Mortgage Rates Now a-la-carte
Mortgage rates have gotten sliced and diced in very narrow catagories and credit score ranges. Last year we were able to pool 700 ficos with 650.. this doesn't hold true any longer. I've included the MAIN FANNIE MAE AND FREDDIE MAC matrix below for what we as mortgage lenders have to look at before we price a loan. There is also matrices for cash-out refinances, condo's, investment properties and 2nd homes.
Don't expect any of the mortgage rates you see in the paper or online to hold true. The mortgage rates you see online are "base" rates and are only offered to a very small percentage of the population with the highest credits scores and largest down payments.
With declining property values, high loan defaults and lower credit scores so common now you will be better served working with a mortgage person you can first trust and one that has access to many lenders. Access to many lenders will help you find the right rate and approval for your particular needs.
As you can see on the below matrix 720 credit scores with lots of equity home owners are getting the best rates. This matrix applies to conventional loans only not FHA or VA loans. FHA and VA loans offer there own risk based adjustments. Guideline changes have been almost non stop since the end of 2007 due to the disrupted nature of mortgage lending.
Below adjustments are strictly for addtional points added for risk based add-ons. 1 point equals 1% of the loan amount. EX: 1 point for a $100,000 loan is $1,000, 2 points for a $100,000 loan is $2,000, and so on.
A borrower that doesn't want to pay risk based 'points' can typically increase their rate to absorb points. It usually costs a .25% increase in rate to eliminate 1 point.
Example: .25% increase in rate may eliminate a 1 point charge, .50% in rate may eliminate a 2 point charge. A 5.0% rate may have a 2 point charge or the client may pay 5.5% rate with 0 points.
The below risk based point adds are national guidelines that apply to all conventional mortgage lenders. Some lenders can add on their own additional "regional" risk premiums.
Clients can choose to incur the below addtional points or a higher rate to offset any additional points that must be charged due to additional risk.
| Fanne Freddie Conventional Conforming Adjusters | Increase rates or charge borrower below points or a combination of point/rate | |||||||||
| LTV% | <=60% | 60.01-<=70% | 70.01-75% | 75.01-80% | 80.01-85% | 85.01-90% | 90.01-95% | 95.01-97% | ||
| LTV / FICO Adjusters: All Products w/Terms > 15 Yrs | ||||||||||
| >=740 | FIXED/ARM | (0.250) | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | n/a | |
| 720 - 739 | FIXED/ARM | (0.250) | 0.000 | 0.000 | 0.250 | 0.000 | 0.000 | 0.000 | n/a | |
| 700 - 719 | FIXED/ARM | (0.250) | 0.500 | 0.500 | 0.750 | n/a | n/a | n/a | n/a | |
| 680 - 699 | FIXED/ARM | 0.000 | 0.500 | 1.000 | 1.500 | n/a | n/a | n/a | n/a | |
| 660 - 679 | FIXED/ARM | 0.000 | 1.000 | 2.000 | 2.500 | n/a | n/a | n/a | n/a | |
| 640 - 659 | FIXED/ARM | 0.500 | 1.250 | 2.500 | 3.000 | n/a | n/a | n/a | n/a | |
| 620 - 639 | FIXED/ARM | 0.500 | 1.500 | 3.000 | 3.000 | n/a | n/a | n/a | n/a | |
| <620 | FIXED/ARM | n/a | n/a | n/a | n/a | n/a | n/a | n/a | n/a | |
|
ADDITIONAL CONVENTIONAL CONFORMING ADJUSTERS CHARGE A HIGHER RATE OR BORROWER MUST PAY ADDITIONAL BELOW POINTS |
|||||||
| LTV > 90% <= 95% | 0.250 | ||||||
| 15 -year FRM w/ 120-month term | 0.250 | ||||||
| Investment Property LTV <= 75% | 1.750 | ||||||
| Investment Property LTV >75% <= 80% | 3.000 | ||||||
| Investment Property LTV >80% <= 90% | n/a | ||||||
| 2 Unit Property | 1.000 | ||||||
| 2 Unit Second Home Cash-Out refi <= 75% | 0.500 | ||||||
| 3 & 4 Unit Property | 1.000 | ||||||
| Secondary Financing | |||||||
| 75/20/5 LTV>65%/CLTV>90<=95% & FICO>=720 | 0.250 | ||||||
| 75/20/5 LTV>65%/CLTV>90<=95% & FICO<720 | 0.500 | ||||||
| 80/10/10 | 0.250 | ||||||
| All Other LTV>75% & FICO>=720 | 0.250 | ||||||
| All Other LTV>75% & FICO<720 | 0.500 | ||||||
| Non-escrowed (except CA, IA, IL, MN, NJ, NY, OR) | 0.250 | ||||||
| Temporary buydowns >80% LTV w/no MI | 1.000 | ||||||
| Condo > 75% LTV | ALL PRODUCTS W/ TERMS > 15 YRS | 0.750 | |||||
| Low Loan Size Adjuster | |||||||
| $0 - $49,999 | 0.500 | ||||||
| $50,000 - $99,999 | 0.250 | ||||||
No Appliances in the Home.. Can I get a Loan?
