Mortgage Info
General Mortgage Information
See the latest live mortgage rates, find mortgage providers in the area, and view a wealth of mortgage information and tips. If you are interested in a FHA or USDA loan, you should read the government booklet on obtaining loans.
Note: A lot of changes are occurring in the fees being charged by appraisers and underwriters. Please read this article for the details. For one thing it is extremely difficult and expensive to get a mortgage for a condo.
Mortgage Week in Review : This is a weekly update on what is happening in the mortgage arena sent out by Mortgage Consultant , Cameron Lewis.
Preferred Mortgage Consultants: If you follow this link you will find the names of mortgage consultants who are knowledgable, easy to work with, and most importantly, work hard to ensure that you will be able to obtain the financing to buy your property.
Mortgage Calculator Use a variety of simple calculators to help you figure out your monthly mortgage payment, how much house you can afford, and much more.
Factors that Determine Loan Approval
Credit Scores
Your credit score will influence the interest rate for which you can qualify. You may be aware that you are entitled to receive a free copy of your credit report from each of the three credit reporting agencies once each year. These agencies have set up a website to provide you this service. Unfortunately they will not give you your score for free. There are several websites that will provide you with your scores if you sign up for a trial period for their credit monitoring service. You could do this and get your scores, but then you must remember to cancel the service before the end of the trial period. There are two services that will provide you with a score indicative of, but not identical to, the widely used FICO score from Fair Isaac. These sites are CreditKarma.com and Quizzle.com . MORE
Home Buyer's Down Payment FAQs
With today's combination of lower home prices, some of the lowest interest rates the industry has ever offered, and the $8000 tax incentive for first-time buyers, buying a home has never been so attractive. The only real hurdle left for many Americans is coming up with a down payment. With this in mind, we've put together some of the most frequently asked questions we get about down payments in today's market. MORE
Pre-Qualification vs Pre-Approval
Getting pre-qualified helps you determine how much home you can afford, based on a specific financial information you share with your lender. The lender does not verify this information, and consequently there is no guarantee you will qualify for the loan amount. Getting pre-approved requires that the lender verify your financial information, and does serve as a commitment to lend a specified amount based on that verified information. This gives you significant buying power with a seller who recognizes you will be approved for a loan.
What is pre-qualification?
Pre-qualification is an informal discussion between borrower and lender. The lender estimates the amount that you can borrow based solely on what you tell them about your income and assets. The lender does no verification and is not bound to make the loan when you're ready to buy. On the other hand, loan pre-approval is based on documented and verified information regarding your employment, your income, your liabilities, your assets and the cash you have available to close on a home purchase.
How is pre-approval better?
To a seller, a lender's pre-approval letter is considerably stronger than a pre-qualification letter. If a seller knows your financing is secure, your offer is stronger. Pre-approval also gives you peace of mind as you shop for a home, knowing that you will qualify for the proper mortgage amount.
Preferred Mortgage Consultants
There are several good mortgage consultants in Asheville. Following is a short list of the folks that I have worked with to ensure that you will succeed in obtaining your loan in a timely manner. In addition, Prudential Lifestyle Realty has an alliance with Wells Fargo mortgage division who has two mortgage consultants assigned to work with our clients.
Crystal Sheppard, South Chase Mortgage
203K Renovation Certified Loan Specialist
FHA, VA and USDA Specialist
Crystal has over 15 years of experience and offers mortgage products that many other companies do not, like the 203K renovation loan and energy loans. She also has a program for borrowers who do not have credit or who do not have great credit. Her company does non-traditional loans and manual underwriting.
Cameron Lewis
300 Executive Park, Asheville, NC 28801
The top mortgage consultant in his company, Cameron is very knowledgable. The company offers all of the traditional products.
Factors That Determine Loan Approval
As you can see, over a long period of time you would save much money if you have a good credit rating upon loan application. For this particular loan, you have the potential to save $56,520 over 30 years. That’s money that could potentially be invested into your retirement, used for vacations, a new car or two, etc. etc. It pays to keep your credit score as high as you are able. For larger loans, the savings potential climbs substantially!
In this situation, over 30 years, you have the potential to save a whopping $186,840!!! It pays to be dependable! With the money you could save on this loan the possibilities are endless.
