Archive for the ‘Mortgage Industry’ category

« Older Entries
Newer Entries »

A Working Government Program for Home Owners

March 3rd, 2010

Over the last couple of years, the government has made many attempts at trying to help home owners keep there homes.  Many of these attempts have been disappointments at best or all out failures at their worst.  There are a couple of programs though that are working to help home owners lower their mortgage payments, and get them into good, stable 30 year fixed mortgages.  The two programs I speak of are the DU Refinance + and the Freddie Mac Open Access and they are part of the Making Home Affordable Program.  These two programs are designed for home owners who have seen a decline in their properties value, but have still kept making their payment on time.

Here is a brief synopsis of how the program works and what is required to qualify for it.  These loan programs will allow a home owner to refinance their 1st mortgage into a 30 year fixed mortgage without mortgage insurance, even if their new first mortgage is more than 80% of their homes value (up to 125% of the homes value).  You have to qualify the same way you would with a regular refinance and the rates will (in many cases) be similar to what you would get if you were refinancing with an 80% loan to value (LTV).  There are two main requirements for this program though.  First, your loan must be serviced by Fannie Mae or Freddie Mac.  To check this go to the website http://www.makinghomeaffordable.gov/loan_lookup.html and follow the links.  Remember too that just because you are not making your monthly payment to Fannie or Freddie, doesn’t mean they aren’t the servicer.  Either check the website above or give the Kunselman Team a call and we can look it up for you.  The second qualifying factor for this program is that your original first mortgage had to be for less than 80% of the homes value at the time you got the mortgage.  So if you have had or currently have mortgage insurance on your mortgage, you don’t qualify for this program.  That being said, there may still be options for you as long as you have not missed any of your payments.  You are allowed to have a 2nd mortgage on the property (this is perfect for all of you who got an 80/20 when you bought or refinance) as long as the existing 2nd mortgage company is willing to re-subordinate their mortgage.  You cannot get cash out on this refinance but you can save a lot of money by lowering your interest rate.

The Kunselman Team has helped many home owners with these amazing programs, and have lowered some peoples interest rates by over 1.50%.  The Making Home Affordable Programs are shining diamonds in the trash pile of the many failed government programs out there and while it won’t work for everyone, it may just work for you.  So give The Kunselman Team a call to see if you qualify and take advantage of the low interest rates before they go up.

No comments »

Posted in Know Your Mortgage, Mortgage Industry, Real Estate Industry, Understanding Your Mortgage

Tags:

What Are Rates Going to Do This Year?

January 21st, 2010

Interest rates for mortgages over the last 6 months have been amazing.  Most borrowers have been able to get rates in the low 5% without paying any points or high 4% if they wanted to pay some points.  There is a lot of speculation in the market right now about what is going to happen with rates.  There are really only two arguments, rates are going to go up or rates are going to stay the same.  Here is the basis of both of these arguments.

Rates are going to go up:
Rates have been kept artificially low over the last year.  The government has been investing billions if not trillions of dollars into the purchase of mortgage backed securities.  The government has only committed to buying mortgage backed securities through the end of the first quarter of 2010.  This news raised a lot of chaos in the market toward the end of last year.  Rates stepped up about a half of a percent on this news.  The government cannot continue to keep purchasing more and more of these securities.  If they do, the value of the dollar will continue to go down as well as the risk of another housing bubble.

Rates are going to stay the same:
The government has spent the better part of two years attempting to stabilize the housing market.  The most successful aspect of this effort has been the purchasing of mortgage backed securities to keep interest rates low.  If the government stops buying these mortgage backed securities, who will be there to buy them?  The market has not shown a strong appetite for these securities since they first crashed a few years ago.  The only reason that banks are still writing new mortgages is because there is someone buying them on the secondary market.  If the secondary markets disappears, the banks will all but shut down the market.  The government showed the big banks that they would not let them fail and the banks know they hold all the cards.  Until a new investor shows up in the secondary market, that wants to buy mortgage backed securities, the US Government is going to be obligated to keep buying them.  Failure to do so would result in another crash of the housing market.

