Tag Archives: Payment

Financial Troubles? How to Handle Your Mortgage Payments

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None of us can appreciate — nor anticipate — the future. Although we always believe it will never happen to us, once in a while, calamity strikes, and then we have to address these very hard and difficult questions.

You own a house, with a sizable mortgage. Suddenly, you (or your spouse) lost their job, and you cannot make the monthly mortgage payments.

There are a number of options you should immediately consider. However, the very first thing you should do is to talk with your lender. Don’t just discuss your issues with a low-level employee. Try to go as high up the corporate ladder as you possibly can. And don’t be afraid to be honest. Legitimate mortgage lenders will try to work with you, since they don’t want to evict you and have to own and carry your house until they sell it.

Here are some of the options which are available to you.

1. Temporary indulgence.  Here, the lender, at your request, may grant you a short period of time — usually not more than three months — in order to cure any delinquency. However, this is merely temporary relief, and by the end of that short period of time, the borrower must be completely current.

2. Repayment plan.  Here, the borrower is given a fixed period of time — usually not to exceed one year — in which to bring the mortgage current by immediately making and continuing to make payments in excess of the monthly mortgage payment. It is important to get this repayment plan reduced to a written document, signed by both the lender and the borrower.

3. Special forbearance relief agreement.  Here, the regular monthly mortgage payments are suspended or reduced for a period of up to eighteen months from the due date of the first unpaid monthly installment. At the conclusion of this relief period, the regular payments must be resumed; additionally, a comprehensive plan must be agreed upon for the repayment of the amount that has been suspended.

In this case, the lender will make a determination that the default is curable, and based on the current financial and appraisal data, the lender must be satisfied there is a likelihood that the borrower will be able to comply with the repayment plan. Clearly, the burden will be on you to document and justify the plan, so as to satisfy the lender’s requirements.

If you are in the military, the Soldier’s and Sailor’s Relief Act provides various forms of relief, but you should check with your military or civilian lawyer to determine your eligibility under that Act.

4. A short sale.  Here, the lender will authorize you to sell the property for what it is really worth, and the lender will get all the proceeds. Let us look at this example. The house can probably be sold at $395,000, but the mortgage is $425,000. The lender may allow you to sell the property for $395,000, giving a real estate broker a commission. The lender gets all the remaining sales proceeds; you get nothing from the sale. However, under this “short sale” approach, you will be relieved of your mortgage. In some cases — depending on your financial situation — the lender may want you to pay a portion of the mortgage shortfall; this depends on the lender and is clearly negotiable.

5. Deed in lieu of foreclosure.  This is another remedy that may be available to you. Under this arrangement, you deed your property to the lender (or to whomever the lender designates) and this is in lieu of (instead of) foreclosure proceedings. This arrangement is an acceptable and customary procedure when, for example, the borrower is deceased and the estate is willing and able to transfer the property, or the borrower has filed Chapter 7 bankruptcy, and the trustee has abandoned interest in the property.

6. Foreclosure.  Here, the lender will sell your property at auction (or in some states at the Courthouse), and you will lose your home and your credit rating (whatever is left of it. Legitimate lenders do not want to foreclose. and they will reluctantly start the process if all else has failed.

7. Bankruptcy.  Your final option, of course — which should be used only as a last resort — is for you to file bankruptcy. When someone files for bankruptcy, there are many protections that automatically apply from the day the bankruptcy petition is filed with the Bankruptcy Court. The most important protection under the bankruptcy law is known as “the automatic stay.” If you are in bankruptcy, no legal action can be taken against your house unless the lender requests the Court for permission to “lift the stay.”

You cannot ignore your financial problems hoping you will win the lottery or find some other immediate source of funds. The level of your cooperation is the most significant aspect that will determine how willing the lender is to similarly cooperate [with you].

courtesy of:  http://realtytimes.com/consumeradvice/mortgageadvice1

4 Reasons Why 2016 is a Good Time to Buy a Home

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With 2016 fast approaching, now is the time for renters to get off the sidelines, start organizing their finances and take on the excitement of homeownership.

But given the recent history of the housing market and Americans’ increasing need to stay mobile, it is understandable that it can be nerve-wracking to invest your hard-earned money in a home.

However, unlike years past, all key economic indicators are ripe and there are two major changes to the mortgage process that help make 2016 a good year to buy a home.

1. Rental rates continue to rise

With the on-going low supply and high demand of rental units, rental rates are continuing to rise. In the last 12 months, 88% of property managers have raised their rent prices. And there is no sign of that stopping given that 68% of property managers predict their rental rates will rise again in 2016.

2. Interest rates are historically low

Freddie Mac’s latest survey of lenders shows little change in the 30-year fixed-rate mortgages, which averaged at 3.89% for the month of September compared to 4.16% a year ago. Low interest rates make home buying more affordable.

3. Clear mortgage terms

The recent TRID announcement has mandated clearer terms at the closing table. For first-time homebuyers, this is a huge benefit because it will ensure there are no surprises at the closing table. These clear terms will help homebuyers better understand both their financial commitment and what is expected of them.

4. Down payment protection will be available

Writing a check for a down payment on a home is often one of the largest investments someone will make. Down payment protection is a new option that can give modern homebuyers the flexibility they need to more confidently and securely buy a home. When homebuyers put less than 20% down at closing, this kind of coverage protects their down payment just like private mortgage insurance protects the bank.

Given that the average employee tenure in the U.S. is 4.6 years overall, and 3 years for millennials, it’s understandable that the modern homebuyer may be nervous to commit to living in one location for an extended period of time.

