Wednesday, 18 May 2011
The New York Times: Mortgages: Financing Foreclosed Homes
FORECLOSED homes don’t show very well — financially strained borrowers may ignore maintenance; lenders turn off the water and power to cut the cost of letting the place sit. A poor appearance can complicate financing, but it doesn’t prevent sales.
To read the full article, please click here.
Thursday, 24 February 2011
FORBES.COM: The FHA 203(k) Loan: A Home Repair Loan And Mortgage All In One
From Forbes.com, Amy Fontinelle dives into some great information on the FHA 203k Home Repair Loan Mortgage. She goes over the specific types of 203(k) mortgages and a few of the details of the process. You’ll find out how much cash you’ll need specifically on hand to get started on this gift from the government.
Read more here: http://www.forbes.com/2010/06/18/fha-home-repair-loan-personal-finance-203k.html
Friday, 8 October 2010
Make your house your home! FHA 203k
FHA does it again. In today’s tough economic environment the 203k program helps homeowners rehab and repair their properties. They allow for improvements above and beyond the value of the house today. For example, on a refinance transaction, the maximum mortgage calculation is based on the lesser of:
- The existing debt on the property before rehab, plus the estimated cost of rehab and allowable closing costs, or
- The lesser of the “As-Is” value plus rehab costs or 110 percent of the “After-Improved” value multiplied by the appropriate LTV factor.
So, simply stated, the cost of rehab plus closing costs can exceed the current value of the property – and in the case of example number two above, lend more than the property will be worth at completion. This opportunity doesn’t currently exist anywhere else in the spectrum of mortgage products. In times past, homeowners used HELOC’s or second mortgages to rehab or remodel their homes. However, these programs never allowed for the amount financed to exceed the value of the property.
If you have been staring at the “To Do” list of home repairs now is the time to take a look at the FHA 203k loan program. This is your chance to truly make your house your home. Here is a short list of allowable repairs:
- Foundation Issues
- Termite/Pest Issues
- Completion of unpermitted structures
- Roofs, gutters and downspouts
- HVAC systems
- Minor kitchen and bath remodels
- Interior and exterior painting
- New windows and doors
- Weather insulation
- Decks, patios, porches, etc.
- Basement completion
In addition, there are further incentives for those folks who are interested in helping our environment by doing improvements that are Energy Efficient. Under the Energy Efficient Mortgage Program a homeowner can finance into the mortgage 100 percent of the cost of eligible energy efficient improvements, subject to certain dollar limitations, without an appraisal of the energy improvements and without further credit qualification of the homeowner.
Whether you are looking to make that kitchen new again or add an energy efficient improvement to your property please let American Heritage Lending help you investigate the FHA 203k loan program. This article hasn’t even addressed the basic benefits that are enormous in value. The loan is a brand new 1st mortgage with current market rates, the mortgage interest is still tax deductible, the lender will handle of the paperwork required to do the loan and administer the draws between the contractor and the lender.
Please take the time to contact us today. We can send you more information regarding this program and help guide you through the process of obtaining funds for your improvements!
Wednesday, 1 September 2010
Mortgage Rates Lowest On Record!
American Heritage Lending makes a promise to all clients that we will keep them informed of interest rate drops. Well, over the last several months, we’ve been communicating with our clients every couple of weeks that new lows are being set in the bond market – making mortgage interest rates the lowest on record. There is a direct correlation between the bond market, stock market, and mortgage interest rates. It is quite easy to understand. As investors flee risk in the stock market they buy bonds. This makes the price of the bonds go higher and causes the yields to drop. When those yields drop, so do the interest rates on mortgage loans. The current yield on the 10 year Treasury note is roughly 2.68%. While this might not be a great investment return it is good news for homeowners.
With every piece of good news there is sure to be some not so good news. In this case the not so good news is that our economy is still not back on track and many homeowners are still watching as their precious equity slips away. However, this is not the time to ignore the good news.
It really makes me scratch my head when I hear clients say, “we’re going to wait to refinance…the rates are going to go lower.” THIS IS GAMBLING. Please consider that this is the lowest that interest rates have ever been. American Heritage Lending specializes in FHA Streamline Refinances and helps clients with future refinancing needs for no cost. So, if the rates DO go lower, American Heritage Lending will help you take advantage of the rates available in the market and no additional cost – meaning, please take advantage of the rates being offered today, don’t wait!
The headline news on Yahoo! Finance last week was “Mortgage rates hit low of 4.36 percent.” American Heritage Lending has seen rates lower than this for FHA Streamline Refinances. Rates for five year fixed loans are below 4 percent. This is certainly the time to secure financing on your home. If you are current on your loan you should be able to refinance and lower your monthly payment.
