As a Licensed Mortgage Originator, I often see credit reports where the borrower has cosigned on a debt for a family member or friend. You may be a parent co-signing on your child’s student loans to help them get a better rate, helping your brother buy a car by co-signing the lease or auto loan or perhaps co-signed on a family members mortgage so they can buy a home. They’re going to be responsible for the debt and making the payments and you’re helping them out. Often times, folks don’t realize how this good deed may impact them qualifying for a mortgage down the road. [Read more…]
Is My Credit Checked Before Closing
June 9, 2012 by Leave a Comment
A “soft” credit check is just prior to closing on your mortgage. This is to ensure that no new debt was obtained during the mortgage process and that the information on your final application that you sign at closing still represents your financial scenario.
A soft credit check does not impact your credit scores. It will disclose any new debts and credit inquiries. If there are changes to your credit revealed from the soft credit check, be prepared to explain and document whether or not new credit was obtained. Even if the credit card you decided to open during the transaction has not been used, you will still need to provide documentation regarding this new potential debt.
A “hard” credit check may take place if your existing credit report is set to expire before closing. Different than a soft credit check, the mortgage company will order a new credit report and the terms of your mortgage will be impacted by what the new report discloses, including any changes to your credit scores. This includes your current pricing of the loan and qualifying.
It’s really best to not obtain any new credit during the mortgage process and avoid applying or inquiring for any credit. Even when the creditor states “six months same as cash” or “this won’t impact your credit” – don’t buy it! If you do feel you need to make a purchase just prior or during the mortgage process, please discuss it with your mortgage professional first. A new car or big screen tv for your home may delay the purchase of your new home.
Hammered with HARP 2.0 Offers from Lenders You Don’t Know?
June 7, 2012 by Leave a Comment
I received this email from one of my readers:
"My mailbox is being bombarded with out of state Harp 2 "pre-approved" loan offers and I did call one of them and they talked me into running a credit report and when I found out their fees for the loan I didn't call them back and told them I had to think about it. I'm a not sure if this is a scam or not so I thought I would check locally…"
The Home Affordable Refinance Program (HARP aka HARP 2.0) has created a refi boom for mortgage originators. Many large banks are now telling their clients it may take up to three months to process their refinances due to the heavy volumes that are being experienced. Some banks have so much business that they're turning away clients just because they have private mortgage insurance or LPMI with their existing mortgage. NOTE: Our company is closing HARP loans and accepting HARP refinance applications with existing pmi and lpmi for properties located in Washington state.
HARP 2.0 has created a great opportunity for mortgage originators and companies to buy leads. I've always scratched my head at why a mortgage originator or mortgage company would have to buy leads. You have to wonder how their service is if they do not have enough business by clients who return to them for their HARP refinance. Especially if the company is out of state – is their business so bad they have to go out of state to find consumers who have never heard of them?
I would never work with a non-Washington based mortgage originator or company who has to buy leads in order to get a loan. However, should you decide to, please check the NMLS to make sure the company and mortgage originator are licensed to do business in Washington State. The solicitations you're receiving from these out-of-state lenders must disclose the license numbers for the company.
Google the company and the mortgage originator to learn more about them. Should you decide to proceed with someone you're about to spend several weeks with while your refinance is in process, you might want to check their credentials first.
If you are considering buying or refinancing a home located anywhere in the state of Washington, I'm happy to help you. I've been originating mortgages at Mortgage Master Service Corporation since April 2000 and I've never paid for a "lead". My business is completely referral, returning clients and those who find me from reading my blog. Our local mortgage company located in King County has been family owned and operated since 1976.
Just one more week for higher and lower FHA mortgage insurance premiums
June 4, 2012 by Leave a Comment
A week from today, on June 11, 2012, HUD has more changes scheduled for FHA mortgage insurance premiums. I've been sharing this news with you here on my blog.
Let's start with the higher premiums. If you are considering an FHA high balance (also known as an FHA jumbo) mortgage, if possible, you want to obtain your FHA case number as soon as possible. Starting next week, effective on case numbers obtained on or after June 11, 2012, FHA annual mortgage insurance premiums for high balance loans will go up an additional 0.25%. FHA annual mortgage insurance is paid monthly.
