Borrowers are going to pay more for an FHA loan in 2012. FHA mortgage insurance premiums are going up AGAIN. This change could possibly take an approved loan file straight to the DENIED bin.
The recent, signed legislation to extend the payroll tax deduction means an increase in FHA’s mortgage insurance premium. The FHA (Federal Housing Administration) has 2 charges to the borrower:
· Up Front Mortgage Insurance, which is currently 1% of the loan amount
· Annual Mortgage Insurance, currently at 1.15% and slated to increase to 1.25%
How could this affect you?
It could end in loan denial. Namely, if as a borrower, you are near the limits of allowable debt-to-income ratios. For example, on a $250,000 loan, this increase will add another $26.04 per month in additional mortgage insurance which also gets added into the debt-to-income ratios. This increase couple topple the peak of allowable ratios and result in a denied status on your loan.
What do you do?
We Are All About Solutions!
Two things:
a. No monthly MI means your purchase power just increased dramatically (see illustration below).
b. Sellers and banks LOVE conventional offers!
c. Many lenders will tell you that there is a rate increase for doing this “flavor” of conventional financing (called single premium financed MI). DON’T LISTEN. You can get the SAME rates as those borrowers paying monthly mortgage insurance. You just need to work with a lender who has that capability.
Happy House Hunting!
You are in your jammies, its 1:00 AM and visions of new homes are dancing in your head. How much is this going to cost? What interest rate will you get? Who are you gonna call? No need, my friend…the internet has got you covered!
Information is GOLDEN. And if you are like most, you are a do-it-yourself-er (DIY). You want and expect information at your fingertips until you reach a certain point in the home buying process.
I GET THAT.
Most people prefer to browse and learn online before shopping with the aid of a real estate or lending professional. We GUARD and PROTECT our privacy. Anonymity rules. But where do you start? Well, bookmark this blog because The MN Mortgage Mom has just dialed in for you.
1)Interest Rates
Cool. You can find “estimated” interest rates all over the net. I say, “Not so cool.” Why? Because interest rates, to some extent are derived from credit scores, loan-to-value and other criteria. Typically, the posted rates you find on the internet are for those with a minimum of a 740 credit score with 20% down, conventional financing. Maybe you are an FHA borrower/buyer? VA or Rural Housing? Maybe your credit scores are around 680? You need LIVE rates based on YOUR INDIVIDUAL criteria. You can get that HERE. (Disclaimer:Don’t be sending me nasty grams at 1:00 AM that the rates aren’t LIVE. Yep, markets close just like businesses. If you want real live rates, you’re going to have to check them during business hours.)
2)Closing Costs
How much is this mortgage going to cost? (First, if you are buying a home there may be a possibility of getting seller paid closing costs. If you are refinancing, there is a possibility of rolling the costs into the mortgage, thereby reducing your cash-to-close. But, that is a whole new blog…I will get into that another day.) I have never seen a web site that offers the public real closing cost estimates. But, fear none, I got this one. Same link as the one above:Closing Cost Calculator. Enter your criteria and you will receive the interest rates and closing costs specific to your deal. Real Estate Agents!This tool can be invaluable for you and your clients when working up an offer.
3)Calculating Monthly Payment 
This is fairly self-explanatory. To incorporate the rates you see into a monthly payment, you can use the mortgage calculator on the right side of our website (about half way down) by clicking here. All you’ll need to do is add the rate, estimated purchase price, estimated down payment, property taxes, estimated homeowners insurance and (if applicable)mortgage insurance.
a.Property Taxes and Homeowner’s Insurance?
Yes. You do not want to forget about these. In most cases, your total monthly mortgage payment will include PITI (principal, interest, taxes and insurance). If you have your eye set on a property or two, you can readily check the current property taxes right here. Click on your state and find the appropriate County link to search by property address. You can get a broad idea of your homeowner’s insurance premium by multiplying the price of the home by .006. Then, divide that number by 12.
b.Mortgage Insurance!
Oh pew, you say. Yep, if you are putting less than 20% down on a conventional mortgage, you will be contending with MI (exception with VA financing). Mortgage insurance is simply insurance that aides in covering a lender’s losses after foreclosure and sale of the property….and you get to pay that premium. Use this resource to learn and compare MI products, options and costs. If this looks like hieroglyphic mumbo jumbo, you may need to pick up the phone and call your loan officer. There are many options and he/she can detail what makes most sense for your needs.Want to jump right to an MI calculator? Jump!