I need to make a home loan application - help!
Home Loan Purchase Process Video:
"When discussing the loan process with homebuyers, I stress that they must be completely candid with their loan officer, be incredibly detailed and provide as much documention as they can. This is the new norm for home loan approvals". David Stevens -FHA
IMPORTANT OVERVIEW:
In the next few days or weeks you'll be looking at a handful of homes. One will catch your eye and you want to be completely prepared to make a strong offer. Most sellers give higher priority to buyers who have secured a full Home Loan Preapproval Letter over those other homebuyers that have only been "prequalified" over the phone. A full preapproval review with assets, income and liabilties verification is the highest level of preparedness. The application process below is oriented toward a successful full preapproval. How much of a committment would you ask for if you were lending someone $100,000, $300,000 or $500,000?
At the bottom of this letter you will find an internet link to a basic home loan application and credit authorization. Please click on it after you've read this overview. And please, always call if you have any questions while reading over and completing the forms or at any other time. I enjoy helping my customers and look forward to helping you, your friends, co-workers and family. Your referrals are always appreciated.
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PLEASE DO NOT MOVE ANY MONEY AROUND UNTIL YOUR LOAN CLOSES. If a bank verification shows a recent increase in your accounts an explanation of the increase will be required and may cause delays. No "cash, non-payroll or matress money" should be introduced into any part of the transaction without a prior discussion.
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Postpone ANY LARGE PURCHASES until after your loan closes. If a re-verification of credit JUST PRIOR TO CLOSE shows you have recently increased credit balances it could jeopardize your loan approval.
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Notify me immediately in the event of a job change.
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Don't take any Cash Advances on your credit card(s) or personal loans.
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Don't allow any additional inquiries (credit checks) on your credit report.
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Do not open or close any credit or bank accounts.
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Continue to make ALL of your payments as agreed.
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Quickly return all documents from the lender or closing company. You will be mailed papers from time to time, send all received documents that you receive in the mail regarding the loan to me for immediate review.
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Your loan will be underwritten to nationally accepted mortgage guidelines. The investor is lending a great deal of money, please don't "self-underwrite" your loan. Be prepared to offer all paperwork that is asked of you all the way to the day of close. A lot of money and trust is being conveyed to you- please don't take the loan or process for granted. Gathering paperwork is a good deal for all the funds you will be receiving.
- Once a contract has been accepted your mortgage rate and terms need to be locked. You must email or call me directly after the accepted contract to discuss where rates have settled on this day. If you don't call, I may lock your terms the day I receive the fully executed contract at then market rates.
- Please send me a copy of your purchase contract earnest money check front and back showing the check processed through the bank along with the official bank statements showing the earnest money deposit taken out as soon as it becomes available.
- PLEASE SEND OFFICIAL BANK STATEMENTS FOR ALL NUMBERED PAGES EVEN IF THE PAGES ARE BLANK. ANY ITEMS SUCH FAXED SHOULD BE LEGIBLE. PLEASE SEND ITEMS AS QUICKLY AS YOU CAN.
Be mindful that lenders conduct quality control checks -calling to verify your employment or savings. Are you receiving down payment assistance from an outside source? Please be prepared to document all non-payroll deposits. If the source is a gift from a close relation, you'll need: 1) Gift letter, 2) donors bank statement, 3) copy of the original gift check made out to you, 4) copy of deposit slip going into your account, 5) bank statement to show the deposit was captured to your account, 6) copy of the gift check post deposit front and back from donor showing it went through the bank processing center and 7) copy of the donors bank statement showing the gift check clearing. Different underwriters may differ in their requests, please be prepared to fully document non-payroll deposits, monitary gifts and outside downpayment funds. NO "cash/matress money" or loans for closing funds.
Two weeks prior to closing you will want to call your homeowners insurance agent if any insurance coverage is needed and pay for a full policy and have the insurance company fax the policy to me (cost credited to you at closing).
Stay flexible in your closing timeline in case closing is delayed.
Once the purchase contract is accepted by the seller we will need to order a property appraisal. Appraisals require payment directly to the appraisal company in advance. The cost of the appraisal will be credited to you at closing.
After all the above procedural stuff, what really matters is... The season to enjoy your own home is coming and what a wonderful time to make the transition!!!
Your referrals are valuable. Do you know any friends, family and co-workers that can also use my services now? Can you email this article?
