What Mortgage Programs Are Out There for First-Time Buyers?

There are plenty of special loan programs out there for first-time buyers. We are going to talk about a few of them today.

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We’ve been getting some great questions from our viewers about mortgages lately, and we wanted to answer one of them today. This one comes from Ron who asks, “Which programs are out there for first-time home buyers?”

The first thing we should mention is that all of the loan programs we’ve previously talked about, including VA, USDA, FHA, and conventional loans can all be used by first-time buyers. However, there are some additional programs out there that you can combine with your loan if you’re a first-time buyer.

What we like to do with our first-time buyers is pair our USDA 100% financing loan with the MCC tax credit program, which is for first-time buyers as well as buyers who haven’t owned a home in three years or longer.

The MCC tax credit program provides those buyers with up to 50% of their mortgage interest paid on their tax return each year they live in and own the house as a primary residence. The value of this credit can be up to $2,000, which could equate to a few mortgage payments that will be covered just by agreeing to own a home.

This program helps swing the pendulum in favor of first-time buyers.

One reason this tool is beneficial to our buyers is because, from an underwriting standpoint, it allows us to use the credit as income to offset your debt-to-income ratio. Salaries aren’t increasing at the same rate as home prices are, so a lot of our buyers are being priced out of the market. This program helps swing the pendulum in favor of first-time buyers.

I hope this answers your question, Ron. If you have any other questions, don’t hesitate to reach out to us via phone or email. We look forward to hearing from you soon.

What Happens to Your Loan After You Close?

What happens to your loan after you close? It gets sent to our post-closing department where they package everything up and ship it off to secondary market investors to be sold on the secondary market.

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After your loan closes, it gets sent to our post-closing department where they package everything up and ship it off to secondary market investors to be sold on the secondary market. This is done for a few different reasons.

The first is that this is how we mortgage bankers make money in our industry. We sell your loan with hundreds of other loans that month. That’s how we get paid, but the benefit for you as the buyer, the borrower, is that you get access to the bigger banks and their interest rates. The second reason is that it allows us to keep our fees very low compared to our competition because we’re not having to charge origination fees or discount points to make money on your loan.

After your loan closes, it gets sold on the secondary market.

Does this change my payment or loan in any way? When your loan gets sold on the secondary market, the only thing that changes is where you make the payment to. Your interest rate, the loan balance, and the term of your loan has to stay exactly the same.

Do you sell my loan to a bank of my choosing? Unfortunately, no. When we sell the loan on a secondary market, we have a group of investors that we at Success Mortgage Partners sell to. It may end up with your financial institution, but that institution may be one we’re either not approved to sell to or not actually involved in mortgage loan servicing, to begin with. From a lending standpoint, it depends on who we can package your loan with and who we can make the most money with.

We understand that the post-closing process can sometimes be a little confusing, so if you ever have any questions about it, don’t hesitate to reach out. It is our goal to be your mortgage lender for life, whether it be for your next home purchase or a refinancing of the home you own now. Just call or send us an email and we can talk about it.

How Exactly Does Closing Day Work?

By the time you’ve made it to the closing table in your transaction, the hard part is over.

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Our walkthrough of the mortgage process continues with the closing day. First off, congratulations. You made it. This is what you’ve been working toward for weeks, maybe months. Let’s walk through what’s going to happen on closing day step-by-step.

On your way to the closing table, you will wire your funds to the title company. Once you get to the title company, that’s where you will re-sign everything that you have previously signed. You may have done e-signatures all the way through, but we need your physical signature on every single document. Bring an ice pack for your hand if need be. 

You should also bring two forms of identification with you. One should be your driver’s license, and the other can be something that verifies your name or identity, like a social security card. The closing agent is going to review all the paperwork with you as you sign it. Once you are done signing the documents, they are going to take a few select documents and send them back to our closing department to get funding authorization. We as the lender will then have to review those documents before we release the money to the seller.

You have achieved the dream of homeownership.

If you’ve been issued funding authorization and the buyer and seller documents are all signed, you can leave the closing table and go directly to your new house to celebrate. There’s no delay with you getting in, although it is a good idea to have your utilities switched over for when you take possession of the home.

Congratulations, this is a huge accomplishment. You have achieved the dream of homeownership. If you have any questions for us or know anyone looking to buy a home, give us a call or send us an email. We look forward to hearing from you.

Meet Jamie Lowe Our Business Development Representative

We'd like you to meet Jamie Lowe, the newest addition to the team. Jamie will be our business development representative.

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Today I wanted to introduce Jamie Lowe, our newest team member. As the business development representative for our team, Jamie will work with Realtors, builders, and others in the community to give support and build awareness for everything our team offers.

Jamie will be in charge of marketing efforts both online and face to face. She will make sure your incoming referrals are followed up on in a timely and professional manner, and we’re really excited to have her on our team in this capacity.

Jamie will be coming by your office in the near future to introduce herself and tell you more about what she can do for you. We are looking forward to having Jamie on our team to help us provide you with better service.

