Monday, October 29, 2012

Waiting Periods After Bankruptcies, Foreclosures, and Short Sales


After a bankruptcy, a foreclosure, or a short sale, a potential home buyer must wait a certain period of time before they are eligible to get a mortgage.  The minimum length of time after a bankruptcy is 2 years, and the minimum length of time after a foreclosure or a short sale is 3 years.

In addition, the underwriting guidelines state that they must "re-establish" their credit.  Many buyers are unaware of this additional requirement, and it prevents them from getting a loan. 

Here's what re-establishing credit means: for the 12 months preceding the loan application date, the borrower must have a perfect payment record on all of their existing credit accounts.  In other words, they can't have any late payments for one full year before applying for the mortgage.

If you have any prospects who have had a bankruptcy, foreclosure, or short sale, do them a favor and tell them to make sure they are paying all of their bills.  Even one late payment will prevent them from getting a loan.

This "no late payments" rule ONLY applies to people who have had a bankruptcy, foreclosure, or short sale.  Everyone else is allowed to have late payments on their credit report and they can still get a mortgage.


Getting a loan approved is easy - if you know what to do.  The Mortgage Experts know what to do!!!

Make sure you check out our web site:



By the way, don't forget to refinance your current mortgage.  Rates are very, very low right now.  Don't miss out!  Call us today to get the details for your particular situation.

Down Payment Requirements


Here are the most recent down payment requirements for the various types of home loans:

For conventional (non-government) loans:
  • 5% down for a primary residence (3% is allowed, but the rates are higher and the mortgage insurance is higher)
  • 10% down for second homes 
  • 20% down for investment properties
For FHA loans (primary residences only):
  • 3.5% down - can be a gift from a relative of the borrower
  • $100 down if the property is a HUD home and the offer is for the full price 
For CHFA loans (primary residences only):
  • $1,000 minimum investment by the borrower - can be a gift from a relative of the borrower
VA loans (primary residences only):
  • 0% down

Getting a loan approved is easy - if you know what to do.  The Mortgage Experts know what to do!!!

Make sure you check out our web site:



By the way, don't forget to refinance your current mortgage.  Rates are very, very low right now.  Don't miss out!  Call us today to get the details for your particular situation.

Friday, October 26, 2012

How Much Can I Qualify For?


The top two questions we've been asked this past week are: "How big a mortgage can I qualify for if I make X amount of money?" and "How big a mortgage can I qualify for if I have X amount of debt?"

The two questions are really related because the amount you qualify for is based on the ratio of your debt-to-income.  Here's how you figure it out:
  1. Add up the total housing payment for the mortgage you are trying to get.  Add together the monthly principal, interest, taxes, homeowner's insurance, and any mortgage insurance and HOA fees.
  2. To the sum above, add the minimum monthly payments that show on your credit report.  This number is your total monthly debt for mortgage approval purposes.
  3. Divide your total monthly debt by your gross monthly income.  This will give you your debt-to-income ratio (DTI).
  4. Once you know your DTI ratio, then you can tell which kinds of loans you can qualify for.  The maximum DTI for a conventional loan is 45%, and the maximum DTI for an FHA loan or a VA loan is usually 50% or slightly higher, depending on the lender.
As you can see, you need to know a lot of information before you can say how much you qualify for.  At a minimum, you need to know your gross monthly income (income before taxes) and you need to know what shows on your credit report.  Your credit report does not show everything you owe each month, so don't make the mistake of guessing what's on your credit report.

The only way to know for sure how much you can qualify for is to let a competent lender figure it out for you.  We've got a great suggestion on who to call if you're looking for a competent lender: call us! 


Getting a loan approved is easy - if you know what to do.  The Mortgage Experts know what to do!!!

Make sure you check out our web site:



By the way, don't forget to refinance your current mortgage.  Rates are very, very low right now.  Don't miss out!  Call us today to get the details for your particular situation.

Friday, October 19, 2012

Which Credit Score is Used?

There are three credit reporting agencies: Experian, TransUnion, and Equifax.  When a lender pulls someone's credit, they get a score from all three agencies.  The score that is used to determine whether the borrower qualifies for a mortgage (and what their interest rate will be) is the middle score.

If two people are applying for a loan together, then the score that is used by the lenders is the lowest of the two middle scores.  If one borrower has a mid-score of 720 and the other borrower has a mid-score of 680, the loan approval and the interest rate would be based off the 680 score.

If one of the borrowers has a mid-score that is too low to qualify for a loan, or that is too low to get a good interest rate, then the person with the higher score should be the only person applying for the loan.  The only potential problem is that the income of the person whose credit score is not being used cannot be counted to qualify.  If someone's income is counted, then their credit score needs to be counted.


Getting a loan approved is easy - if you know what to do.  The Mortgage Experts know what to do!!!

Make sure you check out our web site:



By the way, don't forget to refinance your current mortgage.  Rates are very, very low right now.  Don't miss out!  Call us today to get the details for your particular situation.

