Archive for the ‘Loan Programs’ Category

Declining Asset Loan Option

May 16, 2016

Blog Header

In the last post, I commented on a situation where a retiree with over half a million dollars in a brokerage account could not count his $4,000 monthly withdrawals from that account as “income” for a mortgage qualification.

So here’s what he can do with his current assets….I represent an investor who will do a “declining asset” loan for this retiree.  (Not all lenders will do this type of loan.)  We start with his account balance and multiply by 70%.  This is to adjust the balance for potential stock and bond market fluctuations.  That gets him to $350,000.

Then to fit this amount into a 10 year monthly income forecast – I divide by 120 months.  That yields about $2,915 per month in available income.  And that is all the “income” I can use based on his assets.

Retirement Income

This retiree told me that he had been “prequalified” by another lender for the full $4,000 “income” that he withdraws every month.  I asked, “Did that lender ask you any questions about HOW you earn your income?”  His response was, “No.”

We at Dunwoody Mortgage are trained to ask important questions up front.  By digging in just a little bit, we might discover potential underwriting road blocks early in the process.  Then we can either determine a way to work through the road blocks or stop the process early, before the buyer and the Realtor waste a lot of time and the buyer’s money (for home inspections, appraisals, etc.) on starting the home purchase process when they cannot win underwriting approval.  His Realtor was very appreciative that I helped him avoid wasting a lot of time searching for houses that this retiree could not afford.

If you know a retiree who is thinking about buying a home in Georgia, tell them to carefully consider how their assets are allocated and how they receive their income.  Not all assets and income are treated equally.  Have them call or email me at Dunwoody Mortgage Service.  We will discuss their options and we can even help them coordinate with their financial planner if necessary.  I can help them structure the deal right the first time – without wasting their time on homes that they cannot buy using their current asset accounts.

blog_footer_RShaffer1

Advertisements

When You Can’t Use Assets as “Income”

May 9, 2016

Blog Header

I’ve been talking this week with Don (not his real name), a retiree from the Northeast who wants to move to Atlanta to be closer to family.  Don has over $500,000 in an investment account and takes out $4,000 every month for living expenses.

And I cannot count these previous monthly distributions as “income” for mortgage purposes.  Don holds his money in a standard brokerage account.  Lending guidelines will not allow use of historical withdrawals from that type of account as a basis for “income.”

Piggy Bank #2

If Don held these funds in a retirement account – an IRA or 401K account – then we might be able to use his historical distributions as a basis for income.  (More about that in a future post.)

Don has found a house that he really likes, but his allowable income will not support the mortgage payments.  I may have to recommend that he buy the house with cash.

If you know a retiree who is thinking about buying a home in Georgia, tell them to carefully consider how their assets are allocated and how they receive their income.  Not all assets and income are treated equally.  Have them call or email me at Dunwoody Mortgage Service.  We will discuss their options and we can even help them coordinate with their financial planner.  I can help them structure the deal right the first time – without wasting their time on homes that they cannot buy with using current asset accounts.

blog_footer_RShaffer1

VA Jumbo Loans

April 25, 2016

Blog Header

The VA program for jumbo loans is excellent.  A quick definition here – a jumbo loan in Georgia is defined as a loan with a principal amount of more than $417,000.

The first benefit is that you can get a VA jumbo loan with a lower down payment than a conventional jumbo loan.  The minimum down payment for a conventional jumbo is 10% of the total loan amount.  The minimum down payment for a VA jumbo is 5% of only the amount above the jumbo threshold of $417,000.

So if your veteran friend David wants to buy a house priced at $517,000, his minimum down payment options are (1) $51,700 for a conventional loan or (2) only $5,000 for a VA loan.

(Anybody else remember this catchy recruiting jingle from the early 1980’s?)

And veterans like David can get a VA jumbo loan with a credit score as low as 680.  Our minimum credit score for a conventional jumbo is 720.

Lastly, David can get a much lower interest rate on a VA jumbo – perhaps even ¾% lower than with a conventional loan.  Interest rates on VA jumbo loans are comparable to conventional non-jumbo mortgage rates.  So David will save a lot of money every month by obtaining a VA jumbo loan.

