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Friday, June 25, 2010

Jumbo Mortgage Frisco Refinance or Purchase

169 comments
Many families in Frisco Tx with the need for a Jumbo loan do not know their options, and should. See YMGFL post on Refinances and remember, what you can do with a refinance on closing costs, you can also do on a purchase.

For weekly and sometimes daily updates on the #1 Frisco Mortgage Blog, click on or paste this link into your browser... http://www.yourmortgageguyforlife.com/

Wednesday, March 24, 2010

Redirect To My New Blog Website

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Thanks for checking out my site! I have moved all of my Blog posts to my new website. This site will let me be a better education post to my clients and other mortgage and Real Estate seekers.
Please go to my new site by either clicking HERE or copy and pasting this into your browswer. http://www.yourmortgageguyforlife.com

Thanks for staying in touch!

Tuesday, March 02, 2010

It's Official...FHA Up Front Mortgage Insurance Increased

9 comments
In a HUD Mortgage Letter I received today, David H. Stevens, Assistant Secretary for Housing-Federal Housing Commissioner issued the change for FHA Up Front Mortgage Insurance. So, effective for FHA loans for which the case number is assigned on or after April 5, 2010, FHA will collect an upfront mortgage insurance premium of 2.25 percent. Previously it was 1.75%. This policy change will increase premiums for purchase money and refinance transactions, including FHA-to-FHA credit-qualifying and non-credit qualifying streamlined refinance transactions.

The only FHA programs that are exempt from this change are as follows:

- Title I
- Home Equity Conversion Mortgages (HECMs)
- Hope for Homeowners (H4H)
- Section 247 (Hawaiian Homelands)
- Section 248 (Indian Reservations),
- Section 223(e) (declining neighborhoods)
- Section 238(c) (Military Impact areas in Georgia and New York)


Just when you think the rule changing is part of the past, it finds it's way back to the present.

Rates Fall 6 Straight Weeks, and Stay Under 5% for 2 Weeks Straight

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Rates Remain Under 5% for 2nd Week In a Row (see last paragraph for mention of possible extension of Tax Credit again!)

"The possibility of securing a mortgage rate below 5% has greatly improved in recent weeks, in a positive sign for would-be home buyers", said CNNMoney.com. All facts show, from Freddie Mac's report to Bankrate.com, rates have dropped.

After 6 straight weeks of rates dropping, we now wonder if forecasts for higher rates may be off on their expected timing. Maybe rates start their climb in late 2010 and we see the higher 6% rates in 2011...Warren Buffet said yesterday that he expected recovery in the housing market to be full on in 2010, so who do we believe?

Freddie Mac's (FRE, Fortune 500) weekly report said the 30-year rate slipped to 4.87% for the week ended Thursday, the lowest since May. According to the mortgage backer, last week's rates stood at 4.94%. On the other hand, Mortgage tracker Bankrate.com said the average 30-year fixed loan slipped to 5.22% from 5.25% the previous week. The 15-year fixed rate also fell, Bankrate said, to 4.6% from 4.64% the week before. Keep in mind, Bankrate.com always posts higher rates, I believe, because their main audience is Loan Officers and lenders of their competition because they do such a good job of posting cause in the daily fluctuation of mortgage rates as it pertains to stock and bond works daily. So, Freddie is more accurate as a whole.

Why are mortgage rates still dipping below 5%? Bankrate.com said that it's because of the poor employment reports. Poor stability in the growth, or at least having a lesser amount of unemployment from month to month, is a sign that economic rebound is not coming along as fast as we hoped. Therefore, investors in the stock and bond world are nervous, and when they are nervous, they pull money from risky stock and put it into bonds. When bonds are seeing more attention from investors than stock, in ratio terms, it's good for our mortgage rates. Also reported to cause this change in rates, CNNMoney said, "Now the central bank has less than $15 billion left to spend on its buyback program, which led some investors to worry that yields would soar again. So far, that's not the case."
On Wednesday, reports said Democratic congressional leaders were working to extend a $8,000 tax credit for first-time home buyers past the Nov. 30 expiration date and could even make it available to current homeowners who buy a new house...CNNMoney reported.

Foreclosure Ban...Review for Obama's Modify Mortgage First

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The Federal Housing Finance Agency (FHFA) is authorizing the extension of Home Affordable Refinance Program (HARP) until June 30, 2011. Also included in the HARP is the modification program. This is good news for those who need to refinance their homes but still have little equity in their home. TheTruthAboutMortgage.com reports that 24% of mortgages in America are "underwater". Meaning, there is a need for modification or refinance to lower payments and get payments to a managable amount.
The Obama Administration announced the foreclosure ban. Possible foreclosures under this plan would have to be reviewed for to see if they would qualify for the Home Affordable Modification Program first. TheTruthAboutMortgage said, "A document detailing the proposal obtained by Bloomberg said it 'prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed.'”
This plan is not approved, but many think it will not be shot down.

