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8 Reasons a Borrower Should Choose an FHA Mortgage

 

The Federal Housing Administration (FHA) is a United States government agency created in part by the National Housing Act of 1934. FHA Mortgages expand the eligibility of home-ownership to borrowers that may not fit into the typical conforming loan.  Nearly 1 in 5 home buyers use an FHA loan to finance a home. The agency is best-known for its old-fashioned 30-year fixed-rate mortgage, but the FHA also offers a 15-year fixed rate loan as well as a series of adjustable-rate mortgages.

 

    1. FHA generally has lower overall down payment requirements, typical down payments are as low as 3.5%, and gift funds can be used for the entire down payment.

   2. FHA allows lower FICO score requirements than conventional financing.

    3. FHA allows for higher debt to income ratios to qualify. That can be great for first time home buyers who may not have significant incomes but can dedicate a greater portion of their income toward home-ownership.

    4. FHA allows for a shorter time frame following major negative credit events, such as foreclosure or bankruptcy than conventional lending.

    5. FHA mortgages are assumable and in a rising interest rate environment can position the buyer to have an advantage when selling their home later. Most conventional fixed-rate mortgages are not assumable.

    6. FHA allows seller concessions up to 6% of the purchase price even with only 3.5% down payment, while conventional loans would only allow 3% seller concessions on down payments of 10% or less.

    7. FHA mortgage insurance is much more affordable than conventional private mortgage insurance for borrowers with less than excellent credit scores.

    8. FHA interest rates are generally lower than mortgage rates on conventional loan given the same credit scores.

 

What are The Advantages of VA Mortgages?

 

The VA Home Loan is the most powerful home buying tool in the industry. The GI Bill reshaped post-War America, and the VA Loan Guaranty Program has surged since the housing crash. VA Mortgages help Service members, Veterans, and eligible surviving spouses become homeowners. As part of our mission at Mortgage 1 and our most rewarding, we are pleased to announce we are one of the top two lenders in our home market in 2016.  VA guarantees a portion of the loan, enabling Mortgage 1 Inc. to provide more favorable terms.

VA Loan  Advantages

    Primary Residence Only

    NO Mortgage Insurance

    Max Loan Amount: $424,100 (Up in 2017)

    FICO 620+

    Mortgage can be Assumable for Other Veterans

    Flexible Down Payment Options.

 

The Streamlined 203(k) Program

FHA's Streamlined 203(k) program permits homebuyers to finance up to an additional $35,000 into their mortgage to improve or upgrade their home before move-in. With this new product, homebuyers can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or FHA appraiser.

 

Purchase Loan & Cash-Out Refinance: VA loans are obtained through a lender of your choice once you obtain a Certificate of Eligibility. You can obtain a COE through eBenefits, by mail, and often through your  lender.

 

Adapted Housing Grants: You can apply for an SAH or SHA grant by either downloading or completing VA Form 26-4555 (PDF) and submitting it to your nearest Regional Loan Center, or completing the online application.

 

What Seller Contributions are allowed under the VA program? 100% of Closing costs and up to 4% on

 

The Advantages of Conventional Financing

While all the other programs may get more press, the more strict requirements for conventional loans can give the conventional buyers a head start over other buyers with lesser qualifications. Homeowners with good credit and money for a larger down payment could avoid paying upfront mortgage insurance or monthly mortgage insurance like an FHA loan. There are several reasons why a Conventional Loan could be the best option for your next home.

 

Faster Loan Underwriting  – Conventional loans can require less paperwork and can be obtained more quickly than government-insured loans. Mortgage lenders can approve the loan, without typical delays from FHA or another government agency. The seller will not face an exhaustive FHA inspection which could require time-consuming repairs.

 

More options – conventional loans come in all different types and sizes want a 10 year fixed? Looking for an adjustable 7-year term than conventional is the only place to find it.

 

Optional Escrow Accounts – a conventional loan also usually offer an option to pay taxes and insurance directly, without adding them to the monthly payment through an escrow account.

