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Posts from the ‘Mortgage Programs’ Category

Interest rates are driven by various factors. Here is what you may not know…

There are a few other factors such as property type and occupancy status. But this is a good start to understanding how interest rates are determined.

If you’re like most people, you want to get the lowest interest rate that you can find on your mortgage loan. But how is your interest rate determined? That can be difficult to figure out for even the savviest of mortgage shoppers.

Your lender knows how your interest rate gets determined, and we think you should, too. That’s why we’ve created a new interactive tool that lets you explore the factors that affect your interest rate and see what rates you can expect.

Armed with information, you can have confident conversations with lenders and ask questions to make sure you get a good deal. Here are seven key factors that affect your interest rate that you should know:

1. Credit score

Your credit score is a number that lenders use to help predict how reliable you’ll be in paying off your loan. Your credit score is calculated from your credit report, which shows all your loans and credit cards and your payment history on each one. In general, if you have a higher credit score, you’ll be able to get a lower interest rate. You can use our tool to explore how your credit score impacts the rates available.

Before you start mortgage shopping, get your credit report. Check for errors, and make sure to get them fixed. Examine your debts, and see if there are any you can pay down to improve your score. Learn more about how to raise your score.

Credit scoring is complicated—in fact, you have many credit scores, not just one. You can learn more about how mortgage lenders evaluate your credit history and use credit scores.

It’s a good idea to try to get a sense of your credit score range before you start mortgage shopping. Once you have an idea of your credit score range, put it into our tool to get more accurate rates.

2. Home location

Many lenders have slightly different pricing depending on what state you live in, so to get the most accurate rates using our tool, you’ll need to put in your state. If you live in a rural area, you can use our tool to get a sense of rates for your situation, but you’ll want to shop around with local lenders as well. Making a loan in a rural area can be more complicated, so large lenders may not serve that area.

3. Home price and loan amount

Your home price minus your down payment is the amount you’ll have to borrow for your mortgage loan. Typically, you’ll pay a higher interest rate on that loan if you’re taking out a particularly small or particularly large loan.

If you’ve already started shopping for homes, you may have an idea of the price range of the home you hope to buy. If you’re just getting started, real estate websites can help you get a sense of typical prices in the neighborhoods you’re interested in.

4. Down payment

In general, a higher down payment means a lower interest rate, because lenders see a lower level of risk when you have more stake in the property. So if you can put 20 percent or more down, do it—you’ll usually get a lower interest rate.

If you can’t afford 20 percent down, experiment to see how lower amounts affect your rate.

5. Loan term

The term of your loan is how long you have to repay the loan. In general, shorter term loans have lower interest rates and lower overall costs, but higher monthly payments. Learn more about your loan term, and then try out different choices with our tool to see how your term affects your rate and interest costs.

6. Interest rate type

Interest rates come in two basic types: fixed and adjustable. Fixed interest rates don’t change over time. Adjustable rates have an initial fixed period, after which they go up or down based on the market.

In general, you can get a lower initial interest rate with an adjustable-rate loan, but that rate might increase significantly later on. Learn more about interest rate types, and then use the tool to see how this choice affects interest rates.

7. Loan type

There are several broad categories of loans, known as conventional, FHA, and VA loans. Rates can be significantly different depending on what loan type you choose. You can learn more about the different loan types in our Owning a Home loan options guide.

Now you know

That’s it—know these seven factors and you’ll be well on your way to getting a great interest rate for your situation. And just remember:
•You don’t need to have all seven of these factors decided before experimenting in our tool.
•As you consider your budget and learn more about your options, come back often. The more you know, the more accurate the rates will be.
•As you start talking to lenders, compare their offers to the rates in the tool to see if you are getting a good deal.

Now go forth and find a great mortgage rate!

See more via http://www.consumerfinance.gov/blog/7-factors-that-determine-your-mortgage-interest-rate/?utm_source=newsletter&utm_medium=facebook&utm_campaign=01202015_oahlaunch

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HARP refinance-helping homeowners who are current on their mortgage payments, but who are “underwater” on their mortgage

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Last night I left my client’s home after a refinance closing with an awesome feeling. They are saving just shy of $500/month! Yes, you read that correctly. It’s what the HARP loan is all about.

