If you are a loan officer or broker, you’re probably looking for ways to effectively deal with credit tightening, declining markets, and the disappearance of loan programs. It’s possible, especially in Florida and California, that you cover areas filled with foreclosed homes that have suffered from disrepair and neglect. Banks that own these foreclosed properties are often unwilling to repair them. This makes it harder for borrowers to quality for traditional loan programs since the property itself does not meet the minimum standards to quality as acceptable collateral for most conventional loan programs.

This potentially negative situation is a real opportunity to savvy mortgage professionals who use the Federal Housing Agency’s (FHA) 203(k) rehabilitation loan program.

This FHA-insured program prevents the need to find separate interim financing for the property’s purchase and rehabilitation and allows one mortgage to cover both aspects. Maximum loan amount are determined by the Department of Housing and Urban Development (HUD) on a county by county basis. An example of a lower limit would be a single family home in New Mexico where the maximum in most counties is $271,050. Higher maximums of $729,750 are found in California. You can look up the HUD county limits by going to https://entp.hud.gov/idapp/html/hicostlook.cfm.

Some downsides to the 203(k) loan are the extra work and time it takes. However, although there is more involved in completing a 203(k) purchase than a traditional loan, most 203(k) loans can close within 30-60 days from beginning to finish. As to the additional effort that is required, that extra work can translate into a sale that you wouldn’t have otherwise had. Thus in the case of 203(k) loans, more work equals more money.

Some of the benefits of a 203(k) loan may include:

* Repairs Under $15,000 do not require 3rd party inspection (Streamline-K).

* Mixed Use Properties Eligible — Subject to maximum percentages based on number of stories and percentage of commercial use.

* 1-4 Unit Owner Occupied Homes: SFR up to $729,750; 4 Family up to $1,403,400.

If you are a loan officer or mortgage broker trying to build your business, you owe it to yourself and the borrowers you represent to work with a lender who can provide 203(k) loans.

The changes to the mortgage industry during the last couple of years have created turmoil at all points of the value chain, from the borrower to the secondary investors to the global economy. These changes have included credit tightening and the disappearance of loan programs. Part of that credit tightening has focused on collateral located in real estate markets that have been identified as “Declining Markets”. This article provides some suggestions for originating in such markets.

First, analyze your MSA (Metropolitan Statistical Area) and determine stable markets, i.e., pockets or neighborhoods that are not declining markets even though the surrounding MSA is considered a declining market. If you have data from the appraiser stating that the home is not in a declining area, your lender may underwrite the loan as though the property were not in a declining market.

Second, target borrowers within the stable markets that you have identified. Marketing campaigns can include traditional ideas such direct mail or telemarketing, or less conventional guerilla marketing. For example, you could set up a lemonade stand at ball games or crowded parks and offer lemonade in exchange for a quick mortgage analysis. During the winter, you can offer hot chocolate, peanuts, or popcorn.

Third, make sure you can provide government loans. FHA loans have been popular, and with the temporarily expanded loan limits and high-balance limits, more homes than ever are eligible for FHA loans. Become approved takes time, so it’s best to get started immediately.

Agency jumbos can also be good choices for more expensive homes. They can go up to 125% of the median housing value, allow a higher debt-to-income ratio than FHA loans, and do not charge the MIP (mortgage insurance premium) found with FHA loans.

A good tip to help your file receive an “Accept” status from your lender is to submit only appraisals that are recent. This is because appraisals older than 90 days and outdated comparables represent a significant risk. It is recommended to submit two (2) Comparables dated within 90 days AND two (2) Active listings (pending sales).

The market continues to change, but you can still be successful. Hopefully these ideas will help.

When you’re thinking about buying a home, there are two keys activities in which you have to engage. One is finding a house you want to buy. The other is finding the money with which to purchase that home once you have found it.

We’ll begin with deciding on a home. If you haven’t decided yet which city to move to, there are useful tools on the Internet that can help you make a decision. By typing the keywords “city profile” or “neighborhood profile” into a search engine, you’ll be able to find a site that can give you valuable information. For example, you’ll be able to learn about a city’s population, the percentage of that population that are Democrats or Republicans, teacher-to-student ratios, demographic make up, median age and income, unemployment rate, median home values, information about the climate, overview of the crime in the area, air and water quality, sales and income tax for the city, and even information about religion.