Cordially Yours, Gil Kerbashian
(847) 873-7295
Fax: (847) 770-4850
The loan application has a very important list of items at the bottom that I will need to gather in order to issue strong preapproval. Always call if you have any questions. Once you print the application, you can complete it, fax it or we can meet quickly to go over it together and make sure you feel comfortable with the process.
One Page Loan Application: www.realestateloans.com/gilsapp.pdf
FHA AND CONVENTIONAL HOME LOAN Closing cost basics for Illinois: www.realestateloans.com/gfe.pdf
Freddie Mac Important Internet Links
Freddie Mac Email Subscriptions
http://www.freddiemac.com/news/alerts/newscenteremail.html
Choose the Freddie Mac Bulletins, Announcements
and Publications you would like to receive notifications
of via email
Freddie Mac Forms & Guide Access
http://www.freddiemac.com/sell/guide/
Access Freddie’s Single Family Selling & Servicing
Guides as well as forms
Freddie Mac Learning Center
http://www.freddiemac.com/learn/
This website includes links to Quick Reference
Summary Charts on LP, Condominiums, Residency
and Citizenship, Various products, LTV/CLTV/HLTVs,
Refinances, New Construction, Income/Assets,
Collateral., Credit, and Super Conforming- just to name
a few!
Single Family Mortgage Products Page
http://www.freddiemac.com/singlefamily/mortgages/
This website includes links to Product Summaries,
Overviews, Marketing Materials, Affordable Income &
Property Eligibility Lookup Tool, FAQs, Links to live
product training opportunities and much more!
Training Events Page
http://www.freddiemac.com/learn/edu/train/
This page provides links to Live and Web Training
Events on LP, Underwriting, Product, Selling, Servicing
and Delivery-Related topics.
Loan Prospector Main Page
http://www.loanprospector.com/
This is the home page for all things LP! Features,
Benefits, documentation requirements, products, credit
report vendors, LOS vendors, news & highlights, best
practices, as well as login access to LP itself!
Loan Prospector Functionality Page
http://www.freddiemac.com/learn/uw/
This page provides resources and training associated
with documentation and underwriting-related topics
Loan Prospector Helpful Tips & Best Practices
http://www.loanprospector.com/getthemost/bp.html
This page provides links to guides that are very
detailed and well-written for originators, processors,
underwriters and quality control functions within an
organization. These are great reads for everyone!
Loan Prospector Training Page
http://www.loanprospector.com/learn/index.html
This page provides links to recorded training sessions
divided out by topic and category. These short
sessions are excellent educational resources that new
and even experienced LP users can benefit from!
Fraud & Quality Control
http://www.freddiemac.com/learn/uw/qc.html
This page provides links to Quick References
regarding predatory lending, property flips, appraisal
underwriting, documenting citizenship and residency,
rental income, standard income, Freddie’s
Exclusionary List, and standard quality control best
practices
Freddie Mac Homebuyer/Homeownership Page
http://www.freddiemac.com/corporate/buying_and_owning.html
This page includes various resources, tools and
information for both homebuyers and homeowners
Freddie Mac Loan Look-Up
https://ww3.freddiemac.com/corporate/
Determine if Freddie Mac currently services your own
or your borrower’s existing mortgage
Freddie Mac Marketing Kits & Materials
http://www.freddiemac.com/singlefamily/kits.html
Freddie offers excellent marketing materials in the form
of fillable flyers, mailers, post cards, door hangers,
brochures, and stuffers and some are even offered in
languages in addition to English! These are some of
the most professional-looking materials out there! Very
easy to sign up for access and easy to use!
Loan Program Changes
Debt to Income Ratio: Many FHA lenders will soon be or have started in the last few weeks introducing their own maximum debt to income ratios limits. This DTI limit resembles the same one Fannie/Freddie implemented in December. Please double check your buyer pre-approvals.
FHA HVCC: Feb 15. Appraisals for all FHA case numbers assigned to a property transaction on or after this day will require the appraisal to be ordered through an Appraisal Management Company (AMC). Same as conventional loans, FHA will require a neutral third party to "manage" the appraisal order process.
PURCHASE TAX INCENTIVE TIMELINE WARNING: April 30th is the last day for inked contracts. If you now have buyers/borrowers that are still waiting to make an offer, please let them know that they are shooting themselves in the foot. As the deadline nears, underwriting turn times will slow down substantially. If your buyers property shows an appraisal or inspection concern in the last few weeks of April, what time does it give you or the home buyer to correct the deficiency or start looking for another property? DON'T PROCRASTINATE!