No comments »

Posted in Know Your Mortgage, Mortgage Industry, Real Estate Industry, Understanding Your Mortgage

Tags:

Looking Back at 2009

January 21st, 2010
  1. The $8000 first time home buyer tax credit that didn’t have to be paid back is introduced.
  2. Foreclosures declined but short sales were on the rise.
  3. Stated income loans went away, making it difficult for self-employed income borrowers to get a new mortgage.
  4. New mortgage guidelines tightened up.
  5. Large investors (unless they are cash buyers) got bumped out of the market.
  6. Resurgence of the small/first-time investor.
  7. Resurgence of the USDA 100% financing mortgage for rural areas.
  8. The Government injected lots of capital into the mortgage backed securities keeping interest rates low.
  9. The Government injects billions into the banks in the form of the TARP (Troubled Asset Relief Program) with the intent to modify existing mortgages.  The banks modify only a very small percentage of these mortgages.
  10. Fannie Mae and Freddie Mac introduce the DU Refinance + and the Home Access Programs designed for home owners to refinance who initially had 20% equity when they first got their mortgage and have seen their home values decline.  Program is a moderate success.
  11. Rates went up and rates went down.
  12. The Home Valuation Code of Conduct (HVCC) is introduced in May.  Appraisals must now be ordered through Appraisal Management Companies (AMCs). Many reports indicate this system is very flawed and has lead to higher costs to the borrower in obtaining a new mortgage.
  13. The Mortgage Disclosure Improvement Act (MDIA) is introduced in August.  It gives borrowers more information upfront before any money can be collected, but adds costly time to the mortgage process.
  14. The Government extended the $8000 First Time Home Buyer Tax Credit to June ’10 and added a $6500 repeat home buyer tax credit.  Experts say there will not be any more extensions.

No comments »

Posted in Know Your Mortgage, Mortgage Industry, Real Estate Industry, Understanding Your Mortgage

Tags:

Looking Forward to 2010

January 21st, 2010
  1. Good Faith Estimate (GFE) 2010 is introduced January 1, 2010.  Six items now required before the loan originator can provide you with a GFE: Name, Property address, Estimated Property Value, Loan Amount, Income, and Social Security Number (Credit Report). Fees locked for 10 business days from issuance of GFE.  Designed to protect the consumer from an increase in fees and encourage comparing options.  Most likely, will lead to less comparing since a GFE can’t be issued until the loan originator can pull credit.
  2. Legislation on the table to repeal HVCC.
  3. Federal Reserve Board debating over Yield Spread Premium (YSP).  In the past, YSP was a credit that had been paid to the loan originator by the lender.  GFE 2010 changes YSP from a loan originator credit to a borrower credit.
  4. HUD to suspend the 90 day anti-flipping rule for one year starting February 1, 2010.  Existing rule prevents a home owner from selling a home that they have owned for less than 90 days.  Lenders still have to approve this new rule.

No comments »

Posted in Know Your Mortgage, Mortgage Industry, Real Estate Industry, Understanding Your Mortgage

Tags:

*New* Move-Up/Repeat Home Buyer Tax Credit

November 24th, 2009

Here are the Details of the extension of the Move-Up/Repeat Home Buyer Tax Credit

Definition Move-Up or Repeat Home Buyer:

A home owner who has owned and resided in a home for at least five consecutive years of the eight year prior to the purchase date.

1.  Buyers will have to have a binding sales contract signed by April 30th, 2010 and close by June 30th, 2010.
2.  The Tax Credit Does Not Have to Be Repaid!
3.  Up to $6,500 or 10% of the purchase price (which ever is less)
4.  Max Home Purchase Price $800,000
5.  Income Limits (For Full Tax Credit)
a.   Single Taxpayer = $125,000/year
b.   Married Taxpayers =  $225,000

6.  Income Limits (For Partial Tax Credit)
a.  Single Taxpayer = $144,999
b.  Married Taxpayer = $244,999

7.  Tax Credit vs. Tax Deduction
a.  A Tax  Credit is a dollar-for-dollar reduction of what the taxpayer owes.
b.  A Tax Deduction is subtracted from the amount of income that is taxed. (i.e. You get a reduction based on your tax bracket)

1 comment »

Posted in Mortgage Industry, Real Estate Industry

Tags:

First Time Home Buyer Tax Credit Has Been Extended

November 24th, 2009

Here are the Details of the extension of the 1st Time Home Buyer Tax Credit

Definition First-Time Home Buyer:

Someone who has not owned a principal residence during the three-year period prior to the purchase.