In conclusion, ACT NOW! These rates will not last forever. No matter what you might read in the news.
Friday, 14 May 2010
Where is the housing market headed?
Where is the housing market headed?
During the last several quarters I have been asked many times whether I think we are at the bottom of the market. As any realist would admit, if I knew the answer to that question, I wouldn’t be writing this blog. I’d be out taking advantage of the market to position myself for the eventual direction. So, before we get started, I want to make it perfectly clear that I don’t have any better visibility to what the price of real estate will be in my neighborhood in 12 months than you do – or maybe anyone does. BUT I think it’s important that I publicly share some of the data points that might make you and everyone else who is interested in the value of real estate form an opinion.
Positives – We are in the lowest interest rate environment EVER! In fact, when you consider that the mortgage interest on a home loan is deductible from your income tax, the net interest rate is as low as it has ever been. In many areas of the country it is less expensive to own a home than rent. We haven’t been in this position since the last real estate crash back in the ‘80’s. Another positive is that new home construction has been pretty much non-existent for the last several years. During this time more people are entering the “home ownership” phase of their life and will be buying. This bodes well for the demand side of the equation. The best positive is the rebirth of the FHA. American Heritage Lending specializes in FHA Streamline Refinances as you may already know. We also monitor this market for changes and are happy to report that this segment of the lending business is becoming more and more popular for first time home buyers and repeat buyers. The reasons are simple…the down payment is small (3.5%), the rates are the same or lower as conventional rates, and the guidelines are favorable. In fact, if you have a loan that is FHA insured, even if you are under water on the equity you can refinance to take advantage of the lower rates. This is not yet entirely possible with conventional programs.
Negatives – Foreclosures and “shadow inventory” still loom in great quantity. The job market seems to be stabilizing but unemployment is still high. The number of borrowers who are more than 60 days behind on their payments is still increasing. And, compared to historical data, this number is higher than it’s been since the Great Depression. Many experts say that nationally we are back to prices from 2003. In many areas this might even be conservative. Additionally, the loan programs of yesteryear are continuing to come due. These adjustable rates don’t cause too much harm as the index that they are based on is at all time lows. However, the homeowner who wants to refinance into a fixed rate is not able to for reasons of equity, income, or credit. As we all know, the lending industry has made it very difficult for borrowers to qualify. The other factor that is weighing on the downside of the market is the participation from our government. This is not a political statement of any kind, rather, just an obvious statement that never before has the government of our country put so much capital to work shoring up the efforts of every bank, lender, servicer, etc. At some point this money will need to come out of the market and be paid back.
Conclusion – I leave it to you to decide which way you think this market will go. In fact, I would love to hear from you which way you think we’re headed and why. You can reach me at firstname.lastname@example.org. The good news in all of this is that your primary residence is a place to raise your family and provide shelter. Not a stock that you have to monitor and trade with the familiar “buy low – sell high” philosophy. American Heritage Lending has been positioned well to provide opportunity to families in many neighborhoods. As an expert in FHA Streamline Refinances we believe that the best advice we can give our clients and their friends and families is to make sure that you take advantage of the positives (low rates, buy vs. rent, etc.) AND take advantage of the negatives (government support of mortgage bonds, better loan programs through the FHA, etc.) while they last. At some point we’ll look back at these times and say, “I should have…”
Thursday, 1 April 2010
Am I really skipping a payment?
Am I really skipping a payment?
If you’ve ever refinanced chances are you were promised the opportunity of skipping a payment. Most Loan Originators promise the opportunity of skipping a payment as a fringe benefit to the FHA refinance. The truth is you’re not really skipping a payment. Yes, you don’t have to write a check, go online, or physically make a payment at your bank, but this doesn’t mean you’re skipping a payment and avoiding the payment all together.
You may feel like you’re skipping a payment but the secret is, your payment is made in the payoff of your existing FHA loan.
What does it mean that your payment is included in the FHA payoff? In order to answer that question, we must understand how interest is calculated on your FHA mortgage.
First, it’s important to know that mortgage lenders collect interest in ARREARS – which means they collect interest at the end of the month rather than the beginning. When you make your FHA payment that is due on July 1st, you are paying all interest due for the month of June. When you refinance your FHA mortgage, the payoff figure will include 30 days of interest, even if you’ve never missed a payment. This is because interest is collected by the FHA lender at the end of the month or in ARREARS.