Once you know the city where you’d like to live, it’s important to know how much home you can afford to purchase. While how much debt you’re comfortable with might be different than somebody else, there are also objective factors that determine the amount of money you might be able to borrow. These factors include your income, your credit score, and how much debt you have. There are free mortgage calculators on the Internet that can help you get an idea of the maximum loan amount you might receive, what your monthly payment might be (an important figure to know!), whether it’s better to rent or buy, and how much you could save by making extra payments.

Once you know about how much you can spend on a home and the general area you want to move to, it’s time to find houses that are in the price range and neighborhood you want. Certain websites on the Internet will show you an estimated value of a home just by typing in its address. You can also find estimated values by typing in a zip code or city. The site will then show you an aerial map of the area. You can move the map around, zoom in, and see an estimated value for each home on a street. You can then select a house and be shown a photo taken from the ground as well as information about the home. Provided details might include the number of bedrooms and bathrooms, when the home was built, what type of roof it has (shake, asphalt, etc), how many square feet the house is, the size of the property, and more.

Searching for a home as described above may mean falling in love with a house that isn’t currently for sale. If this happens, you might approach the owners and make an offer. A better method might be to search first for homes that are for sale, and once you have found one, use an Internet valuation tool to see if the home’s price is close to the estimated value and in line with the value of neighboring homes. There are various websites that show homes for sale. A savvy shopper can use these sites in conjunction with a real estate agent.

After finding the home you want to move into, you’ll most likely need to obtain a mortgage loan. Choosing the right loan from the right lender is extremely important because of the huge amount of money you’re dealing with. When evaluating lenders, consider how quickly they can close your loan, how many different types of loan programs they have, how competitive their rates are, and how convenient they are. For example, will you have to drive somewhere to sign the final documents, or will the lender send the notary to your home or office? Will you be able to upload supporting documents over the lender’s secure system or will you have to spend money to mail the documents?

Taking advantage of the Internet will allow you to research cities, find homes for sale, learn home values, calculate how much you can afford, and find the best mortgage lender. May you have much success in your move!

There are a variety of free mortgage calculators available on the Internet. These can be useful for determining how much home you can afford, whether to buy a home or continue renting, and what your monthly payment will be. Here are descriptions of a few different calculators.

What Can You Afford

It’s a good idea to know approximately how much money you can borrow for a home before you spend time looking for a new house. An affordability calculator will use information about a loan (such as interest rate and the length of the loan), the cost of taxes and insurance for the property, your debts (auto loans, credit card debt, etc), and your income to calculate the maximum mortgage you might obtain.

Monthly Payment

When determining whether or not you can afford a loan you should look at both the total amount you’ll pay over the life of a loan AND what you’ll pay each month. This monthly payment includes not only principal and interest but also taxes and insurance. A payment calculator takes all four factors into account to give you a true monthly payment.

Is Renting or Buying Better?

A ‘rent or buy’ calculator helps you see how much more money you might gain or lose by buying a home as opposed to renting. A key element to consider in this calculation is the time period looked at. For instance, if you were to rent a home for five years, you’d save $80,000 in monthly payments compared to if you were to buy a home. However, if you were to buy a home, when you sold it, you’d make that money back plus an extra $5,000. This calculator can help you see all this so that you can make the best decision about whether to rent or buy.

Refinancing Your Mortgage

If you currently own your own home, you may wonder whether or not it would be beneficial to refinance. There is a calculator for this too. One of the factors to include when considering whether to refinance or buy is how soon you’ll sell your home. For example, if you plan to sell your home in five years, you might end up saving $1,500. However, if you were to sell it in ten years, your savings could be $4,000, while if it sold in 25 years, you would lose $7,500.

Good, Better, Best

There are a variety of loan products available out there. In order to know which is best, you need a loan comparison calculator that considers interest rates, points, and closing costs. You can then compare the loans based on important factors such as the monthly payment and the total cost over the life of the loan. Some loans also have mortgage insurance associated with them, but many calculators might not take this into account, so be careful.