1.  Buyers will have to have a binding sales contract signed by April 30th, 2010 and close by June 30th, 2010.
2.  The Tax Credit Does Not Have to Be Repaid!
3.  Up to $8,000 or 10% of the purchase price (which ever is less)
4.  Max Home Purchase Price $800,000
5.  Income Limits (For Full Tax Credit)
a.   Single Taxpayer = $125,000/year
b.   Married Taxpayers =  $225,000

6.  Income Limits (For Partial Tax Credit)
a.  Single Taxpayer = $144,999
b.  Married Taxpayer = $244,999

7.  Tax Credit vs. Tax Deduction
a.  A Tax  Credit is a dollar-for-dollar reduction of what the taxpayer owes.
b.  A Tax Deduction is subtracted from the amount of income that is taxed. (i.e. You get a reduction based on your tax bracket)

No comments »

Posted in Mortgage Industry, Real Estate Industry

Tags:

How to Claim Your First Time Home Buyers Tax Credit

November 24th, 2009

2009 was a very good year for the 1st Time Home Buyer.  Many of you out there purchased a home and now qualify for the 1st Time Home Buyer Tax Credit worth up to $8000, but how do you get it.  My first suggestion is to have you taxes done by a professional but for those of you who still enjoy filing your taxes yourself here is the process you will need to complete:

  1. First begin Form 1040.
  2. Be sure to take note of your adjusted gross income, which you enter on lines 37 of the form. Form 5405 actually requires you to note your modified adjusted gross income, but that affects few people, so most will just use their adjusted gross income.
  3. When you come to Line 69 you’ll be asked to enter your tax credit amount. To do that, you’ll need to first complete Form 5405.
  4. Once you complete Form 5405, enter the amount on Line 69, then complete your return.
  5. Attach Form 5405 to your return.

IRS Form 5405 can be found by CLICKING HERE!

*Please note that this form can only be used for homes that were purchased before November 7th, 2009.  The new form for purchases between November 7th, 2009 and June 30th, 2010 will not be available until December 2009.  The Kunselman Team will post the form here when it becomes available.

2 comments »

Posted in Know Your Mortgage, Mortgage Industry, Real Estate Industry, Uncommon Useful Knowledge, Understanding Your Mortgage

Tags:

Applying for a Mortgage…The Personal Invasion Process?

November 2nd, 2009

When I (Luke) first got into the mortgage business over 6 years ago, the world was a very different place.  The government and financial institutions were operating under the idea that everyone in America should own a home.

The first company I worked for specialized in Stated Income Stated Asset mortgages.  While this sounds risky, these loans were only given to people with a great credit score and credit history and a verifiable income source.

The next company I worked for specialized in subprime loans.  These were loans designed for people with less that stellar credit and these types of loans were designed to be a short term fix.  In fact, many people who received these loans would have lost their home at that time, if it were not for these subprime loans.

The idea was that real estate was always a safe investment for banks because property values always went up. If the borrower defaults (went into foreclosure) the lender would get the property back and be able to sell it to get most of their money back.  But nobody really thought about what would happen if too many homes went into foreclosure and property values started to drop.  Well, as we all know, that worst case scenario did happen and as a result, getting a new mortgage in today’s market can be very difficult.  This month’s article is going to give you some tips about how to make getting a new mortgage as painless as possible.

The first and most important thing to remember in today’s mortgage/real estate market is that YOU MUST DOCUMENT YOUR INCOME! There are no more stated income loans.  For self-employed borrowers such as myself, this can often pose a problem.  The best advice I can give to all of you self-employed people is to have a professional mortgage broker review your file to see if you can document enough income to qualify.

The second tip that can make getting a mortgage go much quicker is to Collect All Your Documents Ahead of Time.  Here is a short list of documents that are required on most loans today: 2 years tax returns including W-2s, 30 days of Paystubs for all jobs, 2 months of banks statement for all bank accounts (including retirement accounts), Copy of drivers license and social security card.  These are just to start.  Your mortgage broker professional could have a list of additional items for you to collect.  It is very important to get the requested documents back to your mortgage broker ASAP.

The final tip that I would like to give you about getting a new mortgage is Have Patience.  The mortgage process is not longer a streamlined process.  Lenders are all asking for more and more documentation.  As long as you are working with a Professional Mortgage Broker, they will guide you as quickly and painlessly as they can through the mortgage process.

1 comment »

Posted in Know Your Mortgage, Mortgage Industry, Uncommon Useful Knowledge, Understanding Your Mortgage

Tags:

Don’t Wait Too Long, FHA Rules are Changing

September 29th, 2009

For those of you who have tried to get a mortgage done recently, you have probably realized that option are getting smaller and smaller. If you have a high loan to value (You owe almost as much as your home is worth) you may be limited to an FHA loan. This is a mortgage that will allow you to borrow up to 96.5% of your homes value. (Not including the upfront Mortgage Insurance Premium.) FHA is changing some rules January 1st, 2010 in an attempt to make it easier to get a n FHA mortgage, but these one of these changes could actually have the reverse affect.

