Is your rate 6% or above?  Do you have an FHA loan with an adjustable rate?  Did you know that on a $200,000.00 loan a 1% lower rate would save you over $125.00 a month.  2% lower more than doubles that.  Let me get you a 30 year fixed rate as low as 4.875%.  Even if your credit is not as good as when you orginally got your FHA loan, or you have more debt you may still qualify for this program.  It is designed by HUD to simply make your monthy payment more affordable.  I can qualify you in just a few easy steps!  It is simple and takes as few as two weeks to complete!

Lower Your Mortgage Rate on Your FHA Loan with FHA Streamline

Community First Bank makes it simple. If today’s mortgage rates are lower than your current rate, or you have an FHA ARM that may adjust upward, you can refinance your FHA loan up to the original amount of your current loan at today’s lower rates. And with FHA Streamline, you could qualify for an FHA refinance with no appraisal and no income verification. It’s easy, fast and designed to get you a lower payment on your FHA loan.

What the FHA is Saying about FHA Streamline

Here is some information from HUD’s website about FHA Streamline:

“The ‘streamline’ refers only to the amount of documentation and underwriting that needs to be performed by the lender, and does not mean that there are no costs involved in the transaction. The basic requirements of a streamline refinance are:

• The mortgage to be refinanced must already be FHA insured.
• The mortgage to be refinanced should be current (not delinquent).
• The refinance is to result in a lowering of the borrower’s monthly principal and interest payments.
• No cash may be taken out on mortgages refinanced using the streamline refinance process.”

Get an FHA Streamline and Get a Lower Mortgage Rate Today

Let’s clarify the benefits of FHA Streamline. Consider a 30-year fixed rate mortgage of $250,000. The monthly payment on this mortgage at 7% is approximately $1,663. If you could lower that interest rate to 5%, your payment would be approximately $1,342. That’s a monthly difference of $321. Over a year that would be $3,852. Over 10 years the difference is $38,520. And over the full life of your 30-year mortgage, that’s a difference of $115,560.

The housing industry's had a rough few years.  Foreclosures are way up, home values are way down, and -- pardon my french --  but mortgage underwriters are so tight that if you stuck a lump of coal up their fist, in two weeks you'd have a diamond.

The upside of it all is that today's home buyers have an unprecedented amount of negotiation leverage with the sellers.  Want a lower sales price? Just ask for it.  Need your closing costs paid for? Put it in your offer letter.  Want to close in 30 days?  The world is your oyster.

A look at the recent statistics, though, suggests the market is morphing.

• Sales of new homes are rising at the fastest clip in a decade
• The supply of existing homes is falling month-by-month
• Home buyer activity continues to surge

Furthermore, home prices are no longer falling in many U.S. markets.

So, all this to say, if it hasn't happened already, home buyers are about to lose their upper hand with their sellers.  And when they do, buying a home won't be nearly the "deal" it may feel like today.  Especially once mortgage rates head back up and the $8,000 First-Time Home Buyer Tax Credit meets its December 1 expiration date.

After all that, home sellers will be back in the proverbial driver seat, moving homes for more money and with fewer concessions.  Indeed, housing data suggests that this is happening in some markets already.

They say today's housing market is a Buyer's Market.  Well, it's only a buyer's market if you actually buy.

If you're thinking about buying but are on the fence about what to do next, call or email me anytime.  I'm happy to work with you.

Over the past 2 two years, mortgage guidelines have tightened and one of the lasting impacts on home buyers is that it now takes a larger downpayment to buy a home.

It's as true for conventional home loans as it is for FHA ones -- banks want to see more of home buyer's own skin in the game.

Unfortunately, not every buyer has the cash.

This is one reason why -- anecdotally -- the number of home buyers asking for "downpayment gifts"  from family members is rising. With home prices down, mortgage rates low, and a generous first-time home buyer tax credit in place, there's a lot of would-be homeowners that don't want to miss out on the action.

However, if taking a gift of downpayment is part of your upcoming home financing strategy, you need to know that there's a right way and a wrong way to do it.  You can't just deposit your parents' money into a bank account.

Accepting cash for a downpayment is a 3-step process.  Follow the steps to a tee, or expect an underwriter to disallow the gift as a source of downpayment.

First, complete and sign an acceptable gift letter.  There are lots of variations on the "Downpayment Gift Letter" but each follows the same basic format.

• Includes the amount of the gift
• Includes the subject property address
• Includes the relationship of the gifter to the giftee
• States that the gift is actually a gift and not a loan
• Signed and dated by all parties

If you don't have a template gift letter on-hand, send me an email and I'll forward you the one I use for my clients.

