may change monthly, or bi-monthly. It all depends.

A Borrower could have a great credit score if they paid current for the last 12 months on their mortgage…but what about BEFORE THAT? If a Borrower has had mortgage lates in the last 24 months, but had been on time for the past 12, then they can no longer qualify for the premiere program with the lowest rates. These premiere programs examine the last TWO YEARS of mortgage history.

There are some programs that will only look at the last 12 months, but those are specialty programs…these are NOT the ones that offer 2%-2.5%.

Can you get an extremely low rate right now? YES.

Will that rate allow you to refinance, build equity and pay off your mortgage much sooner? YES.

How good will your rate be? We need to examine that. Depends on what you have going on with your situation!

Rates are at historic lows now, but they will inevitably rise at some point in the future.

Whether or not you are purchasing, or refinancing, now IS a great time to attempt to renegotiate and lock in an available, low fixed-rate loan! If you owe less than 15 years left on a 30-year mortgage, then 15-year loan rates are also historically low.

If you have great credit, or even not-so perfect credit, we have programs that can go as low as sub-600 credit scores…just do NOT expect a 2% rate with low scores!!! (#nopenopenope).

If you own a property with equity, then maybe you can also take advantage of a lower rate. Bring in 2021 like a champ!

Purchasing? We have programs that can cover you from 96.5% up to 100% for that purchase (of course, each borrower’s situation is different. Loans, pricing, and availability can vary by state).

We are your CREATIVE funders, bringing a combined 30+ years of experience to the table. We know how to satisfy the underwriters…to creatively get your loan approved and approved the RIGHT way. Call us today if you want to take advantage of the historically low rates available!

FROM LIBOR TO SOFR (WHAT THE HECK???) EXPLAINED IN PLAIN ENGLISH

Wed, 25 Nov 2020 22:36:39 GMT

You probably saw this title and was like:

We will do this in a Q& A fashion, to make things easy…in plain ENGLISH.

What is LIBOR?

LIBOR is the London Interbank Offered Rate. This is an interest rate average, or primary benchmark reference that Lenders, Banks and other Financial Institutions use to determine interest rates for things like your real estate mortgages, credit cards, student loans, corporate loans, bonds and more.

What is the point of this post?

LIBOR is going away, supposedly, at the end of 2021. The process to phase it out has already begun. Realistically, LIBOR probably won’t be completely phased out in 2021, because of the worsening pandemic. LIFE is slower, in general since COVID-19 hit. Anyone else notice how we blinked…and went from Valentine’s Day to Halloween this year, like only a week had passed?

There really is no concrete ETR (estimated time of replacement) set yet…and honestly, the transition could go well into 2022. As with ANY major transition, there are going to be kinks that need working out.

Why is LIBOR going away?

SOFR.

What is SOFR?

SOFR is the Secured Overnight Financing Rate. It was chosen by the ARRC (Alternative Reference Rates Committee) as the recommended alternative to LIBOR. The transition is supervised by the AARRC of the Federal Reserve Board and New York Fed (Federal Reserve Bank of New York).

WHY SOFR instead of LIBOR?

SOFR is a nearly risk-free reference rate. Unlike LIBOR, SOFR is based on actual market transactions, observable prices in the market, is SECURED and is less susceptible to market manipulation. LIBOR is an UNSECURED, forward-looking term rate, determined by what banks would charge each other to borrow. Banks were asked to estimate the rate at which they COULD borrow from other banks, not rates at which they ACTUALLY borrowed.

Can you say “Manipulation”, boys and girls? Bankers were manipulating the rate right after the Great Recession.

SOFR is based on transactions in the Treasury repurchase market and is seen as preferable to LIBOR since it is based on data from observable transactions rather than on estimated borrowing rates.

Um…the transition is NOT going to be easy, is it?

#Nopenopenope

This is not going to be a cakewalk. There is about $200 trillion in outstanding LIBOR contracts and debt. LIBOR has 35 different rates and is all about unsecured loans. SOFR publishes just one rate based exclusively on overnight loans, is risk-free and is all about secured loans backed by T-bonds (Treasury bonds, which are risk free, fixed-rate U.S. government debt securities with a maturity range between 10 and 30 years.).

Repricing contracts is going to be hairy. What will the fallback provisions entail? These are the sections of a loan agreement that describes what happens if LIBOR is no longer available.

The shift to SOFR will affect derivatives (securitized contracts) consumer credit products (like adjustable rate mortgages, or ARMs) private student loans and commercial paper.

What EXACTLY does the switch to SOFR mean for me?

