Recently Zillow, an online real estate database, did a national survey and found there are myths that borrowers believe and things they just don’t know about mortgages. At Indigo Mortgage, we’ve found that most of these perceptions hold true in the local Albuquerque and Rio Rancho market as well.
The first item is that borrowers believe that when they get pre-approved for a home and that lender issues a pre-approval letter to the seller, the borrower must close their loan with that lender. This is untrue-- borrowers do not have to use the pre-approval lender and actually, it’s wise to shop that mortgage around.
The second misconception is that borrowers believe that the bank they do business will offer them the best rate. This again can prove costly to a borrower. It’s a good idea for a borrower to shop their mortgage around to find the best rate and terms, and not just turn to a single lender even if it’s a bank they have been with for years.
Here are some other statistics:
- 34% of prospective home buyers don’t know what the term APR means
- 50% of prospective home buyers don’t know mortgage rates change daily
- Millions of homeowners still don’t understand that the HARP loan program can help them refinance even if they owe more than the home is worth.
Of course, it’s really not the borrowers’ fault if they don’t understand. We always say, mortgages are very complicated and the landscape is always changing, so what’s true today may change tomorrow. That’s why it’s so important to use a local lender. someone you can meet face to face, and talk to the same person from one phone call to the next. With so many complexities in the mortgage business, out-of-state or national lenders do not always give the correct information to local borrowers. Local lenders are the best source of information to local borrowers.
At Indigo Mortgage, we’re happy to answer any question about mortgages. Contact us at 505-836-5700 or fill out our Quick Analysis on our website.
INDIGO Mortgage (505) 836-5700 Albuquerque's Premier Mortgage Loan Provider! We have five loan divisions to serve you. Select from Residential Loans, Commercial Loans, VA loans, Reverse Mortgage Loans or Construction Loans.
Wednesday, May 29, 2013
Friday, May 17, 2013
How Bank Statements Affect Your Mortgage Loan
It’s hard to image that bank statements can affect a mortgage loan, but they can.
Verifying a borrower’s assets usually involves checking and savings accounts. For example if a borrower’s application says the borrower has $2500 in their bank account as assets, then the lender wants to see two months of the most recent bank statements to verify that money. That sounds pretty easy to provide the statements showing the money-- but underwriters will dissect the statements and scrutinize all deposits. It’s the deposits they want to know about, not withdrawals.
Verifying a borrower’s assets usually involves checking and savings accounts. For example if a borrower’s application says the borrower has $2500 in their bank account as assets, then the lender wants to see two months of the most recent bank statements to verify that money. That sounds pretty easy to provide the statements showing the money-- but underwriters will dissect the statements and scrutinize all deposits. It’s the deposits they want to know about, not withdrawals.
In the recent past, underwriters wanted documentation and explanations for large deposits usually over $500 that were not from payroll or automatic payment such as Social Security or pensions. But in today’s lending environment, underwriters want explanations and documentation of all deposits, no matter how big or small.
This can be quite intrusive and frustrating for borrowers. The reason underwriters want verification is to reveal if the money in the account is legitimately theirs or if it was loaned or borrowed from relatives or from another lending institution. Either of those would alter either the debt ratio or would show that the borrower didn’t really have those assets.
To avoid some of that scrutiny, list assets for the loan qualification that are fairly stable in their deposit history. For example, use a savings account that is not very fluid or one that doesn’t show much activity, or a checking account that doesn’t have a lot of non-payroll deposits. For more information about how bank statements affect your loan qualification, contact Indigo Mortgage at 505-836-5700.
Indigo Mortgage is a locally owned and operated company, serving homebuyers in Albuquerque, Rio Rancho, Santa Fe and all across New Mexico. The company has five mortgage divisions for Residential, VA Loans, Reverse Mortgages, Construction and Commercial loans. Our mortgage broker and underwriters are certified by the National Mortgage Licensing System, NMLS # 239924.
To avoid some of that scrutiny, list assets for the loan qualification that are fairly stable in their deposit history. For example, use a savings account that is not very fluid or one that doesn’t show much activity, or a checking account that doesn’t have a lot of non-payroll deposits. For more information about how bank statements affect your loan qualification, contact Indigo Mortgage at 505-836-5700.
Indigo Mortgage is a locally owned and operated company, serving homebuyers in Albuquerque, Rio Rancho, Santa Fe and all across New Mexico. The company has five mortgage divisions for Residential, VA Loans, Reverse Mortgages, Construction and Commercial loans. Our mortgage broker and underwriters are certified by the National Mortgage Licensing System, NMLS # 239924.
Tuesday, May 7, 2013
Second Homes and Rental Properties
Borrowers wishing to purchase a 2nd home, a rental property or a non-owner occupied property will need to know what classifies homes as such.
The rule of thumb is a 2nd home is just that-- a 2nd home-- one that is not their primary home and where a homeowner will spend extensive time throughout each year but not rent it out. A 2nd home cannot be purchased in the same city as their primary home and must be at least 55 miles in distance from their primary residence.