Wednesday, February 24, 2010

Procrastinating Refinance Prospects Soon to Miss the Boat

24 comments
Future home buyers of America, and Americans concerned about the future of their investment, it may be time to turn your frown upside down. Top economists across America representing American Bankers Association's Economic Advisory Committee have a positive forecast for our economy, reported by USNEWS.COM. Although we have heard many other economist, top economist as well I might add, say that the recession, in definitions terms, has already ended. Many of those economist believe that we are on a slow ride in recovery at this point, but the fact is, if the remaining "top economist" in the nation are all on the same boat in regards to where the economy stands by end of the third quarter of 2010, which is what the message from the economist in the American Bankers Association's Economic Advisory Committee have forecasted, we MUST be headed toward "greener pastures" sooner rather than later, right?

Despite the Fed's attempts to keep rates as low as possible to keep the rise of the Real Estate market churning, as the economy makes it's turn to the final back stretch to the finish line of recession, the natural progression of higher rates, which is many times the byproduct of a stronger market, will likely begin it's succession. No worries though, it seems like we have been able to study the history of our economy to the extent that unless a major event occurs, we will be able to manage mortgage rates to avoid any major hikes like we saw in the 80's where rates were well over 10%.

If you have chose to "stop procrastinating tomorrow" on your home refinance and you are one of the ones that has made it through the variety of rate hike scares where rates inched up, but somehow have fallen back down to 5% or just under, your luck is surely running out.

CALL TO ACTION: If your interest rate is at or above 6% and you plan on being in your house more than 3 years, and/or you are currently in a 30yr fixed loan but could afford making about $100-$250 more on your mortgage in which would make a rate and term change to a 15 yr note possible, call your trusted mortgage advisor today! At the beginning of these low rates, I refinanced my own home from a 30 yr fixed with 5.125% rate to a 15 yr fixed around 4.25%, and it only changed my payment by $200 and I'll make up $40,000 more principle in my new plan over the next 7 years than I would have in my old if I stayed where I was at.

Tuesday, February 23, 2010

FHA Loses Fight to Increase Down Payment Requirement from 3.5% to 5%

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Thanks to the NAMB (National Association of Mortgage Brokers), the fight to hold the minimum down payment for a FHA purchase at 3.5% instead of bumping it up to 5%, has been won. Today, the fight turns focus to keeping the annual mortgage insurance costs that FHA charges on loans at .55% instead of moving it up considerably. The mortgage insurance is calculated by multiplying .55% times the loan amount, and then divide that by 12 to get your monthly cost.
My worries about this aren't that it just goes up, but typically this is not something that is temporary...once the market regains strength, why should everyone continue to pay the high cost for mortgage insurance. After all, why not wait a little while and see if all the new changes help offset troubles first. Like that commercial says, "this is how FHA sticks it to the man", but this time, American home buyers are "the man". To hear a live version of the story, go to the Think Big Work Small website.

Monday, February 22, 2010

6 Easy Steps to Shop for Your Mortgage and Be Successful

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After 8 years helping families find the right loan for their needs, I want to tell you how I would shop for a loan if I were no longer in the business. Please note, if a good deal to you in buying a home is saving a couple hundred dollars in closing costs in comparison to another lender's offer of the same interest rate on the same type loan, this message is not for you. You might want to read the book, How Do I REALLY Decide What's Important in Life for Dummies, and then come back to this message. (wink wink) Now back to a more serious note, follow these steps and you will likely be more successful in choosing the right lender.

1. You need to figure out what loan officer you genuinely like the most first. However you come up with your list, get your list of lenders you plan on shopping for your mortgage. Some suggested best ways to derive your list are as follows; referral from a friend, referral from a Realtor, check with your local bank. Now, use your best people skills as you make first contact with each of these contacts at the lenders office (loan officers) to REALLY LISTEN to the "person" that answers your question and not so much the detail of the answer. You want to be a great listener in this first communication to find out who sounds more trusting and compatible with you. Maybe even try to get off the subject of mortgage just a bit. In this first communication, you might ask some mortgage questions to make sure they know their business, but interview them. (this step does not require a face to face appointment, so don't waste their time setting an appointment just yet) Once you've talked to your list of loan officers and decided who you like best, this will be the lender you target as your hopeful transaction coordinator and leader in your financing process. Lets call him your #1.