In the meantime, if you have any questions about mortgages or the loan process, you can always call me at 352.242.1535 or you can email me at Kristin@KristinJamiesonFL.com.

What Are New Orders in the Mortgage Process?

Previously, we discussed mortgage loan disclosures. Once disclosures are issued and everything has been signed off on, we can move forward by placing the new orders.

In other words, until certain information has been verified, we don’t want to order anything that will add additional costs to the transaction, such as appraisals and surveys.  

This is an extremely important process. We are unable to proceed with new orders until we verify all pertinent information, such as employment, the applicant’s social security number, tax verification, and rental verification. At that point, we can move forward and order the title, appraisal, and all of the remaining verification. Then we can go to underwriting.

We cannot place any orders for that mortgage until the disclosures have been sent back & your buyer has given their intent to proceed with financing.

We cannot place any orders for that mortgage loan process until the disclosures have been sent back to us and your buyer has given us their intent to proceed with financing.

Once we have that, our loan partners will package the file and submit for new orders. At that point, the new orders person will order the appraisal, the survey, title, tax transcripts, and verify your client’s tax returns.

We will also verify your client’s social security number. We want to make sure that they are who they say they are, and we want to make sure that they are not on the national terrorist watch list.

If you have any questions for me, please don’t hesitate to give me a call or send me an email. I would be happy to help you.

Loan Disclosures Protect Buyers from Mortgage Surprises

I wanted to take a minute to discuss mortgage loan disclosure documents. This content was created to help my clients understand their mortgage, and keep them informed throughout the process of purchasing a home. I hope that you find this video helpful, and I encourage you to share this content with your clients!

What are loan disclosures? Once you're under contract, the loan officer is going to take the purchase contract and your income and asset documentation, and will generate what's called mortgage loan disclosures. They can be between 64 and 100 pages long depending on your loan program, and will ensure that you have no questions moving forward about you understand your interest rate, payment, and what the fees are gong to be.

It protects from those horror stories you hear about getting to the closing table and finding out you have an adjustable rate when you thought you had a fixed rate or a surprise pre-payment penalty.

These documents have to go out to you within three days of application, which is set forth with us with the Consumer Financial Protection Bureau. That way, the lender can't hold these documents and force you to close quickly under pressure because they didn't get them out in a timely manner.

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Loan disclosures make sure you understand every facet of the whole loan.

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Can disclosure documents differ from your closing documents? In October of last year, the Consumer Financial Protection Bureau came out with more safeguards to protect consumers from their closing documents changing or their fees changing. We now have what's called the closing disclosure, which must go out at least three business days prior to closing. These will be your final numbers.

After you’ve acknowledged the closing disclosure, if anything in those three days changes the annual percentage rate by more than 1/8th or the zero-tolerance fees, ultimately, the lender would have to re-disclose your closing disclosure and wait another three days to close your loan. This way, you'll have ample time to review everything before going to the closing table and signing away on a 30-year loan.

This can be a complicated topic, but I would love to answer any questions you may have about loan disclosures. Give me a call or send me an email today. Let's talk soon.

4 Milestones to Look Out for During the Mortgage Process

Today we’ll be looking at the first four major milestones in the mortgage process and discuss what they mean for your client. I hope that you find this video helpful, and encourage you to share this content with your clients!

1. Loan processing. This is the first of the four major milestones. Your loan will be pre-underwritten by our processors to ensure that we have everything we need. They’ll confirm that we have all of your W-2s, tax returns, bank statements and verifications of employment, compile them into a neat file, then submit them to underwriting. We strive to have the loan processors hold the file for no longer than 72 hours before they push it through to the next step of the process.

2. Underwriting. Underwriting is, in my opinion, one of the most stressful times of the mortgage process. The file is randomly assigned to an underwriter who double-checks the work that the loan originator and the processor did during the pre-approval process in putting the file together. They’ll go through the file with a fine-tooth comb, recalculating income and inspecting the appraisal as well as the paycheck stubs. Underwriters are in place to protect you by making sure that you are not getting in over your head by buying a property you can’t afford.

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Underwriters are in place to protect you.

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3.  What happens when my loan is approved with conditions? As far as where you can be at this point in the process, being approved with conditions is exactly what we want to see. What this means is that the underwriter is going to offer you a conditional commitment to lend, as long as you provide what they’re asking for.

If this is a purchase, one of the most common conditions is verification of your earnest money deposit. We have to see the resulting balance of your bank account once that money comes out. Often, if the deposit isn’t verified correctly, the buyer may be short on funds to close.

Other possible conditions could be very minor, like needing an updated paystub and bank statement, or simply a letter of explanation.

4. What does it mean when my loan is clear to close? This is the best milestone in the process: the happy dance milestone. It means that all of the conditions have been met, and there is nothing keeping you from getting into your home.

If you, or your clients, have any further questions for me about the mortgage process, please don’t hesitate to reach out to myself or my team by phone or email. We’d be happy to get back to you. Looking forward to hearing from you!

What Are the Ups and Downs of Appraisals in the Mortgage Process?