A rental property or non-owner occupied property is a property that is within 55 miles of their primary or any property that will be used to generate income by renting it out. If a homeowner wishes to buy a home for kids or parents and not charge them rent, and that property is in the same city or less than 55 miles away, then it is still considered a rental property.
As a side note, the FHA will allow what is called a non-occupant co-borrower for people who wish to go on a loan in the same city with kids or relatives BUT all parties must qualify for credit and be on the loan. It important to classify the occupancy correctly as the down payment requirement is much higher and interest rates much higher for non-owner occupied properties.
Downsizing to a smaller home may be more difficult than you might think. When an underwriter sees that a buyer is purchasing a property less than 55 miles away and that is less expensive than what they are living in, they will automatically want to classify it as a rental. Even if the borrowers are truly downsizing, they must prove to the lender that they are indeed moving to a smaller home especially if they retain the larger property. It can be done but there are many hoops to jump through. For more information, please call Indigo Mortgage at 505-836-5700.
The rule of thumb is a 2nd home is just that-- a 2nd home-- one that is not their primary home and where a homeowner will spend extensive time throughout each year but not rent it out. A 2nd home cannot be purchased in the same city as their primary home and must be at least 55 miles in distance from their primary residence.
A rental property or non-owner occupied property is a property that is within 55 miles of their primary or any property that will be used to generate income by renting it out. If a homeowner wishes to buy a home for kids or parents and not charge them rent, and that property is in the same city or less than 55 miles away, then it is still considered a rental property.
As a side note, the FHA will allow what is called a non-occupant co-borrower for people who wish to go on a loan in the same city with kids or relatives BUT all parties must qualify for credit and be on the loan. It important to classify the occupancy correctly as the down payment requirement is much higher and interest rates much higher for non-owner occupied properties.
Downsizing to a smaller home may be more difficult than you might think. When an underwriter sees that a buyer is purchasing a property less than 55 miles away and that is less expensive than what they are living in, they will automatically want to classify it as a rental. Even if the borrowers are truly downsizing, they must prove to the lender that they are indeed moving to a smaller home especially if they retain the larger property. It can be done but there are many hoops to jump through. For more information, please call Indigo Mortgage at 505-836-5700.
Loan Types and Options
Mortgage rates continue to stay at historical lows. So far in 2013, we have seen a huge jump in purchase transactions. So it’s a good time to review the different options buyers have in today’s market.
By far the most beneficial loan program is the Veteran’s mortgage or the VA loan. The VA loan is the only true 100% purchase money mortgage today, meaning zero down for the veteran and it does not require mortgage insurance.
Then there’s the FHA loan which only requires 3.5% down of the purchase price but it does require monthly mortgage Insurance .
And of course there is the conventional mortgage loan which now only requires 3% down but there are credit score thresholds and this too requires mortgage insurance. The benefit of the conventional loan over an FHA loan is that the loan amount can go up to $417,000 while FHA is limited to just over $271,000. The VA mortgage will go to 417,000 with zero down.
Because the real estate market is very active, buyers need to act fast. Often they are up against a growing number of other buyers jumping into the market. So it’s imperative that buyers start the process with a mortgage lender like Indigo Mortgage so they are pre-qualified. Realtors today will not even begin to show properties to perspective buyers unless they have been pre-qualified. Indigo Mortgage will do the pre-qualification free of charge and in just a few minutes. This is a two-fold benefit as it shows sellers you are a serious buyer and it prepares the buyer to know exactly what the loan and payments will look like at a given purchase price.
By far the most beneficial loan program is the Veteran’s mortgage or the VA loan. The VA loan is the only true 100% purchase money mortgage today, meaning zero down for the veteran and it does not require mortgage insurance.
Then there’s the FHA loan which only requires 3.5% down of the purchase price but it does require monthly mortgage Insurance .
And of course there is the conventional mortgage loan which now only requires 3% down but there are credit score thresholds and this too requires mortgage insurance. The benefit of the conventional loan over an FHA loan is that the loan amount can go up to $417,000 while FHA is limited to just over $271,000. The VA mortgage will go to 417,000 with zero down.
Because the real estate market is very active, buyers need to act fast. Often they are up against a growing number of other buyers jumping into the market. So it’s imperative that buyers start the process with a mortgage lender like Indigo Mortgage so they are pre-qualified. Realtors today will not even begin to show properties to perspective buyers unless they have been pre-qualified. Indigo Mortgage will do the pre-qualification free of charge and in just a few minutes. This is a two-fold benefit as it shows sellers you are a serious buyer and it prepares the buyer to know exactly what the loan and payments will look like at a given purchase price.
Tuesday, April 23, 2013
Study Shows Lender Choice Influenced by Realtor
A new national study just released shows that nearly 50% of homebuyers make the decision on which lender to finance their purchase, using their realtor’s recommendation.
