Author Archive

How to Avoid the Grinch Stealing Your Closing!

November 10, 2014

mortgage_grinchThe holiday season is upon us and the temptations that come out this time of year make the home buying and mortgage process even more hectic and tricky than normal. A common misconception that homebuyers have is that the mortgage approval is complete when the loan officer gives them a pre-qualification letter or when they receive the telephone call that they have been approved in underwriting.

What most consumers don’t realize is that the mortgage approval process occurs in stages and continues to the day of closing. The changes they make to their income, asset, debt or credit profile can change an approval to a decline very quickly. (more…)

FHA HAWK Program: Not Yet Approved, but Getting a Lot of Attention

July 21, 2014

FHA_HAWKThe new FHA HAWK (Homeowners Armed With Knowledge) Program designed to give homebuyers a discount on the FHA Mortgage Insurance Premium (MIP) in exchange for them taking approved Homebuyer Education Classes has been getting a lot of attention and press. Real estate professionals and homebuyers are beginning to inquire about how to apply for the HAWK Program.

The most important major detail that many of the articles and news reports are not making very clear is that the HAWK Program has not yet landed its final approval status and IS NOT available!

HUD’s current estimate is that phase one of the four-year, four-phase program should roll out winter of 2014 or spring of 2015.

Below are the basic program details if the program rolls out without any changes to the current program proposal: (more…)

FHA vs. Conventional: Which is the Better Option?

July 7, 2014

fha_or_conv_loanMany homebuyers are seeking a loan with very little down payment. If they aren’t eligible for a 100% VA or USDA loan, they have two choices: FHA with 3.5% down payment or Conventional with 5% down payment. Determining which is best can be challenging. There are pros and cons to both loan types.

Most people have heard that FHA loans are good because they offer lower interest rates and are easier to qualify for than Conventional loans.

This is true, but if the buyer can qualify for the Conventional loan, it could be cheaper overall, even if the interest rate is a bit higher. Remember, there is more to a monthly mortgage payment than the principle and interest payment. The big factor that separates FHA and Conventional loan monthly payments is the Private Mortgage Insurance for each loan type.

Let’s break down each loan type: (more…)

Rent or Buy: The $54,000 Question!

March 17, 2014

buy_or_rentA renter paying $900 per month for rent will pay their landlord $54,000 over 5 1ears! With that same monthly payment this renter could be a homeowner building equity and reducing taxes.

A renter paying $900 per month could potentially buy a home in the price range of $120,000 to $135,000 (depending on borrower’s credit score and debts) and not increase their monthly payment (based on a $130,000 sales price, 3.875% 30 year fixed rate with an ARP of 6.177%).

Plus, Mortgage Interest Rates are still at historically low levels. For example, the cost for every $1,000 borrowed at a 3.75% 30 year fixed rate is only $4.63 per thousand. (more…)

QM & ATR Rules: Good Intentions Have Unintended Consequences

February 17, 2014

new_mortgage_rulesThe year 2014 brought more than a blanket of ice and snow to the country! It brought some new Mortgage Rules that are part of the Dodd-Frank Financial Reform Law passed back in July of 2010. The Rules that came into effect on January 10, 2014 are referred to as the Qualified Mortgage (QM) and Ability to Repay (ATR) rules.

A major change due to the new QM rules is the 43% maximum Debt to Income Ratio if the loan doesn’t receive an approval in the Automated Underwriting Systems for Fannie Mae or Freddie Mac. A borrower making $4,000 per month who receives an approval in Desktop Underwriter – the Automated Underwriting System for Fannie Mae – could qualify with a Debt to Income Ratio as high as 50%. This same borrower would qualify for $56,000 LESS if they don’t receive an approval and are limited to the 43% DTI under QM based on current interest rates.

So here’s the Good and the Bad of the latest Financial Reform Rules that took effect Jan. 2014! (more…)

FHA Loan Limits to Decrease by $25k for Most Georgia Counties

December 16, 2013

fha_loan_limitsEffective Jan. 1, 2014, FHA loan limits for most of the counties in Georgia will drop from $346,250 to $320,850, a decrease of more than $25,000! This applies for all FHA forward purchase loans with FHA case numbers assigned on or after Jan. 1, 2014 through Dec. 31, 2014.

If you’re hoping to secure an FHA loan above the new $320,850 loan limit level, you better act fast! Homebuyers will need an accepted, signed Sales Contract; a full Loan Application; and signed and returned all documents to their FHA lender no later than December 20, 2013 in order to meet the deadline and allow time to have their FHA Case # request processed and issued before the deadline and the decreased loan limits come into effect. (more…)

Interest Rates – One Size DOES NOT Fit All

November 11, 2013

ice_cream_interest_rates“What are the current interest rates?” This is a very common question from real estate agents and buyers. Answering the question of what’s today’s interest rate is as difficult to answer as “What’s the price of a four bedroom home in the Atlanta area?” The answer to both of these questions is, “It depends!”  There are many factors that impact both of these numbers.

The price of four bedroom homes in the Atlanta market area ranges wildly based on location, actual size of the home, amenities of the subdivision, quality of construction and construction materials, and a very long list of other factors.

Interest rates also vary wildly based on the individual borrower’s credit score, loan to value, borrower’s assets, borrower’s income, borrower’s debts and loan options such as waiving escrows, and if the property is a condo.

Interest rates are like ice cream. The price of a plain vanilla cone is one price, but if you add hot fudge, nuts, fruit and cherries, the cost goes up! (more…)

Credit Disputes Can Delay Your Mortgage Application Even if they are Legitimate!

