Recently there has been a larger push for self-regulation within the mortgage industry. On January 10 – 12th, the first “Mortgage Revolution” will take place in Atlanta. When explaining why there is a need for a mortgage revolution, their site site explains,

Because we’re not happy with the way things have been…. and it is up to us to make a change.

We’re tired of the media painting all originators as crooks, we’re done with unprofessional and unethical loan officers playing bait-n-switch with our clients and making us all look like liars.

We’re on a mission to prove that transparency can exist in the lending world.

The purpose of the Mortgage Revolution is to create “a grass-roots movement of real loan officers joining forces for the future of our industry.” It is good to see that there are many that care for the mortgage industry. This is especially important because if we do not find a way to self-regulate, the government will do it for us. However, I’m afraid that the wind of change is already blowing in that direction with the current political climate. Although I wish it was, I’m not sure that our industry is currently equipped for self-regulation.

Teaching the NMLS courses on federal regulations and ethics here in Arizona has been an eye-opening experience for me. There is a great divide between the perspective of the advocacy groups and that of most mortgage professionals — especially when considering the need for financial (compensation and YSP) disclosure. This is why we are seeing the dramatic revisions to RESPA (new GFE) and TILA (potential flat-fee compensation).

The biggest problem revolves around the fact that mortgage lending is an extremely fragmented industry. We are regulated by multiple agencies on the federal and state level and there is a history of inter-agency contention and competition for control and staying-power. We are employed by large national banks, independent bankERs, or mortgage brokers who compete against each other for market share and typically do not share common goals. We do not have strong professional organizations (compared to REALTORS or CPA’s for example) that support and lead us. Lastly, the historically low barrier to entry into our profession has allowed for the in-and-outflow of individuals who simply do not belong in a position that requires a high level of professional care.

Ideally, we could self-regulate and our industry could operate under a strict code of ethics that sustains current regulation and is controlled by the application of judicial precedent.

Personally, I like the Code of Ethics that is pledged by the National Association of Mortgage Brokers that includes:

• Honesty and Integrity
• Professional Conduct
• Honesty in Advertising
• Confidentiality
• Compliance with Law and
• Disclosure of Financial Interest

In order for our industry to self-regulate and adhere to a code of ethics, we have to break the barriers between federally chartered banks, mortgage bankers and mortgage brokers. I hope the grass-roots efforts at the Mortgage Revolution can lay a proper foundation.

Why College Graduates Should Use FHA Loans to Buy a House.

May is graduation month across America and Best FHA Lender would like to offer congratulations to all of the recent college graduates. What an exciting time in your life. You may have been offered a nice starting position and the door to your future is wide open. You have the opportunity to make smart financial decisions that will lay the foundation of your financial future and benefit you for the rest of your lives. As enthusiastic as that sounds, it may not translate easily if you’re living in mom and dad’s basement. But, even if you’re not “that guy” or “that girl”, you should consider the fact that right now is an incredible time to buy your first home, and a FHA loan is a fantastic tool for recent college graduates who are first time home buyers.

Why choose an FHA loan? How does a college graduate looking to buy a house benefit from an FHA loan?

Here are the Top 10 Reasons that college graduates should use a FHA loan to buy their first home.

10. Housing prices are extremely low.

Admittedly, this is not a function of FHA; however, it does create a sense of urgency for a recent college graduate to take advantage of the fact that they graduated while home prices in the real estate market are so low. FHA loans have the features that provide the opportunity to buy your first home right out of college.

9. FHA interest rates are extremely low.

You may think that this is not a function of FHA either and that it is dictated by the market, but that is not entirely true. You probably have learned in college that a higher risk correlates to a higher return. If that is the case, why do FHA rates have such low interest rates when they are so often used by first time home buyers and people with bad credit or no credit? The answer is that the federal government insures the loan, thus providing a lower level of risk to the investor.

8. Take advantage of the $8000.00 first time home buyer tax credit.

On February 17th, 2009, President Obama signed the American Recovery and Reinvestment Act that included, as one of its key provisions, a modification of the first time homebuyer tax credit. Currently, first time home buyers can obtain up to $8000.00 in the form of a tax credit. The good news is that repayment of the tax credit is no longer required. The availability of this tax credit currently expires on December 1st, 2009. Click here to see more details about the $8000 first time home buyer tax credit.

