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

It's time to have a quick class on FHA loans, the fees for FHA mortgages, and just a basic understanding on how all of this works. This is truly frustration on my part from some loan officers blatantly lying to borrowers, just to justify their fees and such. It's total BS and it needs to be talked about.

Just today, I spoke to a borrower that is having a concern with their 2nd lender, after the first lender failed them miserably. This lender is charging them 6.00% with 1 1/2 points as an origination fee. His credit scores are above 670 and the purchase price is $272,000 with the minimum down. And they are being charged a $495 commitment fee. With this scenario, they should be getting at least a 5.50% interest rate. Here is what they are being told.....

So here is the story of one borrower after speaking to their current loan officer. They were told that they are getting 6.00% and not 5.75%, because of his credit score of 670. Well, I don't know one investor as of 6/13/09 that would charge you 1/4% percent, let alone, a 1/4 point, for credit scores above 670. He was told it was because he didn't have a credit score of 700.

Secondly, he was told that out of the 1 1/2 points of the FHA origination fee, that a 1/2 a point goes to FHA and the other 1 pt goes to the lender that they are selling this too. Even if the other lender was collecting something, FHA or HUD doesn't collect origination fees. Sadly, this is the 3rd time just this year that I have heard a loan officer tell a borrower that part of the origination fee goes to FHA. Rut Row... see Pinocchio's nose on the loan officer? His nose should be much longer, because this is one of the biggest lies that I have heard. The commitment fee being charged? Very average in most csses.

So, let's define FHA origination fee or just origination fee. It is explained to be a fee charged for the processing of the loan application. This is even the same definition in the HUD buying handbook. The fee is often expressed as a percentage of the loan amount, which does vary among lenders. The basics behind this, no matter who gives what definition? It is a point to pay for your rate. Either the lender is buying your rate down, or using it for extra profit. In my example above, it is being used for a larger profit.

So, what does HUD/FHA collect on all FHA loans? Just the Upfront Mortgage Insurance Premium (MIP) and the monthly mortgage insurance MMI. The lender gets all other lender related closing costs. I hate saying this, but if a loan officer tells you that part of the origination fee goes to FHA, don't walk, run very quickly and far away. This is not my opinion, but a real cold hard fact.

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- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages -

- Conventional Loans - 203 k loans -

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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

Tax Credit Alert - $8,000 to $15,000??

Will the flood gates open for home sales? Through some news reports such as Bloomberg and other media outlets, those lawmakers in Congress are looking to change up the current $8,000 first time homebuyers tax credit that ends on November 31st, 2009. The new bill was introduced on June 10th, 2009, but pending. This could be some good news for more than just first time homebuyers. But I have a different opinion on just the basics, from raising the tax credit from $8,000 to $15,000. But what are the changes that are being talked about?

New proposed Tax Credit changes ....

• The tax credit of $8,000 would be raised to $15,000
• They would take away the income restrictions. The current income caps are : Single - $75,000 and Joint return - $150,000.
• Making this available to anyone, even if you aren't a first time homebuyer.
• Extending this for 1 year after the new bill becomes active.

Let's talk about this now..... I will agree that this could even help those that aren't first time homebuyers. It would help those that owned a home, that are upside down, who sell their home, yet have no money now.

Now, here is my problem about the current first time homebuyers tax credit or even if this is revived shortly. Yes, we will be printing more money then ever before, even from the last stimulus bill. Want I would like to see is the government and HUD put their heads together to come up with a plan to allow the homebuyer to use this money even for their initial 3.5% down payment. If you aren't sure what I am talking about, please read this. First time homebuyer tax credit approved by HUD to get the monies before settlement.

Conclusion: There are some that have argued with me that this new change, that HUD will allow you to get the monies before closing, to be used for part of your down payment and closing costs, will help a lot. I have been arguing this point 2 months after the $7,500 tax credit was approved in early 2008. My argument is that this will help some, a few, but not as many as the government projects or hopes that it will help. My argument? You need some of your own money first to be able to buy. Yes, you still would need 3.5% of your own money and in this economy, not everyone can save this in a timely manner. And many of these people that can't save adequately would still be good to excellent buyers... at least in my opinion, from 16 + years of lending.

Overall, if we could come up with a comprimise to allow all buyers to use this money even for their initial down payment, then that would open up the flood gates. People, keep in mind that we have the USDA loans and VA loans that allow 100% financing. This shouldn't be about having skin in the game, because these 2 programs have a good success rate. I will be writing about this over the weekend, my thoughts on what we can do, so please stay tuned for this. Thoughts? Opinions? thanks

PS..... UPDATE.... Per Lenn Harley's comment & Pat Kennedy's, don't get me wrong, I am not a big fan of printing all of this money. I have talked about this in such blogs as :

I need my quick fix now, please pass me that 4.5% rate now. - why we can't afford to keep lowering the interest rates, thinking that this will help now. This kind of thinking is just for consumer confidence, but will bury us in the very near future, which is mentioned in the next link below, inflation vs deflation.

Inflation vs deflation - Is it criminal? -

My Series on the First time homebuyers $8,000 tax credit - Everything you need to now, from start to finish - What's allowed and what's not allowed :

- The $8,000 tax credit for first time home buyers - The basics - What to know about it - Understanding what the tax credit is all about.

- Use a 6 month gift from a relative to buy a home, thanks to the Tax Credit - How to get creative in using the tax credit and some FHA mortgage guidelines in helping you use this tax credit to your advantage.

- Using First-Time Homebuyer Tax Credits for the Downpayment - It's GONE !!!! - The story of the $8,000 tax credit - The bottom line, you can't use the actual tax credit as your downpayment.. for your downpayment, unless you get it from other sources prior to buying the house and receiving the tax credit.

- FRAUD ALERT - Advice on the $8,000 first time homebuyers Tax Credit - Do you chance it??? - This explains to you that it's fraud if you directly obtain the money from the IRS before you actually purchase the house. Even HUD and many lenders/investors acknowledge this also.

- The $8,000 tax credit for First Time Homebuyers - How & when to get it legally - So how can the tax credit be received legally for your downpayment? Just be careful of those that promise other ways not mentioned. I talk about what is illegal in the previous blog above. Please click the link.

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

Do you put 110% into your clients, yet you don't feel appreciated at times? Do you get beat up in this business? Do you feel like you spin your wheels, especially in today's market place? Overall, does your pain show, even when you think you have your happy face on?

Well, in the last 2 weeks, this has all happened to me one way or another. This post is not to brag about my ethics, how I treat clients, and that I feel that I am better than most when it comes to mortgages. But more so a form of therapy for me, which I wanted to share.

How many wear your heart on your sleeve? How many of you have a heart larger than life? How many of you have passion for what you do?

It was rewarding the other day, while speaking to a potential borrower, that she could tell that I have passion for what I do. But why the gloomy face in recent weeks? Feeling like I am lifeless, that I have lost that passion just recently. And because of this, I haven't blogged in the last 10 days or commented in the last 5 days. And because of two specific transactions, I haven't spelt well nor have I eaten as much. Yes people, I take this more than as a job, but as a part of my life. I love helping others, and even though some things happen out of my control, I feel like I have failed. Here are my reasons to why I have felt like this in recent weeks.

• I have a borrower that was suppose to have closed on May 27th, 2009. We ran into an appraisal issue that had an AVM fail, not pass. This property is in a declining market. I called everyone, even the listing agent, on the 20th of May to tell them to schedule it for that Friday, the 29th. I have been doing this for over 16 years, and I believe in communication, even if it's bad news. Of course people were going to be mad, and that there were 3 other transactions involved. They finally agreed to this on the 22nd, but we still were having problems with the AVM. Let's define what an AVM is first.

AVM stands for Automated Valuation Model. It calculates value of a property, just like an appraisal does. It uses the MLS to find other properties that are related to the suject property. Many investors and warehouse lines are requiring AVm's now, especially in declining market areas. The problem with AVM's are that they aren't always as accurate and several of the properties are not tagged properly.

In any case, we even missed the 29th and I told them that I don't stop until a solution is figured out. As it stood, they would have to put down an additional 5%, which would have been $30,000 that they didn't have. I reached out to a few of my lender contacts and had someone that could help them. But they decided to use the listing agents recommendation. But as I mentioned, I still don't stop. As of Friday, we finally got the AVM overturned, after several reviews. The buyers decided to come back to me, because rates have climbed drastically. And even though I was 1/2 percent better, I didn't use this against my borrowers to charge them for what it cost me to extend their current rate of 4.75%. And this cost me a pretty penny, even though I am still making something on them. But I didn't use all of this to my advantage, so I would lose this money. My integrity and referrals means more. The overall picture? A happy client at the end.

• My other closing? Another AVM issue that was on a property in Florida. The good news is that it's a Fannie Mae owned property. The property was originally being sold for $186,500, and was reduced to $170,000 by the AVM. Fannie Mae came back and accepted this price, which is even better for the buyer. But again, I had to extend the rate lock and I didn't charge the borrower for this.

Summary : Overall, more lessons were learned and it won't compromise my work ethics and how I treat people, even though I was yelled at and talked badly about. The first client, I was yelled at by the realtor for not returning a phone call the night before at 8 pm. Yes, these people involved where use to me calling and accepting calls at 10 pm. I do go beyond the call of duty. Yet, I can't be there 24/7... I do have a life and things do happen. If I don't pick up, it's for a reason. The example of the 2nd client? The realtor that was referred to me, who was in Arizona, because his wife had a co-worker that needed help in Florida? He e-mailed me, telling me that he was disappointed, because we had a closing issue. But the funny thing is that he jumped the gun, thinking that it was my fault. People, in both cases, these were issues not in my control. It wasn't a credit issue... it wasn't a credit issue. It wasn't a problem created by Jeff Belonger or Infinity Home Mortgage. I take too much pride in what I do to have those problems occur. But the bottom line, both deals are still closing.

Question to all of you in real estate and mortgages.... How do you set yourself apart from others? How do you handle adversity? I feel like I should be making $1,000,000 a year, because of my worth to my clients. But we all know that is not how it works in this business. I know a few loan officers that have tripled my income this year, and they truly suck at their job. But I can sleep at night. But as I mentioned, I didn't sleep for many nights, because I do care. Maybe too much... and it showed, because I had co-workers and friends bring this to my attention. Yes, I have a job to do, but I also have pride. And I don't accept failure, no matter who is at fault. Overall, I truly try to set clients expectations to a certain level, which I think is underrated when it comes to mortgages and how others make promises or guarantees, just to appease the people involved. Or, when a problem occurs, that it's not mentioned until the last minute. These are things that you won't get from me. That is my only guarantee......

- 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

BUYER BEWARE of Tax Credit

The first time homebuyers tax credit of $8,000 has been approved by HUD for all FHA loans. But don't get too excited too quickly. If you get a chance to read the mortgagee letter, ML 2009-15, it states that you can't use this tax credit for the required down payment of 3.5%.

HUD originally put out mortgagee letter 2009-15 on May 12th, but was rescinded the next day. Please read about that here : $8,000 tax credit rescinded by HUD. For some reason, it was prematurely placed on HUD's web site, but apparently wasn't finalized. Now we have a new version and if not read correctly, you could be putting misinformation out there. So what does the new mortgagee letter state?

Here is the positive part about the tax credit. You can receive the first time homebuyers tax credit upfront, but not through the IRS. This would be illegal. Please read : It's illegal to receive your tax credit before you close on your home. Buyers - BEWARE, please read that, because too many people are saying that you can get the money directly from the IRS prior to closing. The IRS & HUD both say no!!!

So how can you receive this upfront? It can be given to you as a second or a silent second from any Federal, State, or local agencies, and any FHA mortgagee or any FHA approved non-profit organization. People, in layman's terms, this is already acceptable by HUD's standards, except for the lender that is now able to give the monies upfront in a form of a 2nd mortgage. Another terminology is that this can be an advance loan from any of the entities mentioned above.

Summary : Essentially, this means that the entities mentioned above, are purchasing this tax credit on your behalf and giving it back to you. The short version of this is that you can use some of the money from the $8,000 Tax Credit as your down payment, but after you put down the first 3.5% of that down payment. Meaning, you have to come up with 3.5% of your own money still. With FHA loans, it can still be a gift from a relative/family member. It also can come from non-profit or government agencies to be used as your initial down payment, but not used through the tax credit. Overall, the tax credit that is advanced, can be used for all closing costs. But you can't receive monies back at closing.

And again, keeping in mind, it's illegal to receive this tax credit upfront directly from the IRS. There is more verbiage in the mortgagee letter 2009-15 , but the main point is that you have to have 3.5% of the downpayment yourself, before you can use the tax credit that would be 'loaned' to you.

THOUGHTS??? - Well, in all honesty, how does this truly help? What is the gov't thinking here? As a buyer, I would still need the initial 3.5% of my monies for the down payment. Again, needing money to buy. I know some of you are for this fact, that buyers should have skin in the game. But keep in mind, this was not the true demise to our foreclosure mess. We need to sell houses to keep this economy going. Just my opinions and food for thought. thanks

My Series on the First time homebuyers $8,000 tax credit - Everything you need to now, from start to finish - What's allowed and what's not allowed :

• The $8,000 tax credit for first time home buyers - The basics - What to know about it - Understanding what the tax credit is all about.

• Use a 6 month gift from a relative to buy a home, thanks to the Tax Credit - How to get creative in using the tax credit and some FHA mortgage guidelines in helping you use this tax credit to your advantage.

• Using First-Time Homebuyer Tax Credits for the Downpayment - It's GONE !!!! - The story of the $8,000 tax credit - The bottom line, you can't use the actual tax credit as your downpayment.. for your downpayment, unless you get it from other sources prior to buying the house and receiving the tax credit.

• FRAUD ALERT - Advice on the $8,000 first time homebuyers Tax Credit - Do you chance it??? - This explains to you that it's fraud if you directly obtain the money from the IRS before you actually purchase the house. Even HUD and many lenders/investors acknowledge this also.

• The $8,000 tax credit for First Time Homebuyers - How & when to get it legally - So how can the tax credit be received legally for your downpayment? Just be careful of those that promise other ways not mentioned. I talk about what is illegal in the previous blog above. Please click the link.

• The First time homebuyer $8,000 tax credit has been amended - May 29th, 2009 - Buyer, beware !!! You still need 3.5% of your own money for the down payment. It can't come way of an upfront loan through the tax credit.

- 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

Memorial Day

- How many of us truly know what Memorial Day is and what it stands for? Besides that extra day off, that many of us celebrate it with friends and family. Do you know that today is a day to honor all of those men and women that died while serving in the military. It's not suppose to be a day to honor those men and women that now serve us, but those that gave their lives for us to enjoy the freedom that we have today, as Americans.

Memorial Day was first known as Decoration Day and is celebrated on the last Monday of May each year. It's a day for those to go around to the cemeteries to decorate the graves of those that fought and died for our country. One of the traditonal ways to observe this time is a national moment of remembrance that takes place at 3 pm on Memorial Day. Another tradition is to fly the flag of the United States at half staff from dawn until noon. For more information on this great day, Memorial Day, please read : Memorial Day (the picture and some of the information supplied is from Wikipedia)

I was watching the news last night, which I hardly do anymore for several reasons. But they had interviewed this gentleman, Tom Day, who is a retired military officer who started Bugles Across America. What touched my heart the most while watching this interview is that this is a person that feels that our Veterans that died in the military should deserve a live rendition of taps played by a live bugler. What is intriguing about this is that Congress passed legislation stating that Veterans had the right to at least two uniformed military people to fold the flag and play taps on a CD player. Mr. Day wanted to take this a step further.

Overall, this touched me on several issues and I wanted to spread this message to others. My grandfather, James Quinn, fought in World War II and passed away on May 30th, 2003. We had a very nice service for him and even had the bagpipes there. But at the very end, the two in uniform that were there on behalf of the military, had a problem folding the flag. And I was asked to help if I had an idea on how to tuck the end of the flag in, because I had served in the U.S. Army from '86 to '88. At one time, we actually had a quick class on how to tuck the flag of the United States, so I was honored to help. But I commend Tom Day and his organization, to make sure that the men and women who died so courageously for our freedom, that they get the real thing. If anyone has ever been to a funeral to where there is real live taps being played in the background, it sends shivers down your spine. At least it does for me whenever I hear this. And to think that we can just make a small effort in making sure that this is real, for those that died while serving our country, I think it is the least that we can do.

Now, Mr. Day does ask for donations on his site. I know in a struggling economy, this might not be easy. But they also look for volunteers that could actually play Taps on the bugle or a few other instruments while doing the same. His organization now has more than 5,000 buglers that can volunteer acros the Untied States. For more information on this and information that he displays on his site, please go to : Bugles Across America

Part of my passion in writing this was because not only was I inspired to write about this because of Tom Day's desire to give Veteran's a proper and honorable burial, but that I was inspired after reading Missy Caulk's post, What are you talking about around the picnic table. Something that I think many of us don't do as often as we should do. And keeping in mind that this is not Veteran's Day, which is a day to honor and thank all those men and women who served in the military, those living, who died, or those on active duty. Please just keep the focus here and honor all those that died for our country.

Proud to be an AMERICAN

- 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