Many still have questions in this lending environment. While guidelines on credit have tightened, there is still plenty of money to be lent. Many lenders, including mine, have increased minimum credit scores to obtain a FHA loan up to 600. This does not mean you need perfect credit, but you do have to have sufficient credit and show the willingness and ability to repay debt.
In order of importance, underwriters look at:
Mortgage history/rental history
Automobile loans
Credit cards
With FHA loans, sufficient credit means you must have three open lines of credit with a satisfactory credit rating for 12 months. Satisfactory does not mean perfect. If you do not have sufficient credit, there are a couple routes that may help you qualify. These options include using alternative credit and/or non-occupant co-borrowers. These will not help if you have bad credit, but it will help if you have limited or insufficient credit.
The first route is alternative credit. If you do not have enough traditional credit on your credit report, we can use alternative tradelines including rental history, cell phone, car insurance, utility bills, telephone bills, etc.... If your history is satisfactory, we can use these if they are paid on time.
Another route is non-occupant co-borrowers. Non-occupant co-borrowers can be family members and they do not have to reside in the home you are purchasing or refinancing. Loans with non-occupant co-borrowers are also known as "kiddie condo" loans. The co-borrower's income, assets, liabilities and credit history are considered to determine credit worthiness.
And, no matter what your circumstances are, FHA permits home buyers to purchase a home with as little as 3.5% down payment. This money can come from a gift from a family member or close friend. They will also refinance homes up to 97.75% of your home current market value.
If you have any questions or would like to see if you qualify for a streamline refinance, please feel free to contact me.
IRRRL stands for Interest Rate Reduction Refinancing Loan. Except when refinancing an existing VA guaranteed adjustable rate mortgage (ARM) to a fixed rate, it must result in a lower interest rate. When refinancing from an existing VA ARM loan to a fixed rate, the interest rate may increase.
No appraisal, income, or credit underwriting is required by VA.
A certificate of eligibility is not required. Your lender may use an e-mail confirmation procedure for interest rate reduction refinance in lieu of a certificate of eligibility.
An IRRRL may be done with "no money out of pocket" by including all costs in the new loan. (Remember: The interest rate on the new loan must be lower than the rate on the old loan unless you refinance an ARM to a fixed rate mortgage).
You do not have to go to the lender you make your payments to now or to the lender from whom you originally obtained your VA Loan.
You must NOT receive any cash from the loan proceeds.
An IRRRL can be done only if you have already used your eligibility for a VA loan on the property you intend to refinance. It must be a VA to VA refinance, and it will reuse the entitlement you originally used. You may have used your entitlement by obtaining a VA loan when you bought your house, or by substituting your eligibility for that of the seller, if you assumed the loan.
The occupancy requirement for an IRRRL is different from other VA loans. When you originally got your VA loan, you certified that you occupied or intended to occupy the home. For an IRRRL you need only certify that you previously occupied it.
The loan may not exceed the sum of the outstanding balance on the existing VA loan, plus allowable fees and closing costs, including funding fee (.5% of the loan) and up to 2 discount points.
No loan other than the existing VA loan may be paid from the proceeds of an IRRRL. If you have a second mortgage, the holder must agree to subordinate that lien so that your new VA loan will be a first mortgage.
If you have any questions or would like to see if you qualify for a streamline refinance, please feel free to contact me.
"Streamline" is not a program or product. It refers to the amount of documentation and underwriting that needs to be performed by the lender. You may do a FHA streamline with your current lender or a any lender for that matter. You do not have to go through your current lender. FHA has permitted streamline refinances since the early 1980's.
The basic requirements of a streamline refinance are:
The current mortgage must already be a FHA loan.
The mortgage to be refinanced should be current (not delinquent).
The refinance is to result in a lowering of the borrower's monthly principal and interest payments.
No cash may be taken out using the streamline refinance process (up to $500 is permitted).
What don't you need on a streamline refinance?:
There is no income verification.
There is no verification of assets.
There does not need to be an appraisal
There is no need for the lender to pull credit. However, mortgage history will need to be verified.
