Monday, December 23, 2013

Stop the G Hike Man

The Mortgage Bankers Association is welcoming the announcement from incoming Federal Housing Finance Agency Director Rep. Mel Watt, D-N.C., that he will be postponing planned increases in fees at Fannie Mae and Freddie Mac.

Watt – who will be sworn in on Jan. 6 – announced on Friday that he will delay mortgage fee increases until he has time to fully evaluate the reasoning behind the plan.

Last week, Fannie and Freddie – at the behest of FHFA – announced there will be a 10 basis point increase charged to borrowers with mid-range or below credit scores and who don’t meet down payment criteria. Fannie and Freddie issued the directives at the instruction of the FHFA.

Such an increase would amount to a roughly $4,000 increase in interest on a 30-year, $200,000 mortgage, or about $11.11 per month. 

"We were surprised by the announcement of the g-fee hikes from (outgoing acting FHFA director) Ed Demarco, right on the cusp of the new QM rule, loan limit changes at the FHA and apparent slowing home sales," MBA CEO and president David Stevens said Monday afternoon. "The decision by Mel (Watt) was the only decision to be made given the GSEs are making such huge profits."

Watt’s announcement on Friday said that he will be reviewing the proposed hikes, but there was no indication on what factors he would overrule or proceed with any rate hikes.

"Upon being sworn in as Director of the Federal Housing Finance Agency, I intend to announce that the FHFA will delay implementation of the g-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 GSE's risk exposure, the cost and availability of credit and how the plan would interface with the qualified mortgage standards,” Watt said in a written statement. 

Watt was traveling in his district Monday and could not be reached for comment.
A statement from his office said, "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."

To receive personalized rates please email me at with your available times to discuss your options.  

Wednesday, December 18, 2013

3rd Party fees....Title Insurance



The Importance Of Title Insurance 

Title insurance is an optional insurance policy for homeowners. Most real estate experts recommend that you purchase it always, however. You may never need to make a title insurance claim. If you do, however, you'll be glad your home is insured.
Imagine having to leave your home because county records show that the seller who sold you the home never really purchased it himself. In this instance -- which happens! -- you would be forcibly removed from your home and left without shelter.
Title insurance protects against situations such as these. When a claim is made, your title insurer will research the claim on your behalf and, if necessary, will make you whole for any loss incurred. 
This may include paying your remaining mortgage balance in full, and paying relief for related expenses.
Title insurance is purchased at the time of closing and is a line-item on your settlement statement. It's a one-time cost. Title insurance is not paid annually. Policies for a refinance transaction are often less costly than those for a purchase.
Your lender can assign your title insurer, or you may comparison shop on your own.

Title Insurance Claims 

It is the seller's obligation to sell you a home with "clear title". This means that you are buying a home with no liens, encumbrances, or claims to which you did not agree and which are known to the seller or the title insurer.
However, mistakes occur and you don't want to be on the receiving end of a title claim. Note that none of the reasons for a claim will be "your fault", necessarily. Title claims are often the result of oversight or error.
Here are few examples of potential claims against your title :
  • Your home sale was not properly recorded in the public record
  • The seller's home loan was not properly paid off, or was not recorded as "satisfied"
  • Evidence of an undisclosed prior mortgage which was not paid at closing
  • Forged notarizations and/or forged witness acknowledgement
  • A "newer" will is discovered after probate of an initial will
Again, none of these claims may be your fault, however, you'll still be affected by the claim. Title insurance is protection. And your title insurer will do its best to search for issues before your closing occurs.
This is known as a title search. 
Title searches are hunts for flaws on a home's title. The search is performed by the title insurer and involves an extensive hunt through public records and private databases in order to locate claims of interest to a property which currently, and previously, existed.
These claims of ownership are compiled into a document called a "title report". The title report includes the full legal description of the property; a summary of real estate tax payments due and paid; and, recent claims made to the property along with notes stating whether those claims have been satisfied (i.e. are no longer in effect).
Title search errors are covered by your title insurance policy.

You Must Purchase Title Insurance For Your Lender

Title insurance is optional coverage for a homeowner. However, title insurance for your lender is required. This is because -- like you -- your lender has an interest in your property.
Also like you, your lender does not want to see your home undefended, and lost, in a valid title claim.
The lender's title policy is sometimes called a "loan title policy" and it functions in much the same way as your owner's title policy. A title search is performed to identify encumbrances and liens and any unsatisfied claims are addressed prior to closing.
With the title policy in place, in the event of an error or claim, your lender can be reimbursed for losses.
Home sellers typically pay for a buyer's lender's title policy. Premiums are paid up-front at closing with nothing due over the remaining years of a loan. The policy expires when the current loan is paid-in-full. When you refinance, you will be required to get a new lender's title policy.