However, the current state of the market and these major mortgage changes will help to ensure that when life happens, the homebuyer won’t be completely out of luck when it comes to protecting their nest egg.

courtesy of:  http://www.housingwire.com/

7 Tips For Improving Your Credit

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Here’s how to clean up your credit so you get the least-expensive home loan possible.  Getting the loan that suits your situation at the best possible price and terms makes homebuying easier and more affordable.  Here are seven ways to boost your credit score so you can do just that.
1. Know your credit score
Credit scores range from 300 to 850, and the higher, the better.  They’re based on whether you’ve paid personal loans, car loans, credit cards, and other debt in full and on time in the past. You’ll need a score of at least 620 to qualify for a home loan and 740 to get the best interest rates and terms.
You’re entitled to a free copy of your credit report annually  from each of the major credit-reporting bureaus, Equifax, Experian, and TransUnion. Access all three versions of your credit report at www.annualcreditreport.com. Review them to ensure the information is accurate.
2. Correct errors on your credit report
If you find mistakes on your credit report, write a letter to the credit-reporting agency explaining why you believe there’s an error.  Send documents that support your case, and ask that the error be corrected or removed. Also write to the company, or debt collector, that reported the incorrect information to dispute the information, and ask to be copied on any materials sent to credit-reporting agencies.
3. Pay every bill on time
You may be surprised at the damage even a few late payments will have on your credit score.  The easiest way to make a big difference in your credit score without altering your spending habits is to diligently pay all your bills on time. You’ll also save money because you’ll keep the money you’ve been spending on late fees. Credit card or mortgage companies probably won’t report minor late payments, those less than 30 days overdue, but you’ll still have to pay late fees.
4. Use credit carefully
Another good way to boost your credit score is to pay your credit card bills in full every month.  If you can’t do that, pay as much over your required minimum payment as possible to begin whittling away the debt. Stop using your credit cards to keep your balances from increasing, and transfer balances from high-interest credit cards to lower-interest cards.
5. Take care with the length of your credit
Credit rating agencies also consider the length of your credit history.  If you’ve had a credit card for a long time and managed it responsibly, that works in your favor. However, opening several new credit cards at once can lower the average age of your accounts, which pushes down your score. Likewise, closing credit card accounts lowers your available credit, so keep credit cards open even if you’re not using them.
6. Don’t use all the credit you’re offered
Credit scores are also based on how much credit you use compared with how much you’re offered.  Using $1,000 of available credit will give you a lower score than having $1,000 of available credit and using $100 of it. Occasionally opening new lines of credit can boost your available credit, which also affects your score positively.
7. Be patient
It can take time for your credit score to climb once you’ve begun working to improve it.  Keep at it because the more distance you put between your spotty payment history and your current good payment record, the less damage you’ll do to your credit score.

courtesy of:  http://www.clientdirect.net/newsEdit.asp

Mortage Loan Documents To Change August 1st

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On August 1, 2015, loan documents to homebuyers are going to be simpler and easier to understand.  Two new forms, a Loan Estimate and a Closing Disclosure, will replace the HUD-1 Settlement Statement, the Good Faith Estimate, and the Truth-in-Lending disclosure form.

The purpose of the new forms is to simplify closing information and make it simpler for consumers to compare their estimated costs to final costs.

Created by the Consumer Financial Protection Bureau  [CFPB] with input from consumers and industry groups such as the NAR, the new forms will hold lenders to three-day deadlines so that consumers will have the information they need well before closing.

The three-day rule applies to both the Loan Estimate and the Closing Disclosure. Buyers should receive the former three days after applying for a loan and the latter three days before closing. Buyers should take this time to look carefully for any changes between the Loan Estimate and the Closing Disclosure.

Consumers will have a more transparent experience, including less obfuscating jargon and greater clarity concerning closing costs. On the new forms, the interest rate, monthly payments, and the total closing costs will be clearly presented on the first page, making it easier to compare mortgage loans and choose the one that is right for them.

Important information will also be highlighted, including the costs of taxes and insurance and how interest rates and payments may change in the future. This information will help consumers decide whether they can afford the mortgage loan and the home, now and in the future.

The new forms also warn consumers about features they may want to avoid, like penalties for paying off the loan early or increases to the mortgage loan balance even if payments are made on time.

Consumers will appreciate that the first pages of the new Loan Estimate and the new Closing Disclosure look the same, so they can more easily compare costs. If discrepancies are found, consumers can contact their real estate agents or their lenders for more information.

courtesy of:  http://realtytimes.com/consumeradvice/mortgageadvice1/

87 Percent of U.S. Homes Qualify for Down Payment Help

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RealtyTrac® the nation’s leading source for comprehensive housing data, today released a joint analysis with Down Payment Resource on the availability of down payment programs across the country, which found that 87 percent of U.S. homes qualify for down payment help.

RealtyTrac looked at 2,290 down payment programs from Down Payment Resource’s Homeownership Program Index and found that out of more than 78 million U.S. single family homes and condos in 1,792 counties with sufficient home value data, more than 68 million (87 percent) would qualify for a down payment program available in the county where they are located based on the maximum price requirements for those programs and the estimated value of the properties.

“Many homebuyers, especially Millennials, haven’t fully investigated their home financing options because they are pessimistic about qualifying for a mortgage. Our Homeownership Program Index highlights the wide range and availability of down payment programs available to today’s homebuyers. In fact, 91 percent of the 2,290 programs in our registry have funds available to lend to eligible buyers. Plus, income limits vary depending on the market and programs extend beyond just first-time homebuyers,” said Rob Chrane, president and CEO of Down Payment Resource. “It’s important for buyers to research down payment programs as part of their loan shopping process.”

“Historically low homeownership rates across nearly every age demographic have led to a public policy push to lower the barrier to homeownership through down payments as low as 3 percent, but the fact is that the barrier to homeownership is often much lower than even that 3 percent for borrowers who take advantage of one of the myriad down payment help programs available across the country,” said Daren Blomquist, vice president at RealtyTrac. “Prospective buyers — or their agents — willing to put in a few minutes of time to find out what programs are available to them will put themselves in a much better position to successfully purchase a home.”