Many lenders will pull your credit to verify mortgage history. For my company, If the mortgage is not serviced by Wells Fargo, Prosperity permits 2x30 and 1x60 on the mortgage history within the last 12 months. If serviced by Wells Fargo, the current loan need only be current.
Many loan officers confuse their company's guidelines for FHA guidelines. There is no minimum credit score for FHA streamlines.
Lenders may offer the several ways to streamline. Some lenders offer "no cost" refinances by charging a higher interest rate on the new loan than if the borrower financed or paid closing costs in cash. From this premium, the lender pays any closing costs that are incurred on the transaction.
Lenders may offer streamline refinances and include the closing costs into the new mortgage amount. This can only be done if there is sufficient equity in the property. This is known as a "streamline refinance with an appraisal". You can refinance 97.75% of the appraised value.
Streamline refinances can also be done without appraisals, but the new loan amount cannot exceed the original loan amount. Closing costs, prepaid expenses, and Upfront Mortgage Insurance may be included in the loan up to the original loan amount. Borrowers may bring the balance that is unable to be financed to settlement and it does not need to be verified. There is no maximum LTV on "streamline without appraisals".
Prosperity will perform streamline finances on FHA loans up to $417,000. If the FHA loan is greater than $417,000, the streamline process is not available.
If you have any questions or would like to see if you qualify for a streamline refinance, please feel free to contact me.
The following has been approved by Congress and is expected to be signed in Obama early this week. While the majority of the $800 billion dollars will not stimulate the economy, this should have a direct impact on the housing economy and get things headed in the right direction.
FIRST-TIME HOMEBUYER TAX CREDIT
As Modified in the American Recovery and Reinvestment Act
Major Modifications Shaded
February 2009
FEATURE
CREDIT AS CREATED JULY 2008
APPLIES TO ALL QUALIFIED PURCHASES ON OR AFTER APRIL 9, 2008
REVISED CREDIT -
EFFECTIVE FOR PURCHASES ON OR AFTER JANUARY 1, 2009 AND BEFORE DECEMBER 1, 2009
Amount of Credit
Lesser of 10 percent of cost of home or $7500
Maximum credit amount increased to $8000
Eligible Property
Any single family residence (including condos, co-ops, townhouses) that will be used as a principal residence.
No change
All principal residences eligible.
Refundable
Yes. Reduces (or can eliminate) income tax liability for the year of purchase. Any unused amount of tax credit refunded to purchaser.
No change
Purchasers will continue to receive refund for unused amount when tax return is filed.
Income Limit
Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000).
No change
Same income limits continue to apply.
First-time Homebuyer Only
Yes. Purchaser (and purchaser's spouse) may not have owned a principal residence in 3 years previous to purchase.
No change
Still available for first-time purchasers only. Three-year rule continues to apply.
Revenue Bond Financing
No credit allowed if home financed with state/local bond funding.
Purchasers who utilize revenue bond financing can use credit.
Repayment
Yes. Portion (6.67% of credit or $500) to be repaid each year for 15 years, starting with 2010 tax filing.
No repayment for purchases on or after January 1, 2009 and before December 1, 2009
Recapture
If home sold before 15-year repayment period ends, then outstanding balance of repayment amount recaptured on sale.
If home is sold within three years of purchase, entire amount of credit is recaptured on sale. Applies only to homes purchased in 2009.
Termination
July 1, 2009
(But note program changes for 2009)
December 1, 2009
Effective Date
Purchases on or after April 9, 2008 and before January 1, 2009. Repayment to begin for 2010 tax year.
All revisions are effective as of January 1, 2009
With low rates, reduced values, and this tax credit; it truly is a good time to buy. You will not know when the bottom of the market has hit until it has already passed. Foreclosures will continue through 2009 and 2010, but it is I believe banks and the Feds will continue to work with these homeowners. Confidence will be restored and the economy will begin to rebound in 2009.
The Senate is currently working on passing the 2009 stimulus bill. The House passed their version last week. There are many parts to this bill, which is why it is close to $900 billion and there is a lot of wasteful spending in the bill, however, there are two excellent parts of the bill. Congress is now working to get some of the waste out of the bill.