To receive personalized rates please email me at with your available times to discuss your options. 

Tuesday, December 17, 2013

G Fee Increase?


Government Loans And Risk-Based Fees

The federal government backs more than 90% of today's U.S. mortgage market, and the majority of that effort is via the Federal Housing Finance Agency (FHFA).
The FHFA was formed last decade as part of the Housing and Economic Recovery Act of 2008. Later that year, as the housing market deteriorated, the agency took quasi-public mortgage-securitizers Fannie Mae and Freddie Mac into conservatorship, which nationalized the former government-sponsored entities.
The FHFA has many roles, but among its most important is its obligation to "preserve and conserve" the assets of Fannie Mae and Freddie Mac. This means that the FHFA has a responsibility to run Fannie Mae and Freddie Mac as a business; with the hope that net income for the groups remains positive.
One way in which the FHFA keeps Fannie and Freddie profitable is via loan fees known as loan-level pricing adjustments (LLPA).
Initially introduced in 2008, LLPAs are extra loan fees charged to applicants whose mortgage traits are "risky".
A home buyer whose FICO score is 660 is a higher default risk than a buyer whose score is 740. Therefore, the buyer with the 660 FICO pays an extra loan fee. The high credit score buyer does not.
There are other loan traits which trigger LLPAs as well.
For example, purchasing or refinancing a multi-unit home (e.g. 2-unit, 3-unit, 4-unit); or, purchasing or refinancing an investment property; or, purchasing or refinancing a home for which the combined loan-to-value exceeds 75% LTV can add to a borrower's cumulative LLPA loan fees.
A new 10 basis point LLPA will be assessed to all loans beginning next spring. Many lenders will reflect the change even sooner than that.

Guarantee Fees : Rising In "Foreclosure High-Cost" States

Guarantee fees were once an esoteric element of the mortgage business. Through the last few years, though, they've moved into the (semi-)mainstream consciousness -- most notably after Congress added a 10 basis point "G-fee" hike to help fund last year's U.S. budget.
A G-fee's primary function is pay for the pooling, servicing and selling of a mortgage-backed bond. However, they're also used to pay for the cost of credit default protection. Like an insurance policy, g-fees help protect the FHFA when loans go bad.
This is why high-risk loans carry higher costs at closing -- protection against credit default costs more and the FHFA is required to "conserve" its assets. It's also why the FHFA is raising its g-fees yet again.
In looking default and foreclosure data from all 50 states, the government deduced that the cost of a default to the FHFA varies by location, based on local law. In some states, the process of foreclosing on a home in default is simple. In other states, the process is arduous.
In the latter set of states, g-fees collected don't cover the true costs of foreclosing on a home. So, to align these homes with their true cost to insure, the government will raise g-fees by 25 basis points in the following four states :
  1. New York
  2. Florida
  3. Connecticut
  4. New Jersey
These four states are "statistical outliers" with respect to default-related costs as compared to the rest of the United States. The new g-fees will better align the risk of lending in New York, New Jersey, Connecticut and Florida with the FHFA's mandate to "preserve and conserve" its assets.
If any of these 4 states reform its laws to shorten foreclosure timelines or to reduce default costs, the FHFA would likely remove its state-specific guarantee fee. A 25 basis point increase will raise retail mortgage rates by as much as 0.625 percentage points.
The FHFA also announced the removal of its 25 bps adverse market fee. This will move rates lower. 

Mortgage Rates To Rise From New G-Fees

Higher g-fees are coming and, with each g-fee increase, mortgage rates rise. Some lenders have already added the fees to their rate quotes. This is why the best way to get low mortgage rates may be to lock your mortgage rate now.
Mortgage rates may "improve" between now and March, but the effect of new g-fees pits shoppers against the government. The tax of new fees will raise your rate dramatically.

To receive personalized rates please email me at with your available times to discuss your options.

Freddie Mac Myth's

A Freddie Mac senior vice president is using the company's blog to debunk a few myths she says may be keeping homeowners from refinancing through HARP, the Home Affordable Refinance Program.  Tracy Mooney's information about on nine HARP misconceptions might not only be helpful for homeowners themselves but a good resource for lenders to share with customers and the public.