IHDA: Down payment assistance program seminar at McHenry County Association of Realtors open to all. Feb 24th 10am. Call now to reserve your seat. Seating is limited. MCHCAR: 815.893.5100
Home Buyer Fliers
Understand Home Buyer Closing Costs
Processing Fee Estimate: $350
This fee is charged by us to pre-approve, pre-underwrite and make sure the home buyers loan fits program guidelines prior to us submitting the loan to an underwriting unit for full approval. We will review all documents, submit the package, insure compliance, attend closing and maintain support all the way to closing. Fee paid directly to us at closing. This fee also includes credit reports, approval certificates and document gathering expenses.
Discount Points to Buydown Rate:
Normally not charged unless a buyer requests or needs to buydown an interest rate in order to qualify for the loan.
Appraisal Fee Paid to Independent Appraisal Company Estimate: $275-$450 Upfront Cost
This fee is paid directly to an independent appraiser to determine the maket value of the property. The appraiser is chosen by a neutral third party and you must pay this fee at the start of the loan process once a property is determined.
Underwriting Fee Paid to Independent Undewriting Unit Estimate: $600-$800
This fee is paid by the home buyer directly to the loan underwriting entity at loan closing. Once we have pre-underwritten the loan and we have determined the best lender able to actually fund the loan, we submit it to them for review, approval, legal documents and funding.
Homeowners Insurance Paid to Your Insurance Company Estimate: $300-$600 Upfront Cost
The home buyer will contact their personal insurance provider two weeks prior to the closing date to determine the cost of a homeowners insurance policy. This will be paid in advance of closing directly by the home buyer to the company they have picked. A one year policy must be paid for in advance of closing. If the property is in a flood zone, the home buyer will also be required to get flood insurance also.
Mortgage Interest Payment at Closing Estimate: Depends on closing date.
Depending on the day of close, the home buyer will pay for the days of homeownership from the day of closing to the last day of the month. Example: if we close on the 15th of the month home buyer will pay from the 15th to the last day of the month for each day they own the home.
Homeowners Insurance Escrow Paid Directly to Lender Estimated: $60-$120
Like taxes above, lenders will want to pay for the homeowners insurance when it comes due. Most lenders will require a 2 month cushion placed into the escrow account at closing.
Fees Paid Directly to Providers Pre-Chosen by Others Estimate: $1500-$2500
These are standard fees required to purchase a home. Refinances are much lower. These fees are not chosen by us but rather chosen by the sellers attorney.
Home Purchase Transfer Tax Stamps Estimated: Call the city to see if buyers pay these
Most common in the city of Chicago and a few others. Not all cities or villages charge buyers a transfer stamp tax. Usually a sellers expense. Can be expensive for buyers if they are charged.
**** In a home purchase transaction the home buyer may have the Seller of the Property pay for some, most, or possibly all of the above expenses. This is called a "Seller Paid Closing Contribution". This is highly recommended if the home buyer is short on funds to close or currently only has the downpayment and no other funds available. Seller can pay up to 3% of the purchase price towards closing costs.
If the Seller picks up yclosing costs, any monies paid up front other than the home inspection (appraisal and homeowners insurance up front) will be applied to the downpayment commitment.
FHA FAQ's
FHA HUD Links
• www.hud.gov - HUD Home Page
• www.fha.gov - FHA Home Page
• http://www.hud.gov/offices/hsg/sfh/ref/hsgregst.cfm - Subscribe to HUD’s Single Family Mailing List
• http://hud.gov/offices/hsg/sfh/events/events.cfm - HUD Single Family Events & Training Page
• http://hud.gov/offices/hsg/sfh/talk/parc/phiarch.cfm - Phili HOC Recorded Webinar Archives
• http://www.hud.gov/groups/lenders.cfm - HUD Lenders Page **NEW**
• http://www.hud.gov/offices/hsg/sfh/lender/mtgeekit.cfm - Title II Mortgagee Starter Kit of HUD Handbooks
• http://www.disasterhousing.gov/offices/adm/hudclips/handbooks/hsgh/ - Complete List of Handbooks
• http://www.fhaoutreach.gov/FHAHandbook/prod/contents.asp?address=4155-2 - Link to Home Page for new 4155.1 and 4155.2 Searchable Handbooks
