FHA Streamline are you aware?

 

What Is An FHA Streamline Refinance?

The FHA Streamline Refinance is a special mortgage product, reserved for homeowners with existing FHA mortgages. FHA Streamline Refinances are the fastest, simplest way for FHA-insured homeowners to refinance their respective mortgages.

The FHA Streamline Refinance program's defining characteristic is that it does not require a home appraisal. Instead, the FHA will allow you to use your original purchase price as your home's current value, regardless of what your home is actually worth today.

In this way, with its FHA Streamline Refinance program, the FHA does not care if you are underwater on your mortgage. Rather, the program encourages underwater mortgages. Even if you owe twice what your home is now worth, the FHA will refinance your home without added cost or penalty.
The "appraisal waiver" has been a huge hit with U.S. homeowners, allowing unlimited loan-to-value (LTV) home loans via the FHA Streamline Refinance program. Homeowners in places like Florida, California, Arizona and Georgia have benefitted greatly, as have homeowners in other states and cities affected by last decade's housing market downturn.

Beyond this "no appraisal" feature, however, the FHA Streamline Refinance behaves very much like any other loan product. It's available as a fixed rate or adjustable mortgage; it comes as a 15- or 30-year term; and there's no FHA prepayment penalty to worry about.
Another big plus is that FHA mortgage rates are the same in the FHA Streamline Refinance as with a "regular" FHA loans. There's no penalty for being underwater, or for having very little equity.
Check your FHA Streamline Refinance eligibility.

FHA Streamline : No Verification Of Job, Income, Credit

Another big plus is that the FHA Streamline Refinance is fairly easy for which to qualify.
Earlier this decade, in an effort to help U.S. homeowners, the FHA abolished most of the typical verifications required to get a mortgage. So, today, as it's written in the FHA's official mortgage guidelines :

1. Employment verification is not required with an FHA Streamline Refinance
2. Income verification is not required with an FHA Streamline Refinance
3. Credit score verification is not required with an FHA Streamline Refinance

There's no need for a home appraisal, either, so when you put it all together, you can be (1) out-of-work, (2) without income, (3) carry a terrible credit rating and (4) have no home equity. Yet, you can still be approved for an FHA Streamline Refinance.
That's not as crazy as it sounds, by the way.

To understand why the FHA Streamline Refinance is a smart program for the FHA, we have to remember that the FHA's chief role is to insure mortgages -- not "make" them.
It's in the FHA's best interest to help as many people as possible qualify for today's low mortgage rates. Lower mortgage rates means lower monthly payments which, in theory, leads to fewer loan defaults.
This is good for homeowners that want lower mortgage rates and for the FHA -- but mostly for the FHA.
Check your FHA Streamline Refinance eligibility.

Are You FHA Streamline Refinance Eligible?

Although the FHA Streamline Refinance eschews the "traditional" mortgage verifications of income and credit score, as examples, the program does enforce minimum standards for applicants. The official FHA Streamline Refinance guidelines are below. Note that not all mortgage lenders will underwrite to the official guidelines of the Federal Housing Administration.

Perfect, 3-Month Payment History Is Required

The FHA's main goal is to reduce its overall loan pool risk. Therefore, it's number one qualification standard is that homeowners using the Streamline Refinance program must have a perfect payment history stretching back 3 months. 30-day, 60-day, and 90-day lates are not allowed. One mortgage late payment is allowed in the last 12 months. Loans must be current at the time of closing.
Click for your personalized FHA Streamline Refinance mortgage rates.

210-Day "Waiting Period" Between Refinances

The FHA requires that borrowers make 6 mortgage payments on their current FHA-insured loan, and that 210 days pass from the most recent closing date, in order to be eligible for a Streamline Refinance.

Employment And Income Are Not Verified

The FHA does not require verification of a borrower's employment or annual income as part of the FHA Streamline process. There is no Verification of Employment, nor are there paystubs, W-2s or tax returns required for approval. You can be unemployed and get approved for a FHA Streamline Refinance so long as you still meet the other program requirements.

