Category Archive : Mortgage

There is a bankruptcy bill that is being pushed by Democrats that would give Judges the power to dictate mortgage terms.

If this bill were to pass, a homeowner could file bankruptcy and the Judge could change the terms of his primary residence mortgage to make it more affordable for the homeowner so one they can afford their monthly mortgage payment and two to bring the mortgage down to market value.

The Mortgage Bankers Association, American Bankers Association and the U.S. Chamber of Commerce oppose this bill and have spent millions to try and prevent it from being passed.  According to the chief lobbyist for the Mortgage Bankers Association, Steve O’Connor, said “new homebuyers would end up paying higher interest and bigger down payments if lenders are saddled with the risk that a judge could change mortgage terms.”  Why would homebuyers end up paying a higher down payment and interest rate?  The lending guidelines are very stringent now and you can’t buy a home anymore without at least 3.5% down so I would imagine that the default rate on these new home loans would be very small?  So the risk for Lenders and Banks have dropped considerably compared to loans they gave out back in 2003-2006.

I can see why the Mortgage Bankers Association and American Bankers Association would want to prevent this bill from passing because it certainly would harm the bottom line for lenders and investors holding mortgages or would it?  How much harm would it really cause Lenders and Banks with the Government bailout?  Bank of America just received a 2nd bailout of $20 billion dollars!  Banks appear to be using their bailout money to acquire other banks so I am not too concerned with them complaining that they would lose money if this bill passes.  What I am concerned with is Lenders and Banks requiring homebuyers to come in with a higher down payment and increases in interest rates.

We need a solution to the foreclosure mess since Banks and Lenders can’t get short sales or loan modifications approved in a timely manner.  The passing of this bill would help streamline the process and allow homeowners to keep their homes by bring their mortgage down to market value and giving them a payment they can afford.  This will prevent more homes from going into foreclosure which helps keep inventory levels from increasing and should help prices begin to level out.  When there is confidence again in the real estate market, it will begin to spill over to other industries which will help lead us out of the recession our Country is facing.

What is a Loan Modification and does it fit the needs of homeowners who cannot afford their mortgage payment and who owe  more on their mortgage than the home is valued?

“A Loan Modification is a permanent change in one or more of the terms of a mortgagor’s loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford.”

In the State of Nevada, an Attorney should negotiate on the behalf of a homeowner to get a loan modification approved.  There are those that aren’t Attorneys that attempt to help homeowners, which is fine,  but it’s against the law for them to charge you any up front fees.

A Las Vegas Homeowner does not have to be late on a payment in order to be approved for a loan modification.  However; I have seen some Lenders deny a Loan Modification because the homeowners weren’t late on their mortgage, so it does come down to who your lender is.

We work with several reputable Attorney’s in Las Vegas they we can recommend to you if you are in need of a Loan Modification for your Las Vegas Home Loan.  We can be reached at 702.838.7522 or complete our contact form and one of our representatives will contact you for a private consultation.

As home prices continue to decline in certain markets, home owners with adjusting interest rates face the obstacle of not being able to refinance due to their mortgage balance exceeding the value of their property.

The FHA Short Refinance program may be able to help if you are in this scenario. Read More

In response to the new “HOPE for Home Owners Act” (HR 3221) that was recently passed by the House of Representatives, FHA announced new Mortgage Insurance Premiums starting October 1, 2008 through September 30th, 2009.

Up-front Mortgage Insurance Premiums:

• Purchase Money Mortgages and Refinances = 1.75%
• Streamline Refinances (all types) = 1.5%
• FHA Secure (Delinquent Mortgagors) = 3%

Monthly Mortgage Insurance Premiums:

• 30 yr mtg. –  LTV > 95%, monthly will be @ .55%
• 30 yr mtg. –  LTV < 95%, monthly will be @ .50%
• 15 yr mtg. –  LTV > 90%, monthly will be @ .25%
• 15 yr mtg. –  LTV < 90%, monthly will not be required.
• FHASecure – LTV > 95%, monthly will be @ .55%
• FHASecure – LTV < 95%, monthly will be @ .50%

* This information was provided by Jeff Mifsud @ FHAGamePlan.com

Meeting with a loan officer for the first time can be a quick and painless experience if you are prepared.

