Category Archives: Underwriting

5 THINGS HOMEBUYERS SHOULD AVOID DOING ONCE THEY HAVE BEEN PREAPPROVED FOR A MORTGAGE

The worst is over! You have chosen a lender and real estate agent, you have found the home of your dreams, and your team has negotiated the best deal available for you. As a homebuyer, all you have to do now is sit and wait for your loan to close, right?

Wrong.

Getting a home loan is an interactive process. To help avoid any surprises while waiting for final approval, clients should consider the following do’s and don’ts.

Bart Swan and his team recommend that you keep your loan process on track by remembering the following:

• Do keep the process moving by responding to your loan officers’ requests.
• Do make decisions as soon as is reasonably possible.
• Do convey questions or concerns you have as they develop.
• Do continue to make all of your rent or mortgage payments on time.
• Do stay current on all other existing accounts.
• Do continue to work your normal work schedule with no unplanned time off.
• Do continue to use your credit as normal.

After you have been preapproved for your mortgage, refrain from falling into some of these common pitfalls, which can tie up your loan process, or worse, reverse the process entirely:

1. Don’t make any major purchases (car, jewelry, furniture, appliances, etc.).
2. Don’t apply for any new credit (even if it says you are preapproved).
3. Don’t pay off charges or collections (unless directed by your loan officer).
4. Don’t make any changes to your credit profile.
5. Don’t make unusual deposits into your bank accounts or move money around.

Follow these simple rules and you will help to make your loan closing as smooth and hassle-free as possible. Call me today for any questions you may have about your upcoming purchase.

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New TRID Updates and How They Affect You

WHY THE CHANGE?

The new TILA-RESPA Integrated Disclosure rule (TRID) rules and forms took effect October 3, 2015. You may have heard of the new rules, however, I’ve taken some time to clarify a few questions and ways that the new regulations will affect both buyer and lender. This new rule is meant to simplify and clarify. The TRID updates are an attempt to improve and correct possible flaws with the current regulations. Starkey Mortgage can assist with this process which will make for a smooth buying process.

THE NEW RULES

To begin with, there are two new forms that are much more user-friendly than their predecessors. They are the Loan Estimate and Closing Disclosure forms, which are replacing four different forms from two government agencies. The form layouts are easier to understand, and you might find that they simply look better. They also make comparison shopping loans easier on the borrower.

Another change is the timing of the closing and the delivery date requirements. Borrowers will now be able to review the Closing Disclosure for at least three days prior to closing. In addition, the title company will need to send their fees to the lender well enough in advance of closing to allow the lender to meet the new delivery date requirements. The seller will receive this Closing Disclosure at or before closing. This prevents the deal from changing at the last minute, while giving buyers more time to review the paperwork before reaching the settlement table.

HOW IT AFFECTS LENDERS

Lenders will likely have a lengthier process to undergo than in prior years. They are now responsible for the Closing Disclosure instead of the title company. Internally, they will need to allow for more time in order to have the required forms submitted on deadline. While the new regulations lay more responsibilities on the lender, they benefit all involved in the long run.

HOW IT AFFECTS YOU

The National Association of Realtors is also recommending that Realtors add 15 days to the normal closing time frame to account for these changes. As a buyer, your quoted closing time may increase, but you will likely benefit from this extra time.

Any inspections or repairs will need to be handled earlier in the process than before the new updates. The goal here is to reduce any last-minute complications. So while the burden is increased on the lender, you the buyer can greatly benefit from the new regulations.

HOW I CAN HELP

Our team of professionals can help you navigate the TRID maze and come out a winner on the other side. Though the process has changed, our concierge customer service has not. Our experts understand the ins and outs of these new rules, and want to help you feel confident in your home purchase. For more FAQs, please visit: http://www.realtor.org/law-and-ethics/faqs-tila/respa-integrated-disclosure-trid-rule.

FHA maximum mortgage limits to be reduced

 

FHA loans in Florida
FHA loans in Florida

Sometimes people think that FHA is an acronym that means first time homebuyer. The Federal Housing Authority (FHA) loan isn’t just for first time homebuyers.  In fact, you can have multiple FHA loans.  It is required that you plan to reside in the home as your primary residence though.  It’s conceivable under certain conditions that you could rent your current home with an FHA loan already in place and relocate to another home and get another FHA loan, having two FHA loans at the same time.  “FHA” does not mean “first time homebuyer”.