Credit Scores Are Not Verified

The FHA does not verify credit scores as part of the FHA Streamline Refinance program. Instead, it uses payment history as a gauge for future loan performance. This means that FICO scores below 640, below 620, below 580, and below 500 are eligible for Streamline Refis.

The Refinance Must Have "Purpose"

Streamline Refinance applicants must demonstrate that there's a Net Tangible Benefit in the refinance; a legitimate reason for refinancing. Loosely, Net Tangible Benefit is defined as reducing the (principal + interest + mortgage insurance) component of the mortgage payment by 5 percent or more. Another allowable Net Tangible Benefit is to refinance from an adjusting ARM into a fixed rate loan. Taking "cash out" to pay bills is not an allowable Net Tangible Benefit.

Loan Balances May Not Increase To Cover Loan Costs

The FHA prohibits increasing a Streamline Refinance's loan balance to cover associated loan charges. The new loan balance is limited by the math formula of (Current Principal Balance + Upfront Mortgage Insurance Premium). All other costs -- origination charges, title charges, escrow population -- must be either (1) Paid by the borrower as cash at closing, or (2) Credited by the loan officer in full. The latter is called a "zero-cost FHA Streamline".

Appraisals Not Required

The FHA isn't concerned about home value -- it's insuring your loan regardless. Therefore, the FHA does not require appraisals for its Streamline Refinance program. Instead, it uses the original purchase price of your home, or the most recent appraised value, as its valuation point. Homes that are underwater are still FHA Streamline-eligible.

FHA Streamline Refinance Mortgage Insurance Requirements

The FHA Streamline Refinance is an FHA-insured mortgage, and FHA borrowers are required to make two types of mortgage insurance payments -- an upfront mortgage insurance payment paid at closing, plus an annual payment split into 12 installments, paid with your mortgage payment each month.
With respect to mortgage insurance premiums, homeowners using the FHA Streamline Refinance program are split into two classes :

1. Homeowners whose new loan replaces an FHA-backed mortgage endorsed prior to June 1, 2009
2. Homeowners whose new loan replaces an FHA-backed mortgage endorsed on/after June 1, 2009.

Homeowners in the first class -- those with "old" FHA mortgages -- pay markedly lower mortgage insurance than "new" FHA homeowners.

FHA Streamline Refinance MIP (For Loans Endorsed Before June 1, 2009)

If your existing FHA mortgage was endorsed prior to June 1, 2009, your mortgage insurance premiums have been "grandfathered". You can refinance via the FHA Streamline Refinance program and pay reduced rates for both for upfront MIP and your annual mortgage insurance premium.

Upfront Mortgage Insurance Premiums (UFMIP)

For an FHA Streamline Refinance that replaces a loan endorsed prior to June 1, 2009, the new FHA mortgage's upfront mortgage insurance is equal to 0.01 percent of the loan size, or 1 basis point.
For example, if your new FHA Streamline Refinance is for $100,000 mortgage, the FHA will assess a $10 upfront mortgage insurance premium (MIP) to be paid by you at closing. The FHA automatically adds the $10 payment to your new loan balance.

Annual Mortgage Insurance Premiums (MIP)

Annual MIP is similarly cheap for "old" FHA loans. For an FHA Streamline Refinance replacing an FHA loan endorsed prior to June 1, 2009, the annual MIP is 0.55% annually, or 55 basis points.
The complete annual MIP schedule is as follows :

• 15-year loan terms with loan-to-value over 90% : 0.55 percent annual MIP
• 15-year loan terms with loan-to-value under 90% : 0.55 percent annual MIP
• 30-year loan terms with loan-to-value over 95% : 0.55 percent annual MIP
• 30-year loan terms with loan-to-value under 95% : 0.55 percent annual MIP

15-year fixed rate mortgages with LTVs of 78% or less pay no annual MIP.
For an FHA Streamline Refinance which replaces a FHA loan endorsed prior to June 1, 2009 and for which the mortgage is a jumbo FHA mortgage (i.e. loan size exceeds $625,500), no additional mortgage insurance premiums are due.
Note : FHA jumbo loans over $625,500 are permitted in "high-cost" metropolitan areas only. This includes Montgomery County, Maryland; New York City, New York; and Fairfax County, Virginia.
Most of California, Hawaii and Alaska are FHA jumbo loan-eligible, too.

