LenderBradford's Blog

FHA 203K Streamline Renovation/Purchase

Tim Bradford (American Midwest Mortgage) — Fri, 20 Nov 2009 15:53:14 -0600

This is a very good post by Ken about things that can be done with a FHA 203K Rehab loan. For additional information check out www.Ohio203K.com

Via Ken Cook, FHA Home Loans 678-439-8683:

So you or your client have found a home in a great area in the client's price range. Only one problem: it's in bad shape. The HVAC system is 50 years old, the roof is 40 years old and the windows may as well not even be closed. Plus the kitchen has vinyl floors in 3 different patterns and the counters are all laminate with burns and holes and scars.

Not to fear! Meet the FHA 203K Streamlined renovation loan.

Eligible Improvements Virtually any kind of improvement is eligible provided it becomes a permanent part of the real property and adds value.

Additions to the structure

Kitchen or bath remodels

Finished basement or attic

Patios, decks or terraces

Roofing and landscaping

Safety, energy efficiency and electrical upgrades

Handicapped accessibility improvements

Luxuryitems are not eligible

Swimming pools, hot tubs, tennis courts, gazebos, barbecue pits, saunas or alterations to support commercial use

The maximum loan amount must be within the FHA loan amount maximum for the MSA where the home is located and must include the purchase price and the renovation amount. The maximum renovation amount is $35,000 and the minimum is $5,000. Under $5,000 we can do with an escrow of repair funds. A minimum of 10% contingency reserve is required and must also fit into the FHA loan maximums for the area where the property is located. (Any balance remaining on the contingency will be applied to the principal balance and may not be used for additional repairs.)

Yes, it takes a little longer to close an FHA203k Streamline loan than it does to close a standard FHA loan. If you are an agent and you are concerned about that extra couple of weeks just think of it this way: You may make a sale you would not have otherwise made. You may help a buyer get into a home in the area where they wanted to live instead of where they "had" to live. You can be a real hero for someone.

If you are in Georgia I can help you with the necessary paperwork and give you a short class in how to use the FHA 203K Streamline Rehab loan to purchase, sell or represent homes in today's economy. Never hesitate to call me at any time and I'll be happy to answer your questions.

Ken Cook - Georgia - FHA, USDA, VA and Conventional Home Loans (678) 439-8683

Low Appraisals do not unilaterally terminate Florida FAR-9 Purchase Contracts

Tim Bradford (American Midwest Mortgage) — Sun, 15 Nov 2009 13:44:31 -0600

I believe this is good advise and information for buyers in Ohio Also.

Via Stephen McWilliam, ABR,CRB,CRS,GRI (Florida State Realty Group, Inc):

Many REALTORS® and even attorneys have fallen to the mistaken belief that the FAR-9 contains a contingency that permits the Buyer to unilaterally terminate the transaction in the event the Property appraises below the Purchase Price.

The reference to the Property's appraised value appears in the Financing paragraph of the FAR-9 as provided below.

FAR-9 Residential Sale and Purchase Contract

Paragraph 3: FINANCING: .... Once Buyer provides the Commitment to Seller, the financing contingency is waived and Seller will be entitled to retain the deposits if the transaction does not close by the Closing Date unless (1) the Property appraises below the purchase price and either the parties cannot agree on a new purchase price or Buyer elects not to proceed, (2) the property related conditions of the Commitment have not been met (except when such conditions are waived by other provisions of this Contract), or (3) another provision of this Contract provides for cancellation.

This is strictly a financing contingency, not to be confused with an appraisal contingency. In order for the Buyer to terminate the transaction using this provision two things must occur: 1) the Buyer must have provided a Loan Commitment during the defined Loan Commitment Period; 2) the appraisal must impact the financing so as to prevent the Buyer from obtaining financing. The simple fact that the appraised value was less than the Purchase Price is not sufficient grounds to terminate the transaction and successfully recover the Buyer's escrowed funds.

Let me provide an example:

Purchase Price $250,000.00

Total Financing $50,000.00

The Buyer provided the Seller with a Loan Commitment during the Loan Commitment Period

In this example the Property appraises for $200,000.00 vs. the Purchase Price of $250,000.00. The question is now: Can the Buyer obtain a denial letter from the Lender based on the appraised value not being able to support the loan with only a 25% LTV ratio? In this example, it would be highly suspect if the Lender would provide such a denial. As such, the Buyer must proceed with the transaction or face the potential of a Buyer's default.

Should the appraised value cause an increase in the LTV ratio that would exceed the allowable limits of the mortgage (ie. LTV increased from 78% to 81%) and the Buyer or the Property does not qualify for the higher LTV financing then the Buyer should be able to terminate upon presentation of the mortgage denial letter.

Obviously, if the appraisal was done prior to the Loan Commitment and it prevented the mortgage approval because of the low value; the Loan Commitment would never be issued and a denial letter should be provided stating the denial was based on the insufficient collateralization of the mortgage loan.

The biggest question should now be how Buyers protect themselves from low appraisal valuations, especially in light of the affects of the HVCC. One might suggest that the Purchase Contract restate the appraisal language in the Special Clause section. Thus, such language outside of the Financing paragraph should create a true independent financing contingency. Example:

"Should the subject property appraise below the Purchase Price and either of the parties cannot agree on a new Purchase Price or the Buyer elects not to proceed this Purchase Contract shall be terminated and Buyer's Deposits will be immediately refunded."

This Special Clause would not be necessary in Purchase Contracts using FHA or VA financing. The FHA/VA Addendums address the issue of low appraisal valuations.

This information is not intended to be considered as legal advice. You should always consult, and suggest that the customers consult, with a competent attorney for a proper legal opinion.

What is APR, Can You Explain It?

Tim Bradford (American Midwest Mortgage) — Fri, 13 Nov 2009 17:27:36 -0600

Great post and read this twice ...............

How Do APR Predators Work?

Many sophisticated borrowers shop interest rates by searching for lowest APR which, if property stated, is a valid way to compare similar loans. Unfortunately, APR is not always stated properly.

How is advertised APR is misstated?

Prepaid Interest is not included - most common deception and true on all online Rate sites i.e.: Bankrate.com, Interest.com, Mortgage101.com, ShopRate.com, etc.
Prepaid Interest is understated - must be 15 days when closing date is unknown.
MI or MIP is not included in the APR on any online rate sites, Bankrate etc.
Some lenders do not include MI or MIP on their web sites such as Amerisave.com
Lender fees are either understated or not included in the APR calculation. This is a tricky one because No or Low Lender Fees does not necessarily indicate a predatory lender. Some lenders charge a higher rate and no points or fees for their so called "Zero Cost" loan. However, the "Zero Cost" rate will always be higher than a rate with points and/or fees.
Notes to the above:
- there is no such thing as a Zero Cost loan and some states prohibit lenders from advertising Zero Cost Loans.
- The spread between Rate and APR on loans greater than 90% LTV should be at least 0.700%. When it is not... you are being scammed

Via Bill Ladewig Your FHA Guru - FHA and VA Loans Since 1970:

WHAT IS APR, Can You Explain It?

APR Demystified and APR Predators Exposed

First, lets demystify Annual Percentage Rate (APR).

APR was designed to allow consumers to use one standardized number to compare each lender's rate for the same type of loan while rate shopping. It is supposed to represent the borrower's cost and it works like this.