The following is a list of the general borrower information and conditions that need to be presented at the time of the initial mortgage application process for a full approval:

Personal Information

1. Full Name
2. Date of Birth
3. Social Security Number
4. 2 Yrs Residence History – monthly payment, rent or own, payment method
5. List of all Real Estate Owned – values, balances, monthly payments, taxes, and insurance
6. 2 Yrs Employment History – job title, yrs in industry, income / structure, contact information

Subject Property Information

1. Type of property purchasing – Condo, Single Family Residence, Las Vegas High Rise, New Construction, Re-sell
2. Residence Status – Primary, Second Home, Investment Property
3. Budgeted Down Payment
4. Budgeted Monthly Payment
5. Desired Program Type – Fixed, ARM, Negative Amortization, Reverse Mortgage
6. Names to be listed or left off of title
7. Estimated time in property
8. Goals with property

Conditions

1. Most recent 2 pay stubs
2. Most recent 2 Yrs. W2’s
3. Most recent 2 Yrs. Tax Returns
4. Most recent 2 Bank Statements, 401k, Mutual Fund, or other Investment Accounts

The application process is a time where your loan officer can help you structure the best mortgage plan of action that will fit with your long and short term financial goals.

Will the new federal housing bill help the Las Vegas Real Estate Market?  Without a doubt!  The federal housing bill should stop future foreclosures, stabilize home prices, encourage a wave of more home buyers and reduce the housing inventory.

The federal housing bill will allow distressed homeowners who might be facing an eminent foreclosure to refinance out of their existing mortgage and into more attractive terms.  According to the bill, financially distressed homeowners have the opportunity to reduce their mortgages to 90 percent of their home’s current appraised value. The newly created mortgage will be a 30-year fixed FHA loan at the prevailing interest rate.  In exchange for refinancing, the homeowner agrees to share a substantial portion of any future appreciation with the original lender and the FHA.

So this gives a homeowner two choices.  They could either go through with foreclosure and destroy their credit or refinance their home at 90% of the appraised value and share any future appreciation with the original lender and the FHA.  I think this is an easy choice, don’t you?

The Federal Housing Bill will reduce the amount of future foreclosures on the market, which is significant.  This means the current housing inventory will decrease at a quicker rate and home prices should stabilize because of the decline in inventory.  We have had 6 straight months of increased home sales and it has been making a small dent in the standing inventory because of the increase in foreclosures.  So with foreclosures decreasing because of the new bill, we should see a decrease in the inventory over the next 8 to 10 months.  With the decrease in inventory comes with the stabilization of home prices.  Home prices should start to level out over the same period.

I think this bill was exactly what we needed to help the Las Vegas Real Estate Market which will ultimately have a positive effect on the Las Vegas Economy.

What exactly IS a Las Vegas Reverse Mortgage?

A reverse mortgage is a loan that enables homeowners who are 62 years of age or older to access the equity in their homes as tax free income without having to sell the home, give up title or take on a new monthly mortgage payment.

With a regular mortgage, money is borrowed to purchase the home and payments are made.  The difference between what you borrowed and the market value of the property is your equity.  As time goes on, the payments reduce the amount borrowed and hence, the equity enlarges.  A bonus is also the appreciation in value of the property over time which also contributes to your equity stake.

A reverse mortgage works in the opposite direction.  You use the equity in your home to receive cash, either as a lump sum, a line of credit, monthly amounts, or a combination of all three.  As time rolls on, the payments to you increase the loan amount and your equity in the home decreases

How do I qualify for a Reverse Mortgage?

• You must be 62 years of age or older and have equity in your Las Vegas Home.