• http://www.hud.gov/offices/hsg/sfh/ref/hsgrcont.cfm - HUD/FHA HOC Reference Guide
• http://www.hud.gov/offices/hsg/sfh/faqs/faqsmenu.cfm - HUD/FHA FAQ by Category
• http://www.hud.gov/faqs/faqbuying.cfm - HUD Common Questions Page
• http://www.nls.gov/offices/adm/hudclips/letters/mortgagee/ - HUD Mortgagee Letters
• https://entp.hud.gov/idapp/html/hicostlook.cfm - FHA Mortgage Limits Search
• https://entp.hud.gov/idapp/html/condlook.cfm - FHA Condominium Search
• https://entp.hud.gov/idapp/html/apprlook.cfm - FHA Appraiser Roster Search
• http://www.hud.gov/groups/appraisers.cfm - FHA Roster Appraiser Home Page
• http://www.hud.gov/offices/hsg/sfh/reo/reohome.cfm - HUD REO Home Page
• http://www.hud.gov/offices/hsg/sfh/owning.cfm - HUD Owning a Home Consumer Info Page
• http://portal.hud.gov/portal/page/portal/HUD/states - Links to State-Specific HUD Home Pages
• http://www.hud.gov/library/index.cfm - HUD Online Library-Links to Various Common Topics
• http://portal.hud.gov/portal/page/portal/HUD/webcasts/archives - HUD Webcast Archives-Recorded Webcasts
• http://portal.hud.gov/portal/page/portal/HUD/webcasts/archives/sinfamily - HUD Single Family Housing Webcast Archives
• https://entp.hud.gov/clas/index.cfm - FHA Connection
• http://portal.hud.gov/portal/page/portal/HUD/program_offices/administration/hudclips/forms - HUD Forms Search
• http://www.hud.gov/offices/hsg/sfh/fharesourcectr.cfm - FHA Resource Center Home Page
• http://www.fhaoutreach.gov/FHAFAQ/ - FHA Resource Center Searchable FAQ
• http://www5.hud.gov:63001/po/i/netlocator/ - HUD Employee Locator-Online Search Engine
• http://www.hud.gov/offices/adm/dds/ - HUD Direct Distribution Center- Order Publications!
• http://www.hud.gov/library/bookshelf11/hudgraphics/fheologo.cfm - Equal Housing Graphic/Logo for Printing
• http://www.hud.gov/offices/hsg/sfh/sys/caivrs/caivrs.cfm - HUD CAIVRS Home Page
• https://www.epls.gov/ - Excluded Parties Listing System Home Page (EPLS)
• http://www.hud.gov/offices/fheo/promotingfh/928-1.pdf - Fair Housing Poster-English Version
• http://www.hud.gov/offices/fheo/promotingfh/lep.cfm - Booklets HUD Materials in English and Other Languages
• http://www.hud.gov/offices/hsg/sfh/buying/homebuyingguide.pdf HUD Homebuying Guide for Consumers
• http://www.hud.gov/offices/hsg/sfh/buying/loanfraudfaq.pdf HUD Smart Consumer Fact Sheet
• http://www.hud.gov/offices/hsg/sfh/ins/hoctenyr.pdf - HUD Approved 10 year Warranty Plans
• http://www.hud.gov/assist/webpolicies.cfm - HUD Web Policies
Cash / Mattress Money is a Deal Killer
- Cash / Mattress Money is a Deal Killer-
AHEAD OF THE CURVE ARTICLE BELOW
Below is a list of my top programs that should be in every agents resource
folder:
-FHA closed on time: [http://www.realestateloans.com/fhadonewell.pdf]
[http://www.realestateloans.com/fhadonewell.pdf]
www.realestateloans.com/fhadonewell.pdf
-100% Rural Development: [http://www.realestateloans.com/usda.pdf]
[http://www.realestateloans.com/usda.pdf] www.realestateloans.com/usda.pdf
-$100 down for HUD owned homes:
[http://www.realestateloans.com/100hudhome.pdf]
[http://www.realestateloans.com/100hudhome.pdf]
www.realestateloans.com/100hudhome.pdf
-Deferred maintenance homes:
[http://www.realestateloans.com/uglyhomes.pdf]
[http://www.realestateloans.com/uglyhomes.pdf]
www.realestateloans.com/uglyhomes.pdf
-100% pre-approval to closing ratio:
[http://www.realestateloans.com/concierge.pdf]
[http://www.realestateloans.com/concierge.pdf]
www.realestateloans.com/concierge.pdf
-VA 100% financing: [http://www.realestateloans.com/va.pdf]
www.realestateloans.com/va.pdf
-Home Buyer job protection mortgage:
[http://www.realestateloans.com/rainydays.pdf]
www.realestateloans.com/rainydays.pdf
CASH IS KILLING DEALS:
I recently had a borrower call me and state she deposited $6000 into her
bank account from an unsecured loan. Without telling the Realtor or myself
she used this money for the contract deposit. Some form of outside monies
has been interjected into four of the last ten deals I've done and the
borrowers did it after reading
[http://gilkerk.realestateloans.com/condominiums/2009/05/07/i-need-to-make-a-home-loan-application-help.html]
my home purchase introduction link which clearly states that cash and large
deposits should be avoided.
Why isn't cash allowed into a transaction? It's the borrowers money right?
Several obvious reasons: Patriot Act/Banking Laws, Drug Money, Cash
Laundering, Straw Buyer considerations, Under the Table Seller Concessions,
Realtor or Loan Office contribution, Unsecured/unreported loan, Gift from
an unacceptable source, etc..