Nothing, if you don’t have an adjustable-rate loan. The combo of super low rates and pandemic uncertainty have borrowers focused on FIXED-rate mortgages. Unless you are an investor, where a 3 to 7-year loan term would work for investment property goals, why WOULDN’T you want a 30-year fixed at a possible 2.75%?

What do I need to dooooo?

If you have an ARM, a reverse mortgage, or a home equity loan, read the FINE PRINT. Is it already SOFR or Treasury based, or is it LIBOR-based?

If it is LIBOR-based, call your Servicer/Lender and ask when they will shift to SOFR and what that change will mean for you.

What is the real fallout of this switch?

Mortgage rates could possibly increase if rate swaps become more expensive for banks. Some borrowers could possibly get charged more…it all will depend. There is still a LOT left to be deciphered.

You may also get that postcard in the mail one day. SOMEBODY is going to claim they were wronged in this. It is inevitable.

You know the infamous class-action lawsuit postcard, where the suit amount is for double-digit millions of dollars….and you smile from ear-to-ear, thinking you are about to get a DECENT-sized check….

...but you receive that $6 check in the mail 8 months later?

Bottom line?

Ready or not, LIBOR’s a leavin’ and SOFR’s a comin’.

We’ll keep you posted.

REAL ESTATE FIX & FLIP INVESTORS!?

Wed, 04 Nov 2020 23:22:31 GMT

What does a wholesale real estate fix and flip investor (otherwise known as a “flipper”) do?

The most successful flippers are off-market property gurus! Their reach is long, with connections that always have the best deals. They buy real estate properties at huge discounts, (these properties often need major renovations) using an estimated after repair value (ARV), which is based on comparable homes on the market. These flippers borrow the purchase price and the amount of their rehab budget, complete all renovations and sell off the property for great profits.

They find the property in the worst shape in the best neighborhood. Put in the time, money, and sweat equity needed to renovate the home and bring it in line to compete with comparable homes on the market.

Then, they sell the home at a profit, ideally within just a few months.

Buyers look favorably to buying a home already rehabbed where they don’t have to do the work. So, they will pay more than the price of the house prior to the flip.

In the end, investors price the home for buyers to get the move-in-ready home they want, allowing themselves to be paid for the work they did on the rehab itself.

Below are the details of our 100% Aquisition/ 100% Rehab Program for all Legal Residents of the US, which is GREAT for real estate Investors:

Loan Type: 100% Purchase, 100% Rehab (Tiers vary based on credit)

Who Can Borrow: Qualified Experienced investors, as well as FIRST-time real estate investors. Individuals, sole proprietorships, partnerships, corporations, LLCs, LLPs, and LPs who are citizens of the United States or holders of “Green Cards”.

Min/Max Loan Amount: $50,000 - $1,000,000

Property Types: 1st Lien - Investor 1-20 Unit Non-Owner Occupied Residential, SFR, 50/50 Mixed-Use, Commercial and Modular

Rates: As low as 9.99% Interest Only, payable monthly (rate depends on income documentation type, borrower experience, and credit score)

Terms: Varies per experience - 4 month, 8 month & 12 month options - Extensions Available Up to 6 months

LTV: Up to 65% of ARV (After Repair Value)

Prepayment Penalty: None

Exit Fees: None

Minimum Credit Score: 620 - FICO scores below 620 will need a co-borrower or guarantor with strong credit and financials.

Income Types Accepted: Full Doc, Lite Doc (personal, business <gain on sale>, net rental)

Liquidity: Must have at least closing costs + 6 months reserves (3 Months paid at closing).

No Contractor approval required – DIY acceptable (will still need a Scope of Work & Inspection)
Co-Borrowers/Co-Signors: Accepted! This can strengthen the overall Credit, Income &/or Liquidity Draws unlimited.

States We Can Loan In: Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Kansas, Louisiana, Maine, Maryland, Massachusetts, Missouri, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Tennessee, Virginia, and West Virginia.

*****New York Investors: We do not lend in Queens, Bronx, Brooklyn, Staten Island, or Manhattan.*****

HOW TO QUALIFY - IT IS RELATIVELY EASY!

This is NOT a stated, no questions asked, zero credit scores showing, 100% program. A tri-merge report will be obtained on each Borrower. The credit report must have been obtained within ninety (90) days of loan closing.

