US Housing Market Swings in Favor of Home Ownership

Mortgage Presentation

Buying or Selling Florida real estate in 2014?  Don't miss this important presentation being held on February 4 at the Delray Beach Chamber of Commerce.

Self Employed Borrowers & Mortgages

Being self employed leaves you with the freedom to make your own decision as well as not have to answer to a boss. Unfortunately, it is not the 90's anymore, when borrowers only needed a few months of bank statement to show your cash flow. Now self- employed borrowers must prove their income with two years of tax returns instead of using a stated income loan.

Declining income is most likely a result of the recession, but for someone who is attempting to qualify for a loan that takes the average of the past few tax returns; this can actually prevent a borrower from qualifying for the loan.  

Many self-employed borrowers report the gross income minus their expenses for a net income. It is more beneficial to have the net as low as possible, but the net is what they use to qualify the borrowers income. They have to ask themselves "what is more important? Being approved for a larger loan or avoid paying taxes?" 

They must also prove their business exists. In addition to the tax returns a lender may request the following: 

1. Written statement from their accountant.

2. Business License

3. Website

4. Client Statement

5. 1099

Jumbo Loans aka a Jumbo Mortgage

What is a Jumbo Loan?

A jumbo loan is a non-conventional loan that agencies such as FHLMC and FNMA, will not buy and trade due to the loans cost. When lender offers a mortgage loan, they normally do not keep the mortgage for the duration of the loan. They sell the loan on the secondary market to agencies such as FHLMC and FNMA.

Jumbo loans were designed to help people with high incomes afford homes in higher price range. Whether it be a luxury home or a smaller home in a higher end neighborhood. With home prices rising more middle-income Americans have turned to Jumbo loans to purchase their dream homes.  

a.k.a. "Jumbo Mortgage"

The pro's of a Jumbo Loan

- You need the money, you get the money

- No need for multiple loans

- Variety of different Jumbo loan programs

- Dropping interest rates

- Easier to apply for

- Refinancing can bring huge savings

- Special offers from banks & lenders

The con's of Jumbo Loan

- HIGHER interest rates

- More difficult to get

The bottom line is that if you are considering a jumbo mortgage loan, DO YOUR HOMEWORK!

As with any major purchase, weigh your options, both the pros and cons to ensure you make a well informed decision for your loan. 

Pre-approved!!

What is pre-approval?
 It is a written commitment from the lender (The Mortgage Firm) stating that the borrower (you) qualify for a particular loan amount based on your credit information and income.

Why?
There are many reasons to get pre-approved. The most important reason for accurate idea of how much you can afford. This will ensure that you only look at houses that are truly in your price range. A pre-approval letter is essential in a competitive real estate market. If you make an offer on a house without a pre-approval the seller will not take your offer as seriously as someone who has been pre-approved. This means you could lose out on your dream house.

**Most bank owned homes will require a pre-approval letter 
from the lender before accepting the offer**

How do you get pre-approved?

First contact your lender (me) 

You will need to provide:

• W2 from the past two years
• Your pay stubs for the past 2 months
• Your tax returns for the past 2 years
• Your checking and savings account statements for the past two months
• Your statements for all other assets for the last two month
• Current mortgage statement or contact information for current landlord
• If you are self-employed: you will also nee your business tax returns for the past two years as well as your year-to-date profit and loss statement with a balance sheet
• As your lender I will also need to pull a current credit report for you and the co-borrower.
• If you are divorces, separated, or paying child support or alimony- documentation will be needed

We will analyze your credit report for any red flags, the credit score will affect your ability to qualify for a loan, as well as the rate your can get. A score above 720 will get the most favorable rates. 

What happens if you are denied?

This just means that you have some work to do. Three most common ways:

1. Correct the errors that may have been discovered in your credit report
2. Decrease the debt and improve your debt to income ratio
3. Increase your down payment amount in order to qualify for the price of the home you want

What NOT to do after you have been pre-approved

• Do Not apply for a new credit card
• Do Not make any major purchases
• Do Not pay off all debt
• Do Not co-sign any loans
• Do Not change jobs
• Do Not ignore your lenders requests
• DO keep a paper trail of all deposits
• DO stay current on existing accounts
• Do Discuss seller 

For more information specific to your situation is available, just a phone call away! 

