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The increase in home values have helped many homeowners right the ship in terms of having equity in their house. Back in January 2012, 41% of homeowners were upside down in terms of owing more on their home than what their house was worth. One year later, only 18% of the county’s houses are underwater. That is great news for the housing industry. Now many homeowners who have been sitting on the sidelines wanting to sell are now able to.
Just two weeks ago, we posted that the new mortgage rates moved slightly lower to officially hit new all-time lows. It appears that after the July Fourth holiday, rates have trickled down even more, marking yesterday, July 10th as the third consecutive day at new all-time lows. As of this week, according to the article from Mortgage News Daily, today’s best execution rates are:
- 30-year fixed – 3.5% to 3.625%
- FHA/VA – 3.5% – 3.75%
- 15-year fixed – 2.875% – 3.00%
Additionally, according to the article, Europe and our own domestic economy are the two main considerations keeping downward pressure on mortgage rates, and investors are waiting for both of those things to either happen or for the risk of them happening to die down significantly before moving out of the safety of bond markets.
Ultimately, choosing whether or not to refinance your home loan can be a stressful process if you’re unsure how to proceed. If you’re curious about seeing how The Mortgage Guys can potentially save you money on your mortgage, don’t hesitate to contact us with questions and concerns.
For those interested in purchasing a home in Atlanta, GA, rates are still historically low and FHA allows a down payment of as little as 3.5 percent of the purchase price. The housing boom is starting to rise again, and interested homebuyers still have some time to take advantage of these current rates.
Not sure if an FHA mortgage will benefit you? Give the Mortgage Guys in Atlanta, GA a call in order to take advantage of purchasing or refinancing your home in metro Atlanta to get these great rate reductions with FHA. For those with an FHA loan, there’s never been a better time to refinance for an FHA loan, especially if their current mortgage rate is about 5 percent.
Did you know that Valentine’s Day dates back all the way to Ancient Rome? We stumbled upon this page of Valentine’s Day facts and figures over at History.com and just had to share.
Did you know?
- Over 50 percent of all Valentine’s Day cards are purchased in the six days prior to the holiday?
- 141 million Valentine’s Day cards are exchanged annually, making Valentine’s Day the second-most popular greeting-card-giving occasion.
- $367 million: We Love our Pets – collectively, consumers spend this much on Valentine’s Day gifts for their pets each year.
- $126.03: The average expected amount, per person, that Americans will shell out for the holiday. That’s up 8.5% from last year. Consumers are expected to spend the most on jewelry, at a collective $4.1 billion.
Are you a fan of the Google doodles? Today, Google put up a video that helps remind everyone what all the fuss is about today.
What’s your favorite part of the holiday? Do you participate, or think the holiday is all hype? Either way, Happy Valentine’s Day from The Mortgage Guys in Atlanta, GA!
What is the HARP Loan?
The newly modified Home Affordable Refinance Program will allow more homeowners to refinance as it allows anybody to refinance their mortgage, regardless of how much the owe and how much their home value has dropped.
The modified HARP loan program removes a stipulation from previous refinance regulations that stated that homeowners who owed an amount on a loan that was 25 percent, or more, greater than the home’s value would not be eligible to refinance. The removal of this stipulation allows up to an estimated 4 million homeowners to refinance.
Who Qualifies for the HARP Loan?
To qualify for a HARP mortgage, homeowners must first have a mortgage that is owned or guaranteed by Fannie Mae or Freddie Mac. Additionally, they must have a one to four unit home as their primary residence, be current on their mortgage (no late payments more than 30 days in the last 12 months), have a home that has decreased in value, and have a first mortgage not over 125 percent of the home’s current value.
Currently, the HARP loan program is available until June, 30th, 2012. If you want to take advantage of some of the HARP program’s great opportunities, give The Mortgage Guys Atlanta a call so we can help refinance your home loan.
Image courtesy of Flickr.
One of the most common questions I get asked on a daily basis other than “What is the rate?” is “What is the best loan for me?” To answer this question requires a thorough understanding of the client and what they are looking to achieve both in the short term and in the future. In today’s tough lending environment, there are essential two types of loan available: Government which includes FHA, VA and USDA and Conventional loans. Government loans are insured by the Federal Government, while conventional loans are underwritten to Fannie Mae or Freddie Mac guidelines and are not insured by the government. Although, today the government does control both Fannie and Freddie, but that is a topic all to itself.
For the purpose of this article, we will be spending our time dissection the FHA loan. First of all, what is FHA and what is its purpose. FHA stands for the Federal Housing Administration and it was created by the National Housing Act of 1934 to increase home construction, reduce unemployment and operate various loan insurance programs. There are several advantages for using FHA financing. The first is the low down payment requirement. Today, FHA only requires 3.5% of the purchase price for a down payment. If someone is buying a house for $100,000, they would be required to bring a minimum of $3,500 to the closing table. They would also be required to pay closing costs but this can be negotiated with the seller to have him pay it. The second advantage of FHA is that is allows the seller to pay up to 6% of the closing costs, which should cover all closing costs. Make sure you speak with a loan originator so you will have a good idea how much closing costs will be for your transaction. Another nice feature is that a FHA loan allows for a family member to gift the funds needed to close on the loan. The person giving the needs to be an immediate family member such as parent, grandparent, sibling or spouse and can gift the entire amount needed to close the loan.
