Posts Tagged ‘FHA’

FHA Streamline Refinance

July 30th, 2010

If you currently have an FHA Mortgage on your home, you may qualify to save hundreds of dollars on your monthly mortgage payments.  As with the Fannie Mae and Freddie Mac programs that we have been talking about for the last few months, you may not have to have an appraisal.  In addition, this program does not have any debt to income ratio requirements.  As long as you have not had any late payments on your mortgage (more than 30 days) in the last 12 months, you may very well qualify for an FHA Streamline Refinance.

The biggest differences within this program are determined by whether or not an appraisal is done.  If you are like me, the first question that comes to mind is, “If it is not required, why would you do an appraisal?”  If you decide NOT to do a new appraisal, the new refinanced loan cannot add any of your closing costs to the new loan balance (except odd days interest).  That means that you would either have to have your closing costs covered by the lenders wholesale credit or you would have to bring money to closing.  This option is actually a great value for many borrowers.  Particularly if you feel that your home’s value has declined since you took out your last mortgage.  Rates are so good right now too that you could probably get a rate in the 4% without having to bring more than one month’s payment to the closing table.  If you choose to get a new appraisal during the loan process, you will be allowed to roll any necessary closing costs into the loans so you can maybe get a lower rate without the out of pocket expense.

The other thing to remember with FHA mortgages is the up front mortgage insurance premium.  This is the amount collected by FHA upfront and is usually rolled into the new loan. (Please note that if you choose to use the no appraisal options, this is not a cost that can be rolled in.)  The good news is that on an FHA Streamlined refinance, you will get a portion of your existing upfront mortgage insurance credited back to you.  If you have had your FHA mortgage for a short period of time, the percentage of your credit will be high and the opposite is true too.

Rates are REALLY good right now.  If you have been thinking of refinancing your current home or buying a new one, now is the time.  Let The Kunselman Team find the right mortgage to fit your needs!

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Everyone Has an Opinion, But Which Ones Really Matter?

June 2nd, 2010

It is human nature.  Everybody wants to seem like they know what is best for other people.  This is never more true than during the process of purchasing or refinancing a home.  If you have ever purchase or refinance a home, you have probably experienced this.  As soon as you tell someone that you just got a contract accepted on a home, someone tells you that you should have got it for less. Or you tell a friend that you just locked in a great new interest rate, and they tell you that they hear that someone you’ve never heard of just got a better one.

Now most of the time, friends and family aren’t trying to crush your spirit or make you feel bad about your decision, they are just trying to look out for you. But would you go to your auto mechanic and ask him a medical question?  Of course not.  You would ask your doctor for his professional opinion.

Now sometime, the opinion is coming from a “Professional” (another REALTOR or Mortgage Originator).  It is important to look closely at this opinion though.  First, is this person just some random professional or someone that you know and trust? If it is, then why aren’t you working with them in the first place?  Everything else being equal, you should always work with the person you know and trust! Second, how much do they know about your personal situation?  Someone who says they can get you a better interest rate, without knowing the detail of your scenario, is just making empty promises.

You choose to work with your REALTOR and/or Mortgage Broker for a reason. If you have lost cost or trust in them, you better make sure that you have full confidence in the new professional because changing mid-stream can be costly if not done right.

As always, if you would like to work with a team of Mortgage Brokers that you Know and Trust, give The Kunselman Team a call.

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7 Things You Should Never Do When Applying for a New Mortgage

April 1st, 2010

This is a list of things to steer clear of when you are seeking to obtain financing for a home. The following items may prove to be a detriment when you wish to move forward with the loan process.

  1. Don’t open any new credit accounts, especially buying or leasing a vehicle!  Brand new lines of credit can bring your score down by lowering your average history length of your credit accounts. Lenders also look carefully at your debt-to-income ratio or DTI. A large payment such as a car lease or purchase can greatly impact those ratios and prevent you from qualifying for a home loan.
  2. Don’t transfer your assets between bank accounts!  Moving money around ends up complicating things because the transfer of money must be documented.  In addition, if you have any unusual deposits of cash, the lender is going to want to know where it came from. You can consolidate your accounts later if you need to.
  3. Don’t change jobs!  A new job may involve a probation period, which must be satisfied before income from the new job can be considered for qualifying purposes.
  4. Don’t make any large purchase during or right before the loan approval process. (This includes furniture and appliances for the home.)  New purchases can increase your debt to income ratio to the point that you will no longer qualify for the mortgage you are applying for.
  5. Don’t put your information on “lending” websites like LendingTree.com or anything similar.  These website are not lenders but marketing companies that sell your information to multiple lenders (I have seen as many as 25).  Each of these lenders will pull your credit to see what you qualify for.  ALL inquires must be explained during the lending process and too many pulls can lower your credit score.
  6. Don’t transfer balance around on your credit cards.  An experienced lender can advise you if any money should be transferred and how much.  Also, if you recently paid off or substantially reduced the balance on debt, contact the company and get something on their letterhead stating your new balance.