Security

Conventional mortgages are usually fixed-rate products, meaning that once an interest rate is “lock in” the borrower will keep that same payment for the life of the loan. Borrower’s payments stay the same month to month, whether interest rates climb or housing prices fall. Even if interest rates fall far enough to make refinancing tempting, borrowers have the flexibility with a conventional mortgage because they have already met the tough requirements to get the mortgage.

Advantages

 

• Mortgage Insurance not required if 80% Loan to value or less

• Cancel existing mortgage insurance at 80% LTV

• Can be used on all property types

• More loan program options

• Can hold numerous conventional loans

• No maximum loan limit

 

Disadvantages

 

• Higher down payment requirements

• Higher credit score requirements

• Maybe more difficult to qualify than FHA loan

• Mortgage insurance still required for loans above 80% loan to value

 

When is a Jumbo Loan Required?

A Jumbo Mortgage is required when the loan amount exceeds the current conforming loan limits. As of 2017, the highest conforming loan amount (set annually by the Federal Housing Finance Agency (FHFA)) can vary by county, In Michigan, Florida, Ohio, and Texas it is $424,100. In California, the limits go as high as $636150. Any loan amount above the limit set by FHFA is normally called a Jumbo Loan.

 

Unlike loans that have the terms dictated by the government, Jumbo loan limits are determined by Mortgage 1 underwriters. The variations on jumbo loans can be substantial when compared to conventional lending.

 

Many borrowers at this level can have complicated income situations, including self-employment and substantial investment income.  Conventional lending normally will require more paperwork with borrowers that have that type of income. Jumbo loans can be less cumbersome from a paperwork perspective.  It is not uncommon for multiple appraisals to be needed when the purchase price is seven figures. Two appraisals are often required when the home purchase a home that is more than $1 million.

 

How do the loan rates compare to conventional mortgage rates?

 

Jumbo mortgage rates are very similar to conventional 30-year fixed rates. As with all lending, the interest rate the consumer pays has more to do with the strength of the borrower’s financial profile.  There are several components lenders pay close attention to when evaluating a jumbo mortgage application.

 

Jumbo loan applicants should have great credit and a score above 720, and a low debt-to-income ratio preferably less than 40%. Jumbo applicants typically have significant reserves and liquid assets. If the Jumbo borrower has other investments or properties, the lender will want to evaluate any monthly payments on those types of investments, as well.

 

What is jumbo loan down payment requirements? How are they different from regular loans?

 

Most jumbo loans require 20% down for primary residences, some programs can require less than that depending on other factors.

 

 

 

5 Ways Borrowers Impact Their Interest Rates.

1. Credit Score

More than any other factor, borrowers credit scores have the most significant influence on all types of borrowing. Mortgage rates vary considerably inbetween credit scores of below 640 and above 740.  Borrowers credit scores predict how likely borrowers will pay the mortgage loan on time. Borrowers have many credit scores and they should remember that the scoring model used by the Mortgage industry is specific to housing.  The score they bought online will not be the same score that the lender uses.

 

2. Loan Amount

Borrowers pay a higher interest rate on loans if the loan amount is particularly small or very large loan. When borrowers apply for a smaller loan, the costs can make up a larger percentage of the total costs. To offset those cost sometimes the lender will have to charge a slightly higher interest rate for very small loans. When the loan amount gets very large the risk factors increase along with the interest rate.

 

3. Down Payment

The value of the home and the amount a borrower puts down can impact the interest rate. In general, a higher down payment means a lower risk and interest rates. Borrowers should strive to put down at least 20 percent if you want to get lower interest rates.

 

4. Loan Term

The term of the loan is how long the loan is for. Shorter terms normally have lower interest rates and lower overall costs, but will have higher monthly payments. If you can afford slightly higher payments shorter terms will reduce your costs of interest rates. Discuss what term is best for you with a Mortgage 1 Loan officer for your exact situation.

 

5. Loan Type

There are several broad categories of loans, known as conventional, FHA, and VA loans. Rates can be significantly different depending on what type of loan borrowers choose.

