No Equity? Underwater? I've Got a Loan for That!

Welcome to this week's post at the Ft. Wayne Mortgage Minder Blog!

I receive tons of questions from borrowers who, thanks to the real estate crash a few years back, have either NO equity in their home or are underwater.  They're also stuck in a rate that they would love to get rid of, they can't sell and they think they can't refinance.  Good news, dear readers, those days are gone.  Whether you have a conventional mortgage, an FHA mortgage or a USDA loan, there are refinance options for underwater borrowers!

I'll tackle USDA and FHA options in a future post, so if you have one of those mortgage types, check back in a week or two.  For now, keep in mind that the FHA & USDA program structures are very similar to the conventional option.  Now, onward for my conventional friends!

I want you to stroll down memory lane with me for a minute........ Remember when we were kids and how utterly bored we would get listening to our parents talk about things like: 

• The neighbors' yards....
• Which house was starting to look rundown....
• How much the neighbor's house sold for....

Boring convo's they may have been, these things had a direct impact on the value of their home and whether it would be a prudent time to sell or refinance and they knew it.  Appraisals are based on the selling price of homes within a specified distance from the home in question within the past year.  They're usually required in refinance loans and almost always required when you're buying.  If the neighbor's house sold for a super low price, or if Mr. Jones got foreclosed on, it can affect the value of your very own home.  Fair or not, my friends, it is how the game is played.

Do you see where this is going?  What I used to consider boring and gossip-y I now realize were everything but; these things had everything to do with the financial decisions in our very own home.  These are very important things to think about if you are considering a purchase or a refinance!

Now, consider this:

Imagine if hundreds of thousands of people across the US suddenly lost their jobs and couldn't pay their mortgages......

Imagine if foreclosures skyrocketed, even in neighborhoods that held their value for decades.....

No need to imagine, right?  We're living it RIGHT NOW.  Thousands of dollars in equity were lost instantly when the bubble burst, even for folks who had great credit and who hadn't even lost their jobs.  

People who had worked years to build equity in their homes to send kids to college, to apply to their retirement someday when they sold their homes and downsized - these folks lost thousands of dollars in equity, and all within minutes.

WHAT IS A HOMEOWNER TO DO?

Now for the GOOD News:

In the wake of the housing crash, the federal government legislated a special program for conventional lenders to help in that very situation.  This program is referred to as the HARP program (a.k.a., the Home Affordable Refinance Program).  There are many details to the HARP program that I will not get into here, but know this:  I am currently refinancing equity-strapped and underwater borrowers through this program.

Here is the KEY point:  under the HARP backing for a conventional lender, the value of your home does not matter.  Seriously!  Most do not do full appraisals - wouldn't that defeat the purpose of the intent to help the homeowner?  They do internal appraisals, sometimes called "desktop appraisals", sometimes called "property valuation reports".  Either way, it is a brief survey of value.  Now, remember what I said a minute ago: Value does NOT matter.  They are required to report a value but that number does not affect whether or not you will get a loan (some do have value caps but not all).  

Lenders DO have qualifying factors, this is not risky lending nor are lenders refinancing for just anyone.  I have listed bullet points minimum requirements from one of my lenders below and many of the standard requirements for mortgages do apply.  I'm not going to post a list of these since there are so many; but one, for example, is that you can't be going through the bankruptcy process.  Chapter 13 bankruptcy is a little different, though, and in many cases I can still help, believe it or not!  Chapter 7 and some of the other types you will need to wait awhile before you can refinance.  However every profile is very different, so email me and see if we can do anything for you.

Now, here's your checklist for the HARP 2.0 program.  I want you to keep in mind that many lenders have additional requirements, so don't be surprised if you find different information out there!  This list is from one of my more popular lenders with the HARP 2.0 program.

Do a mental check to see if you fit in to these criteria, then email me to see if I can help you out.  If you're not sure about some of these items, that's okay!  I can usually determine most of this information for my customers.  If you don't have a conventional mortgage - remember, I can probably still help you!

• Must currently have a conventional (Fannie Mae or Freddie Mac) mortgage.  That is, not FHA; not USDA; and your lender isn't a private lender.
• You must have been in your home prior to May 31st, 2009.
• You must not have had any lates on your mortgage in the last 12 months.
• If you have TWO mortgages, such as a 1st and a HELOC (home equity line of credit) or a standard 2nd mortgage - I can still help!
• Condos and second homes / vacation homes CAN take advantage of this program!

Thanks for taking a minute to read!  If you have general questions, post them below or click here to email me directly!  Please do not post any personal information such as social security numbers or phone numbers below in the comments section.  They are visible to everyone.  I will only take that information over the phone or in person.  On that note - emails reach me immediately, 24/7, if you have questions or to pre-approve you right away!

