Cheryl Hale - South Florida Mortgage Lady

Nothing beats listening to some great live music while soaking up the ocean view and moonlight. Last night I had the pleasure of listening to Alex Romano and Kirk Green perform at the Patio Bar on the ocean in Deerfield Beach.

The Howard Johnson Patio Bar and Grill is located just north of Hillsboro on AIA just across from the Deefield Beach pier.

From soulful jazz to get off your feet and dance music, the crowd enjoyed the show until 11PM.

During their break, Alex and Kirk mingled with the crowd and I had the opportunity to chat with them for a few minutes. Alex has a website that has many samples of her talent. In addition, you can do a search for her on You Tube and find dozens of songs.

The duo plays gigs throughout the tri county area and are also available for private events. Take a look at Alex's website for more information and some samples of her talented singing at ARMusicFusion

No, you do not need to refinance to get a lower interest rate. You might be able to qualify for the Home Affordabe Modification program. If qualified, you lender may lower your rate by modifying your mortgage.

The first thing you should do is go to your lender's website. They should have a section regarding how to get assistance if you are having difficulty making your mortgage payments, or something similar. This is where you can find out if they participate in the Home Affordable Modification program. If so, you can find out if you qualify. If this information is not on your lender's website, you can go to the Government website http://makinghomeaffordable.gov/refinance_eligibility.html for more information.

Basically, in order to qualify, your current mortgage payment ( principal, interest, taxes, insurance and HOA fees) must be more that 31% of your gross monthly income. ( Gross income is your pay before taxes and other deductions are subtracted).For example, if you make $60,000 a year, your monthly gross income is $5000. 31% of that figure is $1550. If your current mortgage payment is more than this, then you could qualify for the program.

The income of whomever is on the note is the income that is used to qualify you. If you are married, but you are the only one on the note, you do not need to disclose your spouse's income.
There is a calculator on the government site that you can use to see if you would be qualfied for the program.
If it looks like you are qualified, contact your lender's loss mitigation department and tell them you want to apply for the program. Be prepared with some basic financial information - have paystubs handy so you can discuss your gross income, and a list of your monthly household expenses.

This post was inspired by a comment from Alex regarding my post Borrowers Don't Wait for the Well to Run Dry. That post discusses some changes in mortgage underwriting guidelines and how it is getting more difficult for borrowers to qualify for a mortgage.

"Well it is sure the trends show that it is going to harder for the consumers to cover the requirements but what happens with those who didn't make their payments. Those who failed at a certain point. They loose their home?"

Alex,

You are correct about the trends. Lenders are being much more cautious.

You've asked an excellent question that I am sure is on the mind of many homeowners these days. Based on what I am seeing and hearing, lenders are willing to try to work something out with those who have become delinquent...a foreclosure is very costly for the lender. AND bad for everyone all the way around. The lender prefers to avoid this option. As long as the borrower can demonstrate an ability to repay, the lender may do one of the following:

-Reduce the interest rate for a few years
-Allow the borrower to "skip" a few months of payments to get caught up (the "missed" payments are added to the balance of the loan, effectively extending the mortgage term a few months)
-Extend the term of the mortgage from 30 to 40 years
-Freeze the rate on an adjustable mortgage when the rate has increased to the point that the borrower cannot afford the payment.
-The FHA Secure loan is another option..borrowers who have fallen behind due to an adjustable rate increase may qualify to refinance into a lower fixed rate program to reduce their monthly payment. If you have a 2nd mortgage or HELOC, and owe more than the property is worth, you may still be able to refinance. FHA will allow for subordination of the 2nd lien.

-A short sale is another option. If you own more than your home is worth and you can prove hardship, you may be able to sell your home and start fresh. A short sale is less damaging to your credit report than a foreclosure. If you want to explore this option, be sure to work with a realtor who is experienced with short sales. This can be a time consuming, tricky process.

There is also some proposed legislation that may provide some relief in the form of reduced interest rates to make monthly payments more manageable.

Options are there. It is very important for a borrower who has gotten behind to contact their lender to see what can be done. They should also contact a mortgage professional to see if they qualify for a refinance to reduce the monthly payments. Folks are giving up before they explore their options.

Information brought to you by The South Florida Mortgage Lady, a mortgage broker in Boca Raton, FL

As reported by Mortgage News Daily, FICO is planning on releasing it's new credit scoring product sooner than planned. FICO states that this new system will help reduce default rates on mortgages and other consumer loans.

The key points:

Consumers will not be hit as hard for an occasional, or one time missed payment provided the rest of their bills are paid in a timely manner.

As a consumer and mortgage broker, I like this one. While I don't advocate that making late payments is a good thing, once in while, someone with otherwise good credit could miss a payment for some odd reason. With the current model, this could lower their score considerably. I once did a refinance , and during the loan process, the borrower accidentally missed a payment on a Home Depot card...the account had been paid on time for 99 months. The score dropped 60 points since the delinquency was recent, and when the lender re-pulled the credit, they no longer qualified for the loan.

Another item that will be addressed is the authorized user. In the past, someone with an account in good standing could add an authorized user (spouse or child, for example) and that would almost immediately boost the score of the authorized user.

Another item: Those with a mix of revolving and installment debt will have a higher score than those with revolving debt only. So it can show you can manage a car payment and credit debt, your score will be higher

As a mortgage broker, I work with a lot of first time homebuyers. The loan process is sometimes scary and intimidating. It really doesn't need to be that way, however you do need to be prepared to provide certain information so the lender can determine if you can pay the loan back.

A purchase that I am working on is consuming a lot of my time and energy, so I've decided to write this "letter" to hopefully educate and inform first time buyers and anyone else who may not be familiar with the mortgage loan process.

Dear Borrower:

As a mortgage broker, I pride myself in getting loans closed as quickly as I can. I'm good at what I do, but I also rely on a team to help me. That team can include an appraiser, a Realtor, a processor, an underwriter and YOU. Everyone on the team relies on the others to do their job correctly.

That's right - you are part of the team too. And your job is to provide me with the documentation I request in a timely manner. If you do that, you loan is going to close quickly. If not, your file is not going anywhere.

You are wondering why it's been a month and your loan hasn't closed...let's see..what could be the problem? ..

The pay stubs you gave me are from July, not December or January. It's taken me 2 weeks to get current pay stubs from you. If I submit your loan with outdated documents, the underwriter is going to put your file at the bottom of the pile. You told me you had a 401K, so I asked for verification. Another week goes by..OK, I think you get my drift.

You're upset that I am "asking for so much stuff" that you're going to have to take time off work.

I am asking you for the things I know the underwriter will require. The underwriter needs to justify approving your loan. If you were loaning someone a few hundred thousand dollars, wouldn't you want to be assured you would get paid back?

If you are prepared with the documentation you will need , your loan process will go very quickly and smoothly.

Here's a list of documentation you will need to provide to your mortgage professional:

• 1 month's worth of current pay stubs
• W2's for the past 2 years
• 2 years tax returns if you are self employed
• 2 months of current bank statements..all pages
• Current statements for any other assets such as a 401K or mutual fund.
• 2 years of complete employment history and a phone number for the HR department or a supervisor who can verify your employment.
• Letter of explanation for any derogatory items on your credit report. Something very short and to the point, you don't have to write a novel.
• For a purchase, a copy of the sales contract signed by all parties
• A copy of your driver's license and social security card

It seems like a lot, but this is what your mortgage professional needs so they can submit your file to an underwriter for approval. Providing these things with the file makes the underwriter very happy and that means a faster closing for you!

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Information provided by The South Florida Mortgage Lady, a mortgage broker in Boca Raton, Florida