How is my benefit amount calculated?

• The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA’s mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow.

What properties qualify for Reverse Mortgages?

• Most property types are eligible for reverse mortgages.  These would include Single Family Homes, qualified condominiums, townhouses, manufactured homes and 1 to 4 family owner occupied residences are eligible.

How do I get my money?

You have three options on how to receive your funds.

1. Monthly Payments (made to you)
2. Lump Sum Cash to you
3. Line of Credit – unscheduled payments or in installments, at times and in amounts of borrower’s choosing until the line of credit is exhausted.

What are the Benefits of a Reverse Mortgage?

• Funds from a reverse mortgage are tax free and do not effect your eligibility for regular social security and Medicare.
• Reverse mortgages allow you to access the equity in your home while allowing you to stay in the home.
• No monthly obligation of a mortgage payment.

A Reverse Mortgage borrower cannot be forced out of his/her home. Nor will he ever owe more than the value of his house. Reverse Mortgages are “non-recourse” loans, meaning in the rare case of drastic declines in home prices, the homeowner can never be held liable beyond the value of the subject home.

Requirements of maintaining a Reverse Mortgage

You continue to be responsible for payment of property taxes, hazard insurance and the proper upkeep of the home.  Any breach of these obligations renders the outstanding loan due and payable.

Similarly, any absence from the home of the last surviving borrower for more than twelve consecutive months terminates the agreement.  Selling or renting out all or part of the home or having liens attached to the home for whatever reason also means that all bets are off and the transaction ends.

What happens when I die?

At the time of your passing, the reverse mortgage comes due and payable in full.  At that time, your heirs have two options.  First, they can payoff the balance and keep the home.   Second, they can sell the home and they would receive any proceeds above the reverse mortgage balance.

If you are interested in receiving more information about a reverse mortgage or would like to speak to someone about a reverse mortgage, please call us at 702.376.0088.

After many months or maybe years, you have finally decided to buy your own home. You have pinched every penny to save up a sizeable down payment. You have made open houses a weekend ritual but still can’t seem to make the leap into purchasing a home. Why not??

Maybe you’re comfortable in your current space. You have accepted the shortcomings of where you live whether it is loud neighbours or no parking readily available. Not many surprises since you have been there so long.

First time home buyers tend to freeze up when it comes time to actually picking a house. Will they be happy there? Will they like their neighbours? Will they be tied down because they are now house rich and cash poor? What happens if their financial situation changes for the worse? Basically, the fear of the unknown becomes a constant nagging in their ear and prevents them from moving on towards purchasing their dream home.

Here are some steps to try and then maybe you can take the leap to home-ownership:

• Get comfortable with your finances: Make sure you sit down and go over all of your current finances and the new ones that will occur with home ownership. Things like property taxes, home owners insurance, commuting to work and cost of utilities should be factored into your monthly expenses to make sure you are buying within your limit.

• Partner with a Realtor: You need to pair up with a knowledgeable realtor. Even though the internet will allow you to do lots of research on your own, you can’t get the low down on a property without help from a realtor. They will be able to answer questions you will have and give you the inside scoop on the property. They will also help you write an offer and make sure you get a good deal.

• Accept some risk: There is uncertainty in everything about life, you just need to deal with it. Learn from people you know that have purchased a home. Find out their mistakes and what to look for. Make sure you don’t drain your bank account with purchasing the home, keep a safety net in case of emergency.

• Fine tune your “must-haves”: Make your list of “must haves” in your new home. A garage, the neighborhood, size and layout of the home, and anything else you feel is important and that you can’t live without. You may find that you are willing to sacrifice one feature, if the rest is fabulous. If you are not crazy about the house, don’t bid. It is important you love the home you are bidding on, after all you will be living there for some time.

• Be ready to bid: Great homes and prices don’t stay around for long. If you love the home, have your realtor help you make an appropriate bid. If you are wavering, ask yourself, “How will I feel if I don’t get this house?” You might just get it, and if not, at least you’ll you know you tried.