The first part of the bill I agree with are the tax cuts...they are always good. However, this blog is about the Home Buyer tax credit. In 2008, Congress passed the $7,500 tax credit for First Time Home Buyers. Unfortunately, it had little affect on the housing market since it had to be paid back and was basically a 15 year interest free loan. Congress realized its ineffectiveness, therefore, the introduction of the 2009 stimulus bill. While the bill still needs to be finalized by the Senate and approved by the President, some form of this stimulus bill will be approved.
The one thing that both parties have agreed to is the $15,000 tax credit for ALL home buyers. The tax credit will equal 10% of the sales price or $15,000, whichever is less. And, the credit will not have to be paid back as long as the home is not resold within 24 months of the purchase.
Some of the great features are:
1. Increased tax credit from $7,500 up to $15,000.
2. It will not have to be repaid unless home is sold within 24 months of the purchase price.
3. It is for everyone that purchases a primary dwelling, whether they are a first time home buyer or not.
4. The income limits will be removed.
5. It will extend the tax credit from July 1, 2009 to September 1, 2009.
6. It will take affect the day the President signs the bill.
I do not like to mortgage our children and grandchildren's future, but some of this is necessary. A tax credit in the 1970s was similar to this tax credit and helped stabalize the housing market as I feel this will help, too. Some experts say this could have a 10% increase in 2009 real estate sales. This will stablelize values and hopefully rejuvenate our economy.
Please remember that this bill has not been finalized and is subject to change. However, I feel some version of this bill will be signed into law. This along with current interest rates will make it an excellent time to buy. Don't be one to miss the bottom.... the bottom may be here.
The Senate is currently working on passing the 2009 stimulus bill. The House passed their version last week. There are many parts to this bill, which is why it is close to $900 billion and there is a lot of wasteful spending in the bill, however, there are two excellent parts of the bill. Congress is now working to get some of the waste out of the bill.
The first part of the bill I agree with are the tax cuts...they are always good. However, this blog is about the Home Buyer tax credit. In 2008, Congress passed the $7,500 tax credit for First Time Home Buyers. Unfortunately, it had little affect on the housing market since it had to be paid back and was basically a 15 year interest free loan. Congress realized its ineffectiveness, therefore, the introduction of the 2009 stimulus bill. While the bill still needs to be finalized by the Senate and approved by the President, some form of this stimulus bill will be approved.
The one thing that both parties have agreed to is the $15,000 tax credit for ALL home buyers. The tax credit will equal 10% of the sales price or $15,000, whichever is less. And, the credit will not have to be paid back as long as the home is not resold within 24 months of the purchase.
Some of the great features are:
1. Increased tax credit from $7,500 up to $15,000.
2. It will not have to be repaid unless home is sold within 24 months of the purchase price.
3. It is for everyone that purchases a primary dwelling, whether they are a first time home buyer or not.
4. The income limits will be removed.
5. It will extend the tax credit from July 1, 2009 to September 1, 2009.
6. It will take affect the day the President signs the bill.
I do not like to mortgage our children and grandchildren's future, but some of this is necessary. A tax credit in the 1970s was similar to this tax credit and helped stabalize the housing market as I feel this will help, too. Some experts say this could have a 10% increase in 2009 real estate sales. This will stablelize values and hopefully rejuvenate our economy.
Please remember that this bill has not been finalized and is subject to change. However, I feel some version of this bill will be signed into law. This along with current interest rates will make it an excellent time to buy. Don't be one to miss the bottom.... the bottom may be here.
Is this the right time to buy? I have been asked this question so many times, I felt the need to blog about it. I do believe its a great time to buy and there are a lot of buyers waiting for rates and values to hit bottom. There are several reasons why now is a good time to buy including:
1.Interest Rates are low. Interest rates have recently been as low as 4.75% with no points or origination fees. While they have risen recently, they are still extremely low based on history. With rates at 5.5%, you would save $18,600 on a $250,000 purchase, which allows you to spend this additional money on a home or pocket the savings. Below is a chart that shows the savings at 5.5% and 4.75%.