10 U.S. Counties with Most Homes Qualifying for Down Payment Help
State County Total Single Family Homes & Condos in County Total that Qualify for Down Payment Assistance Pct that Qualify
CA Los Angeles 1,762,256 1,377,813 78.18%
IL Cook 1,372,463 1,163,913 84.80%
AZ Maricopa 1,227,121 1,052,746 85.79%
TX Harris 1,038,027 961,957 92.67%
MI Wayne 692,174 653,221 94.37%
CA San Diego 717,165 618,050 86.18%
FL Miami-Dade 716,924 589,683 82.25%
NV Clark 605,679 558,411 92.20%
TX Dallas 574,849 533,518 92.81%
FL Broward 623,634 523,178 83.89%

read more —>  http://www.realtytrac.com/news/home-prices-and-sales/down-payment-assistance-analysis-q1-2015/

The Difference Between Traditional and FHA Mortgage Loans

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Before choosing potential lenders and processing mortgage applications, you need to have sufficient information about home loans first. By having adequate knowledge, you will succeed in finding loans that would meet your needs and interests as a borrower.

One important thing you should understand is the difference between traditional and FHA loans. You can understand this area easier by knowing the definition of the two.

After knowing their definitions, you can proceed to comparing their apparent differences and deciding which of them will become more beneficial to you.

What is a traditional loan?

A conventional loan is the most accepted mortgage form in the real estate market. Unlike other loan types, it is not issued by any recognized government agency. It requires borrowers to accomplish 20% down payments in order to gain approval from lenders. It is widely used by people who have good credit histories and abilities to accomplish required initial payments.

Borrowers who choose to avail this type are presented with the opportunity to choose between fixed and adjustable rate mortgages. In the former program, an individual is expected to pay fixed interest rates during the entire duration of the loan. Meanwhile, adjustable programs have fluctuating interest charges. Its rates are adjusted depending on suggestions of predefined conditions.

What is an FHA loan?

Now that you know what conventional loans are, you can easily understand the nature of an FHA loan. As it names suggests, the Federal Housing Administration actually issues it. The government subsidizes it in order to encourage more buyers and stimulate the real estate market. It has also succeeded in insuring lenders with guaranteed capital reimbursements while extending their help to troubled home buyers.

An FHA loan gives borrowers the chance to purchase properties that they cannot afford. It seems friendlier to most borrowers because it obliges them to pay for low down payments. Usually, required initial payments are 3.5% of the market value of a property. It does not also depend on credit scores when checking the credibility of a borrower. Those with bad credit scores are given the chance to prove their capabilities of repaying the amount of home loan they are requesting.

What makes them different?

Three things make FHA and conventional loans different from each other. The first one is the manner in which they are issued. FHA programs are backed by government agencies, while traditional mortgages do not have any relation with the government or other federal agencies. Their second difference lies on the way they approve loan applications. FHA loans are more lenient, hence increasing the probability of approving more applications. Meanwhile, conventional types rely on credit histories when screening potential candidates. This means that people who have bad credit scores have slimmer chances of gaining traditional loan approvals.

Lastly, FHA loans have smaller interest rates and required down payments. They carry fewer risks because of their comprehensive insurance policies. This is why first time home buyers with limited budgets are often advised to choose these tolerant programs. On the other hand, traditional mortgages have more expensive down payments and interest rates.

courtesy of:  http://areaofentrepreneurs.com/

Fannie Mae, Freddie Mac – 3% Down Payment Mortgage Program

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In an effort to open up lending to more low-income and first time home buyers, Fannie Mae and Freddie Mac announced Monday that they will start backing mortgages with down payments of as little as 3% of the home’s price.

But borrowers will still need to meet strict criteria first, the two government-backed mortgage giants said.

The new loans will only be doled out to those who buy private mortgage insurance, have a credit score of at least 620 and offer complete documentation of their income, assets and job status. And, to further mitigate risk, the agencies will require borrowers to receive home ownership counseling.

Both programs are for fixed-rate loans given to first time homebuyers and those seeking to refinance. Fannie will start backing the loans as soon as December 13, while Freddie will start offering them March 23.

courtesy of:  http://money.cnn.com/

Majority of Home Buyers Unaware of Down Payment Assistance Programs

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Although there are hundreds of millions of dollars available for down payment assistance, 70 percent of U.S. adults are unaware of these programs for middle-income home buyers in their community, according to findings from the second annual America at Home survey commissioned by NeighborWorks America.

NeighborWorks organizations provided 6,000 people with more than $100 million in such assistance last year, and expect to make even more available this year.

Down payment assistance is especially helpful for home buyers who are unsure about affordability because of student loan debt.

C.A.R. [CA Association of Realtors] offers a resource to help buyers find down payment assistance programs. In California alone, there are more than 300 homeownership programs available, including direct down payment and closing costs assistance as well as mortgage credits of up to $2,000 for the life of the loan.

find out more —>  downpayment.car.org

courtesy of:  CA Association of Realtors

Nine Reasons To Buy A House Right Now

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Buying a house is like having a baby: there’s no absolute perfect time to do either.

The down payment-interest rate-economic factors-qualification quadrangle can be so confusing. Rising rates, loosening requirements, down payment options, buyer’s markets, seller’s markets – what does it all mean to you if you want to buy a home? The truth is that while the banks might have a magical formula to determine your mortgage-worthiness, determining if the time is right really comes down to three main questions:

Do you want to buy a home?
Are you financially prepared?
Is your credit where it needs to be?

If yes, then go for it. Here are nine reasons to do it now.

1. Prices are good. According to the latest S&P/Case-Shiller report, home prices are still gaining, but have slowed. “The 10-City Composite gained 5.5% year-over-year and the 20-City 5.6%, both down from the 6.7% reported for July,” they said. “The National Index gained 5.1% annually in August compared to 5.6% in July.” This is good news if you were afraid that big price gains would put homeownership out of reach and also bodes well for your long-term equity once you purchase.

2. Rates are low. “Imagine paying over 18% interest on a 30-year fixed mortgage. It’s almost unthinkable. But that was the reality for home buyers in October 1981 — a year when the average rate was almost 17%,” said Yahoo Finance. “The average rate has been 5.18% since the start of this country’s history,” making today’s rates, which hover around historic lows at 4%, sound even better.

3. Loan requirements are softening. They’re not approaching the look-the-other-way-and-stamp-it-approved levels that led to the market crash, but the overly tough restrictions that followed have loosened. “Major lenders are making adjustments,” said The Street. “Wells Fargo has lowered the minimum FICO score for borrowers applying for loans insured by the Federal Housing Administration to 600 from 640.” They also count JPMorgan Chase’s lowered loan-to-value “standards in certain markets for both jumbos and conforming mortgages.” For buyers that can mean an easier road to loan approval, even without a ton of money upfront and perfect credit.