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One vital part of the mortgage loan process is the appraisal. An appraisal is something the bank orders on your behalf to verify the information about the property. It’s like a 17- to 24-page storybook about the home you are buying. It will give all the characteristics and compare it to recently sold homes in your area. This will do a few things for you:

1. Protect you from a bad investment.

2. Keep the lender from lending more than the home is worth.

Lenders rely heavily on appraisals. They take up about ⅓ of the mortgage process. Homes can come in lower than the asking price, and it’s becoming more common as property values increase and inventory declines.

"Lenders rely heavily on appraisals."

People are offering sometimes more than what the home has been listed for, but for lenders, they are still only going to lend on the lower of the sales price or the apprasied value of the home. If the appraisal came in a little below the contracted sales price, you as the buyer would have to pay the difference from the appraised valueand the purchase price if the seller was not willing to accept the current appraised value.

One of the biggest things we see when it comes to appraisals is repairs needed on the home. Government loans are very strict with any health and safety issues, and appraisers are trained to find them. Keep in mind these are strictly health and safety concerns, not cosmetic issues. It’s not something you should feel bad about asking a seller to fix. You don’t want to buy a house where your health or your family's safety will be in danger.

If the seller isn’t willing to make repairs, we have a few options. There are some programs we can add into the loan for the cost of rehab. You could also ask for repairs at closing or cancel the contract. You would still be able to get your earnest money deposit back due to the appraisal contingency in your contract.

If you have any questions for me, don’t hesitate to reach out. I would love to hear from you via phone or email. Talk to you soon!

Everything You Need to Know About USDA Mortgages

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USDA mortgages offer 100% financing for low-to-moderate income families so they can get into a home they can afford with little to no money out of pocket. Here are a few things you should know about the USDA loan program:

1. Who qualifies and why?

USDA loans have geographical restrictions, as well as income limitations that vary county by county. For example, in Lake County, a family of one to four people cannot make more than $75,850. That number goes up as the number of people in the family increases, and it’s going to be a different requirement in each county.

There are some exceptions to the income limit. If your client makes more money than the income limit suggests, please reach out to us. As many of the baby boomers are getting older, we may be taking our parents into our homes. If you’re applying for a USDA loan, any expenses that go into the care of the aging parents can be a deduction for the income.

Another expense to take into consideration is childcare. As the mother of a two-year-old and a six-year-old, I pay astronomical amounts in childcare every month. Child care expenses can be deducted from the USDA income limit.

As for geographical restrictions, those can be found on the USDA’s website. Simply enter the property address and the site will determine if it is in an eligible area. Traditionally, eligible areas are rural. However, in Claremont, we have a population of more than 20,000, which usually doesn’t work with the USDA’s guidelines but the area is still considered rural in character. All of Lake County Florida is still USDA eligible.

2. What are the minimum program requirements?

There are no down payment requirements. However, the USDA does have the most strict debt-to-income ratio requirements of any loan program. After all, the whole purpose of this program is to get low-to-moderate income families into homes they can afford. They don’t want people to be house rich and dirt poor.

"The USDA mortgage helps low income families get into homes they can afford."

That said, they are the least strict with credit score requirements. Ideally, you should have a score of at least 620, but credit scores are not actually required. If you have nontraditional credit, such as documentation that you have paid rent, that’s all you need. They are very open-minded when it comes to credit.

3. What are the coming changes to this program and when will they take affect?

Right now, the USDA charges a 2.75% mortgage insurance fee. Anyone using the program pays that fee. Since the USDA offers a down payment below 20%, you also have to make a monthly PMI, or private mortgage insurance, payment. PMI protects the lender should the borrower default, and that payment is usually 0.5%.

However, one of the best changes in our industry is coming soon. In October of 2016, they are lowering the upfront mortgage insurance fee to 1% and the monthly PMI fee to 0.35%. This huge change allows more people to get into the program at a lower cost!

If you have any questions, please don’t hesitate to reach out to me. I would be happy to help you!

What Do You Need to Know About VA Mortgages?

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If you’re eligible for one, a VA mortgage loan is one of the best products available. A VA (Veterans Administration) mortgage is offered to veterans, active duty service members who have had two years of active duty or been on foreign soil, and surviving spouses of veterans. There is 100% financing and no private mortgage insurance, which keeps the monthly payment low for our veterans.

Our minimum down payment requirement for VA loans is 0% (unless the purchase is for a home valued at more than $417,000). We do require that the borrower has at least a 600 credit score, and the debt-to-income requirement will be determined by the automated underwriting system, but the requirements for VA loans are far more liberal than some other conventional loans.

One thing that’s different about a VA loan is that they have a residual income piece. The Veteran’s Administration wants to make sure that families can pay for their homes as well as certain other expenses. So, along with the debt-to-income requirements, you must meet a certain residual income requirement.

Like I said earlier, the VA mortgage is one of the best products available. If you can qualify and are interested in buying a home anytime soon, please don’t hesitate to contact me. Interest rates are incredibly low and it is a phenomenal time to buy a home.

I look forward to continuing this conversation with you!