FHA Streamline MIP For Loans Endorsed On/After June 1, 2009

If you are refinancing an FHA mortgage via the FHA Streamline Refinance program and your existing FHA mortgage was endorsed on, or after, June 1, 2009, your mortgage insurance premium schedule on the new loan is as follows.

Upfront Mortgage Insurance Premiums (UFMIP)

For an FHA Streamline Refinance replacing a loan endorsed on, or after, June 1, 2009, the FHA upfront mortgage insurance premium is equal to 1.75 percent of your loan size, or 175 basis points.
This is $1,750 for every $100,000 borrowed. The FHA automatically adds the $1,750 premium to your loan balance for you -- it's not paid as cash. Furthermore, not all refinancing households will pay the full amount.
For FHA-backed homeowners refinancing within the 3 years of their existing loan's start date, the FHA provides a refund on previously-paid upfront MIP. The size of the refund diminishes as the 3-year window elapses.
For example, a homeowner who refinances an FHA mortgages after 11 months is granted a 60% refund on his initial FHA UFMIP. 30 days later, the refund drops to 58%.
This is why is rarely a good idea to "wait to refinance" with the FHA. With the FHA Streamline Refinance program, the sooner you refinance, the bigger your refund, and the lower your total loan size. This lowers the monthly payment and preserves the home equity -- two huge positives.
You can review your own FHA mortgage insurance refund chart at top.

Annual Mortgage Insurance Premiums (MIP)

The annual MIP schedule for an FHA Streamline Refinance which replaces a loan from on, or after, June 1, 2009 is as follows :

• 15-year loan terms with loan-to-value over 90% : 0.70 percent annual MIP
• 15-year loan terms with loan-to-value under 90% : 0.45 percent annual MIP
• 30-year loan terms with loan-to-value over 95% : 1.35 percent annual MIP
• 30-year loan terms with loan-to-value under 95% : 1.30 percent annual MIP

Note, though, that jumbo FHA mortgages are subject to an additional MIP fee.
15-year fixed rate mortgages over $625,500 pay an additional 0.25 basis points annually. Loans with terms of 20 years or 30 years pay an additional 0.20 basis points.
A Los Angeles, California homeowner, therefore, borrowing at the $729,750 local loan limit with a 30-year fixed rate mortgage will pay annual mortgage insurance premiums of 1.55% to the FHA, or $943 per month.

FHA MIP Cancelation Policy

For some FHA-backed homeowners, annual mortgage insurance premiums are temporary. The FHA makes this determination based on the amount of home equity at the time of closing.
For homeowners using the FHA Streamline Refinance to replaces a loan from on, or after, June 1, 2009, the FHA MIP cancelation schedule is as follows :

• Loan-to-value of 90% or less at the time of closing : MIP required for 11 years
• Loan-to-value greater than 90% at the time of closing : MIP required for life of loan

The FHA's MIP cancelation policy is the same for 15-year loan terms as for 30-year loan terms.
Refinancing homeowners are welcome to reduce their loan balance at the time of closing to avoid paying MIP for the loan's life. In many cases, this will require an up-to-date appraisal of your home.
This FHA MIP cancelation policy applies to FHA loans beginning June 2013. Note that FHA MIP will also be canceled in the event of a refinance to a different loan program such as a conventional loan backed by Fannie Mae or Freddie Mac, or upon sale of the home.
Homeowners planning to move within 10 years may not be affected by the FHA's "Life Of The Loan" rule.