2. In most cases, when you are buying a home, you will have already gotten to your #1 (your #1 is the chosen/preferred lender) BEFORE you have found a house, because most Realtors won't show you homes on "their dime" unless you can show them you are pre-approved...and they have VERY good reason to make sure you are pre-approved before they take you out as well. Now that you have your #1 selected. You have a goal and you want to put that goal in the responsible hands of your #1. Your goal is to get pre-approved, get comparable offers from your list of lenders, get the answers to all your lending transaction questions answered, and find out what your prospective monthly payment and dollar out of pocket at closing estimates are. Just FYI, the dollar out of pocket at closing is NOT to be used at any point as a detail used in determining what lender you use...do not use a "bottom line" on an estimate sheet from a lender to compare lenders. Schedule a time to meet with your #1, face to face if possible, or at minimum, by phone. Allow your #1 to run a credit report, collect ALL of your income and asset documents to underwrite your loan, and in the end, complete your pre-approval. PLEASE NOTE, YOU HAVE NOT STARTED YOUR "SHOPPING" AND COMPARING COSTS YET!!!

3. At a point in time between meeting with your #1, mentioned above, and before you are ready to make a bid on a home, you need to get some numbers from your list of lenders for shopping purposes. Listen very closely here! You do not need, and you should NOT ask for a Good Faith Estimate, Initial Fee Worksheet, or any other template form that the lender has in his system to come up with the variables you need for shopping at this point. To compare lenders, you need to know 3 things: 1) Interest rate, 2)Points (origination and/or discount), 3) total of lenders fees. So get out a writing pen and paper and ask all three lenders what their total of lender fees are that you will incur by doing business with them, what is the current interest rate for the program that you and your #1 decided was the best loan program for you, and how many points do they charge for that interest rate. Your notes might look like this: $1190 total lender fees, 4.875% interest rate on a 30 yr FHA loan, and 1% origination (point). If you go against my shopping plan and ask for a GFE or Initial Fee Worksheet and think that you'll just pull out what YOU know to be the right fees and variables for shopping a lender, then you open yourself up to trouble. I'm not going to bother with the huge number of ways in which that can be used against you, and if you are not willing to take my advice about this, then it won't matter anyway.

4. Now that you have gathered the necessary numbers to compare your lenders, hopefully your #1 was sitting right "in the mix" with the other lenders. If he was .125% higher in interest rate than your other lenders AND the lender fees and origination were higher, you might need to have a talk with your #1, and if the fees were higher by much, you need to work with #2. There is nothing wrong with paying $200-$400 higher in fees and points for a similar or same interest rate if you are going to enjoy the process more with your #1, have confidence that all is going to go well while you and the family are packing everything you own to move, and your sure that #1's experience and advice is going to get you to your destination smoothly and with less collateral damage costs in the end. You are buying a house after all, and not a car, or a stereo system at a pawn shop...$200-$400 in extra fees and $8-$15 extra a month for a slightly higher interest rate is not a bad sacrifice to pay for comfort in the transaction, and to make sure you do not end up paying collateral damage costs at the end of the transaction because you chose a lesser expert to handle your business. (collateral damage costs may be for example: you don't close on time, so you have to pay $100 a day to your moving company while you wait for your loan to be ready, or your contract needs to be extended because your loan wasn't done in time and the seller wants you to put up more cash to make it worth their waiting on you).

5. At this point, you have compared your lenders by interest rate, lender fee total, and points associated with the offered interest rate. You now should have located a property you want to buy, and have an executed contract on that property. You now have an exact purchase price, and a selected title company in which was selected on the contract in the negotiation. Give your shopping lenders the exact purchase price of the home, and the name and number of the title company that was used (if the number is not on your contract, ask your Realtor for it), and give them a copy of your contract...the contract should tell them if there is a survey fee, and seller contribution and all that. Ask them for a Good Faith Estimate in return and that you will be deciding on locking in the next day or two...whether you are or not (this will keep them honest). The 2010 Good Faith Estimate is designed so that you can easily compare lenders, and if the costs in the Good Faith Estimate end up being higher by fee or rate at closing, the lender will be required by law to "EAT THE DIFFERENCE". When you ask these lenders for their GFE's, they will probably want to know what your credit score is and so forth. They may in most cases need that to give you an accurate estimate on your loan. As long as your credit score is above 700, it more than likely will not hurt you to let them pull their own credit report. They'll need to know your income and asset information too, just like you gave your #1, so you might try and have that in email or fax-able form. If your lender can not get you an estimate in 24 hrs, you really need to think about the availability this lender will have in answering your questions during the process, and therefore thinking about that being a reason to NOT use that lender. If they can not get you an estimate in under 48 hours (assuming normal business hours, not including Saturday and Sunday), you REALLY might think about not using them.

6. Now that you should have all your GFE's from the different lenders, just make sure that the lender you chose as your #1 is close or better than the other offers. You might even just ask your #1 to match it and in turn you would work with him. Lastly, while comparing deals, if any one of the lenders has an estimate where the interest rate is more than .375% better than the others and the costs are similar, be very leery and get additional advice from your Realtor or ask him directly why his rate is so much lower. Lastly, make your decision on whether your #1 can compete so you can work with him, or pick the next best option in line.