Next, with the gift letter in place, the gifter should to make an extra strong paper trail for the money being gifted.  This is one reason why certified checks are preferable to wire transfers.  Both are acceptable methods of gifting, but certified checks are easier to document and simpler to prove  -- all it takes is a teller receipt.

Make sure the amount of the gift matches the amount specified on the gift letter.

And, lastly, when receiving the gift, the giftee should be careful to accept the gift as-is.  Deposit it with a live teller in a branch bank and make sure the deposit is not commingled.  If the gift is for $10,000, for example, make a $10,000 deposit -- nothing more, nothing less.  Don't add a random $100 check to the deposit, in other words.

Follow these 3 steps, though, and everything should be fine.

Meanwhile, there might be legal and tax liabilities when gifting funds between family members.  If you're unsure about how donating or receiving a gift might impact you, be sure to talk with your attorney and/or accountant.

As strict as mortgage underwriting has been lately, it may seem that there's a magic formula to getting approved. Truth is, there's not.

Getting approved for a mortgage is the same as it ever was, just with higher hurdles. Satisfy the Mortgage Income-Equity-Credit Triangle and everything else is cream cheese.

The Income-Equity-Credit Triangle is the basis for most mortgage approvals -- conforming, FHA, Jumbo and otherwise.  The more strength that an applicant shows across each of the three elements, the more likely that person is to get approved in underwriting.

The 3 corners of the mortgage approval triangle are:

• Income : The relative strength of monthly taxable income versus monthly household debt.  This is more commonly called debt-to-income, or DTI.
• Equity : The percentage of equity in a home. This is more commonly called loan-to-value, or LTV.
• Credit : The middle of the three credit scores, as reported by Experian, Equifax, and TransUnion.

Now, for every mortgage product on the market, applicants must meet or exceed a series of minimum requirements in order to gain an approval.  These requirements are more commonly called "guidelines" and they've been been dramatically toughened over the past 18 months.

This is one reason why getting approved for a mortgage has been challenging lately. Meeting the minimum requirements is like hitting a target with a bow-and-arrow and the smaller the bulls-eye, the harder it is to score.

Furthermore, the bulls-eye's size varies from loan program to loan program.

Whenever the 3 elements exceed minimum requirements -- as shown in the illustration at top -- the "Morgage Approved" bulls-eye is fully visible.  This tells us that the applicant's home loan is likely to be approved in underwriting.

Not every mortgage applicant will show three-category strength, though, and that's okay, too.

Weakness in one of the 3 areas can be compensated for if the applicant can show exceptional strength in the two other categories.  In essence, the applicant's strengths counter-balance his weakness, and a mortgage approval can be just as likely.

In the industry, it's called "compensating factors" and is illustrated by the graphic at right.

Although income levels are less than ideal, credit scores and home equity percentages are stronger-than-necessary, leaving the "Mortgage Approved" bulls-eye in full view.  This applicant's home loan is likely to be approved in underwriting.

Now for that same applicant, if credit scores and home equity percentages are not strong, the bulls-eye falls out of range.  With no compensating factors, on paper, the loan looks primed to default and it's going to be denied in underwriting.

This is illustrated at right.

And, unfortunately for homeowners, mortgage lenders are putting less faith in compensating factors these days than they used to.  It's another reason why mortgage approvals are tougher to come by.

In response to spiraling mortgage defaults, Fannie Mae, Freddie Mac and the FHA all drew lines in the sand with respect to certain minimum applicant requirements.

For example, debt-to-income levels have a "hard-stop" in the 40-percent range.  Anything above that triggers a turn-down.  This holds for everyone -- even the multi-millionaire with 20% loan-to-value.

Hard stops are a cause for consternation among both homeowners because, in some respects, it's like common sense is getting thrown out the window.  "Of course I can repay this mortgage," an applicant will say.  "Look at my bank accounts.  Look at my payment history.  Look at my equity.  I'm the perfect borrower!"

Sadly, underwriters don't care much for that.  A hard stop is a hard stop and the mortgage application will be turned down because the paper file fails to meet minimum mortgage guidelines.

So, in reviewing the mortgage approval process, nothing's really changed over the past few years.  Appraisals are under more scrutiny, income must absolutely be verified, and there's more steps from start-to-finish but the process itself is exactly the same.

The only thing that's different is the size of the bulls-eye.  It's been shrunk.  And trying to jam yourself into the smaller bulls-eye isn't always your best answer.  Oftentimes, there's a better-fitting product with rates just as low.