When it comes to determining how much you can qualify for in terms of maximum loan amount, we use the debt-to-income ratio. This ratio is calculated by taking your gross monthly income and dividing it by your total monthly expense plus your new housing payment. So if you make $5,000 per month and your minimum monthly expenses that show up on your credit report equals $850 and your new monthly mortgage payment will be $1,000 your DTI will be (850+1000)/5000 = 37%. FHA will typically go up to 50% or more with compensating factors. FHA allows for a family member to act as a non-occupant co-borrower and help the borrower to qualify. This is a fantastic feature of FHA.
Possibly the main reasons why someone chooses to go with FHA is the credit profile requirements. FHA is more lenient than other types of financing. FHA does not typically require someone to pay off open collections or have a specific number of open trade lines (credit accounts are also called trade lines), although this falls under the underwriter’s discretion. Another credit advantage is for someone who has had a bankruptcy or foreclosure in the past. For Bankruptcies, FHA requires 2 years after a Chapter 7 has been discharged and you can still be in a Chapter 13 as long as you can show 12 months of payment history. As for a foreclosure, you will need to wait 3 years from the time the foreclosure settlement date. Lastly, one can typically get approved with a middle score as low as 620 and still get a great interest rate.
To summarize, FHA is a fantastic loan for a first time home buyer, someone with lower credit or newly established credit, someone who needs assistance from family in terms of cash to close or income to qualify.
Can I get a Loan?
This is a great question, especially in today’s tough lending environment. Today, everything is on sale when it comes to real estate, but for most of us, we will need some assistance in the way of a mortgage to help finance home ownership. When I sit down with a client, I go over the 4 C’s of lending with him. The 4 “C’s” of lending are Credit, Collateral, Cash to close and Capacity to repay. Each category is a very important part of the loan process and anyone of them is reason for a lender to turn him down. Now the best part is that when working with a knowledgeable Loan Originator, if you are not able to qualify for a loan today, he will set up a road map so you will be able to do so in the near future.
The First “C” of lending is Credit. When applying for a loan, a lender is going to pull your credit report from all three major credit bureaus: Equifax, TransUnion, and Experian. Credit scores range from 350 to 850 and in order to qualify for a loan today, you will typically need a minimum between 620 and 640. In order to qualify for the best rates, your middle credit score will need to be at least 740. You can get a copy of your credit reports for free at www.annualcreditreport .com. In order to get you score with the free report, you will have to pay a small fee. So what does a credit score mean? In simple terms, it rates the likelihood that you will pay your loan back. So, the lower the score, the less likely you are in the lenders eyes to be able to repay the loan and thus will most likely have to pay a higher rate or put more money down.
“C” number two is collateral or the property itself. As part of the loan process, an appraisal will be ordered to come up with a value for the home you want to buy. If you are to get a loan, the house should be worth at least as much as you are paying for it. If not, the lender is on going to lend based on the amount of the purchase price, so you will have to make up the difference. Now the value is just one issue with the appraisal. The second is the condition of the property. Most loan programs want the property to be in at least average condition. If the property requires a lot of repairs, the lender may require those items to be corrected before the loan can close and if you are buying a bank foreclosure, the bank may not be willing to do this.
The third “C” is Cash. In order to buy a property today, you will need a required amount of money to execute the transaction. We will have to source and season the funds. This is done by reviewing your most recent two months of bank statements. All large deposits must be sourced and come from an acceptable place. A refund for you taxes is acceptable. Money you have been saving under your bed is not.
The final “C” is the Capacity to repay or Income. You must have some source of stable income. This can come from a job, retirement or disability to name a few. It must be ongoing with the likelihood to continue for at least 3 years. Income is one of the toughest parts of a loan document and much time goes into determining how much income can be used. Lenders use the DTI or Debt to Income ratio to determine your maximum loan amount. The ratio needs to be below 50% and is calculated by taking your total monthly expenses (those that show up on your credit report) and your new mortgage and dividing that number by your gross monthly income. . So if you total monthly expenses are $3,500 including the new mortgage payment and you make $10,000 a month, your DTI will be 35%.
If the four “C” can meet the requirements required of the loan program, you should be in great shape to qualify for a home loan today!
By George Beylouny – 678-428-6514, email@example.com
We are very excited about our new radios show that airs on Saturday and Sunday mornings at 10:00 am. The show is driven by our listeners who want their mortgage questions answered. We interview industry veterans on all sorts of industry related topics. In order to make the show better, we need you questions and feedback. Make it a great day! George