Loan officers and Realtors should never allow or encourage customers to
deposit or use cash for ANY part of the transaction nor turn a blind eye if
they know a client is borrowing money from credit cards or personal loans.
This type of mistake will certainly cause problems and create needless
tension. Now more than ever, loan files are being looked at with a fine
tooth comb. More and more careful verifications are being done a day before
closing- be prepared and don't let your deal die for dumb reasons.
Remember, FHA case numbers follow these loans. If one underwriter declines
a loan, the disposition will follow that loan. Realtors and Loan Officers
must work closely to prevent problems from day one.
Please call me at (847) 873-7295 to discuss nuances. Here to help you get
homes financed.
Is your loan officer less responsive than you'd like? Cut yourself free
from bad service, poor communication and start enjoying incredible support
today.
Could your team use an updated presentation to get agents up-to-speed on
loan program changes? Lending is a huge part of transactional business,
consider scheduling my lunch and learn for your team.
Gil Kerbashian
Mortgage Lending Since 1997
Gil's Loan Answer Hotline: (847) 873-7295
Mortgage Insurance
Ahead of the Curve
The Weekly Purchase Money Resource Letter From Gil Kerbashian
This weeks topic:
- Mortgage Insurance -
For Active Real Estate Marketing Professionals...
Mortgage Insurance: Mortgage insurance for home loans can come in several
forms depending on the type of loan the buyer is seeking. With conventional
loans its called PMI (private mortgage insurance), with FHA its typically
referred to as FHA MI, with VA and USDA its called a guarantee fee.
Mortgage insurance is tax deductable. FHA requires mortgage insurance on
their loans for 5 years regardless of property equity. Let's look at the
various programs...
Conventional PMI. Most buyers putting less than 20% down on a home
purchase will be required to purchase some form of PMI. PMI can be a
monthly sum, a one time up front sum, can be paid through a higher interest
rate or a combination of monthly/upfront. The most popular is the monthly.
PMI typically requires a 720 credit score and PMI underwriting will limit
the homebuyers Debt-to-Income ratio to 41% (if you want PMI you can NOT
spend more than 41% of your monthly income on housing and credit debt).
Even today I can still secure a pre-approval from Fannie Mae for a buyer on
a 100% financing with a 620 credit score at a 50% Debt-to-Income BUT I can
NOT get a mortgage insurance company to issue a mortgage insurance policy
(no PMI means no loan). The barrier is not so much Fannie/Freddie as it is
the PMI companies. Some well know PMI companies are: GE, MGIC, PMI Group,
UG, TRIAD, Genworth. You can see if your transaction qualifies for PMI by
looking at [http://www.pmigroup.com/] www.pmigroup.com .
FHA Mortgage Insurance: FHA does not lend money they are a Mortgage
Insurance Entity. FHA mortgage insurance mandates both Up-Front and Monthly
premiums on FHA borrowers**. Borrowers are required to pay a monthly sum
with their mortgage payments and are also charged 1.75% which is placed on
top of their base loan amount. Ex: $100,000 base loan amount plus 1.75%
equals $101,750 total funded loan amount. Even with the two premiums the
payment is typically less than PMI. After close, the 1.75% Up-Front is sent
to HUD for operational costs and the Monthly is pooled with the lender for
default reserves. FHA allows for higher Debt-to-Income ratios which is why
many buyers still use FHA even with 10 or 15% down payments.
**Some 15 year amortizing FHA loans are excluded from Monthly but always
must pay the Up-Front.
VA and USDA loans: These loans require what is called a Guarantee fee. VA
is 2.15% (some exceptions exist) and the USDA is 2.0%. This percentage is
charged to the loan. No monthly amount. Ex: $100,000 base loan (100% of
purchase price) plus 2.0% on top of the base loan equals $102,000 total
loan amount.
That was a quick primer on mortgage insurance and if I've missed
something, you are always free to call me at (847) 873-7295 to discuss
nuances. Always here to help and earn your referrals and business.
Is the lending process burning you out? Is your loan officer slower than
you'd like? Cut yourself free from bad service, poor communication and
start enjoying incredible support today. Call if I can assist.
Could your team use an updated presentation to get agents up-to-speed on
loan program changes? Lending is a huge part of transactional business,
consider scheduling my lunch and learn for your team.
Win over your listing presentations and let your listings professionally
present themselves with a year of free TALKING HOME TOUR TECHNOLOGY. Call
to sign up today. See the above flier for details.