If I lend you, $10,000 and, I charge a $500 Bump-ta-Bump Fee, you will actually receive $9,500, however you must still repay me $10,000. APR is my real yield and your real cost on this loan.

We agreed that you will repay the loan at 8% interest on $10,000, HOWEVER you only received $9,500 therefore I will earn more than the 8.0% interest rate I charge on $10,000. In this case, my yield (APR) is 9.799% on the $9,500 you received.

APR is the lender's yield on dollars actually lent ($10,000 minus $500 = $9,500); in this case, the lender's yield (APR) on $9,500 is 9.799%   (APR is computed as if the above example is a 30 year loan)

The $9,500 also represents the Amount Financed in the Truth In Lending (TIL) disclosure.

For those of you who use spreadsheets the Rate Function will find APR. Use the Amount Financed for Loan Amount and use the monthly payment on the actual loan amount.

Fees that must be subtracted from a mortgage loan to properly calculate Amount Financed for APR

Origination and Discount Points

Processing and Lender Fees

Pre-Paid Interest (Use 15 days when closing date is unknown)

Monthly Mortgage Insurance must be added to the payment of all FHA loans and Conventional loans greater than 80% loan to value.

The inclusion of Mi or MIP accounts for the large spread between Rate and APR on loans with mortgage insurance.

NOTES: Fees Not used in APR calculation; third party fees such as appraisal and credit. APR can only be compared on loans of the same type and amortization period

How Do APR Predators Work?

Many sophisticated borrowers shop interest rates by searching for lowest APR which, if property stated, is a valid way to compare similar loans. Unfortunately, APR is not always stated properly.

How is advertised APR is misstated?

Prepaid Interest is not included - most common deception and true on all online Rate sites   i.e.: Bankrate.com, Interest.com, Mortgage101.com, ShopRate.com, etc.

Prepaid Interest is understated - must be 15 days when closing date is unknown.

MI or MIP is not included in the APR on any online rate sites, Bankrate etc.

Some lenders do not include MI or MIP on their web sites such as Amerisave.com

Lender fees are either understated or not included in the APR calculation. This is a tricky one because No or Low Lender Fees does not necessarily indicate a predatory lender. Some lenders charge a higher rate and no points or fees for their so called "Zero Cost" loan. However, the "Zero Cost" rate will always be higher than a rate with points and/or fees.

Notes to the above:

there is no such thing as a Zero Cost loan and some states prohibit lenders from advertising Zero Cost Loans.

The spread between Rate and APR on loans greater than 90% LTV should be at least 0.700%. When it is not... you are being scammed

Rate - Points - Fees are all interdependent

The best way I can explain this is show various Rate - Point - Fee combinations where the lender is making the same gross profit on each combination.

In the examples below, we will use a $200,000 loan amount and Lender gross profit of $1,000, on a day when the Lender's cost for a 5.000% rate is par (0 point).

Best Rate: $1,000 Lender profit in various combinations of points and fees

Rate

Fees

Points

APR

Profit

5.000%

$1,000

     0

5.044%

$1,000

5.000%

$500

0.250

5.044%

$1,000

5.000%

$0

0.500

5.044%

$1,000

Lowest Fees:
You pay $0 points and fees and Lender's investor pays the lender $1,000 for the higher rate.

Rate

Fees

Points

APR

Profit

5.125%

$0

    0

5.125%

$1,000

The point here is that lenders design their loans to provide talking points for their sales staff (loan officers). They all require a certain profit margin and it is not important the way the loan is structured as long as the closed loan delivers their required profit margin.

This illustration also points out the value of correctly stated APR as a way of comparing mortgage loans. For the sake of these illustrations, prepaid interest was not used. If 15 days PP was calculated it would have increased each APR by 0.019%.

Bill Ladewig

800.664.7283 (SAVE)

Bill@YourFhaGuru.com

Website

Bill Ladewig is a Mortgage Broker Licensed by the California Department of Real Estate 00968137

San Diego FHA and VA Home Loans Escondido Mortgages Escondido Localism San Diego FHA and VA Home Loans San Diego Localism San Diego UFMIP Escondido Mortgages Escondido Localism San Diego Mortgage What is APR

Summary of the Revisions to the First Time Buyers Program

Tim Bradford (American Midwest Mortgage) — Sat, 07 Nov 2009 09:34:51 -0600

This is from the NAR website of the current provisions, I suspect that there will be some revisions however for the time being this is a good reference. For home buyers in Ohio, they also want to check out the Ohio Housing Finance Agency's Mortgage Credit Certificate Program, because it can easily triple the amount of Tax Credits a buyer can recieve. Drop me an email and I will glady send any buyer or Realtor information about this program.

FEATURE	Jan 1 - November 30, 2009 Rules as enacted February 2009	November 7 - April 30, 2010 Rules as enacted November 2009
First-time Buyer Amount of Credit	$8000 ($4000 married filing separate)	$8000 ($4000 married filing separate)
First-time Buyer Definition for Eligibility	May not have had an interest in a principal residence for 3 years prior to purchase	Same
Current Homeowner Amount of Credit	No Provision	$6500 ($3250 married filing separate)
Effective Date Current Owner	No Provision	November 7, 2009
Current Homeowner Definition for Eligibility	No Provision	Must have used the home sold or being sold as a principal residence consecutively for 5 of the previous 8 years
Termination of Credit	Purchases after November 30, 2009. (Becomes April 30, 2010 on Date of Enactment.)	Purchases after April 30, 2010
Binding Contract Rule	None	So long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.
Income Limits (Note: Increased income limits are effective as of date of enactment of bill)	$75,000 - single, $150,000 - married, Additional $20,000 phase out	$125,000 - single, $225,000 - married, Additional $20,000 phase out
Limitation on Cost of Purchased Home	None	$800,000 November 7, 2009
Purchase by a Dependent	No Provision	Ineligible November 7, 2009
Anti-fraud Rule	None	Purchaser must attach documentation of purchase to tax return

How will this affect the Omaha real estate market? Was this tax credit a good idea? Stay tuned for my follow-up blog post.

100% Financing and Avoid Conv PMI, Avoid VA Funding Fee or FHA Mortgage Insurance Premium

Tim Bradford (American Midwest Mortgage) — Tue, 27 Oct 2009 20:06:59 -0500

If you are looking to buy a home in Rural Ohio, you may want to check out the USDA Rural Home Loan Program.

If you are below these income limits, you may qualify.
New Income Limits Effective 4/20/2009
	1 Person-4 Person	5 Person-8 Person
Cleveland MSA	74,550	98,400
Akron, OH MSA	74,750	98,650
Putnam County, OH	75,200	99,250
Columbus, OH HUD Metro FMR Area	78,900	104,150
Cincinnati-Middleton, OH-KY-IN HUD Metro FMR Area	79,550	105,000
Union County, OH HUD Metro FMR Area	88,350	116,600
All Other - Areas in Ohio	73,600	97,150

Other rules do apply and the best way to find out is to give me a call or send me an email.

A completely new proposal to save the real estate market. It's not as crazy as you might think!

Tim Bradford (American Midwest Mortgage) — Sat, 24 Oct 2009 17:41:00 -0500

I am rebloging this to hear from people that disagree with this proposal. I did post this on the blog itself because out of 173 posts I counted only 8 that disagreed.

Here are my comments, let me know if I am off base.