Bi-Weekly Payments

Would you like to know the benefits of paying your mortgage every two weeks instead of once a month? Using the right calculator can help you decide if it’s worth it. You’ll see how much sooner the mortgage will be paid off and how much interest can be saved. When you pay off your loan quicker, you could lose some tax savings. The best calculators will take this into account and show you a “net savings”.

Using some or all of these mortgage calculators can help you make a better decision regarding buying or refinancing a home.

Buying a home has been tougher due to the mortgage crisis and the resulting credit crunch. This article describes some of the consequences of the crisis including the discontinuance and temporary appearance of some loans.

The serious losses suffered by Government Sponsored Enterprises (GSE’s), Wall Street firms, and other investors across the United States brought about credit tightening and the disappearance of the loan products that caused these losses. The leading culprit was the high-risk, 100% CLTV 2nd mortgages on investment properties, most of which were executed with Stated Income and Stated Income Stated Asset (SISA) documentation. This loan type started disappearing two to two and a half years ago with credit tightening or discontinuance happening rapidly. Other high-risk loan types that resulted in significant damage were the Owner Occupied SISA and No Doc loans. Most lenders no longer offer these loans.

The struggle to mitigate high losses led to maximum loan-to-value (LTV) percentages being reduced for conforming full-documentation loans for homes in declining markets (areas where home values have gone down). The reduction was done with the hope that default rates would decrease, and is being lifted this summer under certain circumstances.

During the first half of 2008, conventional/conforming loans (non-governmental loans equal to or under $417,000) and FHA loans have been popular. Borrowers with low credit scores have the possibility of qualifying with both types of loans, although the FHA loans may be capped at a minimum of 580 FICO score. FHA loans allow a slightly higher loan-to-value ratio (lower down payment) than the conventional loans.

The following are three temporary mortgage programs that came about because of the current mortgage crisis:

FHASecure - this is a refinance loan insured by the Federal Housing Administration and is available for homeowners with a non-FHA adjustable rate mortgage (ARM). Originally intended for people who had defaulted on their ARM, or would likely default when the rate reset, it is now available to a wider demographic.

FHA High Balance - HUD (the U.S. Department of Housing and Urban Development) has established limits for its FHA-insured loans that vary by county. It has temporarily increased the allowable size of the loans that it insures. These higher balance loans may actually have better rates than smaller FHA loans.

Agency or Conforming Jumbos - Jumbo loans are mortgages for amounts above $417,000. Loans values equal to or smaller than $417,000 are “Conforming” loans. Conforming loans and Jumbo loans normally have different guidelines that must be met in order to qualify for the mortgage. However, through the end of 2008, borrowers wanting loans up to $729,750 can qualify under the regular Fannie Mae and Freddie Mac conforming loan guidelines with the addition of some underwriting restrictions. The county limits established by HUD determine the actual maximum loan. These loans are available only for 1-unit purchases (i.e., the maximum does not apply to duplexes).

HUD’s county limits can be viewed at: https://entp.hud.gov/idapp/html/hicostlook.cfm

With all the lenders out there, how do you know which one to use for your home loan mortgage? Does it even really matter? What are the points you should consider when comparing lenders, and how do make sure the lender is legitimate? This article suggests that who you choose as your lender IS important, and presents some key factors to consider when comparing mortgage lenders.

First, why is which lender you choose important? The most obvious reason, is of course, cost. When you take out a mortgage loan, you incur a monthly payment associated with a large debt. Therefore, you ought to pay close attention to a loan’s cost. And it’s not just the interest rate you have to consider. Make sure you find out about additional fees such as an underwriting fee, an origination fee, an appraisal fee, etc. These fees are combined with the interest rate to come up with the Annual Percentage Rate (also known as the APR). It is the APR that you ought to pay the most attention to.

When you have a tight time frame within which to buy a home, a lender’s speed becomes important. One lender may be able to underwrite the loan in three days and fund it in one more day while another lender may take a couple of weeks or more. Don’t ignore this important aspect of lending.

The level of convenience offered may also play a role in who you choose. For example, can you upload your documents over the internet or will you have to mail them? Will you be able to apply for and choose the loan completely online, or will you have to talk to a person? Will the lender send a notary to a place of your choosing, or will you have to drive to a Title company’s office?