Note that VA jumbo loans still require paying the VA funding fee.  But even with the fee, VA jumbo mortgages are a great product – they make buying a house more affordable than most other jumbo loan alternatives.  If you are a veteran or if you know a veteran friend or family-member who wants to buy a high-priced home in Georgia, call or email me at Dunwoody Mortgage Services.  We can discuss loan options and help you obtain all the great VA loan benefits you have earned with your service.  We love serving military veterans.  Delivering great loans with excellent service is a small way that we can say “thank you” to those who have served.

blog_footer_RShaffer1

VA Loans Offer Low Interest Rates

April 18, 2016

Blog Header

If you have friends or family who are military veterans, it’s a great time to buy a house – from a mortgage perspective.  We have already reviewed how veterans can obtain loans with a low, or even no, down payment.

To make things better, interest rates are near their historic lows and VA rates are some of the best around.  Let’s do a quick comparison of a VA loan vs. a conventional loan.

A hypothetical situation here – Phil Soldier is an Army veteran.  He has an average credit score of 690 and plans to make a 10% down payment.  He can apply for a VA loan and obtain an interest rate of about ½% to ¾% lower than his rate for a similar conventional loan.  In addition to his lower interest rate, Phil does not have to pay a monthly mortgage insurance premium.  On a loan of around $250,000, Phil could easily save $150 more on his monthly payments.

Military Salute

Making a low down payment and having lower monthly payments sounds great to me!  What do you think?

We will take a look at VA jumbo loans in the next blog post.

VA mortgages are a great product – they make buying a house more affordable than any other program out there.  If you are a veteran or if you know a veteran friend or family member who wants to buy a home in Georgia, call or email me at Dunwoody Mortgage Service.  We will discuss loan options and help you obtain all the great VA loan benefits you have earned with your service.  We love serving military veterans.  Delivering great loans with excellent service is a small way that we can say “thank you” to those who have served.

blog_footer_RShaffer1

VA Loans – Low or No Down Payment

April 11, 2016

Blog Header

Military veterans who want to buy a home don’t have to spend years scraping together a down payment. That helps make home ownership possible for scores of veterans and military families who might otherwise not buy a home.

Veterans can actually get loans with no down payment.  All the veteran must do is pay a Funding Fee – and that fee can be rolled into the loan balance.  So a veteran with very little cash can still get a mortgage.

The Funding Fee is based on the type of service and whether the veteran has obtained a VA loan before.  For first time use, a regular military veteran will pay 2.15% for a zero down loan.  For the same loan, a reserves or national guard veteran would pay a 2.4% funding fee.

Color Guard

For veterans who have previously had a VA loan, the funding fee is 3.3% for both service levels.  Veterans can opt to pay a larger down payment to lower their funding fee amounts.

That is a great deal for veterans with a good job but not a lot of cash.  They don’t have to wait months or even years to scrape together a down payment.

In future blog posts, we will review other great aspects of the VA loan program.  For now, if you are a veteran or if you know a veteran friend or family member who wants to buy a home in Georgia, call or email me at Dunwoody Mortgage Service.  We will discuss loan options and help you obtain all the great VA loan benefits you have earned with your service.  We love serving military veterans.  Delivering great loans with excellent service is a small way that we can say “thank you” to those who have served.

blog_footer_RShaffer1

VA Loans are Quite Popular Now

April 4, 2016

Blog Header

Realtor.com recently reported that the VA loan program closed more mortgages in 2015 than any year in the program’s history.  The VA guaranteed about 631,000 loans for veterans last year, breaking the record set two years before.  Recently released figures show that VA loan volume surged 19% year over year.  For perspective, the VA guaranteed more home purchase loans in 2015 than total loans (purchases plus refinances) in fiscal year 2010.

And the outlook for the VA loan program is bright too.  A recent Deutsche Bank analysis reported that the population of younger veterans will rise about 36% over the next 5 years.  These young veterans will be in prime household-formation and home-buying years.

