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Thursday, January 28, 2010

How to Successfully Get a Mortgage in 2010

How to Successfully Get a Mortgage in 2010
Getting a mortgage in 2010 is a little more complicated than it has been in the past due to the challenging economy and increased government regulation of the mortgage industry. In fact, it's like a giant hurricane has swept through the housing and mortgage markets, leaving chunks of
debris and danger in its wake. But never fear; that's why I am here! As your Certified Mortgage Planning Specialist, my role is to walk by your side, be your personal guide, and set you up for success every step of the way. Here are a few of the challenges that we will tackle together as we
navigate the danger zone known as the 2010 mortgage process!

New Good Faith Estimate
The US government has created a new version of the disclosure form known as the Good Faith Estimate (GFE). The old GFE itemized all your closing costs and illustrated your "cash-to-close" - the amount of cash you would need to bring to the closing if you are buying a home, or the net proceeds you would receive at the closing from a cash-out refinance. The new GFE lumps in your closing costs under certain categories instead of itemizing them, and does not illustrate your cash-to-close. Also, if the seller is paying closing costs or points on your behalf, this is not reflected on
the new GFE. In other words, it will look as though you are paying these fees even though the seller is paying them. As your Certified Mortgage Planning Specialist, I go above and beyond the government's minimum requirements for my clients. In fact, I have created special systems and easy-to-understand forms to help illustrate the total costs associated
with the loan options available to you. Please contact me for more details.
New Appraisal Guidelines
Most mortgage loans these days are either insured by the Federal Housing Administration (FHA) or sold to Fannie Mae or Freddie Mac. This means that mortgage banks and brokers need to follow the rules set by Fannie, Feddie, and the FHA. In 2009, Fannie and Freddie adopted new rules surrounding the home appraisal process. In 2010, the FHA followed suit and implemented many of the same guidelines. What this means for you is that the appraisal process is going to be more stringent and inflexible, costly, and time consuming than it has been in the past. Standardizing the mortgage planning process through participation with the CMPS community of experts.
In fact, many appraisals are now conducted by appraisers who may not live in your community, resulting in value estimates that may not agree with your own opinion of what your home may be worth. Also, many appraisals now go through multiple layers of screening and are handled by Appraisal Management Companies, resulting in higher costs and fees. Finally, loan originators are prohibited in most cases from ordering appraisals or communicating with appraisers. Even so, it is important to keep in mind that an appraisal is simply somebody's opinion of what your home
would sell for in today's market. You and I are entitled to disagree with the appraiser and have a different opinion, but the lending guidelines that we need to follow require us to use the appraiser's opinion when calculating your loan amount and strategy.
As your Certified Mortgage Planning Specialist, my commitment to you is that I will help you understand the appraisal report once it is completed. If there are any errors, I will do what I can to get them corrected. Most importantly, I will work hand in hand with you to adjust the mortgage strategy as necessary if the appraiser's opinion of value comes in
below what you or I think your home may be worth.
New Disclosure Rules
The US Congress has enacted some new laws, and the Federal Reserve Board has issued some new guidelines that could delay the loan process. For example, if the APR on your loan changes by more than 0.125% before the closing, the lender needs to issue new disclosure forms and give you time to review the new forms. Here are just a few examples of what could cause the APR to change:
You decide to lock in your interest rate or get a rate lock extension
You decide to reduce your loan amount
You are getting an adjustable rate mortgage and the index value changes
Your credit score changes before closing, resulting in a higher rate or higher fees
You decide to pay more or less points than what you initially requested
As your Certified Mortgage Planning Specialist, my commitment to you is that I will help you avoid costly delays to the best of my ability by planning with you ahead of time and setting you up for success. While I can't control everything that happens during the loan process, I do have the experience to know what pitfalls to look out for and help you plan
accordingly.
Standardizing the mortgage planning process through participation with the CMPS community of experts.

Higher Credit Score Guidelines
As stated above, most mortgage loans these days are either insured by the Federal Housing Administration (FHA) or sold to Fannie Mae or Freddie Mac. This means that mortgage banks and brokers need to follow the rules set by
Fannie, Freddie, and the FHA - all of whom have issued stricter credit scoring guidelines. I know it sounds ridiculous, but if your credit score is less than 740 (gasp!) you may get hit with higher fees if your loan is being sold to Fannie or Freddie! Most of my clients are responsible individuals who take pride in paying their bills on time and maintaining a
good credit rating. However, many Americans have recently been hit with unexpected financial difficulties due to the challenging economy.
In fact, many credit card companies have reduced the credit limits on accounts that have never even been late. This is causing credit scores to go down across the board for people who have never been late on any payments in their life! If you fall into this category, or if you have some challenges with your credit score, you may get hit with higher costs when it comes to getting a mortgage. As your Certified Mortgage Planning Specialist, I will work with you to evaluate your options and point out strategies and ideas for increasing your credit score and getting a great deal on your mortgage.
Please contact me for more information on any of these items and how they may impact your situation. As always, I am here for you every step of the way. Together, we will make getting a mortgage in 2010 a very rewarding experience for you and your family!
Standardizing the mortgage planning process through participation with the CMPS community of experts.
Jennifer Buchanan, CMPS ®
57 Green Farm Road
Westport, CT 06880
203-341-6949 direct

Thursday, January 21, 2010

First-Time Homebuyers Tax Credit

Tax Credit for Homebuyers
First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000.
Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.
Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.
Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.
What are the New Deadlines?
In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.
Tax Credit Versus Tax Deduction
It’s important to remember that the tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a first-time homebuyer were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she would owe nothing.
Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a first-time homebuyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!
Higher Income Caps
The amount of income someone can earn and qualify for the full amount of the credit has been increased.
Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible
Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.
Jennifer Buchanan
MetLife Home Loans
Jbuchanan@metlife.com
203-341-6949 - phone

Friday, January 15, 2010

Why you need a Mortgage Committment to Lend

If you are in the market to purchase a home, you will want to have either a pre approval or a commitment to lend document from a mortgage bank or broker with your offer to purchase.
A pre approval means - you have spoken with a mortgage lender and have verbally given them your financial information and permission to order a credit report. The mortgage lender will then have your verbal information analyzed by their computer underwriting software - and give you an approval, subject to verification of the verbal information you have provided. So in reality there is no guarantee you will be approved for a mortgage with a pre qualification.

A commitment to lend means, you have submitted an application with a compete document package to a mortgage lender. You have supplied items such as, pay statements, bank statements, W2's, tax returns, photo ID - and any other required documents. Your loan application package has been approved by the bank, and when you find a property the bank will lend you mortgage money after an appraisal determines you are paying fair market value for the property. It is in your best interest to have the mortgage lender approve you for the maximum mortgage you qualify for. It is easier to ask for less money than it is to ask for more, and you will know for sure your home purchase budget. If you find a property that requires less money than you qualify for, the good mortgage lender will issue a letter with no dollar amount, so your ability to negotiate a price will not be compromised by how much mortgage money you actually qualify to borrow.

When you submit your offer to purchase a property, the seller will most likely chose a buyer who has a commitment to lend - Real Estate Agents know the difference between a pre qualification - and a commitment to lend and they will advise the seller accordingly.

The hardest part of the purchase process for a mortgage is the commitment to lend - and it just makes sense if you are a serious buyer to complete the full process before you start to make offers on a property.


A pre approval or a commitment to lend is a no cost, no obligation process for the borrower. If you are serious about a purchase, chose a lender and have yourself, at no cost and no obligation - approved for a commitment to lend.