Full Doc - Min 620 Credit Score:

• 6 Months Bank, money market or securities account statements - All pages, even if blank
• You can use 60% of the value of 401(k) or IRA plans (1 month required, using the most recent balance)
• Two (2) years (most recent) personal/corporate/partnership tax returns
• Two most recent paystubs

Lite Doc - Min 700 Credit Score, or you will need to go FULL doc:
• 3 Months Bank, money market or securities account statements - All pages, even if blank
• You can use 60% of the value of 401(k) or IRA plans (1 month required, using the most recent balance)
• One (1) years (most recent) personal/corporate/partnership tax returns
• Most recent paystubs

EASY LOAN PROCESS

Email your scenario over.
We will pre-approve and price out your loan.
You will complete and return an application along with other required documentation.
Only FIRST-time Borrowers with this program pay a required $250 application fee (not to us as the Correspondent Lender, but to the investors directly). You only have to pay this ONCE. It is never charged again.
Once your loan is closed, submit draw requests as needed. Your funds will be wired right away.

RESERVES/LIQUIDITY REQUIREMENTS

Borrowers must demonstrate sufficient cash flow to qualify. Various financial information and income sources are analyzed when approving your loan.

You must show a minimum of all closing costs & 6-month interest reserves (3 Months paid at closing)

OUR CUSTOMER DEFINITIONS

New Customer: You have ZERO loans funded within the past 2 years.

Repeat "Premiere" Customer: You are super FAST! You are looking for 4-month term loans, you have 5+ loans with us in the past 2 years, no more than $2M outstanding, and perfect payment history with our loans.

Returning Customers: You have funded/paid off more than 1 loan within the past 2 years. You do not qualify as a Repeat "Premiere" Customer.

GUIDELINES ON ISSUES

Bankruptcy: Cannot be currently in bankruptcy (active). BK must be discharged and closed before closing. Chapter 13 cases filed with the last twelve (12) months and Chapter 7 cases discharged within the last twelve (12) months will be considered on a case by case basis with a satisfactory explanation from the Borrower.

Charge Offs, Collections, Judgements: Charge-off and collection accounts greater than three (3) years old and aggregate amounts less than or equal to $7,500 within the past
three (3) years may be left open. Individual charge-offs, repossessions, collections, and judgments over $1,000 within the past three (3) years must be satisfactorily explained. Exceptions will be considered on a case by case basis. Charge offs, collection accounts and judgments that affect title must be paid before closing or from the loan proceeds.

Foreclosure: We will not lend on any property currently in foreclosure unless it is fully satisfied that the transaction is arm's length. Exceptions will be made on a case by case basis.
Borrowers with foreclosure activity with the past twenty-four (24) months will be considered on a case by case basis

Condominium Eligibility: If the property is part of a condominium association, you will need to obtain a condominium questionnaire and insurance certificate from the condominium association to ensure that it meets eligibility criteria.

Email your scenarios NOW!

SHOULD YOU USE A REALTOR TO BUY YOUR NEW HOME, OR NOT?

Wed, 23 Sep 2020 21:38:18 GMT

Whether or not you use a Realtor to buy a home seems like a trick question to some, since there are homes that are “For Sale by Owner”, but the answer is SIMPLE.

YES. YES. TRIPLE YES!

Buying a home is one of the most important and most expensive items in your lifetime. Going it alone when buying a house is like performing your own surgery without calling a doctor.

Can you just Google everything you should know about buying a home on the internet? NO. You REALLY need a real estate professional that knows the "ins and outs" of the real estate market. This PRO should be an intelligent, focused, resourceful, and skilled negotiator, who knows how to make the right offers.

*Mic drop.

Why not get it right the first time? Unless, of course, you have THIS type of Realtor:

Then fuhgeddaboudit.

In a transaction, there are Listing Agents and there are Buyer’s Agents (Selling Agents). Say, you drive through a neighborhood and see a “For Sale” sign out front. What you DO NOT want to do is just call that Realtor up to help you with the house. The odds will NOT ever be in your favor.

Do NOT volunteer as tribute.

Listing Agents work for the Seller. Their job is to get top dollar for that house. It will not only make the Seller happy, but the Realtor will earn a heftier commission, if you pay with both arms and a leg. Make sense?

You need to call up a Selling Agent, or “Buyer’s Agent” who will exclusively represent YOU. They have one job as far as you are concerned and that is to get you into a house you are pleased with. This is your bodyguard in real estate. It is very much like having your attorney with you in a courtroom. They will present your offers and protect you from being taken advantage of during your purchase.

Can the Listing Agent represent both you AND the Seller? Absolutely. This is called a “Dual Agency” and it is legal. This is NOT the option that is best for you. If you could, would you sue the driver who totaled your car using the same lawyer that represented him?

