I am proud to announce that Home Loan Island LLC, d/b/a Victory Lending Group, is approved to do business in the Commonwealth of Virginia. We are please to offer our excellent service in Virginia and look forward to serving you with the same great service and solutions!

Michael Sally - Victory Lending Group

http://www.mortgagesbymike.com

Free annual credit report and why it is now so important to know your credit and know your score.  Knowledge is power, and money!

I've read multiple free credit report blog posts on activerain.com regarding obtaining your credit report.  And this post is a basic reminder of the same concepts, but I would like to expand on why now, more so that ever, it is important to obtain your credit report (and perhaps credit scores).

For first time home buyers, or for those who wish to refinance, who don't know what is on their credit report, go to http://www.annualcreditreport.com/ . This web site will allow you to obtain a free copy of your credit report from each credit reporting agency.  You may also obtain your free reports by phone or by mail if you are more comfortable with doing it that way.  I get upset when people tell me they heard the commercial on television, and they got their "free" report.  It's not the same!  IF you're going to pay for your credit reports, my personal preference is http://www.myfico.com/ .  They have a more comprehensive service.

Knowing you're credit score, knows where you stand as far as actually obtaining financing.  Generally, a score above 620, will be one that will allow you to obtain a conventional mortgage, but, that is of course you don't have judgments that are unsatisfied, or the public records (bankruptcy) that will affect your credit rating.

However, there is a hitch.  I recently discussed in my blog whether it was a good time to purchase and obtain a mortgage on a home now .  Well, certainly still is, but, your rate and eventual payment can be affect by the level loan price adjustments (llpa's) that Fannie Mae has instituted on its products.  So, you will want to try to maximize your credit score.

Let's look at an example:

Refinance

80% loan to value, for this example, let's say the property is worth 200k, so the loan size will be 160k.

Single Family Home

Rate and Term Refinance, 30 year loan.

Credit score: 620

Hit to the rate by the LLPA = 1.75, Par rate on this loan would be approximately  6%, P & I payment: 959.28

The same scenario with a 690 credit score, the LLPA is: Zero; Par rate on this loan would be 5.375! P & I payment: 895.95

Difference in P & I payment: 63.33

Difference over the term of the loan: $22,618

Alright, well there is quite a savings both in monthly payment, as well as interest over the life of the loan.

Well, I know someone might be saying, what about FHA?  Well, an FHA mortgage is not going to be as liberal as a conventional as far as any collection account or any adverse credit, and that might disqualify you from FHA.

Alright, there is brief overview of why the free credit report is important, and how is can affect your loan, whether you are a first time home buyer, or seeking a refinance.

Michael Sally - Victory Lending Group

http://www.mortgagesbymike.com/

Michael J. Sally - Victory Lending Group

608 E. McMurray Road

McMurray, PA  15317

Phone 724-941-6814 x202

Fax 866-484-5106

Toll Free 877-562-6643 x202

I recently wrote blog article (Conventional versus My Community Mortgage) that exhibited the great features of a My Community Mortgage ("MCM").    I am firm believer of the MCM program (and still am) since it does have features that are more flexible!  First time home buyers really liked the benefits of this program and it allowed many to first time home buyers to garner the American dream.

Well, we get the email today --- 6% Sellers Concessions No Longer for 100% LTV MCM with our favorite mortgage lender!  The lender also discussed the implementation of the LLPA's!   RATS!!!

There you have it!  My favorite lender finally closed the door to 6% sellers' concessions on 100% LTV on MCM deals.  For some of us, this was sometimes the make it or break it solution for someone who "could" versus someone who "could not."  It was also an answer to sometimes that extra something that buyers used that "could" make the deal possible and "could not" be passed up.  For sellers, it was the part of the deal that could make someone on the edge to make the offer and sell without further delay in haggling over price! 

Remember way back when...well, not that long.... 

Not sure about you, but I vividly recall my first home purchase.  Over ten years ago, I contributed a total of 4% of the purchase price, including down payment and closing costs, the tax escrows were modest and the transfer tax was lower that what it is now!  I did 100% financing and was able to afford the payment!! It was not an FHA loan!!

So, does this signal the end of MCM?  Could or could not?  Is a transaction with concessions no longer going to happen?  Could or could not?

Well, I believe the flexible features of MCM will exist, but, over time, and soon, we will continue to see and erosion of MCM features and more of a move in lending standards towards conventional lending standards, and FHA lbeing the standard vehicle (preferred) for first time home buyers who seek high LTV's. 

Michael Sally

Victory Lending Group

http://www.mortgagesbymike.com or http://www.michaelsally.com

The recent release of the HOPE NOW program by President George W. Bush asserts that up to 1.2 million homeowners could be assisted by the program Treasury Secretary Henry Paulson and Housing and Urban Development (HUD) Secretary Alphonso Jackson to work with lenders, loan servicers, mortgage counselors, and investors on an initiative to help struggling homeowners. 

