Archive for the 'Mortgage Guidelines' Category

Rates are even lower and tax credits may be extended

July 1st, 2010

Written by Frost Mortgage

It’s a busy week in the news for potential homebuyers.

First, both 15-year and 30-year loans hit record lows for the second week in a row.

Second, as Reuters reports, the tax credit extension has passed a key hurdle:

The House backed by a vote of 409-5 a measure to extend the closing deadline to September 30 for buyers who already met the April 30 deadline to have a signed contract. The current deadline requires those buyers to close the transaction by June 30 to receive the $8,000 tax credit for first-time homebuyers.

The measure must also go before the Senate for approval.

Rates are dropping and home sales are also down.

What this means is an exceptional window of opportunity for those looking for a new home. Please contact one of our loan officers today and allow us to help you find out what is available to you. We think you’ll be glad you did.

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FHA: A range of creative options for borrowers

June 30th, 2010

Written by Frost Mortgage

The Federal Housing Administration (FHA) helps prospective borrowers in a wide range of ways. Frost Mortgage is a huge fan of the FHA program; in 2009, for instance, we were named No. 2 in America for FHA fundings by Mortgage Originator Magazine, and we’ve consistently been the top FHA lender in our home state of New Mexico.

CreditLoan.com has a great article on some of FHA’s main programs, including loans for

• First homes,
• Fixer-uppers,
• Reverse mortgages,
• Energy efficiency, and
• Manufactured or mobile housing.

We can help you with any of these needs–we’re FHA experts. Please call one of our experienced loan officers today for more information on how FHA programs can help you fund your next move.

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Final days for ’seller concessions’

June 1st, 2010

Written by Frost Mortgage

The writing is on the wall for funds for homebuyers from sellers that can pay for some services and taxes in the transaction. As the Washington Post explains,

Say you’re buying a $200,000 house. If you are using FHA [Federal Housing Administration] financing under current rules, you can structure the contract so that the seller agrees to pay at settlement all closing costs and even the cost of some needed repairs, up to 6 percent of the price, or $12,000. On a $400,000 house, allowable concessions go to $24,000. That’s huge, especially if you have to struggle to come up with a 3.5 percent down payment and you’re not sure where you’ll find the closing and repair money.

Contrast that with using Fannie Mae or Freddie Mac conventional financing, in which seller concessions generally are limited to 3 percent. For many buyers, the extra negotiating flexibility built into the FHA program makes the choice of programs a no-brainer.

Sometime this summer, though, seller concessions will be cut to a maximum 3 percent. The precise timing is unknown because the announcement had not been made in the Federal Register, but the message is clear: Act now if the concession affects your deal.

We can help. Frost Mortgage is a “Full Eagle” FHA expert. Please contact one of our experienced loan officers today and we’ll quickly help you work through any questions. Because at Frost Mortgage, we don’t just close loans–we open doors.

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‘Qualified mortgages’ to be exempt from new risk requirement

June 1st, 2010

Written by Frost Mortgage

The recent “Wall Street Reform” bill required that 5 percent of a mortgage be retained as a buffer against risk. Fortunately, as National Mortgage Newsreports, a measure passed in May amended that requirement to exempt “qualified mortgages” (subscription required)–those that are generally fully documented and include 20 percent down and mortgage insurance. We agree with Sen. Johnny Isakson, one of the co-sponsors of the bill, who said, “Risk retention is not the cure-all for good lending–underwriting is.”

If you’d like to join a mortgage group that values smart thinking and solid principles like these, please look into our Branch Partner Opportunities. We’re always looking for qualified new partners for this industry-leading offering.

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Appraisals must now be electronic, Fannie says

May 11th, 2010

Written by Frost Mortgage

Fannie Mae has begun mandating that appraisals be delivered by lenders electronically, according to National Mortgage News.

Lenders will have several options for providing the information according to MISMO standards (”the leading technology standards development body for the residential and commercial real estate finance industries, is a wholly owned subsidiary of the Mortgage Bankers Association”). Smaller lenders may upload PDFs or use the XML format using a Web portal, while larger lenders may work
directly with Fannie’s chosen technology provider, Veros Real Estate Solutions.

According to one analyst, “the migration to the newly adopted valuation standards will largely be invisible to the lending community on the origination side” but is expected to have significant impacts on secondary markets.

Are you a top producer who follows news like this? If so, visit our site and find out why our Branch Partner Opportunities are among the best in the business. Come see why we don’t just close loans, we open doors.

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HUD close to higher minimum net worth for lenders

May 10th, 2010

Written by Frost Mortgage

A new letter from the U.S. Department of Housing and Urban Development (HUD) outlines plans to raise minimum net worth requirements for prospective FHA mortgagees (MortgageDaily.com; subscription required).

The minimum net worth requirement had been $250,000 since 1993. Within the next few days, the amount will change to $1 million, though existing lenders will have one year to meet the new requirements.

Frost Mortgage has some of the best Branch Partner and Loan Officer offerings in the business. If the new requirements have you looking at platforms that can help you continue to be a top producer, give us a call–we don’t just close loans, we open doors.