So, if you're having trouble getting a home loan through underwriting or want to talk about your qualifications, send me an email anytime and we can talk about what's possible for you.

The $8,000 First-Time Home Buyer Tax Credit expires December 1, 2009.

If you're planning to claim use the credit and haven't started looking for a home, your clock is officially ticking.  You must be closed on your new home on or before December 1.

Because purchase closings come 60-days standard, therefore, your $8,000 is in jeopardy unless you go under contract prior to October 2, 2009.  That's less than 70 days from now.

Use it or lose it, as they say.

The First-Time Home Buyer Tax Credit is part of the American Recovery and Reinvestment Act of 2009.  In it, Congress authorized a first-time homebuyer tax credit of up to $8,000 for home buyers meeting certain qualifying criteria.  The program's goal was to stimulate entry-level home purchases and, by most measures, the plan has been successful.

First-time home buyers accounted for about one-third of all home resales in May.

Now, the IRS definition of "first-time home buyer" may be different from what you expect.  According to the IRS, a first-time home buyer is anyone who has not owned a "main home" in the last 3 years with "main home" defined as a home in which a person has lived "for most of the time".  Main homes can include traditional homes, houseboats, trailers and other residence types.

For couples -- married or otherwise -- both home buyers must be first-timers to be tax credit-eligible.

Moreover, not every first-time home buyer is eligible for the $8,000 First Time Home Buyer Tax Credit.  Some notable exclusionary cases include first-time home buyers who:

• File taxes separately and whose adjusted gross income exceeds $95,000
• File taxes jointly and whose adjusted gross income exeeeds $170,000
• Acquire property from a mother, father, sibling or child
• Acquire property from an entity in which they're a majority owner
• Acquire the home by gift or inheritance

And then, the First-Time Home Buyer Tax Credit may not deliver the full $8,000.

The tax credit is limited to 10 percent of the home's purchase price the it also diminishes as home buyer income rises.  Tax credit phase-outs start at $75,000 for homebuyers filing separately and $150,000 on joint returns.

Assuming you qualify, though, the good news is that it's easy to claim your tax credit.

1. Buy and close on a new, "main" home before December 1, 2009.
2. Submit IRS Form 5405 with your 2009 tax returns in April 2010.

That's it.

Meanwhile, the program does come with some gotchas.  For example, If you sell your home, or cease to use it as your "main home" within 36 months of purchase, the IRS will require a full payback.  There are only a few allowable exceptions to this policy and you shouldn't count on being granted one.

Not moving in the next 3 years? Don't worry about it.

If you're a first-time home buyer and have questions, you're welcome to reach out to me directly anytime. I'll answer your questions and if I don't lend in your state, I can refer you to loan officers that I trust who do.

And lastly, please don't just take my word for it on tax issues. I am a loan officer and not an accountant. I can offer basic guidance, but paying a professional for expert advice is often the right way to go. If you don't have an accountant you trust or you're not using the free filing and tax audit services of TurboTax or something, call or email me for a recommendation.

Mortgage approvals are getting more difficult.  Again.

After reviewing recent unemployment data and market fluctuations, plus patterns of mortgage fraud, Fannie Mae is making major mortgage guideline changes for the first time in more than 6 months.

The changes are broad, impacting 15 separate areas of the mortgage approval process as detailed in Fannie Mae's official announcement.

Across-the-Board Guideline Changes:

• Credit, income and asset documentation can't be more than 90 days old. The former guidelines allowed for 120 days.
• Lenders must compare actual federal tax returns from the IRS to a borrower's supplied income documentation. Previously, this review step was at the lender's discretion.
• "Tip" income must be verified.
• Trailing secondary wage earning is now prohibited. This means that P&G employees relocating to Cincinnati can't use a spouse's "expected" Cincinnati income until that spouse actually has a job.
• Stocks, bonds and mutual funds get assigned 70% of current market value. Formerly, this was 100%.
• Retirement assets get assigned 60% of current market value. Formerly, this was 70%.

By themselves, these bullet points would kick more than a handful of home loans out of the underwriting queue but of all the changes Fannie Mae is making, the most impactful one may new its new restrictions on mortgages for 2-unit properties.

Until now, Fannie Mae had treated duplex homes as somewhat "safe", granting them the same liberal underwriting policies as for a single-family home.  Because of defaults and fraud prevention efforts, though, Fannie Mae decided to make getting approved for a 2-unit property decidedly more difficult.

Minimum credit scores are higher and maximum loan-to-values are lower.