So instead of shopping around for a lender, homebuyers are influenced by their agent to use the lender of the realtor’s choice-- for better or for worse. Realtors want speed and reliability from a lender and usually establish relationships with lenders who offer both. The downside to that might be that the lender does not offer the lowest rates or the best terms for the borrower.
Just blindly going with the referred bank or lender clearly isn’t wise, because when it comes down to it, you really won’t know how competitive they are, unless you shop your loan elsewhere. Often times when a buyer makes an offer on a home, the real estate agent will ask them to get pre-approved with the recommended “preferred lender.” While it may be in your best interest to get the pre-approval to show you’re very serious about buying the property, the buyer doesn’t need to use that lender to obtain your financing. You can still shop that mortgage around for the best rates and terms. Now, we are not in the slightest saying not to use the realtor’s preferred lender, just to be prudent and get other quotes.
Using a mortgage broker like indigo Mortgage can mean the difference of a .25 to .5 % in the interest rate, which over the life of the mortgage, can save the borrower thousands of dollars. If it’s an FHA or VA loan, the borrower can also see a swing of several thousand dollars in lender-paid closing costs, again saving you money.
A mortgage broker has access to several different lenders so the buyers’ chance of getting the best rate and getting their loan closed is much greater. Remember, It’s actually best to start with a lender before even contacting a real estate agent or looking for homes because this way the borrower can be approved for a certain level of mortgage, and will have full knowledge of their loan before they make an offer.
So instead of shopping around for a lender, homebuyers are influenced by their agent to use the lender of the realtor’s choice-- for better or for worse. Realtors want speed and reliability from a lender and usually establish relationships with lenders who offer both. The downside to that might be that the lender does not offer the lowest rates or the best terms for the borrower.
Just blindly going with the referred bank or lender clearly isn’t wise, because when it comes down to it, you really won’t know how competitive they are, unless you shop your loan elsewhere. Often times when a buyer makes an offer on a home, the real estate agent will ask them to get pre-approved with the recommended “preferred lender.” While it may be in your best interest to get the pre-approval to show you’re very serious about buying the property, the buyer doesn’t need to use that lender to obtain your financing. You can still shop that mortgage around for the best rates and terms. Now, we are not in the slightest saying not to use the realtor’s preferred lender, just to be prudent and get other quotes.
Using a mortgage broker like indigo Mortgage can mean the difference of a .25 to .5 % in the interest rate, which over the life of the mortgage, can save the borrower thousands of dollars. If it’s an FHA or VA loan, the borrower can also see a swing of several thousand dollars in lender-paid closing costs, again saving you money.
A mortgage broker has access to several different lenders so the buyers’ chance of getting the best rate and getting their loan closed is much greater. Remember, It’s actually best to start with a lender before even contacting a real estate agent or looking for homes because this way the borrower can be approved for a certain level of mortgage, and will have full knowledge of their loan before they make an offer.
For questions about selecting a mortgage lender, contact Indigo Mortgage in Albuquerque at 505-836-5700. Indigo Mortgage offers five mortgage divisions including Residential, VA Loans, Reverse Mortgages, Construction and Commercial. They are licensed by the Nationwide Mortgage Licensing System (NMLS #239924), and can provide loans anywhere in New Mexico.
Tuesday, April 16, 2013
Mortgage Updates and Tips
Things in the mortgage industry are always changing! Today, we have a quick overview of some recent changes and enhancements and some tips. The first one that the “HARP-2” or Home Affordable Refinance Program was set to expire in December of this year but has now been extended until the end of 2015. This is due to the fact there are millions of borrowers who are eligible for the HARP-2 but still have not refinanced. That means that any homeowner who has not refinanced in the past several years should really reach out now and see if they can’t save substantially each month on their mortgage by refinancing.
Another big change is that FHA has increased their monthly and upfront mortgage insurance premiums again. This has made the mortgage insurance permanent for the life of the loan, no matter how low the loan-to-value gets. In other words, until that FHA loan is paid off from either selling or refinancing, the mortgage insurance is permanent.
Now, for a couple of tips. A recent trade magazine article states that using a mortgage broker in today’s mortgage environment carries some big advantages. First, a mortgage broker has access to many different lenders and most likely will find the lowest rate available on the market. Because mortgage brokers have access to many lenders, they can offer a wider range of underwriting guidelines. That means your chance of getting your loan done are much better, and likely at better rates than using a single-source lender. Most mortgage brokers are locally owned and operated, so you’re likely to also get better customer service.
And of course, Indigo Mortgage is a true mortgage broker right here in Albuquerque. Contact Indigo Mortgage at 505-836-5700 for any mortgage related questions. Indigo Mortgage is a locally owned and operated company, serving homebuyers in Albuquerque, Rio Rancho, Santa Fe and all across New Mexico. The company has five mortgage divisions for Residential, VA Loans, Reverse Mortgages, Construction and Commercial loans. Our mortgage broker and underwriters are certified by the National Mortgage Licensing System, NMLS # 239924.