For 30 year fixed FHA financing with minimum down payment, the MI calculation is quite simple: Loan amount x 1.15% / 12.
4)But How Much Can I Afford?
Final step! You have your interest rate, you understand the closing costs and you have worked up the monthly mortgage payment. Can you afford it? Take the Pre-Qualification Test Drive! This is a simple spreadsheet that will allow you to enter your debt and income information and get a general idea if you can qualify for that dream home dancing around inside your cranium. Download the worksheet and off you go.
Woot! The numbers look great! This just may be the home! It’s 2:00 AM and you are chompin at your fingers wanting confirmation of all your hard work. Aw heck, pick up that phone and call (or email) The MN Mortgage Mom. I just “may” pick up the phone. After all, I’m most likely working up the loan for your neighbor who just called me at midnight.
Happy House Hunting!
A few years ago, we lost a friend, a companion and a family member. His name was Pup and he was a beautiful, 11 year old black lab. Kidney disease took him. He was incredibly special to us and the loss was sooo hard. I remember the final days...his body was so weak, but his mind was just like it was when he was 2. I couldn't let go just yet and I filled an air mattress, covered it with lots of comfy blankets and that's where Pup and I slept, cuddled and spent our final time together. When the day came to say goodbye, we knew he was ready. He would look at me on that mattress and say, "Mom, I'm too tired to fight anymore." Uuugh...that was one of the worst days of my life. I still reflect on his beautiful life...sometimes with tears and sometimes with smiles. We loved him dearly and still miss him terribly.
And my husband and I said never again. The loss was too hard to go through a second time.
Well, that didn't last long. Our home was too lonely. It was just too quiet. Our kids said, "How bout a puppy? P-L-E-A-S-E!!!" A puppy! Do you know how much work they are? No way!
For any of you who have kids, well, they can be quite pursuasive and in their world, yes means yes and no means maybe. They continued to "work" us...nothing like hitting mom and dad when we're down! Our hearts were still broken and those little stinkers knew it...they preyed on our weakness.
So, a puppy it was! What kind should we get? Ha! Not a cute little terrier that I could galavant around in my foo-foo bag to all my closings. Not even another lab...we didn't want to feel like we were trying to replace Pup. How about an Old English Mastiff? "Mom, they are so cute and we can have lots of fun with it!" Are you nuts??? Those things are HUGE! But I couldn't help myself...I went straight to my handy dandy laptop and started doing the research...
The next thing we knew, we were driving to Cambridge, MN to pick up our cute little 8 week old Mastiff from a Mastiff breeder. And cute he was!!! 11 pounds of wrinkly skin and baby slobber to boot.
That was 2 years ago. Now, at 2 1/2 years old, everything is gotten REALLY BIG. Big body (lordy, this guy is almost 200 pounds), big paws (or should I say massive), big slobber (our home is littered with bibs to catch it before it slings), even big poops. Okay, I could have probably skipped the last visual, but dang, everything about this wonderful beast is BIG. Sorry if I offended anyone. Small digression...we keep teasing our next door neighbors, who are one of our dearest friends and non-pet owners that we're going to build sculptures out of the stuff...Ha! Let me just say, it's a whole lot of poop. Dad's daily clean up job...
Back to the 4-legged child. His name is Mic. He's cute, he's funny and he's a whole lot of work. First came the potty training. For all you who have a puppy, invest in Nature's Miracle. It IS a miracle...the stuff WORKS. We now own stock in the company :). Let me tell you, potty training was not fun. Mic just didn't understand...he was confused by the whole process, but we were successful...2 weeks and he figured it out. Kind of reminds me of my First Time Home Buyer clients! Now don't get me wrong...I love first time home buyers...they are my niche. I really enjoy working with these people. The lack of understanding and confusion about the whole process is what grounds me...keeps me to the basics with patience, kindness and understanding of my own. Kind of like Mic and the whole potty training business.
And he whines...he whines when he is bored, he whines when he wants attention. He's the perfect little toddler. And when I want him to do something (we're STILL working on obedience and tricks) he just looks at me like "you're kidding, you really want me to do this?" Think about all those underwriters out there that get paid the big bucks to make all of our lives a little bit miserable. They want this, they want that...conditions, conditions. I call my wonderful mortgage client and I can feel that look right through the telephone wires. "Are you kidding? You really want me to do this?" Don't kill the messenger...we've got a doozy of an underwriter on our hands...we all take a deep breath and work through it together.
What makes it all worthwhile? His love and appreciation. When he wags his tail because he's so happy to see us. When he slobbers on our face to show us his love. It's unconditional. When the day is done, all the work, the headaches and frustration melt away. He adores us and shows it in so many wonderful ways.