Currently, HUD requires that all originators work for a broker or banker that is FHA Approved. The new rule will no longer require that a mortgage broker have this approval, instead it will shift the responsibility to the funding lender. The lender will now have sole responsibility for quality control of the loans. The intent of this new rule is to allow more mortgage brokers to be able to originate FHA mortgages. Some speculate that because of the shift in responsibility, lenders could start to have stricter guidelines as to who can originate FHA loans with them.

If the lenders start to become more restrictive than they already are, it is going to be harder to find someone to do an FHA loan that is not a bank. If you have been thinking about buying or refinancing a home with an FHA loan, it would be wise to do it before the end of the year.

2 comments »

Posted in Mortgage Industry, Real Estate Industry

Tags:

What is Yield Spread Premium and Why is it Beneficial?

September 28th, 2009

Today’s “Know Your Mortgage” article is going to cover Yield Spread Premium or YSP. This is becoming a hot topic in the news right now because the Federal Reserve has purposed a new rule that would make it illegal for banks to pay yield spread to any loan originator. This rule, if passed will have a very detrimental impact on your ability to get a new mortgage. So in that light, I thought it would be good to explain what YSP is and how it facilitates mortgage lending.

Yield Spread Premium is money that is paid to a mortgage broker, by the bank, for originating the mortgage. The dollar amount (of the Yield Spread Premium) paid by the bank is determined by the rate of the new loan. The third and forth component of the pricing of a new mortgage is the origination and discount points. Both of these are costs paid by the consumer. It is the relationship between all four components that make up the majority of costs of a new mortgage. If you are paying discount points, the broker is not receiving any yield spread. If you are not paying any origination points, the broker is getting paid in Yield Spread Premium. Some of the benefits of Yield Spread Premium are:

 YSP allows the consumer to use other sources besides banks to get a mortgage done.
 YSP allows for lower closing costs because that lender is paying a portion of the closing costs.
 YSP allows for better flexibility on rates.
 YSP paid to mortgage brokers allows you the consumer to see how much money is being paid on your mortgage.

Yield Spread Premium allows for more consumer options by allowing non-bank companies to originate mortgages for the consumer. The largest collections of these companies are mortgage bankers and brokers. In fact, it’s very likely that many of you reading this today got your mortgage through one of these sources. Some of the ways that mortgage brokers and bankers help facilitate the mortgage process is by offering more programs, better rates and fees, and probably a shorter time frame. In addition, because most mortgage brokers are paid strictly commission, they will work harder for that business because they don’t get paid unless they get you into a loan that works for you.

Yield Spread Premium has also allowed for consumers to have lower closing costs and more flexibility on rates. When a loan originator works for a bank, they have very stringent pricing guidelines to follow. A mortgage broker on the other hand has the option of looking around with multiple lenders to see which one has the best pricing.

The other benefit that Yield Spread Premium brings to the table is that the consumer gets to know what is being made on their new mortgage. When you are working with a mortgage broker, Yield Spread Premium must be disclosed from the beginning of the loan process now in addition to on the final settlement statement. What that means is that you the consumer see from start to finish, what a mortgage broker is making on a new mortgage. Banks also have a yield spread premium but they are not required to ever disclose. This does not mean that money isn’t there. It just doesn’t have to be disclosed.

The Fed’s argument against YSP is that it gives incentive for brokers to give their clients worse loan programs because of their own personal gain. And even though, law requires full disclosure about the Yield Spread Premium, the Fed believes that the American consumer is not smart enough to protect itself so YSP must be eliminated. The reality is that many consumers “shop” around when looking for a new mortgage or they work with someone they know and trust. If you have had a bad experience in the past with a mortgage broker, odds are you either didn’t “shop” around or were not working with someone you trusted. If you don’t know any good mortgage brokers, ask a friend. If you don’t have any friends, check out your local real estate association. Any of these sources should be able to provide you with a list of reputable mortgage brokers.

To read more about the new Federal Reserve Board Ruling Regulation Z – Truth in Lending – Closed-end Mortgages [R-1366] check out http://www.federalreserve.gov/newsevents/press/bcreg/20090723a.htm. The purposed rule is currently in its public comment period, so please leave comments!

We hope that you found this information useful and as always, if you would like to see what it feels like to work with a mortgage team that can bring a little sanity to an insane world, give The Kunselman Team a call.

1 comment »

Posted in Know Your Mortgage, Mortgage Industry, Real Estate Industry, Understanding Your Mortgage

Tags: