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Karl Peidl - Accredited Loan Consultant

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FHA Announces New Mortgage Insurance Premiums

08-28-08
Karl Peidl - Accredited Loan Consultant

A Special FHA Announcement from FHA Expert Jeff Mifsud


In response to the passing of HR 3221, this update announces FHA's new Mortgage Insurance Premiums for the period of October 1st, 2008 through September 30th, 2009. FHA's Risk Based Premiums that went into effect on July 14th, 2008 will be on hold until October 1st, 2009.

Here are the 6 things you need to know about these changes...

1. Up-front Mortgage Insurance Premiums:

  • Purchase Money Mortgages and Full-Credit Qualifying Refinances = 1.75%.
  • Streamline Refinances (all types) = 1.50%.
  • FHASecure (Delinquent Mortgagors) = 3.00%.

2. Monthly Mortgage Insurance Premiums:

  • For 30 year loans with LTV > 95%, monthly will be .55%.
  • For 30 year loans with LTV < 95%, monthly will be .50%.
  • For 15 year loans with LTV > 90%, monthly will be .25%.
  • For 15 year loans with LTV < 90%, monthly will not be required.
  • For FHASecure loans with LTV > 95%, monthly will be .55%.
  • For FHASecure loans with LTV < 95%, monthly will be .50%.

3. Mortgages with FHA case number assignments made on July 14, 2008, through and including September 30, 2008, shall maintain the risk-based premium structure for the life of the mortgage.

4. FHA will issue another notice that will formally advise when the moratorium is concluded and the premium pricing structure that should be followed once the moratorium ends.

5. Credit Scores:

  • Borrowers with credit scores below 500 will require an LTV of 90% or less.
  • Borrowers with 3 scores, the middle score is used.
  • Borrowers with 2 scores, the lowest score is used.

6. These premium changes apply to the following FHA loan programs: 203b (standard 1-4 unit property), 203k (rehab loan), and 234c (condominiums) and do not apply to FHA reverse mortgages.

We are still awaiting more changes in response to HR 3221 so watch for future updates.
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Avoid Changes to Your Financial Profile

08-28-08
Karl Peidl - Accredited Loan Consultant

Once your loan package has been sent to the lender, there are a number of things you should avoid doing that will change your financial picture. Remember, the lender is looking for stability and consistency. If you want the best interest rate, keep that in mind. Here are a few things to consider:

The lender is looking to see what your source of down payment is.

Your lender will most likely ask you to provide proof of your liquid assets. This includes bank statements for checking and savings accounts, verification of investments, and any other liquid assets. Some of the things they ask for may seem trivial, but keep in mind, if you are planning a move to a new home, it's important to have all documentation readily available. If the lender asks for cancelled checks or deposit receipts to meet certain conditions, you want to be able to find these things quickly to avoid delaying the closing of your loan. Make sure your paper trail is easy to document, and don't move money from one account to another.

Major purchases tip the scales against your favor.

Avoid making any major purchases. You might be thinking about purchasing new appliances for the new home. This is not the time to do it. Avoid making any major purchases on jewelry, appliances, furniture, vacations, or anything with a significant price tag.

Buying or leasing a car can make a negative impact on the way the lender views your financial status. This is a big ticket item that dramatically affects your debt-to-income ratio. You may feel you have room in your budget to purchase a new car, and think this is a worthy investment if you are looking for a home that will mean a longer commute for you on a daily basis. But by tacking a car payment onto your existing debt, you reduce the amount that you will qualify for in a home loan. A $400 a month car payment can reduce your approved loan limit by as much as $50,000. Think about doing this after your loan is approved if you really need it.

If you have to change jobs, you may be asked to document why this change occurred.

If you are changing jobs to increase your income, that's a no-brainer for the lender. If you have an erratic work history to start with, another job change may make it look worse for you.

If you are an hourly wage employee, most likely a job change will have no effect on your ability to qualify for a loan. If you have a track record of a consistent amount of overtime or consistent bonuses over the last two years, the lender views this favorably. If you change jobs, there is no way of knowing if the new employer will pay overtime. Many do not! If you work on a salary + commission or straight commission basis, it has a dramatic effect on your stability. If you are considering starting your own business, again, this is something to consider after your loan is funded.

Call me directly for a free consultation.


Licensed Mortgage Banker, NJ Deptartment of Banking and Insurance. Corporation also services CO, CT, DE, FL, GA, IN, MA, MD, MN, MI, NC, NH, NY, PA, SC, TN, VA, & RI.
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Pros and Cons of a Bi-Weekly Mortgage Program

08-25-08
Karl Peidl - Accredited Loan Consultant

When a borrower enters into a contract to make bi-weekly payments on their mortgage, the amortization schedule is accelerated. For example, with a 30-year amortization schedule, the borrower makes 12 payments per year. In a bi-weekly arrangement, the borrower makes 26 'half' payments, which allows the loan to be paid off in 22.8 years instead of 30 years. It's the same as making 13 monthly payments.

This ultimately saves the borrower thousands of dollars in interest rate fees. However, bear in mind that bi-weekly programs usually have some type of setup, transaction, and maintenance fees associated with them. A custodian manages the bi-weekly payments in a trust account (and also makes a profit on the interest accrued there). Because the lender really doesn't accept partial payments, this middle man is still making monthly payments to the lender on some type of pre-payment schedule.

It is important for the consumer to know that the same results can be achieved without hiring an outside company to do this. As long as your loan program carries no pre-payment penalty, pre-payments can be made on a monthly or annual basis to shorten the loan term to save money on interest or remove PMI charges on loans that have less than a 20% down payment. The borrower simply needs to indicate the extra payment is being made toward the principal balance, and have the discipline to make these extra payments as scheduled.

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The Balancing Act - Work, Family and You

08-22-08
Karl Peidl - Accredited Loan Consultant

These days, most of us work two jobs-the one that pays, and the one we love (at least most of the time): raising our kids.

On the messageboards at iVillage.com, they have great tips on how to make it easier to do both at once. It's also a great place to share advice of your own, and to get support if something's getting you down. And though it's mostly for Moms, working Dads can find plenty of helpful advice, too.

Here are a few of the best tips for balancing work and family:

Get up before your kids do. Painful, but worth it. Getting that extra 15 minutes of sleep is nothing compared to the calmness you'll feel if you get up and get yourself ready first. Whatever it takes for you: work out, take a shower, get the coffee down your throat. When your act is together, it makes it easier to get their acts together.

Prep ahead. You do it at work, why not do yourself a favor and think a few steps ahead at home, too? This can mean anything from picking out their outfits for the next day before going to bed, to making lunches the night before, to keeping casseroles frozen for fast and easy dinners. A little prep can prevent a mad dash.

Stick to a routine. Whether it's getting dressed in the morning, or eating dinner at night, make sure your kids know what to expect when, and what's expected of them. A lot of melt-downs can be avoided by everyone knowing the plan.

Stay involved with your kids' care. Okay, so you work during the days, but that doesn't mean you can't be an active participant in your kids' daycare or school. If you can't drop in for lunch like stay-at-home parents, maybe you can bring in an activity for the kids, or a snack. Or you can use your work skills to do something for the class, like build the kids a little website, or cut out the patterns for a class project. Your kids will feel like you care, and so will the school.

Save some time for you. Make sure when all is said and done that there's some time for you and your partner to be adults together. It can be a lunch date, dinner once a week, or even renting a movie. Just build it into the schedule. It'll help you feel better about all the demands on your time. Because if you're not a happy camper, you can't expect the other campers to be happy.

We all have to do what it takes to keep the ship afloat. Hope these tips help to give your ship a little more buoyancy.

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What Lenders Look for in Home Loan Applications

08-21-08
Karl Peidl - Accredited Loan Consultant

Once your loan application is filled out and sent to the lender for review, the first thing they will look for is your ability to payback the loan you are requesting. My team and I have a streamlined loan process to help you get your ducks in a row prior to this review. A grand slam loan package is in perfect order and answers all the important questions up front. We know what the lenders are looking for, based on long-term relationships with them and extensive knowledge of guidelines for a multitude of loan programs that are available today.

What is the lender looking for when they review the loan application?

The lender wants to know about your personal financial picture, including savings and credit history and your employment stability. The co-borrower's history is also taken into consideration. The lender also considers the loan amount and appraised value of the home you are looking to purchase. Not every applicant is approved the first time through the process. If the underwriter has any questions or concerns, he or she will require certain conditions be met before they approve the loan. Pre-approval prior to house hunting lets you know exactly how much you are qualified to borrow in advance.

What can I do on my end to make it easier?

Before taking out a home loan it helps to establish a consistent record of paying your bills on time. If you have utility bills that are overdue, bring these up to date. Make sure you are paying credit card installments in a consistent and timely manner.

We can help you evaluate your debt-to-income ratio to determine what mortgage payment will be comfortable and affordable for you on a monthly basis. Aim for having enough savings to cover your down payment, closing costs if necessary, and two month's expenses in case of emergency. We'll help you find the loan program that works for you.

If I just started a new job six months ago, can I still apply for a loan?

A stable employment history is important, but the lender does take human factors into consideration. If you've recently completed college or vocational training, or were released from the military, you have good cause to have a lack of consistent work history. If your profession is seasonal, and gaps in employment are normal in your field, there are loan programs that can work with your situation. If you are a freelancer or do contract work, the lender will look for consistency in income over the last two years.

Consistency is the key word in the lender's mind. But know that lenders have developed many different loan structures to meet the needs of the general public. When your grandparents bought their first home, they probably put 50% down and made a lump sum payment when the note was due. Times have changed, and so have loan programs. My team and I stay on top of current mortgage trends. We monitor rates daily and have a support network of Realtors®, CPAs, Financial Planners and Credit Repair Consultants to lend you additional assistance.

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