1.      Myth One is that refinancing with HARP (or any other program for that matter) would reset the clock and the borrower would again be looking at 30 years of mortgage payments.  This, as Tracy points out, is not true as almost any refinancing allows the borrower to pick a term from 10 to 30 years for the new loan.  The counterpoint is that most borrowers opt for a 30yr term and this does indeed entail a new 30 years of payments.  Even then, if the interest rate is lower and the borrower simply continued paying the original mortgage payment, less interest would be paid over time and the loan would be paid off faster than the original would have been.  Bottom line: all things being equal, dropping the rate is advantageous in most cases.

2.      Some borrowers have so many offers to refinance coming their way they fear some may be scams.  Mooney says that many legitimate offers have specific information identifying the borrower's existing loan such as the account number.  Also the borrower can report any suspicious offers at 888-995-HOPE. When in doubt borrowers should check with their current lender.

3.      Another myth is that HARP can't help homeowners who are underwater on their mortgage.  That, in fact, is what HARP was designed to do and has no restrictions on loan-to-value ratios for fixed-rate mortgages.

4.      The fourth myth is that refinancing is hopeless for the unemployed.  HARP does offer options that might work such as underwriting based on assets rather than income.  Borrowers should reach out to their lender to discuss available solutions.

5.      It is possible to refinance through HARP even if the borrower's current lender doesn't participate in the program.  Freddie Mac and Fannie Mae have lists of lenders who can discuss options and eligibility with anyone. 

6.      Some people believe they are ineligible if they currently have an adjustable rate mortgage (ARM).  HARP was in fact created to help such homeowners obtain mortgages that are more stable and sustainable.  With rates still so low it is the perfect time to lock into a fixed-rate mortgage

7.      Myth Seven is that condos are not eligible for HARP refinancing.  Not only are condos eligible but so are investment properties and second homes.

8.      It isn't always necessary to have sufficient cash up front to pay closing costs.  Lenders can evaluate whether a borrower qualifies to have closing costs and other necessary expenses rolled into the new loan.  

9.      Finally many homeowners think HARP is only for those who are behind in their payments and in danger of foreclosure.  In fact HARP is intended specifically for homeowners who are current on their mortgages but are underwater and unable to refinance through a traditional refinance programs

Moony said potentially millions of homeowners could save money each month by refinancing through HARP.  The program has more than 2.9 million success stories so hopefully if you now know these myths are just that, she says, reach out to your lender and get started with HARP because, "Saving money is a good thing!" 

To receive personalized rates please email me at with your available times to discuss your options.

Thursday, December 12, 2013

FHA Fact or Myth

Myth 1 : The FHA Is A Mortgage Lender

Fact : The FHA is not a mortgage lender. It's a mortgage insurer.
The acronym "FHA" stands for Federal Housing Administration, a government agency within the U.S. Department of Housing and Urban Development. The FHA doesn't make mortgage loans to home buyers or refinancing households. Rather, the FHA provide mortgage insurance to banks, credit unions, and other lenders which make loans meeting FHA insurance standards.
The FHA reimburses lenders for a portion of incurred losses in the event that their FHA-insured loans default, or go to short sale or foreclosure.

Myth 2 : FHA Loans Are For First-Time Buyers Only

Fact : FHA loans are not for first-time buyers only. FHA loans can be used by first-time buyers and repeat buyers alike.
The FHA loan is often marketed as a product for "first-time buyers" because of its low downpayment requirements. However, last decade, many U.S. homeowners have lost home equity in the housing market downturn. These repeat buyers may have little money for downpayment -- even after the sale of their former home.
The FHA will insure mortgages for any primary residence. You don't need to be a first-time buyer.

Myth 3 : FHA Loans Require 20 Percent Downpayment

Fact : FHA loans do not require a 20 percent downpayment.
For home buyers, FHA mortgages require a 3.5 percent downpayment with the fewest "strings" attached. This makes the FHA mortgage one of the most lenient mortgage types available nationwide.
There are very few credit restrictions with the FHA loan and the agency allows your 3.5% downpayment to comes as a gift from a family member, employer, charitable organization or government home-buyer program.

Other low-downpayment mortgage programs have eligibility requirements. The VA loan, for example, allows for 100% financing but you must be an eligible military borrower to use it.