Another big change is that FHA has increased their monthly and upfront mortgage insurance premiums again. This has made the mortgage insurance permanent for the life of the loan, no matter how low the loan-to-value gets. In other words, until that FHA loan is paid off from either selling or refinancing, the mortgage insurance is permanent.
Now, for a couple of tips. A recent trade magazine article states that using a mortgage broker in today’s mortgage environment carries some big advantages. First, a mortgage broker has access to many different lenders and most likely will find the lowest rate available on the market. Because mortgage brokers have access to many lenders, they can offer a wider range of underwriting guidelines. That means your chance of getting your loan done are much better, and likely at better rates than using a single-source lender. Most mortgage brokers are locally owned and operated, so you’re likely to also get better customer service.
And of course, Indigo Mortgage is a true mortgage broker right here in Albuquerque. Contact Indigo Mortgage at 505-836-5700 for any mortgage related questions. Indigo Mortgage is a locally owned and operated company, serving homebuyers in Albuquerque, Rio Rancho, Santa Fe and all across New Mexico. The company has five mortgage divisions for Residential, VA Loans, Reverse Mortgages, Construction and Commercial loans. Our mortgage broker and underwriters are certified by the National Mortgage Licensing System, NMLS # 239924.
Friday, April 12, 2013
Study Lists Reasons Borrowers Not Utilizing HARP Refinances
April 9, 2013-- Albuquerque, New Mexico.
Fannie Mae just released a new study showing that many HARP -2 eligible borrowers have still not refinanced. The study wanted to know what has caused these borrowers to not take advantage of the HARP-2 program. The study found that perceived Costs, rigid loan terms, distrust of the lender or offer, and misperceptions about qualifying are the main reasons why people are not refinancing.
Along with those reasons, borrowers also said they don’t want to take out another 30 year loan; they feel they’ve been bombarded with mailers and offers; they still think their home has lost too much value; there is too much paperwork; and they do not like or trust their current servicer.
We’d like to address several of these issues. First, borrowers can still use the HARP to refinance into shorter terms and they do not have to take out just a 30 year loan-- they can do a 10, 15, 20 or 25 year term, which also would decrease the amount of interest paid during that loan.
At Indigo Mortgage, we realize that borrowers are sometimes inundated with offers and mailers so we try to be more of a resource. We can often answer many of their questions without even doing an application. Remember that a borrower does not have to return to their current lender to take advantage of the HARP refinance. As a matter of fact, these homeowners would be well served to shop their mortgage around before and review various offers in order to choose their new lender.
Indigo Mortgage has completed many HARP-2 refinances and we strive to make it as easy and seamless as possible to complete your refinance. If you have questions on a HARP refinance or for any other mortgage or refinance information, contact Indigo Mortgage at 505-836-5700.
Along with those reasons, borrowers also said they don’t want to take out another 30 year loan; they feel they’ve been bombarded with mailers and offers; they still think their home has lost too much value; there is too much paperwork; and they do not like or trust their current servicer.
We’d like to address several of these issues. First, borrowers can still use the HARP to refinance into shorter terms and they do not have to take out just a 30 year loan-- they can do a 10, 15, 20 or 25 year term, which also would decrease the amount of interest paid during that loan.
At Indigo Mortgage, we realize that borrowers are sometimes inundated with offers and mailers so we try to be more of a resource. We can often answer many of their questions without even doing an application. Remember that a borrower does not have to return to their current lender to take advantage of the HARP refinance. As a matter of fact, these homeowners would be well served to shop their mortgage around before and review various offers in order to choose their new lender.
Indigo Mortgage has completed many HARP-2 refinances and we strive to make it as easy and seamless as possible to complete your refinance. If you have questions on a HARP refinance or for any other mortgage or refinance information, contact Indigo Mortgage at 505-836-5700.
Indigo Mortgage is a locally owned and operated company, serving homebuyers in Albuquerque, Rio Rancho, Santa Fe and all across New Mexico. The company has five mortgage divisions for Residential, VA Loans, Reverse Mortgages, Construction and Commercial loans. Our mortgage broker and underwriters are certified by the National Mortgage Licensing System, NMLS # 239924.
Thursday, April 11, 2013
HARP Just Extended to 2015
The Federal Housing Finance Agency today announced that borrowers with mortgages backed by Fannie Mae (FNMA) or Freddie Mac (FMCC) will have until the end of 2015 to obtain new loans under the Home Affordable Refinance Program (HARP).
HARP had been scheduled to expire at the end of 2013. This program allows borrowers to reduce their loan payments by refinancing at lower interest rates even if they are in homes that have lost value since the mortgage was originated.
To date, more than 2.2 million borrowers have used the HARP program. To meet the program’s qualifications, homeowners must be current on their payments and have loans that originated before June 1, 2009.
HARP is “a useful tool for reducing risk,” FHFA Acting Director Edward J. DeMarco said in a statement. “We are extending the program so more underwater borrowers can benefit from lower interest rates.”
The FHFA will soon begin a marketing campaign to expand the program’s reach to additional homeowners, DeMarco said in the statement. Some industry analysts estimate that as many as two million eligible borrowers haven’t taken advantage of HARP.