4. FHA loans make it even easier for first-time buyers. If your credit is less than stellar and you don’t have a large down payment, an FHA loan can get you in the door. Credit scores can be as low as 620 to qualify and only 3.5% down is required. Whether you’ve never bought before or have been out of the market for a few years, an FHA loan can be your answer.

5. Fewer buyers around the holidays means less competition for you and more negotiating power. “Sellers who are actively looking to sell their homes during the holiday months — namely, October through December — are serious about shedding the weight of their residences,” said US News. “This often works in favor of savvy buyers looking to get a deal on discounted homes. Having less competition on the buyer’s side can mean lower prices on homes, in addition to fewer counter-offers to compete against.”

6. Rates are predicted to rise. “The Mortgage Bankers Association expects the average rate on a 30-year, fixed rate mortgage to rise slowly to 5.1 percent by the end of 2015,” said the Washington Post. If you want to take advantage of low rates, now is the time.

7. Pent-up demand could zap affordability. “The housing market is about to get even more competitive,” said Yahoo. “The pent-up demand of younger professionals, who moved back in with their parents during the recession, is about to explode. This eager subset of buyers will create some steep competition for homes, especially if they have been saving up to make larger down payments or high ticket offers. If the current homes on the market have more potential buyers, bidding wars develop, and the purchase prices are driven up.

8. “Buying is cheaper than renting in most markets,” said Housingwire. With a little knowledge of loan options and low down payment programs, you can easily flip the switch from renter to homeowner.

9. Because you want to buy a home. There really is no more compelling reason than that. You want it. So make it happen.

courtesy of:  http://realtytimes.com/consumeradvice/buyersadvice1

Mom-and-Dad Banks Step Up Aid to First-Time Home Buyers

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The Bank of Mom and Dad is playing a growing role as lender of last resort for a housing recovery struggling to provide more traction for the U.S. economy.

Last year, 27 percent of those purchasing a home for the first time received a cash gift from relatives or friends to come up with a down payment, according to data from the National Association of Realtors. That’s up from 24 percent in 2012 and matches the highest share since the group began keeping records in 2009.

Those numbers will probably keep growing this year as younger Americans remain constrained by student debt, tough entry into the job market and stricter mortgage-lending rules that require more cash up front. At the same time, rising stock and property values give their baby boomer parents the ability to assist those wanting to lock in near record-low borrowing costs …. read more —> 

courtesy of:  http://www.bloomberg.com/news/

Homeownership Still Holds Promise For 90% of Americans

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A new survey shows the vast majority of Americans still regard homeownership as a “highly desirable goal,” despite lingering effects of the housing crisis in the market. The results stem from the latest COUNTRY Financial Security Index® survey and overall it was found that Americans are feeling more optimistic, likely due to an improving economy and labor market.

Making sense of the story

  • The survey found that 89 percent of Americans feel that buying a home is an important part of achieving the American Dream.
  • Furthermore, 64 percent of respondents expressed belief that owning a home is an attainable goal for a typical middle-income family, a significant improvement over last year, when just 41 percent said the same.
  • There was a generational split on opinions regarding whether or not the goal of homeownership is achievable. Respondents among the ages of 30–39 and ages 50–64 were most likely to be negative in that regard, with 26 percent and 20 percent, respectively, saying owning a home is not an attainable goal for a middle-income family.
  • Among non-homeowners, a quarter of those under age 30 and a fifth of those ages 50–64 said they have no interest in owning a home.
  • For those who currently don’t own a home, financial limitations represent some of the biggest barriers to homeownership. Fourteen percent say a low credit score is the primary obstacle.
  • Americans also cite a lack of a down payment (13 percent) and the price of homes in the area (12 percent) as impediments to homeownership.
  • More than half (56 percent) say their home is a long-term investment of 10 years or more to help fund retirement goals. Half of Americans also said they would avoid taking out a home equity loan unless absolutely necessary.

courtesy of:  California Association Of Realtors

Mortgage Rates Drop – Mortgage Standards Expand To Include Lower Credit Scores

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May 19, 2014

Mortgage lenders are lowering mortgage credit standards nationwide.

Effective immediately, home buyers and refinancing households can get approved for an FHA loan or a conventional loan with lower credit scores than during any time in the last five years.

Combined with mortgage rates today, which are at an 11-month low, it’s an excellent time to apply for mortgage.

Mortgage Credit Score Minimums Drop

It’s getting easier for borrowers to get approved for a mortgage. As the economy has improved, jobs growth has been ongoing; home values have climbed steadily; and the number of loans in default have dropped dramatically.

Lenders are taking fewer losses and realizing bigger returns. In response, they’re loosening loan guidelines in an effort to reach consumers who have been thus far locked out from the housing market rebound.

Earlier this year, U.S. lenders lowered minimum credit score requirements by 40 points for borrowers using FHA-backed financing, opening the low-downpayment program to a wide swath of underserved borrowers.

Lenders are making a similar move for conventional loans.

Lowering credit standards is a big deal in the U.S. housing market. Credit scores predict the probability of foreclosure with lower credit score correlating to high foreclosure probability.

During last decade’s housing market downturn, homes in foreclosure cost banks hundreds of millions of dollars. As more loans went bad, banks grew more risk-averse, tightening up what they would lend, and to whom.

This month’s loosening of loan standards suggests that fewer loans are defaulting nationwide, and that banks are willing to assume new risk given today’s strengthening economy.

For today’s buyers of homes and households wanting to refinance, this is good news.

You no longer need “perfect” credit to get access to Fannie Mae- and Freddie Mac-backed mortgages. A 620 FICO score now works just fine.

The Mortgage Approval “Triangle”

Because there are tens of available mortgage programs, there is no “one” formula for getting approved for a mortgage. However, mortgage approvals almost always focus on three key areas — your income, your equity, and your credit.

In this three-pronged approach, “income” is the amount of documented income you earn annually as compared to your monthly debts. In general, your debts must not exceed 45% of your documented income.