7. Buying a house will increase recent college graduates’ opportunities to itemize your deductions on their tax returns.

When you file your tax returns, you have the option to choose between taking either a standard deduction or itemizing your deductions. As you might expect, there is a threshold that you must cross in order to be able to itemize your deductions. Many recent college graduates do not have enough deductions to meet the level needed to be able to itemize. In 2008, the standard deduction for an individual filing under the “single” status was $5450. If you own your home, the interest paid on your primary residence is tax deductible and the interest that you pay over a year’s time may be greater than the standard deduction depending on your loan size and interest rate. Once you have met the threshold for itemization, you may potentially be able to itemize the following expenses (please check with your CPA or tax advisor):

• Interest expense on your primary residence (as mentioned)
• Private mortgage insurance paid on your primary residence
• Unreimbursed Medical or Dental Expenses
• Taxes paid. This includes taxes on personal property and state income tax. Keep in mind that a sizeable portion of your annual car registration is a personal property tax.
• Charitable donations – both as cash or assets – made to qualifying charitable organizations.
• Casualty and theft losses.
• Unreimbursed job-related expenses.
• Other miscellaneous deductions

6. FHA loans allow recent college graduates to count their time in school as part of their employment history.To qualify for a mortgage, you have to prove income stability. Typically, a lender will require that you prove at least two years of previous employment history in the same field. How do you do that if you just graduated and you’re starting your first job in your career path? FHA allows a recent college graduate’s previous school experience to be used in order to satisfy the two year employment history requirement.

5. FHA loans allow recent college graduates to qualify with limited credit history.

FHA loans allow you, a potential first time home buyer, to be approved for a mortgage even if you have no FICO scores or if you have a credit score with limited credit history reporting. This is through the use of “non-traditional” credit references. FHA allows you to provide a clean 12-month payment history for three credit references that do not report to the credit bureaus such as rental payments, utilities, cable TV, telephone bills, etc. FHA underwriters will review these alternative credit references in order to evaluate your bill paying habits and make a determination of whether or not you will be approved.

4. FHA loans allow recent college graduates to be approved using a non-occupying co-signer.

Many college graduates start their careers in entry-level positions with entry-level pay. However, they know that their earning potential is good and that their income is likely to increase. If you are a recent college graduate, you can buy the house that you want now, by taking advantage of the fact that FHA loans allow for the use of a non-occupying co-signer. The co-signer must be a blood relative, or an unrelated individual that can document evidence of a family-type, long-standing relationship not arising out of the loan transaction. If this is the case, the co-signer’s income, assets, liabilities and credit history are included on your loan application in order to determine your credit worthiness.

3. FHA loans allow the seller to pay recent college graduates’ closing costs.

One of the largest barriers to home ownership is paying the closing costs that are related to a home purchase. These fees include origination fees, discount points, appraisal fees, processing and underwriting fees, title fees, prepaid taxes, prepaid insurance, etc, and they can add up to be thousand of dollars. Fortunately, for recent college graduates who are buying a house, FHA loans allow the seller to pay up to 6% of the closing costs related to the transaction. Typically, this should be enough to easily cover all closing costs.

2. FHA loans have two great features that allow a recent college graduate to “Ease In” to their mortgage payment.

What does that mean? FHA loans allow for you, a new home buyer, to take advantage of features that will initially reduce your payments through temporary interest subsidies. These options are the FHA 2-1 Buy Down option and the FHA Interest Abatement option.