Exactly.

There has to be a slight conflict of interest.

You need your own, independent party. The only thing a Dual Agency is good for is adding extra lining ($$$) in that Dual Agent’s pockets.

I’d kindly provide them with a dual “NO THANK YOU” via text and email.

Fully engage with a Realtor during the home-buying process!

They are not just looking at your purchase. They would love it if you were SO happy with their services, that you referred them to your friends, family members and colleagues. A Realtor’s network is huge. They know folks like us (loan companies) title companies, escrow agents, interior designers, attorneys, appraisers, etc. This can highly benefit you. They have access to property listings (unlisted properties) that you cannot find on the internet. They spend countless hours networking, so utilize their knowledge!

The FLIP Side:

I cannot lie. Realtors can be INTENSE. They want their commission (livelihood) and their bottom line is to complete a sale. We GET it. Therefore, Realtors be like #nope.

Depending on your dollar amount, Realtors (per Sellers) may want proof of funds. Lets assume a price range of under $1.5M. The best thing to gift a Realtor is a Pre-Approval Letter. Get pre-approved for a loan to buy, first, ladies and gentlemen. For Pete’s sakes, nobody wants to burn up gas, dragging you and your entire family all over the city, opening lockboxes to multiple homes, only to find out later that you CAN’T buy anything.

#Nope.

Hey…we know loans and we know the Mortgage Business, well! We finance all types of situations, from easy, all the way to hard-to-close loans, bank fallouts, and much more. We specialize in creative funding. We think outside the box and can usually help you gain what you are looking for if it makes sense. Let us get you pre-approved, today! KNOW your buying power. If you are ready to buy a home and connect with a Realtor, give us a call, now.

ARE YOU FINALLY READY TO STOP RENTING?

Thu, 03 Sep 2020 20:24:19 GMT

We know the THOUGHT of going to buy a home right now has got you like:

Seriously, buying a home is not a picnic, but it can be good. VERY good. Let’s discuss.

It is simple. When you rent, you write a monthly check and the money is outta there. It’s going to the property owner, never to be seen again.

When you own your home, you can then deduct mortgage loan interest and property taxes from your tax returns and build up equity that you can then draw in the form of cash, later. Being a homeowner affords many benefits.

First step if you want to stop renting?

Get pre-approved. Find out what you can actually do. We have Conventional Loans, FHA loans and special, creative programs that CAN go to 100%, using a 1st and a 2nd and other grants, through FHA.

What is an FHA Loan?

FHA stands for Federal Housing Administration (FHA). This loan is a mortgage insured by the Federal Housing Administration (FHA) and issued by an FHA approved Lender. These loans accommodate Borrowers with lower credit scores and low to moderate incomes. FHA is more lenient than Conventional. FHA Lenders have been known to go down to a 550 credit score. Now, with the ever-changing COVID guidelines, you should have a 620+ to be on the safe side. Your down payment will be 3.5%. We will do 96.5% loan with FHA.

However, higher scores, like 680+ can go for our Advantage Program through FHA, for only 1.5% down (nice!) or a few of our other 100% programs. Keep in mind, dear people….the lower the rate and the lower the down payment, the more you need to SHOW to be approved for the loan. You must go full doc with those nice programs because you must prove income/ability to repay. Can’t come in with 5 bank statements and “secretive” income, expecting 100%. #Nope.

What is a Conventional Loan?

Conventional loans are not backed by a government agency and conform to lending rules set by none other than the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). Now you know who Fannie and Freddie is.

Your down payment with these will be 3%. We will do a 97% loan for you. You buy a house for $400K and we will do 97% of that ($388K).

Both loans get you on mortgage insurance (MI). There is MI for Conventional loans if your down payment is less than 20%. FHA gets you PERIOD with a Mortgage Insurance Premium (MIP) on every loan. The good thing is this amount is financed

into your loan amount.

NOW…REALLY Ready to Stop Renting Already?

Please don’t start driving around with the fam looking at houses just yet, unless you’re just going for fun, the free cookies and to see a model home that looks NOTHING AT ALL LIKE THAT when you REALLY buy one. Lol.

Get pre-approved first , so you know what house price you can afford. You need to know what your credit looks like, and what your debts and overall financial picture is.

You don’t want to get your mind set on a $580K house, when your price range is $305K. Often, if the house is a good price, there will be MULTIPLE offers on it. Realtors are not playing around. Getting properties sold is kind of the point and they have ZERO time to waste. You need to have your pre-approval letter ready, in order to make a fast offer.