September 9, 2013

credit_fixersAll lenders are requiring any disputed account on a borrower’s credit report to be resolved or the dispute removed before the loan can be approved. The reason for this is that unscrupulous “credit repair” or “credit fixer” companies have told consumers how to use (abuse) the Fair Credit Reporting Act to falsely inflate the consumer’s credit scores.

The Fair Credit Reporting Act allows for any consumer to dispute any credit account or payment history rating they believe to be incorrect. The Act requires that any account that is under “dispute” be omitted or neutralized and not considered in determining the consumer’s credit score. This Law is in place to protect innocent consumers from erroneous credit reporting. (more…)

What Really Influences Your Credit Score?

August 5, 2013

credit_factors2Your credit report overshadows every part of your life. Whether it’s a bank, insurance company or mortgage lender, your credit score is how they figure out whether you’re likely to miss payments or default on a loan. Now, it’s not uncommon for landlords and employers to check your credit before approving an application.

No one is exempt from the impact of their credit score.

There are five factors that determine a borrower’s credit score – payment history, debt balance, credit history, types of credit and new credit inquiries – and each factor carries a certain weight or percentage. Together, they determine a person’s credit score. Knowing which factors carry the most weight may help you the next time you’re thinking about applying for a new credit card or just paying the minimum on your balance. (more…)

“Mortgage Rates Hit New 14 Month Highs. More Volatility Ahead!”

June 10, 2013

high_interest_ratesThis was one of the top news stories this week in Mortgage News Daily and many other news publications and broadcasts. I find this comical since mortgage interest rates have been at historic lows for several years and are still close to historic lows!

This “terrifying” interest rate rise causing these news headlines is an increase in the average 30 year fixed rate from 3.5% to 3.75%.

Let’s put this into perspective. The difference in the monthly payment for a $100,000 loan between 3.5% and 3.75% is a whopping $14. My guess is that most of us would find $14 if we vacuumed under all our car seats and sofas. (more…)

Does Your Buyer’s Pre-Qualification Hold Water?

May 6, 2013

does_prequal_hold_waterThe critical first step in the home buying process today is the pre-qualification/pre-approval process.  Home sellers should be very selective when considering which buyer’s offer they will accept when they have multiple offers to choose from. The only thing worse than no offer, is selecting the wrong offer based on a meaningless pre-qualification letter!

The truth is most pre-qual letters only mean that the lender has pulled a credit score on the potential buyer and the  credit score meets the minimum score requirements. This is simply the first hurdle in the total mortgage loan underwriting process. Lenders issue “pre-qual” or “pre-approval” letters every day based solely on a credit score only. The language in their pre-qual letter goes something like this: (more…)

FHA Increasing MIP on Apr. 1

March 11, 2013

fha-mip-changes-2013For the first half of 2013, the U.S. Department of Housing and Urban Development has made two major changes to their policies:

1. Monthly Mortgage Insurance Premiums (MIP) are scheduled to increase affective April 1, 2013. While Upfront MIP is remaining the same at 1.75%, Monthly MIP is changing from 1.25% to 1.35%.

2. June 3, 2013 the FHA will no longer allow an FHA borrower to cancel their mortgage insurance premium payments when the loan balance drops to 78% of the property’s value!

This is the fifth increase HUD has made to the FHA MIP cost in the past 3 years. In April of 2012, FHA increased the MIP rates from 1% to 1.75% on the Upfront MIP and from .90% to 1.25% on the Monthly MIP. (more…)

Pre-Qualification vs. Pre-Approval

February 18, 2013

pre-approval

How do I know what price range to look in? How do I make sure my offer is accepted? These are two of the most commonly asked questions from first-time and experienced homebuyers alike.

Give your buyer the added advantage of a true pre-approval, not just an empty pre-qualification in this highly competitive market where multiple bids are common and sellers are considering every aspect of every offer they receive.

Identify your property price range and strengthen your bargaining power by understanding the difference between pre-qualification and pre-approval. Here’s the difference: (more…)

Good News: Mortgage Debt Tax Relief Extended!

January 7, 2013

fiscal_cliffWhen lawmakers dodged the “fiscal cliff” last week, they also decided to extend the tax break for forgiven mortgage debt that was set to expire on Dec. 31, 2012. The Mortgage Forgiveness Debt Relief Act of 2007 has been especially important with the current glut of short sales and foreclosures, and it’s truly a “relief” that it has been extended until the end of 2013.

The Mortgage Forgiveness Debt Relief Act of 2007 was enacted on Dec. 20, 2007. The Act protects homeowners from paying income taxes on the deficiency difference between what they sell their home for and what they owe. Whether the home is sold in a short sale or foreclosed upon by their lender, these distressed homeowners are protected by the Debt Relief Act of 2007. (more…)

Homeowners with Foreclosures and Short Sales Could See a Tax Increase in 50 Days!

November 12, 2012

If the Debt Relief Act of 2007 is not extended, 2013 could be a very Unhappy New Year for homeowners who have foreclosures and short sales!

New headlines are warning of a financial cliff that is approaching with the end of 2012, and the real estate industry will be hit particularly hard! It’s the expiration of the Mortgage Forgiveness Debt Relief Act of 2007.

The Mortgage Forgiveness Debt Relief Act of 2007 was enacted on Dec. 20, 2007. The Act protected homeowners from paying income taxes on the deficiency difference between what they sell their home for and what they owe. Whether the home is sold in a short sale or foreclosed upon by their lender, these distressed homeowners have been protected by the Debt Relief Act of 2007, which is set to expire on Dec. 31, 2012 unless Congress acts… quickly! (more…)


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