This has been Kari Peters with Ft. Wayne Mortgage Minder reminding you that knowledge is power, but knowledge of credit makes you downright dangerous!  Thanks again and see you next week!

Livin' That Country Dream..... Sooner Than You Think!

Welcome to this week's post at the Ft. Wayne Mortgage Minder Blog!

Ever dreamed of living in the country?  Think you could never afford it?  What if I told you there is a 100% financing loan product out there for families with low- to moderate-income so long as the house is located in a rural area?  You'd think there's a catch.  Well, guess what?  There is no catch and it happens to be one of our most popular loan products.  This week's post at the Ft. Wayne Mortgage Minder discusses the two types of USDA loans established specifically for low- to moderate-income households realize the dream of living in the country.  And no, you don't have to become a farmer!

A quick history and we'll move on.  Loans from the USDA to borrowers are nothing new, believe it or not.  The first time the USDA extended credit to families happened right after the Great Depression.  Poor families could borrow money so they could move into rural areas and farm the land.  The USDA also gave emergency loans to existing farmers who had lost everything in order to replace much-needed farm equipment.  These days the USDA continues to help families who want to move into the country, but the requirements to become a farmer or to buy tractors and combines have since been dropped!

MLOs (that's me, a licensed Mortgage Loan Originator!) work with two residential programs under the Rural Housing Administration: the USDA Guaranteed Loan and the USDA Direct Loan.  If you read no further than this, here is your take-home message:  the GUARANTEED loan is the one you want, NOT the Direct Loan (in most cases).  We do not even offer the USDA Direct Loan program at Legacy Lending (my company).  Here's the difference:

USDA Direct Loan

In the USDA Direct Loans, you make your monthly checks out to the USDA, not to a traditional lender.  Both the interest rate and the monthly payments are subsidized by the government.  This means that you don't even make the entire payment for the loan; the government helps you out each month.  This sounds great, but here's the kicker (and why we don't even do these loans at Legacy):  when you sell or refinance the home, all of that subsidy money must be paid back to the government.  Every single red cent.  I'd like to see the government make the banks who received all of that TARP money pay it back, but instead, the feds prefer to make sure We the People pay them back.  Isn't that lovely?  And now for the cream-of-the-crop (pun intended) loan program between the two:

USDA Guaranteed Loan

In a USDA Guaranteed Loan, you make your check out to a traditional lender, not to the USDA office.  No portion of this loan is subsidized.  The rate you get is the rate you earn, just like a conventional or FHA loan.  It is unsubsidized and your monthly payment is yours entirely.  In this loan product, the USDA acts as a mortgage loan insurer: you don't have PMI (private mortgage insurance), instead, your loan has been guaranteed to your lender by the USDA.  A small portion of your mortgage bill goes to the USDA for that guarantee, similar to FHA mortgage insurance.  When you refinance or sell, you don't owe anything to the USDA Guaranteed Loan as you would with the USDA Direct Loan.

The USDA Guaranteed Loan product is indeed a great option and we do a ton of these at Legacy.  Here are some basics on the program, take a look and see if you think you would be a good fit for this:

• Let's face it, times have been tough.  I don't have that much money in the bank.  That's fine!  In fact if you have too much money sitting around, you won't qualify.  This loan was designed for people like you.  The entire purchase price is financed, including the 2% funding fee that the USDA charges.  So, essentially, it is a 102% financing program.
• Here comes the catch - finance everything and the rate is going to be sky-high, right?  Wrong!!!  The exact opposite is true actually.  USDA rates tend to be better than the rate you would get under a conventional loan product!
• How do I know if I qualify?  First, you need to make sure the property you're looking at is within the allowed region.  Click here for the USDA address input site.  You'll know immediately.  Don't have a specific address?  That's okay - you can search zip codes, counties, etc. so you know where to begin looking for your dream home.
• I have a home in mind.  Now what? Get ahold of me!  If you want a buyer to take you seriously, reach out and let's get you pre-approved!  It only takes about 15 minutes and I let you know immediately if you qualify.  If you do, I will email your pre-approval letter to you right away and send one to the listing agent at the same time (if you would like).

Thanks for taking a minute to read!  If you have general questions, post them below or click here to email me directly!  Please do not post any personal information such as social security numbers or phone numbers below in the comments section.  They are visible to everyone.  I will only take that information over the phone or in person.  On that note - emails reach me immediately, 24/7, if you have questions or to pre-approve you right away!

This has been Kari Peters with Ft. Wayne Mortgage Minder reminding you that knowledge is power, but knowledge of credit makes you downright dangerous!  Thanks again and see you next week!

Inaugural Post: Tips, Info & More!

Cutting the Crap......

I don't know about you but I'm pretty tired of reading articles containing so-called "credit tips" by people with several letters after their name who probably have no idea what it's like to be broke.  They've probably never:

• Been jobless
• Gone through a horrible divorce
• Been a jobless post-grad watching their finances go down the toilet.