If at any point along the way you did not like your #1 anymore and the other options were not good either, find another lender to throw in. If you run into discomfort and can not find a lender you like after trying a variety of lenders, you might suggest taking yourself out of the "equation", and allow yourself to be advised and directed. Controlling personalities end up, in many cases, with 2 outcomes. 1)They end up working with someone willing to let the buyer run the show (inexperienced Loan Officers work with anyone), where in turn the buyer won't "let go of the steering wheel", so the inexperienced buyer leads everyone through a very bumpy ride where the entire process is like running a mile with an anchor on your back, or 2) the buyers expectations are underachieved throughout the entire transaction because they did not allow the expert to set the expectations because they thought they could control the process themselves...even if it is your 3rd or 4th time to buy a home, you have no business setting your own expectations in a loan transaction. Loan officers live a life directly related to how the market moves, and if tracking their income as it goes up and down like a roller coaster from year to year is not enough to tell you how the market changes and how often it changes, listen to the news. That being said, a loan transaction today is very dissimilar from one a year ago.

Best of luck in your home search, and shopping!

Using a USDA Mortgage for 100% Financing...No Down Payment

12 comments
Many people do not think of housing when they hear USDA...they think of rural life farm animals, and not a mortgage that brings together the need to buy with no out of pocket money toward down payment, and lack of ability to afford more conventional or FHA mortgages. The USDA mortgage was designed to help low to very low income households or individuals purchase a home. Just in case you don't consider yourself as a low or very low income household, you might first realize that USDA uses that term a little more differently than what we might.

Let me make an example to help you better understand what kind of household incomes qualify for a USDA Mortgage Loan program that you might think do not. In the system that we have available through USDA, I run this as a loan officer for my clients needing qualification for a USDA Loan, I ran the total household income at $84,000 a year, considered 3 in the household (2 adults, and a child in day care), I was able to list $6,000 a year ($500 monthly) of expenses for the child in daycare (USDA will take that amount out of your household income to better help you qualify as low income), and still qualify for the USDA loan. So you can make $84,000 a year between two adults with one child and qualify for USDA. If you have more kids in the household, you can even make more. To me, I don't think about a household earning $84,000 a year as low income, and this is why I said above that USDA may define low to very low income differently than what you might consider as low or very low income.





Why are USDA loans so great?
First of all, they do not require any down payment. Let me say that again in a different way: USDA Rural Program loans are 100% financing and therefore require ZERO DOWN PAYMENT. Some of the other important details about them that help out so much include; you can roll in closing costs if the seller won't provide cost for you at closing (could help with as much as $3,000-$6000), if the seller will pay closing costs, there is no limit to how much they can pay (meaning the seller can pay ALL of the closing costs if agreed on), loan up to 102% of the appraised value, there is no monthly mortgage insurance (don't get this confused with mandatory Home Owner's Insurance that provides you with risk management where mortgage insurance supports the risk of the lender), you don't have to be a first time buyer to benefit from this program, and there is no sales price maximum (if you can afford it through underwriting evaluation, you can buy it).

The one piece of loan structure in the USDA program that is different to conventional, but not indifferent than FHA or VA, is the 2% participation fee. Just like FHA(upfront mortgage insurance 1.75%) and VA's (2%) up front fee you have to pay when you take on a Government loan, the USDA loan comes with a 2% participation fee. This is 2% of the loan...example: $100,000 loan, then you pay $2,000 up front in participation fee. The USDA loan is still less costly than the FHA option because the USDA does NOT have a monthly cost like FHA does. You pay the one time fee up front for the USDA loan, and then you are done.

The other point about USDA loans that make them so great is their interest rate. Since these loans are guaranteed by USDA, lenders' risks are similar to other Government loans and therefore, the interest rates on USDA loans are almost, if not the same as, present day conventional and FHA financing. So, no down payment, super low interest rate, 100% financing, and multitude of low to no closing cost options out of pocket in the end make up one of today's most beneficial lending programs...for those who qualify in the way of income and location of the subject property being purchased.
To find out if the home you want to buy, or if the neighborhood you are wanting to buy in, is eligible for the USDA program, check with your lender (Me, Brad Lynch at 469-450-2723, or email me at bl@fmillc.com). The cities, towns, or communities with population under 20,000 are typically going to fall in the USDA eligible limits.

Tuesday, February 16, 2010

Future for Texas Housing Market...2010

3 comments
After reading an article in CNN this week, it sounds like the guru's of the housing market think that research on the cost of home owning versus the cost of renting, can determine what Americans can expect in the outlook for housing in America for 2010. Thats a sensible statement, right?

