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.

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.

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.

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.

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.