Gil Kerbashian
Mortgage Lending Since 1997
Gil's Loan Answer Hotline: (847) 873-7295
Integra Mortgage Corp
Mortgage Banking and Brokering
Crystal Lake - Schaumburg - Arlington Hts
REFINANCING HOME LOANS MORTGAGE BROKER MORTGAGE REFINANCE MORTGAGE LOAN
INTEREST RATES HOME EQUITY LOANS NEW HOME LOAN HOME LOAN RATES HOME MORTGAGE LOAN
LOANS COMMERCIAL LOANS LENDERS HUD FEDERAL HOUSING AGENCY FANNIE MAE FREDDIE MAC CRYSTAL LAKE SCHAUMBURG PALATINE CHICAGO ARLINGTON HEIGHTS INTEGRA MORTGAGE IAMP BANK OF AMERICA WELLS FARGO MORTGAGE DISCOUNT MORTGAGE RATES WHOLESALE LENDING LOWEST MORTGAGE RATES 60613 60013 60193 CHICAGOLAND 203KS 203K REHAB WISCONSIN REMAX COLDWELL BANKER REALTY EXECUTIVES PRUDENTIAL KELLER WILLIAMS FHA, Government Home Loans, Home Loan application, VA, Home Appraisals, Credit Scores, USDA Loan, Refinance, Downpayment, Homeownership, Crystal Lake Real Estate Agents, Agonquin Real Estate Agents, Cary Illinois Real Estate Agents, Mortgages, Mortgage Interest Rates, Fannie Mae, Freddie Mac, FHA Appraisals, FHA Appraisers, HUD Owned Homes, HUD Homes, HUD Foreclosures, Lake in the Hills Mortgage, McHenry Home Loans, realestateloans.com, Integra Mortgage Schaumburg Illinois, Mortgage Buydowns, 2-1 buydown, FHA 2-1 Buydowns, Mortgage loan application, mortgage application, 203ks, fha 203ks, 203k, Gil Kerbashian, FHA Gift Letter, (847) 794-5000
FHA Condo Updates
Here is some insight as to what you might expect to see in the way of condo requirements. The final HUD condo requirements have not been finalized yet.
1. FHA concentration will remain at 50 percent.
a. In "well established" project, the concentration may go up to 100 percent.
b. "Well established" buildings show clear financial stability, including a minimum of 10 percent reserves, owner occupancy of 50 percent, and a transfer of title.
c. In the ML, HUD will provide an explicit definition of "established."
2. Owner Occupancy will remain at 50 percent.
a. REOs will be excluded altogether from calculation.
3. Pre-sale requirement will be 50 percent.
a. FHA will accept a spreadsheet from the developer as certification under the pre-sale requirement.
b. Additionally, FHA has created a specific document that developers must sign to certify that all of the information is accurate.
4. Temporary Certificate of Occupancies will be accepted.
5. All 40,000 + condo projects currently approved will remain approved
6. HUD Review and Approval Process (HRAP) is permissible in Florida.
7. The ML will clarify that under Direct Endorsement Lender Review and Approval Process (DELRAP), a lender is not responsible for another lender's approval process (specifically, additional project review is not required).
8. New ML will clarify that reserves should be at 10 percent, if not then a lender can request a reserve study.
9. New ML will add specific guidance on insurance (specifically, gap insurance).
10. Transfer of control requirements will be dictated by the state and local requirements.
11. New ML will clarify the definition of site condos.
12. New ML will clarify phasing requirements.
Courtesy of Stacey Sprain
F
Gils Enews: Credit Scores
This weeks topic:
- Credit Scores -
(thank you to the agents that emailed topic suggestions last week)
Please email me your topic suggestions. Driving around dropping off fliers wastes gas, time and paper. Help me keep it Green, Clean and Current.
Update on current purchase transaction turn times:
FHA: 5 days to underwrite. (still time to close for the $8,000)
Conventional: 4 days to underwrite
FHA rehab: 15 days to underwrite
Gil's current loan closing performance stats:
100% ytd pre-approval letter to closing record
100% ytd rate quote to rate delivery accuracy record
97% ytd on-time closing record
89% ytd purchase to refinance loan ratio
Years of reliable and trusted service for purchase money financing.
What are some current loan process concerns right now?
1. Funds to close verification from buyers (no unsourced deposits allowed)
2. Debt to income ratios
3. Horrible loan pre-approvals on down-leg transactions
4. Low credit scores
Below is a list of my top 9 programs that should be in every agents resource folder:
Fast closing flyer: www.realestateloans.com/fhadonewell.pdf
100% Rural Development: www.realestateloans.com/usda.pdf
$100 down for HUD owned homes: www.realestateloans.com/100hudhome.pdf
Deferred maintenance homes: www.realestateloans.com/uglyhomes.pdf
Pre-approvals that close: www.realestateloans.com/concierge.pdf
VA 100% financing: www.realestateloans.com/va.pdf
My personal email for questions: gilkerk@yahoo.com
Ahead of the Curve
For Active Real Estate Marketing Professionals...