Because this post was featured in the daily email and I thought the Title was interesting, I stopped by to read the post. As I read thru 173 posts I was surprised to only find 8 posts that I felt disagree with the proposal. Make this #9 that disagree. I support the elimination of the 8,000 credit. While at the same time agreeing with some of the posters that if renewed it should be the greater of the downpayment or a fixed maximum amount. With the tightening loan criteria I see the current stimulus as PAYING PEOPLE TO (that can afford to buy) BUY HOMES. Your proposal continues to do just that and in larger amounts.

Here is my list of people that disagreed with the principle. #25 #56 #63 #107 #108 #116(Possibly the best) #118 152

I ask everyone that supports this proposal if they support higher taxes and if they support this proposal because they would benefit with more income from sales. People need to ask what is the best for everyone not just themselves.

Via Richard Weisser Coweta Fayette Real Estate ERA United Realty:

A lot of real estate agents are speaking as if the door on real estate sales will be slammed shut if the federal tax credit for first-time homebuyers is not extended. And while this opportunity to collect cash has had a very positive effect on sales in the lower price ranges, it really hasn't meant much to sellers with homes valued in excess of $200,000.

My preference is to let this credit just go away. The expiration of the credit could actually lead us back to a true fair market, where buyers buy because they need a house rather than just trying snag a great deal with future profit potential.

I would like to propose an alternative remedy to help sale in all price ranges. My proposal would really create interest in buyers that could really stimulate the market, and it is the only remedy that I have even seen proposed that would actually correct the mistakes of the past.

The solution I am proposing is to make all down payment monies for a personal residence up to and including a cash sale an income tax deduction. Not a refundable credit, just a deduction against income.

This also would encourage buyers with both cash and significant incomes to get back into the market. It would lead us back to the days when more down payment was better, and smaller mortgages would prevent the short position debacle that we are experiencing today.

The higher end market would see an extensive boost in sales, and prices would stabilize. And once again, homeowners will be encouraged to have equity in their homes to cushion them against negative market forces.

So what do you think? A dollar for dollar tax deduction for down payments on a house sounds like a good idea to me!
All content, including text, original art, photographs and images, is the exclusive property of Coweta Fayette Real Estate, Inc., and may not be used without the expressed written permission of Coweta Fayette Real Estate of ERA United Realty Newnan Georgia. All information is believed to be accurate but is not warranted, Copyright 2003-2009. Richard Weisser REOS, E-Pro. licensed Auctioneer. 770-827-6225.
Learn more about Coweta County and Fayette County Georgia Real Estate, and to search the entire Georgia MLS for free with no registration required visit CowetaFayetteRealEstate.com! Photos of the Great Smoky Mountains National Park.

Get the latest GA Foreclosure List Updated Daily! We Do HUD bids in Georgia! 770-827-6225

FHA notice on delay in FHA condominium changes: Now set for Dec 7, 2009

Tim Bradford (American Midwest Mortgage) — Wed, 21 Oct 2009 15:52:10 -0500

Just recieved this notification that the new Condo Guidelines are being delayed again. One issue that was of interest to me was how Lenders were suppose to evaluate the Reserve Requirements. On another post here on Active Rain it was said for existing Condominums the guideline would be reserves needed to be funded at 60%. I have seen nothing to confirm that number, hopefully the updates promised by HUD will give the guidance for Lenders.

Implementation of FHA's new policy guidance for condominium project approval and condo unit financing will be delayed until December 7th 2009. The new guidance, to be issued within the next two weeks, will: 1) offer additional leniencies to address the difficult market conditions and
2) augment some portions of FHA Mortgagee Letter 2009-19, providing additional information and clarification.

Until the new guidance takes effect on December 7th, 2009 lenders may continue to use the Spot Loan Approval guidance issued in Mortgagee Letter 1996-41. Further, the site condo and manufactured housing condo project changes that have already been implemented are not affected by this delay.

After a Short Sale, Will I Ever Be Able to Buy a Home Again?

Tim Bradford (American Midwest Mortgage) — Sat, 10 Oct 2009 18:35:59 -0500

Dawn, As others have said your post it timely and excellently written. As you said the guidelines presently call for 2 years after Completion date. (no exception per present FNMA guidelines) If a seller is in the position where a mortgage modification that is acceptable to the lender and affordable to the seller it should be considered. This can be a good option for the Lender, the owner and the real estate market if the modification works. However, I hear modifications generally just forestall the inevitable. The owners/sellers have very difficult decisions to make, but they need to understand it is better for them to make the decisions than to make the lender make the decisions.

Hopefully your post will seller facing a difficult decision will contact a professional that understands the options and is willing to work with them.

It should also be noted that I have seen some sellers, realtors and lenders try to coordinate a short sale closing with the purchase of a new property. Unless full and complete disclosure is made to the old lender, new lender, realtors and underwriters, this can create legal problems.

Via Dawn Maloney, CDRS Elite (RE/MAX Commitment):

"Will I ever be able to buy a home again?"

Today I received another call from another homeowner in foreclosure. Burning questions that no one could (or would) answer were pouring out like lava, pent up emotions were finally being released in a meltdown of fear, frustration, sorrow, confusion, anger.

I just listened, acknowledged, and took notes, listening to learn if I would be able to help.

Eventually, in sharing with me, there was some relief from the pressure, and the courage to ask a question about the future arose: "Will I ever be able to buy a home again?"

Yes! As long as you can financially afford it with a steady source of income and a downpayment, YES. You will be able to buy another house in the future. Usually in about two years after a short sale, you will be eligible to purchase a home and get a loan.

If you opt for foreclosure, it will be seven years, but you will still be able to buy another home in the future, based on standards of the lending community as we know it.

A short sale will give the fastest return to loan eligibility. But even a foreclosure does not mean you will never be able to buy a home again.

The future looks better in time. Here's to your future homeownership and to your financial rescue today.

If you feel you have nowhere to turn for answers to your questions about short sales, loan modification and foreclosure, please call. I can point you in the right direction.

$8,000 First Time Home Buyers Tax Credit, ends Dec. 1, 2009.

Up to $14,999 3 to 1 MATCHING GRANT for First Time Home Buyers in Summit County (Not including Akron, Barberton & Cuyahoga Falls).

Call today to learn if you qualify for many other financial programs!

Dawn's cell: 330-990-4236
Email: dawn@dawnsold.com

http://www.DawnSold.com

Attention Cleveland Area Home Buyers - Time is Running Out on the 8K Tax Credit

Tim Bradford (American Midwest Mortgage) — Mon, 05 Oct 2009 10:31:56 -0500

Chirs, Thanks for the mention in your post. I do agree that anyone looking to purchase and take advantage of the $8,000 should step up their house hunting.

On an added note there are additional tax credits from the Ohio Housing Finance Agency. Information and a calculator can be found here. Funds are limited and only available on a first come first serve basis. The OHFA Tax credit ranges from 20-30% of the interest paid on each year on the loan. Borrowers recieve this credit each and every year they owner occupy the home. On a $100,000 purchase the OHFA credits could exceed $30,000.

Via Chris Olsen Broker Owner Cleveland Ohio Real Estate (Olsen Ziegler Realty):

Any first-time home buyer in the Greater Cleveland and Akron Ohio marketplace is hopefully well aware of that time is running out on the 8K federal tax credit -- you must close on a home by November 30th, 2009.

For those buyers who are either on the fence or are in the middle of trying to negotiate a short sale, time is running out and you need to act now if you wish to take advantage of it.