Apply For Your FHA Streamline Refinance Here

The FHA Streamline Refinance is among the easiest and best-valued mortgage products available.
If you have an existing FHA mortgage, get yourself a FHA Streamline Refinance rate quote. FHA mortgage rates are low and closings can occur in as few as 20 days. And, the faster you close, the bigger your FHA upfront mortgage insurance premium refund.

Is A GFE worth the price of paper?

 

What's On Page 1 Of The Good Faith Estimate?

The first page of the Good Faith Estimate is a summary of your mortgage terms. It lists your name and property address; one available mortgage rate-and-fee combination; and your bottom-line settlement charges among other items.

The GFE Header Box

The upper-most part of your Good Faith Estimate lists your name, the address of the subject property, and the date on which the GFE was prepared. The date is a key element because mortgage rates change daily, and a GFE from today won't be the same as a GFE from tomorrow.
The header box also lists the name and contact information for the GFE-preparing lender.

Important Dates Box

The Good Faith Estimate includes a section with key dates, which explains the duration for which the GFE is valid. This section is provided to protect mortgage lenders from "out-dated" GFEs. You can't lock a mortgage rate from 6 weeks ago, and the GFE attempts to prevent this type of misunderstanding. An explicit GFE expiration date is provided.
For loans with specific locks periods, the GFE will indicate the number of days for which the rate lock is valid. For loans with "floating" mortgage rates, the GFE indicates how many days prior to closing a mortgage rate must be locked.

Summary Of Your Loan Box

Many people review the "loan summary" section first on a Good Faith Estimate. The summary area includes the key terms of your loan, and describes whether the GFE is for a fixed-rate mortgage or an adjustable-rate one.
The items included in the summary section include your loan size, your loan term (in years), your loan's initial interest rate, and your monthly principal + interest obligation at the start of the loan. .
The section also answers the questions "Can your interest rate rise?" and "Does your loan have a prepayment penalty?" If the answers to either of these questions is "yes", the rules of your loan's adjustment and/or its prepayment penalty are required to be shown.
Lastly, the section indicates whether the mortgage carries negative-amortization or balloon mortgage features.

Escrow Account Information

This GFE section lists whether an escrow account was included in the pricing of your mortgage, and whether you're required to escrow in order to get access to the mortgage rate provided. Note that some mortgage types -- including FHA loans and conventional loans over 80% loan-to-value -- require escrow accounts for all approved mortgages.

Summary Of Your Settlement Charges

This section lists your "bottom-line" figure due at closing. It presents, on the first page, the sum of two figures taken from the GFE's second page. Note that the amount listed in your summary is not necessarily the amount of cash you are required to bring to closing.
Your bottom-line figure is -- loosely -- your closing costs minus your closing cost credits plus whatever monies are required for your escrow.

What's On Page 2 Of The Good Faith Estimate?

The second page of the Good Faith Estimate is a summary of your closing costs and funds required for your escrow impound. Together, these fees are labeled "settlement costs" on the GFE.

Your Adjusted Origination Charges

The GFE's Adjusted Origination Charge section is split into two parts -- the fees charged by your lender for the loan, and the number of discount points required to get the lender's offered mortgage rate.
The first part, labeled "Our origination charge", is a sum of all lender-charged fees. It comprises processing fees, underwriting fees, wire service fees, along with every other lender-related charged. There is no itemization of fees provided which is why the GFE explicitly reads "This is our charge for getting this loan for you."
If the lender charges it, it's included in the origination charge.
The second part of the section lists your loan's accompanying discount points. There are three available checkboxes. Lenders will use only one of them.
If the first checkbox is checked, it tells that your loan's discount points were included in the "Our origination charge" section. If the second checkbox is checked, it indicates that a closing cost credit is being provided at the GFE's listed interest rate, a setup sometimes known as "Reverse Discount Points".
Lastly, if the third checkbox is selected, it indicates that your lender-offered interest rate requires discount points, and the charge for your discount points will be listed in dollars and cents.

