Wednesday, April 11, 2012

What happened to my credit score??

We all know how important it is to keep our credit history in good shape.  You know, ... always pay on time and don't get too much credit.  By doing this it almost always assures that your credit score will be higher too.  But, sometimes we do seemingly logical things that drop our scores overnight.

People contact me all the time about this issue and they really have no idea what they did to make it drop 50 points.  That is why I put together this short video.  If you are aware of these things you will be able to manage your credit wisely and never again be surprised.

Remember, your score not only determines what you qualify for but it also determines how much interest you will pay.

I hope this video helped.  If you have any questions you can find out more at mortgage underwriters, or just send us an email.

Monday, March 26, 2012

USDA Guaranteed Home Loan

This USDA Loan is absolutely one of the best home loans available on the market today.  No down payment required.  Yes!! ... It's real.  Home buyers love it and so do lenders.  Lenders love it because the guidelines are very much like a conventional loan. 

It's easy,  unlike the FHA Guidelines that can be cumbersome and difficult to understand.  But to be fair, FHA is a good loan too.  They require 3.5% down and that can be a gift.  It gets a little complicated and the documentation requirements are really tough.  If you don't have the documentation chances are it will not be approved.  That is pretty true with all home loans today.  Every penny must be documented and traceable.

The VA home loan is also a great loan, but ... you have to be a veteran.  The VA loan does not require a down payment and the guidelines are different and can be confusing.  This loan does not qualify buyers based on Debt To Income ratios.  The calculations are all about Residual Income.  Personally I think this is better than the DTI stuff.  It really gets down and dirty as to: "can you really afford the mortgage payment or not"?

USDA actually has another home loan called the Direct Loan.  Not a lot of people know about this loan.  I would say it is a sub-prime loan on the tax payer's dime.  It's all Government money and people can qualify for this loan even if their income includes food stamps.  The Government actually subsidizes the payment if their income is less than 50% of the median income for that county.  That should warm your heart.

There are a lot of good home loans on the market today.  Most people are so busy with their family and jobs that they really do know which loan is the best one to apply for.  We put together the video below as an overview so buyers can start to understand their options.  When you walk into a bank or a lenders office and talk about a home loan, they are going to point you to the loan they want you in.  It is better that you have some in site before you sit in that chair.  If you have questions just shoot us an email.  We do not do loans and we do not share your information.

Here is a much shorter video just on the USDA Guaranteed loan.

Good luck and send us an email if you have questions.

Wednesday, March 21, 2012

Mortgage Processing Tips That Help Your Loan Close Faster

Getting a home loan through processing, underwriting, and closing is possibly one of the most frustrating things you will do in your life.  It is not uncommon for a loan to take two to four months to close.  I remember the days when everyone thought 30 days was too long!

I am hoping the information here will help you get all your stuff in one bag before you even apply for a mortgage.  After you have applied, a sharp loan office can also do many things that will help speed things along before your file actually goes to underwriting.

The first thing you should do as a home buyer is pull all three of your credit reports.  You also need to know what your credit scores are.  Do your research about credit guidelines and try to get your credit in order if it is not.  Do your research, ... know what you are up against.  A great place to start is here:  They have other sites for more detailed guidelines focused at different loan types.  Learn as much as you can and compare the information to your reports.

Then, based on everything you have learned try to decide which loan is best for your situation.  Questions you should ask yourself are:

  • How much do I have for a down payment?
  • What is my DTI?
  • Should I pay off some bills first?
  • Is my credit score high enough?
When you feel pretty confident then apply for a mortgage and I would recommend that you use a mortgage broker in your local area.  Banks are way too conservative and don't always offer all the products that are available today.  If there are questions or things you don't understand you can always send us an email and we will try to find the answers for you.  We are totally unbiased.  We don't do mortgages or try to sell you anything at all.

You should also watch this short video so you can have documentation ready if you need it.  Your loan officer should be looking out for this stuff but just in case, well, ... you will know what you need.

So, if you have done your research, pulled your credit, and have your documentation together your loan has a better chance of being underwritten smoothly.  Of course these are not all the things that could delay underwriting or a closing.  There is sooo much more,  and much of which you have no control.

We wish you the best and remember if you have questions, just send it to us at

Saturday, February 11, 2012

Obama Administration Says Refinance USDA Mortgage - Think Twice!

If you have a USDA Rural Development Guaranteed Mortgage on your home you may have heard about USDA's home loan pilot program that allows buyers to refinance those loans to a lower interest rate.  USDA had a news release on Feb. 1, 2012 titled: "Obama Administration Announces Pilot Program to Help Rural Borrowers Refinance Mortgages, Get Lower Interest Rates".   My father would say: "If  it sounds too good to be true, it probably is!"  There are new fees USDA Rural Development is not telling you about.  In the long run it will cost you much more, even if you do lower the interest rate. 