I am closing a home purchase this coming week for a buyer (not a first time buyer) and this loan/purchase is closing in under 30 days, so when the right folks (agents, lender, title, escrow, inspectors) are involved, it can happen.

If you are still negotiating with a seller of a short sale property, chances are, it's not going to happen. The bank will still have to approve it, as well as the underlying investor.

If you feel you have waited to long, you haven't. If you start the process now, provided you can get pre-approved for a loan, it's not too late and you can still start and complete the process.

The right agent with the right resources will make or break your home purchase so choose your buyer's agent wisely.

If you need an exceptional lender, Tim Bradford with American Midwest Mortgage has more experience and options than any other lender I know for first time home buyers in the Greater Cleveland and Akron Ohio real estate market.

Shopping for mortgages - The Public Image of Advertising that is misleading !!!! - Part 1 of 2

Tim Bradford (American Midwest Mortgage) — Tue, 29 Sep 2009 22:04:35 -0500

Thank you Jeff for a great presentation about some of the advertising that consumers see daily. Being in the mortgage industry for many years I am still surprised how many consumer believe these ads. With regard to the false or misleading ads, I suspect that these companies are more than willing to pay the fines because of the profits they make on the loans that they write.

Via Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages - USDA loans (Infinity Home Mortgage Company, Inc):

ADVERTISING – Those ads that seem too good to be true.

I have been in the mortgage business for 17 + years. I have seen so much advertising when it came to mortgage companies and how many of the ads were misleading or just flat out lies. Those companies advertising low rates that didn't happen. This easily went on from 1992 to 2002. I always wondered why this wasn't regulated as strongly as it should have been. I found out that some of these companies had 100's of complaints, yet they still operated for those 10 years. I think this is misleading and I call it Shark Advertising. It's dangerously misleading, yet it worked for many companies, at the expense of the borrower.

If anyone has noticed, we haven't see as much advertising from mortgage companies or large banks in the last 18 months or so. I am now seeing a few mortgage companies advertise on the radio and as of lately, a few advertise on TV, especially ESPN. The ads are misleading because they appear to make you believe that it's being backed by the government. Has anyone seen a few ads on tv that look like a news update, a spokesperson telling you about government funded programs or that the government is helping in sponsoring these programs. Yet if you read the fine print, it's a mortgage company, disguising this ad very carefully, spinning it as thought the government is putting this out to the public??

I am even seeing this more and more in such places as Facebook. Below are a few that I am seeing on Facebook now.

Here are some ads found on facebook and comcast.net. As you can see, these mortgage companies and or companies that are lead generators, make you think that the government is behind this. Obama hasn't asked homeowners to refinance. The first one on the left, upper left, is from a company called Lower My Bills. They sell leads to other mortgage companies, after they have gathered your information online. Then you have like 4 to 10 lenders call you, sometimes daily.

People on Facebook that give basic information – eye catchers to pull you in.

Here is a loan officer on Facebook that placed this on his Wall, to capture the attention of others. You just need to be aware of what you read. Sure, this can happen, but there are some unknowns not mentioned. And sometimes the loan officer will raise that unknown, so you can't obtain that great rate and get the next best thing. Keeping in mind, it's not always about the Best Rate. How service? Integrity? Educating the borrower? And so much more.... Please read : I want the same deal that my friend receivd... & Mortgage payment vs Interest Rate

Web Sites that are deceiving !!!!

As I explained in this blog post, deceptive web sites, here is a great example above. Doesn't this look like it could come from the USDA themselves? But it isn't. It acts as a lead catcher, catching your info to call you and or sell you about USDA loans or any other type of mortgage loan. No Cost Obligation is mentioned on the site. - We always love to hear about free things, but are they free overall?

Here is a FAVORITE of mine !!!

I am sure many of you have seen this one on tv, FreeCreditReport.com. The commercial announces a free credit report. But at the very end, it says that you need to enroll in their Triple Advantage program.

A free credit report? They have tons of commercials & commercials cost money to display on TV. They also have like 3 to 4 different kinds of commercials and. producing commercials cost money.

Well, I feel like an investigative reporter for the news. I filled out my info online, trying to see what I get. It says that it takes 3 to 5 days for me to obtain these credit reports from the 3 credit agencies. (giving my credit card #) And then there is a button that says, to obtain your 3 reports now, click here. Imagine that, it's asking for $24.95 now. See the 2nd paragraph on the left, highlighted in yellow? It talks about the new Federal Law and I am wondering if that is what they are sending me now, because that is free. But from what I know, you have to go to annual credit report to get the free reports.

Conclusion :   Just be very careful of what you read and what says free, when it might not be free. I always have said, someone has to pay for it from some where. Is it you? Is it me who pays for it?

Shopping for mortgages - The Public Image of Advertising that is misleading !!!! - Part 1 of 2

Shopping for mortgages - The Lending Trees of the World (lead generators) - Part 2 of 2

Advertisements - Is the grass greener on the other side?



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_________________________________________________________________________________________

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

If Borrower is underwater on the home they live in should they be permitted to purchase another Home

Tim Bradford (American Midwest Mortgage) — Mon, 21 Sep 2009 18:21:00 -0500

Recently, I have had 3 homeowners contact me telling me that the home they currently live in no longer is meeting their needs and they want to purchase another home using FHA Financing. Also, these borrowers were underwater with respect to the value of the homes versus the present mortgage balance and the cause of them being underwater was not purchasing at the peak of the market, it was them refinancing to take cash out of the property. Is this something as a lender I should consider doing? Legally, I could do this, but should I do them morally?

In two of the cases property was just in one persons name, so I could consider doing the loan in the persons name that was not on the current mortgage. In one case the prospect told me they had discussed with the Realtor the stopping of monthly payments on the current loan to accumulate funds for the down payment on the new purchase. I could not even consider this loan because the non obligated borrower did not have sufficient income to qualify.

The second one was similar in that the current home was just in one persons name. The non obligated person could qualify based upon their income. I suspect that if this borrower does make a new purchase, they will then default on the current loan, either intentionally or because of their life styles. The combined annual income of this couple combined is approx $120,000 and according to them they only have approx $2,000 per month in fixed monthly expenses. I am told there are no extraordinary expenses such as college tuition for children, so I wonder why there are no history of savings. Any funds for the down payment would be a gift from a family member.

Legally, maybe the second loan could be done, but should it really be done. This may be a deliema that loan officers faced a number of years ago. They could legally write the loan, but should they. As we know these loans were written and now we have the foreclosures and short sales.

Down Payment Assistance in Ohio, Cleveland, Columbus, Toledo and every other city

Tim Bradford (American Midwest Mortgage) — Mon, 14 Sep 2009 21:10:39 -0500

If cash for the down payment is an issue for you and you are looking for funds to make a purchase of a home for your family, you may wish to look at HUD Homes because you can purchase most of them with only $100.00 Down. Also, in most cases HUD will also pay $2,500.00 in your closing costs and you can ask for additional assistance if needed. If you are a first time buyer you will likely also qualify for the $8,000 Federal Incentive. Also, current the OHFA MCC program has funds available for Bank Owned Properties (HUD Owned Properties Qualify) for a 30% Tax Credit. On a $100,000 purchase this could amount to over $30,000 in Federal Income Tax Credits. Give me a call (or send me an eMail) if you have any questions or would like a referal to a Realtor that sells HUD Homes and is familar with these incentives.