• FHA 2-1 Buy DownThe FHA 2-1 buy down allows you to reduce the initial interest rate on your mortgage by 2% the first year of your loan and 1% the next year. This is not an adjustable rate mortgage (ARM). The FHA 2-1 buy down option works in conjunction with the FHA fixed rate program. So, if you purchase a home with an FHA loan with a fixed rate of 5.5% (for example), the first year’s payment will be based on an interest rate of 3.5%, the second year’s payment will be based on an interest rate of 4.5% and the payment will be based on the 5.5% rate thereafter. This is a great benefit to recent college graduates who are starting with entry-level salary but anticipate pay increases with experience.
• FHA Interest Abatement OptionThe FHA interest abatement option allows your interest payments to be paid on your behalf for up to six months. As a result, your initial payments are very low. For example, if you were to buy a home for $150,000.00 financed with a FHA loan at 5.5% (example), the principal and interest payment could be around $840 a month. Of that amount, the interest portion of around $678 could be paid on your behalf. The remaining payments (which will include the principal, taxes, insurance and mortgage insurance) are very low and affordable for up to the first six months. This allows you to “ease in” to your payment. This is a great benefit to recent college graduates who can use the amount saved to pay down other debts or buy furniture, fixtures and equipment for their new home (vacuums, law mower, etc.).

Typically, the subsidies required to operate these options are covered as part of the FHA-allowed seller paid closing costs.

1. FHA has very low down payment requirements and multiple down payment assistance options.

As mentioned previously, closing costs are a significant barrier to home ownership for many recent college graduates. But, the greatest barrier to home ownership is arguably the required down payment. Because of the current status of the housing market, the majority of the “low down payment” mortgage programs are no longer available. Even if the investor (e.g. Fannie Mae, Freddie Mac) will accept a low down payment program, most of the private mortgage insurance companies will not insure them. In many areas that have been deemed a declining market, the minimum down payment on a conventional loan is 10%. This could keep many college graduates with the goal of purchasing a home from being able to do so. Fortunately, FHA insured loans still have a low down payment requirement of 3.5% and many different options regarding how you can come up with your down payment.

Down payments for FHA loans can come from you, a family member, an employer or charitable organizations. If you do not have the proceeds required to make the down payment, FHA loans allow for you to receive a gift from a charitable organization, an employer, a blood relative, or an unrelated individual, as long as they can document evidence of a family-type, long-standing and substantial relationship. A gift is cash given to you voluntarily and without compensation. No conditions may be attached to this gift, nor can repayment be expected or implied.

Suppose that you do not have a family member that is willing and/or able to gift you your down payment but they will lend it to you. In the past, this was not acceptable, but last year the Housing and Economic Recovery Act of 2008 included a provision that caused FHA loans to allow you to borrower your down payment from a family member.

If that does not work for you, FHA loans allow you to borrow your down payment against a secured asset such as an automobile, artwork, collectibles, real estate, or financial assets (such as savings accounts, certificates of deposit, stocks, bonds, and 401(k) accounts).

FHA loans also allow for your down payment to come from various down payment assistance programs. A significant source of down payment assistance is derived from the American Dream Downpayment Initiative (ADDI). The American Dream Downpayment Initiative (ADDI) was signed into law by President Bush on December 16, 2003. It provides down payment, closing costs, and rehabilitation assistance up to $10,000 or six percent of the purchase price of the home to first-time homebuyers. ADDI funds are administered as part of the HOME Investment Partnerships Program (HOME) by state and local participating authorities and HUD-approved non-profit organizations.

So, there you have it, the top 10 reasons that you and all college graduates should use a FHA loan to buy your first home. By taking advantage of FHA’s loan options, you will not have to wait. FHA loan programs are extremely flexible and have numerous options and benefits. In fact, there are so many that you may have noted that I had to consolidate some similar benefits in my “top 10” list. I figured that “the top 15 reasons that you and all college graduates should use a FHA loan to buy your first home” just doesn’t have enough pizzazz.

If you have any questions or comments, please feel free to contact me or leave a comment.

These 6 steps can be found here: Arranging A Veteran’s Guaranteed Loan.

As I read through these six steps I thought to myself: “huh, the Dept of Veterans Affairs could certainly spell these out a bit more…”

So, instead of trying to get them to do it – yes an act of Congress – and Congress has plenty to do already, I’ll do it for them and for you.

My version of the 6 Steps In Arranging A Veteran’s Guaranteed Loan.

First of all, I would have titled it something like: The 6 Steps To Buying A Home Using A VA Loan.