 

 

10 Steps Toward a Smooth Mortgage Transaction

Navigating the Mortgage Process has never been more difficult than it is now.  The Lending Professionals at Mortgage 1 have access to thousands of programs and the experience to custom tailor a loan that is right for every individual.

First-time home buyers as well as consumers who have been through the mortgage process before should keep these tips in mind:

 

• Future borrowers should review their future budget including the new mortgage amount ahead of time, to make sure they are comfortable with the new payments.
• Borrowers should not to allow any new credit inquiries on their credit report. A new credit report will be pulled a few days prior to closing and all inquiries will have to be explained to an underwriter.
• Do not increase the balances of any existing credit accounts; it’s best to postpone all additional credit transactions until after the closing.
• Try not to make any job or negative income changes and don’t make any major purchases that could change your financial picture.
• Keep up to date on all income taxes, pay all your bills on time and don’t allow any overdrafts to checking accounts.
• All large deposits into bank accounts require source information, if they aren’t specifically identified on the statement, make copies of checks. Be prepared to offer explanations on the source of the deposit.
• Save paystubs and bank statements; they may be required to provide updates before closing.
• Notify us of any plans to be out of town during the mortgage process.
• Any changes regarding the details of the loan need to be reported to the lender to avoid complications and violations to the guidelines of loan program.
• Check email often to ensure prompt receipt of time-sensitive documents or requests for information. Delaying acknowledgement could delay the loan process.
  
  One or two days prior to settlement, the borrower should inspect the property one last time. Check that all items are as agreed to on the purchase contract. On the day of settlement, all those on title need to sign the closing documents. Bring valid photo identifications. Be prepared to spend a little more than one hour at closing.
  
  

5 Home Buying Tips for Millennials

The number of first-time home buyers has fallen significantly since 2008.  According to Fannie Mae National Housing Survey published, July 2014, the number of millennials living with their parents has increased nearly 15% since the end of the Great Recession. Overall The Homeownership rate is down from the all-time high of 69% down to 63.7% according to the most recent U.S. Census Bureau report.

 

Millennials grew up watching the great recession devastate their communities and it is understandable that they have been hesitant to enter the ranks of homeownership. There’s a strong indication that millennials are ready to become homeowners,  Millennials understand the long-term value of owning a home.  According to Fannie Mae  below are a the top  5 reasons why;

 

Having control over what you do with your living space   93%

Having a sense of privacy and security                                 90%

Living in a nicer home                                                              81%

Feeling engaged in your community                                    75%

Having flexibility in future decisions                                       53%

Millennials like many generations before them will start family and enjoy the benefits of homeownership  Real estate is a valuable asset  according to world famous investor Warren Buffet “for a great many people,” particularly for families that plan on being in the same location for many years, He recent told CNBC: “If you know you’re going to live in a given area or think it’s very likely, for a considerable period of time and you’ve got a family, the home is terrific.”

 

5 home buying tips for Millennials

• GET PRE-APPROVED FOR A MORTGAGE SO YOU KNOW YOU’RE SHOPPING FOR THE RIGHT HOME PRICE RANGE AND YOU HAVE A STRONG OFFER.
• FIND A GOOD REALTOR® JUST LIKE ANY OTHER SERVICE YOU SHOULD ALWAYS INTERVIEW 3 AND PICK THE ONE YOU ARE MOST COMFORTABLE WITH.
• TAKE YOUR TIME AND DON’T GET OVERWHELMED.  ASK QUESTIONS AND RESPOND QUICKLY TO YOUR HOME BUYING TEAM.
• DOCUMENT ALL DEPOSITS INTO ALL BANK ACCOUNTS, PAY DOWN CREDIT CARD DEBT, PUT MONEY ASIDE FOR CLOSING COSTS.
• WHEN YOU FIND A HOME ORDER A PROFESSIONAL HOME INSPECTION AND FOLLOW THE INSPECTOR THROUGH THE HOME.

