East Windsor, NJ

Do you think you are helping the situation, but actually hurting the situation by answering a question??

I am sure many of us want to help answer a question, giving our honest opinion and such. Hoping that it could give some good insight to helping that person with their question. But how many times could this actually turn against the person seeking help, answers, and some guidance?

I bring this up, because I signed up for Trulia questions a few months ago, and I see so many realtors answering questions that should be handled by a professional loan officer. And I am sure that there are some loan officers that answer questions that should be handled by a realtor only. But what about those that answer questions asked by someone in a specific state, but someone 1,500 miles away gives an answer, but it could be different because of the market area??

Here is the question that was stated on Trulia...

"If the appraisal comes in lower than the offer price why would the buyer pay the difference if the price is lower? For instance, if the house is offered at 150,000 and the appraisal comes in at 140,000 and the seller does not want to lower the price, why would the buyer not benefit from the lower price, why would he put more money down on a lower sale price?" - From Homebuyer in New Jersey

Here is an answer from a realtor in Texas.....

"In this market I really will not recomend you to pay the difference between the appraisal value and the sellers asking price, negociate with the seller if they do not want to lower the price, get another property, This is a Buyer Market. There are a lot of properties available in the market."

I have a few problems with this answer.

• Each real estate market is different. - in some areas of the country, prices have bottomed out. In some areas, prices are expected to go down another 5%. But there is no guarantee of both. And what about values increasing in the next 5 years.
  

• You need to have goals when buying. - How long do you plan on being in the house. Are you buying in area to be in a good school system and baring any work related transfers, could you be there for 4 to 10 years because of your kids? Are you moving up, into a bigger home, need the room. Are many of the homes in the area, smaller on average, so you love this big home?

• It's a buyers market, with many homes on the market. - This realtor said this, and said don't buy, look at other homes. Again, each market is different. And we need to remember a few things. This could be the buyers dream home. When collectors buy coins or diamonds, aren't the values determined by those that give their opinion? What about appraisers? Don't the buyers usually dictate the price in many cases? Isn't the value determined by an appraisers opinion, using comps of other like sold properties in the area? Keeping in mind that not one house is the same.

• What about comps or the subject property. - How long has the property been on the market? Does it have an unique feature? Is the property hard to comp? Do we know what the seller needs in order to sell the house?
  

Conclusion : Sure, negotiating with the seller can be a good thing. You could get a lower price. But how much do you really want that new home? What if 5 appraisers appraised this home, 1 that came in 5k more, 2 that came in at the asking price, and 2 below the asking price. What happens if you got the appraiser with the lowest opinion that ended up with the lowest appraisal.

As I mentioned, you need to have goals, even though they can change from time to time. In many cases, you shouldn't be buying a home just to buy, right? And what about those realtors that give answers to a FHA question or a mortgage question? Just because your loan officer told you, doesn't mean it could be the right answer. In fact, I have read many misleading answers to mortgage questions..... even by loan officers. As a person asking questions, just beware... do your research and be careful.

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- Energy Efficient Mortgages -

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- 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

FHA loans seem to be one of the main choice of mortgages in the last 6 months or so. There are several reasons for this, which should be spelled out below in my comparison. What I hate hearing is that FHA mortgages have taken the spot of the subprime loans. This is not true by any part of the imagination. This statement is from those that are inexperienced in both the mortgage and the real estate industries. The realization has been that 30% of the subprime mortgages in the last 5 years previous to the last 2 years should have been FHA mortgages, not subprime.

To compound this, so many said just because you had a conventional loan, you had the better loan. This was not always true when putting 3% or even 5% down. In most cases, you were told this, because that particular lender was not FHA approved. Now? Even with 10% down and credit scores less than 680, FHA loans in many cases, will be the best mortgage for you. You want to see a shocking example? Here is an example of 20% down and it shows that the FHA loan was still better. Please read : FHA Loans vs Conventional Loans - 20% down - A Rude Reality Check

So you could argue the fact that this is my opinion, that FHA loans in many cases would be better for you. True, even though I have over 16 years of experience as a loan officer in the mortgage industry. But numbers don't lie. Let me show you.....

The example below is based on a $280,000 purchase price with 5% down. One reason why conventional rates are a little higher in this scenario as in FHA rates is because Fannie Mae and Freddie Mac have added penalties per se. If you are putting down less than 30% and your credit score is less than 720, certain fee penalties would apply to you, which would increase your rate. The FICO (credit score) that I am going to use is 679, which is above the average credit score and I will still show in this example that FHA loans are cheaper, even with 5% down.

***And keep in mind, some lenders have penalties on FHA mortgages with credit scores under 660. And many lenders can't do FHA loans under 620. Just beware of those that promise you a mortgage with scores under 620. It can happen, but they aren't as easy as advertised.***

Disclaimer : These rates are examples, but the spread shown in the example is real. To compare this scenario apples to apples, the fees are the same and with zero points. In this scenario, there is a $475 commitment fee and points. The conventional rate also includes the penalty for the 679 credit score.

Some of you might be saying that you will be adding $4,655.00 onto your principal balance if you did the FHA mortgage because of the FHA one-time mortgage insurance premium. This is correct and I don't want to confuse you with more numbers and charts. But here is a quick breakdown. If you kept your house for 5 years, you would have saved $11,916 in payments in 5 years. Subtract the Upfront Mortgage Insurance premium from the monies saved in 5 years and you have saved a difference of $7,261.00!!! And one other thing that is very small, but still makes a difference. You will be subtracting a few more dollars per month from your principal because your interest rate is lower, which would offset the interest that you would write off on the 6.25% rate. Just something else to remember, but consult your tax consultant or CPA.