1. Step 1
   • Theirs: Find the property suitable for your needs.
   • Mine: Go to your VA lender, actually 3 VA lenders and apply for a VA loan with them. Going to three lenders gives you a way to compare rates and fees and should keep your loan officer honest. Most real estate and mortgage people call this: getting pre-approved.
2. Step 2
   • Theirs: Go to a lender and apply for the loan
   • Mine: Find a real estate agent and start your home search based on what you qualify for with your VA loan. To search for a home before you know what you qualify for is just a big waste of time. In fact, any real estate agent worth working with shouldn’t even send you any listings to look at until you have spoken to a VA lender.
3. Step 3
   • Theirs: Present your discharge or seperation papers relating to the latest period of service and/or a Certificate of Eligibility.
   • Mine: This step would be covered in my Step 1 above. Instead, complete the negotation process with the seller of the home you want to buy. Make sure you negotiate with them to pay as much of your loan costs as possible. In fact, if you and your real estate agent are really good at negotiation and presenting your offer you should be able to get the seller to pay all of your home purchase costs which would allow you to buy a home with virtually no money coming out of your bank account. VA loans are just about the only mortgage left to allow for 100% financing – lucky Vets.
4. Step 4
   • Theirs: Property is appraised by approved appraiser.
   • Mine: Once your purchase offer is accepted you will in most states enter into what is commonly called the property inspection period. This is the period of time where the home gets appriased. With a VA loan you have to have your home appraised by a specifically VA qualified appraiser in your area that the VA assigns to appraise your home. Also during the inspection period other inspections occur such as pest, radon, water, septic, roof, structural home inspection to name a few.
5. Step 5
   • Theirs: Estimate of property’s reasonable value is determined
   • Mine: If the appraised value matches or is above your sales price then you are good to go on completing your mortgage loan qualification. If the value is less than your sales price you will have to work out some sort of contingency with the seller if you want to continue with buying this home. Make sure you cover contingencies with your real estate agent in my Step 3 above as you present your offer.
6. Step 6
   • Theirs: If application is approved, you get the loan.
   • Mine: If your loan is approved, you go to closing and get the keys to your new home. And congratulations you have just become a home owner using the 6 Steps To Buying A Home Using A VA Loan.

Good luck!

FHA Loan Options in Phoenix AZ

Home buyers in Phoenix AZ are taking advantage of the low rates and flexible features offered by our Phoenix AZ FHA loans.

Flexible Features of AZ FHA Loans

• Low FHA interest rates in Arizona
• Buy a house with little to no money
  • Low down payment requirement
  • Take advantage of gift programs
• Helps home buyers with less than perfect credit
• Allows for non-occupant co-signers
• FHA loans do not have prepayment penalties
• Your Phoenix AZ FHA loan may be assumable

Some people and real estate agents in the Phoenix area mistakenly avoid FHA loans because of common misconceptions such as:

• Takes too long. Wrong – see our ten day close guarantee.
• Too much paperwork. FHA does have a few more disclosures that you will have to sign at application, but the extra 5 minutes is worth it.
• Requires restrictive repairs. FHA appraisals are much easier than they were in the past. They just want to make sure that there aren’t any safety concerns.

There are several Phoenix FHA loan programs to promote home ownership. If you are an Arizona first time home buyer, you can use an FHA loan to easily qualify for your mortgage.

Remember, because FHA insures your Phoenix AZ mortgage, lenders are more willing to give Arizona FHA loans with lower qualifying requirements. That’s why its easier for you to qualify.

Phoenix AZ FHA loans have been around since 1934. They are a great mortgage option to help you buy your home. Also, even if you happen to encounter hard-times after buying your home, a Phoenix AZ FHA loan has many options to help keep you in your home and avoid foreclosure.

To get the most out of your Phoenix AZ FHA loan, you should pick the best FHA lender. We’ll help you buy your home with a Phoenix AZ FHA loan for all the reasons above.

Call today to find out if a Phoenix AZ FHA loan is right for you.

What is an Assumable Loan?

Investopedia.com defines an assumable loan as follows:

“A type of financing arrangement in which the outstanding mortgage and its terms can be transfered from the current owner to a buyer. By assuming the previous owner’s remaining debt, the buyer can avoid having to obtain his or her own mortgage.”