New Credit Score Requirements: Credit score requirements are now lender to lender specific. Due to default rates with certain lenders and secondary market requirements some lenders have been pushed to increase credit score requirements for their mortgages. You may want to proactively monitor your buyers to make sure they are matched with lenders that have an appetite for their credit score.
Recently, I've started seeing the introduction of three to four Tiers for FHA loans: 620, 640 and 660. You will see 660 minimums with a few lenders that have been hardest hit with mtg defaults and low FHA score card results. Some lenders are also overlaying the higher scores to protect their future FHA score card.
As most of you know, conventional lenders have already instituted risk based pricing on conventional loan programs. Risk based pricing is tiered towards both down payment and credit score. Prime rates are offered at scores starting at 720. You will see rate/fee increases when the score goes down in 20 point increments. 700-719 pricing, 680-699 pricing, 660-679 pricing, 640-659 pricing and so on down to the 620-639 floor.
Please take a look at the above flier on credit scoring. I'm supporting my Tier one agents and their buyers with credit score inhancement and rescoring.
Is the lending process burning you out? Is your loan officer slower than you'd like? Cut yourself free from bad service, poor communication and start enjoying incredible support today. Call if I can assist.
Could your team use an updated presentation to get agents up-to-speed on loan program changes? Lending is a huge part of transactional business, consider scheduling my lunch and learn for your team.
Win over your listing presentations and let your listings professionally present themselves with a year of free TALKING HOME TOUR TECHNOLOGY. Call to sign up today. See the above flier for details.
Gil Kerbashian
Mortgage Lending Since 1997
Gil's Loan Answer Hotline: (847) 873-7295
FANNIE MAE'S NEW DEBT TO INCOME RATIO'S
USDA Homeownership Website Links
Subscribe to receive Single Family Housing News for GUS & GRH: http://www.rdlist.sc.egov.usda.gov/listserv/mainservlet
USDA Rural Housing Home Page: http://www.rurdev.usda.gov/RHS/
Rural Development Contacts Page: http://www.rurdev.usda.gov/RHS/Admin/contact.htm
Rural Development Regulations Page: http://www.rurdev.usda.gov/regs/
Rural Development FAQ Page: http://www.rurdev.usda.gov/rd/faqs.html
Rural Development Income & Property Eligibility Site: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do
Single Family Housing Guaranteed Loan Income Limits: http://www.rurdev.usda.gov/rhs/sfh/sfh%20guaranteed%20loan%20income%20limits.htm
Loan Application Package Checklist: http://www.rurdev.usda.gov/regs/an/an4470.pdf
Rural Development Regulations: http://www.rurdev.usda.gov/regs/
Rural Housing Origination Handbook 1980-D: http://www.rurdev.usda.gov/regs/regs/pdf/1980d.pdf
GUS Lender User Guide 2008: https://usdalinc.sc.egov.usda.gov/docs/rd/sfh/gus/lender/GUSLenderUserGuide.pdf
GUS Login Page: https://pws.sc.egov.usda.gov/login/login.aspx?TYPE=33554433&REALMOID=06-f8405ea7-471f-474d-8a4e-731f76f1e536&GUID=&SMAUTHREASON=0&METHOD=GET&SMAGENTNAME=-SM-S3%2fpukYCkOnlZ%2feImVktFvcBZTmcxsBEbQyvAIf2sN6XculadBu%2f5WF4TmWxHg2x&TARGET=-SM-HTTPS%3a%2f%2fgus.sc.egov.usda.gov%2faus%2findex.jsp%3fcallingPath%3dusdalinc.sc.egov.usda.gov%2fRHShome.do
Administrative Notices for Loan Origination and Underwriting: http://www.rurdev.usda.gov/wi/programs/rhs/sfhg/handbook/originating/ans.htm
USDA Rural Development Forms Library: http://www.rurdev.usda.gov/regs/formstoc.html
Rural Development State Office/Service Center Locator: http://www.rurdev.usda.gov/recd_map.html
USDA Live WebEx Training Schedule: https://rurdev.webex.com/mw0305l/mywebex/default.do?siteurl=rurdev&service=7
USDA LINC Training and Resource Library: https://usdalinc.sc.egov.usda.gov/USDALincTrainingResourceLib.do
Guaranteed Rural Housing Consumer Marketing Brochure: http://www.rurdev.usda.gov/RHS/sfh/GSFH_Information/Common/09_2009_Website_%20Hooray%20For%20Housing%20GRH%20Brochure.pdf
Guaranteed Rural Housing Consumer Marketing Booklet: http://www.rurdev.usda.gov/rd/pubs/pa1501.pdf
Rural Development Lender Information Page: http://www.rurdev.usda.gov/rhs/sfh/GSFH_Information/lenders.htm
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