Hopefully, you are not in California trying to do this, though, if your price range is $305K.

I’m from California…so there will be many jabs like this. Get used to it. Lol.

These are the things we would look at for you:

· We will look at your income (paystubs, tax returns, etc.) assets and liabilities. These will help determine how much you can borrow.

· Any and all liquid assets you have will help. These are checking, savings, retirement accounts, etc.

· Your Credit Score and all debts: We will take the MIDDLE of your three credit scores and go from there. Hoping you are 620+ during COVID!

You can get a quick pre-approval by returning the following items:

1) Fully-completed 1003 Loan Application

2) Income docs (If wage earner, pay stubs for the most recent 30 days, most recent 2 years of

W’2’s. If self-employed, most recent 2 years of tax returns)

3) Valid ID matching the name on the application

4) Current Tri-Merge Credit Report

Need help? Let’s DO it!

If you are ABLE to be pre-approved, we will get you pre-approved.

HOW MUCH HOME CAN I REALLY AFFORD?

Thu, 20 Aug 2020 22:02:37 GMT

That is the magic question….and we won’t be like this. We promise!

I will make this SIMPLE. You will love me for it, later.

Here we go:

1) Figure out what your annual gross income and your MONTHLY gross income, is. These numbers are EVERYTHING.

a. If you are a wage earner, that ought to be easy. You know what your annual salary is. You know what your monthly GROSS income is. It’s that delightful bigger amount that dwindles FAST to a smaller one once the government gets their cutouts.

b. If you are self-employed, add up your total sales revenue, then subtract any refunds and the cost of goods sold. Add in any extra income such as interest on loans, and you have your gross income for the business year. Divide that by 12 for the monthly.

2) Go to www.creditchecktotal.com or other similar service where you can get your true Tri-Merge Credit Report. This means the report shows all three credit scores from Equifax, Transunion and Experian and all tradelines. Omg…do NOT use the reports from Credit Karma or other similar services. They use Algorithms. We’ve had Borrowers report 700 scores on Credit Karma. When we pulled their real reports, they were closer to 600! Just….no, please.

Obviously, the better your credit is, the better your interest rate and the better the terms will be that are available to you. We take credit down to a 620 for most low rate loans. COVID-19 has changed a LOT of guidelines, though. Every file can be quite unique. Just sayin’.

3) What debts do you have? FIGURE OUT YOUR DEBTS YESTERDAY.

You need to know two super-important terms RIGHT NOW:

Front-End Debt Ratio = The front-end ratio, indicates what portion of your income is allocated to mortgage payments. It is calculated by dividing your anticipated monthly mortgage payment by your monthly gross income.

Back-End Debt Ratio = The back-end ratio, indicates what portion of your income is allocated to mortgage payments AND all other monthly debts. This is the whole kit and caboodle. It is calculated by dividing your anticipated monthly mortgage payment and all other debts by your monthly gross income.

These debts can include student loan payments, credit card payments, non-mortgage loan payments, union dues, alimony, child support and more. Once people have car notes, child support, union dues, credit cards, etc., debt ratio creeps upwards and can disqualify a Borrower for a particular dollar amount.

And YES, deferred student loans CAN STILL count against your debt ratios. If you have student loan balances and it says you pay $0 per month because of deferment, a percentage of that balance will be counted against you as if you WERE INDEED PAYING. It sucks, I know…but this is real.

***** Let me give you an example of home affordability.

EXAMPLE: Say you have a 680 credit score. Your monthly gross income is $8,500. You have ONE car note for $350 and no other debts.

You want to buy a new single-family home to live in for $350K (purchase price). We quote you a rate for 2.875% under a Conventional loan (97% loan to value) and an estimated PITI (Principal, interest, taxes and insurance) monthly payment of $ 2,132.00. Your Conventional loan amount would be 97% of $350K = $339,500.

Here are your ratios, based on $339,500:

Front-End - $2,071/8,500 = 24.36%

Back-End - $2,071 + 350 (car note) = $2,421/ 8,500 = 28.48%

Wooo-hooo! With these ratios, it is clear you could afford a $350K home just based off of your credit score, income and debts.

Of course, you would have to put down only 3% of the $350K purchase price ($10,500) plus the cost of a property appraisal (usually runs between $300-750, depending on the home’s square footage and location) and cover any closing costs and 3rd party fees (title, escrow, etc).

An IDEAL front-end debt ratio is 28% and less. An ideal back-end ratio is 36% or less. However, we can go up to 50% debt ratio in some instances.