• They lowered their rate from the 6% range to the 4% range
• Their loan to value was higher than 100% (the underwater part-they owe more than the value of their home in today’s market
• They did not need an appraisal
• I was able to cover their closing costs

This is one of the reasons I do what I do for my career, and feeling great about it!

Do call me if you wish to talk over your mortgage situation to see if you can get HARPed 630.362.6405.

Calling All Home Buyers! The 3% Down Payment Makes a Comeback

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New programs available for first-time and lower-income homebuyers.

Socking away enough for a down payment isn’t easy. In fact, recent research found that, with Americans’ current savings rate, it would take the average buyer as long as 12 years to build up a 20% down payment on a median-priced home. Fannie Mae announced an option for qualified first-time homebuyers that will allow for a down payment as low as 3%.

As a result, many first-time, younger and lower-income homebuyers have been largely left out of the housing market in the years since the recession.

Now, Fannie Mae and Freddie Mac are hoping to change that. The mortgage giants announced on Monday that they would begin backing mortgages with down payments as low as 3%. Fannie’s program will start this month; Freddie’s will begin March 2015.

The catch? Borrowers would have to meet strict standards to be eligible, such as a credit score of at least 620. The program would also only be available for first-time homebuyers, those who haven’t owned a home in a few years, and people with lower incomes. Further, borrowers would be required to undergo home-buyer counseling and purchase private mortgage insurance before signing on the dotted line. And those eligible for the program would likely have to meet other measures to offset the increased risk, like boasting a low debt-to-income ratio.

“This will be particularly helpful to those who are strapped by wealth rather than credit challenges,” Jim Parrott, a senior fellow at the Urban Institute, told The Wall Street Journal. – See more at: http://www.trulia.com/blog/calling-home-buyers-3-payment-makes-comeback/?ecampaign=cnews&eurl=www.trulia.com%2Fblog%2Fcalling-home-buyers-3-payment-makes-comeback%2F#sthash.yY8d4i4n.dpuf

It’s official: Obama to direct FHA to cut mortgage insurance premiums

Finally, a positive change for those needing an FHA loan…

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The Obama Administration is directing, via executive action, the Federal Housing Administration to reduce annual mortgage insurance premiums by 50 basis points, from 1.35% to 0.85%.

“…(T)oday, the President announced a major new step that his Administration is taking to make mortgages more affordable and accessible for creditworthy families,” according to a statement from the White House.

The White House statement says that the typical first-time homebuyer, this reduction will translate into a $900 reduction in their annual mortgage payment.

read full article via http://www.housingwire.com/articles/32533-its-official-obama-to-direct-fha-to-cut-mortgage-insurance-premiums

Mortgage Interest Rates are Dropping…

Mortgage Interest Rates are Dropping like a ROCK!
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Do not hesitate to call me if you wish to consider refinancing scenarios or
perhaps you know someone looking to purchase a home.

(630) 362-6405

The Truth About Buying a Home: You DON’T Need 20% Down

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In a recent survey, How America Views Homeownership, it was revealed that 68% of Americans feel that now is a good time to buy a home and 95% said they want to own a home if they don’t already.

Franklin Codel, head of Wells Fargo home mortgage production, explains:

“Although the home buying process has changed in many ways in recent years, our survey found Americans still view homeownership as an achievement to be proud of and many believe that now is a good time to buy a home.”

