Marlyn was hit by a school bus while sitting at a stop light.  She was not expected to ever walk again.  She is still recovering, and thankful to complete her refinance saving their family hundreds of dollars per month!

Mortgage Rates Are Down
(But not everyone is eligible)
by Laure Feld, CMPS

Are 100% loans gone?  Almost extinct, but there are still 2 very affordable, low interest rate,  100% purchase loans available for borrowers that I use:

1)      My favorite is the USDA.  The US Dept of Agriculture has a very aggressive 100% PLUS purchase loan, but it is “area” restrictive.  In other words, you can’t get this loan in Chicago!  But you would be surprised at how many areas actually DO QUALIFY. 

2)      VA has a very low interest rate, 100% loan for qualifying Veterans and should be considered if you are a Veteran.

If you have credit issues stopping you from buying or refinancing, you may need help.  Give me a call and I can teach you how to clean up your credit history.  I will tell you what to do to buy that home, or refinance at the lowest rates GUARANTEED !

**I CAN HELP RAISE YOUR CREDIT SCORE!**

Overall, mortgage rates are at their lowest levels since late-2005.  Despite rates falling, however, not everyone can take advantage.  This is because mortgage lenders started to tighten the guidelines of what they will lend and to whom. 

Not so very long ago, there was a saying in the Lending profession:  “If you can fog a mirror, you can get a mortgage”.  Well, it’s not that easy any longer.  We finally gone back to the basics in mortgage lending and here are some of the requirements:

1)      You have to have solid employment for the last 2 years.  Job changes are acceptable, even outside your normal line of work.  Years ago, you were required to have had 2 years in the same profession, but that is not an issue today (but I wouldn’t be surprised to see that return in the future…. Stay tuned!)  Job gaps are deal KILLERS.  And what exactly is a “job gap”?  It’s a gap in employment of greater than 2 -3 months.  So if you’ve been collecting unemployment for 5 or 6 months, don’t plan on buying or refinancing.  If you are a seasonal employee, and typically get laid off in the winter, that is completely fine!  (isn’t that weird?)  If you get laid off every year, we can even use the unemployment income to qualify you financially!  But you have to be back on the job in order to close the loan.  The longer you hold a job, the more stable you income is and that is an important consideration.

2)      The payments on the home must be affordable.  That is still a moving target….”affordable” and the definition thereof.  The traditional definition of affordable is determined by “expense ratios” and every loan program has it’s own criteria of what is acceptable.  Generally acceptable is when the house payment,  including taxes and insurance, is 29% to 31% of your GROSS income.  Total expenses (credit cards, car payments but not utilities) should not exceed 43% of your Gross income.  These are considered the standard expense ratios for Government Guaranteed Mortgage loans which include VA Loans, FHA Loans and USDA Loans.  Government “backed” loans are much less restrictive and I’ve received approvals with expenses over 50%!

3)      Your credit history must be acceptable.  Perfect credit is great!  But not everyone has a perfect credit history.  A glitch in your credit is not as difficult to overcome as an entire credit history full of late payments.  Your credit report really paints a picture of how you pay your bills over time and that is the real issue…. Do you have bad habits?  Or did you have a situation that caused you to pay late?  And how long did that last?   Bankruptcy can even be ignored in some circumstances, if it can be documented as an acceptable cause ie. Death of a spouse or medical bills which are the two most acceptable reasons. 

4)      How much equity you have.  What is equity?  If you sold the house tomorrow, and you paid off your mortgage, how much cash would be left?  That is your “equity”.  Again, another moving target in the mortgage finance world.  There has been a lot of finger pointing in this latest mortgage implosion, and some of the fingers are pointing at Appraisers, accusing them of over-valuing homes and allowing Borrowers to finance too much… giving a falsified sense of equity to the Lender and to the Borrower both!  Today, to get the very best mortgage rate, you should expect to have 20% equity.  In other words, if you home is worth $100,000 then you would not want a mortgage of more than $80,000.  I’ve seen the most tightening in this area of equity or “Loan to Value”.  Loan approvals at higher loan to values have less appealing interest rates or other “add on” expenses such as PMI (private mortgage insurance).

 **I CAN HELP RAISE YOUR CREDIT SCORE!**

You can reach Laure at American Mortgage Lending, Inc.  3709 N. Sheridan Rd, Peoria, Il  61614  309-688-5568 or at www.FinanceLady.Net

Mortgage Financing is complicated. 

Oh, sorry, it's only complicated if you want to be placed into the LOWEST interest rate program that you qualify for with the lowest overall expenses.  That's why you should only trust a True Professional when it's time to finance your home. 

I break mortgage loans down to two basic categories: Government Guaranteed & Government Backed.