Everyone is different. Everyone’s debts are different. There is not a one-size fits all formula that can magically and easily be applied. Each Borrower has their own, unique situation. What you receive all depends on what TYPE of mortgage you ultimately choose, dollar amount of the loan you need and the area you are buying in. $350K in Tombstone, Arizona may buy you your dream home with a pool! $350K in CA…well, now…$350K is probably going to be just a down payment on a 1.35 Bedroom that still needs work.

You are by now thinking, WTH? Lol.

Don’t fret. It is not as hard as it seems. WE CAN HELP YOU. We even have certain grant programs where you can even pay less down. We have LOW RATES. We have special programs. We are experts in creative funding and getting the impossible done.

With the RIGHT loan professional, these things can always be figured out quite easily. We can easily and quickly pre-approve you and even get you an approval letter so you can go look for homes, with just a few, simple things:

1) Fully-completed 1003 Loan Application

2) Income docs (If wage earner, pay stubs for the most recent 30 days, most recent 2 years of W’2’s. If self-employed, most recent 2 years of tax returns)

3) Valid ID matching the name on the application

4) Current Tri-Merge Credit Report

8 MORTGAGE TYPES YOU SHOULD KNOW

Wed, 05 Aug 2020 21:47:44 GMT

Thinking about buying a house, but not quite sure what loan to pursue?

Not to worry. Below are eight types of mortgage loans you should be familiar with:

1. CONVENTIONAL / FIXED RATE MORTGAGE

This loan is best for home buyers who want lower monthly payments that do not fluctuate. Rates are usually your lowest with these. Your rate is FIXED; it never changes. Payments are stretched out over time. Conventional mortgages are obtainable in the following yearly terms: 10, 15, 20, 30 and even 40 years. Most of our Borrowers love the 30-year and 40-year terms, to keep their monthly payments the lowest. We recommend these for Borrowers with great credit, income, assets and easy, provable ability to repay.

2. ADJUSTABLE RATE MORTGAGE (ARM)

You guessed it. Your rate adjusts after a specified fixed period with this mortgage type. Most common are your 5/1 ARM and 7/1 ARM loans. These simply mean that your rate and payment is locked for the first 5 or 7 years and then adjusts annually thereafter. ARM rates are usually lower, resulting in lower payments for the fixed periods. These mortgages can be extremely beneficial to homebuyers and investors who: 1) Will not be in the property for long-term and/or definitely plan to refinance later with a lower rate (hopefully); 2) Plan on selling the property before the fixed period is up. After the fixed-rate period ends, the interest rate on an ARM loan moves based on the index of the markets.

3. INTEREST-ONLY MORTGAGE

We tend to recommend these mortgages for our fix and flip and other investors. It is to their benefit to pay the least amount possible before fixing and selling their property. These mortgages do not pay down any principal, only interest. While the lower payments are quite attractive initially, if there is no plan in place, you are only renting the money. Most Borrowers have admitted they were not disciplined enough to make periodic principal payments in addition to the interest.

If Borrowers are disciplined enough, however, to pay down their principal balances through large annual bonuses, or increases in cashflow, each year, then MAYBE these could work. As low as rates are, though, with principal, interest, taxes and insurance all lumped into one payment, why bother with the worry?

4. FHA LOANS

FHA’s…these are guaranteed by the Federal Housing Administration. There is built-in mortgage insurance to protect against the possibility of not being able to repay the loan (that you will pay for as a rolled-in loan cost, btw). If your credit is a bit shaky, FHA will give you a chance. Before COVID, FHA loans accepted credit scores down to 500.

The required down payments are also smaller with these loans, at only 3.5%. There are even 100% financing capabilities through FHA-based programs, that combine a first and a second loan.

5. VA LOANS

Salute! These are the loans for our awesome veterans of the United States armed forces to buy homes, with no money down. These loans are guaranteed by the Department of Veteran Affairs. There is no mortgage insurance, but there is a VA funding fee required.

6. USDA LOANS

Looking to purchase or refinance rural properties (and some suburban, as well)? USDA home loans backed/issued by the U.S. Department of Agriculture are for you! These loans also have no down payment for most properties. There are many loans and grants available for home improvement, as well.

7. BALLOON LOAN

We DEFINITELY always recommend these for investors who move property and conduct real estate transactions often. Many are conducting mergers, expanding business capabilities, etc. These loans benefit Borrowers who need shorter periods of time for a loan, for instance, 1-3 years. For 1-3 years, they will pay interest only. At the end of the fixed period, the total principal amount is due. It will be all bad if that total principal is not rectified after the fixed period.

