New County Loan Limits For Riverside & San Bernardino

Stateline Funding Corporation has expanded Fannie Mae’s High Cost loan limit to Riverside and San Bernardino Counties.  The new loan limit is $679,650  effective immediately.  Lower rates, fewer guideline restrictions and less documentation than jumbo loans.  No more manual underwriting, instead we use Desktop Underwriting Approvals and can close loans in 15 days.

Buy A Home 1% Down

Woodcrest Pool Home For Sale

Click link for Instant photos, open house dates and price.

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Remove Your FHA Mortgage Insurance

Mortgage Insurance Is A Waste Of Your Hard Earned Money!

What Is It?
FHA Mortgage Insurance Premium (MIP) is a financial guaranty for FHA loans that helps reduce loss in the case of a default by the borrower. FHA acts as the insurer for a lender that services FHA loans.

When Can I Stop Paying FHA Mortgage Insurance?
There are two ways to remove your FHA mortgage insurance from your loan:
1) Refinance to a conventional loan without mortgage insurance.
2) Wait for automatic termination when the balance reduces to 78% compared to the original value of the property. Unfortunately, this does not take into account any of the property’s appreciation gained over the years. Making your normal 30 year payment, the time frame is approximately 11 years for the automatic termination. FHA loans obtained after June 3, 2013 have no mortgage insurance termination date and remains for the life of the loan.

The surest way to get rid of your mortgage insurance is to refinance to a conventional loan without mortgage insurance. The first step in this process is to verify the value of your home to see if you have gained enough equity to meet conventional loan requirements.  Go to http://www.MortgageInsuranceRemoval.com for your Free Automated Home Valuation Report.

Joint Mortgage and Joint Ownership: Which is the Better?

A joint mortgage means nothing more than that two people are sharing the responsibility for paying the mortgage loan. Both names are included on the loan agreement, and both are equally responsible for ensuring that the mortgage loan is repaid as contracted.  It does not infer that each has a share in the ownership of the property.

For example, you could have a parent help you to purchase your home by agreeing to have their name stated on a joint mortgage. This gives added security to the lender, and will enable the parent’s income to be considered when the total sum you can borrow is agreed. Without the joint mortgage you would have had to purchase a cheaper property.

Joint Mortgage and Joint Ownership Are Not the Same

So Joint Mortgage and Ownership are not the same. The discussion is between a joint mortgage where the risk is shared, and joint ownership, where each party involved in the risk also owns their share of the property. You would think the latter arrangement would be best, but not always.

Sometimes it is not best for ownership of the real estate to be legally shared. One example of this is where a parent has helped a couple to purchase their first home.  Although a joint mortgage would be necessary for this to happen, it would be crass for the parent to then insist on owning a share of the marital home.

Even if ownership has been agreed to be shared, there are options as to the way in which it is shared. There are two basic options you should consider when coming to a joint ownership agreement. You can make the passing on of ownership to your partner automatic on your death, or make it clear in your will to whom ownership should go.

Joint Ownership Agreements

Joint Tenancy Agreement:  There are some legal aspects of joint ownership that should be considered. This can be arranged in two ways. One is Joint Tenancy, where the property is jointly owned and the survivor assumes sole ownership in the event of the other partner’s death. This is the best arrangement for married couples, and should be set up when the mortgage is arranged. It guarantees the survivor to take sole ownership of the property.

Tenants in Common: The other is known as Tenants in Common, where each partner owns an equal share of their home. They can leave that share to whoever they wish in their will. In event of a death, sole ownership would have to be established in probate court. It is feasible in this case for one partner or even both to leave their share in the property to a third party in their will.

Leaving the Mortgage Agreement

It is normally not possible for either partner to leave the mortgage agreement. Both are legally responsible for repaying the mortgage loan. Even if they agree between them, the lender will likely not agree unless they are certain the remaining person has the wherewithal to make the combined payment. Only if the loan is assumable can this be carried out by right, and even then only if the remaining debtor is able to prove continued ability to pay.

Joint Mortgage Vs Joint Ownership: Summary

This is not a choice, and hence not a valid comparison. Joint mortgage and joint ownership are not options as such. You can have one without the other. Two people can jointly pay a mortgage on a home that only one of them owns.  Likewise two people can be legal owners of a home, the mortgage for which only one of them pays.