HARP loans began to surge last year and now account for almost a third of all refinancing applications, according to the Mortgage Bankers Association. Nearly 1.1 million borrowers used HARP last year alone, equaling the 1.1 million in the first three years of the program combined.
About a quarter of HARP loans have gone to borrowers who owe more than their properties are worth. In January, nearly half of HARP refinancings were for such underwater borrowers.
To see if you meet the requirements for refinancing through the HARP program, contact Indigo Mortgage in Albuquerque at 505-836-5700. Indigo Mortgage offers five mortgage divisions including Residential, VA Loans, Reverse Mortgages, Construction and Commercial. They are licensed by the Nationwide Mortgage Licensing System (NMLS #239924), and can provide loans anywhere in New Mexico.
HARP had been scheduled to expire at the end of 2013. This program allows borrowers to reduce their loan payments by refinancing at lower interest rates even if they are in homes that have lost value since the mortgage was originated.
To date, more than 2.2 million borrowers have used the HARP program. To meet the program’s qualifications, homeowners must be current on their payments and have loans that originated before June 1, 2009.
HARP is “a useful tool for reducing risk,” FHFA Acting Director Edward J. DeMarco said in a statement. “We are extending the program so more underwater borrowers can benefit from lower interest rates.”
The FHFA will soon begin a marketing campaign to expand the program’s reach to additional homeowners, DeMarco said in the statement. Some industry analysts estimate that as many as two million eligible borrowers haven’t taken advantage of HARP.
HARP loans began to surge last year and now account for almost a third of all refinancing applications, according to the Mortgage Bankers Association. Nearly 1.1 million borrowers used HARP last year alone, equaling the 1.1 million in the first three years of the program combined.
About a quarter of HARP loans have gone to borrowers who owe more than their properties are worth. In January, nearly half of HARP refinancings were for such underwater borrowers.
To see if you meet the requirements for refinancing through the HARP program, contact Indigo Mortgage in Albuquerque at 505-836-5700. Indigo Mortgage offers five mortgage divisions including Residential, VA Loans, Reverse Mortgages, Construction and Commercial. They are licensed by the Nationwide Mortgage Licensing System (NMLS #239924), and can provide loans anywhere in New Mexico.
Thursday, March 28, 2013
FHA Changes Ahead for Borrowers
The FHA loan continues to be one of the strongest mortgage loan programs on the market but there are some big changes coming as of April 1st, 2013. The monthly mortgage insurance premium, also known as MIP, has been at 1.25% but after April 1 that will increase to 1.35%.
But the biggest change coming for FHA will be that the monthly mortgage insurance premium can never be taken away; it will exist over the life of the loan.
Currently, borrowers with an FHA loan can request the MIP be canceled when their loan-to-value goes down to 78%. After April 1st this MIP will be permanent for the life of the loan.
The FHA loan still offers many first-time home buyers or those with less-than-perfect credit a great way to purchase a home since it only requires 3.5% down. FHA loan is also not as restrictive as a conventional loan with mortgage insurance. It also allows up to 85% on cash-out transactions and if a borrower is trying to pay off a first and second mortgage, the FHA loan will allow an loan-to-value ratio of 97.5%.
It’s good news that the new FHA streamline loans will not be affected. If a borrower currently has an FHA loan that was secured before June 1st 2009, then they can streamline into a new FHA loan and the Mortgage Insurance is actually cut in half and the up-front mortgage insurance all but goes away. The new FHA streamline can save borrowers a lot of money if their loan qualifies. Again the FHA streamline on loans taken out prior to June 1st of 2009 will not be affected by the changes coming on April 1st.
If you’re a first-time homebuyer and have questions on FHA loans, or for any other mortgage or refinance information, contact Indigo Mortgage at 505-836-5700. Indigo Mortgage is a locally owned and operated company, serving homebuyers in Albuquerque, Rio Rancho, Santa Fe and all across New Mexico. The company has five mortgage divisions for Residential, VA Loans, Reverse Mortgages, Construction and Commercial loans. Our mortgage broker and underwriters are certified by the National Mortgage Licensing System, NMLS # 239924.
But the biggest change coming for FHA will be that the monthly mortgage insurance premium can never be taken away; it will exist over the life of the loan.
Currently, borrowers with an FHA loan can request the MIP be canceled when their loan-to-value goes down to 78%. After April 1st this MIP will be permanent for the life of the loan.
The FHA loan still offers many first-time home buyers or those with less-than-perfect credit a great way to purchase a home since it only requires 3.5% down. FHA loan is also not as restrictive as a conventional loan with mortgage insurance. It also allows up to 85% on cash-out transactions and if a borrower is trying to pay off a first and second mortgage, the FHA loan will allow an loan-to-value ratio of 97.5%.
