Georgia Mortgage FHA

Posts Tagged ‘Loan’

The cause for celebration over Federal Housing Administration lowering the upfront mortgage insurance premium is short lived. Concurrent to lowering the upfront fee is the increase of the monthly insurance premium fee.

Lowering the UFMIP from 2.25% to 1% will certainly decrease the amount of repayment. However, increasing the MIP from .55% to .90% (on loans with a down payment of 5% or less) will increase the cost of repayment significantly. The end result will be the FHA having more operating capital if the result is not a significant decrease in the number of sales due to borrowers not being able to qualify on debt-to-income ratios.

Currently, if you are purchasing a home at $200,000 (for example) with the FHA minimum down payment of 3.5% your base loan amount, prior to the UFMIP add back, is $193,000. Adding back the UFMIP, at the current rate of 2.25%, brings the loan amount to $197,343. The MIP cost per month, at the current rate of .55%, is $90.45 per month.

After October 4th 2010 the UFMIP will be only 1% meaning the loan amount including UFMIP will be $194,930 – a savings of $2413 on the purchase price. However with the new MIP rate of .90% the monthly MIP addition to the payment will be $130 – resulting in a payment approximately $40 per month higher.  At that rate the savings on UFMIP ($1900) will be lost in about 4 years.

One plus is that, at least currently, MIP does have a tax benefit and the buyer should consult their tax preparer for detailed information on the tax benefits of a monthly mortgage insurance premium.

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Community Outreach Leader and Licensed Loan Officer NMLS ID 208452 - office address 2300 Windy Ridge, Atlanta GA, 30339

— Ken Cook NMLS ID 208452

Soon will come the day in the lives of most readers when purchasing a new home will be a desire realized or a necessity placed on them by the demands of life. Even those who already own a home may be faced with the decision or necessity to refinance a current home loan. Sadly most home buyers and owners plan more for their next vacation or even a family picnic than they do an upcoming mortgage.

Mortgage planning really is a science because it is based on numbers instead of emotions. While the buying process itself may be driven by more than numbers the actual financing of that property, or even the decision to purchase with cash, is primarily a series of numeric calculations. As such there are ways for anyone to plan for their next mortgage in order to receive the best possible rate and terms available.

The four sins

Negative impacts on the applicant’s ability to borrow loans are not always of their own doing yet some are. Clearing one’s history of these three sins, if they exist, will greatly improve their likelihood of not only being approved for a home mortgage but getting the best rate and terms. Read the rest of this entry »

Community Outreach Leader and Licensed Loan Officer NMLS ID 208452 - office address 2300 Windy Ridge, Atlanta GA, 30339

— Ken Cook NMLS ID 208452

The Annual Percentage Rate (APR) is one of the most misunderstood numbers there is on the mortgage documentation. Additionally it is the most easily abused and even though it is supposed to exist to protect shoppers can be so misconstrued as to actually harm the shopper. Be that as it may here are fees that must be included in the calculations for APR in the state of Georgia.

APR FEES
Processing Fee	Allowed
Underwriting Fee	Allowed
Origination Fee to Lender	Allowed
Discount Points to Lender	Allowed
Broker Fees for Services Rendered	Allowed
Commitment Fee	Allowed
Lock Fee	Allowed
Closing/Escrow Fee to	Allowed
Attorney’s Fee to	Allowed
Disbursement/Funding Fee	Allowed
Wire Transfer Fee	Allowed
Warehouse Fee	Allowed
Assignment Fee	Allowed
Amortization Schedule Fee	Allowed
Copy Fee	Allowed
Fax Fee	Allowed
Document Review Fee to Lender	Allowed
Courier or Express Mail Fee to	Allowed

The APR is the total cost of the loan over the life of the loan averaged with the base interest rate. For example if you have an interest rate or 4.5% and closing costs of $5000 on a $100,000 loan the .5% APR qualified closing costs would result in an APR of 4.923% while $10,000 in APR qualified closing costs on the same loan would result in an APR of 5.333%

The way this can be abused or manipulated is by charging a higher base rate and shifting the rate commission to cover some of the closing costs. Not that this is necessarily a bad thing but it gives a hint as to how this figure can be manipulated.

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Community Outreach Leader and Licensed Loan Officer NMLS ID 208452 - office address 2300 Windy Ridge, Atlanta GA, 30339

— Ken Cook NMLS ID 208452

“Anyone can qualify regardless of credit”. “No application refused”. “No minimum credit score required”. The ads are still out there and mostly on Craigslist. Generally those ads are not from mortgage lenders or banks but from mortgage lead generation companies. Unlike mortgage companies lead generators are not required to be licensed, don’t offer home loan services and are not held to the strict standards of mortgage companies in advertising so they make a lot of outrageous claims hoping to get as many people to give them their information as possible.

The truth is there just aren’t any conventional home loans for people with “bad credit”. Not even FHA as is often misconstrued. FHA home loans, just like conventional home loans, actually require a relatively clean credit history although they do allow some negative reporting – even that is limited to scope and history. Read the rest of this entry »

Community Outreach Leader and Licensed Loan Officer NMLS ID 208452 - office address 2300 Windy Ridge, Atlanta GA, 30339

— Ken Cook NMLS ID 208452

Actually this should be title “How to kill your chance of closing on time” or “How to sabotage your own home purchase or refinance”. Then again this is the short, short list of a long list of things you can do to bring your loan process to a screeching halt.