Many real estate investors who are purchasing a home for the first time have no idea exactly how to figure out how much house is enough, and how much is too much. There are some key points to take into consideration when purchasing a home. The first time investor will need to examine their budgets, their finances and the potential real estate assets closely in order to be able to make an informed investment decision.
People make careers out of writing books to tell us how to budget our money, how to manage our finances and how to get the most bang for our buck. There is one major problem with all of them however. They do not include any "real-world" variables. Not everybody is a whiz with finances, able to live off very little money and spend only what is necessary while dutifully saving the rest.
Then there are the minor inconveniences, which are so frequent in the real world and so seemingly unimportant to the authors of those books. The car breaks down, the kids braces need to be replaced; the other child has broken the neighbor's bay window playing baseball in the yard. All of these factors force the investor and potential homeowner to face the very real fact that they have to spend a lot of money just to survive.
When we are renting our homes, we do not freely associate many costs with home ownership. If the garbage disposal breaks at two in the morning, all we have to do is call the property owner or the maintenance person and they fix it. When the real estate investor or homeowner has a problem, the costs multiply rapidly. Throw that in on top of the normal costs of life itself, and it should be easy to see that the potential homeowner needs to look beyond what they pay for rent as a basis to decide how much home they can or cannot afford.
For over ninety percent of the population, a home purchase will be the single largest financial investment of their life. Care should be taken so that investment lasts for a lifetime and not foreclosed or lost due to poor financial planning.
Ideally, the homeowner should be able to pay all of their most basic bills including the mortgage, electric, phone, car payment and so forth with one paycheck. Not very many people live in an ideal world however.
A more realistic approach is that all of the major bills can be paid with what the primary financial investor earns in two weeks. If all of the bills can comfortably be paid with the pay that is earned in three weeks, it is still viable, but there will not be many luxuries available to the homeowner until such a time as the mortgage is paid off.
If you are looking to purchase a home, especially for the first time, make sure that all of the bills can be paid at the very least with three weeks earnings. There will always be unforeseen circumstances which arise as a part of every day life. Financial planning must be completed in such a manner as to allow the real estate investor to have a way and a means of paying all of the bills, no matter what eventuality arises. Careful budgeting and financial planning before purchasing the home is imperative to being a successful real estate investor.
South Chase Mortgage
339 Merrimon Avenue
Asheville , NC 28801
Office: (828) 210-2771
Cell: (828) 242-4749
Fax: (828) 418-8017
crystal@southchaseloans.com
Beverly-Hanks Mortgage Services
Direct Line (828) 258-1945; Mobile Phone (828) 231-4909
Fax (828) 254-7202; Toll Free (877) 293-5946
Email: clewis@beverly-hanks.com (One of the best ways to reach him)
What is your FICO?
A FICO score is a credit score developed by Fair Isaac & Company to help lenders determine the risk involved in lending money to any person applying for a loan. It is widely accepted by lenders as one of the most important components helping determine eligibility as well as specific amounts, rates and terms that can be offered. FICO scores range from 300-850. The higher your score, the less risk involved in lending to you. There are approximately 30 factors that influence your credit rating. Some of these factors, such as your payment history, weigh more heavily on eligibility than others. Every factor’s importance varies by person and can change individually as your credit history lengthens. Also keep in mind your score can change daily as new credit is established or paid down/off. All factors can be grouped into 5 main categories:
·Payment History – Do you make your payments on time? Since this determines (on average) 35% of your score, it is certainly in your best interest to make any and all payments on time! Your payment history includes credit cards, car payments, mortgages, student loans and other loan types. Other public records on file, such as a bankruptcy, will be calculated in this group as well. If you have been late on payments bits of additional info, such as how recently these payments were made and how much time elapsed between the due date and pay date, will also factor into your score.
·Outstanding Debt – Most people over the age of 18 have debt. The question is how much? All outstanding balances for credit cards, car loans, mortgages, etc. will determine (on average) about 30% of your score. How many of these accounts have balances? For example, if you can possible pay down significantly or pay off credit card debt, you’ll be in much better shape during loan approval. Eliminating some avenues of credit can demonstrate your willingness and ability to responsibly pay back new loans.