When your 2-unit is your Primary Residence:

• Purchase: Maximum LTV lowered to 80%; 640 minimum FICO.
• Rate-and-Term Refinance: Maximum LTV lowered to 80%; 640 minimum FICO.
• Cash Out Refinance: Maximum LTV lowered to 75%; 680 minimum FICO.

When your 2-Unit is an Investment Property

• Purchase: Maximum LTV lowered to 75%; 660 minimum FICO.
• Rate-and-Term Refinance: Maximum LTV lowered to 75%; 660 minimum FICO.
• Cash Out Refinance: Maximum LTV lowered to 70%; 680 minimum FICO.

Overall, Fannie Mae's new 2-unit guidelines restrict loan-to-value limits by as much as 15 percent and raise minimum FICOs by up to 40 points -- 2 major shifts in policy.  Because of it, going forward, fewer 2-unit mortgage applicants will qualify for mortgages and that should slow both purchase and refinance activity in the 2-unit market until the market returns to balance.

It's especially tough for owners of more than 4 financed properties.

Fannie Mae has said September 1, 2009, is the "effective date" for its underwriting changes so not every lender is underwriting to the new rules just yet.  It's expected that by August 1, all of them well.

Therefore, if you know that you have a 2-unit home to refinance, or that you need your stock and/or retirement portfolio to qualify for your mortgage, consider moving up your timeframe to the next two weeks.   Lenders often implement new guidelines without advance warning and that could leave you in the cold.

Better to get a good rate today than to be ineligible for a great rate tomorrow.  If I can help you plan for an upcoming mortgage, call or email anytime.

Whether you're buying a home in Louisiana or refinancing one, there's lots of ways to make a play for lower mortgage rates or fewer loan fees.  For Example:

1. Have a higher credit score
2. Make a larger downpayment

But, sometimes, the easiest way to save money on your mortgage is by picking a better closing date.

It's all about Rate Lock Commitments.

A Rate Lock Commitment is a bank's promise to honor a specific mortgage rate for a specific period of time.  It's a contract, of sorts, in which the lender says: "Provided you close on your loan in the next however-many days, we'll make sure you get your locked rate."

In many respects, a mortgage lender's profitability is linked to its ability to accurately predict what mortgage markets will look like at the end of a Rate Lock Commitment.

It's a dangerous game to predict the future and banks know that the farther into the future they try to predict, the more likely their predictions will be wrong.  It's why longer rate lock commitments tend to carry higher interest rates, higher fees, or both -- banks are purposefully hedging against "time risk".

Rate locks typically come in 15-day increments with the 30-day rate lock serving as the basis for all other pricing:

• 15-day rate lock : Often 1/8 percent lower than the 30-day rate lock
• 30-day rate lock : The basis for all other pricing
• 45-day rate lock : Often 1/8 percent higher than the 30-day rate lock
• 60-day rate lock : Often 1/4 percent higher than the 30-day rate lock

Based on the chart, you can see why choosing a closing date matters.  A simple 1-day difference can lower your mortgage rate by 0.125% -- an annual $380 savings against a $400,000 home loan.

And the math doesn't just apply to purchase mortgages.  It applies to refinances, too.

A refinance that can close in 30 days is going to be better priced, in general, than one that takes 45 days to close.  It's one reason why being responsive to documentation requests is so important -- quicker to process means quicker to close.

Managing a mortgage rate lock commitment is an often-neglected method for keeping mortgage rates and loan fees down -- mostly because homeowners and real estate agents rarely know how to do it, and loan officer rarely talk about it.

So, before choosing a closing date for your pending home purchase, or starting to work on a new refinance, consider the impact of time on your bottom line.  The shorter your rate lock commitment, the more money you're likely to save.

It's been a wild few months in the mortgage markets and a trying time for mortgage rate shoppers.

Making sure you get the absolute "lowest rate" has never been tougher.  Rates are up.  Then, rates are down.  Rates are up.  Then, rates are down.  Over the past 5 weeks, mortgage rates have carved out a 1.500 percent range.

It's been a stomach-dropping ride for people trying to time a market bottom before locking in a rate and it's all happening because traders can't seem to answer to the most important question on Wall Street right now:

Is the recession ending, or getting worse?

It would seem like a simple yes or no -- there's plenty of available data , after all -- but the data is conflicting.  As soon as we get cause for optimism from one sector of the economy, weak data presents itself somewhere else.

Furthermore, when it comes to predicting the future of the U.S. economy, not all data is created equal.  Unemployment statistics tend to lag, for example, whereas Retail Sales may be more immediate.

So, what's a home buyer or would-be refinancer to make of it all?

