Utah Mortgage Pro

Sanity in Mortgage Lending Guidelines coming to Washington???

Wow...for the first time in a long time I just came across some potentially good news for a great piece of mortgage legislation. The "Helping Responsible Homeowners Act of 2011" has been on the table since January. As with most good ideas I figured this one would be shelfed as fast as it was printed. It was brought to my attention today by Rob Chrisman from www.mortgagenewsdaily.com that apparently this legislation may not be dead and in fact it may be gaining some traction.

Here is what he said: "Yesterday officials held a conference call promoting the "Helping Responsible Homeowners Act of 2011." Originally introduced in January, the bill aims to remove the barriers that keep non-delinquent, existing borrowers from refinancing. Those in the mortgage business should be interested to know that they are proposing to eliminate LLPAs and adverse delivery charges for loans - the GSEs could not charge any additional upfront fee beyond the standard guarantee for a qualified mortgage. (In effect, this would lead to only one standard guarantee fee for all borrowers.) It would remove LTV limits for underwater borrowers so mortgage refinancing would not be limited by the LTV of the borrower. (Currently, borrowers in the HARP program can have a maximum LTV of 125%. Removing this constraint could allow up to 10-15% of borrowers in the 2005-07 vintages to be eligible for GSE refinancing.) It would remove the second-lien barrier to refinancing so that servicers and creditors that refuse to have their second liens "resubordinated" in the refinanced mortgage would be prevented from originating new GSE loans. And it would ensure that higher LTV borrowers receive a fair mortgage rate, suggested at no more than 40 basis points higher than the GSEs' 60 day commitment rates."

It has never made sense to me why Fannie Mae and Freddie Mac (GSE's) would not allow borrowers who were making their payments on time to refinance these loans in some sort of streamline program where appraised value is not important. If your main goal is to keep home owners in their homes and to help them to continue to make their payments on time, why then would you not throw them a preverbial bone? Trip and fall all over yourselves to find a way to work with those that havent made a payment in 6 months but leave the ones who are busting their hump to makes ends meet high and dry??

Statistics have shown that more then 20% of the borrowers who recieve a loan modification are in default (more then 30 days behind) again within 1 year. Yet we are cutting loan balances and dropping rates to as low as 2% for these folks. Now I want to be very clear here, I am not saying that we should stop loan modifications for those who are at risk of losing their homes. I am saying that I think a bill like this allowing Fannie and Freddie to loosen their refinancing guidelines for those who have and are making their payments on time makes a lot of sense.

It would be a nice shot in the arm for the economy to have 10-15% of home owners who still have rates in the 6% range to drop more then 1% off of their interest rate which would save the average home owner here in Utah about $183.33 per month. That is a lot of potential cash that could find its way back into our local and national economies each month.

I am hopeful but still not holding my breath, I have learned over the last couple of years the hard way that Sanity and Mortgage Lending Guidelines and legislation don't often keep the same company.

Stetson Lowe -Security Home Mortgage-

Why you need to get Pre-Approved not just Pre-Qualified for your new home

I talk to many people each week here in Utah that call and ask if they can get pre-qualified to purchase a new home.  My response to them is often the same "I would be happy to get you pre-qualified but what you really need to do is get fully pre-approved prior to beginning your home search."  The difference is simple.  Pre-qualification means that you tell me how much money you make, what your approximate credit score is, what your debt payments are each month, and how much money you have in the bank.  We also may discuss how long you have been at your current job, in the same line of work, at your current and former addresses and so forth.  Sounds pretty thorough right?  The only problem is you are telling me all of these items with out me actually verifying them with supporting documentation.

What's the big deal just take my word for it.....

Many of you are in such a hurry to move on to the house hunting that you don't want to take the time necessary to put together all of your supporting documentation i.e. tax returns, W2's, pay stubs, bank statements, etc.  The problem with this is that a good deal of the time I find that there are some minor and or major discrepancies from what people tell me and what the real story is.

Do people flat out lie?

For the most part I would say absolutely not.  It's just that people sometimes think that there credit score was 700 8 months ago when they bought that new car so it must be higher then that now.  They forget that getting a new loan can lower your score, or they may not know that their wife has added a couple thousand dollars to their RC Willey credit card balance and that has hit their credit score pretty hard.

Another thing I see all the time is someone who has worked at their job for a year or so and they get paid $36,000 per year salary and another $7,000 in commissions or bonus income.  They then tell me that they make $43,000 per year.  True.  The problem is, if I were to qualify them at $43,000 and they went out and put an offer on a home based on that pre-qualified amount they would be very disappointed when they got the offer accepted and then brought me their income documentation at which point I would have to break the bad news to them that we can only use the $36,000 base salary for qualifying as you have to have a 2 year history of overtime, bonus, or commission in order to count them for qualifying purposes.