The result of a home purchased through a loan assumption is that the person assuming the loan will simply begin to make the payments as they come due when the title is transferred.

FHA Mortgages Are Assumable.

All FHA loans are assumable when processed using HUD’s guidelines. However, mortgages closed on or after December 15, 1989 require credit qualification of those borrowers wishing to assume the mortgage. See FHA Handbook 4155.1 REV 5, Sections 4-1 and 4-4 and Handbook 4330.1 REV 5, Section 6-6.

What Is the Benefit of an Assumable Loan?

The main benefit of an assumable FHA loan is that the interest rate is transferable upon assumption of the loan. If you are financing your home today, this may not seem like a big deal to you. But if you plan to sell the house you are currently financing in a few years from now (or later), it could be. Consider the competitive advantage that you will have as a seller if your house is on the market with at 5.5% fixed assumable interest rate at a time when the market rates are at 9 or 10%. Because your house is much more affordable to a prospective buyer, it will have a higher likelihood of selling.

Will Interest Rates Go Up?

The benefit of having an assumable loan is based on the ability to transfer the rate to a new buyer when the market rates are higher. Obviously, for this scenario to transpire, market rates have to go up. Will this happen? Many economists predict that as the economy starts to recover we will experience inflation and rates will go up. This prediction appears reasonable when one considers the existing monetary policies that are in use to help stimulate the economy (e.g. quantitative easing and stimulus packages).

Therefore, if you are considering what type of financing to use to purchase or refinance your home, remember that aside from the current great low interest rates, low down payment requirement and liberal underwriting criteria, the fact that FHA loans are assumable is a significant benefit.

Are you one of the many people that are making the decision to move to Yuma Arizona? The Yuma area is attracting more and more people for a variety of reasons. People buy Yuma AZ homes either because of job opportunities, the location (close to Phoenix, San Diego and Mexico), the winter weather or to take advantage of the many interesting things to do.

There are a number of surrounding communities to consider when searching for Yuma homes for sale such as Somerton, Gadsden, San Luis and Yuma Foothills.

Yuma Mortgage Information

If you need a Yuma Mortgage, you have many financing options.

There are many Yuma mortgage programs have been designed to suit your needs.

FHA Purchase loan information in Yuma, Arizona
Information on Downpayment Assistance in Yuma, Arizona
FHA Refinance information in Yuma, Arizona

Many of our Yuma mortgage customers are taking advantage of the 100% financing that is currently offered through USDA. Here are some of the highlights:

• Low interest rates
• 102% Financing based on appraised value, if appraised value exceeds sales price, borrower can finance closing costs and repairs
• 30 Year fixed term
• No monthly mortgage insurance
• No downpayment requirement.
• No Yuma AZ First Time Homebuyer restrictions.

We also specialize in VA loans in Yuma AZ.

Need a loan closed fast by a local Yuma mortgage professional who is the best in the business? Try Derek Egeberg and ask him how he guarantees your home loan will close on time.

The big secret to always close your Yuma mortgage on time?

In no particular order:

• Have a loan officer who knows what they are doing.
• Have processing in house.
• Have underwriting in house.
• Have doc drawing in house.
• Have a way to get appraisals done, even with the HVCC guidelines in place.
• Have senior management that will accept nothing less than excellence and hold each person accountable for achieving the goal of a ten day close each and every time.
  

Please contact me with questions. I would love to help you with your Yuma FHA mortgage today.

Steve Lines

Best FHA Lender in Arizona

Scottsdale is known for its affluent culture and high society. The city boasts many luxury restaurants, bars, nightclubs, golf courses, art galleries, and other cultural diversions.

BestFHALender features the key resources needed when searching Scottsdale homes for sale including:

• free home search tools,
• market statistics
• and the best Scottsdale loan options.

Scottsdale Homes for Sale: Free Home Search

The Internet gives you full access to view listings of homes for sale in Scottsdale AZ.

As a Scottsdale home buyer, you can take advantage of a free MLS search tool offered by one of Scottsdale’s most respected real estate agents.

Scottsdale Homes for Sale: Scottsdale Real Estate Statistics

In our current market, it is crucial that you have the proper knowledge to make a smart home buying decision and buy with confidence if you are looking to buy a home in Scottsdale AZ.