Federal Housing Administration (FHA)

The Federal Housing Administration (FHA) is a United States government agency as part of the 
National Housing Act of 1934. 

The goals were:

• To improve the housing standards& provide home financing through insurance of mortgage loans 
• Stabilize the mortgage market. 

4 out of 10 of the American population were renters
The new practices allowed a number of people who could afford the down payment and monthly payments.

When the FHA was first introduced to Americans, the industry was "flat on it's back".
Over 2 million construction workers were without jobs.
The terms for those who were seeking a mortgage were difficult to meet.

1965: It became part of the Department of Housing & Urban Development Office, aka HUD. 

1940's: The FHA helped finance military housing and homes for the  veterans returning from the war. 

1950's & 1960's: helped spark production of million of privately owned apartments for elderly and handicapped,as well as lower income Americans. 

1970's: Thousands of apartment building were struggling to survive, the FHA's emergency financing kept troubled properties a float. 

1980's: Home prices were on a steady decrease & the possibilities for potential home buyers to get financing they needed during the recession.

2001: Nations home ownership rate has soared to an all time high of 68.1%

The FHA insures the loan so the lender will offer a better deal!

The government insures FHA Loans, making the home the collateral and giving lenders protection against default.

Who is eligible?

• First-time Home-buyers
• Low Income Households
• Low Credit Scores
• Poor Credit History
• Bankruptcy
• $0 Out of pocket cash

The Advantages to FHA?

• Smaller down payment (3%)
• Lower Costs & closing cost can be included in mortgage
• Easier to qualify
• Flexible Credit Guidelines
• No income requirements

Tip for First Time Home Buyers- By making your FHA Loan payments on time, you are building your credit and equity, you'll have the option to refinance into a conventional loan, with even better rates and NO MORTGAGE INSURANCE.

"Take the first step to home ownership and contact me for more information about 

FHA Loans!

             

VA Loans, are you eligible?

Here are the basic eligibility requirements for a VA Loan:

¨ 90 days or more active duty service during wartime

¨ 181 days or more of active duty during peacetime

¨ You were not dishonorably discharged

¨ You are active duty and meet the above requirements

¨ You are the surviving spouse of a veteran who died during service or 

    because of service-related injuries and you have not remarried

(If you're a reservist, you will need six years of service and an honorable discharge - OR - if you've been deployed for 90 days or more in a combat zone, then you will be eligible for a VA Loan)

Alright, so we have established that you are eligible, but now comes the next question – Do you Qualify for a VA Loan? If you are confident that you'll have no problem qualifying for a VA Loan, then the next step is to get your Certificate of Eligibility, which you can obtain from the VA or your VA Loan Officer can obtain one for you as well. Credit You don't have to have great credit to qualify for a VA Loan. Lenders will vary on what they are looking for credit score-wise, but most require a 620 minimum score. Lenders are going to look at your last 12 months to make sure you've been timely with all your payments as well. One late payment won't disqualify you, but lenders want to know you are on top of your credit.  Income The VA wants you to not only have enough money to make your mortgage payment each month, but they want you to have money left over after everything has been paid as well. This is called your residual income and there is a minimum requirement depending upon your location and family size.  Employment The VA likes it when you are employed - it makes you an attractive borrower when they know you have steady income and it's been that way for 2 consecutive years. There are circumstances where VA will allow for less than 2 years, but you will need a good explanation and documentation to support it.  Bankruptcy If you've had one - don't fret, it's not the end of your VA quest - you just have to wait. VA requires that you're two years removed from a Chapter 7 Bankruptcy discharge and 1 year removed from a Chapter 13 discharge. Also, VA requires that you've had no late payments while paying off a Chapter 13 Bankruptcy. *If you are confident that you'll have no problem qualifying for a VA Loan, then the next step is to get your Certificate of Eligibility, which you can obtain from the VA or your VA Loan Officer can obtain one for you as well.