Do not pack away your important documents. (Tax returns, W-2s, Bank Statements, Military Paperwork, Bankruptcy Paperwork, divorce/child support papers, etc.)  These things are crucial to the loan process and having to dig through boxes to find them will only waste valuable time.

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A New FHA Refinance Program for Struggling Home Owners

April 1st, 2010

Last Friday, HUD announced a new program designed to help home owners who have seen a drop in their home’s value.  We do not have all the details yet, but here is a quick summary of what was announced:

1.  Existing lender must be willing to write down/reduce the loan’s principle balance by at least 10%.

2.  The new maximum loan to value (LTV) can be no more than 97.75% of your home’s value.

3.  If you have a second mortgage, your new combined loan to value (CLTV) can be no more than 115% of your home’s value.

4.  The new first mortgage will have standard FHA mortgage insurance.

5. Maximum housing expense ratio of 31% (No more than 31% of your gross income can be going toward your housing payments.

6. Maximum total expense ratio of 50% (No more than 50% of your gross income can be going toward your housing payments, credit cards, and other loans on your credit report.

7.  You MUST be current on your mortgage payments.

8.  Minimum Credit Score of 500.

9.  This will show as a Write Down or something similar on your credit report. (This means it has some impact but probably less than a foreclosure.)

10.  You cannot already have an existing FHA loan.

Now, the thing to keep in mind with this program is that even though HUD/FHA set these new rules, each lender has their own overlays that adjust the program’s qualifying guidelines.  But if this program rolls out the way it should, the new program should help thousands of home owners who want to keep from losing their home.

If you are interested in this new program, please feel free to send us an email at service@TheKunselmanTeam.com and we will keep you informed as this program is released.  Also, keep in mind the other Making Home Affordable Programs that The Kunselman Team offers which can help many homeowners who lost equity in their home, but have managed to keep making their payments on time.

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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.

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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.

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Fewer Rules, More Common Sense

September 24th, 2009

The HVCC as mentioned above is just another example of good intentions gone bad.  One of the biggest problems facing our country right now is the flood of new laws being put into place.  Because of the state of the economy and incorrect opinions about what got us to this place, many politicians are creating laws based more on what they think will get them more votes instead of looking taking the time to really understand the problem so they can properly fix it.

Here is the inherent problem with trying to solve the problems in our country with more rules.  Every time you create a new law, you create more loopholes for people to get around the laws.  All the laws really do is increase the cost of doing business for those professionals who continue to operate in a legal and ethical way already.  Someone who is currently breaking the law, will just end up breaking the new laws.

What we really need in this country is more common sense.  Instead of creating new laws, why don’t we just give more power to those who have authority to enforce the laws we already have.  Before the HVCC was put into place, it was against the law for any lender or mortgage broker to influence the value of an appraisal.  The real problem was that if an appraiser felt that he or she was being pressured, they didn’t have a strong enough system put in place to give them any power to stand up to that lender or broker.

One more thing; if a law is created and at some point it becomes obvious that it is a bad law, let’s just get rid of it.  We don’t need more laws to get around the bad one.

As always, if you would like to see what it feels like to work with a mortgage broker that can bring a little sanity to an insane world, give The Kunselman Team a call.

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Just don’t fall for it?

September 24th, 2009

We have all heard the saying, “If it sounds too good to be true, it probably is”, yet we have all fallen for someone who promised us the world and only delivered us disappointment. In the last month or so, we at The Kunselman Team have started to hear a lot of stories about people who were promised great things from some mortgage broker that they didn’t really know and surprise surprise, the broker did not deliver on their promise.  This is not that uncommon in this market because many mortgage brokers are desperate for business and will tell people anything to get a loan.   We had a client call us last week because they had decided to work with a broker who promised to close their loan in two weeks when we said it would take about 30 days.  The loan didn’t close in two weeks and it still hasn’t closed.