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Positive news for insured loans

May 3rd, 2010

Written by Frost Mortgage

Private mortgage insurers are coming back to the market, the Los Angeles Times reports, even as the Federal Housing Administration (FHA) is pulling back.

Private insurers had almost completely left the sector. Last year, the Times reported, the FHA insured roughly 30 percent of low-down-payment (less than 20 percent down) single-family loans; 10 percent would be considered appropriate. The FHA has also raised down-payment requirements on insured loans.

The move by the private insurers, though, signals increased confidence about the economy, the Times notes.

Changes are happening fast, and it remains a great time to consider a Net Branch Partner opportunity. Please contact us today and learn why our offering is among the best in the business.

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Today: FHA upfront premiums rise for mortgage insurance

April 5th, 2010

Written by Frost Mortgage

The Department of Housing and Urban development is reminding the mortgage industry that, starting today (April 5, 2010), an upfront mortgage insurance premium of 2.25 percent will be collected “for purchase money and refinance transactions, including FHA-to-FHA credit qualifying and non-credit qualifying streamlined refinance transactions.”

HOPE for Homeowners and Home Equity Conversion Mortgages will be charged a 2 percent premium, according to Mortgagee Letter 2010-02.

Do you thrive on news like this? Are you a top producer? Consider joining with the best in the business — Frost Mortgage — and becoming a Branch Partner.

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Good Faith Estimates and RESPA: Don’t lose sight of the big picture

March 8th, 2010

Written by Greg Frost

The Real Estate Settlement Procedures Act (RESPA) that took effect earlier this year has attracted a lot of attention both from the industry and from borrowers. The act requires that “loan originators provide borrowers with a standard Good Faith Estimate that clearly discloses key loan terms and closing costs and that closing agents provide borrowers with a new HUD-1 settlement statement.”

After several months with the new protocols in place, we have some perspective on the changes. From the buyer’s point of view, the new rules mean a lot more paperwork for a relatively small amount of money, since differences in Good Faith Estimates are rarely significant. And from our perspective, RESPA looks like a Band-Aid solution that doesn’t give buyers credit for their intelligence.

We pride ourselves on following the strictest standards, and we ensure that our people are up on all the latest developments, but we see the chance that too much focus on minutia could make us lose sight of the forest for the trees. Buyers, the details do matter, and you need to get the facts from a reputable broker such as Frost. But fear about relatively small amounts like these shouldn’t keep you from getting on with your lives. And those in the mortgage industry, you need to maintain a focus on what really matters–helping people get the funds they need to make society run, just as our industry has done for most of the last 200 years, by providing sensible, reasonably priced products that fit the need.

If you have any questions at all about what all of this means to you, please contact us today. We’ll be happy to help.

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Home buyers can save today by not trying to “time the market”

March 4th, 2010

Written by Greg Frost

Though the jury’s out on where we stand in terms of an overall economic recovery, mortgage rates remain historically low and tax incentives remain intact. There’s arguably never been a better time to purchase a home. That being said, here are a few significant dates to keep an eye on:

1. On March 31^st, the Federal Reserve will discontinue purchasing Mortgage Backed Securities. Most economists believe we’ll see increased mortgage rates as a result.
2. Those wishing to take advantage of home-buyer tax incentives must have a binding purchase contract in place no later than April 30^th.

Today, I’d like to address a common mistake many home shoppers make – trying to ‘time the real estate market’. In other words, some shoppers try to make their purchase at or near the bottom. In theory, this seems like a good idea. However, the following illustration makes a powerful point:

Hypothetical Home-buying Situation A:

Alvin has his eyes on a home currently listed for $250,000. He’s pretty sure he can negotiate the seller down to $240,000, but right now, the seller’s stuck at $245,000. What if Alvin acts today and pays $245,000 for the home? Assuming he qualifies for a 30-year fixed mortgage with a 5.5% interest rate and puts 20% down*

1. Alvin ends up financing $196,000 ($245,000 x .8).
2. Alvin’s monthly payment (P+I) would be approximately $1,113.
3. Over the 30-year loan, Alvin will pay $204,631 in total interest.

Hypothetical Home-buying Situation B:

Alternatively, let’s assume that Alvin hangs in there for 60 days and gets his target price of $240,000. He feels great because he saved himself $5,000! However, let’s also assume that in the 60 days that passed, the rate on 30-year fixed mortgages increased from 5.5% to 6.5%*. (This type of rate increase can sometimes occur in a week, let alone a 60-day period.) Alvin’s still prepared to put 20% down, so

1. He’ll finance $192,000 ($240,000 x .8)
2. However, because interest rates rose from 5.5% to 6.5%, Alvin’s monthly mortgage payment is $100 higher ($1,213) than in Situation A when he’d paid $5,000 more for the home!
3. Furthermore, Alvin will pay over $40,000 more in interest ($244,885) in Situation B over the life of the loan!

As you can see, trying to time the market can be a risky proposition – and often backfires. If you or anyone you know is in the process of purchasing a home, please feel free to share this advice with them. As always, I’d be happy to conduct this analysis free of charge and am honored by the trust you’ve instilled in me as your mortgage advisor for life.

* By the way, for illustrative purposes I used hypothetical rates for the above scenarios. If you’d like to know what today’s mortgage rates are, please feel free to call me today!

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