Will it really assist that many homeowners?  Is this program enough?

The program has three prongs to assist homeowners:

1)      Refinancing into a new private mortgage;

2)      Move into an FHASecure loan;

3)      Freezing of current rates for five years.

The requirements to participate in the program is fairly stringent, and most with Adjustable Rate Mortgage's ("ARM") are already in trouble --- in that they most likely have been late on their mortgage or are in an area with actual depreciation of property values, and an appraisal with recent comp properties supporting value might be tough to obtain - so obtaining a private mortgage - perhaps even another subprime mortgage, will result in a minimum reduction in the interest rate.

     First, a private (conventional) mortgage is going to require assets and a good credit score.  This is possible, but, it will also require on time payments,

     Second, the FHASecure product has strict guidelines:

1)      History of one time payments BEFORE during fixed rate period and a reset of the loan (between June 2005 and December 2008);

2)      Sustained employment and sufficient income to make the mortgage payment;

3)      3% cash or equity in the home.

     Third, a freezing of the rates for five years --- while this will provide a temporary relief, not sure this will avoid individuals and families from being able to afford to continue to pay their mortgage on time and avoid foreclosure.

     The remainder of the plan is that of prompting Congress to make changes and reforms.  Although this is an important issue, are we that sure that Congress will follow through (with speed) with the changes suggested to assist additional homeowners?

      While I applaud the program, I simply don't believe it is enough, nor does it provide the relief that is needed to assist homeowners that entered into adjustable rate mortgages and face mortgages that cannot be paid and eventually foreclosure.  Do you?  If not, what are the solutions??

      Going forward, we all should be responsible in making sure our clients understand what a mortgage is, the products that we are offering them, and educate the customer.  As professionals, we can all make this a more responsible lending landscape, and continue to make property ownership the American dream.

Michael Sally

Victory Lending Group

http://www.mortgagesbymike.com/ or http://www.michaelsally.com/ - two great domains, same great destination!

In my most recent blog article, So, still believe its a good time to buy, well, in the Pittsburgh area, well, it is! But, there is a catch!! I discuss a product called My Community Mortgage ^TM.  There are many advantages to using the My Community Mortgage ^TM.  This program is available to all homebuyers, including first time home buyers. 

Previously I've also mentioned that an 80/20 option is one that can be used to avoid mortgage insurance (PMI or MI)) I believe this article is even more relevant now since in the current mortgage market we are finding that sources that provided second mortgages at competitive rates are beginning to no longer offer second mortgages with a CLTV of 100%.

The My Community Mortgage ^TM is one that has many benefits.  Traditionally, it is a product that is geared towards low to moderate income borrowers, but, that is not always the case.  Please read on.

The product offers the following key features as stated at their web site as the following:

• No minimum borrower contribution required
• 40 year term possible
• Options for lower initial monthly payments
• Funds for down payment and closing costs can come from gift or borrowers own funds
• LTV's permitted up to 100 percent for 1-unit properties.
• Extra flexibility on credit histories, including consideration of nontraditional credit histories.
• Cash reserves at closing not required in most cases.

Most lenders will require a minimum middle credit score of 620 in order to utilize this product.  On top of this, this product does allow for up to 6% sellers assist for 100% financing!!  Of course, mortgage insurance is required for this product for LTV's greater than 80%.

Let's now compare this to a conventional fixed rate product (that allows 100% financing):

• Loan-to-value ratios permitted up to 100 percent for 1-unit properties
• Up to a 40-year term
• Some flexibility on credit histories.
• Cash reserves at closing required in most cases.
• Funds must be sources and seasoned.

Most lenders will require a minimum middle credit score of 680 in order to utilize this product. Of course, mortgage insurance is required for this product for LTV's greater than 80%.

Alright, by now, your probably wondering why I am writing this...well...there are some really great features to a My Community Mortgage ^TMthat really assist a potential homebuyer/borrower.

Here is a classic example:

Husband and Wife, both employed and have steady incomes, and they seek to purchase their first home after renting for several years.  They have limited reserves in the bank for both a down payment and closing costs, but have the closing costs, since most of their savings go towards their retirements since they have no children at this time.  They are seeking to purchase a home to live into for at least ten years as they plan to settle down and have kids, so the school district where they are living at is very important and they have combined incomes of 80k.  The middle credit score of the wife, who is the primary borrower (since she has the higher income), is 680.   Both incomes are required to qualify for the mortgage.

An offer has been accepted for the purchase of a three bedroom, 2 bath, single family residence, purchase price 120k.  They've been fortunate enough to obtain 6% sellers concessions since there is a large inventory of homes in the area they are seeking.