If this seems confusing, a mortgage professional can help make things clear.  It is essential that you understand these terms before entering into any one of them. You don’t want to find yourself paying equally for a mortgage on a home for which you have no ownership rights – unless it is for your son or daughter!

 

Ability To Repay a Mortgage: New 2014 Mortgage Rule

The ability to repay a mortgage has always had inherent importance as a factor in the success or otherwise of a mortgage loan application. In January, legislation helped mandate such a requirement.

It is intended to protect borrowers from themselves, and to measure as far as is possible that they are able to repay their agreed mortgage. Adopted by the Consumer Financial Protection Bureau (CFPB), the rule is not only designed to ensure that proper checks are carried out on prospective borrowers, but also to protect them from lending practices that have led to problems in the past.

Here are some of the main points of the new rule.

Verification of Financial Information

In order to establish theer ability to repay a mortgage, lenders must examine documents proving a borrower’s financial status. That includes:

• Employment status
• Income
• Existing assets
• Existing debt obligations: credit cards, car loans, other mortgages, etc
• Credit record and history
• Monthly outgoings
• Alimony, etc

Each of these must be documented. This means that ‘no doc’ loans will no longer be allowed.  Lenders will not be permitted to offer quick finance without documentation from the borrower. Many past foreclosures were due to lenders failing to identify false financial details from borrowers whose monthly income was too low for the amount of mortgage offered.

Ability to Repay a Mortgage

A mortgage lender must make sure that the borrower has the ability to repay a mortgage before offering it. They should examine the debt to income ratio, and be sure that the monthly repayment can be easily met without hardship. Too many loans have been offered in the past to borrowers who were already overburdened with monthly payments.

Toxic Features Involving Loss of Equity

Loan terms should not exceed 30 years and interest only payments should not be offered. Negative amortization should likewise be stopped. This is the type of loan where the principal increases over time.

These features lead to either static equity at best, or more likely, a loss of equity. The borrower owes more over time than the value of the home. The asset is no longer an asset but a burden: it cannot be sold to cover the amount still owed.

Debt To Income Ratio Caps

In future, mortgages will only be offered where the DTI ratio is less than 43%.  It has often been the case that mortgage loans were offered with DTI ratios well above that, which is a strong indication of an inability to consistently maintain repayments. For a limited period, loans will be offered to borrowers with a debt-to-income ratio of more than 43% if they otherwise qualify for a Fannie Mae or Freddie Mac insured mortgage.

Abolition of Excess Closing Fees

Many people who have been offered a mortgage have been hit hard by unexpected closing or upfront fees. There will be a limit placed upon such fees including those paid to brokers and loan officers.

There are several other factors involved in the ability to repay a mortgage  that will help to prevent lenders from offering loans to those obviously unable to afford the repayments. This is to benefit both lenders and borrowers, since foreclosures benefit nobody. If you intend purchasing property towards the end of this year, keep the above comments in mind.

FHA no longer will drop mortgage insurance premiums

Andrew Cuomo, then the U.S. Housing and Urban Development Secretary, said it was a big day for the nation’s homebuyers.

The Federal Housing Administration’s Mutual Mortgage Insurance Fund (MMIF) had experienced an unprecedented financial turnaround, allowing borrowers who had reached a 22 percent equity stake in their homes an opportunity to drop their mortgage insurance “just like the conventional markets,” Cuomo told a group of reporters.

That announcement, made 13 years ago, was a big deal because FHA mortgage insurance previously had to be paid for the entire term of the loan, regardless of how much equity a borrower had in the property. The move saved a borrower with a $100,000 loan approximately $1,500 over the life of the loan.

As of June 3, 2013, however, most FHA loans will again require mortgage insurance for the life of the loan. In a recent letter, HUD informed all lenders offering FHA loans that the automatic cancellation of mortgage insurance premiums will be rescinded and that any mortgage greater than 90 loan-to-value at time of origination (the overwhelming majority) would require mortgage insurance for the life of the loan.

If the FHA loan is originated at an amount equal to or less than 90 LTV, the mortgage insurance must remain for 11 years.

FHA also will scrutinize credit scores and debt ratios. As of Apri11, 2013, HUD will require a “manual” underwriter review if the credit score is less than 620. This means that even if FHA’s Automated Underwriting System (AUS) approves an application, an underwriter may reverse this approval with a closer review of the data.