• Find an experienced Mortgage Professional: Sit down with an experienced mortgage professional and have them help you analyze your options for financing your new home. Finding the right mortgage can be as important as finding the right home. Make sure you clearly understand what type of mortgage you are getting. Ask as many questions as you need too until you are absolutely clear on the type of financing you are applying for. Remember, you are the one paying back the mortgage.

I hope this pushes all of you “on the fence” home buyers “off the fence” and into the home of your dreams. Happy House Hunting.

One of the most common things said when I am talking to a potential client on the phone is “I don’t want you to run my credit because it will drop my score”.

This is one of the most annoying statements made when you are trying to qualify a client for a mortgage. You simply can’t give them proper information without reviewing their credit report. So, I decided since how credit scores are calculated are somewhat of a mystery to everyone that I would elaborate some on this topic.

Each time a consumer applies for a loan, credit card or auto loan, they are having their credit checked. These credit checks are used by lenders to determine if the consumer is able to obtain financing. Every time a lender checks a consumers credit history, it shows up on the consumers credit bureau (Experian, Trans Union and Equifax) as an inquiry. These inquires can drop the consumers credit scores if too many inquiries are made in a certain period of time.

Many lenders rely on the FICO scores they pull when running a consumers credit history. These scores are tabulated by software from Fair, Isaac and Company Inc, along with what information is on the consumers history. Due to increasing pressure on Fair, Issac and Company to release how their software works, they have released information on how their scoring model calculates a FICO score for the consumer.

Inquires on a credit report are an indicator of risk and according to Fair Isaac and Company, the more inquires made means the more likely the consumer will not be able to pay his bills. When consumers want to buy or refinance a home, they usually contact more then one mortgage company for information. In order for the consumer to get accurate information from several mortgages companies, they need to have their credit checked by each mortgage company which in turn leads to many inquiries (especially if using an online site which shops various lenders). Since too many inquiries lead to lower scores, eventually the consumer could lose out on decent financing because their scores are too low.

Now for some good news and a way to combat that dreaded statement in the beginning of the article.

There is a new policy at Fair Isaac and Company, the software will ignore all auto and mortgage related inquiries that occur in the previous 30 day period from the time the credit is checked by the lender.

These inquiries will not be used to tabulate the credit score for the consumer. For each 14 day period prior to the 30 day period, only 1 inquiry will be counted no matter how many inquires where made during a particular 2 week period.

Inquiries on a credit report carry the lowest impact on scores. Things like high balances in relation to credit limit, recent late payments, judgments, and bankruptcy carry much more weight in tabulating a score. This information should be very usual to combat the consumers resistance to pulling credit because it will effect their scores.

Real-estate agents and mortgage professionals need to remind their clients that it is critical to sit down and review credit in order to provide options on the mortgages that they qualify for. This is the only way to provide the client with accurate information.

According to FBI Special Agent, Scott Hunter Las Vegas is called mortgage fraud ground zero.

This problem is becoming so wide spread that special task forces have been created to combat the problem.  Every week you read in the paper or view the news about another real estate industry professional being arrested for some type of real estate or mortgage fraud.  Just this month, Cindy Birkland was arrested for alleged mortgage fraud.

According to the FBI, mortgage fraud is becoming one of the fastest growing white collar crimes in the United States.

Mortgage Fraud is usually committed by several individuals who all have a certain role within the scheme.  Usually a loan officer, borrower, real estate agent and/or an appraiser.  The most common type of mortgage fraud is a “straw buyer”.  This is where the bank lends hundreds of thousands on a home that is way over inflated due to an appraiser setting an unrealistic value.  The group splits the money and never has any intention on making any payments on the home.