Well, I see that this couple has a combined income of 100k.  Didn't I just state that the My Community Mortgage is for low to moderate income borrowers?? And example of this would be the Washington County HUD median income of 57k.  My Community Mortgage uses the HUD Median Income for the respective area you are purchasing in BUT if your neighbors are eligible for the My Community Mortgage ^TMand a knowledgeable loan professional can determine that, then you are eligible for the program, no matter what your annual income.  For those in the Pittsburgh area, the South Side is a classic example of where this applicable - where house pricing/sales prices typically are 200k plus. 

Let's take this one more step further...the mortgage insurance.  In our example, the Husband and Wife are long term buyers, seeking 100% financing, and, well, in 10 years their mortgage insurance will be no longer needed.  The My Community Mortgage ^TM Program offers reduced mortgage insurance compared to the Conventional Mortgage.

            So, in closing, if you are considering 100% financing with one mortgage, where sellers concessions can be obtained, a My Community Mortgage ^TM just might be the number that gets you in your home and provide you with additional savings.

Michael Sally

Victory Lending Group

http://www.mortgagesbymike.com/ or http://www.michaelsally.com/ - two great domains, same great destination!

Here are the numbers...enjoy!

1. The difference in the cash to close over 10 years represents a 5% return over 10 years;
2. Interest rates used are examples.  Actual rates may vary and change daily.

In an recent article titled Real estate here defies U.S. trend, the recent (and ongoing) appreciation of real estate here in the Pittsburgh area is explained.  It confirms to me that despite some rising inventories, based upon simply the season here in Pittsburgh, the rising inventories are simply attributed to that  --- a regular cyclical occurrence given the winter months and it is just as good as time to invest, purchase or refinance in the Pittsburgh area. 

In my recent blog post entry, First time home buyers --- should you buy a home now?   I discussed the issue of buying a house now, and went over several points that led me to believe to be a good time to be a first time home buyer and to purchase.

I'm going to re-emphasize that it is a good time to buy for the first time home buyer.  This time, it's going to be a variant to what I have already stated - planning and your credit score have a lot do with the granting of credit and obtaining the financing as the best possible terms. 

As we have all have heard everywhere, the sub-prime mortgage market is slim.  Although there are still institutions providing this type of financing, financing on this level is provided at a heavy premium.  For example, a recent poor credit borrower, with a lower 500 credit score, was able to obtain an approval for a loan, however, the interest rate was in the double digits AND they were required to put 20% down, plus have the closing costs, ouch!

While financing options and low rates remain available to those with good to excellent credit, with the collapse of the sub-prime market and its continuing fallout, credit standards will become more stringent, as investor will be constantly reminded of the fallout.  So what does this mean to the first time home buyer or for that matter, someone who is upgrading or has a need for financing --- careful planning will be necessary to get the best case scenario as far as financing goes and obtaining the best possible interest rate since the market will continuously conscience of this fallout.

Already, Fannie Mae is applying new loan level price adjustments ("LLPA") that apply to mortgages with combinations of "risk characteristics" that include credit score, range of loan to value ("LTV") and subordinate financing that relates to credit scoring and payment and amortization features of products and two unit properties.  It is expected that these changes will take place in December 2007, and some lenders have already implemented these LLPA's .

What does this mean?  Well, those potential first time home buyers with lower credit scores will be paying a premium for borrowing money should the LTV be higher than 70% and having a credit score under 680. OK, so now what??  Now its not all bad news! The My Community Mortgageis not affected by this most recent LLPA!  I'm going to do a post directly explaining My Community Mortgage and there are some really great features to this option.

            OK, so careful planning - continue to know and monitor your credit score before and during the loan process so that financing can be obtained on the best possible terms for the borrower. 

Michael J. Sally

http://www.mortgagesbymike.com/

Should you buy a home now?

First time homebuyers...you might think that spring or summer is the best time to buy a home...well, right now, it probably a great time to buy a home, even for first time home buyers.  Let's take a look at just a few factors that are all contributing to making this an optimum time to purchase a new home.

1)      Availability of 100% financing

100% percent financing still exists.  Yes, it is leveraging a financial transaction, but not everyone has 20% of a down payment, plus closing costs to put into their first home purchase.  The 100% programs are either a 100% one mortgage with mortgage insurance or an 80/20.  The 80/20 allows you to avoid the expense of mortgage insurance and generally keeps your payment lower over the life of the loan by utilizing two loans.  Your credit does not have to be excellent to obtain a 100% one loan, although, for the 80/20 scenario, your credit does have to be excellent.

2)      Interest rates

Interest rates continue to remain favorable.  For example, if you were to purchase at $100,000 home, as of November 21, 2007, the interest rate remains quite favorable at approximately 6.125% for a 30 year fixed mortgage.