The USDA Rural Development loan also allows 100% financing but the USDA program requires that your home be in a less-developed census tract; and that your household income is within certain limits.

Fannie Mae's former 3% downpayment program -- the Conventional 97 -- required higher credit scores than an FHA loan, and loan sizes were limited to $417,000. Through 2013, FHA loans are available for loans of up to $729,750.

Myth 4 : FHA Loans Require High Credit Scores

Fact : Lenders can approve FHA loans with no credit score whatsoever.
FHA loans feature some of the flexible and forgiving credit standards of any available loan type. With an FHA-backed loan, perfect credit is not required, and mortgage lenders are expressly instructed to consider a borrower's complete credit history --  not just isolated instances of late payments here and there.

You can get an FHA loan if you've recently experienced a short sale, foreclosure or bankruptcy via the FHA Back to Work program. Sometimes, a waiting period is required, but not always. Depending on your personal circumstances, you may be eligible to purchase another home using FHA financing right away.
Since 2011, FHA mortgage rates have been lower than comparable conventional products.

Note that not everyone will qualify for an FHA home loan. Borrowers with a "banged-up" history, though, have a much better chance of getting loan approval via the FHA than other government agencies.
Even if you've been turned down for other types of credit, such as an auto loan, credit card or other home loan programs, an FHA-backed loan may open the door to homeownership for you.
Click to get pre-approved for an FHA loan.

Myth 5 : FHA Loans Are Expensive

Fact : FHA loans can be more expensive, or less expensive, than other loan types. The long-term cost of an FHA loan depends on your loan size, your downpayment, and your location.
The biggest cost of an FHA home loan is usually not its mortgage rate -- FHA mortgage rates are often less than comparable conventional mortgage rates via Fannie Mae and Freddie Mac. The biggest cost is FHA mortgage insurance.

FHA mortgage insurance premiums (MIP) are payments made to the FHA to insure your loan against default. MIP is how the FHA collects "dues" to keep its program available to U.S homeowners at no cost to taxpayers.

MIP is paid in two parts. The first part is paid at closing and is known as Upfront MIP. Upfront MIP is automatically added to your loan balance by the FHA so no payment is required at settlement. Upfront MIP ranges from 0.35% of your loan size to 1.5% of your loan size. Your loan traits determine your MIP cost.
The same is true for annual mortgage insurance premiums, which are paid in monthly installments along with your mortgage payment.

Annual MIP can range as high as 1.55% in high-cost areas such as Orange County, California; Potomac, Maryland; and, New York City, New York. For most borrowers, MIP is between 0.45% and 1.35% annually.
As compared to conventional loans with less than 20% downpayment, FHA MIP is sometimes more costly and sometimes less so. Your loan officer can help you compare choices.

Myth 6 : All FHA Loans Are The Same

Fact : All FHA loans are not the same. There are many "types" of FHA loans, and mortgage rates vary by lender.
As an agency, the FHA publishes and maintains minimum eligibility requirements all of the loans it insures. However, FHA lenders enforce additional requirements on FHA loans, known as "investor overlays."

A sample of investor overlays includes raising the minimum FHA mortgage score requirement; or, requiring additional time since a bankruptcy, short sale, or foreclosure; or requiring employment verification for an FHA Streamline Refinance transaction.
Because of overlays, when you've been turned down for an FHA mortgage by Lender A, you should always try to apply with Lender B which may approve your FHA loan request. Plus, mortgage rates can be very different from bank-to-bank.

In addition, the FHA offers special refinance loans, home construction loans, and various benefits to eligible applicants.

To receive personalized rates please email me at with your available times to discuss your options. 

Wednesday, December 11, 2013

Harp 3.0 Say Watt?

Watt was nominated in May to be the regulator of Fannie and Freddie, a decision that drew fierce opposition from Senate Republicans who argued someone with technical expertise in mortgage finance markets not a politician should lead the agency.
In October, Watt failed to clear a 60-vote threshold necessary for his nomination to advance. But a recent controversial Senate rule change, which requires only a simple majority vote to get around procedural hurdles, cleared the way for Watt’s confirmation.

Senate Republicans on Tuesday continued to criticize Obama for choosing a politician to lead the FHFA and blast their Democratic colleagues for last month’s historic rules change that took away the minority party’s ability to filibuster most presidential nominees.
“This is an independent agency with a highly complex task impacting our entire economy and it is for this reason that many senators noted the reason to avoid politics and to emphasize the technical expertise needed to fill this position,” said Sen. Mike Crapo (R-Idaho), the ranking member of the Senate Banking Committee.