Confusion Creates Paralysis

However, the survey also reported that many are afraid to purchase a home because of uncertainty about “qualifying for a mortgage or navigating the home buying process”. Though 74% said they “know and understand” the financial process involved in buying a home, they also gave answers that suggest otherwise. For example:

•30% of respondents believe that only individuals with high incomes can obtain a mortgage
•64% of respondents believe they must have a “very good” credit score to buy a home
•44% believe that a 20% down payment is required

In actuality many of these beliefs are unfounded. Let’s look at the question of down payment:

Freddie Mac, in a recent blog post addressing the issue, confirmed that there is misinformation regarding the amount necessary when determining the down payment for a home purchase:

“Did you know 40 percent of today’s homebuyers using mortgage financing are making down payments that are less than 10 percent? And how about this: since 2010, the number of people putting down less than 10 percent for conventional loans has grown three fold. So, not only are low down payment options real, they represent a significant portion of today’s purchases.”

In a separate Executive Perspectives, Christina Boyle, Freddie Mac’s VP and Head of Single-Family Sales & Relationship Management explained further:

•A person “can get a conforming, conventional mortgage with a down payment of as little as 5 percent (sometimes with as little as 3 percent coming out of their own pockets)”.
•Qualified borrowers can further reduce the down payment coming out of their own pockets to 3 percent by lining up gifts from family, grants or loans from non-profits or public agencies.

Education is the Key

Boyle talked about the importance of educating potential buyers:

“Letting more consumers know how down payments are determined could bring more qualified borrowers off the sidelines. Depending on their credit history and other factors, many borrowers can expect to make a down payment of about 5 or 10 percent.”

Codel agreed:

“It is important for prospective homebuyers to feel empowered to ask lenders and real estate agents questions about available options, such as down payment assistance or FHA loan programs or VA loans for veterans.”

Bottom Line

If you are saving for either your first home or that perfect move-up dream house, make sure you know all your options. You may be pleasantly surprised.

via http://www.keepingcurrentmatters.com/2014/09/23/the-truth-about-buying-a-home-you-dont-need-20-down/

What is a HARP loan?

I was just asked this question by someone on Sunday, so I figured it’s important to share since there are an estimated remaining 4-plus million households nationwide who could refinance via HARP, but haven’t.

A HARP loan allows those who have lost equity in their home to refinance without adding mortgage insurance or increasing their mortgage insurance even if they happen to be upside down on their loan.  I will need to check to see if your current mortgage is HARP-eligible.

The best suggestion I can make is to call me so I can determine if your mortgage is eligible.  Once I determine that, we can discuss the options and monthly payment scenarios.  All it takes is a quick phone call or email to me so I can research it.  I do not want those I know to miss out b/c they didn’t know what HARP is.

Are you HARP eligible?

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Have any of you been previously denied for refinancing due to lack of equity in your property? With the increasing values we’re seeing, it might be time to try again. While rates aren’t as low as they were last year at this time they are still fantastic. And there are an estimated remaining 4-plus million households nationwide who could refinance via HARP, but haven’t.

Here are the general HARP guidelines in case you’re interested: * Mortgage has to be owned by Fannie / Freddie (this is different than who you make your payments to). * Loan must have closed prior to 6/1/2009 * No late payments in the past 6 months Often times there is no appraisal needed. I can find out if you are eligible. Let me know how I can help.

 

100% VA financing still available to veterans

I dropped off a housewarming gift to my clients who purchased a home using No Money Down VA financing.  They purchased a foreclosed property that was $30-50,000 LESS than what homes are listing for in the same subdivision just a month later!  My clients even walked out of the closing with a check.  It was my privilege to work with them and be part of their move-up!

Many veterans have never used their VA eligibility.  It is a GREAT program!  And with  the no money down option, you may be surprised to learn it is the best performing loan type even over conventional loans.

Petition to improve HARP refinances PLEASE SIGN!

One of the problems with the current HARP refinance program is the arbitrary date that they chose as a cutoff (6/1/09).  Please sign the attached petition to try to have that date modified or removed altogether. HARP is a fantastic program for borrowers who have little or no equity in their properties but many of them cannot refinance because their loan was sold to Fannie Mae or Freddie Mac after that 6/1/09 date.  Please take a moment to sign the petition.  You could help your friend, family or even yourself refinance or refinance again under HARP.

https://petitions.whitehouse.gov/petition/fhfa-eliminate-cutoff-date-june-1st-2009-harp-20-program/2Jl4hPsH