In the greater Seattle area, this will impact FHA loans from $417,001 to $567,500.
I have more about the increase to the FHA mortgage insurance premiums on this earlier post.
If you are buying a home with utilizing an FHA insured mortgage – make sure you get your case number pronto. This also implies to you if you're doing a rate-term FHA refinance (not an FHA streamline) or an FHA streamline refinance that was endorsed after June 1, 2009.
This is a good segue to the reduced premiums that take effect next week…
HUD has dramatically reduced FHA mortgage insurance premiums on loans that were endorsed prior to June 1, 2009. An FHA mortgage is "endorsed" after closing – sometimes many weeks after. It's possible your FHA mortgage closed in May 2009 and was not endorsed until after June 1, 2009, in which case, your loan would not qualify for the reduced mortgage insurance premiums.
If your FHA mortgage was endorsed prior to June 1, 2009, your eligible for greatly reduced MI rates. HUD has reduced the upfront mortgage insurance premium to 0.01% and the annual mortgage insurance premium to 0.55%. It's a significant savings, especially when you factor in today's extremely low mortgage rates.
The reduced FHA mortgage insurance premiums are available for FHA streamlined refinances with case numbers obtained on or after June 11, 2012. Guess what? You do not need to wait until June 11, 2012 to start your FHA streamlined refinance. We are accepting mortgage applications now for FHA streamlined refinances as long as your home is located in Washington state. FHA streamlined refinances do not require an appraisal so it's okay if your home has lost value.
I have been originating FHA loans since April 2000 at Mortgage Master Service Corporation. If your home is located in Washington State, I'm happy to help you with your mortgage. Click here if you would like me to provide you with a mortgage rate quote for your Washington home.
What May Move Mortgage Rates the week of May 29, 2012
May 30, 2012 by Leave a Comment
This past weekend, we made an addition to our family, a flat coated retriever pup who we call Scupper.
While this has nothing to do with mortgages or how low rates are right now, I just wanted to share this cute fella with you.
Mortgage rates continue to be a very low levels. Many home owners are taking advantage of this and refinancing now – especially if they qualify for FHA streamline or HARP 2.0.
HARP 2.0 for your High Balance (aka Conforming Jumbo) Mortgage
May 22, 2012 by Leave a Comment
Conforming mortgages have a loan limit of $417,000 for a single family dwelling. Some counties in Washington, such as King, Pierce, Snohomish and San Juan, qualify for an additional higher limit known as "high balance" or sometimes called "conforming jumbo". In the greater Seattle area, the current high balance conforming loan limit is $417,001 to $506,000. (NOTE: FHA's high balance loan limit in greater Seattle is $567,500).
High balance conforming mortgages may qualify for HARP 2.0, which allows home owners to take advantage of today's lower rates and refinance regardless of how much equity their home has lost.
Here are some basic pointers for a high balance HARP 2.0 refi:
- existing mortgage must be securitized by Fannie Mae or Freddie Mac. This is different than who you make your mortgage payments to. If when you obtained your mortgage, it was considered a jumbo/non-conforming (vs a high balance conforming), then odds are, it's not a Fannie/Freddie mortgage.
- existing mortgage must have been securitized prior to June 1, 2009. This is different than when you closed your existing mortgage. Securitization often takes place weeks or even a few months after the mortgage is closed.
- maximum loan amount capped at current high balance loan limits. In greater Seattle, this is currently $506,000. It's possible to currently have a true high balance conforming mortgage at a higher loan amount since they were previously at $567,500 and rolled back to $506,000 recently. HARP 2.0 is limited to current conforming loan limits. A cash-in refinance may be a consideration for those home owners with those loans who want to take advantage of HARP 2.0.
- no maximum loan-to-value unless your new mortgage is an ARM (they're capped at 105% ltv). It doesn't matter how much equity your home has lost – as long as it meets the rest of the criteria, HARP 2.0 may be an option.