Well, first of all, it's important to recognize that markets are moving on momentum and fundamentals right now.  That's a dangerous combination because even the smallest market event could lead to a mortgage rate surge  The other side, of course, is that rates could fall on new news, but mortgage rates usually rise much faster than they fall.

There's an old adage: Mortgage rates take the elevator on the way up, but take the stairs on the way down.

Lately, we've even seen this IRL.  There have been days where rate are up by as much as half-percent as investor flee from the bond market, but when rates recover lower, they seem to be dropping just an eighth of a percent at a time.

Floating your mortgage rate is fine, but given the current market conditions, you may be playing with house money right now and this is as good a time as any to cash in your chips.  All it will take a series of strong earnings from the banks this week and some hotter-than-expected inflation data to push rates back near 6 percent again.

The world moves quickly and mortgage rates do, too.  If you're not already working with a loan officer and are looking for a specific mortgage rate before locking, you may want to participate in my Rate Watch program.  You pick your target interest rate and when it's available on the open market, I'll lock it for you.

Call or email me directly.  I'll take a full loan application from you to keep on file, ready for when rates fall

Are mortgage rates going up? Are mortgage rates going down?

Bankrate.com has a mortgage rate survey that is for conforming mortgages only. It does not apply to FHA mortgages, VA mortgages, jumbo mortgages, or foreign national mortgages. For rate quotes, contact me directly.

The group's 30-day prediction from July 16, 2009 says this about mortgage rates:

• 50% predict mortgage rates will increase
• 25% predict mortgage rates will decrease
• 25% predict mortgage rates will remain unchanged

A couple of things are happening in our market right now and none of them are good for mortgage rates.  If we use our 20/20 Hindsight Glasses, we probably could have seen it coming.

1. Home prices are no longer on a steep decline
2. Consumer Confidence is rising
3. The financial system is returning to profitability

Furthermore, Americans no longer have Recession on the Brain like they did last September and October.  Back then, the financial crisis was the leading story of every news-related show on TV and in print.

The notable absence of these The End Of The World As We Know It-like messages may be one reason why consumer purse strings are starting to loosen.  For the fourth straight month in May, Retail Sales figures were hotter-than-expected.

Consumer spending accounts for the majority of the economy's activity and, now that spending is up, Wall Street is betting that businesses will prosper.  The Dow Jones is up 5 percent since Monday.

It shouldn't surprise you, but mortgage rates have tanked over the same period of time.

In 2008, mortgage rates benefited from the stock markets' losses.  Investors fled risk and parked their dollars in the relative safe haven of the mortgage-backed bond market.  Now, in 2009, as the stock market improves, some of those safe haven trades are getting unwound.

Over the next few weeks, at least, gains in the stock market should come at the expense of mortgage rates.

Remember, though, mortgage rates move quickly.  If you're not already working with a loan officer and know you'll want a new mortgage soon, you should consider being a part of my Rate Watch program.

Call or email me anytime and I'll take a full loan application from you to keep on file and queued up. I'll ask you to pick a "target rate" and then, when I see it available on the rate sheets, I'll submit and commit it for you. We then start working toward your closing.

It's transcended trending -- it's now a given.  Foreclosures regionalize.

In June, for the brazillionth time in as many months, just 3 states accounted for half of the country's foreclosure-related activity.  The top 10 states accounted for 75%.

Clearly, the foreclosures crisis doesn't impact every state in the same way.

Setting aside the personal pain foreclosures can cause, the massive mortgage default numbers have a silver lining.  Both first-time home buyers and opportunistic real estate investors can now buy foreclosed homes at relatively low prices and finance them at attractive mortgage rates.

Not every foreclosure is going to a "diamond in the rough" but there are some great deals to be had out there.  It may help explain why distressed properties accounted for nearly half of all home resales in April and for one-third of May's.

Meanwhile, to meet the burgeoning demand for foreclosed homes, several real estate companies built high-powered Foreclosure Search Engines geared at general home-buying public.  Whether you're a home buyer, real estate investor, or just curious about your neighborhood, there's lot of ways to find a foreclosed home.

Foreclosure search engines are rarely free but often come with "trial periods".  Trial memberships are usually full-featured and you can use your 7 free days to make an unlimited number of queries to help ascertain whether or not the foreclosure market is a good fit for your personal real estate goals.

According to RealtyTrac, the number of Q2 foreclosures was the second highest on record so there's deals to be had if you know where to look.  And when you find that deal and want to finance it, be sure to reach out to me directly by phone or email.

I'd be happy to work with you.