No one knows how long rates will remain this low. I already have buyers kicking themselves for missing out on 4.75%. And, one day, I will have customers kicking themselves for missing 5.5%.
2.Homes are more affordable now. Estimates claim home values in the Baltimore metropolitan area have declined 15-25% since 2007. If this is the case, a $250,000 home was once selling for somewhere around $300,000 or more in 2007. This is another $50,000 in savings.
3.Inventory is high. With supply so high, the average home is not selling for list price or above list price. Prior to 2007, many homes were selling for list price or even higher. This is additional savings. While these differ per transaction, I would think it would be safe to say this is another 2-5% in savings. Each seller and each transaction is different.
4.We are in a buyer's market. Most sellers are negotiable and willing to help buyers with closing cost assistance. While not every seller is willing to pay closing costs, many are. If a seller contributes $10,000 towards closing costs, this is another $10,000 in savings.
5.Lastly, there is a tax credit for 5% of the sales price or $7,500 for all first time home buyers. But, you must settle by June 30, 2009 to qualify for this tax credit.
6. There are mortgage programs available. You don't need perfect credit or 20% down. If you have any financing questions or would like to be prequalified, please give me a call.
With all these savings, a house that costs $250,000 will cost you $80,000-$100,000 less or more than if you had purchased two years ago. If you wait for the market to bottom out, you will already have missed the bottom. No one knows when the bottom has hit until it has already passed.
For all your purchase and refinance needs and questions, feel free to contact me at 410-248-1762 or bob.lowery@prosperitymortgage.com.
Is this the right time to buy? I have been asked this question so many times, I felt the need to blog about it. I do believe its a great time to buy and there are a lot of buyers waiting for rates and values to hit bottom. There are several reasons why now is a good time to buy including:
1.Interest Rates are low. Interest rates have recently been as low as 4.75% with no points or origination fees. While they have risen recently, they are still extremely low based on history. With rates at 5.5%, you would save $18,600 on a $250,000 purchase, which allows you to spend this additional money on a home or pocket the savings. Below is a chart that shows the savings at 5.5% and 4.75%.
No one knows how long rates will remain this low. I already have buyers kicking themselves for missing out on 4.75%. And, one day, I will have customers kicking themselves for missing 5.5%.
2.Homes are more affordable now. Estimates claim home values in the Baltimore metropolitan area have declined 15-25% since 2007. If this is the case, a $250,000 home was once selling for somewhere around $300,000 or more in 2007. This is another $50,000 in savings.
3.Inventory is high. With supply so high, the average home is not selling for list price or above list price. Prior to 2007, many homes were selling for list price or even higher. This is additional savings. While these differ per transaction, I would think it would be safe to say this is another 2-5% in savings. Each seller and each transaction is different.
4.We are in a buyer's market. Most sellers are negotiable and willing to help buyers with closing cost assistance. While not every seller is willing to pay closing costs, many are. If a seller contributes $10,000 towards closing costs, this is another $10,000 in savings.
5.Lastly, there is a tax credit for 5% of the sales price or $7,500 for all first time home buyers. But, you must settle by June 30, 2009 to qualify for this tax credit.
6. There are mortgage programs available. You don't need perfect credit or 20% down. If you have any financing questions or would like to be prequalified, please give me a call.
With all these savings, a house that costs $250,000 will cost you $80,000-$100,000 less or more than if you had purchased two years ago. If you wait for the market to bottom out, you will already have missed the bottom. No one knows when the bottom has hit until it has already passed.
For all your purchase and refinance needs and questions, feel free to contact me at 410-248-1762 or bob.lowery@prosperitymortgage.com.
Wells Fargo Home Mortgage (our parent company) has over 150 years of experience in mortgage lending and they are the most stable and secure mortgage lenders in the county.
Wells Fargo holds over 95% of the loans they originate so they will, most likely, always service your mortgage.
Wells Fargo has been the #1 retail Mortgage lender in the USA for the last 15 years and is the only AAA Rated Bank in the world.
Prosperity Mortgage isWells Fargo's largest joint venture and we are the 4th largest lender in the Baltimore/Washington area.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
;)
;)