This ratio is known as your debt-to-income (DTI) ratio.

“Equity” is the amount of equity, in percentage terms, you hold in the home you’re mortgaging. For a home buyer, your equity is equal to your downpayment. For a refinancing mortgage applicant, your equity is your loan size divided by the home’s value, a ratio known as Loan-to-Value (LTV).

Loan-to-value requirements vary by program. For example, for borrowers with a FHA-backed loan, the maximum LTV on a home purchase transaction is 96.5%. On an FHA refinance, however, there are no LTV restrictions at all.

Or, for a military borrower using a VA loan for a purchase, the maximum LTV is 100%; there is no downpayment required whatsoever.

The third prong in mortgage underwriting is “credit”.

Your credit score is a based on a formula which determine the likelihood that you’ll go 90 days without making payment to your lender, which puts your loan into default. Credit scores are on a scale of 300-850 and are sometimes referred to as “FICO” scores, generically.

Credit scores of 740 or higher are considered excellent.

To get a mortgage approval, it’s not required for applicants be “excellent” in all three prongs of the mortgage approval triangle — you must only earn a “passing” grade.

With credit standards dropping, it’s easier for today’s borrowers to get approved.

Loan Programs For Borrowers With Average Credit Score

Mortgage lenders are loosening home loan standards. They’re lowering minimum credit score standards and granting more “exceptions” as compared to last decade.

If you were recently turned down for a mortgage because your credit score or income, it might make sense to re-apply — especially because of the number of home loans now available to borrowers with less-than-perfect credit scores.

One such program is the USDA Rural Housing Loan, which allows 100% financing for home buyers in rural and suburban neighborhoods. The USDA loan backed by the federal government, is available in all 50 states, and requires a minimum FICO score of 620.

Another available program is the VA loan, which also enforces a minimum FICO score of 620. VA loans are available to members of the military and require no downpayment whatsoever.

VA loans require no mortgage insurance and can be assumed by the future buyer of your home. This means that your 3.75% mortgage rate can be “sold” along with your home, so long as the buyer can be VA loan-approved.

Assumable loans add value to a home in a rising mortgage rate environment.

A third program for borrowers with less-than-perfect credit scores is the FHA home loan. Official FHA guidelines state that a 500 FICO score is required to get approved, but many lenders will underwrite to a minimum 580 FICO or better.

FHA loans are assumable, as well.

Low-credit-score borrowers can also use conventional mortgage financing. Conventional loans are loans which are backed by Fannie Mae or Freddie Mac.

Conventional loans are available with credit scores of 620 or higher, and can be the best choice for buyers with downpayments of 10% or more; or for refinancing homeowners with home equity of at least twenty percent.

Additionally, Fannie Mae or Freddie Mac can access the Home Affordable Refinance Program (HARP) program. Sometimes called the “Obama Refi”, HARP loans are for homeowners whose homes have lost equity since the date of purchase.

HARP is allowed with a 620 FICO score or better.

Get Today’s Live Mortgage Rates

As mortgage rates move to an 11-month low, mortgage lenders have opened their loan guidelines to a wider group of applicants. If you’ve been turned down for a mortgage in the recent past, consider applying again.

courtesy of:  http://themortgagereports.com/14951/mortgage-rates-fico-score-credit

Mortgage Lenders Begin Easing Rules for Home Buyers

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As a sign of mortgage lenders’ rising confidence in the housing market, restrictive lending standards are beginning to ease, and the credit freeze is starting to thaw. Lenders have started to accept lower credit scores and to reduce down-payment requirements.

Making sense of the story

  • Lenders recognize that refinancing old mortgages will no longer be a huge profit center for banks, so competing for borrowers will be needed for business and future profits. As a result, lenders will have to open up to borrowers who may not have perfect credit or large down payments.
  • For example, the lender TD Bank began accepting down payments as low as 3 percent through an initiative called “Right Step” for first-time buyers. A year ago, the program required at least a 5 percent down payment.
  • Mortgage originations are expected to reach $1.1 trillion this year, which is down from $1.8 trillion last year and $2 trillion in 2012 due to less refinancing.
  • While private lenders have shied away from low-down-payment mortgages in the past few years, in the past year, more than one in six loans made outside of the FHA included down payments of less than 10 percent.
  • Credit scores for borrowers seeking conventional mortgages also are easing, as scores on purchase mortgages stood at 755 in March, down from 761 a year earlier.
  • Smaller lenders are trying to appeal to first-time buyers while many larger lenders are gradually reducing down payments for jumbo loans in order to attract wealthy customers.

courtesy of:  http://online.wsj.com/

Derogatory Credit Waiting Periods

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CONVENTIONAL LOANS 

Bankruptcy Chapter 7:

2 years from Bankruptcy Discharge date with extenuating circumstances. Borrower must have a re-established credit history. See acceptable reasons for extenuating circumstances and clarification of re-established credit history at bottom.

4 years from Bankruptcy Discharge date. Borrower must have a re-established credit history. See clarification of re-established credit history at bottom.

Bankruptcy Chapter 13:

1 year from Bankruptcy date with extenuating circumstances. Borrower must have a re-established credit history. Lender must include Bankruptcy payback payments into Debt Ratios and the borrower must obtain court approval prior to entering into a purchase contract. See acceptable reasons for extenuating circumstances and clarification of re-established credit history at bottom.

Foreclosure:

3 years from Foreclosure date in which title was transferred back to the Lien Holder with extenuating circumstances. Borrower must have a re-established credit history. See acceptable reasons for extenuating circumstances and clarification of re-established credit history at bottom.

7 years from Foreclosure date in which title was transferred back to the Lien Holder. Borrower must have a re-established credit history. See clarification of re-established credit history at bottom.

Short Sale:

2 years from Short Sale date in which title was transferred to the new Lien Holder, with extenuating circumstances and a minimum down payment of 10%. Borrower must have a re-established credit history. See acceptable reasons for extenuating circumstances and clarification of re-established credit history at bottom.