8. JUMBO

Jumbos are the bee’s knees right now. Most of these were suspended during the start of COVID and still are. We are still funding these, however! Contact us if you need one. We have great rates! These loans refer to a mortgage that is too large for the Federal Government (Fannie/Freddie) to purchase or guarantee. Limits range per state, county, etc. Some states like California have prices so high that ranges fall into a high-balance category before it reaches the Jumbo level.

Borrowers who transact with more expensive/luxury homes benefit from these loans, whether purchasing or refinancing.

If you have any questions on any of these mortgage loans, give us a call, today!

5 THINGS YOU MUST NEVER DO ONCE YOUR LOAN IS IN PROCESS

Thu, 23 Jul 2020 20:44:29 GMT

Hey, there! Hope all is well. Let’s get to it. I’ll tell you a story about a Borrower. Let’s call this Borrower Elbert (purely fictional, okay?). We were almost to the CLOSING point on an investment rate and term refinance. This loan had already taken a few months. You read right. Months! Why? He refused to respond to our processing team’s calls. In fact, he would hang up on them, later stating that he thought they were telemarketers.

Elbert turned in one condition every few weeks. Imagine my delight! Oh, but he could call and demand to know when he would close, though! So, one day Elbert decided he really did need the lower rate he asked for. It was a miracle! He started cooperating. We got him all the way to the closing point. The Underwriter just needed to verify everything before closing and then, BAM---this bright individual purchases a brand-new luxury car and overhauls something huge in his personal home. What the…? Was he serious? These two, new loans, with resulting monthly payments of several hundred dollars each, suddenly made his debt ratio shoot to 79%. Conventional debt ratio can go to 50% max (in some circumstances) but most programs like to see 43% max. As a result, unless he placed a co-signer onto the loan for income (of course he didn’t have one) this ready-to-close loan was suddenly, yep, you guessed it, DEAD. Money and time LOST for everyone!

So today, Ladies and Gents, I’m going to tell you 5 things you should never, ever do once you have entered the sacred loan process:

#1 DO NOT MAKE CREDIT CARD PURCHASES

You are to act like a child in a supermarket. Don’t touch anything. Don’t attempt to buy anything. Don’t even look at anything, if it is to be charged onto your credit cards. Unless you are making card payments, act like they don’t exist. Credit charges report fast. They will increase your monthly payment and decrease your available credit = no good. Higher monthly payments equal a higher debt ratio. New purchases for normal items need to be cash or Debit /ATM card only, or on someone else’s credit cards (that don’t list you as an AUTHORIZED USER, because that’s the same darned thing as YOU using it) until you are FUNDED. As a side note, if you also dabble in investment properties, DO NOT purchase any other property for investment, not even in cash. Real estate properties have taxes and insurance to boot. Those new expenses will have to factor into your monthly debt ratio.

#2 DO NOT PAY YOUR BILLS LATE

Do NOT pay your bills late. PAY ALL YOUR BILLS ON TIME, OMG, especially your rent or mortgage. Any late payments will affect your loan. A 1x30 mortgage late can completely cost you the loan you were approved for. Keep all accounts paid on time, including car payments, all installment loans, utility bills, cell phone bills, and even child support accounts.

#3 DO NOT QUIT/ CHANGE YOUR JOB

Do NOT quit/change your job. You cannot decide your job and your boss both suck and NOW is the time to leave it all in the dust. NOPE! Do NOT change jobs in the middle of your loan process. Two years of job history and income is KEY. Any new changes can have a negative impact on the income already calculated and approved for you. We will need you to pull up a chair, have a Coke and a smile and sit DOWN somewhere until your loan is over.

#4 DO NOT APPLY FOR NEW CREDIT, ANYWHERE

DO NOT apply for new credit, anywhere. I don’t care if that new offer says you are pre-approved by the President of the United States, you STILL cannot DO IT. I am sorry, but all of this will need to wait until you close your current loan. Your debt ratio will be affected and could mean the difference between you ending up with a closed loan, or a denial.

#5 DO NOT MAKE LARGE DEPOSITS/ WITHDRAWALS

Do NOT make large deposits / withdrawals. The most recent bank statements are an important part of your loan qualification process. Large deposits or large withdrawals = possible red flags. If you plan on receiving any part of your down payment as a gift, please mention that upfront, so your Loan Officer can walk you through all of the required steps for gift funds.

The goal is to get you closed. If you have questions on additional do’s and don’ts when your mortgage application is in process, contact us today!