That is just one example of things that can be missed with just a basic pre-qualification versus a full pre-approval.  There are many many more reasons to get fully pre-approved and one of the best reasons is this,

NO SURPRISES.....

If you have already taken the time to get your full income documents together and into me then I will go through it and come up with your qualifiable income.  I will then have the underwriter do the same so that we know exactly what you qualify for right down to the dollar.  We will run a tri-merge 3 bureau credit report, order verifications of employment and 4506T tax transcripts from the IRS.  We will have a full file all ready to close once you find the home of our dreams.

Using a Real Estate Agent....

I highly recommend the use of a professional Realtor to help you buy a home.  The benefits are numerous and the cost is usually FREE to you.  In Utah it is customary to have the sellers pay the buyers agent commission.  I would say in over 99 out of 100 homes sold the buyers agent commission is paid by the seller if not 100 out of 100.  So why not have an advocate on your side.  Someone who can watch out for your best interests and help to make sure that what you see is really what your getting.  Click here to see a list of my preferred agents.  I have personally worked with each one of these agents and hand picked them from 1000's of licensed agents here in Utah.

Appraisal and Title Work....

Once you find that perfect home all that is left on our end since you got fully approved is to order an appraisal and title work.  We can usually have these items back in just a few short days.  Once they come back and if everything is acceptable to you such as the title history and the appraised value, we will then hand in the full file to be underwritten in house just a few feet away from my office.  I will not send your file off to be underwritten like most banks and ALL brokers do.  I will simply walk the file over to our underwriters desk and put it in her stand up to be underwritten and approved within 24 hours.

Clear to Close....

Once your file is approved and we have met any conditions then you are clear to close.  We then order docs and make arrangements with the title company to set up a closing time.  See how easy that is?  Compare this to finding your home first and then compiling your paper work, then having us order all of the required verifications, then ordering the title and appraisal.  We can usually shave a week or 2 off of the closing time frame and make the whole process much smoother and more relaxing .

So before you start looking for your next home....

Remember to get fully pre-approved.  It makes your offer much stronger if you can tell the sellers that you are fully pre-approved and that you can close in 2 weeks versus 30-45 days like most people who will be submitting competing offers.  You can start the pre-approval process today very simply by applying online 24 hours a day at www.applywithstetson.com or call me at 801-318-4996. 

Stetson Lowe - www.applywithstetson.com - Utah's #1 mortgage professional

 

Utah Housing a wonderful 0 down payment option

 

There is a lot to be said of the great mortgage program administered through the Utah Housing Corporation.  This 0 money down mortgage option is a fantastic way for home buyers to make the dream of home ownership become a reality. 

Here's how it works for you if you are looking to buy a home and down payment is standing in your way.  First contact a lender who is approved to do Utah Housing loans.  Obviously I am partial to Security Home Mortgage and our great UH loans.

Second you need to fill out an application either on line www.applywithstetson.comor in person.  Some helpful information to have handy while filling out your application would be your W2's and or pay stubs so you know your gross income, your personal information such as your social security # and date of birth and your employment and residence history for the last 2 years.

Third check to see if you qualify for a Utah Housing 0 down Mortgage.  Currently UH requires a 660 fico and a standard FHA automated approval through FHA scorecard Fannie Mae's FHA automated underwriting engine.

Once you are pre-approved this is what you can expect.  You will have a 1st mortgage which is a standard FHA loan.  You will also have a 2nd mortgage which will be for up to 6% of the 1st mortgage amount.  The proceeds from this loan can go towards down payment requirements (currently 3.5% of the purchase price on an fha loan) and closing costs.  As of the time of this post the current Utah Housing interest rate is 4.75% on the 1st mortgage and 7% on the second mortgage.

You will be required to pay upfront and monthly mortgage insurance just like you would with a standard FHA loan.

Utah housing mortgage loans may not be for everyone, if you have down payment saved or if you are able to have down payment funds gifted to you, you might be better off with a Conventional loan or an FHA loan, if you are buying a home in a rural area you may even want to look into the USDA Rural Development loan as well.

If down payment is holding you back I would definitely recommend checking into the Utah Housing loan, especially for the next couple of months while you can still take advantage of the $8000 tax credit being offered from the IRS, the $8000 can be used to pay back the Utah housing 2nd mortgage although there are limitations to how quickly you can pay off the loans with out incurring a penalty.

Click on this link for a list of frequently asked questions about on Utah Housing Mortgage Loans

You can also view the income limits in your county.

Or to find out more give me a call.