Democrats praised Watt’s experience, noting his long tenure on the House Financial Services Committee and argued it’s time for the agency to have a confirmed director.
“He’s the right person to protect Americans who work hard and play by the rules every day, and he’ll be the right regulator to make sure the kind of crisis we just went through never happens again.,” Obama said in a statement.
Watt was a part of a congressional delegation that traveled to South Africa for Nelson Mandela’s memorial service, and his office said he would not be available to comment until later in the week.

Watt, 68, will become the first regulator of Fannie and Freddie confirmed by Congress since August 2009 when James Lockhart left office and Ed DeMarco was promoted to acting director of the FHFA. DeMarco has held the job ever since.
Watt’s resignation from Congress will open up his House seat in North Carolina’s Democratic-leaning 12th Congressional District, where a handful of Democrats have already begun raising money to campaign for the soon-to-be-vacant seat.

Rep. Maxine Waters (D-Calif.), the top Democrat on the House Financial Services Committee who has served on the panel with Watt for years, said she is “elated” to see her colleague confirmed.

“I believe Mel Watt has the vision, experience and temperament necessary to ensure the FHFA remains focused on the long-term stability of the economy and the housing finance system,” Waters said.

Watt will take over FHFA as both the House and Senate work on legislation to get rid of Fannie and Freddie and develop a new housing finance system. The two companies were taken over in September 2008 and received $187.5 billion in taxpayer bailouts. As the housing market has recovered, Fannie and Freddie have sent record profits back to taxpayers and by early next year they are expected to return to the government as much money as they received in bailouts. Under the terms of the bailout, they will remain under government control.

There will be several big decisions Watt will face in managing the two companies once he takes office, including whether to put in place a debt forgiveness program for struggling homeowners that DeMarco rejected and determining the maximum loan size Fannie and Freddie can guarantee.
DeMarco is expected to stay on and assist Watt with the transition, though it’s unclear how long he will remain at the agency.

Watt has served on the Financial Services Committee since he first took office in 1993. His Democratic colleagues on the panel, which has jurisdiction over housing policy, said Tuesday that the knowledge Watt has gained during his tenure on the committee will be an asset as he transitions into a regulatory role.
“I’ve worked side by side with Mel Watt for five years and I can’t think of a lot of people who have worked harder in understanding extremely complicated issues around mortgages and derivatives,” said Rep. Jim Himes (D-Conn.).

Committee Republican said they were hopeful that once Watt assumes his new job, the personal relationships he has built with House members will ensure an open line of communication between the FHFA and lawmakers.
“You would hope that he would have an open-door policy to talk to his former colleagues as we all work on what to do with Fannie and Freddie in the long term,” said Rep. Randy Neugebauer (R-Texas), who co-sponsored a bill this year along with committee Chairman Jeb Hensarling (R-Texas) that would abolish Fannie and Freddie and significantly reduce the role of the Federal Housing Administration.

To receive personalized rates please email me at with your available times to discuss your options. 

Tuesday, December 10, 2013

What is LTV?


Simple Definition : Loan-To-Value (LTV)

In the world of mortgages, Loan-to-Value (LTV) is the amount of money you're borrowing as a percentage of your home's value.
Lenders use loan-to-value calculations on both purchase and refinance transactions. The math to determine your LTV may vary based on loan purpose, however.  
With a refinance, the LTV is equal to your loan size divided by your home's appraised value. For a purchase, LTV is based on the sales price of the home, unless the home appraises for less than its purchase price. When this happens, your home's LTV is based on the lower appraised value -- not the home's purchase price. 
Here are four simple examples to illustrate the concept of loan-to-value :

Buying a Home which appraises for more than its Purchase Price

  • House price: $100,000
  • Appraised value : $110,000
  • Downpayment: $20,000
  • Loan amount: $80,000
  • Loan-to-value (LTV) : 80%

Buying a Home which appraises for less than its Purchase Price

  • House price: $100,000
  • Appraised value : $90,000
  • Downpayment: $20,000
  • Loan amount: $80,000
  • Loan-to-value (LTV) : 89%

Refinancing a Home with no Second Mortgage

  • Home value: $100,000
  • Loan balance: $80,000
  • Equity: $20,000
  • Loan-to-value or LTV: 80%

Refinancing a Home with a Second Mortgage

  • Home value: $100,000
  • Loan balance: $80,000
  • Second loan balance : $10,000
  • Equity: $10,000
  • Loan-to-value or LTV: 90%
Whether you're buying or refinancing, though, your loan's loan-to-value is important because it helps to determine your mortgage rate and your loan eligibility.