In addition, if the total qualifying ratio, often referred to as “debt-to-income” ratio, is greater than 43 percent of the borrower’s income, a manual underwrite must be obtained regardless of AUS findings.

Why? The once healthy MMIF now is struggling to stay afloat. In fact, an audit, conducted by the Integrated Financial Engineering Inc., concluded that FHA had reserves of $30.4 billion, but will experience a net loss of $46.7 billion for 2012 on existing loans in its primary account.

The agency entered fiscal year 2013 at negative $16.3 billion. By comparison, the FHA MMI Fund had a negative economic value of $2.6 billion in 1990 before rebounding later in the decade.

“These new rules are intended to ensure that borrowers have sufficient income or assets to repay a mortgage loan,” said Mark Palmer, vice president of loan production for Seattle Mortgage. “Since these rules go into effect for applications received on April 1, those seeking FHA financing have until March 31 to get their application in place under the current rules.”

Mortgage insurance – which the Federal Housing Administration labels mortgage protection insurance – is commonly called private mortgage insurance (PMI) by conventional lenders. Most banks, credit unions, savings and loans and other lending institutions require this coverage for people borrowing more than 80 percent of the purchase price of the home.

Because a lack of a substantial down payment has made some borrowers more of a risk than other conventional buyers, low down-payment buyers must obtain an insurance policy to make sure the lender gets his payments. If the borrower defaults on the loan, and the house is not sold for enough money to repay the bank, mortgage insurance will supply the difference.

The cost of mortgage insurance varies depending upon the amount borrowed and when the premiums are paid.

Palmer said that borrowers with loans not insured by FHA could still request to have their mortgage insurance payments eliminated when they reached the 22 percent equity threshold.

“However, it’s not automatic,” Palmer said of dropping the payments. “The borrower must request it be removed. And, depending on when they obtained the mortgage insurance, there is a minimum amount of the loan term that needs to be fulfilled. At this time, the minimum is generally 24 months.”

Private mortgage insurance is often confused with mortgage life insurance. PMI is required by lenders, while mortgage life is an option for the buyer.

Typically, a mortgage life policy pays off the home if the buyer dies or is disabled. Often, the goals of mortgage life can be accomplished by purchasing a term life insurance plan. This option can be less expensive and stays with the individual, not the loan. Many people think the coverage follows the borrower, but it only follows the loan.

Mortgage life is still available if you did not accept coverage at the time you took out your loan or refinanced it. Ask the lender who wrote your loan, or the insurance agent who handles your homeowners insurance, for details.

FHFA Extends HARP to 2015

The Federal Housing Finance Agency (FHFA) on April 11, 2013 directed Fannie Mae and Freddie Mac to extend the Home Affordable Refinance Program (HARP) by two years to December 31, 2015. The program was set to expire December 31, 2013.

“More than 2 million homeowners have refinanced through HARP, proving it a useful tool for reducing risk,” said FHFA Acting Director Edward J. DeMarco. “We are extending the program so more underwater borrowers can benefit from lower interest rates.”

In addition, FHFA will soon launch a nationwide campaign to inform homeowners about HARP. This campaign will educate consumers about HARP and its eligibility requirements and motivate them to explore their options and utilize HARP before the program ends. HARP is uniquely designed to allow borrowers who owe more than their home is worth the opportunity to refinance their mortgage. Extending the program will continue to provide borrowers opportunities to refinance, give clear guidance to lenders and reduce risk for Fannie Mae, Freddie Mac and taxpayers.

Here are some of the requirement to be eligible for a HARP 2.0 refinance:

• Your mortgage must be securitized by Fannie Mae or Freddie Mac. NOTE: this is different than who you make your mortgage payment to (your mortgage servicer). You may be making your mortgage payment to a big bank and your mortgage is securitized by Fannie or Freddie.

• Your mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009. This is not the same as your closing date and takes place sometimes several weeks after the closing of your loan.

• Your mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.

• Your current loan-to-value (LTV) ratio must be greater than 80 percent. It doesn’t matter how “under water” your home’s equity is! Often times, no appraisal is required.