Experts have called VA loans “the most powerful residential loan product on the market.”  And in this time of slow wage growth and a tight housing market, more and more veterans are using these loans as their go-to financing source.

armed forces logos

So what makes VA loans so popular?  Here’s a quick summary of VA loan benefits:

  • Low Interest Rates – Even on jumbo loans
  • Low Down Payments – Veterans can even obtain loans with 0% down payments
  • No Monthly Mortgage Insurance

In future blog posts, we will review each of these great benefits in detail.  For now, if you are a veteran or if you know a veteran friend or family member who wants to buy a home soon, call or email me at Dunwoody Mortgage Services.  We will discuss your loan options with you and help you obtain all the great VA loan benefits you have earned with your service.  We love serving American veterans.  And we sincerely appreciate your service and sacrifice.

blog_footer_RShaffer1

Financing a cash purchase

October 20, 2015

blog-author-clayjeffreys3

We are currently in a seller’s market, and you are looking to buy a home. You want to be competitive, but you don’t want to tie up cash for 6+ months. After buying a home, the must be on title for at least 6 months in order to do a cash out refinance OR open home equity line of credit.

If there was only a way to pay for the home in cash now, and then get a loan to recoup the cash immediately. There is now!

Buyers who purchase a home within the past six months in cash are eligible to finance the property today. That way a more competitive cash offer can be presented to the seller, and the home buyer can still get financing after they close on the home.

To qualify for Delayed Financing:

  • The new loan amount can be no more than the actual documented amount of the borrower’s initial investment in purchasing the property plus the financing of closing costs, prepaid fees, and points.
  • The loan is subject to the maximum allowed loan to value ratios for the cash out refinance.
  • The purchase transaction was an arms-length transaction.
  • The transaction is documented by the HUD-1, which confirms that no mortgage financing was used to obtain the subject property. A recorded trustee’s deed (or similar alternative) confirming the amount paid by the grantee to trustee may be substituted for a HUD-1 if a HUD-1 was not provided to the purchaser at time of sale.
  • The sources of funds for the purchase transaction are documented (such as, bank statements, personal loan documents, HELOC on another property).
  • All other cash-out refinance eligibility requirements are met.

Wanting to make a cash offer on a home, but not tie up the cash for the next 6+ months? Buying that home in the state of Georgia? If you’ve answered yes to both, contact me today to get started. I can help guide you through the loan process to get you approved for a cash out refinance without the 6 months seasoning requirement.

footer_clayjeffreys4

 

Should I consider a 15 Year Mortgage?

August 27, 2015

Blog Header

Someone recently asked me, “Do you recommend a 15 year mortgage now since interest rates are so low?”  To quote a CPA friend of mine when asked if a business expense is deductible, “It depends.”  The question I will ask in response is, “How much can you afford to pay every month?”  The answer to the question depends totally on the borrower’s budget.

While getting a lower interest rate is a very good thing, amortizing a loan over 15 years instead of 30 means that you pay significantly more principal with each payment.

So let’s play with the numbers to put the question in perspective:

Your friend Sally is looking to get a $250,000 mortgage on a single family home.  She has excellent credit and will make a 10% down payment.  Let’s assume that Sally would have received a 4.0% interest rate on a 30 year mortgage and her monthly principal and interest (“P&I”) payment would have been about $1,194.  For a 15 year mortgage, let’s assume that Sally would have received a lower 3.25% interest rate, but her monthly P&I payment would have been much higher at $1,757.

Over the life of the 30 year mortgage, Sally would spend $179,674 in total interest payments.  Over the life of the 15 year mortgage, Sally would spend $66,201 in total interest payments.  Ultimately, Sally would save about $113,500 in total interest payments by selecting the 15 year loan.

Term Summaries

Saving that amount of money over the life of the loan is fantastic.  But, on the flip side, Sally would have to pay an extra $560 per month to “earn” the lower rate.  Only Sally can decide if that fits in her budget.  (And of course, Sally would have to earn an income high enough to support the larger payment based on our debt to income guidelines.)

So if your friend Sally, or anyone else you know, wants to buy a new home and thinks a 15 year mortgage is the way to go, have her contact me and I will run the numbers for her.  I’ll take the time to explain the details, and then let Sally make the decision that is best for her family.  There are other ways to reduce your total interest expense, even if you select the 30 year mortgage.  Curious?  Call my mobile phone or send me an email to start the conversation now.

blog_footer_RShaffer1

How to keep your loan approved – Credit

August 18, 2015

blog-author-clayjeffreys3

Wrapping up a three-part series on ways to avoid causing a loan that is approved to be delayed or even denied. One thing to remember as this series comes to an end is that any of these nine examples can cause a loan closing to be delayed or denied AFTER the loan has been approved through underwriting.