It’s good news that the new FHA streamline loans will not be affected. If a borrower currently has an FHA loan that was secured before June 1st 2009, then they can streamline into a new FHA loan and the Mortgage Insurance is actually cut in half and the up-front mortgage insurance all but goes away. The new FHA streamline can save borrowers a lot of money if their loan qualifies. Again the FHA streamline on loans taken out prior to June 1st of 2009 will not be affected by the changes coming on April 1st.
If you’re a first-time homebuyer and have questions on FHA loans, or for any other mortgage or refinance information, contact Indigo Mortgage at 505-836-5700. Indigo Mortgage is a locally owned and operated company, serving homebuyers in Albuquerque, Rio Rancho, Santa Fe and all across New Mexico. The company has five mortgage divisions for Residential, VA Loans, Reverse Mortgages, Construction and Commercial loans. Our mortgage broker and underwriters are certified by the National Mortgage Licensing System, NMLS # 239924.
Tuesday, February 26, 2013
Get Credits Toward your Closing Costs
What are Lender Credits?
The FHA and VA loan credits are a great asset
for borrowers because these lender credits can help offset closing costs.
Lender credits are generated by the lenders when they borrow money from federal
progams for next to zero. In order to attract customers, they offer lender
credits as incentives. Higher rates equal higher credits.
The credits on government VA and FHA loans are much larger than those for conventional loans, and the rates are lower. Lender credits from conventional loans are typically smaller and have a less dramatic impact on closing costs.
For example, the lender credits generated on
a FHA or VA 30 year fixed rate of 3.25% today will pay a lender credit of 1%
towards the borrower’s closing costs. A rate of 3.375% will give the borrower a
1.5% credit. So if, a FHA or VA loan amount is $200,000, the 1% credit puts
$2000.000 towards their closing costs, while a 1.5% credit would contribute
$3000.00.
Credits allow borrowers to pay fewer closing
costs on a refinance loan or a purchase loan. It is important to understand who
offers these credits because not all lenders will. Often times, big banks and
most big national lenders do not offer these lender credits. Instead of rolling
them over to the borrower, they keep them. So when a borrower is shopping for a
loan lender, they should consider not only who has the best interest rates but
also whether there are any credits to the borrower.
Indigo Mortgage is one of the lenders that
offer lender credits for our VA and FHA borrowers in the Albuquerque area.
What about regular conventional loans and
lender credits?
The credits on government VA and FHA loans are much larger than those for conventional loans, and the rates are lower. Lender credits from conventional loans are typically smaller and have a less dramatic impact on closing costs.
If you are interested in lender credits or
have any other mortgage related questions, please contact Indigo Mortgage at
505-836-5700.
Tuesday, February 19, 2013
Reverse Mortgages: Good or Bad?
Reverse
Mortgages for Seniors
A reverse Mortgage is a financial tool that turns a borrower’s home equity into cash. According to Ben Lucero of Indigo Mortgage, “The reverse mortgage is one of the best and most advantageous mortgage programs available today. There has been a lot of negative publicity about the reverse mortgage but that misconception has more to do with unscrupulous lenders than the actual benefits of the loan itself.”
In fact, there are many benefits to the reverse mortgage. One of the greatest of these is that the borrower never has any mortgage payments, and the mortgage pays itself from the equity. Borrowers are able to eliminate payments while still keeping the title of their property. The money that is taken out is tax free, and remaining equity goes to their heirs instead of the bank. Additionally, the loan is insured by FHA. All the closing costs of a reverse mortgage are included in the loan, and there should not be any upfront charges besides an appraisal. There are no income restrictions or credit requirements, but the borrower must be at least 62 Years of age to qualify.
Local vs. Out-of State Lenders
If someone is considering a reverse mortgage in the Albuquerque area, it is in their best interests that they consider using only a local lender such as Indigo Mortgage and never an out of state lender. Also, they should never reply to any solicitations in the mail or on the internet. To better understand the reverse mortgage and the process of obtaining one, seniors should set an appointment with their local lender of choice and bring along their family. All seniors interested in a reverse mortgage must take a counseling session on reverse mortgages before they can actually take one out.
Counseling Sessions
As is mentioned above, all prospective borrowers are required to go through a reverse mortgage counseling session by a nonprofit HUD approved organization to ensure that the borrower fully understands the reverse program and what they are signing up for. This can be done over the telephone, but it is important to know that we as lenders cannot go into an application until after the senior completes this counseling session.
If you are considering a reverse mortgage, please contact Indigo Mortgage to discuss any further mortgage questions you might have.
A reverse Mortgage is a financial tool that turns a borrower’s home equity into cash. According to Ben Lucero of Indigo Mortgage, “The reverse mortgage is one of the best and most advantageous mortgage programs available today. There has been a lot of negative publicity about the reverse mortgage but that misconception has more to do with unscrupulous lenders than the actual benefits of the loan itself.”
In fact, there are many benefits to the reverse mortgage. One of the greatest of these is that the borrower never has any mortgage payments, and the mortgage pays itself from the equity. Borrowers are able to eliminate payments while still keeping the title of their property. The money that is taken out is tax free, and remaining equity goes to their heirs instead of the bank. Additionally, the loan is insured by FHA. All the closing costs of a reverse mortgage are included in the loan, and there should not be any upfront charges besides an appraisal. There are no income restrictions or credit requirements, but the borrower must be at least 62 Years of age to qualify.