Your Charge For All Other Settlement Services

Your Good Faith Estimate will also provide a listing of non-bank-related charges you should expect to pay in conjunction with your mortgage. Spilt over 9 separate categories, these fees and charges are estimates but lenders are required by law to be "within range" of the final settlement fees to promote fair comparison.
Some of the services listed in the "Other Settlement Services" section are shopped by the lender and assigned to you. These include appraisal fees and flood certification fees for homeowners in flood plains. Other fees are charged by state and local governments. These fees include recording charges for your mortgage, and transfer stamps in locales which assign them.
Lastly, your GFE will show the amount of prepaid mortgage interest due at closing, as well as whatever real estate tax and homeowners insurance premiums are due. Collectively, these charges are known as Prepaid Items. They are not mortgage closing costs despite their inclusion in your settlement charges.
It's important to note that Sections 3-11 on your GFE's second page should be nearly identical from lender-to-lender. These are charges and costs outside of your lender's control.

What's On Page 3 Of The Good Faith Estimate?

The third page of the Good Faith Estimate explains what Page 1 and Page 2 say, and provides instruction for comparing loans between multiple mortgage lenders. It also includes a listing of mortgage-related fees, sorted by whether they're allowed to change, and by how much.

Charges Which Cannot Change At Settlement

Your Good Faith Estimate commits a mortgage lender to a given mortgage rate-and-discount point combination. GFE items which cannot change increase at settlement include your lender's origination charge and, once your mortgage rate is locked, the number of discount points charged for your loan.
Note that your lender can decrease these costs after your mortgage rate is locked -- it is only prohibited from raising them.

Charges Which Can Increase Up To 10% At Settlement

The Good Estimate Estimate is an estimate based on available information at the time of application. Sometimes, service costs change. For this reason, the Good Faith Estimate may vary from your settlement statement by as much as 10% per item.
Only certain fees are included in this allowance, however. They include government recording charges, and title services fees and other required service for which you are allowed to shop and for which you chose a lender-approved service provider.
Mortgage applicants waive their right to the ten percent cap if they shop with non-lender-approved service provider. Note that lender is not responsible by law for mis-estimating the fees of a service provider with which is has no working relationship.

Charges Which Can Change At Settlement

In this section, the GFE re-iterates that the lender is not responsible for fees related to service providers which you select which are not lender-approved. It also lists that homeowners insurance premiums may change; that real estate tax bills may change; and that daily mortgage interest charges may change. These are items which are not in the lender's control.

Using The Trade-Off Table

For help with "discount point" comparisons, every Good Faith Estimate comes with a Trade-Off Table; a columnar comparison of up to three different mortgage rate-and-discount point combinations as offered by the same lender.
The first column is a summary of the loan terms as listed by the GFE. The second column shows the effect of reverse discount points; receiving a closing cost credit to offset settlement fees. And, the third column shows the effect of paying additional discount points to get access to lower rates.
If you'd like to see these columns completed in full, be sure to ask your GFE-providing lender.

Using The Shopping Chart

To assist mortgage applicants who are shopping for a mortgage, the Good Faith Estimate template provides space to compare offers from up to 4 mortgage lenders. The key details of your loan are listed by column, including loan size, mortgage rate, principal + interest payments, and other key details from your summary page. After you have collected your GFEs from your short list of lenders, you can hand-write your notes into the chart.
Note that mortgage rates change all the time. Your Good Faith Estimates should all have the same "Date of GFE" from the tool's first page.

If Your Loan Is Sold In The Future

Lastly, the Good Faith Estimate explicitly states that your mortgage may be transferred among lenders after your settlement has occurred. If your loan is transferred, the new mortgage lender may not change the terms of your loan.

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

Can you really complete a "Quick Close"?

