Wed, 28 January 2015
Here are eight common refinance mistakes to avoid.
No. 1: Failing to do your basic homework
Before you call mortgage lenders, do your own basic research, says Jill Buchanan, senior vice president at MIDFLORIDA Credit Union in Lakeland, Florida.
For starters, know your credit score, which is key to determining the rate you will receive.
Also, get a general idea of your home's worth by checking home-valuation sites such as Zillow.com or by talking to a Realtor.
No. 2: Opening new credit accounts and running up debt
Lenders check your credit when you apply for a refinance, and they check it again just before settlement.
Making major purchases on credit or applying for new credit could lead to delays in the approval process.
No. 3: Having a low credit score
How good does your credit score need to be to get a refinance? A standard conventional-type loan requires a (credit score of) 620 or higher to be in th game. With an FHA loan, 100 percent of lenders will work with you if you have a (score of) 640 of higher. As soon as you drop to 639, you drop to 25 percent of lenders.
Less than 10 percent of lenders work with borrowers whose credit score is below 620. That number drops to 2 percent of lenders for borrowers with scores below 600.
No. 4: Refinancing with your current lender without rate shopping
It can be convenient to simply refinance with your current lender. But failing to compare rates can be costly over the long run.
Do not assume that your lender will give you a special deal. Instead, compare your lender's quote with others.
Check with various lenders on the same day because refinance rates can vary from day to day, Donnelly says.
In addition to the interest rate, you also need to compare the fees lenders charge for making the loan.
Get all quotes in writing. If you can do better elsewhere, inform your current lender and you may be offered a better deal. If not, refinance elsewhere for a lower rate.
No. 5: Forgetting to consider all costs
Lowering your monthly payment is a key goal of any refinance. But it should not be the only factor you weigh.
Before you even begin the refinance process, check your current mortgage documents to make sure your loan doesn't contain a penalty if you pay off your mortgage early.
Weigh the amount of time you have left on your current mortgage, and factor in the refinance's closing costs. If you don't plan to stay in your house very long or are close to paying it off, a refinance may not make sense or maybe you can look at an ARM product.
Look at all fees when comparing refinance offers. Run the numbers on different scenarios by changing the loan amount, and looking at the cost with and without upfront points.
Some mortgage lenders may offer no closing costs on refinancing to existing customers. But be on guard: Find out if the closing costs are being incorporated into the monthly mortgage payments.
No. 6: Ignoring the key ratios
A pair of key ratios can have a big impact on the success of your refinance numbers:
Loan-to-value ratio (LTV)
This is your loan amount expressed as a percentage of your home's current value. For example, if you want to borrow $80,000 and your home is worth $100,000, your LTV is $80,000 divided by $100,000 or 80 percent.
A higher LTV won't preclude refinancing, but you'll probably have to purchase mortgage insurance, which protects the lender's interest if you default on your loan.
If your LTV is on the high side, one option to consider might be the Home Affordable Refinance Program, or HARP
Two other high-LTV options might be the FHA Streamline Refinance program (if your loan is insured by the Federal Housing Administration) or a loan guaranteed by the U.S. Department of Veterans Affairs.
You could also lower your LTV by paying off a chunk of your mortgage. This approach is known as a cash-in refinance.
Debt-to-income ratio (DTI)
This measures your capacity to pay your debts. For example, if your monthly income is $4,000 and your monthly minimum payments on your credit cards and other non-housing loans total $800, your DTI is $800 divided by $4,000, or 20 percent.
Lenders' DTI guidelines can be somewhat flexible, but if you are carrying a high debt load relative to your earnings, your DTI might be a barrier to refinancing.
No. 7: Not locking in rates
Since mortgage refinance rates can change often, make sure you lock it in a rate with your lender. Typically a lock is for 30 or 60 days.
It can take time to get a refinance approved, so be sure to submit the required documentation as soon as possible, Donnelly says. If you drag your feet, you might have to pay a fee to extend the rate lock. But if your lender needs more time, the company usually will extend the lock without charging extra.
No. 8: Overlooking the possibility that things could go wrong
The refinance process can be relatively straightforward for homeowners with great credit, strong equity positions, full income and asset documentation, and long-standing employment.
But not every American homeowner fits this perfect mold. As a result, the refinance process can be bumpy.
Examples of things that can slow down or derail a refinance include:
When all is said and done, the refinance process could stretch out to 90 days.
Because things can go wrong, be prepared to exercise your right of rescission. When you refinance a home loan with a different mortgage lender, you have three business days after closing to cancel the deal.
If you get cold feet and want to exercise this right, send a letter stating that you are canceling the refinance via registered mail with a return receipt.
Sat, 17 January 2015
The key to finding your ideal mortgage is choosing the right lender. Select a lender who views lending as a collaborative process and understands your long-term financial goals. The ideal mortgage lender focuses on meeting your needs as a borrower rather than simply trying to sell you a product. Vet potential mortgage lenders by gathering recommendations, doing your own research and conducting thorough interviews with candidates.