Local vs. Out-of State Lenders
If someone is considering a reverse mortgage in the Albuquerque area, it is in their best interests that they consider using only a local lender such as Indigo Mortgage and never an out of state lender. Also, they should never reply to any solicitations in the mail or on the internet. To better understand the reverse mortgage and the process of obtaining one, seniors should set an appointment with their local lender of choice and bring along their family. All seniors interested in a reverse mortgage must take a counseling session on reverse mortgages before they can actually take one out.
Counseling Sessions
As is mentioned above, all prospective borrowers are required to go through a reverse mortgage counseling session by a nonprofit HUD approved organization to ensure that the borrower fully understands the reverse program and what they are signing up for. This can be done over the telephone, but it is important to know that we as lenders cannot go into an application until after the senior completes this counseling session.
If you are considering a reverse mortgage, please contact Indigo Mortgage to discuss any further mortgage questions you might have.
Tuesday, February 12, 2013
Pre-qualification is where all home buyers need to start in the home buying process
The
Benefits of Pre-Qualifying for a Home
Now that, the Albuquerque housing market is
seeing a bit of a revival more borrowers are looking to get pre-qualified on
home purchases. This important step is where all home buyers need to start in
the home buying process. In fact, most realtors will not start showing homes to
potential home buyers unless they have been pre-qualified. Pre-qualification
not only qualifies the home buyer on how much they can afford on a house but
also allows them to research exactly which loan programs are currently
available on the market.
During the pre-qualification process, the
borrower will be educated on what will be included in their mortgage payments
such as taxes, home owners insurance, and mortgage insurance if necessary.
Different loan programs will require different down payment amounts and some
will require mortgage insurance while others will allow the lender to pay the
mortgage insurance for the borrower. For example, the VA requires 0 down; the
FHA allows 3.5%, and conventional loans will allow 3 to 5% down.
Another huge benefit of the pre-qualification
process is that it outlines the total closing costs of the purchase transaction
so that the borrower can understand just how much they will be required to pay
in closing costs. It also equips the borrower with information to,
successfully, negotiate closing costs with the seller.
Local Lenders vs. Internet or Out of State
It is beneficial for those looking to buy a home to use a local lender vs. those on the Internet or out of state because Internet and out of state lenders, and big banks do not always respond in a timely manner and may not personally have the borrowers best interest in mind. All too often borrowers find themselves at the mercy of those out of state lenders and big lending institutions and become just another application number.
According to Ben Lucero of Indigo Mortgage, “Borrowers always want to use a local mortgage company because as a local company we are always available and in contact with the borrower.”
If you are interested in pre-qualifying for a home in the Albuquerque area, please contact Indigo Mortgage at 505-836-5700 to discuss.
Tuesday, February 5, 2013
Do You Qualify for HARP 2 Refinance?
Understand What HARP2 Offers
If you qualify for the new Home Affordable
Refinance Loans (HARP2), it is important to understand who offers the program
and what you can expect from lenders. Unfortunately, a number of borrowers who
actually qualify for the new HARP2 refinance are being turned down by their
lenders. For various reasons, some lenders are not actually willing to offer
what the program guarantees. However, there is still a good chance that you can
be approved.
HARP2 loans are being offered by Fannie Mae
and Freddie Mac. Borrowers need to know that most lenders who are not mortgage
brokers must underwrite to their companies specific guidelines. This means that
borrowers are turned down if HARP loan does not meet these guidelines. Although
Fannie Mae and Freddie Mac are offering these new loans with a wide range of
parameters for what they will guarantee, lenders will actually narrow down what
they are willing to offer. Because of this, borrowers who do qualify for the
Fannie Mae and Freddie Mac loans are being told by lenders they do not qualify
simply because these lenders do not offer the full range of HARP loans. The
reasons for this can be due to the borrowers having something which the lender
does not accept such as MI, or they may be at a loan to value over 125%, or a
number of other issues.
Ben Lucero of Indigo Mortgage states, “The
fact is borrowers are not getting a fair shake and are either turned down by the
lender or are converted to a different loan outside the HARP.”
The good news is that mortgage brokers such
as Indigo Mortgage have access to many different companies that offer a wider
range of what Fannie Mae and Freddie Mac will guarantee. A borrower’s chance of
refinancing with the HARP2 program is greatly increased by using a broker like
Indigo Mortgage.
According to Ben Lucero, “I like to call
Indigo Mortgage the HARP headquarters as we will fully investigate what options
are available to borrowers and find a lender who will offer what the borrower
needs to refinance.”
If you are interested in the new HARP2 loans,
please contact Indigo Mortgage at 505-280-1425 or 505-550-6824.
Tuesday, January 29, 2013
Is Congress adding costs to your new mortgage?