Nationwide, as demand and competition for homes for sale has grown, so has buyer demand for "quick closings".
Note that the term "quick close" is without strict definition. You know a closing is quick when you're in one. There is less time to get a mortgage approved; less time to scout the home inspection; and less time to prepare for your final settlement.
Requests for quick closings have climbed as the home buying landscape has become more competitive. Buyers will offer to "close quickly" so their purchase contract stand-outs among the competition.
Offering to close within 30 days is one way in which buyers attempt to "sweeten the deal". And now, today, as lenders approve purchase home loans more quickly, buyers can offer quick closings with more confidence.
Ellie Mae reports that the average time to process, approve and fund a purchase loan fell by four days in August to 42 days. This equals the fewest number of days since Ellie Mae started tracking such data.
The main reasons why purchase turn-times are improving is that mortgage rates have increased.
During May and June, mortgage rates rose nearly every week, moving from 3.35%, on average, to somewhere north of four. This increase -- and its sudden, sharp nature -- spawned a surge of refinance and purchase applications as buyers rushed to get ahead of the market.
Lenders slowed down as pipelines filled up.
Then, with mortgage rates elevated through July and August, refinance activity slowed. Fewer homeowners pursued the FHA Streamline Refinance and VA Streamline Refinance programs; and fewer homeowners attempted to use HARP.
As loan volume decreased, lenders were able to turn purchase approvals more quickly to the benefit of today's home buyers.
Through the end of 2013, however, mortgage rates may move lower. As loan volume rises, then, your ability to do a quick close will wane. Therefore, if you're going under contract 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, some of the 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; or how fast 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.

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

Pre-Qual vs Pre Approved

 

Why Is It Good To Get Pre-Qualified?

Getting pre-qualified for a mortgage is a quick and easy process. Via phone, email or internet, your lender will ask you for some basic information about yourself and -- based on what you share -- you can know whether you qualify for a mortgage.
Pre-qualification questions vary by lender but often include the following :

• What is your annual income?
• What is your credit score or credit rating?
• Have you recently become self-employed?
• Do you own more than 25% of a business?
• How much money do you have "in the bank"?

Your lender may also ask whether you've had a bankruptcy, short sale or foreclosure within the last few years; and whether you're a U.S. citizen.
The answers to these questions can a help a lender determine for what mortgage programs you may be eligible. For example, if you have very little money in the bank and plan to buy a home with 2-units or more, your lender will limit your pre-qualification to FHA mortgages and VA loans.
Similarly, if your credit rating is high with no outstanding judgments or liens, your lender may pre-qualify you for a wide range of mortgage products which are unavailable to buyers with low credit rating.
Based on the information you share, your lender will also assign your purchase to a maximum purchase price.
The strength of a mortgage pre-qualification is that it's easy to process.
The weakness is that it's only as good as the information given to your lender. You may think you're telling your lender your income; or that you know your credit rating, but what if you're wrong like so many buyers before you have been?
This is why pre-qualification letters are only "good". They're a non-verified guess of how much home you can afford. Guesses will do you very little good.
Pre-approvals are a better approach.

Why Is It Excellent To Get Pre-Approved?

Getting pre-approved for a mortgage takes more time than getting pre-qualified. The extra time pays off wonderfully, too.
In the mortgage pre-approval process, your lender will go deeper as compared to a prequalification. Instead of just being asked about your income, your assets, and your credit, you will be asked to prove it.
For example, your lender will ask about your money "in the bank" and whether it's from your job; or, from a 401(k) withdrawal; or, from a cash gift for downpayment; or, from some other source.
The funds will be verified with bank statements.
Your lender will also ask to review your most recent W-2s and tax returns in order to confirm your "eligible income". This figure is then compared to your credit report to determine your personal debt-to-income (DTI) ratio.
Debt-to-income is a key mortgage qualification standard.
Buyers with a debt-to-income ratio below 40% may be eligible for all available loan types include conventional financing, FHA and VA mortgages, and USDA. However, buyers with a DTI between 40-45% may be limited to products via the FHA or VA.
Pre-qualifications don't verify debt-to-income. Pre-approvals do.
Pre-approvals also uncover hidden collections, judgments and liens which may stand between you and your approval.
More than 25% of Americans are harmed by "errors" on their credit report. If you turn out to be one of them, finding a credit report error after you're under contract for home can carry significant costs -- including the loss of your earnest money.
For all of these reasons, home sellers and their REALTORS® insist that home buyers submit a valid pre-approval letter along with their initial offer for the home.
Sellers don't consider offers from people who haven't taken the time to determine if they can even get approved for a loan in the first place.
This is why pre-approval letters are important. They're typically required to even offer on a home.