The FHA, administered by the Department of Housing and Urban Development (HUD), places limits on the mortgage amounts in various counties.  I guess HUD doesn’t want to be financing homes for the rich and famous buying their mega mansion.  They want to finance homes for the common folks like me! HUD changes their limits as prices fluctuate.  The limit is going down this time which seems bad, but it’s because homes are so much more affordable now, and that’s a good thing!

My primary area of business is Okaloosa County,Florida.  The limit in Okaloosa County is reducing from $312,500 to $271,050.  To check the loan limit in your area, click the HUD logo above.  It’s important to note that this change affects loans registered (not necessarily closed) with FHA on or after Oct 1, 2011.  So if you’re working out a purchase agreement in this price range that isn’t going to close for several weeks or months, that’s ok so long as your lender (me, of course) gets it registered with FHA before Oct 1.

How can I help you or your friends?

Rural Housing Loan Changes Are Upon Us!

Rural housing loans in Florida
Rural Housing loans in Florida

I hope you’ve got your Rural Housing loan ready to close by the end of September 2011.  The cost of financing a RH loan will go up for any loans approved by Rural Housing on or after the 1st of October.  It’s not a huge increase, but you may want to know about it.

The Guaranteed Rural Housing Loan is already similar to the FHA loan, but it offers financing at 0% down, whereas the FHA loan requires at least 3.5% down.  The FHA loan has an upfront fee that is rolled into the loan, and an annual fee spread across the 12 payments.  A Rural Housing loan has historically only had an upfront fee.  Beginning with approvals on or after Oct 1 the RH loans will have a reduced upfront fee but will be adding an annual fee.  The difference in payment for loans approved after October 1 will be about $17/month higher per one hundred thousand financed.

It’s interesting to note that the annual fee is calculated every year based on the average unpaid balance for that year.  In other words, the calculation is pretty complex, but makes a little bit more sense than the typical mortgage insurance model.  The new RH model only charges mortgage insurance (they call it “Annual Fee”) on the unpaid principal each year, so it reduces over time.  Typical mortgage insurance is a flat fee calculated upfront and doesn’t reduce regardless of how much you pay down your loan.  So while the RH fee is more complicated, it’s fairer, at least in my humble opinion.

Remember the RH loan has household income limits you can access here, and is only available in some areas.  To find eligible areas, click here.  My primary area of business is Okaloosa County, Florida.  The income limit in Okaloosa county is $102,500/year for a household of 5-8 and $77,650 for a household with 4 or less people.  If your household earns more money than the household limit (kids included), you can’t get a Rural Housing loan.

The Rural Housing loan is an excellent program if you and your property are eligible!

How can I help you or your friends?

Aren’t you glad you earned V.A. eligibility?

For those of you with V.A. eligibility, let me say thank you.  There is no way to get V.A. eligibility without serving our country, and for that I am grateful to you!  If you have that eligibility you are fortunate indeed.  I came across a situation the other day that highlighted the benefit of a V.A. loan that I think everyone should hear.

“Gerald” called the other day.  He makes a lot of money, near $12,000 a month with his military retirement income, and his current defense contractor income.  However, his credit score isn’t very good.  In fact, it’s about 635, well below the national average. 

If Gerald wanted to buy a home using “conventional” financing he would have to put at least 20% down because no mortgage insurance company would approve him for mortgage insurance with his credit score.  And in addition because of the Loan Level Price Adjustments associated with conventional financing his interest rate would be nearly 5.625% for a 30 year fixed rate.  Ah, but Gerald has V.A. eligibility!!

Gerald can buy the same house with absolutely no down payment, and no mortgage insurance.  Even his V.A. “Funding Fee” is waived because he has a slight service connected disability.   And his interest rate is only about 5.125% on a V.A. loan!

So let’s review his situation:   $400,000 purchase price.
Conventional: $80,000 down payment, 5.625%  and a principal and interest payment of $1,842  -or-
V.A.: $0 down,  5.125% and a principal and interest payment of $2,177. That’s just over $200 more per month to finance $80,000 more!  Gerald, aren’t you glad you earned your V.A. eligibility?

For more on V.A. underwriting and my ideas to fix lending see my post entitled: “Mortgage Solutions using V.A. lending as our guide” by clicking here.