Lets start with the common sense reason why we can track the rent vs home price to do our homework on the future of the housing market. Plainly, people generally need a good reason why they might benefit from leaving their lease when they compare and contrast owning and renting for what they give up in monthly out of pocket costs each month. Shawn Tully wrote in the CNN article, "And the surest sign that prices have fully adjusted arrives when the ratio of what people pay in rent versus what owners spend on the same property returns to its historic average." So, that is where it starts.

Through research of rents vs homeownership, they found that in 1999 renters were paying 87% of what homeowners were paying monthly. All in all, Americans are ok with paying a little higher monthly when it came to the benefit of owning...13% higher to be specific in 1999 (the case study was called the REIT research team done by Deutsche Bank...REIT=Ratio of Rents to Ownership Costs). Later studies showed drastic changes in that ratio as the housing bubble was growing in areas like California. Home owners prices drop compared to what renters paid in the bubble times.

When the cost to own is "overpriced" by the rent to own ratio, when comparing out of pocket monthly costs, you typically will see that the housing market will tend to fall more until the ratio of rental to owning is more equal...like in the 1990's. In more recent studies, like the one in 1999, we see that the majority of Americans still pay an "over priced" amount for owning than renting today. This research leads the experts to believe we will see a hopeful and final fall in overall national housing market of 5% more in 2010. (My hypothesis is that Texas will not follow that statistic as close and we'll see much less or even small gain in 2010).

Tuesday, February 09, 2010

You Are Referred to a Trusted Loan Officer...IT DON'T FEEL SO TRUSTY...thanks to New RESPA rules

142 comments
Most Loan Officers, the ones that work outside the large call center type organizations, are entrepreneurial or self employed in nature. What I mean by that, for this message, we do not have a huge research staff that tells us why our numbers are falling, or when there is a major change, how to combat that. Therefore, most of us do what we feel is right and wonder if everyone else is doing it the same way. I read an article that backed me up on the feelings I had with regard to the RESPA changes and how to get conveyance to my borrower correctly without looking suspicious.
Unlike the majority in the industry, I do not despise the new rules under RESPA. On the other hand, I have wondered if I was "doing it right" or doing it like everyone else. I was reading an article from Tracey Ramsey, the Staff Writer for MortgageCurrency.com, and she really said it right. All of the changes that were designed to help the borrower on the new Good Faith Estimate or GFE 2010 do not help the borrower unless they know how to use it, and if they are not aware of the changes, they may not feel comfortable in the shopping process.
To see a little of what changes and when they occurred for the RESPA guidelines, go to my Active Rain Blog here. After reading this article from Tracey that I linked you to above, return for the remainder of this message.
I further suggest that a home loan shopper use their ability to recognize a trusty person rather than their ability to crunch mortgage numbers when shopping for a mortgage person. Use the one Loan Officer you LIKE the most until you are contracted or ready to lock your loan, and then shop by comparing others to him. In the end, you want to try to work with who you feel is most trustworthy if all possible...do not let a matter of $100-$300 in fees be the deciding factor or you may end up with $thousands$ worse over the life of the loan. Trust me shopper, you do not know what is best for you unless you take the advice of a professional...that includes you folks who are working on your 3rd, 4th, or 5th loan transaction too.

Sunday, January 31, 2010

Future of the Home Buying Market in Lead Air Polluted Frisco

33 comments
The Frisco Real-Estate market has enjoyed national rankings in home purchase ratings and new home builds in the last 10 years. As a Frisco homeowner, I think most other Frisco residents will agree, we hope that the return of the economy will soon bring big gains in our home values as well. On the contrary, if Frisco isn't taking priority in the cities air pollution, national news may read a completely different story in years to come in which could have a very negative affect on our values moving into the future. (It's only fitting that I write this Blog entry in GREEN...things that make ya wanna say hmmmm?)

At the Frisco Chamber of Commerce years ago, when I was building my mortgage business, I met today's City Council Member, Matt Lafata. When I was concerned of my family's health in relation to the lead pollution so publicized in the Dallas Morning News recently, I contacted Matt for his thoughts. I was very pleased to receive his response. Matt also is worried of the effects and urges Frisconians to stay on top of this issue and demand the city to stay on top of it as well. You can see Matt's Blog on this by clicking here. From the beginning where time spent together at the Frisco Chamber during the time I was building my mortgage business
In my Activerain Real-Estate network, I wrote a blog with the below story:
For months now, my wife and I, residents of Frisco for over 6 years now,
have been reading about the pollution by the recycling plant near downtown
Frisco. The news is not sounding good, and I am scared to death that my
two babies, daughters 2 and 4 that were raised here, are going to have learning
issues similar to previous children that proved to have high levels of lead in
their systems.
Some of the research studies gathered regarding this topic
where thought provoking. A couple children from the same Frisco family
near downtown Frisco both had issues that could possibly be a result from the
mother transmitting lead to her babies. One daughter has had learning
disabilities attributed to her spinal meningitis and the other can't walk today
do to her spinal issues.
The citizens of Frisco, and homeowners to be in
Frisco deserve easy to reach knowledge on the future governing and real effects
of this lead pollution issue. I think that if anyone has hard evidence on
this issue, or if there is someone studied in the area in which this topic
targets, they might reflect publicly their views on this
issue.
It would be VERY heartbreaking for any family to have a child
that grows up with learning disabilities that could have been controlled from
the beginning by a better maintenance or governing of our city's pollution
levels. It hits home for me and my wife because we have two children here,
and we actually moved to Frisco because of it's attention to detail
regarding the focus and education of children.
Just a disclaimer, I am
not stating that this is a State of the City Emergency, but just wishing to hear
more educated opinions on what is going on to protect the citizens of Frisco,
and my daughters.


