Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages - USDA loans

Shopping mortgage rates can be confusing, especially if you are dealing with a loan officer that has no integrity. It's just a sales job to them. You hear people say... Shop Rate...Shop APR (Annual Percentage Rate)….. Shop mortgage fees….. So which is it? Shopping for a mortgage can be very frustrating also to say the least. I hear so many called experts tell the average consumer to shop APR. This is not the wisest of decisions and can be argued by many professionals. Keep in mind, this is my opinion on this subject.

Lets add some more confusion. Most of us know what the rate is in regards to mortgages. Lets define rate and APR. Rate : A charge or payment calculated in relation to a particular sum or quantity: interest rates. (from answer.com) APR (Annual Percentage Rate) : Is the cost of your credit expressed as an annual rate. This is a federally required formula, designed to help the borrower compare the cost of credit. The APR rate is different from the note rate of your mortgage and is usually higher than the note rate. Why is this?

The APR rate is usually different than the mortgage rate because the APR includes certain fees which are calculated into the actual rate. The problem with this is that so many people tell you to use the APR as your measuring tool when shopping with other lenders. And each lender by law is suppose to send you a Truth in Lending disclosure which shows you the APR.

So why does comparing one companies APR with another can be misleading or incorrect? Because the lender is suppose to include certain fees in this calculation. Not only do some companies leave some of these fees out, but there are other fees that don't have to be included that some lenders might include and the rules are not clearly defined. Sound confusing? Yes and I will talk about this later.

So, what fees are included in the APR?

These fees are generally included :

• Points – both origination and discount
• Underwriting, loan processing, and document prep fees (these are generally true junk fees)
• commitment fee
• attorney and or title closing fees
• PMI (private mortgage insurance) or MIP for FHA (Mortgage insurance premium) financed
• Prepaid interest - Interest that is paid from the time that you close to the end of the month. The problem here is that some lenders put 1 day or 5 days down on your good faith estimate. Even if they don't know your closing date.

Sometimes included :

• Application fee
• Tax related service fee

Generally not included :

• Appraisal fee
• Credit report fee
• Title fee
• Recording fees

Conclusion : The overall function of the APR is to measure the ‘true cost’ of the loan. Its suppose to create fairness and a level playing field amongst other lenders. Getting back to why I think comparing APRs from different companies is a bad idea. As mentioned, some lenders don't know how to compute the APR. Others leave out certain fees that should be included. Lastly, many lenders use programs that help compute the APR and it doesn't matter if you are applying for a FHA loan or a conventional loan. Not all of these APR programs are the same. Blame this on the government for not making it all the same.

Another issue about the APR is that it's based on the length of that mortgage. If you are applying for a 30 year mortgage, it will be based on 365 months. Keeping in mind that the average person moves out of their house in 6.7 years and or would refinance their mortgage in 4 to 7 years. Overall, it's extremely rare that someone would keep that same mortgage for the length of that loan, the term of that mortgage.

My opinion? Use the TIL (Truth in Lending disclosure) as a helpful tool to ask questions why it might be higher or lower than another companies disclosure. But go back to the good faith estimate as your real tool. Why? Because all fees are supposed to be shown on this form. I would compare rate, term, and fees and here is a good example of this. Shopping Good Faith Estimates. (FYI - compare the same programs) Just one word of advice, not every loan officer will be truthful when it comes to the good faith estimate. Some lenders will not show all costs or confuse you by mixing up the different costs. *** And remember this, most of the costs are 3rd party charges which are estimates. You need to decipher what these are in order to shop accurately. Finding a trusted mortgage consultant is very important.

Good Faith Estimates - Knowing & Understanding the Power of the paper!!!

First Time Homebuyers Series :

- First Time Homebuyer Tips : FHA - Conventional - VA - Subprime - The Basics - Part 1 of 5

- First Time Homebuyer Tips : Getting Qualified & Knowing your Credit - Part 2 of 5

- First Time Homebuyer Tips : Understanding the total mortgage process - Part 3 of 5

- First Time Homebuyer Tips : FHA, a better mortgage program? - Best Programs & Why - Part 4 of 5

- First Time Homebuyer Tips : Summary - Red Flags to be aware of - Part 5 of 5

FOLLOW ME ON FACEBOOK

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages -

- Conventional Loans - 203 k loans -

- Mortgages -

Experience & Knowledge at its BEST !!!

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger of Infinity Home Mortgage Company, Inc

CONDO ALERT - Yes, condos have looked attractive to many borrowers of lately because they are dropping in price in several areas by more than a few dollars. But so many people are asking why Condos are more difficult to purchase now than ever before. And so many are complaining that lenders are being more difficult when purchasing condos. The main reason? Many condo associations are under water when it comes to the monthly dues that they collect. They are in the red... I know of one association that is over $50,000 in the red. By normal standards, the association is suppose to have 2 months or more in reserves per unit. Hence why it's been harder to get buyers a mortgage when there are no funds in the reserve account.

In any case, HUD just added a new mortgagee letter on June 12th, 2009... ML 2009-19. Condominium Approval Process

So, what does this all mean? The mortgagee letter, ML 2009-19, goes into effect on FHA loans with any FHA case number assigned on or after October 1, 2009. What is the biggest issue with this new mortgagee letter? The Spot Approval process as defined in Mortgage Letter 1996-41 is eliminated with issuance of this guidance. The DELRAP and HRAP processes have been streamlined to allow for uncomplicated condominium project approvals eliminating the need to approve units on a “spot loan” basis.

Overall, in laymens terms? Lenders won't be able to do 'spot approvals' of a condo unit. What they will still be able to do though is to approve a whole condo project. The mortgagee letter goes into more detail stating that only those lenders that have experience in condo project approvals should do this. In regards to Infinity Home Mortgage Company, we have a few underwriters with 15 + years of doing condo project approvals. And we will take this challenge and still approve condo projects. But HUD says that it can only be done 2 ways. Per the mortgagee letter, this is stated :

The Lender will have 2 options:

1. HUD Review and Approval Process (HRAP).
2. Direct Endorsement Lender Review and Approval Process (DELRAP), outlined in this Mortgagee Letter. This option is only available to lenders who have unconditional Direct Endorsement authority and staff with knowledge and expertise in reviewing and approving condominium projects.

What type of projects are allowed under this new process?

1. Proposed/Under Construction;
2. Existing Construction; or
3. Conversions.

Conclusion : As mentioned, HUD states that only those lenders that have experience in the past should be doing these condo project approvals. Yes, they have streamlined the process to make it simpler. But taking away the spot approvals will add more time onto these approvals. I didn't want to bore anyone with the details of what is allowed, what is not allowed, and what the process is for these approvals. But it can be read in this mortgagee letter, ML 2009-19. Overall, FHA loans are very affordable and this news about spot approvals should not discourage any borrower.... but... be very careful about the association dues, because I have seen many more in recent months become more expensive, just because the lack of funds in the reserve accounts, which is needed for approval. And HUD will always be updated the Condo approval list. You can find out if your condo association is approved by clicking on this link. HUD condo approved list

FOLLOW ME ON FACEBOOK

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages -

- Conventional Loans - 203 k loans -

- Mortgages -

Experience & Knowledge at its BEST !!!

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger of Infinity Home Mortgage Company, Inc

-Energy Efficient Mortgages -

Many of us know that if the home is not up to code, properly insulated, has a poor air conditioning unit or heater, that it could cost you more money monthly. And keep in mind, there is a longer list of items such as lighting, appliances, etc, etc, that could reduce your expenses. Overall, there are specific types of mortgages that allow you to incorporate the costs of these upgrades into your mortgage, without coming out of pocket with extra monies. And this can be done not only with purchases, but with refinances. And to answer the question, what kind of mortgages? This could take place with FHA loans, Conventional loans, and VA loans. But I am going to go over the particulars when using a FHA loan.

So what is the name used for this type of mortgage? EEM, better known as Energy Efficient Mortgages. Unless you are having a new home built that could be an energy efficient home, in many cases, the older home probably won't be up to the current standards, which could cost you hundreds of dollars monthly.

My question to you.... Are you part of the GREEN family now, because not only did you save money, improve your home, but because you are helping the environment? As stated above, this can be done without added expense, except for the home energy rating report.

Realtors - How about that this is a great way for you or a seller to market their home also. Especially for those homes that are 5 years or older.

HUD states that Congress started a pilot program in 1992 demonstrating the use of energy efficient mortgages, known as EEM's. (Energy Efficient Mortgages) FHA has adopted this into their financing options which allows a borrower to :

• save money monthly
• incorporate the improvement costs into the mortgage
• these improvements are installed after the loan closes
• this program allows you to use normal FHA guidelines with FHA mortgages
  

EEM's recognize that reduced utility expenses will allow a homeowner to pay a higher mortgage payment to cover the cost of the energy improvements that were financed into the mortgage. A main reason behind the EEM's program, it offers homeowners who couldn't initially afford the cost of these energy saving improvements out of pocket, giving them the chance to finance them. Thus cutting down on pollution and making the environment a better place to live. And why bring this up again? For 2 reasons.

• Not everyone thinks about this or knows about these programs (and)
• because HUD just released a new mortgagee letter on June 10th, 2009. - ML 2009-18 - The old way was not to exceed $8,000 or $4,000 of improvements, whichever was greater. Now HUD states that : The maximum amount of the portion of the EEM for energy improvements is the lesser of 5% of:

• the value of the property, or

• 115% of the median area price of a single family dwelling, or

• 150% of the conforming Freddie Mac limit.
  

So overall, HUD increased the dollar amount that is allowed, depending on which category you fall into.

Eligibility Requirements

• Properties that are eligible are One to Four unit existing and new construction properties.
• Borrowers are approved through the normal FHA mortgage guidelines for obtaining a mortgage.
• The cost of the energy-efficient improvements that may be eligible for financing into the mortgage is the lesser of 5 percent of the property's value, depending on 3 different equations. Please refer to these changes above.
• To be eligible for this mortgage, the energy efficient-improvements must be cost effective, meaning that the total cost of improvements is less than the total present value of the energy saved.
• The cost of the energy improvements and the energy savings must be determined by a home energy rating report which is done by a home energy rating system (HERS) or energy consultant. The HERS report usually costs from $150 to $350 and can be paid by the seller, the buyer, or sometimes included into the mortgage.
• The energy improvements are installed after the loan closes. The money is placed into an escrow account and is released once an inspection verifies the improvements are completed and that the savings will be achieved.
• Because of this program, the final loan amount can exceed the maximum mortgage limit by the amount of the energy-efficient improvements. Here is a list of the FHA max mortgage limits.

EXAMPLE :

Asterisk *-- MIP now varies depending on credit scores. FHA Mortgage Insurance One-Time MIP

** -- Monthly payment does not include taxes or homeowners insurance. Just Principal & Interest (P & I)

*** -- Mortgage interest rate is just an average, depending today's market, points, and or costs.

**** -- As you can see, it's not a huge savings, but it does add up. Just in 1 year only you saved $918.96. And the cost of the energy improvements that were added onto your mortgage now become a tax write-off.

***** -- My examples in the cost of improvements and your monthly bills, will vary depending on several different factors.... such as age of air conditioner or heating, lighting fixtures, etc, etc. And also depending on what you pay per month. I only used these figures as examples.

Along with the FHA loans for these EEMS - Energy Efficient Mortgages, the VA(Veterans Administration) and FNMA / FHLMC also back these types of programs with their own guidelines.

Department of Energy (DOE) and HUD established a joint response to energy efficient housing.

FOLLOW ME ON FACEBOOK

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages -

- Conventional Loans - 203 k loans -

- Mortgages -

Experience & Knowledge at its BEST !!!

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger

If you are a loan officer or a lender that uses deceiving practices, who lies, or who likes to commit fraud.... you better watch out. I haven't heard about this as much in the pass, but HUD seems to be cracking down on those lenders that abuse FHA loans and HUD's policys.