 First, I determine if you will qualify for any of the
Government Guaranteed Mortgage Loans.

Government Guaranteed Loans: 
USDA Rural Development, FHA, VA

USDA is "area specific" and has income caps BUT has some unique benefits not available in ANY OTHER LOAN PRODUCT!  You can borrow 102% of the APPRAISED VALUE on a purchase loan!  this means that you can borrow all of your closing costs!  Purchase Clients have financed some needed improvements using this loan, such as a new well, or septic system when inspections found them to be deficient.  The Goverment charges a 2% funding fee.  On a 100,000 loan, this amount would be $2,000. There is NO MONTHLY PMI (Private mortgage Insurance)!

FHA is many times the loan of choice, but it is only a 96.5% purchase loan product and may leave the Client short on cash to close.  The FHA loan has some specific, quite unique, possibilities to offer the Borrower such as allowing a family member to Co-sign on the loan without actually living in the home.  FHA loans can make "exceptions" to the normal credit rules for some unique life situations including Death of a Spouse, Medical Bankruptcy, or loss of job due to downsizing or plant closure.  FHA also allows for a Refinance while actually in an active Chapter 13 Bankruptcy!  FHA has a 1.75% funding fee.  On a 100,000 loan, this amount would be $1,750.  There is also a monthly PMI (Private Mortgage Insurance) fee for a minimum of 5 years.

VA loans are specifically for Veterans.  You must have a DD214 (satisfactory discharge from the military) and a COE (Certificate of Eligibility).  Having these documents does not automatically guarantee an approval.  The Borrower must still meet minimum credit and income requirements just as with any loan. The VA has a minimum 2.25% funding fee (the funding fee varies and the VA has a schedule to check on the acutal amount).   On a 100,000 loan, this amount would be $2,250.  There is NO monthly PMI (Private Mortgage Insurance)

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Once I determine eligibility for one of the three Government Guaranteed loans, I can move on to check which of the Government Backed loans you would qualify for.  these would be "Fannie Mae" "or Freddie Mac".  Government backed means that the institution offering the loan is backed by Federal Insurance and the "pool" of mortgage loans written are insured by the Government.

Many Clients and Realtors ask me why I am able to offer a better interest rate or loan program than their bank.  

It's simple.  Your loan approval is only as good as your Loan Officer's ability to understand the computer approval "engines", to collect the RIGHT information for that approval, and to know and understand all the loan products available for a specific situation. 

Some times a Client will feel intruded on when I ask probing questions, but the fact of the matter is, if I don't get enough of the "right kind of information", I won't be able to receive the BEST approval for your loan.  A lazy loan officer won't collect all the information that I ask for.  Sometimes the difference in your approval is documenting the cash value of a life insurance policy,  the value of a 401k,  the value of government bonds, verifying overtime, or bonus income.  A lazy loan officer won't think to ask how old your children are in order to determine when outgoing child support will end or how long incoming child support will last.

Credit... well, I could go on for hours about how credit can change an approval, but basically, my first concern is the ACCURACY of the credit report.  Many times I can achieve the BEST approval for a loan because Both the Borrower and I invest time into proving items incorrect on their credit report. 

Recently, one Client's credit report showed that he was over 30 days late on his previous mortgage TWO SEPARATE TIMES!  I questioned the Client, and he said he had never been late.  After investigation, the client provided cancelled checks to me verifying his "on time" payments to the bank.  I was able to use that to achieve a better approval and a lower interest rate.  But it took work on both of our parts, and it can be frustrating.  If you are willing to work with me on your credit situation, I will work hard for the lowest interest rate and costs for your loan.

FINALLY:  A true loan Professional will compare the interest rates, closing costs and monthly payments for each of the loan products that you qualify for to determine which offers the Client the best overall loan scenario today, tomorrow and OVER THE LONG TERM.  I compare the total cost of credit over 5 years, 10 years and 30 years.  Even I am surprised at times as to which scenario actually ends up being the least expensive for a particular Client's situation.

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Sometimes, it's just not smart to refinance OR purchase a home at this time.   Even when you want to do it, it just is not smart when you calculate out the math.  Many times it "appears" to be an intelligent move to refinance, but once you calculate the true cost of refinancing (including increasing the term to a new 30 year program), I will advise to stay put and not refinance. 

Is that smart?  Well, it's not too good for my pocketbook!  I make a living on fees charged from ACTUALLY CLOSING LOANS.  When I advise you to NOT REFINANCE, it's definitely in YOUR BEST INTEREST and not in mine ! 

I don't get paid for NOT CLOSING LOANS!  I only get paid WHEN A LOAN CLOSES.... so you can trust that my advice is in YOUR BEST INTEREST if I advise against a loan at this time.