Take advantage of the opportunity to review Scottsdale real estate statistics.

Scottsdale Homes for Sale: Lending Options

FHA Loans

Here are some of the advantages of buying a home for sale in Scottsdale using a FHA loan.

• Buy your home with less money through FHAs Low down payment requirements and down payment assistance programs.
• Save money with an affordable monthly payment with low FHA interest rates in Scottsdale even with bad credit.
• If you have bad credit, Scottsdale FHA mortgages have tolerant credit guidelines and the easiest qualifying criteria after a bankruptcy, foreclosure or short sale.

Jumbo Loans

A jumbo mortgage is a mortgage loan in an amount above conventional loan limit set by Fannie Mae and Freddie Mac.
We offer competitive rates and terms on our jumbo loan programs in Scottsdale.

Conventional Loans

A conventional loan is one that is typically not insured by a government entity or agency, such as FHA or VA and most are guaranteed or purchased by Fannie Mae or Freddie Mac and must meet appropriate guidelines.

Traditionally, just under half of all residential mortgages in Scottsdale are conventional loans.

Depending on where you live in the country, currently FHA will allow you to finance up to $729,000 with just 3.5% down?

The reason for this special jumbo loan program is that it was part of the legislation passed by congress recently and chances are that it won’t be around forever. It was a special program that was created by HUD and it could go away at any time.

So if you are considering a home that will need a jumbo loan, be sure to ask your loan officer if the FHA jumbo loan is right for you. You might find that with the recent property declines and with interest rates at all time lows, an FHA jumbo loan might make the most sense for your situation.

That million dollar home in 2006? Chances are that it is now selling for $500,000 and can qualify for a FHA jumbo loan.

Basic FHA jumbo loan guidelines include:

• Up to $729,000 financed. (based on the county loan limits published by HUD)
• 660 FICO score required.
• 3.5% down payment.
• 30 year fixed rates around 5%

FHA jumbo loans take just as much time to close as “regular” FHA loans do – 10 days.  So if you are in a hurry, we are able to accommodate your schedule as well.

And if the FHA jumbo program goes away before you can get qualified and close your FHA jumbo loan?

Don’t say we didn’t warn you.

If one whole extra payment a year seems too much for a tight budget to handle you can do something as simple as rounding up your mortgage payment just a touch more.  Rounding up an extra $10 a month will reduce the life of your loan by 4 months and on a $200,000 mortgage save you roughly $2,469 in interest.  To really see an impact you can increase your mortgage payment by $50 a month for $12,666 in interest saved and shorten your term by 2 years, again based on a $200,000 mortgage.

If you are just purchasing your first home, these are good habits to get into to get the most out of your new asset.  If you currently own, make sure you’ve checked out your financing options to see if you qualify for a lower rate or shorter term and then put these into play to get it paid off even faster.

So what does that mean for those who have been waiting out the market to get the best deal?  Your time is about to be up.  As the housing market begins to rebound an increase in rates is expected as well.  This is sending buyers into a frenzy trying to get in now while rates and prices are still low.  Many buyers are finding frustration in the bidding wars going on over many properties. Buyers need to be ready to be more aggressive in their offers.  A few tips for beating out the competition:

• Get pre-approved, not prequalified.  Pre-qualified means the lender reviewed your credit and your income information and thinks you will be a low risk loan.  Pre-qualified means your documents have actually been reviewed by an underwriter and that you are credit approved making you a safe bet to a seller that the financing will go through.
• Have your agent find out the sellers motivation for selling and then work to meet their need.  In some cases the seller has to be out of the house quickly, work with your lender to find out a reasonable timeframe to close the loan and see if you can offer a quicker turnaround time for the seller.
• Limit your conditions and need for seller help.  Don’t sell yourself short of course, but the fewer things you ask the seller to do for you, the better
  chance you have.
• Keep cash on hand.  Bid on properties that are less than the amount that you are pre-approved for so that you can offer over the asking price if need be to win out in a bidding war.

Lastly remember, new propertiesare always coming on the market so don’t get discouraged.  Buying a home requires taking a leap of faith that when the right house comes along all the pieces will fall into place.