I'm going to cover the good and the bad so you can make an informed decision.  I'll try not to get political but I'll tell you up front that this really makes me cross eyed.  They are pushing it like they are "trying to help the middle class home owner".   In reality the middle class home owner and the lenders are getting screwed while our Government collects more of your hard earned money in new fees that will run for the life of the loan.

OK. Let us start with the good things; no new credit report required, no new appraisal needed, no HUD Handbook minimum property determinations, and no addition property inspections required.  You DO have to meet current income eligibility but no Debt to income ratio calculations are required.  You cannot have any late mortgage payments in the last 12 months.

This pilot program is only available in these 19 states: Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Mississippi, Nevada, New Jersey, New Mexico, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, and Tennessee.  The property does have to be in an eligible rural area.

Here are the  not so good things.  First of all let's consider that you have already closed this loan.  You have already paid, or financed into the loan, the government Up Front fee which was between 2 - 3.5% of the principle balance, depending on when you closed your loan.  Calculate that.  On a $100k mortgage, that is $3500.  You have also paid all your closing costs that probably ranged somewhere between $3000 to $5000.  So, ... you have already paid around $8 - 10K for your mortgage (not including interest).  Hey, and you are doing fine making your payments every month.

Now the Administration says they want to help you out so they are going to LET you refinance your mortgage.  BOHICA!  First of all you'll have to pay another government "Up Front fee" of 1.5% of the principle balance.  You will also have to pay closing costs again for the new loan.  You won't have the cost of an appraisal or a credit report but you will have to pay all other lender fees including a 1% origination fee.  All of this will probably cost you an additional $4 - 6K depending on the size of your loan.

Here is the part they are not telling you.  Effective Oct. 1, 2011 per AN 4551 all loans will now be charged an annual fee of .3%  on the scheduled average unpaid principle balance,  for the life of the loan.  This new fee will be calculated by the lender and included in your escrow along with your taxes and home insurance.  This new fee is then paid to the government, not the lender, at the end of each year.

You can't qualify for this refinance unless you are able to lower your fixed interest rate by at least 100 basis points.  I think you need to apply your calculator to the numbers and think real hard before you decide to refinance.  I wouldn't even consider it unless you are lowering your rate by at least 3%.  I would even ask for a Truth and Lending Statement on the new rate and compare it to the one you received when you originally closed your loan.  An amortization chart might also help you see the whole picture.

Ask yourself, how long you are going to live in the house?  Your principle balance doesn't even begin to decrease until between twelve & fifteen years.  On a $100k mortgage that is about $4500 or $300 a year, or $25 per month.  The figures I have estimated in the article are all based on a mortgage of $100k.  Add in your new Up Front fee and new closing costs.  Not so good!

I am just saying, ... please, really do the numbers and think about it before you decide the Government is doing you a favor.  I don't know your loan amount or your interest rate, or how long you have already been paying on your mortgage.

FYI, for all you Navy Vets:  BOHICA is an American Indian word.  Cherokee I think.  Translation:  Bend Over Here It Comes Again!

Monday, January 16, 2012

Mortgage Underwriting Process Tips

Getting through the mortgage underwriting process today will probably be one of the most frustrating experiences of your life. No amount of empathy or understanding will make it better.  However, there are a few details your loan originator should be monitoring in case there is a need for additional documentation.  The originator should have the documentation in the file BEFORE it ever goes to the underwriter.  This could really save a lot of time and confusion.

Your home address is such a simple thing and silly to think it could cause delays.  IF ... the addresses on the credit report do not reflect what is on the 1003 there could be problems.  Your loan officer/originator should look at this information and if there is a variance it should be document in the file with a letter of explanation.  A mortgage underwriter would see this discrepancy as a red flag. The underwriter would ask for documentation and your file would be set aside.

The loan officer should also look on the credit report for any alias names that may have been used in the past.  Anything unusual or out of the ordinary should also be documented or your file will be set aside.

The credit report offers so much information.  The number of inquires should also be checked.  If there are inquiries from other mortgage lenders a Red Flag will be noted.  Or, ...  if there are numerous other inquires for credit the underwriter will want to know what is up.

This is the tough one.  Your loan officer should look at your bank statements to make sure they reflect your monthly income.  Large unaccounted for deposits are a red flag.  Also large debits that don't reflect current creditors could also be questioned.

Any of these red flags can cause delays with underwriting.  This is just a few examples.  Once an underwriter starts to see discrepancies in a file they become cautious and it seems to be a never ending story.  Mortgage underwriting in today's market is "A Brave New World".  So, try to document stuff before the file is ever sent to the underwriter.  Good Luck.