Lastly, keep in mind that depending on the area that you are buying or refinancing in, that you might not be able to get a conventional loan unless you have 10% down or a 90% LTV. The reason being is the mortgage insurance companies and how they view certain geographical areas and declining market areas.

For more FHA loans vs conventional loans comparisons :

• FHA loans vs Conventional loans - A true numbers comparison with 5% down - 12-20-08 -Using a 710 credit score
  

• FHA loans vs Conventional loans - A real comparison with 5% down - 11-15-08 - Using a 659 credit score
  

• FHA Loans vs Conventional Loans - 20% down - A Rude Reality Check - 04-03-09 - Would you believe that FHA loans could be cheaper even with 20% down? Come see why and how.

• FHA Loans vs Conventional Loans - 5% - 4 comparisons that you need to know - 05-02-09 -Comparing a FHA loan against 3 types of conventional loans with different types of monthly mortgage insurance. Guess who won while still using a 679 credit score.....

• FHA loans vs Conventional loans - Knowing the true comparisons - 07-10-09 -A great comparison with a 679 credit score and 5% down. This example will still show that even with a better than average credit score, that FHA loans are still better in many cases.
  

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 :

XXXXXXXXXXXXXXXXXXX	New Home/Purchase Price	Same home w/ energy cost of improvements
Purchase Price	$250,000.00	$250,000.00
Loan Amount	$245,471.00	$253,471.00
Cost of Energy Improvements		$8,000.00
Monthly payment at 5.5% - 30 yr	$1,393.76	$1,439.18
Monthly Payment for electric/gas/ etc, etc	$375.00	$253.00
Total Monthly payment include (Mtg Payment & electric bill)	$1,768.76	$1,692.18
Monthly Savings		$76.58

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

So you are looking for a mortgage to help purchase your new home or to refinance your current home. You have spoken to a loan officer and find out that you can't obtain a FHA loan for several different reasons. Some of these reasons might be ....

• You don't show enough money as income

• You don't have the 3.5% down payment that is required

• You are not a U.S. citizen, so what are your options?

• How can I get money to fix up my home?
  

So what are my other options out there to help me obtain financing for my home? Let's take a look what is still out there. The types of mortgages that I will be mentioning are for primary residences only.

Types of mortgages or FHA loans :

• FHA Mortgages : This is not just for those that have less than perfect credit. Up to 6% seller concessions allowed. Also, better relaxed guidelines when it comes to CH 7 & CH 13 bankruptices. Also allowing for better cash-out scenarios. Just a very solid loan and depending on the down payment, the rates are usually better than conventional loans with credit scores less than 700. Please read : FHA loans vs convnetional loans - the true numbers

• Conventional Mortgages : Very tough to describe because you need to be approved in the underwriting system, which is usually DU or LP. FHA loans can still be manually approved, conventional loans can't. And there are PMI issues and those properties in declining market areas.
  

• VA loans : For those veterans with 3 months of service in war time and those with 2 + years non-war time. Allows for 100% financing and 4% seller help. No monthly mortgage insurance.
  

• USDA loans : Allows for 100% financing and there are no specific percentages when it comes to seller concessions. It is more cost specific. You don't have to be a first time homebuyer. There are income restrictions and property area restrictions. No monthly mortgage insurance.
  

• Stated Loans / NINA loans / No doc loans : I mention all 3 because some people get the terms confused. There really aren't any strong stated or no doc loans left in today's market. But I still have access to a very good NINA loan, which stands for no income and no assets. Which means you still need to show a job. And you can still do cash-out loans with this mortgage.

Quick product outline :

70% LTV on purchases - credit scores above 700 65% on rate & term refinances

60% LTV on purchases - credit scores from 651 - 700 60% on rate & term refinances

50% LTV on purchases - credit scores from 600 - 650 50% on rate & term refinances

Subordinate financing allowed - for LTV's greater than 65% LTV, max CLTV is 80%. These LTV percentages are for loans up to 1 million dollars. There are program LTV's for loans above 1 million.

There are restrictions that apply to different states and counties. There are tradeline differences & property restrictions. All of this will be talked about in a separate blog later this week.

• Foreign National Loans : These loans are for those individuals that are not U.S. citizens. There are different variations to this program depending on your credit scores and if you have U.S. credit or without U.S. credit. For those without U.S. credit, you need to reduce all LTV's by 20%.

Quick product outline : For those with U.S. credit

70% LTV on purchases - credit scores above 700 65% on rate & term refinances

60% LTV on purchases - credit scores from 651 - 700 60% on rate & term refinances

50% LTV on purchases - credit scores from 600 - 650 50% on rate & term refinances

No cash-out allowed on these programs.

• FHA 203-K loans - This is consider like a rehab loan for both purchases and refinances. There are 2 main types of the 203-k loan.

The 203-k loan - There is no loan restriction limits except those set by the HUD for the FHA county limits, for the maximum mortgage amounts. (meaning, how much you can borrower to fix up the home) The main difference is that you can use this money to even for the foundation & that you need a HUD consultant to review the costs.

The 203-k streamline or the streamline 203-k - You can borrower more than $35,000 for repairs and it can't be used for the foundation. The other major difference is that you don't need a HUD consultant to clarify the costs of the repairs.

Overall, these are just the basic details. Some of what is mentioned above is what I have available to my borrowers and could be different from other lenders. There are also state and local grant programs and other types of loans, but they are more detailed and state specific. For more information on these loans mentioned above, please don't hesitate to contact me at : jbelonger@ihmci.com

- 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 2008-2009 Tax Credit for First Time Homebuyers : 2008 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