·Credit History – How long have you been establishing your credit? Specifically, how long have your current accounts been opened and how long as it been since you used each of them? This usually determines approximately 15% of your score. If no credit history exists, you should begin by establishing credit accounts and be sure to keep them spotless. The less history that exists, the less the loan amount you’ll likely be able to obtain.
·Pursuit of New Credit – Each time you apply for credit, there is an inquiry into your current credit score. How many inquiries into your credit score are there and how recent were they made? If you recently applied for a VISA card, Nordstrom account and car loan, you may want to hold off applying for a home loan for a few months. Each inquiry may slightly reduce your FICO score and may portray you as someone overindulging in credit. This usually accounts for approximately 10% of your total score.
·Types of Credit in Use – How many types of accounts are reported for ATM cards, car loans, credit cards, travel accounts, or any other type of account where payments are being made? This will usually determine approximately 10% of your final score as well.
Once your bank is aware of your FICO score they may or may not choose to share this information with you. Assuming they do share your score with you, it is important to remember the higher the score, the more likely you are to obtain a loan. Also, a higher score directly translates to lower interest rates. Over time with home loans, lower interest rates can play a significant role in the total amount you end of SAVING! See two examples of home loans below and the amount of money you can potentially save while boasting a great FICO score.
Example of a 30 Year Fixed Rate Loan for $150,000
FICO Score
Rate
Monthly Payment
Payment Over 30 Yrs
760-850
5.71
$871
$313,560
700-759
5.93
$892
$321,120
680-699
6.1
$909
$327,240
660-679
6.32
$930
$334,800
640-659
6.75
$973
$350,280
620-639
7.29
$1028
$370,080
Example of a 30 Year Fixed Rate Loan for $500,000
FICO Score
Rate
Monthly Payment
Payment Over 30 Yrs
760-850
5.71
$2905
$1,045,800
700-759
5.93
$2975
$1,071,000
680-699
6.1
$3030
$1,090,800
660-679
6.32
$3101
$1,116,360
640-659
6.75
$3243
$1,167,480
620-639
7.29
$3424
$1,232,640
Now, a great FICO score will not be the only determining factor in loan approval. There are additional factors that figure into the approval process as well. Some examples include:
* Income – Your current income will also be a significant determining factor in loan approval. Pay stubs for the previous two months as well as W-2 forms for the previous year will be requested to help determine your ability to repay the loan amount.
* Employment History – Your employment history can tell a lender much about your stability. If you’re constantly switching jobs it could raise a red flag. However, as their may be other factors influencing your employment length (such as a spouse in the military), lenders may choose to ignore this factor.
* Down Payment – Do you have a down payment? How much? Being able to provide a down payment can be extremely useful in the loan approval process. It means the amount borrowed will be less than the total cost to purchase the home. In some cases, depending on the amount of the down payment, your monthly payments can significantly drop.
The important thing to remember is that no matter what your FICO score, employment history or income levels are there are things you can do to help improve your chances of obtaining loan approval. Get referrals to local credit counselors or financial advisors to help optimize your resources fully.
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April 12, 2010
"THE FUTURE INFLUENCES THE PRESENT JUST AS MUCH AS THE PAST." While getting your mind around that brain-bender from philosopher Friedrich Nietzsche might be a bit of labor...the point of influence is very well-taken. And while the present health of the housing market is certainly influenced by the present health of the labor market - last week brought a bit of welcome good news on the housing front.
The Pending Home Sales number came in with a surprising 8.2% boost in February. Although the report is only a prediction of sales that will close in a month or two, it's a good sign for the housing market...not to mention that it's very good news for those homebuyers who are now under contract in time to take advantage of the Homebuyer Tax Credit before the deadline! Remember, contracts must be in place by the end of this month - April 30th - in order to qualify for the tax credit.
But indeed, the health of housing will be influenced by the labor market - and a lot of work remains to be done in that area of the economy. The national Unemployment Rate remains at 9.7%, but has moved below the 10.1% rate seen in October.