Get A Binding Pre-Approval (For Free)

Sellers don't accept an offer without an accompanying pre-approval letter. Thankfully, getting pre-approved is easy.
First, contact a lender. It can be any lender. It doesn't have to be your "hometown" bank and it certainly doesn't have to be the lender you'll use when you ultimately get your home loan.
The important part is that you speak to a lender, and get the letter.
When you contact a lender, then, be open and honest about your financial background.
Today's mortgage lenders perform tons of due diligence; much more than 10 years ago. Whatever you attempt to "hide" from a lender, they'll ultimately uncover -- and hiding information may be cause to deny your loan.
Even if it's something as simple as a side-business you've recently started which currently earns absolutely no income, share it with your lender. Ultimately, the business may not affect your approval but let your lender determine what's important and what's not.
You should also alert the lender if you're carrying non-credit reporting debts such as a personal loan from a friend or family member.
Lastly, allow the lender to "pull your credit".
Credit checks can reduce your score but they represent a very small percentage of your overall FICO.
Many people believe that a credit check will affect your credit score by less than 5 points on a scale of 850 points. Without the credit check, though, you can't be pre-approved, so let your pre-approving lender check it.

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

What is Title Insurance for?

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 sals 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.
Costs to re-insure a home against title defects are low.

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

Push it to the limit

 
The FHA mortgage offers several advantages to home buyers as compared to a loan backed by Fannie Mae or Freddie Mac.
FHA loans allows for a very low 3.5% downpayment; mortgage underwriting standards are often "loose" as compared to other loan types; and  via the FHA Back To Work - Extenuating Circumstances program, buyers can get an FHA loan just 12 months after a foreclosure, short sale or bankruptcy.
However, the biggest advantage of an FHA mortgage is that you can borrow more money from your bank via an FHA-backed loan than you can with a conventional one. FHA loan limits are higher than Fannie Mae and Freddie Mac's.

What Are FHA Loan Limits?

FHA stands for Federal Housing Administration. The agency is a part of HUD, and has been supporting U.S. homeowners since 1934.
The FHA is not a mortgage lender. Rather, it's an insurer, providing the nation's lenders protection against losses and default. The FHA will insure any mortgage which meets its minimum eligibility standards.
The FHA's minimum eligibility standards, collectively, are known as the FHA Mortgage Guidelines. FHA mortgage guidelines differ in their specifics between purchase and refinance loans, but some guidelines remain shared, too.
For all Federal Housing Administration loans -- purchase or refi -- there is a maximum loan size which the FHA will insure. The maximum loan size allowed by the agency is known as an FHA loan limit, and loan limits vary depending on your home type and where you live.
FHA loan limits range up to $1,403,400. This is the limit for a 4-unit home in Los Angeles County, California. It's also 17% higher than the maximum loan size allowed by Fannie Mae or Freddie Mac.
The FHA lets you borrow more.

How Much Can You Borrow Via The FHA?