2 years from Short Sale date in which title was transferred to the new Lien Holder, with a minimum down payment of 20%. Borrower must have a re-established credit history. See clarification of re-established credit history at bottom.

4 years from Short Sale date in which title was transferred to the new Lien Holder, with a minimum down payment of 10%. Borrower must have a re-established credit history. See clarification of re-established credit history at bottom.

7 years from Short Sale date in which title was transferred to the new Lien Holder, with a down payment less than 10%. Borrower must have a re-established credit history. See clarification of re-established credit history at bottom.

FHA LOANS 

Bankruptcy Chapter 7:

2 years from Bankruptcy Discharge date. Borrower must have a re-established credit history with extenuating circumstances. See acceptable reasons for extenuating circumstances and clarification of re-established credit history at bottom.

3 years from Bankruptcy Discharge date if borrower included property into the Bankruptcy. Borrower must have a re-established credit history. See clarification of re-established credit history at bottom.

Bankruptcy Chapter 13

1 year from Bankruptcy date if borrower has a re-established credit history and extenuating circumstances. Lender must include Bankruptcy payback payments into Debt Ratios and the borrower must obtain court approval prior to entering into a purchase contract. See acceptable reasons for extenuating circumstances and clarification of re-established credit history at bottom.

Foreclosure:

2 years from Foreclosure date in which title was transferred back to the Lien Holder with extenuating circumstances. Borrower must have a re-established credit history. See acceptable reasons for extenuating circumstances and clarification of re-established credit history at bottom.

3 years from Foreclosure date in which title was transferred back to the Lien Holder. Borrower must have a re-established credit history. See clarification of re-established credit history at bottom.

Short Sale:

1 day from Short Sale date in which title was transferred to the new Lien Holder. Borrower cannot be more than 30 days late on previous mortgage/s or other credit obligations and can prove the Short Sale was necessary for financial purposes only such as employment relocation.

3 years from Short Sale date in which title was transferred to the new Lien Holder. Borrower must have a re-established credit history. See clarification of re-established credit history at bottom.

VA LOANS

Bankruptcy Chapter 7:

2 years from Bankruptcy Discharge date. Borrower must have a re-established credit history. See clarification of re-established credit history at bottom.

Bankruptcy Chapter 13:

1 year from Bankruptcy date if borrower has a re-established credit history and extenuating circumstances. Lender must include Bankruptcy payback payments into Debt Ratios and the borrower must obtain court approval prior to entering into a purchase contract. See acceptable reasons for extenuating circumstances and clarification of re-established credit history at bottom.

Foreclosure:

2 years from Foreclosure date in which title was transferred back to the Lien Holder. Borrower must have a re-established credit history. See clarification of re-established credit history at bottom.

Short Sale:

2 years from Short Sale date in which title was transferred to the new Lien Holder. Borrower must have a re-established credit history. See clarification of re-established credit history at bottom.

CLARIFICATIONS:

  1. All loans must receive AUS Approve/Eligible in order to obtain Lender Financing.
  2. Extenuating Circumstances are events that are beyond a borrower’s control. Such events that cause an immediate decrease in income, and or an abrupt increase in a borrower’s financial responsibility, such as death of the primary wage earner or serious medical illness.
  3. Re-established credit is when a borrower has no late payments or negative items reflecting on their credit report for a consecutive 12 month period or longer after an event such as a Bankruptcy, Foreclosure or Short Sale. Borrower must prove they are credit worthy through acts or credit responsibility. A 12 month rental history is also required with no late payments.

courtesy of:  http://brianberes.myallwestern.com/

10 Ways to Prepare for Homeownership

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1. Decide what you can afford. Generally, you can afford a home equal in value to between two and three times your gross income.

2. Develop your home wish list. Then, prioritize the features on your list.

3. Select where you want to live. Compile a list of three or four neighborhoods you’d like to live in, taking into account items such as schools, recreational facilities, area expansion plans, and safety.

4. Start saving. Do you have enough money saved to qualify for a mortgage and cover your down payment? Ideally, you should have 20 percent of the purchase price saved as a down payment. Also, don’t forget to factor in closing costs. Closing costs – including taxes, attorney’s fee, and transfer fees – average between 2 and 7 percent of the home price.

5. Get your credit in order. Obtain a copy of your credit report to make sure it is accurate and to correct any errors immediately. A credit report provides a history of your credit, bad debts, and any late payments.

6. Determine your mortgage qualifications. How large of mortgage do you qualify for? Also, explore different loan options – such as 30-year or 15-year fixed mortgages or ARMs – and decide what’s best for you.

7. Get preapproved. Organize all the documentation a lender will need to preapprove you for a loan. You might need W-2 forms, copies of at least one pay stub, account numbers, and copies of two to four months of bank or credit union statements.

8. Weigh other sources of help with a down payment. Do you qualify for any special mortgage or down payment assistance programs? Check with your state and local government on down payment
assistance programs for first-time buyers. Or, if you have an IRA account, you can use the money you’ve saved to buy your fist home without paying a penalty for early withdrawal.

9. Calculate the costs of homeownership. This should include property taxes, insurance,
maintenance and utilities, and association fees, if applicable.

10. Contact a REALTOR®. Find an experienced REALTOR® who can help guide
you through the process.

courtesy of:  http://www.realtor.org

FHFA Incoming Director Delaying Fannie & Freddie Fee Hike

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Rep. Mel Watt (D., N.C.), the incoming director of the regulatory agency that oversees Fannie MaeFNMA -2.91% and Freddie MacFMCC -3.32%, announced late Friday that he would delay an increase in mortgage fees charged by the housing-finance giants, which was announced earlier this month by that agency.

Mr. Watt is set to be sworn in as the director of the Federal Housing Finance Agency on Jan. 6 after being confirmed by the Senate on Dec. 10.

The fee increases, announced by the FHFA on the eve of Mr. Watt’s confirmation, are set to take effect next March. The FHFA had said it wanted Fannie and Freddie to hike fees that the companies charge to lenders—those increases are likely to be passed along to borrowers in the form of higher mortgage rates—in order to make it easier for private investors to compete with the mortgage-finance giants.