Although the employment picture overall still needs to see some real improvement, there's still good reason to believe that housing will continue to stabilize over the next year, and then begin to move modestly higher. With home loan rates having improved this past week - buyers still have a chance to get into a great home loan rate...and get the Homebuyers Tax Credit before the deadline of April 30th.
After a relatively slow economic report week, the calendar picks up again during the week ahead. On Wednesday, we'll see more news about the labor market when the ADP National Employment Report is released with new data on the employment front. Then on Thursday, we'll see another round of Initial Jobless Claims. After last week's increase in new unemployment claims, you can bet the markets will be waiting to see how this report comes in.
Wednesday brings an update on the all-important topic of inflation when the Consumer Price Index is released. The Fed still officially feels that inflation is not a present concern - but some Fed members have expressed their opinions that upcoming monetary decisions should be made with a "data-dependent" eye. This means that the upcoming data - like the Consumer Price Index - will be analyzed very carefully.
We'll also see updates on the manufacturing sector of the economy, with reports on Industrial Production and Capacity Utilization as well as the Philadelphia Fed Index on Thursday.
Finally, Friday brings another dose of news on the health of the housing industry, with reports on the number of Housing Starts and Building Permits recorded during March.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.
Copyright @ 2010 Mortgage Market Guide LLC
Home Buyer's Down Payment FAQs
With today's combination of lower home prices, some of the lowest interest rates the industry has ever offered, and the $8000 tax incentive for first-time buyers, buying a home has never been so attractive. The only real hurdle left for many Americans is coming up with a down payment. With this in mind, we've put together some of the most frequently asked questions we get about down payments in today's market.
Q. Are there any no-down payment programs left?
Yes. While it's true that most of the popular no-down payment programs disappeared in the wake of the subprime mortgage collapse, there are still two longstanding government-backed programs that offer mortgages with no down payment: the USDA Rural Development Program and the VA Loan Program.
A USDA Guaranteed Loan is a government-insured, 100% purchase loan. This means there is no down payment required if you – and the house you intend to buy – qualify for the program. Not all areas qualify, but you'd be surprised at how many neighborhoods in your area do. There are income and other limitations, but if coming up with a down payment is challenging, you might want to consider this program.
If you or your spouse is a military veteran, you may qualify for a 100% financed loan from the US Department of Veterans Affairs. More than 29 million veterans and service personnel qualify for this service benefit. Give us a call to find out if you're one of them.
Q. Are there any other government-insured programs that can help someone struggling with a down payment?
Yes. In 1965, the federal government created the FHA loan programs to encourage homeownership throughout the country. FHA-insured mortgages offer many benefits, including a minimum down payment of 3.5%. FHA-insured loans have grown in popularity recently due to the seller's ability to pay closing costs up to 6% and a temporary increase in loan limits up to $729,750 in certain high-cost areas, which allows more potential buyers to utilize this program. However as of April 2010, there will be some changes in this program. The down payment amount will depend on the individual's credit rating. To get the 3.5% down, the individual's credit rating must exceed 580, otherwise the required down payment is 10%. Also the seller will be able to pay only 3% of the closing costs.
Q. May I use a gift from family members as part of my down payment?
Yes. In many cases, immediate family can provide monetary gifts to be used as a down payment. There are restrictions of course, and strict documentation will be required, but we will gladly walk you through the finer details of this process. Be sure to mention this option when you're filling out an application with us.
Q. May I use funds from my IRA for my down payment?
Yes. First-time home buyers can use funds from an IRA under certain circumstances for a down payment. The rules regarding this option, however, can be complicated, especially with a Roth IRA, and it's important to understand any and all tax implications before tapping into these accounts. Please talk to your tax professional before making any decisions. If you don't have one, we'll gladly refer you to one we work with on a regular basis.
Q. May I use the $8,000 tax credit as my down payment?
No. At the time of the writing of this article, qualified first-time home buyers do not have direct access to the $8,000 credit to use as a down payment. In May, HUD officials made an announcement to the contrary, but statements backing the announcement were quickly withdrawn from the HUD website. This doesn't mean that HUD and lawmakers will not allow this in the future. We're following this issue closely and will let you know if anything changes. Just keep reading our newsletters and other materials we send to you or give us a call and we'll let you know if any progress has been made.