Stetson Lowe - Security Home Mortgage - 801-318-4996
  

$8000 - $6500 Tax Credit - Tick Tock, Tick Tock

 

Somewhere In, UT

Tick tock, tick tock, the clock is ticking on the tax credit currently available to first time home buyers and those that have lived in their homes for 5 years who are looking to buy.  The program comes to a close on April 30, 2010.   First time home buyers in Utah have the most to gain as the government by way of the IRS is going to line your pockets with $8000 big ones just for signing on the dotted line(s) at closing.  Yes line(s) is plural because there are hundreds of lines you will be signing on.

Where was my $8000 handout when I bought my first home?  No where to be found I can tell you that.  All I got was a crappy 2/228 arm from Long Beach mortgage with a 7.25% rate and a cheap welcome package from our builder.  Man o man what I would have given to get the $8000 bucks that these kids are getting today.  I have some clients that are using it to buy furniture, some are planning to landscape and still some others are paying off their car loans.  No matter how you use it, you can't really lose as long as you don't miss out.

Slightly less enticing but still amazing is the $6500 available to those that have lived in their current home consecutively for the last 5 years or more.  Although not quite the $8000 being shoveled out to the greenies $6500 seems to be enough to get some of the fence sitters off the fence and into the game.  I have several clients out looking right now so they can cash in just in time to claim their prize.  One lovely lady I explained this move up credit to was attentively writing down notes so that she could go back to her husband with exactly what they qualified for and see if she could use her best methods of persuasion on her husband to get him to leave their home of 26 years and cash in on one of the many bank owned deals of a century that are to be had right now in Utah County.   I didn't ask what her method was.....moving on.

The moral of the story folks is to make sure you understand the time lines and deadlines to this program.  As much as I would like to see it extended over and over again, I tend to think that all good things must come to an end, at least that's what my Mom used to tell me when we were leaving Lagoon after our annual Questar family day, boy how I hated to see those days end.

We can get mortgage's done start to finish in as little as 7 days but why wait till the last tick of the clock?

For more useful information and frequently asked questions on the federal tax credit go to http://www.federalhousingtaxcredit.com/ I found this site to have some great information on the topic.

Your comments are always welcomed.  Stetson Lowe is a expert in the mortgage industry specializing in FHA, Conventional, USDA and Utah Housing Loans.  Don't attempt to blog like this at home:)

 

Saratoga Springs, UT - Rural Devlopment Loans - USDA

 
(A view from Saratoga Springs looking back over Utah Lake at Mt. Timpanogos)

Saratoga Springs, UT

What is the USDA Rural Development Loan?  Many of you have been asking the same question.  It sounds like a loan that an egg farmer would take from the government to improve his chicken coops, and in some cases that may happen on the commercial side.  What many people are now finding out is that the USDA also lends on residential homes located in what is deemed to be rural areas.

Many Utah residents can benefit from these loans as over 2/3rds of Utah is deemed to be "rural".  If you are looking to buy a home in Utah county in one of the following cities then pay close attention as this loan may be your very best option.

Saratoga Springs, Eagle Mountain, Payson, Elk Ridge and Santaquin are all found in the eligible areas for USDA home financing.  Click this link to view the map and read more details on USDA loan programs.

The USDA mortgage is much like FHA in that it does require an upfront fee.  In the case of the USDA loan it is called a guarantee fee instead of FHA's terminology which call's it upfront mortgage insurance.  Ultimately it is the same thing.  The upfront fee from both loans is essentially pooled in a fund that is used to guarantee the lender/investor against any future losses on the loan in case of default by the borrower.

The guarantee fee for new USDA loans is 2% of the loan amount.  In the case of a $200,000 loan the borrower would pay a $4000 one time upfront fee to the USDA to guarantee their loan.  The nice thing about the USDA loan is that much like FHA you are allowed to finance the fee into your loan.  This loan already allows for 100% financing for credit qualifying borrowers whose job history and debt and income are in line with the underwriting requirements.  This is a true 102% loan to value loan when you take in to account the fact that you can finance the 2% guarantee fee above and beyond the price of the home.

What an amazing option for those that have little or no down payment.  If you can save enough money for an earnest money deposit you can be on your way to home ownership.  Debt to income ratios on this loan are lower then conventional and fha loans so you may not qualify for quite as much home with the USDA loan but the USDA loan does not have monthly mortgage insurance so your monthly payment is also lower then it would be on a conventional or fha loan which does require 3.5% or 5% down respectively.

If you are looking to buy a home in Utah County and down payment is an issue, consider the USDA rural development loan, it just might be the ticket you are looking for.

Remember the USDA loan can be used in parts of if not all of Saratoga Springs, Eagle Mountain, Spanish Fork, Payson, Elk Ridge and Santaquin.  If you don't have a down payment, don't give up looking all together tell your agent you would like to expand your search into one of these beautiful cities.  Then lets get you pre-approved for a USDA Rural Development loan today.

Stetson Lowe - www.utahloantips.com