Please don't be afraid to voice your opinion and lets get this issue resolved sooner rather than later.

In closing, I wanted to quote Matt on a paragraph from his Blog that really brings this issue "home"...Matt said, "One source of pollution that continues to haunt Frisco and its residents however, is the Exide battery recycling plant. This plant, located just south of downtown Frisco, has been polluting the Frisco air and ground for decades. It extracts lead from old batteries and despite their best efforts in filtering systems, or whatever they do to reduce emissions, they continue to contaminate the area (and with the way the wind blows around here, who knows how far the contamination spreads)."

Saturday, January 30, 2010

Using the Owelty of Partition During a Divorce

62 comments
When is an Owelty Lien used, and why can it be a better option than a Texas Equity or Texas Cashout Refinance? First, here is a couple definitions from different resources, so you can "get your hooks in" on exactly what an Owelty is? For further reference in this Blog, Texas Equity, Texas Cashout, Texas Home Equity, and Texas 50(a)(6), are all terms that can be used synonymously in this Blog for generalization purposes for the specific purpose of this Blog. There are variations of Texas Equity loans, but determination between those variations are not applicable to the specific focus here. Lawyers.com defines "Owelty"- Noun[Anglo-French oelté equality, from Latin aequalitat- aequalitas]: a lien created or a pecuniary sum paid by order of the court to effect an equitable partition of property (as in divorce) when such a partition in kind would be impossible, impracticable, or prejudicial to one of the parties. For the laymen, that means, when parties to a divorce own a home that in which there is substantial equity, one party will often be awarded the home as their separate property and the party receiving the home in the divorce decree will be ordered to pay a cash sum to the other spouse to compensate for that spouse’s community interest in the property.

When there are other alternatives to meet a person's needs in a loan that bring a similar outcome as a Home Equity or Texas Cashout Refinance, many times those are taken. The reason can be for various reasons. To avoid having to delve in too deep about all the specific unique laws of the Texas Equity, I'll try to make a general statement that could be elaborated upon in a number of ways. Once a Texas Equity, or the legal term for it, Texas 50(a)(6), always a Texas Equity...this means, if you refinance your home or current home loan into a Texas Cashout/Texas Home Equity, any refinance you make on that loan from then on out must also fall under the Texas Cashout loan guidelines. Texas Cashout guidelines are more restrictive, and many times lender charge a bit higher interest rate for them. To see a good definition of a Texas Cashout or Texas 50 (a)(6), click here. Lastly, the state of Texas will only let you have a loan to value on your home of up to 80% when you have a Texas Home Equity, and that means you lose the opportunity to use the remaining equity if needed...contrary to many state in the U.S.

In an Owelty Lien, you can get cash/equity out of your home to pay off a spouse in the process of a divorce. You can go over an above the Texas Cashout limit of 80%, and you get the best of the best market interest rates as if you were doing a regular rate and term refinance. In addition, you can Quit Claim Deed the spouse that is moving out of the residence from the property to remove their interest in that property and remove their influence or rights on the loan attached to that property if they were on the loan.

Tuesday, January 26, 2010

203K Rehab to Purchase a Fixer Upper or Help List Your Fixer Upper

19 comments
Frisco and the Surrounding Collin County home buyers should look into the FHA 203K home loan when trying to buy that short-sale or foreclosure...refinances are elgible too!!! When trying to establish the appraised value, the value will be "subject to completion". So for example: A home that has a market value of $150k because it's at the lowest end of value of it's "like" sqr footage among comparables, may get an appraisal value on the 203K loan program for $175k when it has the most upgrades and updates for the homes similar in age and square foot in it's market, even if the sale price was $150k. Now you can use that difference in $150k sale price and expected appraised value to determine the loan to value.

Maximum LTV
• Purchase: Maximum LTV is 96.50%.
• Rate/Term Refinance: Maximum LTV is 97.75%. Maximum CLTV is 100%.
HUD's $100 Down Payment homes are also eligible for this program.