How can this be? The loan approval is based upon the information provided to the underwriter. If the parameters change in income, assets, or credit, then the file must be reviewed again (delay closing). Depending on the change, the borrower may no longer qualify causing the approved loan to now be denied.

We’ve talked about income and assets. Today, we’ll finish with credit.

  • Don’t forget to pay your bills on time: I know, this should be obvious, but you’d be surprised. This one seems about as obvious as not quitting your job” from the first post in this series. A borrower’s credit will be pulled again right before closing. If bills were not paid, the credit score could be impacted. At a minimum, this would cause the file to go back to underwriting. If the score is now too low, then the loan could be denied.
  • Don’t buy a car OR trade up on a lease: I’ve had clients get approved for a loan, and then decide to buy a car because they think the mortgage loan is “out of the way.” The loan isn’t approved until it is closed. If a new payment is found, then the file will need to go back to underwriting causing a delay in the closing. If the payment is now too much on a monthly basis with the new home, the car purchase could cause you to no longer qualify to buy the home.
  • Don’t have anyone pull your credit once the loan process begins: This is how underwriting will find out if a car is purchased OR a credit line is opened to buy appliances or furniture. When credit is pulled, the pull is immediately filed under the “inquiries” section of the credit report. The new car payment, appliance payment, furniture payment, etc. won’t be on the credit report yet, but the inquiry is definitely there. When credit is pulled by underwriting on the day of closing, and sees a new inquiry, this inquiry will need to be addressed. If no credit was extended, then closing simply gets delayed. If credit was extended, then the loan goes back to underwriting. Again, depending on the amount of the new payment, it could cause you to no longer qualify on the home loan.

Looking to buy a home, but are also in need of a car? I get it. Life happens. Sometimes you need a car and a home. In my almost 10 years of closing home loans, this scenario happened several times. Contact me today if you are buying in the state of Georgia. I’ll make sure you know how to proceed if you are in need of buying a car and a home at the same time.

With all of these points about actions to avoid, it will hopefully cut out unexpected failures and get you into your new home on time and stress free!

1epic_facepalm_by_rjth_255b1_255d

footer_clayjeffreys4

 

How to keep your loan approved – Assets

August 11, 2015

blog-author-clayjeffreys3

Continuing a series on how to keep your loan approved by avoiding things that can cause a delay in closing OR EVEN causing the loan to be denied.

Last time, we looked at three things to avoid when it pertains to qualifying income. Today, we’ll set our eyes on the assets needed for the loan approval.

When it comes to assets, we mainly focus on documenting all of the money coming in and out of a borrower’s accounts. As a mortgage loan originator, I must show that no one standing to benefit from the sale of the home gave the borrower/home buyer money to purchase the home. I also must show that any gift contributions given to our borrower/home buyer is from an acceptable gift source. Here we go!

  • Avoid making random and undocumented deposits in bank accounts: If you receive a check for $1,000 from a tax refund OR reimbursement from health insurance, make a copy of the check prior to the deposit. Then let me know so there is no confusion in underwriting. This way we avoid any potential delays in closing.
  • Document gift money correctly: When receiving gift money for a loan, I must document the transfer of funds with a gift letter, proof of funds given, and proof of funds received by my client. I also need to show the giver is an acceptable source for the loan program. FHA has looser requirements, but Conventional loans typically require the giver to be family to the borrower OR have a documented/established relationship. Without documenting the money correctly OR coming from an acceptable gift source, the closing could be delayed or even have the loan denied.
  • Don’t transfer large sums of money between bank accounts: Assuming the transfers are done between your own bank accounts, then at worst, this could cause a delay in closing as  we will need to go back to underwriting with your new provided bank statements showing it was your money. Why do you have to do this? Again, I have to show the money didn’t come from anyone standing to benefit from the sale of the home. If the money isn’t from your own accounts, then we have to go back to the second item listed here and document a gift.

Looking to buy a home, but planning on getting a gift from a family member? Expecting a quarterly bonus to show up, and you need that for the down payment? Worried these things may be difficult in the loan process? Don’t worry. I do this all the time. If you are buying in the state of Georgia, contact me today. I’ll instruct you on how to properly document the assets, and make sure this doesn’t cause a delay to our closing date.

Remember, let’s not make a mistake as we go through the process!

double-facepalm1

footer_clayjeffreys4