You know, the things many Americans have had happen to them, things that have multiplied since the recession in 2008 that left so many people with worse credit than they've ever had in their entire lives.

While many of the authors of these wonderful credit blogs are happily sipping away at mocha-chino-lattes at their favorite coffee shop telling you to just "pay your bills on time" (important, we know, but seriously!), people like me - licensed mortgage loan originators - are working with real people who've been hit by the recession and have been hit HARD.  We're looking at credit reports and understanding how slim the times have been and how hard it is to come back after a financial downfall.

Hence the birth of my blog, the Ft. Wayne Mortgage Minder.  I wanted a centralized location with more than just the same old rehashed information from overeducated, under-experienced authors.  Many of these authors have never had to look a consumer in the face who's just come out of a horrible divorce and had to tell them they simply can't help them right now because their lyin' cheatin' ex trashed their credit rating for them.  Well, guess what?  I have.  And to fly in the face of these other internet authors I'm beginning my blog with one of the biggest gimmes out there, so keep on reading.

Before you scroll down, just a few things:  Most sites that inform you on credit and home lending promise you all sorts of success if you buy whatever they're trying to sell you on the site.  In return for "just 29.95" they'll give you the salient tips for credit and lending success.  I paid for a few of these to see if they had better info than I did.  Most of them?  Complete crap.  Seriously.  Don't even waste your money!

So that you know, you will NEVER be asked to buy anything on my blog. The information I will be posting is given simply to inform and to educate and that is all.  I am a loan originator and I do want your business, don't get me wrong!  But the posts you'll be seeing will be generated from real-life scenarios, questions folks have asked me and things that I've run into in my line of work.  And, I'll also post new information as lending products and programs change so you will always be informed.

And on to the Tips.......

For my inaugural post, I'm going to share something that will improve your score almost immediately.  This one's a "gimme" and it's one of the few out there that requires very little work and actually improves your score without paying a single bill.  This little trick - called the Optout Prescreen Form - takes about two minutes AND it reduces the number of calls you get from solicitors.

See, the three credit reporting agencies (Equifax, Experian and TransUnion) provide basic information about you to lead buyers that they scrape together whenever you authorize a bank or lender to pull your credit.  To sidestep this for my customers I ALWAYS remove your phone number and email address BEFORE I pull your credit report!  Don't worry about asking Macy's or the bank to do the same the next time you apply for credit.  The solution is much simpler.

People like me pay top dollar to lead companies to obtain these lists.  So, if you're not on the Federal Do-Not-Call Registry, you're going to get a call from someone like me.  Before we get to the links, know these things, as they are VERY important:

• Personal information is NEVER shared by the credit bureaus.  We receive information that is already matter of public record, such as your current mortgage balance and who your current lender is.  I never, EVER receive things like social security numbers, birthdates, not even account numbers.

• If you have added yourself to the Federal Do-Not-Call List, don't worry.  You're not going to get a call.  Trust me, companies who pay for leads must then pay for updates of the DNC list and scrub numbers against it.  In fact I just received an updated list from my office manager this morning.  Penalties to companies and individuals who violate this are STIFF and no one wants to violate it, trust me!  If I had a dime for as many times I've heard my boss say "scrub those lead sheets!!  Scrub em!!"  I wouldn't need to close loans, I'd be rich!  So, before you EVER get a call from me, I've already invested serious capital into you and you don't even know it.

• This opt-out form sends your request to ALL THREE credit bureaus (Equifax, Experian and TransUnion) and it gets updated almost immediately (see a future post on the time it takes for reporting to happen).  In one fell swoop, you've just saved yourself from tons of future solicitations.

• Filing out the form online only opts you out for 5 years, but if you print it off and mail it in it removes you PERMANENTLY.  Take the extra time to mail the mere one-page form in.  Trust me, it's worth it.

• This little opt-out measure WILL improve your credit score in most cases.  Strange but true!

Okay, here are the links:

• Federal Do-Not-Call Registry
• Opt-Out Prescreen

Your job now?  Navigate to both sites, fill 'em out and send to EVERYONE you know!  Your best bet is to email the link to this post so they know that you're not just forwarding some email that may or may not be true.  Remember, you're trying to help your family and friends, not leave them wondering if you've just sent them some email forward without scoping the accuracy.

Thanks for taking a minute to read!  If you have general questions, post them below or click here to email me directly!  Please do NOT post ANY personal information such as social security numbers or phone numbers below in the comments section.  They are visible to everyone.  I will only take that information over the phone or in person.  On that note - emails reach me immediately on my cell phone, 24/7, for questions or to pre-approve you right away!

This has been Kari Peters with Ft. Wayne Mortgage Minder reminding you that knowledge is power but knowledge of credit makes you downright dangerous!  Thanks again and see you next week!