Be reminded of the number of people who put a lot of effort in your loan to get it to the closing table. In fact from my office door right now I can see four full-time people who work behind the scenes on every loan. I can see the set-up person, the processor, the compliance officer and the underwriting department supervisor. That doesn’t include your insurance company and the people who touch the policy there, the agents and all the people in their employment who work on your file, the appraiser, inspector, title office and all the people who are involved in working on your file and others. When you do not close all of the work of all of those people is for nothing. That time could have been invested in someone who doesn’t do the things we are talking about today.

Over the years I have seen a lot of reasons for people to be denied a loan after then have been pre-qualified and before they close. Everything from quitting their job to buying a new boat to something as simple as applying for a student loan and being approved. Here is the rule of thumb:

From the time you are pre-approved to the time you have your keys and paperwork in your hands plus about 90 days do not apply for any credit, quit your job, spend your saving, cash out your 401K, co-sign with someone on a loan, or anything else with your money or your credit. Think I’m kidding? I’ve seen it happen no less than two dozen times in the last few years.

Hopefully you are working with a loan officer who knows how to properly instruct you at the time of application or pre-approval and who knows how to accurately answer your questions about changes in employment, income, savings, or credit. If not call me and I’ll find one for you. I know loan officers in almost every state. Now get some popcorn and enjoy this brief video

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Community Outreach Leader and Licensed Loan Officer NMLS ID 208452 - office address 2300 Windy Ridge, Atlanta GA, 30339

— Ken Cook NMLS ID 208452

Any real estate agent who has been in the business more than a few minutes and has shown a home or two has been asked the question, “how much would the payments be?” Chances are the agent does not have their mortgage calculator in their hands to input the mortgage rate, loan amount and other important factors. However, they do have their brain available and can easily estimate a mortgage payment for any home.

Real estate agents are not expected to be mortgage professionals but customers shopping for a new home do expect them to be able to answer the monthly payment question. There is a very simple way of calculating a mortgage payment based on any rate and it can easily be done without a calculator or even pen and paper.

Calculating the interest would be quite straight forward. The trick is always getting the principal added back in to the payment. So, in disregard to accuracy to the penny (or even the dollar for that matter) you can use some historic data to calculate the mortgage payment. Read the rest of this entry »

— Ken Cook NMLS ID 208452

The mortgage process, especially for those who are denied or delayed, is an enigma to most. Understanding a few basics, three in fact, can help open the windows and let some light on the mysterious inner-workings of mortgage lenders. Getting denied or being quoted a higher rate than you heard advertised need not be a huge question mark.

Every conventional lender, those who lend according to Fannie Mae and Freddie Mac guidelines, builds their lending criteria equal to or more stringent than the guidelines offered by those to mortgage holding giants – unless they are selling to Ginnie Mae or another mega investor. In those guidelines are some very simple first steps so important to the lending process they can be the cause for the vast majority of denials or increase costs of credit.

Whether you are applying for money to purchase a home or to refinance one you currently own these three points are crucial to your success in obtaining a good mortgage.

Number One: Employment and Income

Chances are if you skip around from job to job, especially in different industries, and you have large gaps of time between them you will be considered too high risk at least for a prime loan. Even if you have steady employment history if your income is not verifiable to the amount you need for a good debt ratio you can also be denied or incur the cost of risk in the form of a higher interest rate. Read the rest of this entry »

— Ken Cook NMLS ID 208452

With thousands of new homes entering the foreclosure process every month in each market area the question arises ever more frequently, “Can I use an FHA loan to purchase a short sale property?”

For the readers not familiar with short sales let us first define the term as it applies to real estate. As “short sale” on real estate is when the existing lien holder(s) agree to accept a lower amount than is currently owed on the existing loan(s).

If you need an example suppose the home owner has only one mortgage for $350,000 (existing payoff) on a home. Perhaps that home is currently valued only at $275,000. The home owner cannot refinance, the lender has failed to modify and foreclosure is looming so the lender agrees to accept a sales price equal to the current appraised value even though it is a full $75,000 lower than (short of) the payoff.

Answering the question, “can an FHA loan be used to purchase a short sale”, really is too simple. The answer is “yes” provided the property and transaction fall within FHA insurance guidelines. Remember FHA has maximum loan amounts, guidelines for property type and guidelines for property use.

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— Ken Cook NMLS ID 208452

In 2008 the Federal Housing Administration, in a move to try and get permission from congress to insure 100% home loans, were able to get most private third party down payment assistance programs eliminated from the process. Government and civic organizations are still able to operate but some of the largest DPA companies are out of the business of helping home owners with their required contribution to the loan process.

Since that date the only way to get down payment assistance is from generally higher priced government assistance programs or from a gift from a family member or employer. According to the HUD Handbook, chapter 2-10(C):

“Gift Funds.An outright gift of the cash investment is acceptable if the donor is the borrower’s relative, the borrower’s employer or labor union, a charitable organization, a governmental agency or public entity that has a program to provide homeownership assistance to low- and moderate-income families or first-time homebuyers, or a close friend with a clearly defined and documented interest in the borrower.”

There is much more to it than simply having the funds available. Not only does the gift money have to exist. The paper trail, evidence of the donor’s ability to give and proof of the relationship also has to be verified. Read the rest of this entry »

— Ken Cook NMLS ID 208452