Requirements for 203K purchase or 203k refinance loans below:

• All improvements must be performed by a third-party builder. Self-Help is not allowed. (builder or contractor...must be insured contractor)
• The builder’s contract must not be signed before the 5th day after the written application.
• A 10% statutory retainer must be withheld from each advance to cover any claim notices from subcontractors or suppliers. The entire retainer, representing 10% of construction costs, will be retained for 30 days after final completion. (Subcontractors and suppliers have only 30 days after completion to notify the borrower of nonpayment claims) This money is also rolled into the loan with other costs if requested by borrower, and the 10% is calculated off the amount used for fix ups and 203k specific closing fees...EXAMPLE: IF $10,000 is the amount request for fees and fix-ups, you take 10% of $10,000, which is $1,000, and roll that into the loan. If it is not used, the 10% retainer fee will be used to pay down principle of the loan.
• Subject property must be used as the primary residence...this loan IS NOT DESIGNED FOR FLIPS OR INVESTMENT PURCHASE!

Examples of eligible home repair, replacement, or improvements under the FHA 203K are listed below, however, this is not an all-inclusive list:
• Repair/replacement of roofs, gutters and downspouts.
• Repair/replacement/upgrade of existing heating, ventilation & air conditioning systems.
• Repair/replacement of plumbing and electrical systems.
• Repair/replacement of flooring.
• Minor remodeling that does not involve structural repairs, such as kitchens
• Exterior and interior painting.
• Weatherization, including storm windows and doors, insulation, weather stripping, etc.
• Purchase and installation of appliances, including free-standing ranges, refrigerators, washers and dryers, dishwashers and microwaves.
• Improvements for accessibility for persons with disabilities.
• Lead-based paint stabilization or abatement of lead-based paint hazards.
• Repair/replacement/addition of exterior decks, patios, porches.
• Basement waterproofing.
• Replacement of window and doors and exterior wall re-siding.
Most improvements are eligible provided they add value and are permanently affixed to the foundation. Improvements to detached structures and luxury items are not allowed.
Luxury items include: Swimming pools, hot tubs, tennis courts, gazebos, barbecue pits, etc. Repair work to these items is also not allowed.


For more questions regarding the 203K loan, email Brad Lynch directly at blynch@pnlending.com or find me on Twitter at Frisco_Mortgage

Wednesday, January 20, 2010

Policy Changes With FHA Guidelines for Underwriting...Will It affect first time buyers?

11 comments
Have we reached the top of the "mountain" in regards to tightening of underwriting guidelines in the mortgage industry in hopes to reconstruct, and specifically speaking, in FHA lending, so we can take the easier ride down the "mountain" now? Guess not. FHA announced today that there is to be changes in the MIP fee that is charged up front in an FHA mortgage transaction. It was moved originally from 1.5% to 1.75%, and they are not moving it up to 2.25%. In a loan scenario of say $150,000, your up front MIP fee, that is rolled into your loan in most cases, is $2,250 when it was 1.5%, and would have been $2,625 at the 1.75%, and now would be $3,375. That is $1,125 higher than the original amount for this scenario.



Why is FHA doing this? With the higher than normal claims rate (on default of an FHA loan, the lender is insured by a pool of funds that is built by FHA borrowers that pay this MIP fee), the pool of money has been reduced and needs to be replaced. The extra money that will be charged to the new FHA borrowers moving forward will help recoup what has been lost in the recent falling of the industry.


When do the new January 20th FHA changes become effective? The Truth About Mortgage reported, "The proposed changes will go into effect in either spring or summer, giving
lenders time to speed applications through the system under the current
rules."


Additional changes by this FHA policy change include change in FICO, seller concessions/allowable contribution to closing costs, and down payment requirements. The lowest FICO that someone using an FHA loan will be able to have and still enjoy the minimum 3.5% down payment requirement is 580. Anyone with a FICO below 580 will be required to put 10% down payment. This means ultimately, poor credit borrowers are still able to get an FHA loan with a minimal down payment of 3.5%. Presently, the seller can pay up to 6% in contribution toward the buyers costs, but that will be reduced to 3% when this goes into effect.


My look on the matter is simple. The FICO score was invented and does a very good job of providing the lender with a risk grade of a prospective borrower of money, and it's important to the overall growth and recovery of our economy to make the necessary changes to protect our nation's economy from those who are not financially ready to buy...be it because they are not disciplined enough to deserve a mortgage loan, or they have fallen on hard times and the timing is not right. This change in constriction of lending practices is comparable to the old adage "mom" would say, "this is for your own good", even though you do not like it.