FHA Non-Occupant Co-Borrower loans - Also known as Kiddie Condo loans

Tim Bradford (American Midwest Mortgage) — Mon, 14 Sep 2009 17:43:21 -0500

For any parents with children that are headed off to college this may be an option to consider instead of paying the dorm fees.

Via Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages - USDA loans (Infinity Home Mortgage Company, Inc):

FHA Loans – FHA Mortgages

Non Occupanying Co-Borrower loans - Kiddie Condo loans

FHA loans have many features that still aren't talked about as much as one would think, because they are still fairly new to more than have of the loan originators out there. Now, some might argue half is very extreme, even though this is my opinion, I will still stick to this statement for many reasons.

As a loan officer with more than 17 years of mortgage experience, the non-occupant co-borrower program is very simple to understand.

FHA will allow a co-signer that is not living in the house to actually be on the mortgage and co-sign for the loan. Keep one important thing in mind, they must be a family member/relative. And this can be great for first time homebuyers. One thing that so many get confused no matter what type of loan they are applying for is that a co-signer with good credit can't overcome the bad credit of the primary borrower. Meaning that the co-signer with good credit can't get you a better priced loan. If the primary borrower still has lower credit scores that don't qualify, then the loan won't happen.

Now keep in mind that this is a lot different when doing a non-occupant co-borrower loan with a conventional mortgage. Unlike the FHA non-occupant co-borrower loans, which the primary doesn't actually need a job, on a conventional program such as this, that primary borrower still needs to qualify with some type of income ratios. And this usually doesn't help. Besides, in most cases, with the pricing hits on a conventional loan, it would be much cheaper doing a FHA loan. Keep this in mind also, back in April of 2008, HUD allowed this on refinances also. A family could help you refinance your property and not live in the property.

Now, for those of you who remember John Belushi in Animal House, what I consider an American Classic back then, this next part my be very important if you have kids about ready to attend college or are attending college.

The FHA non-occupant co-borrower program can also be known as the Kiddie Condo loan. This basically mirrors the same guidelines as what I explained above. It's just another term and another way to help keep your kids college expenses lower. First off, you don't have to buy a condo. It could be a single family dwelling, or a duplex. One thing that I didn't mention above is that you can't have a co-signer on 3 units or 4 units, not unless they are going to live in the property as their primary.

What's appealing about the FHA Kiddie Condo loan is that you could have other students live in the property and that you could receive rent. A great example :

Duplex : Each unit has 3 bedrooms. Rent goes for about $500 a month. Your total mortgage payment, to include mortgage insurance, taxes, and homeowners insurance is $2,250/month.

You have one son in the property who won't be charged rent. That leaves you 5 other tenants at $500/month. That is $2,500/month. That basically covers your mortgage payment and leaves you a little extra for repairs and such. Your son pays less for attending college, and you get a tax right off, and that you are building equity. Please speak to a tax accountant/CPA for details on this.

Key Point to Remember -

Even though a lot of this sounds easy, you still need to work with a loan officer that is up to date on this kind of financing and on FHA loans in general. A good example : you use to be able to have non-occupant co-borrowers even on 3 units and 4 units, up until about a year ago. One more thing to keep in mind, even though these are HUD's guidelines on FHA mortgages, many lenders have lender overlays. That some lenders might not be able to do what I described above. I know one borrower that already ran into this, after many promises upfront.

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

Should you use your Realtors InHouse Lender? Remember they all live in the same house.

Tim Bradford (American Midwest Mortgage) — Sun, 13 Sep 2009 16:50:35 -0500

This is a question every home buyer should ask themselves especially if your Realtor/Agent has not encouraged you to Shop, Compare and Save. Above and beyond the Rate of Interest and Closing Costs, buyers need to keep in mind that one person/house is controlling the entire transaction. Recently, I was dealing with a buyer that was looking at a New Construction home and as part of the transaction the builder had incentive to use the builders lender. The buyer ultimately walked away from the transaction for a number of reasons. One of the reasons was they were feeling pressuredin general. Also the fact that the Seller/Builder was controlling every aspect of the transaction.

Selling the home
Arranging the Financing
Obtaining the Appraisal from one of their chosen Appraisers
Doing the Title Work
Doing the Closing with their affiliated Title Company

Ask yourself if you want checks and balances by not having everyone in the transaction living under the same roof or having affiliated business arrangements with the individuals they deal with.

As far as a history lesson, consider Car Dealers, it is common place for them earn referral income when they arrange the financing for a car buyer. Also with the number of Cars Repossessed, a sales person is encouraged to do everything possible to get the car sold. Ask yourself if you are doing what is in your best interest or what is in the best interest of the Salesman/Dealership.

Here in Ohio, there are laws preventing your Realtor/Agent from receiving income on a per transaction basis from the Lender or Title Company, however via your Realtors ownership of the affiliated business or another indirect ownership thru an Affiliated Business Arrangement, there may be some conflict of interest. This is the reason buyers and sellers sign AfBA Disclosures. If you are asked to sign one of these forms, ask your agent/Realtor to explain to you any financial incentives they receive. If they say there are NONE, ask them if the company they work for tracks the number of referrals they make to AfBA and if these numbers are discussed periodically with their managers.

I know some Agents/Realtors that work to save their clients money via referrals to lenders and Title Companies, however I know others that make those referals with income or profits being their motive. If you agent/Realtor does not encourage you to independently Shop and Compare, do it for yourself. Convenience shopping at times can be good, however at time Convenience Shopping is not a buyers best option.

Warn your Buyers about Sellers Addendums on bank owned properties.

Tim Bradford (American Midwest Mortgage) — Fri, 11 Sep 2009 11:55:54 -0500

Below is one section of a Sellers Addendum that I believe needs to be reviewed with any buyers. Look at section (b). I think most know that seller addendums like these were written by the attorneys for the sellers and the clients they represent. The wording you see in section (b) is similar to what you see on HUD Owned properties, Now I am starting to see it more often on non HUD contract. IF you are asking the seller to assist your buyer with closing cost and encounter an addendum like this, verify with your buyer if they can cover the additonal closing costs that this paragraph will make them libel for paying.

Any Ohio buyers or Realtors that have any questions, please give me a call or send me an Email.

The Basics of FHA Loans - Mortgage 101 for FHA Mortgages - 08/24/09

Tim Bradford (American Midwest Mortgage) — Sat, 29 Aug 2009 07:23:39 -0500

In todays market, The FHA Loan option can be the best option for many homebuyers. This article explains some of the myths and inaccurate information that is being said about FHA Loans. Buyers and Sellers both can learn by reading this post.

Thanks Jeff, for another Great Post!!!

Via Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages - USDA loans (Infinity Home Mortgage Company, Inc):

As many of us know in the real estate market, FHA loans are being used more than ever before. With the disappearance of the subprime market of 2 years ago and in several cases, that conventional loans can be more expensive, more FHA loans are being utilized. I just wanted to point out some basics, because I am still hearing some misleading information that makes me cringe from time to time.

FHA loans are more expensive than conventional loans. - FALSE

This one is always a favorite of mine. Right now, forget about the pricing hits on the credit scores when comparing the 2 types of loans. In reality, a lender can make a little more on the FHA loan because of the SRP's, which are the service release premiums. This is basically what the investors on Wall Street are paying to buy the loan.

Why would a loan officer state that FHA mortgages are more expensive? Or the fees might seem higher?

Here are a few reasons why you might hear this.....