ASKING FOR RECOMMENDATIONS
If you have a friend or colleague who recently got a mortgage loan, ask about their lender and their experience with the lender. Your attorney, realtor, accountant or financial adviser are also excellent sources for collecting mortgage lender referrals. Because these professionals work so closely with mortgage lenders, they are able to help you narrow down the vast array of candidates based on their abilities and skill sets so that you can confidently decide which one is right for you.
Once you have narrowed down your list of candidates, research each of them on the Internet to learn more about their offerings. Gather details about qualification requirements, fees, points and mortgage rate locks. Also check the lender's experience in the mortgage industry, their reputation with customers and their history of successfully completing loans. If you are working with a credit union or bank that you trust, it is worthwhile to do research their mortgage offerings as well.
You have the right to ask questions of any lender at any point during the mortgage-shopping process, even if you have not engaged one for services. Call lenders, and ask questions about what they are offering. Request that good faith estimates and truth-in-lending statements be sent directly to you in writing via email or fax. Be sure to cover crucial loan details such as mortgage turnaround time and the likelihood of your mortgage being sold. The ideal lender needs to be able to give you a clear idea of what you can reasonably expect in the future. Ask what happens if the appraisal comes back lower than anticipated, if there are problems closing or if your rate lock-in expires.
Look for a lender who speaks to you in straightforward, everyday terms rather than using superficial sales-speak, and take note of those who are slow to get back to you or do not respond to you at all. If you have trouble communicating with a lender during the vetting period, you are likely to have trouble with him or her after you sign loan papers as well. You want a lender who is not just interested in your loan, but is interested in communicating with you clearly and honestly and helping you reach a mortgage loan settlement that agrees with your long-term financial plan.
Thu, 15 January 2015
From Start to Finish, All You Need to Know About Using FHA to Purchase a Home in Phoenix Arizona
Finding The Home
When searching for a home that will be financed through FHA a buyer needs to be aware that not all sellers will accept FHA financing. Reason being there are a few additional requirements of the seller regarding the condition of the home and seller paid fees. When a seller accepts a contract with FHA financing they should be aware of the commitment to abide by the regulatory standards of a government secured loan. These additional requirements come as an added benefit to the buyer by increasing the level of quality the seller will deliver to the buyer in the homes condition. If a buyer is looking to purchase a major fixer upper or a home sold “as is” needs to discuss at length with his Mortgage Broker and Realtor what will be the best way to structure their loan and strategize the purchase. Hold-backs and buyer contributions are allowed but limited.
Making an Offer
When making an offer on an FHA loan you want to make sure your offer is in line with a professionally accessed fair market value. Making an offer over fair market value can hinder the purchase of the home and ultimately cause financing to fall through. Making a higher offer is tempting as a “sweetener” when the buyer is requesting a seller contribution towards closing cost. The appraiser will make an assessment of the value of the home based on the fair market value and the condition of recent sales of like homes compared to the home being appraised. In the event the appraised value is below the sales price of the home FHA will not fund the loan leaving hard decisions to be made by both the buyer and the seller as to what to do with this differential.
Sellers Property Disclosure Statement
This document offers the buyer and their Realtor 1stopportunity to identify any potential damage to the property that would be of concern to Fannie Mae in the financing of the home such as water damage, wood infesting pest, or an occurrence that has affected the structure of the home. Any repairs as such, it is best if done professionally with receipts. Documentation of the repair and receipts can be provided to underwriting to show proper remediation of the damage. When there is water damage and the repair was made, however visually you can still see where the damage happened, the seller should be advised to make the cosmetic repair immediately. The seller making the repair at this stage of the purchase alleviates the hassle of the Appraiser making a notation of a required repair on the appraisal report that could potentially delay the closing or even worse…prevent closing all together.
Buyer Inspection Notice Sellers Response
When financing with FHA it is important when the buyer is making their request for repairs based on the inspection, appraisal and termite report and any other investigations the buyer has made, to focus on the mechanics and structural repairs. The sooner any potential red flags that can hinder FHA from securing the loan be found and fixed the better. You want to make sure the seller repairs any evidence of water intrusion or leaks, exposed electrical or non-working, non- working appliances or potential susceptibility of wood eating pest. These types of repairs must be made in order to close with FHA financing.
Tue, 13 January 2015
Interview with Awni Abbas and the Abbas Group and Why they should represent you for YOUR Real Estate in Phoenix
In this episode you will find out more about Awni and the Abbas group. I will be asking questions like.
1) What drives you and motivates you?
2) What is you definition of success?
3) What makes you different from your competitors?
4) What 4 words best descibes you?
5) What imnpact do you hope to leave someone with?
Listen to what makes a Top agent tick and why YOU want the Abbas Group on your team!
Sun, 11 January 2015
In this episode I will be going over the guidelines for the 3% down program to purchase a home. You can always call me at 602-573-3101 or email the show at email@example.com