Educate Yourself on Costs
In today’s economy, it is important for consumers to be educated about any upcoming changes that could impact the Albuquerque area real estate market. One such concern is bill HR 6429 which was just passed by Congress. This bill is essentially an immigration reform bill, but in order to pay for the costs associated with the program GSE fees were attached to Fannie Mae and Freddie Mac mortgages.
“Basically what this means,” Ben Lucero of Indigo Mortgages states, “is American consumers buying or refinancing their homes will be paying for immigration reforms through higher interest rates and fees on mortgages.”
Because it takes money out of the pockets of people buying or refinancing their homes, the bill has not been favorably received by the mortgage industry. The National Mortgage Brokers Association, as well as the National Bankers Association, oppose the bill—not because of its implications for immigration reform—but because it calls for the use of housing to fund it. In an already shaky housing market, the extra fees are seen as potentially risky for the continued recovery of the housing market.
David Steven, president and CEO of the National Bankers Association was quoted in DSnews.com as saying: “Fannie and Freddie’s guarantee fees are supposed to be used to help offset the risk inherent in providing mortgages, and any increases to those fees should be used for that purpose,” Steven said. “Dipping back into the housing piggybank to pay for unrelated policy items on the backs of America’s homeowners sends the wrong message at a time when the housing market is starting to show signs of recovery.” He went on to say, “Increasing the cost of most mortgages will only add to the uncertainty that is plaguing the mortgage market and deferring a more a robust housing recovery.”
Fortunately, bill HR 6429 still has to pass the senate before it can be implemented. Please check back because we will be posting the bill in the next few days for your review.
In today’s economy, it is important for consumers to be educated about any upcoming changes that could impact the Albuquerque area real estate market. One such concern is bill HR 6429 which was just passed by Congress. This bill is essentially an immigration reform bill, but in order to pay for the costs associated with the program GSE fees were attached to Fannie Mae and Freddie Mac mortgages.
“Basically what this means,” Ben Lucero of Indigo Mortgages states, “is American consumers buying or refinancing their homes will be paying for immigration reforms through higher interest rates and fees on mortgages.”
Because it takes money out of the pockets of people buying or refinancing their homes, the bill has not been favorably received by the mortgage industry. The National Mortgage Brokers Association, as well as the National Bankers Association, oppose the bill—not because of its implications for immigration reform—but because it calls for the use of housing to fund it. In an already shaky housing market, the extra fees are seen as potentially risky for the continued recovery of the housing market.
David Steven, president and CEO of the National Bankers Association was quoted in DSnews.com as saying: “Fannie and Freddie’s guarantee fees are supposed to be used to help offset the risk inherent in providing mortgages, and any increases to those fees should be used for that purpose,” Steven said. “Dipping back into the housing piggybank to pay for unrelated policy items on the backs of America’s homeowners sends the wrong message at a time when the housing market is starting to show signs of recovery.” He went on to say, “Increasing the cost of most mortgages will only add to the uncertainty that is plaguing the mortgage market and deferring a more a robust housing recovery.”
Fortunately, bill HR 6429 still has to pass the senate before it can be implemented. Please check back because we will be posting the bill in the next few days for your review.
Tuesday, January 22, 2013
The Dangers of HELOC Loans
Be Aware of Heloc Advantages and Disadvantages
It is important to research your options before taking out a line of credit for a mortgage in the Albuquerque area because there are some significant disadvantages to Home Equity Lines of Credit (HELOC) mortgage loans.
A HELOC loan differs in several potentially costly ways from a traditional home equity or refinancing loan. This is because a HELOC mortgage is a line of credit secured against the equity of your house while a Fixed Home Equity Loan is not a line of credit. A Fixed Home Equity Loan is a fixed term, fixed rate, fixed payment loan.
Here are some of the dangers of choosing a HELOC loan:
Foreclosure
The equity of your home is pledged as collateral when you take out a HELOC loan. If something happens and you can no longer make payments on the mortgage loan, the lender can foreclose on your home. To make matters worse, after your home has been foreclosed, you will probably still be held responsible for the balance of the HELOC loan.
Home value
If the value of your home decreases at some point while you have a HELOC loan, the balance on that loan could be greater than the value of the home or negative equity.
Termination fee
Terminating your HELOC loan before the due date could lead to a fee. The majority of HELOC loans contain a clause that states you will owe a fee for paying off the loan before a set time has passed. This period of time can be up to 5 years but is usually about 3 years. The fee itself can be a $100, or as much as 3% of the original HELOC mortgage amount.
Annual fees
As long as your HELOC account is open, you will probably incur an annual fee, even if you do not have a balance on your account. If the HELOC loan stays open with a zero balance, the bank may access a non-usage fee to make up for a lack of interest on the balance. This fee could amount to several hundred dollars! These types of fees are not possible on a fixed home equity loan because it is not a line of credit.
Variable rate
Interest rates on HELOC loans are usually variable—which means your rate can go up and increase your monthly payments. HELOC mortgages have no caps on rates so it could increase over time with no end in sight.
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