 

 

 10 Ways to Get Top Dollar When Selling a Home

1. Remove personal photos and items.

Buyers need to be able to imagine their own photos on the walls, and most cannot do that if sellers have personal photos up. Don’t make any buyer ask,“I wonder what kind of people live in this home?”

 

2. Americans collect an amazing amount of stuff and prior to listing their home they should de-clutter!

If home sellers have not used something in over a year it is time to consider selling it on E-bay/craigslist or donating it.

• Remove almost all books from bookcases and coffee tables.
• Store all knickknacks.
• Kitchen counters need to be completely clean and polished.
• Anything you need on a daily basis should be stored behind a cabinet door.
• Sellers will be moving anyway and now is a great time to get a start on the move.
  
  

3. All cabinets & closets need to be reorganized and remove ½ of what is normally inside.

Buyers will open all closet and cabinet doors. If the buyer sees a clean organized space then they are more likely to see themselves living there.

• Organize the pantry.
• Carefully stack dishes and glasses.
• Hang shirts together, buttoned and facing the same direction paints by color and type.
• Line up shoes and remove all but two pairs for each family member.
  
  

4. Get the extra stuff off the property!

Homes show better with less furniture, keep the minimum amount needed. Reduce the size of your dining room table by removing extra leaves. Leave just enough furniture in each room to feature the room’s purpose but with plenty of room to move around.

5. Remove/Replace sentimental items.

If the seller intends to take window coverings, built-in appliances or fixtures with them they should, remove them before showing the home. Any heirloom fixtures should be removed and replaced.

 

6. Make minor repairs.

• Replace cracked floors or counter top tiles and any holes in the walls.
• Fix leaky faucets and doors that don’t close properly.
• Consider painting your walls neutral colors, there is no greater homeowner repair that increases home values than a neat repainting.
• Replace burned-out light bulbs and get new linens for the beds.
  
  

7. Make the house look brand new with an extensive cleaning!

• Wash windows inside and out and power wash all outside services.
• Re-caulk tubs, showers and sinks.
• Polish chrome faucets and mirrors.
• Clean out the refrigerator and keep it ½ full and organized.
• Vacuum daily and Wax all floors.
• Dust furniture, ceiling fan blades, light fixtures and light switches.
• Bleach dingy grout and Replace worn rugs.
• Hang up fresh towels in the Bathroom.
• Air out and sanitize any musty smelling areas.
• Clean and organized the garage remove any oil stains.
  
  

8. Look at the Home with New Eyes.

• Go outside and open the front door. Is it inviting? Does the home welcome you?
• Stand in the doorway of every single room and imagine how the house will look to a potential buyer.
• Carefully consider how furniture is arranged and move pieces to see if until it makes sense.
• Make sure window coverings hang level.
• Tune in to the room’s statement and its emotional pull. Does it have impact and pizzazz?
• Does it look like nobody lives in this house? You’re almost finished.

 

9. Check Curb Appeal.

If a buyer won’t get out of her agent’s car because she doesn’t like the exterior of your home, you’ll never get her inside.

• Keep the sidewalks cleared.
• Mow the lawn and keep it weed free.
• Paint faded window trim.
• Plant yellow flowers or group flower pots together. Yellow evokes a buying emotion. Marigolds are inexpensive.
• Trim your bushes.
• Make sure visitors can clearly read your house number.

 

10. Clean out your garage and get your cars parked inside.

• Remove 90 percent of what is currently inside.
• Add a fresh paint
• Remove any oil stains.

Don’t forget to get pre-approved for your next Mortgage with Mortgage 1!

 

 

 Own a Home with 3% Down

 

The 3% down payment option is similar to existing conventional loan programs with much higher requirements and can help meet the needs of 1st-time homebuyers in the following ways:

 

• The mortgage provides the security of a fixed rate loan.
• The property can be a one-unit single family home or condo.
• At least one borrower has not owned a home in the last 3 years.
• The property will be the new owner’s primary residence.
• The loan amount is below $453,101
  
  

According to the National Association of Realtors, the average home price is around $250,000. The 3% down conventional loan is a great way to expand home buyers purchasing power.