More to follow…

The dreaded mortgage application process isn’t so scary if you know what to expect. Here is a quick breakdown of a few questions that I address during the initial  phone or office interview and mortgage application:

1.  Have you spoken with any other loan officers regarding this transaction?

I like to know what a borrower has been going through prior to speaking with me.  If there have been several credit reports pulled by other banks, I don’t want to contribute to possibly lowering their score by pulling another report.  I also ask this question because I want to know why the borrower is talking with other loan officers.  Is it a rate and closing cost thing, or did the previous banks not fulfill a certain need or expectation?  It just makes more sense to find out what people want up front, so that I can focus the rest of my time serving their specific need.

2.  Will this be a primary residence, second home, or investment property, and how long do you plan on keeping it?

These two questions usually start a conversation about the borrower’s intentions and real estate investment goals.  Buying rates down, ARMs vs. 30 yr. fixed, FHA, conventional, seller paid closing costs…..  There are several mortgage opotions to consider for each individual circumstance.  It is nearly impossible to have a productive discussion about rates, programs, and closing costs until you have clearly articulated your real estate investment goals with your loan officer.  It is absolutely acceptable to ask a loan officer what their rates are, however, be prepared to supply a little more information so that your loan officer can apply the best rate that fits your scenario.

3.  Total monthly payment and down payment you have budgeted for?

Again, back to the needs and goals of the client.  It is common for a borrower to ask a loan officer what they are approved for.  However, you may be approved for more than you actually want.

Here are a couple of easy formulas that you can apply  when calculating a monthly payment, down payment, and total purchase price:

Banks look at a borrower’s Debt to Income Ratio (DTI) as a factor for mortgage loan approval.  40% is a safe DTI to pay attention to for figuring out what you might be approved for.  This means that your total monthly minimum payments, including the new mortgage, cannot be above 40% of your total verifiable gross monthly earnings.  Credit score, down payment, and assets are compensating factors that a bank will consider for approval if your DTI is above 40%.

EX:  Total monthly gross income – $2,000

%40 DTI = $800 a month in total allowable payments

A good rule of thumb for determining a total mortgage payment is by multiplying $70 for every $10,000 loan amount.  I’ve found that this is a safe calculation which also includes taxes, insurance, and mortgage insurance.

So, for this scenario, the borrower would be approved for a loan amount of around $114,000.  If this borrower had a $200 a month car payment, then the the loan amount would drop to $85,000.

$800 a month total @ 40% DTI

– $200 a month car payment, leaving room for a $600 a month mortgage payment.

$600 divided by 70 = 85

85 x $10,000 = $85,000 total loan amount.

*Remember, that 40% is just a good starting point.  I’ve had borrowers approved up to a 65% DTI who had great credit, a significant down payment, and plenty of assets in the bank.

So, why do I ask a client what type of mortgage payment they want?  Simple, if they are approved up to $900,000, but only want a $1500 a month payment with zero down, I’m going to let their agent know to stay around the $200,000 – $230,000 purchase price range.

4.  Employment, residence history, income, and assets.

Just remember the number 2. A bank will need two year’s employment and residence history.  As far as conditions, be prepared to bring provide the most recent two bank statements, W2s, Tax Returns, and pay stubs.

If you have all of this stuff prepared ahead of time, the application should be smooth and painless.

Your adjustable rate mortgage that you signed for a few years ago has just doubled, what do you do?  Well one Las Vegas man decided to sue his lender because his mortgage payment doubled when his adjustable rate mortgage adjusted.

The lawsuit claims he was talked into an adjustable rate mortgage that he could not afford and that documents were falsified by those that were involved in the transaction.

The mans attorney is claiming that Countrywide “took advantage of his lack of education, training, skill and ability”.

So let me get this straight; you sign for a loan, your payment goes up and then you sue and claim “they took advantage of your lack of education, training, skill and ability?” 

Now if loan documents were falsified in order for him to get approved then absolutely he was taking advantage of.  But if after all facts come out and there is no proof that loan documents were falsified then I just don’t see how he can sue because someone else is more educated than him.