Tuesday, October 16, 2012

Home Inspections


We are often asked by buyers and real estate agents to recommend a good home inspector.  Without hesitation, we can recommend Ken Ishmael.  Here is Ken's contact info:
 
Ken Ishmael
Colorado Property Inspections
303-384-3773
 
 
Getting a loan approved is easy - if you know what to do.  The Mortgage Experts know what to do!!!
 
Make sure you check out our web site:
 
 

 
By the way, don't forget to refinance your current mortgage.  Rates are very, very low right now.  Don't miss out!  Call us today to get the details for your particular situation.

Asset Documentation


Here's a list of the information that needs to be provided for a conventional loan when a borrower has to show that they have sufficient assets.  This is taken directly from the Fannie Mae guidelines:

Copies of bank statements or investment portfolio statements. The statements must cover account activity for the most recent two-month period (or, if account information is reported on a quarterly basis, for the most recent quarter). The statements must:
  • clearly identify the borrower as the account holder
  • include the account number
  • include the time period covered by the statement
  • include all deposits and withdrawal transactions (for depository accounts)
  • include all purchase and sale transactions (for financial portfolio accounts)
  • include the ending account balance 
Online printouts are not acceptable unless they contain all of this information, in addition to the name of the bank.


Getting a loan approved is easy - if you know what to do.  The Mortgage Experts know what to do!!!

Make sure you check out our web site:



By the way, don't forget to refinance your current mortgage.  Rates are very, very low right now.  Don't miss out!  Call us today to get the details for your particular situation.

Closing Funds Changes

Some title companies are now requiring that the cashier's checks that buyers bring to the closing be made payable to the title company only.  They no longer allow the checks to be made payable to the buyer, who then endorses the check over to the title company at the closing.

Make sure you check with your title company if you are in the habit of advising your buyers to make cashier's checks payable to themselves.  It could prevent a considerable hassle for the buyers.


Getting a loan approved is easy - if you know what to do.  The Mortgage Experts know what to do!!!

Make sure you check out our web site:



By the way, don't forget to refinance your current mortgage.  Rates are very, very low right now.  Don't miss out!  Call us today to get the details for your particular situation.

Wednesday, October 10, 2012

How Much Down Payment Do I Need?

Here are the required down payments for various types of loans.

For conventional (non-government) loans:
  • 5% down for a primary residence (3% is allowed, but the rates are higher and the mortgage insurance is higher)
  • 10% down for second homes 
  • 20% down for investment properties
For FHA loans (primary residences only):
  • 3.5% down - can be a gift from a relative of the borrower
  • $100 down if the property is a HUD home and the offer is for the full price 
For CHFA loans (primary residences only):
  • $1,000 minimum investment by the borrower - can be a gift from a relative of the borrower
VA loans (primary residences only):
  • 0% down

Getting a loan approved is easy - if you know what to do.  The Mortgage Experts know what to do!!!

Make sure you check out our web site:




By the way, don't forget to refinance your current mortgage.  Rates are very, very low right now.  Don't miss out!  Call us today to get the details for your particular situation.

How Much Interest Am I Paying?


Everyone knows that when you first get a mortgage, most of the monthly payment goes to pay the interest and not to pay down the loan principal.  But how much exactly goes towards the interest each month?

Here's how to figure it out without a calculator - it's really pretty easy.

Mortgage interest is simple interest, meaning that you only pay interest on the actual loan balance.  At the end of the month, you owe interest on whatever the balance was on your mortgage at the beginning of that month.  

To calculate how much of your mortgage payment is going towards interest, multiply the loan balance by the interest rate, and then divide that number by 12.  You divide by 12 because the interest rate is an annual rate, but you pay your mortgage each month, or 12 times a year.

Here's an example.  Let's assume your loan balance is $200,000 and your interest rate is 4%.  To figure out how much of your next payment is going to pay interest, multiply 200,000 by 4%, and then divide by 12.

200,000 x 0.04 = 8,000.  Then divide that number by 12 to get the monthly amount due.  8,000 / 12 = $666.67

So for that month, you are paying $666.67 in interest. 

If you'd like to get an amortization calculator to figure out how much the balance will go down each month, just give us a call and we'll send it over to you.


Getting a loan approved is easy - if you know what to do.  The Mortgage Experts know what to do!!!

Make sure you check out our web site:



By the way, don't forget to refinance your current mortgage.  Rates are very, very low right now.  Don't miss out!  Call us today to get the details for your particular situation.

Recent CHFA Loan Changes


Here are some recent changes to the CHFA (Colorado Housing and Finance Authority) loan program:
  • The minimum borrower contribution of $1,000 may now come from a gift from the borrower's relatives.
  • If the earnest money is more than $1,000, the excess can now be given back to the borrower at the closing.
CHFA loans are good loans for people who don't have a down payment.  There are two loans: the first loan is for 96.5% of the purchase price and the second loan is for 3% of the first loan amount.  The borrower only needs to contribute $1,000 towards the transaction.

Need a CHFA loan?  Give us a call and we'll hook you up.


Getting a loan approved is easy - if you know what to do.  The Mortgage Experts know what to do!!!

Make sure you check out our web site:



By the way, don't forget to refinance your current mortgage.  Rates are very, very low right now.  Don't miss out!  Call us today to get the details for your particular situation.