Once you’ve narrowed down your list of potential lenders, you may want to verify that the company is licensed or registered with your state by checking with your state government. Often this can be done online through the state’s website. One of the first places you might look on the website is the area for the Banking or Financial Institutions division or agency. You can also go the Contact Us page to find a way to contact Customer Support.

Besides seeing if the lender is able to provide loans in your state, you may want to verify that it has a valid business license in the state where its corporate headquarters are located. This can also be done online.

Which lender you choose is important, so remember to include these considerations in your decision making process: Cost (pay attention to APR), speed, convenience, and legitimacy. May you choose the best online lender!

The mortgage industry has experienced tumultuous changes causing brokers and lenders to struggle. Some lenders have even disappeared. Since, as a broker, your relationship with lenders is critical to your success, how can you know which mortgage banks will be around tomorrow? Certainly there are many factors that determine success –this article presents four such factors. The lenders that meet this criteria are likely to provide better service to their brokers and remain in business. If you do business with these lenders, you’ll be able to spend time finding and closing more loans instead of trying to become approved new lender that just might not be here tomorrow.

Here are the four criteria to look for:

1. Comprehensive Loan Portfolio.

2. Keeps up with guideline changes and changes their own guidelines quickly.

3. Automation allowing rates competitive with top-tier lenders.

4. Technology that leads to better quality loans through a rapid alignment with secondary market investor requirements.

Loan programs exist that meet a variety of borrower financial situations. The greater quantity of these programs that your lender provides, the greater possibility it has of providing a loan for which your borrower will qualify. Additionally, the safer it will be if some of its loan programs disappear from the market. You’ll want a lender who not only provides a comprehensive portfolio of loan products but who also has the ability to rapidly adapt its loan programs to meet the requirements of secondary market lenders. This is important because if the loans do not meet investor guidelines, the lender will not be able sell its loans, resulting in less capital to fund additional loans.

Coupled to the process of modifying loan program guidelines is inserting those guidelines into an automated underwriting system (AUS) that uses the programmed guidelines to underwrite loans in seconds, thus quickly ensuring that the borrower qualifies for a specific loan program. By rapidly adapting its loan programs and utilizing an AUS, the lender can help ensure that brokers submit saleable loans. This will contribute to keeping the lender strong and prices down.

A third factor for success is automating multiple processes and incorporating the underwriting into the lending workflow. That way the lender reduces costs and increases its efficiencies, which allows it to provide competitive rates. Great rates are an incentive for brokers to use that lender and contribute to the lender’s strength.

If you’re a broker looking for the best wholesale lender, make sure whoever you choose uses the four keys listed above. Doing so means you’ll be able to earn more money in less time.

The mortgage industry is currently experiencing high volatility, causing some lenders to either go out of business or terminate loan programs. In this time of great flux, it is likely that mortgage brokers will be seeking new wholesale lenders who can provide them good service, competitive rates, and the loan programs that will meet their borrowers’ needs. Although lenders’ applications will differ, following a few common-sense steps will help make the approval process easier.

Just as it’s best to submit a full loan file, you should submit every required document for your application at the same time. This will make things easier for the reviewer and help prevent your own procrastination.

Newly formed brokers — include a detailed resume for yourself and any key staff. Clarify with the lender the number of years of industry experience they require.

If the lender asks for references from account executives you have worked with, make sure the contact information for the AE’s is still good. If you are unable to contact the AE, then the lender won’t be able to either.

Ensure that all required signatures have been provided.

Review your application to ensure you submit all information has been requested.

Verify with the lender what type of financial statements are necessary, if any. Sole proprietors may be asked to submit two years of tax returns or company financials.

Be smart and use a checklist to verify that you have included everything before you submit your broker application.

Do not handwrite the answers to questions on the application. Use a typewriter or printer instead. This will reduce errors.

Although making a living can be tough right now, keep up hope. People are still buying homes and good wholesale lenders are still out there. You can find them, and when you do, these steps will make becoming approved with them a bit easier.