- most transactions do not require appraisal. Once an application is submitted, we are able to run it through Fannie or Freddies automated underwriting systems (DU or LP) which determines if an appraiser is required. Currently, a majority of HARP 2.0 refinances do not require an appraisal.
- rate-term refinance only. You cannot take cash out or pay off a second mortgage/home equity line of credit.
- second mortgages and helocs will need to agree to be subordinated. This is so that the new first mortgage keeps first lien position. I'm seeing most second mortgage lien holders being very cooperative and agreeing to subordinate.
- existing private mortgage insurance is okay as long as it can be transferred to the new loan. Even if your current mortgage has LPMI (lender paid mortgage insurance) it can probably be transferred to the new mortgage.
- owner occupied, second homes and investment properties qualify including single family detached dwellings, condos and townhomes.
- one 30 day mortgage mortgage late allowed during the last 12 months IF it did not happen during the last 6 months.
What if your scenario doesn't meet the criteria for HARP 2.0? You do have some options. FHA may be a consideration, however it does have both upfront and monthly mortgage insurance (which is increasing on June 11, 2012). Current non-conforming jumbo rates are very low, however they require equity of at least 15% (combined with a second mortgage).
Congress is pushing for HARP 3.0 which would expand the above guidelines to allow more underwater home owners participate in the Home Affordable Refinance Program. And President Obama is promoting his refinance plan which would allow mortgages that do not qualify for HARP (not securitized by Fannie or Freddie) to be refinanced using an FHA insured mortgage.
If your home is located anywhere in Washington and you've been current on your mortgage payments, I'm happy to review your options. I have been originating mortgages at Mortgage Master Service Corporation for the last 12 years. I'm required to provide the following language if I'm trying to solicit your HARP refinance – and if your home is anywhere in Washington state, I am!
Freddie Mac and Fannie Mae have adopted changes to the Home Affordable Refinance program (HARP) and you may be eligible to take advantages of these changes.
If your mortgage is owned or guaranteed by either Freddie Mac or Fannie Mae, you may be eligible to refinance your mortgage under the enhanced and expanded provisions of HARP.
You can determine whether your mortgage is owned by either Freddie Mac or Fannie Mae by checking the following websites:
More Listing Agents Performing “Sniff Test” on Mortgage Originators
May 21, 2012 by Leave a Comment
I’m noticing that more listing agents are performing, what I like to call, “sniff test” to check out the lender who has prepared the preapproval letter. By the way, I think this is an excellent idea. This is especially true if the listing agent is reviewing multiple offers, which is happening more in the greater Seattle area with non-distressed homes that are desirable and priced right.
The sniff test is typically a phone call by the listing agent so they can get an idea about the mortgage originator. The listing agent should not ask personal information about the potential home buyer (such as credit scores or available funds).
When a listing agent contacts me, I know they’re sizing up:
- how quickly I returned their phone call or email
- how experienced I am at closing my clients specific mortgage program (for example, Fannie Mae Homepath, Freddie Mac Homesteps or FHA transactions)
- how long I’ve been in the mortgage industry (over 12 years at Mortgage Master Service Corporation)
- how quickly we can close by
- to learn more about our company (family owned and operated since 1976)
I’ve heard from many local real estate agents that they need to make sure the loan can actually close. Often times, a preapproval letter may not be worth more than the paper it’s written on if the mortgage originator has not done their homework with the actual preapproval. NOTE: you are NOT preapproved unless you have provided your mortgage originator your income and asset documentation.
I wrote about “investigating your preapproval letter” many years ago at Rain City Guide. The issue with preapproval letters then was probably that anybody and their brother was a mortgage originator back in 2007. Now there are far less mortgage originators however, if the mortgage originator works at a bank or credit union, they may still lack experience (they’re not required to be licensed). A licensed mortgage originator may be new to the industry as well. Some large internet mortgage companies have been hiring LO’s who can pass the national exam but still lack experience. There’s a big difference between being a good a passing exams and successfully closing loans.
While the number of mortgage originators is dramatically down, it’s still important to make sure your mortgage originator has the capability to see your transaction to closing. It may be a consideration to make sure your mortgage originator can pass a sniff test.
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