 

According to Fannie Mae’s Loan Level Price Adjustment (LLPA) graph, borrowers can have a score as low as 620 to qualify, some borrowers will receive the same or lower rate for a 3% down loan compared to those with 20% down.

 

But these loans will come will come with rates only about a one-eighth to one-quarter of one percent higher than rates available to borrowers putting 5-10% down and the time it takes to save an extra 2% for the down payment could mean higher home prices and tougher qualifying down the road.

 

Subject to credit approval and certain restrictions may apply. Equal Housing lender NMLS# 129386 This is not a commitment to lend. Mortgage 1 Inc. is not affiliated with your current lender. Minimum and maximum loan amounts apply. All approvals are subject to underwriting guidelines. This is not a commitment to lend. Restrictions apply. All Rights Reserved. Mortgage 1 Inc. is not acting on behalf of or at the direction of USDA, Fannie Mae or Freddie Mae or the federal government. (5.00% Interest rate has a corresponding Annual Percentage Rate of (APR) of 5.12% with a 180-month term Rates effective 6/01/2018. Rates are not guaranteed and may change daily. APR is based on a $100,000 loan amount/ Max Loan amount is dependent on your county limits. Rates assume 20% down) APR’s and loan amounts may vary at any time subject to equity, qualifications and market conditions. Minimum and maximum loan amounts apply. The loan information used in connection with this offer was derived from public records. There are no prepayment penalties. Depending on the type of loan the rate may vary after the close. Mortgage 1, Inc. is an Equal Housing Lender. As prohibited by federal law, we do not engage in business practices that discriminate on the basis of race, color, religion, national origin, sex, marital status, age (provided you have the capacity to enter into a binding contract), because all or part of your income may be derived from any public assistance program, or because you have, in good faith, exercised any right under the Consumer Credit Protection Act. The federal agency that administers our compliance with these federal laws is the Consumer Financial Protection Bureau P.O. Box 4503 Iowa City IA 52244

 

 

5 Reasons to Refinance

Mortgage interest has historically been treated differently than all other debt.  It is currently the only debt eligible for a reduction in federal income taxes (Please consult a Tax advisor).  Refinancing done correctly can be the best financial move consumers make.  The first step should always be to sit down with a Mortgage 1 professional to determine financial goals and see if a refinance would be the smart move.  Here are 5 Reasons to Refinance;

1. Credit score has improved since the original mortgage closing. Normally just adding a mortgage account that has been paid on time for a year or more can have a significant positive impact on an individual’s credit score.  Mortgage rates are discounted for every 20 point increase in borrowers credit score up to 740.  Depending on how much higher a consumer’s credit score has improved the potential savings could be substantial. Especially if you combine it with number 2

2, When homes are purchased with less than a 20% down payment many times the borrower will be required to get Private Mortgage Insurance. (PMI).  Refinancing can be a great way to remove those extra premiums for their monthly payments.  Since 1991, home values have increased an average of 3.3% each year, according to the Federal Housing Finance Agency’s (FHFA) House Price Index (HPI). Just in the past year, home prices went up an average of 6.0% across the country.

3. Reduce the term of the loan. When combined with number one and two on this list a borrower could actually get a similar payment with a big reduction in years left to pay their mortgage. Going from a 30-year to a 15-year mortgage can result in saving thousands in interest over the life of the loan.

4. Combining high-interest loans to a lower tax-deductible payment. Student loans, Personal Loans, Auto Loans traditionally are secured with higher interest rates over Mortgage loans.  Refinancing them can be a great way to simplify the number of payments made each month and reduce overall monthly payments.

5. A low-cost source of cash for home improvements or investments. Home improvements can improve the value of the home and many investments that pay higher than the after-tax cost of can provide a source of income over the cost of a mortgage.

A consumer’s best move to always to sit down with a Mortgage 1 professional to determine the best course of action and match their mortgage to the consumer’s goals.  If you would like to start now just call your local Mortgage 1 office.