It went through the rumor mill. If it came from a realtor, the consumer, or the loan officer, it just circulated and either was twisted information or someone didn't know what they were talking about.

Some people get the upfront mortgage insurance premiums confused with the general costs of the loan. If this is not explained correctly, it's very easy to assume that FHA mortgages are more expensive.

Here is a good reason.... because the loan officer wanted to make more money, since the borrower didn't have perfect credit and or the credit scores were in the low 620's. I have known loan officers in the past that gave higher rates and or fees, telling the borrower that they were being placed in a FHA B minus loan.

One false rumor - FHA loans are said to have higher costs. This might take place if the lender or loan officer decides that they can capitalize on FHA mortgages. But in reality, no matter what company that I worked for, my costs were the same no matter if it was a FHA loan or a conventional loan. And as I mentioned, sometimes people included the upfront mortgage insurance and associated it with the costs. Now, this is an extra cost, but you need a very good loan officer to break down these costs and compare apples to apples. I have written a series on comparing FHA loans and conventional loans. I take into consideration the LTV (loan to value) and the borrower's credit scores. (there will be 5 different blogs below, that will show you the differences between FHA loans and conventional loans.)

Other rumors out on the street?

FHA loans now require a 3.5% down payment, not 3.0%. (this was announced in 9/08 and was effective January 1st, 2009.) Besides, back then, it was 2.25% as a down payment and .75% used for closing costs). I bring this up, because a friend of mine who is a loan officer in Florida was told in a class that it's 3.0%. And keep this in mind, this was coming from an instructor.

FHA loans aren't just for First Time Homebuyers. You can use FHA loans over and over.

You can have 2 FHA loans at once, but there are major requirements.

Monthly Mortgage Insurance is not there for the life of the loan. It will fall off when you hit the 78% LTV mark. And if you put 20% or more down, the monthly mortgage insurance is only there for 5 years. On a conventional, this is called PMI, private mortgage insurance.

FHA loans take longer to close !!! - This is 110% incorrect. They take just as long as a conventional loan. It comes down to how hard the deal itself is, and how good the loan officer and the mortgage company.

For more FHA loans vs conventional loans comparisons :

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

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

FHA Loans vs Conventional Loans - 20% down - A Rude Reality Check - 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 - 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 - 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

FHA 203K Loans are still available in Ohio

Tim Bradford (American Midwest Mortgage) — Fri, 28 Aug 2009 21:49:57 -0500

Having received a number of calls from Buyers and Realtors that have been told the FHA 203k Rehab/Repair Loan is not longer available, Let me assure everyone that in fact it is available. Check out www.Ohio203K.com for complete information. For Buyers and Realtors that did not know it is an excellent loan when dealing with HUD Properties, Bank Owned or Distressed Properties. It can also be used to satisfy most community Point of Sale Inspections.

Instead of having an Investor purchasing a home and rehabbing it and then reselling the property at a profit to them, the FHA 203K allows an owner occupant the opportunity to purchase the home and also obtain the funds needed to rehab the property and pocket the profits that might otherwise go to an investor.

As is true with any home purchase the First Step is to be preapproved. When speaking with a lender the borrower needs to discuss their desired monthly payment as well as the monthly payment limit calculated by the loan officer. After determining a payment range, a Realtor familiar with FHA 203k loans can start showing you properties in the areas or communities that you wish to purchase a home.

Borrowers using the FHA 203K Loans are eligible for the $8.000 Federal Stimulus that is due to expire 11/30/2009 (It might be extended, but it might not so if you want to buy a home, do it now. There is also an additional State of Ohio - Mortgage Credit Certificate Program that is available to First Time Buyers that could give you additional tax credits. Visit this site to see the additional credits.

Anyone want to be preapproval for a 203K Loan or referral to a Realtor familiar with properties that could be purchased under this program can contact me or request a Preapproval here.

Note: Any Realtors that desire more information about 203K loans should call me at 216-324-8113

How many hats do you wear? Are you both a loan officer and a realtor?

Tim Bradford (American Midwest Mortgage) — Thu, 20 Aug 2009 19:26:30 -0500

This is another great post from a very respected lender on ActiveRain. His post address the question of a realtor/agent wearing more than one hat during a real estate transcation. His post address when a realtor is also acting as the loan officer. Very similar to the issues he raises occur when a realtor refers a client to related company that might be providing Title Company services or Lending services. I always suggest that buyers shop, compare and save. I encourage buyers to go with the lender that offerred the best loan package, not the lender that made their offer better after seeing a better offer. Service does also come into play.

Via Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages - USDA loans (Infinity Home Mortgage Company, Inc):

DISCLAIMER : This topic might tick off some of those that do play both roles, who are a loan officer and a realtor. Sorry, but I have a problem with this. Just hard core mortgage related facts.

So, how many hats do you wear? Sure, I wear many hats as a loan officer, but in my opinion, it's all part of my job. What about those that are actually a loan officer and a realtor though? How many more hats do they need to wear? Sure, if you are one of those that do both, I am sure you think you do a good job for your clients. But is this just your opinion? And is good good enough? I try for excellent and feel that it's hard to hit that mark if you are both. And keep in mind, this is just my opinion.

I GUARANTEE !!!!

I am sure that these same people that are both a loan officer and a realtor will say that they have your best interests at hand. Their reasons would be :

I am not charging you as much, since I am your realtor and loan officer. But define not as much. And could it cost you more in the long run?

I have been doing mortgages and real estate for 10 years. Okay, is this together, combined in years? Have you been a realtor for 9 years and a loan officer for just one year? More on this later.

"I will guarantee you satisfaction." Well, anyone that knows me, I hate such words and phrases as : "I guarantee" "I promise" "no problem," "Don't worry" "trust me" "I have your best interest at hand" etc, etc. Even though I know I am very good at what I do and know that I can get you a mortgage, I don't like using these phrases. Yes, they calm the borrowers nerves, but I view it usually as a good sales tactic.

Here is how come I can make my opinions. I can base them on past examples and on comments from other individuals that say they are both a realtor and a loan officer.

I wrote this blog a while back. FHA loans vs Conventional Loans, a real comparison with 5% down I was attacked by like 3 loan officers in this blog, telling me that I was way off on my conventional rate example. They either told me that they were both a realtor and a loan officer or I found out after doing some research. What was ironic was that I asked each one of them if they knew how to read a rate sheet and see that there is a major pricing hit for lower credit scores. And that this is not a lender hit, but a FANNIE MAE pricing hit. Only one got back to me and said that he spoke to another loan officer and still told me that I was wrong.Just because someone else confirmed your thoughts, doesn't always mean that it's correct. Hence why I ended up writing about this. Two wrongs don't make a right, or do they?

And the funny thing, yet a sad thing, these same people that tell me that I am wrong are usually both a loan officer and a realtor.

I will say this.... no matter how good you are in the beginning, you do usually become better with more years of experience. But just because you have been doing something for 10 years, doesn't always make that person very good or better. Example - I closed a loan last year that another loan officer had for 30 days, yet he couldn't make the settlement date. He was still working on it when we closed it in 5 business days. There were credit issues that needed to be taken care of. But this was a loan officer that told the borrower that he had been doing mortgages for 30 years. See my point? Age doesn't always make it better or you better.

Passion and having a large heart. - Now, I know many of us have a large heart and passion for what we do. I know I do... but just because you are nice, doesn't mean that you are good at what you do. Sorry, but it's just a fact of life.