Wednesday, January 13, 2010

Brad Lynch You Tube Mortgage Clip Introduction

1 comments

Who is Brad Lynch, and at what angles does he go about business as he works with First Time Home buyers, Move Up buyers, VA prospects, and FHA prospects in Frisco, Plano, McKinney, and North Dallas to best help families buy or refinance their home?

It's a first time "go round", and the video and audio didn't match up when I uploaded it to You Tube.

First 15 Banks That HUD Accounts for High Claims Rate for FHA Loans

13 comments
Yesterday, The Truth About Mortgage lists the first 15 Banks in America that have received a subpoena for a high claims rate on their FHA mortgages. These banks were recognized first because of their high number of failed loans that resulted in the FHA mortgage insurance fund to be debited.
TheTruthAboutMortgage.com quoted Inspector General Kenneth M. Donohue saying, “The goal of this initiative is to determine why there is such a high rate of defaults and claims with these companies and whether there is wrongdoing involved”.
Between the fallout list on America's renown Imploded-O-meter , and the number of banks that have been brought under indictment by the federal government, and the mergers of major banks, Americans had started to think that the surprises within this industry were over. Maybe this is a sign of, "oh contrar mo frar".
The Inspector General did say that they have no evidence in this situation of 15 targeted lenders, but if this story/investigation follows in the footsteps of other investigations that have become the long arm of the law, and literally reached into the deep pockets of America's lending establishments that were figured to have deeper roots than a 100 year old Red Wood, OH there will be casualties!
To read more on this list of banks, go directly to the source that I picked it from. http://www.thetruthaboutmortgage.com.
Below is the list of banks that were served subpoenas:
These lenders and banks are not guilty and there is no hard evidence to say that they have done anything wrong. HUD has only "smelt smoke" and is doing it's investigation to see if there truly is a "fire".
The following companies were served subpoenas today:
First Tennessee Bank N.A., Memphis, TNAlethes LLC, Lakeway, TXSecurity Atlantic Mortgage Co., Edison, NJPine State Mortgage Corporation, Atlanta, GABirmingham Bancorp Mortgage Corporation, West Bloomfield, MIAlacrity Financial Services, LLC, Southlake, TXAssurity Financial Services, LLC, Englewood, COD and R Mortgage Corporation, Farmington, MIWebster Bank, Cheshire, CTMac-Clair Mortgage Corporation, Flint, MIAmericare Investment Group, Inc., Arlington, TX1st Advantage Mortgage, Lombard, ILAmerican Sterling Bank, Independence, MOSterling National Mortgage Company Inc., Great Neck, NYDell Franklin Financial LLC, Columbia, MD

Tuesday, January 05, 2010

Sell Your Home Before Spring This Year Says Experts!

2 comments
If you have even considered to sell your home to the extent that you took a moment to share the thought with just about anyone in the last couple years, you probably got an ear full. You heard things like; it's a buyers market, don't sell in a buyers market...home prices are depreciated and you are going to lose your tail-end if you sell now. All of that could be right, but Real Estate forecasters and experts are starting to see the positive side. Francesca of Forbes.com makes it clear what her expectations are when she says, "Homeowners should buck the idea of selling in the Spring".

Typically it has seemed most reasonable to prepare to sell in the late winter so that you can be first on the board for the rush of buyers that show up in the Spring and early Summer...thought to be brought on by the school breaks for children and lively atmosphere of the fresh weather of the season.

This year, experts predict that selling your home early in the year, rather than waiting for Spring, may bring the quickest and best desires that sellers strive for.
That means, if you are ready and just waiting for the right moment, prepare your home now to be listed by end of this month or next by calling your trusted and loyal experienced Realtor to effectively stage your home to the extent that buyers choose your home rather than the one your neighbor lists "For Sale By Owner". Staging your home leaves no question unanswered to what the buyer is suppose to do with the different amenities and rooms of your home. The key to selling ANYTHING is easy and simple when you prepare for it. Sell benefits, not features...customers/buyers don't want to know how it works as much as they want to know how it will benefit them. Example, if you have a raised area/stage in your 2nd living area and do not put anything on it, the buyer may think that is wasted space...your Realtor/expert stager will know to stage that area so the buyer doesn't ask to himself subconsciously, "what is this wasted space for", but rather will say, "that is a good idea, we can put our ???? there also."
Best of luck selling or buying this year! GO win in 2010!

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Testimonials & About Me

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Frisco, Texas, United States
In 2002, Brad Lynch began energetically consulting families in finding the right mortgage plan for their needs. In the beginning years, he was trained by a mentor who led by example, and this example was the epitome of integrity. Brad learned in the beginning by his mentor that many prospects may not consciously see what good intentions he has for them, do to the “wrap” many have caused w/in this industry, but always do what is right for the customer and in the end it will payoff. Integrity coupled with an energetic nature to nurture relationships, Brad has created clients for life. Through these clients for life, referrals have become the lifeblood of his business.