As a warning to others in the lending business, HUD made a press release on June 10th, 2009, stating 3 lenders that have been suspended by HUD. These 3 lenders were suspended for serious violations under HUD's regulations. This is directly from the press release....."The 3 mentioned were Golden First Mortgage Corp of Great Neck, NY; Great Country Mortgage Bankers, Inc. of Coral Gables, FL; and Beneficial Mortgage Corporation of San Juan, PR."

Yes, it's all about sales and for many, it's how you can rope in some borrowers to come to your company. I see it often and hear more about it through new clients that have been duped or lied to by other loan officers or lenders. But there should be some form of integrity, no matter how much you might have to sell. I truly believe in educating the borrower, giving them a good deal, and allowing them to make their decision then. Don't get me wrong, there are some very good loan officers that follow this same practice. But for some reason, I am getting more people this year that have had bad experiences than I did in previous years.

Overall, why is this? In my opinion, once supbrime mortgages left the market place and conventional loans became harder or more pricey in rate, many lenders applied for FHA approval. You can read about the 3 lenders and why they were suspended in this press release. HUD press release in suspending 3 lenders

Summary : I would love to see more actions taken amongst lenders and loan officers. The 3 lenders that were suspended were for other related actions outside of your normal bad business practices of lying and such. In what I call, the bad performance of a lender or loan officer, to where they either bait and switch, or that they just mess up a semi simple deal. And in some cases, that deal gets delayed and or very poor service is involved. Please read this blog for a few examples that have taken place amongst two new clients of mine. The further that I dig into the first one, they would have never come close to the settlement date, based on some hard core evidence that I found. In my opinion, the previous lender was going to miss the settlement date by at least 7 to 10 days. To me, that is just unacceptable, because there was no urgency in what they were trying to accomplish. Don't get me wrong, I do understand that things happen and can delay a settlement. But this was not the case. Please read about it here.... False information in regards to who gets the origination fee

Other HUD practices against unfair lending practices -

FHA / HUD sets standards for Mortgagee Monitoring

FOLLOW ME ON FACEBOOK

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages -

- Conventional Loans - 203 k loans -

- Mortgages -

Experience & Knowledge at its BEST !!!

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger

If the public and government ever needs to hear our voice, it's NOW !!! I never like to sound negative in my blogs, but we need to face reality. Yes, there are some reports saying that the economy is turning around. There are some reports that say that people are spending money. And even some realtors are saying that they are busier than ever before, in the last 4 months or year. But let's break down some of the reasons why it might seem positive, when overall, I believe that it's really bad out there. This is just my opinion.

Keep in mind, most of what is mentioned below would not cost the taxpayers extra money. So important.....

• Real Estate is very local. Some markets are flourishing now, some are average, and some are just outright sluggish. Part of the problem is that many first time homebuyers can't buy, which doesn't allow for those that own a home to move up or out. I call this the ripple effect. I'll talk about this later.

• The news reports that people are spending more money. Okay, but what about unemployment that might hit 10% very soon. What about the fact that many Americans just got their tax refunds back and might just be willing to spend it, rather than save. The summer and nicer weather makes many of us spend also.

• Many companies reducing their prices, such as airlines and companies that book trips. People are using this to their advantage. Yet, specific foods are costing much more, which isn't mentioned often.

Let's not forget about the news. People report what they want us to hear in many cases. No matter if it's right or wrong. In other cases, realtors or loan officers are interviewed, giving misleading information. Or there are some that claim to be experts in their field, yet they have no clue in what they are talking about. I wrote about it here, "Hey media outlets, I am pissed."

Overall, we need to be heard, in regards to real estate solutions. Talk to those in the trenches and possibly help correct this mess.

Target Money - We need to create better outlets - Call to Action

- Foreclosures- We keep seeing more and more foreclosures and inventory that is not selling. We need to figure out a few programs to help get these foreclosures off the market. I talk about possibly using the seller-funded DPA's as a way to increase the purchases of foreclosures. Please read : Seller-Funded programs can work and have worked in the past.