Conclusion : Let me pose one question to you. Would you want a heart surgeon who specializes in this, to operate on your brain, just because they are a "surgeon" and or went to medical school? What about a realtor who says, well, "I was trained as a loan officer also." The better loan officers and realtors that I know and respect, wouldn't do both. Sure, conflict of interest in my opinion. But it's hard to stay on top of just the mortgage industry alone. Just food for thought and based on my opinions.

PS.... I know we are in a very tough economy. I know many loan officers and realtors that have gotten second jobs. But as a realtor and a loan officer? In my opinion, this is like mixing gasoline with fire. You could just be waiting for an explosion and that explosion could be your mortgage not closing or closing on time.

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

Mortgage Junk Fees - And FHA loans are more expensive!!!!!

Tim Bradford (American Midwest Mortgage) — Wed, 05 Aug 2009 21:50:17 -0500

This is Great Information for buyers to read. I know a number of lenders that advertise "NO ORIGINATION FEE". However they have a processing fee of the same amount that an Origination Fee would have been. Normally those lender then have the other Misc charges that are higher than their competetors. As Jeff's Post lays out any fee is not a JUNK FEE it is just a cost of obtaining a loan thru that lender. Consumers have the choice to choose the lender they want to deal with and this needs to factor into it the costs and the service that will be recieved from the lender.

Via Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages - USDA loans (Infinity Home Mortgage Company, Inc):

BEWARE – A very boring topic below, but important to understand. (please read the whole thing before you assume what I meant by the title of my blog, about FHA loans.)

What first comes to mind when you hear the word junk?

-- Crap?

-- Old?

-- Trash?

What about the term, junk fees? Closing cost junk fees? Answer dot com gives you a definition of this and an example. - Junk Fees - Many people, even realtors and loan officers, assume that fees other than points charged by the lender are junk fees. Back in the day, this might have been partially true. But there is a cost of doing business and in today's market, it's not cheap. It all comes down to how it's explained and how it's shown on your good faith estimate.

So, how does a mortgage work? A mortgage company, the processiing, and it's fees? It really hasn't changed since I got into the mortgage business in 1992. Well, the profit margin and fee structure of a mortgage company hasn't really changed. The cost of doing business has a little.

Your typical fees are generally :

$500 commitment fee

$82 transfer tax fee

Credit report fee

Other fees that you will see :

Processing fee

Warehouse fee

Doc Prep Fee

Attorney Fee

Administration fee

Now, here is what disgusts me when so many realtors or borrowers scream junk closing fees. Until you understand on how a normal mortgage company operates, you won't truly know what is a junk fee or not. And another thing to understand, it also comes down to the rate and points that one is charging. All mortgage companies and banks have fees associated with doing a mortgage. Even your bank down the street or Bank of America or Wells Fargo charge closing costs. It just comes down to where they place these fees. Here are some real examples....

It generally costs about $1,000 for the processing of a mortgage. This is to include fees associated with the lenders warehouse line, underwriting, and closing of the loan. You might say that the lender can get this in the points and or rate. Yes, this can take place and this is how I generally do it. Why? Because you can write of a percentage of your points and interest on the loan. The fees, aka junk fees, can't be deducted on your tax returns. Please consult a CPA or an accountant when talking about this. Overall, it comes down to understanding the process and costs of a mortgage; not what you assume.

My whole point to this is that the fees have to be collected one way or another. Yes, some loan officers or lenders beef up their fees, adding to them, which gives them the name 'junk fees'. I have seen some weird names for some of these fees. But every lender has a profit margin. I have worked for large lenders and small ones, and it usually is close enough. When you borrower money, it costs money. It basically comes down to how large the profit one is willing to make. But keep in mind, it's more than just about the rate and fees. What about service? What about communication? What about timely responses? What about your loan officer educating you about the process? I'll be honest, I would be the cheapest one out there every time, that's if I didn't have to return a phone call or an e-mail or explain anything. And this happens more often once you say yes to a specific lender, in starting the application process. I know this because I hear it from borrowers all of the time. Good news or bad news, that loan officer should be somewhat easy to reach until you are finally closed on your loan.

Important Key Point to remember -

Each borrower is different. Each loan is different. Remember that I said most lenders have a specific profit margin in mind? Let's say it's $4,000 per loan. If I am borrowing $400,000, it would cost me 1 point in fees, points, or in the rate. Meaning that I could charge you no points and no fees, yet charge you a higher rate to still make my profit margin. If I am borrowing $100,000, it will now cost me a total of 4 points, no matter how this is spread out within the fees or the rate.

My whole point is that you can't compare your friends cost of a loan or sometimes the rate. Not if the lender is charging you accordingly. I just had a borrower e-mail me their HUD settlement sheet and yes, they charged $2,083 in fees. But if I look at my profit margin, I was about $2,100 cheaper than this company and a 1/4 percent lower in rate. I agree that you need to shop for your mortgage, but you should not over-shop or shop for the lowest. Just my opinion on this.

Please read : I want the same deal that my friend received on their mortgage.

Pet Peeve -

FHA loans are more expensive!! - No, they are actually cheaper in costs. I just did a cost scenario for a borrower, as I always do, and it was costing him $9,000 less on a FHA loan and the payment was $3.00 more a month. Yes, it was because I had him put 3.5% down instead of 5% down. But it was also because the points for that same rate were actually a 1/2 point less on the FHA loan, which in this case was $1,930 cheaper. Why? Because most investors and major lenders get a larger SRP (service release premium) back from those that buy these on Wall Street. The fact that many say FHA mortgages are more expensive in costs, just don't know what they are talking about in most 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

The Truth About Rates and APR

Tim Bradford (American Midwest Mortgage) — Tue, 28 Jul 2009 19:31:23 -0500

The Truth About Rates and APR

Here is a definition of APR (Annual Percentage Rate) we pulled for another mortgage Web site:

Annual percentage rate (A.P.R.)
"APR is a measurement of the full cost of a loan including interest and loan fees expressed as a yearly percentage rate. Because all lenders apply the same rules in calculating the annual percentage rate, it provides consumers with a good basis for comparing the cost of loans."

The first sentence is true.
The second sentence could not be further from the truth.

The Real Truth About APR

Truth # 1 - Annual Percentage Rate disclosure requirements were established by a rule known as REG Z. All lenders are required to comply with REG Z by disclosing the APR on a form known as "The Truth In Lending Disclosure"
Truth # 2 - Reg Z allows each lender to comply with REG Z in their own way as long as they have a written legal opinion stating they are in compliance. Therefore, virtually all lenders have their own way of calculating their "Truth In Lending Disclosure."
Truth # 3 - Since all lenders do not apply the same rules in calculating the Annual Percentage Rate, it absolutely, positively does not provide consumers with a good basis for comparing loan costs.

Using the APR to comparison shop is absolutely worthless. Can we be any more clear?