GET FUNDED 101: THREE TOP THINGS LENDERS REALLY LOOK FOR WHEN YOU APPLY FOR YOUR LOAN

Fri, 03 Jul 2020 00:22:57 GMT

What lenders really think.

How’s THIS beauty to hide away from COVID in?

If I could give you money for a house that looks like this one, would you take it?

Um, OF COURSE you would!! You’re not a complete egghead, right? You would probably mow down a couple of individuals to get to it, I am sure. If you want one like this in CA, however, you’ll need a few million just for the purchase.

Jeez - have you seen the skyrocketing price of homes in CA?

But hey, you may catch a deal somewhere. However, when finally deciding to purchase a home, there are many other factors to consider other than just the price….safety, location, how close the schools are (if you have school inhabitants) how close grocery stores, banks, gas and fire stations, hospitals, dentist offices and restaurants are, and so forth.

Right now, we are going to focus what lenders and mortgage professionals do when considering a loan for you. The top three things are:

1) Credit/Credit History

2) Income, Assets, and the Ability to Repay

3) Employment/Stability

These terms may be a little formal, so let me break them down in the true thoughts of a lender.

1. Credit & Credit History.

It all comes down to that middle FICO score. What is your middle FICO score? Your lowest and highest mean nothing. Has anyone else taken a chance on you? Who? Why should I take a chance? What have you borrowed already? What was the credit limit and what did you pay per month? Did you pay that on time? If not, WHY not? How much debt do you really have? Can you handle more? Will more throw you out of whack for our debt ratio limits?........... Absorb that. How well do you manage what the heck you already have? Were you late on any mortgage in the last 12 months? Man, I hope not, because that’s a wrap for you and low rates. Any prior bankruptcies? Foreclosures? Liens? Anything that should alert me not to give you my money?

2. Income, Assets & the Ability to Repay.

If I give you money, am I going to have to worry about you paying my money back? First off, do you have money? Are you making any consistent money? How much? Is it mostly comin’ in, or mostly goin’ out? How long have you been making this money? What’s in the bank? Heaven help you if there are a bunch of overdrafts on those bank statements. I need to see that down payment, some reserves and closing costs. Stat. What do you mean right now ? Of course, right now . You are asking for the money right now , aren’t you? I need every page of those bank statements, even if blank. How long has this money been in your bank? Is it seasoned? We are not talking about seafood. Gosh. Seasoned, as in, length of time those funds have been sitting in your bank. If your uncle just wired it all yesterday, as a gift, then we may have a problem. Any overly large deposits? Explain all that, on a letter. We’ll wait. Source where those came from, buddy. Again, is your inflow greater than your outflow? Got any assets, or just debts? Look, if you default on a loan, you got any sellable things I can use to collect my money?

3. Employment/Stability.

You working? Where? When did you start? What’s your job title? If I google the company, will I find it, along with its phone number and verifiable address? What’s your boss’s name and number? Oh, I’m calling your boss to verify that what you say is true. Believe that. In fact, I am asking how likely will it be that you will keep your job? I need to know so that you can pay me back. Why else? How long have you been working there at this job? Have you had this job consistently for the last two years? If not, WHY not and I need to know exactly where the heck you DID work for the two years before that. What exactly happened? You can have multiple jobs, but those jobs need to be steady. Otherwise, how am I going to get my money back? Wait, you are self-employed? Oh, this is going to be good . Need to see those tax returns, dude! Do not say you make $30K per month and this is not reflected. If you show me all losses, you are done. Finished. I need to see sufficient income for the last two years of tax returns, so I can divide those figures I see by 24 months. I need to know you make enough money per month to support all the debt you have…but let’s be clear. Mine is the most important. I need my money back, with interest. Did I mention that? How likely will it be that your business will bring in this money, so that you can pay me back? I’m looking for stability.

You’re welcome.

In fact, all the documents that your Loan Officer asks you to turn in, will lead up to the above and more. It doesn’t have to be that bad, though. If your Loan Officer is seasoned and experienced, that officer can help you successfully fly through these issues going in. He/she will have experience in working with different Underwriters and will know what to look for, ask you for and spot potential problems ahead of time. OMG, understanding Underwriters is an entirely NEW subject we need to discuss – the post is coming!

My advice?

Before even considering a loan, take inventory of your financial, employment and credit situation. You know when something is bad. You know when something looks good. If somebody came to you with your exact profile, would you lend money to them? If your situation looks shady to you, FIX IT.

Fix it all now and for the love of Heaven, wait until it is fixed before pursuing a real estate loan.

The smallest bad detail can cost you an opportunity.

Over and out.

- Deana M. Devereaux