Next you need to know that FHA unfairly charges you for a MONTH OF INTEREST AT THE 1ST OF EACH MONTH rather than charging you per diem interest. What does this mean exactly? It means if you were to win the lottery and decide to pay off your FHA loan on the 3rd of the month, you would still be charged the remaining days in the month even though the FHA loan was paid off on the 3rd. If there was 31 days in the month, you would pay interest on the remaining 28 days. Why do they do this? FHA has promised a full month of interest on the 1st of each month to the investors who buy FHA securities, unfair BUT legal.
This is why American Heritage Lending will only close an FHA Streamline at the end of the month. Most the time we can complete the FHA Streamline earlier in the month but this would cause you to pay DOUBLE interest.
Lastly, it’s important to know that all lenders collect interest in advance when funding a new loan. This is typically referred to as PREPAID INTEREST OR INTEREST IN ADVANCE. When your new FHA loan funds, you begin paying interest to the new FHA lender beginning on that day.
Here’s a real life example:
Your new FHA loan funds on January 30th (TO AVOID DOUBLE INTEREST) – your new FHA lender will collect 2 days of PREPAID INTEREST at closing. There is no February payment because they’ve collected it at closing. February’s interest will then be due March 1st(IN ARREARS). This is when you will make your “first payment”.
So, the illusion is that you “SKIPPED” February’s payment. But, we all know now that the February payment for January’s interest was paid at closing when the old loan was paid off. The next Loan Originator who promises you a skipped payment is not a professional!
Wednesday, 3 March 2010
Benefits of a Streamline Refinance
If you’re reading this blog right now you’re probably wondering why more people don’t take advantage of this program. I mean, what other loan program in today’s market allows the homeowner to lower their rate and monthly payment with the following benefits:
- No appraisal
- No income verification
- Low FICO’s
- Minimum documentation
- Low 30 Year Fixed and Adjustable Rates
Most lenders today are unwilling to look at any refinances where there is more than 80% loan to value. Meaning if your loan is more than 80% of the value of the house (what it would sell for in 30 days) the lender is going to deny the file. HUD was established long ago to help people buy homes. The FHA Streamline Refinance has been around for almost 30 years and it’s still not a widely recognized program.
The FHA Streamline Refinance can be done within 21 days and will be the easiest loan you have ever completed. Limited documentation is required by you and the underwriters won’t review credit, income, or equity.
The loan can be designed specifically for you. If you want to save money on your mortgage payment in the short and long run please consider the FHA Streamline Refinance. We can structure the loan with no closing costs and we offer the American Heritage rate guarantee. Please ask us how you can qualify.
If you’re interested in learning more about the program click here to read an excerpt from the HUD home page regarding FHA Streamline Refinance. If you’d like more information please feel free to contact us by phone or email for more information.
Thursday, 4 February 2010
What is Title Insurance?
Everybody sees a charge for Title Insurance on each refinance or purchase transaction they’re involved in. However, many people can’t define what it is OR why they need it. So, let’s unpack this a little and get some clarity on the subject.
Title Insurance is simply a product used to protect the financial interests of an owner or lender in real property against loss due to defects, liens, or unlawful transfers. It will reimburse the insured for any monetary loss incurred up to the amount of policy. All major lenders require title insurance to insure that their liens are recorded ahead of all junior liens. The property records are such that each lender would rather require insurance versus do a real property records search on every transaction and make certain that they are properly protected in the case of a default or transfer.
The difference between an owner’s policy and a lender’s policy is simple. In an owner’s policy, the seller of the property is transferring title (ownership interest) to the buyer. The policy insures the new owner that the title is free from encumbrances. If the title company issues a policy and misses something they are responsible for covering the financial loss as well as the litigation costs to settle the matter. The amount of the policy is equal to the sales price of the property. On a lender’s policy, the lender is protected in the event the title search/abstract is incorrect and their lien is recorded incorrectly or in a junior position. If there is any loss incurred by a mistake on behalf of the title company the settlement is between the lender and the title company – not the owner of the property.
When compared to other types of insurance title insurance is very affordable. You only pay when you record a new transaction and it’s usually less than 1% of the transaction. The title insurance company bears all the responsibility for the policy including any and all costs of litigation. To make sure that they have enough reserves the government monitors the financial position of these firms closely and requires them to post a large bond in order to obtain a license to sell the insurance.
In conclusion, it might help you sleep better at night knowing that when you buy a house or refinance with a FHA Streamline your financial interests and your lenders are protected. American Heritage Lending is responsible for thousands of clients and their families with respect to the financing we arrange and we feel very confident that our clients are well served with high quality title insurance policies.