I have been blessed with so many wonderful mortgage clients throughout the years. Through the mutual patience, admiration and appreciation for hard work well done. The appreciation of my clients does not go un-noticed. It's what makes me tick and move forward. It is rewarding and fills me up with warm fuzzies. Just like Mic...warm fuzzies and a little slobber to boot.
Okay, perhaps that's a little TOO much information! Perhaps you really don't need to know what splash of color your loan officer is bestowing on his or her bloomers on any given day.
But what you SHOULD know is who your loan officer IS.
Let's see....scum bucket, slime ball, scammer, fraud frog...any of these ring a bell? They do to a whole lot of people, as our industry has been historically speckled with less than scrupulous loan officers committing fraud and scamming the innocent. Unfortunately, those LO endearments have, in many cases, been very well founded. (And how embarrassing that Minnesota and the rest of the Midwest have some of highest percentages of all this nastiness.)
What do you do? Protect yourself by doing your homework.
You have never been in a better position to check out the color of your loan officer's undies. With social media, licensing requirements and the good ole world wide web, you can get a pretty good recon on the LO you intend on working with. Pure attrition (as I wrote about on Who is Going To Write These Loans?) has definitely wiped out much of the riff raff, but those little stinkers still loom. Whether you are a consumer or real estate agent, it is imperative to check ‘em out.
To that end, here is a list of ways to get that done:
•· NMLS. Is your loan officer licensed? Remember, as of January 1, 2011, it is REQUIRED. No license, no ability to write a mortgage.
•· Linked In. Great place to check out your loan officer's resume.
•· Facebook. Whoa! This is a real "personal" insight into your LO's world.
•· Google. For heaven sakes, this is one of the easiest ways to check out your loan officer...just type in his/her name on the search box. What pages come up? If you see your loan officer's name right next to the words San Quentin, you may wanna think twice.
•· BBB. Who does your loan officer work for? What is their company's rating? More importantly, check to see if there is a list of consumer complaints.
•· Twitter. Is your loan officer tweeting about the next local club they are partying at or are they providing tweets that would be relevant to our profession?
•· FHA Neigborhood Watchlist. This is a policing site that allows HUD/FHA to oversee lender activities and performance and publish this information to the public. Good stuff!
There. That should give you a robust start into your loan officer recon search. I just showed the colors of my knickers! Can yours? And nope, mine are not the lime green polka-dotted kind, either.
612-363-1106 / sherri@iloanhomemortgage.com / www.sherrisherpy.com
via Deb Brengman
Qualifying for a Mortgage, we went from one extreme to the next! 3 years ago, if you had a social security number, stated income and ordered an appraisal (with practically a stated value), you were good to go.
Today, when The Mortgage Lady meets with a potential client, one of the opening statements is "we are going to be required to document your documents" and, ask them to not be insulted when the investor has conditions that are beyond what they would expect.
We live in a country where our justice says, we are innocent until proven guilty, everyone has their day in court. In the mortgage world, you're a fraud committing deadbeat WHO LIVES IN A SHOE until you have had your day in court (we call it underwriting)
Because the market was wrong in creating loans available to everyone, who were not even required to show a pay stub or bank statement, and allowed "the liar loan", today's buyer is paying the price.
Previously we needed no pay stubs , today's buyer must provide 30 days of pay stubs, w2's for the past two years, and in some cases, two years of federal tax returns. Of course, that is not enough; the lender is then required to pull your tax transcripts directly from the IRS, need to make sure everything matches. And, we are not done, then it is time to contact the employer to get verbal verification of employment, not just once, but twice!!! Once when the loan process starts, and again within 24 hours of closing, on your new home. The investor wants to know that you are employed, that your employer does not have plans for layoffs or pay reductions, and that you are likely to have continued employment. And that is the requirement for hourly/salaried employees, the requirements grow for self-employed, commission or bonus paid folks!
Previously, no bank statement, today's buyer must provide 60 days of banking history, all pages, even if blank! And heaven help us all if you have a deposit on your bank statement that is not identified as a payroll deposit! All deposits must be sourced and documented. Stating that you had been saving coins for the past 10 years and put the cash deposit in your account is not going to fly; cash is an unacceptable source (what's cash by the way) And, if a relative is gifting you some money, they best be ready to be part of the spot light. Until you prove otherwise, that money got wired to you by Fidel Castro. The person giving the gift will be required to show proof they had the money to give you by providing their bank statement (a cancelled check, no dice, not enough). Then they have to show the money being withdrawn and get their bank statement updated to show the money leaving the account (again, a cancelled check, no dice, not enough). And guess what, if the person giving the gift has non-payroll deposits get ready to write an explanation for that too! Better take a photo copy of that check before you deposit the check too because now you, the buyer, need to show proof it was from the donor, and proof of deposit into your account, and update their bank statement showing the money has been deposited.