Here’s Mr. Watt’s full statement released on Dec. 20:

Upon being sworn in as director of the Federal Housing Finance Agency, I intend to announce that the FHFA will delay implementation of the [guarantee] fee and risk-based pricing plan announced in the FHFA’s News Release dated December 9, 2013 (and detailed more fully in the Loan-Level Price Adjustment Matrix released earlier this week) until such time as I have had the opportunity to evaluate fully the rationale for the plan and the plan’s likely impact on the [companies’] risk exposure, the cost and availability of credit and how the plan would interface with the qualified mortgage standards.

I do not expect to elaborate further on this statement until after I have been sworn in as director of the FHFA in January. However, I felt that it was important to announce my intentions now because of the prospect that some lenders could start to price the announced changes into the market well before the effective dates of the changes outlined in the FHFA’s December 9, 2013 News Release.

The extent of the fee changes announced by Fannie and Freddie took the industry by surprise last week because they would sharply increase upfront fees on borrowers with less than perfect credit scores or without significant down payments. The FHFA had earlier announced an across-the-board fee increase that would take effect in March, together with higher fees in four states—New York, New Jersey, Connecticut and Florida—where banks have taken longer to process foreclosures, raising costs to mortgage investors.

courtesy of:  Nick Timiraos,   http://blogs.wsj.com/

Many Home Buyers Plan to Make a Move This Winter

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Home buyers who weren’t successful this summer at finding a home due to limited inventories and competition from all-cash offers are looking to retry their luck in the winter, according to realtor.com®’s Winter Home Buyer Report.

“This summer and spring, home-buying season was particularly challenging for buyers, especially first-time home buyers trying to compete with all-cash offers and bidding wars because of reduced inventory,” says Alison Schwartz, vice president of corporate communications at realtor.com®. “In fact, a quarter of the winter home buyers revealed they are in the market now because they were unable to find a home during this last home-buying season.”

But winter home buyers know they’ll face some challenges. Forty-five percent of those surveyed say they believe they will be up against inventory challenges again, with few homes for sale within the price range they desire. Twenty-nine percent also say that winter weather makes house-hunting unpleasant.

But they believe that the winter can be a good time to buy a home. Twenty-six percent say winter is a good time to buy because they feel sellers will be more motivated and willing to negotiate. Twenty-four percent also say they think home prices will be better.

Of those looking to buy this winter, 23 percent are planning to make a down payment of 10 to 20 percent, according to the realtor.com® survey. Twenty-two percent are planning to put down 21 to 99 percent in cash; 19 percent plan to put down 100 percent cash; and 13 percent are planning to make a down payment of 3.5 percent to qualify for a Federal Housing Administration loan.

courtesy of:  http://realtormag.realtor.org/

Easier To Get a Mortgage?

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Make no mistake: Mortgage credit is still very tight by historical standards, and only borrowers with the most pristine credit and healthy down payments can get the lowest rates. But there are signs that the noose is loosening, if only slightly, in response to lower mortgage volume.

Volume has fallen because rates are rising. Originations were down nearly 20 percent in the third quarter from the same period in 2012, according to Mortgage Daily.

Refinances are down more than 50 percent from a year ago because of higher rates, the Mortgage Bankers Association says.

The drop in volume has lenders looking for more business, however, and possibly easing up on some standards—or at least removing costly overlays on loans.

“New originations will be down, and nonprime borrowers will start to re-emerge,” said Tim Martin of TransUnion, which reported a 23 percent drop in borrowers’ making late payments in the third quarter versus a year earlier.

Since the recession began in 2008, the percentage of nonprime borrowers—or those with a Vantage Score lower than 700, according to Martin—has fallen from 12 percent of all originations to below 6 percent. That share is ticking up slightly.

“The origination volumes are starting to lower, so [banks say] let’s start easing up a little bit, take a little bit more risk and help some folks get some mortgages done,” Martin said.

After tightening in August and September, credit eased slightly in October, according to a monthly report from the Mortgage Bankers Association.

“Some investors reduced minimum credit scores on certain products,” the report said. “At the same time, other investors reduced the availability of cash-out refinances and limited other programs to primary residences in programs which previously allowed for second and investor homes. The net impact was a slight increase in the index for the month.”

That slight easing may again be just for the most creditworthy borrowers. Options for those with smaller down payments and lower scores are still limited.

D.R. Horton, the nation’s largest home builder, said the share of buyers using low-down-payment loans from the Federal Housing Administration is dropping, as the agency has raised its insurance premiums.

The entry-level builder, which reported fiscal fourth-quarter earnings Tuesday, said the share of first-time buyers dropped to 43 percent from 53 percent year over year. The average FICO score for a D.R. Horton buyer is 723—high by historical standards.

“We’ve not seen any significant changes in the underwriting standards to our customers” said Stacey Dwyer, executive vice president and treasurer of D.R. Horton. In terms of overall loosening, we’re not seeing anything significant,”

It is seeing effects from rising mortgage rates, however—a negative for home sales and refinances but a positive for credit availability as banks seek more business. Rising rates combined with rising home prices will sideline some buyers, especially first-timers.

It remains to be seen if the slight credit easing, though apparently not significant in the eyes of a major home builder, will help sales.

courtesy of:  http://www.cnbc.com/, Diana Olick.

CA MORTGAGE DELINQUENCIES LOWEST IN 5 YEARS!

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SAN DIEGO — The number of mortgage defaults in California has fallen so much that the housing market is once again being considered in balance.

The nation’s Mortgage Bankers Association said mortgage delinquencies have hit a five-year low.

The group’s latest survey finds only about 6 percent of loans on one- to four- unit homes were entering or in the foreclosure process.

That’s the lowest level since 2008.

San Diego State University real estate lecturer Dana Kuhn said that trend is also reflected in San Diego. The rebounding economy and rising prices get a lot of the credit.

“People who literally haven’t been able to make payments, they’ve held on this long and gotten jobs and now they can,” said Kuhn. “Along with that, increased confidence creates hope that if they can just get through the next few months, then they’ll be okay. And, of course, higher prices mean fewer homes are upside down.”