• You must be current on your mortgage payments with no late payments in the last six months and no more than one late payment in the last 12 months

You can click this link to use the Fannie Mae & Freddie Mac look up tools to see if your loan is owned by Fannie Mae or Freddie Mac.  http://www.harp2lender.info/

Fannie Mae and Freddie Mac have helped approximately 2.2 million borrowers refinance their homes since HARP was introduced by FHFA and the U.S. Department of the Treasury in April 2009.

What NOT To Do When Buying A Home

If you are in the process of buying a home or just beginning your search, you need to be aware of what NOT to do in order for the process to go smoothly.

Do NOT change jobs or become self-employed

The lenders need to see stability in your work history and if you change jobs you are starting the process all over. Plus, they require 1 month pay stubs at the closing of every loan to verify your income and you will not have that by the time your loan closes. Also, if you desire to be self-employed, you must wait until your loan has closed escrow. When self-employed, you are required to have 2 years of tax returns in that profession.

Do NOT open new credit

When you are approved for your loan to buy a home, it is based on the credit history you currently have and the liabilities counted against you. When you open new credit you are telling lenders you are a high risk. Also, it can affect your credit score, which you want to remain as high as possible.

Do NOT buy a new car

This will definitely affect your qualification for buying a home. You should never add more debt when applying for a loan. The new car payment will be counted against you, increasing your debt ratio which ultimately qualifies you for less money. Wait until you own the home before you buy a new car.

Do NOT finance or charge furniture to a credit card

We know how exciting it is when you are buying a house and you want to pick out all your new furniture, but you must wait before you buy the furniture for your home. You don’t want to finance anything in the process of buying a home. You also don’t want to lessen the amount of cash in your bank accounts because lenders like to see 2 months of your funds sitting in your account. So the best thing is to wait to furnish your home until you have the keys in your hand.

Do NOT change your bank

Lenders look for stability when approving a loan for a new borrower to avoid lending to borrowers who are high risk. They need to see 2 months bank statements before approving your loan, so you need to stay with the same bank.

Do NOT be late or miss a payment for any credit account

This is a huge factor. Lenders are providing loans to borrowers who are responsible with credit and can prove they will repay the loan on time. If you are missing payments or have late payments on your credit report, you are telling the lenders you are high risk and they will not lend you the money to buy a home. Be responsible and pay every account on time!

These are a few of the most important things you should not do when buying or thinking of buying a home. Following these guidelines will help your loan transaction go smoothly and get you into your new home faster.

New Changes To FHA Loans

Announced on Wednesday, the Federal Housing Administration (FHA) will be implementing important new changes to FHA home loans. Set to begin early spring of 2013, FHA has made key changes to help increase the reserves for the Federal Housing Administration as well as minimize loan defaults.

Increased Mortgage Insurance Premium (MIP)

The first change to take effect is the increased MIP on FHA loans. Government has stated the premium will increase 10 basis points, or .10 percent. Currently the MIP is 1.25, but beginning spring of 2013, the MIP will increase to 1.35. Jumbo mortgages ($625,500 or larger) will receive a 5 basis point increase, or .05 percent.

Lifetime Up-Front Mortgage Insurance

The second change that will be taking place is requiring borrowers to pay the annual premiums for the life of their loan. Originally, FHA cancelled MIP on loans after  22 percent of the original principal balance had been paid. However, with the new changes, the MIP will no longer be cancelled and the borrower must pay the MIP until their loan is paid off.

Why did FHA make this change?

The reason a borrower must now pay the MIP for the lifetime of their loan is due to the fact that FHA is responsible for insuring 100 percent of the outstanding balance throughout the entire life of the loan. Also, FHA has foregone billions of dollars by cancelling the MIP after a loan reaches 78 percent of the original principal balance. By making this change, FHA revenue will significantly increase.

Increased Down Payment For Loans Over $625,500

With an FHA loan, a borrower only has to put down 3.5 percent of the purchase price. However, FHA made a change to the down payment requirements for loans greater than $625,500. Beginning this spring, a borrower must have a minimum down payment of 5 percent for an FHA loan.

According to the risk management team of the Federal Housing Administration,

“The changes announced this week will further contribute to the efforts made throughout the Obama Administration’s tenure to improve risk management at FHA and protect the Mutual Mortgage Insurance Fund.  Because of these commitments, the changes made at FHA over the past four years have already added more than $20 billion in value to the MMI Fund.”

These new changes to FHA loans are set to take place Spring 2013.