And, you better remember every detail of your payment history, because your credit report does (or does it?), and you are going to have to write letters of explanations for everything, and my dog ate the bill is not going to fly! Cross your fingers for a 720+ score, or you are nothing but below average, 680 use to be looked at as decent mortgage credit score, not anymore, you can still get a mortgage with as low as 640 with some investors, however, for best pricing and rates, you need above 720. Your credit report will be pulled at the beginning of the process. Do not think you are done and go out and spend money, for example ON A new couch, because your credit is going to be pulled again the week before closing, and if your debt has increased by more than 5%, you might not get your mortgage. And, that 15% discount off that you will receive for taking out a new credit card at the mall, you better be sure it was worth the discount, because it could stand between you and getting a mortgage.
The moral of the story, please do not wait until 2 months before purchasing to get pre-qualified, it is more important now more than ever to meet with a mortgage lender 6 months prior to buying. That way, if any of the crazy little "hick ups" are in your way, your lender can put you on the right track for homeownership.
It is one of the best times in history to purchase WITH THESE low housing pricing and low rates. Do not be scared, be prepared. Get financially naked in front of your loan officer, and be a healthy homebuyer!
Providing Award-Winning Service, Honesty and Integrity For Nearly a Decade!
Honesty, Integrity and The Power of Knowledge is what I provide...giving my client a great mortgage product just happens to be the by-product...
Good service isn't good enough. You deserve world-class service and I am committed to providing that to all of my clients. I bring an in-depth knowledge of underwriting and credit requirements to your loan application. I pay attention to details and am flexible, accessible, and creative in structuring a home loan to meet your individual needs. You can count on me to stay on top of your file as it makes its way through the approval process.
Total Commitment To My Clients
With this as my foundation, it is my mission to develop life-long client relationships, focused on my own principle of Performance through Excellence, promising to provide my personal best in service, convenience and confidentiality-ALWAYS.
Outstanding customer service is my singular pursuit. I have two clients: the home buyer /owner and the Referral Partner-and I realize I must be committed to every individual in a transaction in order to be successful.
As my client, I focus on your needs. I firmly believe in educating borrowers and working with each individual to develop a mortgage program that meets their short-term objectives and long-term financial goals. I work beyond the "rate-and-term product" and offer solutions that keep the overall savings and financial interests in mind.
Over the last decade I have been consistently ranked in the top 5% of loan originators. I am also very proud of the 100% performance rating I have received from my past customers!
Product Specialties
Sherri,
A sincere thanks for all you did to get the buyers of my clients' home their mortgage. After their original mortgage company failed us on the day of closing, in a 3-day window, with constant pressure from all parties, you not only made it happen but did so with the utmost professionalism. My displaced clients, with everything they owned in a moving van across town, needed to close by Friday. I can't thank you enough for making that happen! Barb Duthler, Minneapolis Lakes Office, Coldwell Banker Burnet Realty
"Dear Sherri, I just wanted to thank you so very much for all of your help, patience and understanding. As a first time homebuyer, I was scared and full of questions. You made me feel at ease and confident that you would guide me and point me in the "right direction"...My experience was wonderful. We even had fun!...Thanks again for all of your help and caring. You were and are great!!" Jane J.
"We want to thank you for your sincere interest and time put into helping us with our home! Your efficiency, knowledge and patience made the whole process much easier for us. The business world needs more people like you! Your company should be proud to have you as part of their team." Lynn and Rhonda F.
"Sherri is the most enthusiastic loan officer I have ever met! I am very grateful that my Realtor referred me to her. Her knowledge, patience and fun-loving demeanor was exactly what I needed. It made my home buying experience very pleasurable. Betty V.
"Sherri's service is second to none. She always answered our questions and helped us to really understand our mortgage. She made it easy to work with her. Sherri also has a great sense of humor. Our experience was enlightening AND fun! We will be back!" Ed and Mary M.
"Sherri is a breath of fresh air. Finally, a Loan Officer who is responsive! She kept me abreast of all the details during the entire process of my refinance. I will continue to recommend her service to everyone I know." Dennis B.
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