High LTV Loans For Home Buyers

Loan-to-value is a key factor in your ability to get approved for a mortgage. In general, lenders prefer loans with low LTV because loans with low LTV represent less risk to the bank. 
That said, there are a number of loan programs specifically geared toward homeowners with high LTVs. There are even some programs which ignore loan-to-value altogether.
Here is a brief review of the more common high-LTV loan types.

VA Loan : Up to 100% LTV allowed

VA loans are loans guaranteed by the U.S. Department of Veterans Affairs. VA loan guidelines allow for 100% LTV, which means that no downpayment is required for an VA loan. VA mortgages are available to certain active-duty military servicepersons, veterans, military spouses, members of the Selected Reserve or National Guard, cadets at the U.S. Military, Air Force or Coast Guard Academy members, midshipman at the U.S. Naval Academy, World War II merchant seamen, U.S. Public Health Service officers and National Oceanic & Atmospheric Administration officers, among other groups.

USDA Loan : Up to 100% LTV allowed

USDA loans are loans insured by the U.S. Department of Agriculture. USDA loans allow for 100% LTV -- there is no downpayment required. USDA loans are sometimes known as Rural Housing Loans but it's a misnomer, of sorts. USDA loans are available in rural parts of the country, but they're available to many suburban homeowners, too.

Conventional 97 : Up to 97% LTV allowed

Fannie Mae offers a special mortgage for homeowners with above-average credit scores called the Conventional 97. Via the Conventional 97 program, home buyers can make a downpayment of just 3 percent with access to below-average mortgage insurance rates. The program also allows for cash downpayment gifts.

FHA Loan : Up to 96.5% LTV allowed

FHA loans are loans insured by the Federal Housing Administration, an agency within the U.S. Department of Housing and Urban Development (HUD). FHA mortgage guidelines require a downpayment of at least 3.5 percent. Unlike VA and USDA loans, FHA loans are not limited by military background or location -- there are no special eligibility requirements. FHA loans can be an especially good fit for home buyers with less-than-perfect credit scores, or for loan sizes over $625,500.

Conventional Loan : Up to 95% LTV allowed

Conventional loans are loans guaranteed by Fannie Mae or Freddie Mac. Both groups offer 95% LTV purchase mortgages, which means you will need to make a downpayment of 5 percent to qualify. 95% loans are available via most mortgage lenders, and private mortgage insurance (PMI) is often required. As compared to an FHA loan, conventional loans to 95 percent LTV are advised for homeowners with high credit scores only. In most other cases, FHA loans are preferred.

High LTV Loans For Refinancing Households

High-LTV mortgages are simpler for refinance transactions as compared for purchase ones. Multiple federal agencies make "no appraisal" refinance programs available to U.S. homeowners which means that loan-to-value is a non-factor for eligibility.
A few of those programs are highlighted below. 

The HARP 2.0 Program

The Home Affordable Refinance Program (HARP) was first launched late last decade. Also known as "The Obama Refi", HARP is available to homeowners with existing mortgages backed by Fannie Mae or Freddie Mac. HARP was revamped in 2011 as "HARP 2.0" and the latest iteration allows for unlimited LTV. No matter how little equity you have in your home, you can be HARP-eligible.

FHA Streamline Refinance

The FHA Streamline Refinance is a special refinance program made available to homeowners with existing FHA mortgages. Official guidelines for the FHA Streamline Refinance waive appraisal requirements, which means that loans with unlimited LTV are allowed. Guidelines also state that income, employment and credit are not required to be verified.

VA Streamline Refinance

The VA Streamline Refinance is a special refinance program for homeowners with existing VA home loans. The official name of the VA Streamline Refinance is the Interest Rate Reduction Refinance Loan (IRRRL). It's sometimes called the VA-to-VA loan. Similar to its FHA cousin, the VA Streamline Refinance does not require an appraisal, nor does it require the verification of income, employment or credit.

USDA Streamline Refinance

The USDA Streamline Refinance is available to homeowners with existing USDA mortgages only. Like the FHA and VA streamline programs, the USDA refinance waives the need for a home appraisal. The program is currently in pilot phase, and available in 19 states. 