If your credit is excellent, second mortgage rates remain favorable as well.  Generally, a middle credit score of 680 or higher is required to obtain a second fixed mortgage at the most favorable rate.

3)      Housing inventories

Housing inventories remain high.  A recent article in Business Week, America's Big, Fat Housing Inventory illustrates the supply of homes for sale.  Demand is low, so as a buyer, you might have the upper hand in negotiating a price for your potential property.  The housing market continues to remain flat.  While further declines in prices are possible, with the housing market as it is, this might be a short term issue, and inventories and availability can rebound quickly.

      So, if you don't believe now is a good time to buy a home, well, it certainly is.  Of course, any perspective homebuyer should be continuing to saving money, and continue to monitor their credit scores, and consult with a qualified mortgage professional to obtain a professional analysis.

Sincerely

Michael J. Sally

http://www.mortgagesbymike.com

Well, in these days of lenders falling by the wayside, well, you begin to see who wants to continue to do business and who does not want to close loans.  Our office is closing loans, but, the experience varies from lender to lender.  Of course, it does help to do conforming loans, as the "subprime" mortgage market is all but gone with the exception of a few lenders that are being so critical right now, its difficult to get the deal done.

In any event, I have been wanting to use a national conforming lender for sometime, and I had the perfect scenario to give them a try...and the experience was just wonderful. 

I believe the experience was due in part to two particular items, and hence that why I am writing this post to share the experience...

1) The lender itself.  Bar none the best experience - EVER.  An underwriter that understood the file and took the time to review the application and what I wrote about it...yes this was a "conforming" deal, but, it did have its challenges about it.  They also understood that there was a closing date within 15 days!!!! I submitted the file on a Friday night...and received an approval the next Monday by 1 pm...now that is service!

2) Being prepared as a loan officer.  I first took the initial application a month before I submitted it, but during that time, I obtained all the necessary docs to do a through prequalification, and made sure I had a approved loan.  I continued to stay in communication with the clients and I made sure the Realtors knew I had qualified purchasers.

HERE's the more interesting part of the story... 

BOTH the sellers and buyer (my clients) Realtors called me since they did not hear of me...and doubted me, if I could get the deal done and if it could close this fast!

AND...well, do to my preparation and the lender, the loan closed on time (we actually could have closed it early!), and the good faith estimate was very good...and at the table the borrowers has to bring less than what was on the good faith estimate! Happy customers and happy realtors at the closing table!!

So, here are my suggestions...get to know your lenders, and continue to use those who want to do business.  Second, be prepared, and ready for things to move quickly, even in this challanging environment!

Michael J. Sally

Victory Lending Group

http://www.mortgagebymike.com 

Well...I am proud to announce that Home Loan Island LLC is doing business as Victory Lending Group.

Victory Mortgage (whom we acquired this year) had quite a presence in the Washington County, PA area.  We had been braining storming on a new name for Home Loan Island LLC and had many suggestions.  Since Victory has such a strong presence, our organization believed it was important to incorporate the "Victory" name.

Victory Lending Group is a continued reflection of our ability to provide quality, honest, lending advice for both residential and commercial lending.

I am proud to be a part of the Victory Lending Group and you can continue to visit me at my website 24/7.  Please feel free to visit me.

Michael Sally

Mortgage Specialist

Victory Lending Group

I recently began to working on reservse mortgages...interesting and a great financial tool for those with equity, who need or want tax free money from their equity.  Funds received from this loan DO NOT affect Social Security or Medicare benefits (However, certain benefits, might be affected).  The homeowner is required to continue to pay the annual property taxes and homeowners insurance.

What is a reverse mortgage? 

Well, it is a non-conventional loan that allows individuals 62 or older to convert some of their equity into tax free funds.  No repayment is required until the property is no longer a residence.  The loan can be obtained on owner occupied properties (up to 4 unit).

The amount of loan that an individual can receive from a reverse mortgage is based upon a HUD formula. 

The loan can be received by the individual in a number of ways...lump sum, a line of credit that can be used or not used and can grow over time, or a monthly amount of funds, or a combination of the ways.  

And guess what, no income, employment or credit requirements are applicable to those who apply.  Fees in originating this loans are highly regulated and borrowers are required to obtain counseling before entering to a reverse mortgage so they understand the workings of a reverse mortgage.

Of course, I recommend consulting your attorney so make sure no benefits that the individual is receiving will not be affected.  The determining factor is if these program take into consideration the amount of assets the individual holds. 

In closing, the reverse mortgage is a useful financial planning tool that can allow older individuals to utilize the equity in their home without the hassles of making a substantial monthly housing payment on a monthly basis.

Michael Sally

http://www.mortgagesbymike.com