FHA loan limits vary by property type. The agency will insure larger loan sizes for a 4-unit home, for example, than a single-family home or a condominium. The Federal Housing Administration will also insure larger loan sizes areas deemed to be "high-cost".
The agency considers an area to be high-cost if its median home sale price exceeds the national average by some fixed amount.
There are 74 counties nationwide which reach the FHA's maximum loan size limit. Plus, there are an additional 697 U.S. counties in which limits are elevated.
In all other counties, FHA loan limits are as follows :

• 1-unit home : $271,050
• 2-unit home : $347,000
• 3-unit home : $419,425
• 4-unit home : $521,250

In high-cost areas -- areas which include New York City; Loudoun County, Virginia and Montgomery County, Maryland; and most of California. In these regions, FHA loan limits range up to :

• 1-unit home : $729,750
• 2-unit home : $934,200
• 3-unit home : $1,129,250
• 4-unit home : $1,403,400

Meanwhile, the agency has designated four areas in which loan limits are even higher, reflecting the ultra-high cost are living there. These four areas are Hawaii, Alaska, Guam and the U.S. Virgin Islands.

• 1-unit home : $1,094,625
• 2-unit home : $1,401,300
• 3-unit home : $1,693,875
• 4-unit home : $2,105,100

Note that the Federal Housing Administration reviews its maximum allowable loan sizes once per year, and that loan limits may change over time. Several years ago, "high-cost loans" did not exist. In several years, they may cease to exist again.
For now, however, the FHA offers loan size opportunities not available via conventional loans.

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

Mortgage Events

For watchers of the U.S. mortgage market, this week is the most eventful in months.
Along with a bevy of housing and economic data, the Federal Open Market Committee (FOMC) meets for the sixth time this year. The FOMC is the sub-group within the Federal Reserve which votes upon U.S. monetary policy.
The FOMC is expected to vote to keep the Fed Funds Rate in its current range near 0.000% but may elect to begin tapering the Federal Reserve's QE3 program, which started one year ago last week.
Via QE3, the central banker purchases $40 billion of mortgage-backed securities on the open market monthly, creating excess demand which holds bond prices high. The Fed's stimulus is directly responsible for last year's lowest mortgage rates in history.
In May 2013, the Fed said it would begin considering whether to increase or decrease the pace of its purchases based on U.S. economic growth. That statement sparked a massive MBS sell-off which pushed rates from 3.5% to the current range near 4.5%.
However, the economy has shown little spark since that date. Job growth is slower-than-expected nationwide; housing data has somewhat cooled; and, consumer spending has failed to keep up. The economy is expanding, but not by enough to warrant a "full taper", some believe.
How the Federal Reserve handles QE3 will be the big news this week, and make the largest impact on U.S. mortgage rates. The week's complete schedule looks like this :

• Monday : Empire State Manufacturing Survey
• Tuesday : Homebuilder Confidence Survey; Consumer Price Index (CPI)
• Wednesday : FOMC adjourns; Federal Reserve forecasts released; Housing Starts
• Thursday : Initial Jobless Claims; Existing Home Sales
• Friday : None

It's also noteworthy that five Federal Reserve members have scheduled speeches between Thursday and Friday. Expect these speeches to affect mortgage rates because each speaker is expected to put their personal spin on "what the Fed should do next".

Will HARP 3 Pass This Week?

U.S. homeowners also wonder if this week is the week Congress passes HARP 3.
Also known as #MyRefi and "A Better Bargain For U.S. Homeowners", HARP 3 would be the third iteration of the popular Home Affordable Refinance Program which was first launched in early-2009. More than 2.7 million U.S. homeowners have used HARP to refinance to lower mortgage rates since the program's inception.
It's unknown what will be different with HARP 3, but there is speculation that any, or all, of the following enhancements could be added when HARP is revamped for the public :

1. HARP 3 may allow the "Re-HARP" of an existing HARP refinance
2. HARP 3 may allow non-Fannie Mae and non-Freddie Mac mortgages
3. HARP 3 may change the program cut-off date to include more homeowners
4. HARP 3 may allow larger loan sizes of up $729,750

HARP 3.0 is currently in committee in Congress and may pass this week, or next week, or not at all. Millions of homeowners may be instantly refinance-eligible should HARP 3.0 pass.