To receive personalized rates please email me at with your available times to discuss your options.  

Wednesday, December 4, 2013

The year of the Condo?

According to the most recent Case-Shiller Index, home values climbed 13.3 percent nationwide for the 12 months ending September 2013. The jump marks the largest one-year increase in home valuation since February 2006.

Each of the Case-Shiller Index's 20 tracked cities posted annual gains in June, led by Las Vegas, Nevada; San Francisco, California; and Phoenix, Arizona. Home valuations in the Las Vegas are up 29% from 12 months ago, which claws back against the heavy losses sustained last decade in the area.

The "last place" finisher in the September 2013 Case-Shiller Index? New York City.
As compared to one year ago, home values in the city's five boroughs -- Manhattan, Brooklyn, Queens, the Bronx, and Staten Island -- rose just 4.3 percent, which is more than three times below the U.S. average.

However, the Case-Shiller headline figure tells just part of the story.
In New York City, the market is thick with condominiums and co-ops and the Case-Shiller Index just happens to ignore those homes types in its "main" housing market index. If we were to add back the New York City condos and co-ops omitted by the Case-Shiller Index methodology, we'd find that the city is performing quite well, actually.

In New York, condo values are up 10.2 % since last year -- more than double the city's Case-Shiller Index reading. Similar differences between condos and non-condos exist within other Case-Shiller Index markets, too.
  • Los Angeles, California : 5.5 percentage point improvement for condos
  • San Francisco, California : 1.7 percentage point improvement for condos
  • Chicago, Illinois : Condos 4.3 percentage point improvement for condos
  • Boston, Massachusetts : 2.8 percentage point improvement for condos
  • New York City, New York : 5.9 percentage point improvement for condos
With tight supply and limited construction, buyers of condos should plan for higher sale prices through the end of 2013 and into early-2014, at least.

Mortgages For Condominiums

Getting a mortgage for a condo can sometimes be a challenge. Last decade, lenders were burned on condos for a variety of reasons and so they've bounced back on condo loans a bit more cautious and a bit more wise.
Today's buyers of condos have fewer financing choices as compared to buyers of single-family detached homes.

As one example, buyers using conventional mortgage financing via Fannie Mae or Freddie Mac pay a premium for all loans with less than 25% equity. For this reason, buyers of condos and co-ops are encouraged to cap loans at 75% loan-to-value (LTV).

Condo loans above 75% LTV remain acceptable and approvable, however, the accompanying mortgage rate and/or closing costs will likely be higher.
VA loans for condos are available, too.

VA loans allow 100% financing with no mortgage insurance required. Mortgage rates tend to be relatively low with a VA loan because all VA loans are guaranteed by the government.

In nearly all cases, though, buyers of condominiums will want to verify a building's warrantability.
"Warrantability" is a mortgage term whether mortgages in a given condo building are eligible for purchase by Fannie Mae or Freddie Mac. Non-warrantable condominiums are sometimes denied for funding, but not always.
A building's warrantability is based on a host of traits, some of which include :
  1. No person owns more than 10% of the building units
  2. No more than 50% of the building's units are active rental units
  3. No more than 20% of the building is dedicated to commercial/retail space
To determine whether a building is warrantable or non-warrantable, mortgage lenders will often use a "condominium questionnaire", which addresses the lendability of a building.
Non-warrantable condos can still be financed, it should be mentioned. Product availability remains limited, though, and mortgage rates are sometimes higher.

To receive personalized rates please email me at with your available times to discuss your options. 

Tuesday, December 3, 2013

Can you close under 47 days?

How many days does it take to get a mortgage approved? More than it used to, that's for sure.
As mortgage rates dropped in September and October, and as mortgage lenders trimmed down staff, the time required to close on a purchase climbed by 4 calendar days. Data from mortgage software firm Ellie Mae shows that lenders needed 46 days, on average, to close an October purchase.
It's a noteworthy stats  for today's active home buyers. Mortgage rate locks of 46 days or more incur more costs than locks of 45 days or fewer.