You’re thinking about buying a home and don’t want to read through a thick book about mortgages. This article provides some general home loan basics to get you started.

The decision to purchase a home by taking out a mortgage is both serious and far reaching. You’ll be either increasing or entering into debt, which means you’ll be responsible to make significant monthly payments. There will also be upfront fees you must pay. Thus you should make sure that you understand the mortgage process and pick both your loan program and your lender wisely.

You’re mortgage education should start with some basic explanations that will help you understand and pick your loan: closing costs, APR, rate, monthly payment, ARM, fixed, and of course, mortgage.

Let’s start with the definition of a mortgage. A mortgage is when you borrow money to either refinance your current home or to buy someone else’s home. The collateral for the loan is the house itself. In other words, if you were to break your mortgage contract, such as by missing payments, then the mortgage holder would be able to take possession of your home.

The rate is the percentage that is used to determine the amount of interest you’ll pay over the life of the loan. Interest is basically your cost for borrowing money. The interest rate can remain constant throughout the loan term. In this case, the loan is considered “fixed rate”. If the rate can change after a specified period (such as after one year or after five years), then the loan is considered an adjustable rate mortgage or ARM.

In addition to interest, there are additional costs to borrowing money for a home. These fees might include paying for the loan application, checking your credit history and scores, underwriting (seeing if you qualify for a specific loan program), title search and insurance, having the property’s value appraised, loan origination, etc. All together these fees are called “closing costs”.

While the interest rate is an important number, by itself it is insufficient for comparing lenders. This is because lenders and brokers can charge different fees, making a loan from Lender A actually less expensive than from Lender B, even though it has a higher interest rate. In order to help provide a number that can be compared across lenders, the government has regulated that closing costs be added to the loan amount to determine what is known as the Annual Percentage Rate or APR.

When choosing a loan, pay special attention to the loan’s total monthly payment. This amount includes what you’ll pay on principal and interest, property taxes, hazard or homeowner’s insurance, HOA dues, and mortgage insurance. When mortgage insurance is factored into your monthly costs, some loans with a higher interest rate might actually have a lower monthly payment. You could end up paying less overall if you pick one of those loans.

If you’re new to buying a home and don’t have the time to read an encyclopedia on mortgages, this is the article for you. We’ll go over some basic mortgage terms and concepts to get you started.

Choosing to obtain a mortgage is an important and significant decision. It costs money both when the mortgage is obtained, and throughout the life of the loan in the form of interest. It also results in a large monthly expense. Therefore, the borrower should carefully choose where to purchase a loan as well as what type of loan program to choose.

You’re mortgage education should start with some basic explanations that will help you understand and pick your loan: closing costs, APR, rate, monthly payment, ARM, fixed, and of course, mortgage.

Let’s start with the definition of a mortgage. A mortgage is when you borrow money to either refinance your current home or to buy someone else’s home. The collateral for the loan is the house itself. In other words, if you were to break your mortgage contract, such as by missing payments, then the mortgage holder would be able to take possession of your home.

The rate is the percentage used to calculate how much interest you’ll pay on your mortgage. This is an important number because it determines your cost for borrowing money. When the interest rate on your loan always stays the same, the rate is called “fixed”. When the rate has the possibility of changing, then the loan is called an ARM or adjustable rate mortgage.

Besides interest, there are additional costs associated with obtaining a home loan. These could include fees for underwriting, the application, checking your credit history and scores, having the property’s value appraised, loan origination, title search and insurance, etc. Together, these fees are called “closing costs”.

Brokers and lenders can charge different amounts for these closing costs, which makes using the interest rate by itself an ineffective method of deciding where to buy a loan. Instead of comparing interest rates, you should compare what is known as the Annual Percentage Rate or APR, since it is calculated by adding the closing costs to the loan amount. It provides a more standardized number for comparing loans among lenders.

Besides looking at the APR, you’ll want to pay attention to the total monthly payment that you will owe. Besides including principal and interest, this amount includes property taxes, hazard or homeowner’s insurance, mortgage insurance, and HOA dues. Mortgage insurance is independent of interest rate, and when factored into your monthly costs, could result in a loan program with a higher interest rate having a lower monthly payment than a loan with a lower interest rate.