How To Really Shop For A Home Loan - Five Steps to Peace of Mind

Step # 1 - Determine what type of loan you need and/or want. With today's rates, usually the choice is easy - a 30 or 15 year fixed rate loan.
Step # 2 - Shop at least three lenders. Even with a referral you need to get a written estimate so you can compare quotes. This is the only guaranteed way to get a good rate at a fair price.
Step # 3 - Request a written quote from each lender that discloses every fee, point, charge, cost and credit associated with your transaction, based on an interest rate guarantee of 30 days (a 30 day lock).
Step # 4 - Follow the rule of SAME. Make certain each lender quotes the SAME LOAN TYPE, for the SAME TERM, for the SAME RATE, for the SAME LOCK PERIOD on the SAME DAY. Anything less and you are not comparing apples to apples.
Step # 5 - Do the math. Sit down with each quote; eliminate the costs of interim (or per diem) interest, property taxes, homeowners insurance and mortgage insurance. Leave everything else in. The lender with the lowest cost after these adjustments is the least expensive. If the differences are too close to care about, then stick with the referred lender. If the differences are significant to you, then give the referred lender a last chance to earn your business. If a non-referred lender is the winner, then ask them for references.

Make your Feeling known regarding Two Proposed Changes to Regulation Z

Tim Bradford (American Midwest Mortgage) — Tue, 28 Jul 2009 17:42:54 -0500

Below are summaries changes that the Federal Reserve has proposed. Both proposal are signifant and I believe all realestate professions need to review the proposal and let your comments be known. I can agree that better disclosure of the terms of loans might assist consumers, however the proposal to restrict some payments to Loan Brokers creates an unfair advantage to Banks and Mortgage Banker. In order to understand the advantage to Banks and Mortgage Bankers, consumers need to understand that Banks and Mortgage Bankers earn a Profit or Income when they originate a loan. Some of the income is earned immediately and some is earned each year the loan is on their books. Service Release Premiums or Yield Spread Premiums are both terms that describe the money paid to Mortgage Brokers (and even some Mortgage Bankers) when the loans transfer from one lender to another.

For consumers, they need to understand that Profit is Profit and they want to just consider the cost of identical products. If you want to buy Apples (Money) and the same ones are avaiable from multiple sources, it does not matter if the grower is selling them, sold at a farm market or your local grocery store consumers are smart enought to Shop, Compare and Save. The same would be true with mortgages provided deceptive advertising and marketing practices are not tolerated by lack of enforcement.

Share your opinions by submitting a comment to the Federal Regulators. Also, share your opinions here for others to use in voicing their opions and providing talking points to individual not familar with the importance of these proposed changes.

Regulation Z - Truth in Lending - Home-Equity Lines of Credit (HELOC) [R-1367] Proposed amendments to change the timing, content, and format of the disclosures that creditors provide to consumers about HELOCs at application and throughout the life of such accounts. The proposal would also provide protections related to account suspensions and credit-limit reductions, and reinstatement of accounts Closing date for comments: 11/27/2009
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Regulation Z - Truth in Lending - Closed-end Mortgages [R-1366] Proposed amendments that would revise Closed-end mortgage disclosures to highlight potentially risky features such as adjustable rates, prepayment penalties, and negative amortization and prevent mortgage loan originators from "steering" consumers to more expensive loans Closing date for comments: 11/27/2009
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Update Cleveland Naca Event - 2009 - NACA mortgage relief claims questioned

Tim Bradford (American Midwest Mortgage) — Wed, 22 Jul 2009 22:01:15 -0500

Here is an update of the Cleveland NACA event as broadcast by www.WKYC.com a local TV Station.

Here is a link to the story ( http://www.wkyc.com/news/local/news_article.aspx?storyid=118350&catid=3 ). Also homeowners facing foreclosure may want to check with the individuals at Cuyahoga County's Foreclosure Prevention Program ( http://www.dontborrowtroublecc.org/ ) or one of the Local Counseling Agencies that have been assisting Homeowners in Northern Ohio for years.

Important Read regarding - NACA: Neighborhood Assistance Corporation of America

Tim Bradford (American Midwest Mortgage) — Mon, 06 Jul 2009 17:58:17 -0500

On todays evening news Channel 3 did a piece supporting NACA. with a Title of

NACA 'Save the Dream' tour helps homeowners lower mortgage rates.

Here you can read the article. http://www.wkyc.com/news/local/news_article.aspx?storyid=117206&catid=45

This is a link to a article titled http://www.capitalresearch.org/pubs/pdf/v1238510994.pdf

NACA: Neighborhood Assistance Corporation of America

ACORN's Rival in Shakedown Tactics

Is the Housing Market Really to Blame of the Economic Problems Today?

Tim Bradford (American Midwest Mortgage) — Sat, 04 Jul 2009 07:04:14 -0500

With the recent announcment of Unemployment numbers and Mortgage Delq's, you might wish to see these number show together. There appears to be a relationship between Unemployment and Mortgage Delq's. The question to ask is then "What is the cause and what is the effect?" and then to ask "What is the Solution?"

The mortgage deql percentages are from reports that are available on FNMA website.

Any Legal Eagles? FannieMae Property Flipping Guidance?

Tim Bradford (American Midwest Mortgage) — Thu, 02 Jul 2009 16:21:37 -0500

Everyone is aware of FHA's Property Flipping Rules. Today I was approached to do a Conventional Loan for the buyer instead of FHA because of the FHA Flipping Rules. I would generally avoid transcations like this however it peaked my interest based upon FHA Rules.

The following are sections of Fannie Mae Selling Guide. (See pages 101 -102). The transaction I am being asked to do would be equivalent to a Simultaneous Closing of the purchase by a Third Party that is negotiating a Short Sale on the current loan. They then wish to resell the loan to the borrower I am working with. Should I look at this as a

"Types of Fraud - Diversion of sales proceeds"

and would only be possible with

"Lender Fraud-Prevention Measures - Modify closing instructions to prevent flips without lender consent."

My opinion is that only after the current Lender consent or they had released their Lien could I look at the Transaction.

Any One have any Opinion?

Types of Fraud

There are a variety of types of mortgage fraud. These include:
• Undisclosed liabilities
• Misrepresentation of income or employment
• Misrepresentation of credit
• Identity theft and/or Social Security number discrepancy
• Misrepresentation of assets
• Misrepresentation of occupancy
• Misrepresentation of property value
• Property flips based on inflated appraisals or other false characteristics
• Misrepresentation of the subject property characteristics or comparables
• Sale of fraudulent loans or double selling of loans
• Mishandling of escrow funds or custodial accounts
• Diversion of sales proceeds

Lender Fraud-Prevention Measures

Fannie Mae works closely with lenders to combat the growing problem of fraud in the mortgage industry. Fannie Mae assumes that the information and processes on which loan decisions are based are honest, accurate, and credible, and that lenders are striving for information and process integrity at every stage in the life of a mortgage-from application through servicing. To prevent and detect fraud, it is critical that lenders know their business partners, aggressively sample their loan populations, carefully review transactions, and consider using outside resources. Specifically, lenders must:

• Have proper hiring practices in place, including careful reference checks.
• Aggressively sample loans that have a high risk for fraud as part of the quality control process. This includes loans that are early payment defaults or that involve problematic business sources, loans in high-risk areas (such as areas with high levels of early delinquencies or defaults), or those that have characteristics in common with previously detected fraudulent transactions.
• Evaluate appraisers and get references. Confirm that the appraiser is currently classified and has not been the subject of disciplinary action.
• Be selective in choosing closing attorneys and settlement agents, and communicate concerns about suspicious files to these individuals.
• Modify closing instructions to prevent flips without lender consent.
• Report suspected fraud to proper authorities.
• Report suspected fraud to Fannie Mae.

Rate	Fees	Points	APR	Profit
5.000%	$1,000	0	5.044%	$1,000
5.000%	$500	0.250	5.044%	$1,000
5.000%	$0	0.500	5.044%	$1,000