Average Purchase Closing Time : 46 Days

In October, 5.12 million homes were sold on a seasonally-adjusted, annualized basis according to data from the National Association of REALTORS®.
The reading marks the sixth consecutive month during which home sales topped five million. Prior to October, this had not happened since Q2 2007. Furthermore, the sales occurring during a period of shrinking home inventory.
There were just 2.13 million homes for sale at the end of October nationwide, a supply which would require just 5.0 months to "sell out" at the current rate of sales. Buyers are competing hard for homes, with many requesting "quick closings" as a means to make a purchase offer stand-out.
"Quick closings", though, have no specific definition. You know a quick closing when you're in one. There is less time to get a mortgage approved; less time to scour the home inspection; and less time to prepare for your final settlement.
A quick closing may be one of 30 days or fewer; or one which is completed before the end of the year. However, buyers expecting to make a quick close should make sure their lender can accommodate first.
Ellie Mae reports that the time required to process, approve and fund a purchase loan climbed by three days to 46 days, on average, in October. This is the longest such period since summer and may be the result of falling mortgage rates plus large-scale industry layoffs.
Into 2014, purchase approval times may lengthen further. Mortgage rates remain low and additional industry contraction is expected.
Therefore, if you're about to buy a home and want to maximize your closing speed, follow these helpful behaviors. Your loan can be approved more quickly.

How To Get Your Purchase Approved More Quickly

For buyers wanting to close quickly, note that many loan factors will be beyond your control. For example, you cannot control how fast an appraisal is performed because the appraisal requires the cooperation of the seller; nor can you control how quickly a title search is performed by a title company.
However, there are steps you can take to make sure your loan gets approved as fast as humanly possible. Step one is to be prepared.

1. Know Your Paperwork Requirements

It's no secret. Mortgage lenders like paperwork. When you're buying a home, you'll want to be prepared with the most commonly-required verification documents. This can include W-2 statements and federal tax returns from the last 2 years; your two most recent paystubs; and your last two bank statements. You should also have a copy of your drivers license handy, as well as the social security numbers of everyone whose name will be listed on the mortgage.
Furthermore, if you know you have a unique credit situation such as a recent short sale or foreclosure; child support or alimony payments; or gift funds from a relative, have the relevant, related documentation ready.
This "gathering paperwork" step can be the most time-consuming one in the mortgage approval process. You know you're going to need the documents. Consider scanning them and having them ready in advance. This can save days off your approval time and help you reach your closing more quickly.

2. Don't Keep Secrets From Your Lender

Be honest and open with your lender -- even if you worry that what you share may harm your approval. There are two reasons for this.
The first reason to share is that withholding information from your mortgage application can constitute loan fraud, which is a far worse outcome than not getting mortgage approved. The second reason is that your mortgage lender will often uncover what you're electing not to share anyway.
As part of the mortgage approval process, a credit check is performed and various "occupancy tests" are conducted by an underwriter. Employers are contacted to verify job status and public records are sometimes checked as part of the approval.
With so many mortgage programs available for today's home buyers -- from large-downpayment to low-downpayment to no downpayment at all -- the more information you share with your lender, the more equipped he'll be to help you close quickly.

3. Use Pre-Approvals To Speed Closing Time

For a buyer, mortgage pre-approvals are among the most under-used tools to speed a purchase closing. Home buyers with pre-approvals in-hand at the time of offer can typically reduce closing times by one week or more. It's because of the role which a pre-approval plays to a lender.
Mortgage pre-approvals are "dry runs"; approvals based on an expected set of loan criteria which will eventually go to closing. During the pre-approval process, your lender will take a complete loan application which includes performing an income and asset verification, and he will account for specific loan traits which may affect your final approval such as your personal credit scores, any required child support payments, and the availability of a co-signer, as examples.
In fact, when a pre-approval is issued, the only missing item is often the physical property address of the home being purchase. To compensate, lenders use dummy information based on probable loan data including a sample purchase price, a sample real estate tax bill, and a sample homeowners insurance policy and/or homeowners association assessment, where applicable.
With their loan "pre-approved", buyers can move immediately from the "Writing The Contract Phase" to the "Underwriting The Loan Phase". This can save 7 days or more days from the approval process.

Save Time : Get Pre-Approved First

For buyers looking for a quick closing, it can be tough to buy a home in less than 30 days. However, plenty of buyers are doing it. The key is to be prepared and the first step in getting prepared is to get mortgage pre-approved.
Pre-approvals will help strengthen the offer you make a home, and they'll help your mortgage approval go through more quickly. So, get started with a pre-approval today and see how much home for which you'll qualify.
Rates and pre-approvals are available online with no cost or obligation.

To receive personalized rates please email me at with your available times to discuss your options.