Mortgage Bankers said the foreclosure rate in California has come down so much that it is close to pre-recession levels.

courtesy of:  http://www.kpbs.org/news

The Ideal Retirement Age

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Retirement at age 65 is no longer the goal for most working Americans. In 2010, for the first time, more Americans said they planned to retire after age 65 than before it, and since then the gap has widened, according to a recent Gallup survey of more than 2,000 U.S. adults, including 636 retirees. More than a third (37 percent) of workers say they expect to retire after 65, up significantly from 14 percent in 1995.

Only about a quarter (26 percent) of employees are still aiming to retire at 65. Another quarter (26 percent) of adults are hoping to retire before age 65, down from 49 percent in 1995.

People who are closer to age 65 generally project later retirement ages than younger workers. More than half of workers ages 58 to 64 plan to retire after age 65, compared with 36 percent of people in their early 50s, 38 percent of 30- and 40-somethings and just over a quarter (26 percent) of people under age 30. “People who are very near retirement age in their 50s and 60s are looking at their Social Security benefits, 401(k) balance, their cost of living, medical costs and food costs and have a better sense of what things might be like when they actually retire,” says Jeffrey Jones, managing editor of Gallup Poll. “They are more aware that early retirement might not be as much of a realistic option for people today as it was 30 or 40 years ago.”

Working longer. Individuals are pushing back their retirement age both because they need more time to save and because they enjoy many aspects of their jobs. Three-quarters (76 percent) of employees say they will continue working past retirement age, with 40 percent working because they want to and 35 percent because they will have to, Gallup found. Part-time work in retirement (61 percent) is greatly preferred to a full-time job (15 percent). But only 19 percent of those surveyed plan to completely stop working at retirement age by choice.

Individuals with high salaries are the most likely to want to stick with their jobs. Nearly half (49 percent) of those earning $75,000 or more say they plan to work past retirement age because they want to, compared to about a third of people earning less money. In contrast, people earning between $30,000 and $74,999 (39 percent) and especially employees earning less than $30,000 (43 percent) are more likely to continue working in retirement because it’s necessary to maintain their standard of living.

Medicare eligibility. Qualifying for Medicare plays a big role in many people’s retirement decisions. Medicare coverage can start as early as the month you turn age 65. People who retire before age 65 face the risk of being forced to pay high premiums for private health insurance or COBRA coverage, or even being denied health insurance altogether. “One of the greatest retirement costs people face, even if they are healthy, is medical care and health insurance,” says Brent Neiser, a certified financial planner and a senior director at the National Endowment for Financial Education in Denver. “You probably do not want to get out of a reasonable health insurance situation before age 65 because if you have a gap that needs to be filled, it could be very expensive.”

Higher Social Security retirement age. The increasing Social Security retirement age may also be inspiring people to work longer. While you can sign up for Social Security as early as age 62, your payments will be reduced unless you wait until your full retirement age to start payments. The full retirement age is 65 for everyone born in 1937 and earlier, but has since increased to 66 for most baby boomers and will further climb to 67 for everyone born in 1960 or later. “You are not tapping into the full potential of Social Security if you elect to claim Social Security before age 66 because it is significantly discounted. Some people might call it a haircut,” Neiser says. “That smaller amount adds up to thousands and thousands of dollars less throughout your lifetime.”

Social Security monthly payments will further increase if you delay your start date past full retirement age, up until age 70. “I think people tend to associate when they begin taking Social Security with when they retire, and I think it’s really important to decouple those two events,” says Tim Kober, a certified financial planner for Cedar Financial Advisors in Beaverton, Ore. “For most families and households, delaying Social Security is the single smartest and most financially savvy decision that you can make because for every year that you delay taking Social Security, your benefit increases 8 percent.”

However, while the age workers expect to retire is growing, few retirees have been able to delay retirement past age 65. Just 17 percent of the retirees in the Gallup survey left the workforce after age 65. Currently, the average retirement age is 61, up from 57 in 1991. The most popular ages to retire are between 60 and 64 (36 percent). And 31 percent of seniors entered retirement before age 60.

courtesy of:  http://news.yahoo.com/

When to Refinance Mortgage Rates

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There are a number of situations that will determine if you should refinance your mortgage. Refinancing at the right time can save you money in finance charges and help pay your mortgage off faster. Before you refinance always have a list of questions to ask a mortgage company. Contact several mortgage companies to see which one has the best terms and agreements and which is the most cost-effective. Determine what your goals and objectives are before you get started.

Rate Reduction

  • If you can receive an interest rate, as a rule of thumb, 2 percent lower than your current rate then you should refinance. The lower rate of interest will save you thousands of dollars in finance charges over the life of your mortgage loan. With a lower rate more of your payment will go toward the principal balance, thereby reducing your balance faster.

Variable Rate

  • If you have a variable rate, which makes your payments fluctuate, you may want to refinance and get a fixed rate. A fixed rate provides stability; your payment will never change. With a variable or adjustable rate mortgage (ARM), your payments can change when your interest rate increases. Sometimes an increase in your payments can be more than your budget can handle. Too large of a payment can lead to mortgage delinquencies and even foreclosure.

Closing Costs

  • If you are going to remain in your home for quite some time after refinancing then you may want to refinance even though there will be closing costs. You could encounter an appraisal fee, title search fees, credit check fees, closing costs and attorney fees. The fees can be substantial. If you are going to remain in your home long enough to recoup your fees then it would be to your advantage to refinance and get a lower interest rate.

Prepayment Penalty

  • Once you decide to refinance there could be a prepayment penalty. If you receive a penalty it may be worth your while to refinance if you can recoup the amount of the prepayment penalty. You will need to calculate how long you need to remain in your home to recoup the penalty. Most prepayment penalties are only in effect for a certain amount of time. Contact your lender to see if there is a prepayment clause in your contract.

Consolidation

  • You may want to refinance and consolidate your credit card debt. Sometimes the interest rates on credit cards can be substantial. Having one payment is a lot more convenient that having five or six. The interest you pay through your mortgage could be tax deductible while the interest paid through credit cards are not. Contact a tax professional to see how this will work for you.

courtesy of:  http://www.ehow.com/
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