The Kunselman Team has a much better philosophy.  We believe in under promising and over delivering.  While many brokers will leave 3rd party fees of their Good Faith Estimates to make it look like they are charging less, The Kunselman Team puts every fee that can come up so that there are no surprises except maybe that your are getting back more money than expected.  We are also realistic about the time it will take to close your loan.  Loans just take longer to do now than they did in the past.  Lenders are looking at every detail much more closely than they have in the past and that takes time.  If you are working with someone who promises to close your loan in two weeks, get it in writing and make sure you get something if they don’t deliver on their promise.

As always, if you would like to work with the best in the industry, give The Kunselman Team a call so we can help you with all your mortgage needs.

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What Can the Stimulus Package Do for Me?

September 24th, 2009

Every day when you turn on the TV you are bound to hear someone talking about the “Stimulus Package” and how it supposed to help home owners buy homes or refinance their existing mortgages but few people explain how this applies to the average person in terms everyone can understand.  Today I want to talk about two specific programs, the “First Time Home Buyers Tax Credit” and the DU Refinance+.  These are two of the better parts of the “Stimulus Package” and I would like to explain how these could help you or someone else you know, like and trust.

The “First Time Home Buyers Tax Credit” in very simple terms is a rebate you get from the government for buying a home.  Now this rebate does come with a few restrictions.   First, you must be a “First Time Home Buyer”.  That means you cannot have owned a property in the last 3 years, so just because you may have owned a home in the past doesn’t mean you can’t qualify for this credit.  Second, if you purchase a home for $80K or more you will get the full tax credit of $8,000; if you purchase a home for less than $80K, you will receive 10% of the purchase price in a tax credit.  In addition to the previous two restrictions there are some income restriction that you will want to talk to you tax advisor about.  But here is the beauty part of this tax credit too.  The tax credit is real money in your pocket.  This is not one of those programs where they will reduce your taxable income by $8,000 so you pay fewer taxes.  If you are scheduled to get a refund of $500 on your taxes, you will get a refund of $8,500 instead.  Now since most of you have probably already filed you 2008 tax returns you have two options when to collect this credit.  You can wait until you file you 2009 tax returns and you will get it then or you can amend your 2008 tax returns and get it this year.

If you have been considering buying a home, now is the perfect time.  Longmont’s real estate market has been stabilizing well and the state as a whole has actually seen its first decrease in foreclosures since they started monitoring them back in 2003.  But you cannot wait forever.  If you want to qualify for the “First Time Home Buyers Tax Credit” you must purchase a home before December 1st, 2009.

The DU Refinance+ program is designed for those who currently own a home and would like to refinance to a low interest rate but might not be able to because their property values have declined.  There are a lot of restrictions to this program so I will cover some of the big ones but each loan is looked at case by case.  First, to qualify for this program, your current first mortgage must have Fannie Mae as its servicer.  The easiest way to find out if your mortgage is owned by Fannie Mae is to call The Kunselman Team and we can look it up for you.  (Please note that even though you don’t make your mortgage payments to Fannie Mae, that doesn’t mean your loan is not owned by them.)  If Fannie Mae owns your mortgage, the second question is “Does your first mortgage currently or in the past had mortgage insurance on it?”  If the mortgage had mortgage insurance on it at any point, you do not qualify, but if your first mortgage is 80% of you homes value or less you may qualify.

This program is particularly helpful for those who have a first and second mortgage on their home.  Many people with first and second mortgage currently owe more than their home is worth.  By current lending standards, these people would not qualify for a refinance but with the DU Refinance+ Program, as long as their first mortgage is not more than 105% of their homes value, they may be able to qualify for this refinance to lower their monthly payments.  This is not a cash out refinance!  You can only refinance your existing mortgage and the loan closing costs.  If you have a second mortgage, that company must agree to the terms of the new loan but since we are usually bettering your situation, many are being pretty cooperative.

If you or someone you know, like and trust would like to see he or she qualifies for either of these fantastic programs, please contact Luke at Luke@TheKunselmanTeam.com or Shelley at Shelley@TheKunselmanTeam.com.

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