What about using the $8,000 Tax Credit as a way to help curb the foreclosures. How allowing to get the whole tax credit and be able to use it as your down payment, if you by a foreclosure. How about increasing the first time homebuyers tax credit to $10,000 if you buy a foreclosure. And keep in mind that HUD has a $100 down payment program on all HUD programs. Why can't we make something like this work on foreclosures? At least try something.

- Investor properties- How about making better programs and giving incentives if you buy an investment property. Now, I am not talking about just anyone. You would need to have a proven track record when it comes to investment properties. There have been many realtors that have stated that rentals have picked up in certain areas. Beth Forbes wrote about how she solved the housing crisis. Explaining how we can turn around some of the real estate crisis by getting investors more involved.

- Seller funded down payment assistance programs and or 100% financing - Many of you will disagree with these statements, that we need to bring back seller-funded down payment assistance and or 100% financing. Sure, I will agree partially that buyers should have some skin in the game. But what about VA loans and USDA loans. They allow for 100% financing and they have a decent track record. I am currently working on some stats to prove this. As mentioned above, how about allowing some of the first time homebuyers tax creditbe used for the initial down payment. As of now, this is how the tax credit can be used. : Tax Credit can be used for partial down payment & closing costs.

HUD did try to get 100% financing approved, but congress shot it down. And HUD wanted seller-funded DPA's discontinued at the same time. I will agree, that with these types of loans comes higher risk. But many of the figures from the past were of those that had credit scores under 600. If we raise the standards and requirements on these kinds of programs, it will lower risk in my opinion. There is a main reason to these foreclosures, and it wasn't seller funded DPA's. Sure, some did foreclosure, but so did every other type of loan program. Besides, most FHA programs require 620 credit scores now anyhow. SO we can use this as a standard/guideline. And I would rather my client keep $3,000 to $5,000 in their pocket after closing, then dump it into the house. In my opinion, Lenn Harley did a great job in bringing up this point. And please read the 2nd comment. Please read : Skin in the game? WHo? Homebuyers or Wall Street?

Conclusion : Here is some information that doesn't get mentioned often. The tax credit being raised to $15,000, in my opinion, will not open up the real estate flood gates. Keep in mind, you need at least 3.5% of your own money for the down payment. Also, these tax credits will cost the tax payer money in the near future. Who do you think is paying for this kind of money being printed by the government.

Foreclosures, because of 100% financing? So many scream that you need skin in the game, money into the real estate transaction. This can be a matter of opinion, backed up by misleading information. Keep in mind, the subprime market and 100% subprime loans didn't help in many cases. Coupled with borrower who had low credit scores and who were assisted with such programs as the seller-funded down payment assistance. Let's look at the reality of this. People losing jobs is a huge reason to why people lose their homes and go into foreclosure. We can sit here and point fingers at so many issues, such as the DPA programs and or not putting skin into the transaction. People without income, just can't pay their bills.

Lastly, those that state that the current tax credit, and possibly raising the tax credit to $15,000, will boost the economy. That it will stimulate it immensely. Yes, it will help, but I don't think it will solve our real estate industry or help it as some think. As mentioned, we need to make the monies available upfront to be used as your initial downpayment.

My pleadge to you : I want to make this work, hoping to get some changes made in congress now. Not waiting for the economy to get worse. If you have other ideas or want to add to some of my ideas above, please list them in your comment. My goal is to get some loan officers, realtors, and politicians to meet at a round table in the next month, to possibly hear these thoughts and opinions. I am working on this and hope to get some big time media coverage for this event also. Anyone that has any contacts with both politicians or the media, please let me know. And anyone that might want to participate in this round table discussion, please let me know. My goal is to possibly hold something in D.C. in the next 3 weeks. thanks

Further thought & explanation - Matt Stigliano expanded on my post and we actually think a like. He did an excellent job at breaking down some of my thoughts and elaborating on them, expanding on them. Please read : Thoughts from a Round Table

FOLLOW ME ON FACEBOOK

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages -

- Conventional Loans - 203 k loans -

- Mortgages -

Experience & Knowledge at its BEST !!!

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger