Mortgage Finance Blog

The process of homeownership is rather simple to explain. However, there is no argument that if you aren’t well informed, you can lose lots of money! According to Brian O’Connell, rates are climbing quickly and many current home owners have taken advantage, but timing is crucial.

Homeowners who refinanced achieved a median interest rate reduction in the fourth quarter of 2012 of 33%, according to Marketwire. Refinanciers have clearly taken advantage of the low rates, but if homebuyers delay they may not be able to afford higher loan amounts, as it will cost more to borrow.

Contact your trusted mortgage broker to help you determine the finer numbers, or for the time being, you can explore by using a mortgage calculator. The calculator can provide fairly close estimates, at least enough to get you started.

Most importantly, get educated on the mortgage process by local non-profit groups & take advantage of the lowest interest rates the market has ever provided. Keep in mind, as rates increase a home buyer will be able to afford lesser space and amenities. There is only one way for rates to go...before they increase, get the home that is best for you and your family. Bigger is better especially when it is affordable!

Your trusted mortgage broker,

Diego L. Quintero, RI/MLO

Let’s start with HARP II, which is helping to stabilize the market as it prevents further foreclosures. This presidential creation of a loan program is allowing homeowner’s to refinance if the mortgage that they are carrying is held by Fannie Mae or Freddie Mac. Consumers can check to see if this is the case by visiting the websites to determine if there is a match. If so, consumers can call their trusted mortgage broker to verify additional information to handle the refinance. Many banks are boasting great rates and fees, but brokers have generally provided the best service coupled with rates & fees.

Due to the advent of the program, there have been a large volume of loans submitted causing slight delays in the underwriting process. With a little patience and the submission of a complete package the process should still be relatively painless. Real Estate professionals who have sold homes to their clients prior to April 2009 are currently calling on these past relationships to offer their clients this option to refinance with local brokers. This Realtor referral strategy has led to the refinance of thousands of homeowners, and we thankful to those agents for helping to strengthen the industry.

Additionally, FHA borrowers who closed on homes or refinances in mid-2009 or earlier may be eligible for special refinancing mortgage insurance premiums. Many FHA borrowers who tried to refinance over the past few years have been watching the great rates pass them by. This was largely due to the fact that the updated premiums were preventing them from obtaining the minimum, five-percent monthly savings. Not everyone gets to take advantage of the lesser premiums, but it is helping many families reduce their monthly outlay.

What could be next? As we all know, conventional lenders work with third party mortgage insurance companies to protect themselves on loan amounts that exceed 80% of the value of the home. It had been a long time since the mortgage insurance companies required at least 700 FICO scores in order to obtain a mortgage above the 80% threshold. In May of 2012, several insurers have moved their standards way-down to requiring 620 FICO scores. Although the premiums are slightly more expensive, they have opened up the opportunity for homeownership to millions.

CoreLogic, reports a nationwide increase of 1.1% over last year April. States with the highest appreciation included Arizona with prices up 8.8%, followed by District of Columbia at 6.4% and Florida at 5.5%. Although some states are still pickup up the pieces, the overall Real Estate market is improving. Rates, programs, insurance, and low home prices are combining to create a stable marketplace, but more importantly, one where loan applicants are achieving more success seeking finance on Real Estate.

Your Trusted Mortgage Broker,

Diego L. Quintero

Article first published as "Improve Credit, Save Money & Open Your Finance Options," on Technorati

One of the first, most important risk factors in approving a home loan is credit scores. With the latest loan guideline changes, brokers and bankers are typically submitting loans with credit scores at or above 640 for FHA and 660 for conventional loans. With a prerequisite of high FICO scores, it makes sense to learn methods of improving your score. Those with higher scores will save more money and have more favorable finance options to choose when buying large ticket items, a new home, or even getting an insurance policy.

High scores are not only a requirement of the bank funding the home loan. In the case where your conventional loans are above 80% of the value of the property, borrowers will need to prove at least 700 credit scores in order to obtain Mortgage Insurance.

If your score is under 700 and you have a small down payment, you will most likely obtain an FHA loan. The only downfall to FHA loan programs is that they are slightly more expensive due to the Up-Front Mortgage Insurance premium (one percent of loan amount due to HUD). Regardless, they are incredibly beneficial to new home buyers & those with less than perfect credit (although, you still need to be a high-scoring 640). The rates are comparable to conventional finance, so while the programs are more forgiving, they are still priced competitively.

What if one of your three scores is above the 640?

The risk assessment is based on the middle of three scores, or the lowest of two, as provided by the credit bureaus. If only one score appears, you will not be approved and need to make some other credit moves and make some calls to ensure that all of the credit bureaus are getting data from your creditors. The three credit bureaus each calculate a score based on the levels of credit, history of payments, history of long standing accounts, etc. Their proprietary method of scoring is just that, private! But as long as you pay your bills on time and in-full, you should score well.

But how can you get an edge on scoring so that you can save thousands of dollars in lower interest rates on car loans, home loans, & insurance costs?

In my experience, “opting out” is usually a good way to start to improve your credit scores. This effectively stops the junk mail from credit card companies and insurance companies selling you on their products. Although there is no guarantee of improved scores from opting out, I have seen 10-15 point increases, within 30-60 days. It is significant enough to be worth thousands of dollars over the life of a loan.

Still seeking to gain an edge on better credit scoring? Generally, the credit bureaus look favorably upon those consumers using 30% or less than their lines of credit allow. For example, if a credit company allows you to borrow $10,000.00 as the maximum balance and you are carrying $3000.00 or less as a revolving balance, it bodes well for your score. What if it’s less? Well, the more credit that you have available, the better! So, don’t close accounts. Keep them open, just manage the paperwork and be well-organized.

Ideally, you will need to have 3-5 lines of credit each with 12 months of history. A line of credit can be a car loan, maybe a credit card, or a student loan. If you want to increase individual lines of credit, just call your creditor and ask for an increase. It may help you decrease your balance to that 30% mark, in case you spent more than the recommended amount. Otherwise, pay them down and show that you are responsible in meeting your obligations.

In the past I have seen 50-60 point swings in credit using these simple procedures. Sometimes it will cost some money to pay down lines of credit, for others, time will be the challenge. There really is no easier way to save money on large ticket items than to ensure that you know how your credit works, be well organized, and educate yourself on the latest tips and tricks.

Need a great starting point before venturing into the home buying arena? Obtain your annual credit report to view the content of your credit history, for free! This source does not give you a free score, but it will give you the ability to view and, if necessary, contact your past creditors. For more information, visit the Federal Trade Commission’s website to learn more. Then, speak to your trusted mortgage broker to find out how you can save money on your mortgage or get approved for a low interest rate on a new home.

Your Trusted Mortgage Broker,

Diego L. Quintero

Article first published as, Making Room for Mom & Dad, on Technorati

Over the last few months, I have run into several clients in the Northeastern US who have discovered a need to manage the aging and changing mobility of their parents. This is not a coincidence anymore, but a real, actual need that many people are experiencing. It has become incredibly important to manage our immediate family and finances together, while ensuring the safety of our parents. It makes it especially difficult since the markets have plummeted and our collective portfolios are worth half of what they used to be.

What advantages can be sought by this event, and how many arrows can one carry in his/her quiver to ensure that the options are the best for everyone involved? Let's take aim at being able to spend less, keep family close, and improve your overall position when it comes to your investments.

The in-law suite or "casita," as they call it in the Southwestern US, has become a popular request on home searches. Being able to finance a detached structure in a new home purchase can be a challenge depending on its maintenance level, but typically it is easily included in a mortgage without any additional costs or rate increases.

Are you interested in moving to accommodate everyone? Call your trusted Realtor and put together a search for a home with an in-law suite. Be prepared to look at a lot of different options and consider things like stairs, and private kitchens & baths. There is something to be said for making a fresh start so if a move is something your family could use, go for it!

But, what if you are perfectly happy with your current location? Additionally, how do you position your parents in your home that may not have the required additional features? The cash required to build an addition or a detached structure could break the bank if you get carried away with upgrades and amenities. Some additional challenges include ease of access to plumbing and electricity lines,town/city permitting, easements and set backs which all come into play when planning the addition. It would be best to speak to a general contractor before venturing into it on your own. More importantly, where is the money going to come from? Here are a few choices.

With rates being so inexpensive, you could refinance your own home and cash-out for "home improvements,” to include remodeling and adding the in-law suite. Putting the money back into your home is not a bad idea in this market. You may see a great return as demand for homes with this in-law feature continues to rise. If you are a naysayer and believe the market could tumble another 15-20%, then this may not be for you. At this point, however, prices are back to fair and this is the market correction that has made Real Estate, “real” again.

Perhaps you have fifty to seventy-five thousand dollars in available equity to be able to make these kinds of improvements and affordability will not be an issue. This is great conversation for you and your trusted mortgage broker. Ask the questions and get the answers you need to make the best decision for your loved ones. 

All along consider how can you afford to build an addition to your home that enables your parents mobility, some freedom, and at the same time offering you peace of mind and...a little privacy!

So, what if moving is not an option and you don't have available equity in your home...and to further your detrimental position, affordability is not in-line with getting a new mortgage? Then, consider what can be done with your parents home. They will most likely have it paid off, we hope! So there should be a viable option.

A refinance using their equity, their income & their credit may help you stay on target. The cash from the equity in their home can help to make the plan come together. There are plenty of loan programs to accommodate the family on the short or long-term.

Please don't misunderstand this option, if your parents are on the line for the loan, it is their responsibility to pay and keep up with the payments. But if it takes you six to eight months to complete an ideal addition to your home, you can sell your parents’ home when it’s complete. This will exonerate them from the debt, altogether, while keeping family close and safe.

Ask yourself if you have hit the target on all of your options. Have you been able to afford the addition? Does it increase the value of your investment? Are your parents safe and well-taken care-of? Do you still have the privacy in your own home that you have worked so hard to get?

If you are taking care of your parents, you deserve to have the ability to use their savings to accommodate them, as the major costs of assisted living options would essentially be avoided. If you have the ability to execute the plan while keeping your expenses to a minimum, you have been able to hit the bulls-eye and you still have lots of arrows in your quiver for future investment growth and your child’s education too!

Your Trusted Mortgage Broker,

Diego L Quintero

Article first published as, PMI, Avoiding Delays in Underwriting, on Technorati

From 2005 until about 2008, the mortgage industry was becoming a place where creativity was taking precedence over ethics. Large banks expected the large and mid-sized broker to maintain quotas for lending. The volume of funded loans became more of a focus than the quality of loans issued. In the "Report to Congress on the Root Causes of the Foreclosure Crisis," published by HUD’s Office of Policy Department and Research in January 2010, studies were cited to provide information to Congress concerning lowered underwriting standards.

The topic has been discussed a million times over. However, as opposed to assigning blame, lately the conversation is more about the changes taking place. Our politicians on the hill, Barney Frank and Chris Dodd have written the self entitled, Dodd-Frank Act to help consumers feel more confident in experiencing the American dream. There are lots of highlights that consumers can appreciate, of course, this is nothing different from what well-trained loan officers should have done all along, but now these are enforced.

Take the time to collect your information, and expect to be questioned about the minor changes in your accounts, time on the job, income, it is all meant to protect you and ensure that your loan is well matched to your needs. Get educated about the process, call your trusted mortgage broker to learn more.

Your trusted mortgage professional,

Diego L. Quintero