And if you live in Arizona and have bought your house in the last couple of years, chances are that you owe more on the mortgage than your house is currently worth.

Can you still take advantage of lower interest rates and refinance even if you owe more on your mortgage than your house is now worth?

You can with the FHA streamline without appraisal refinance program.

Last fall, HUD changed the guidelines on the FHA streamline no appraisal program and now if you are going to do an FHA streamline without appraisal, you can’t finance your closing costs into the loan. I thought this meant that FHA streamlines were pretty much dead — until interest rates went lower than I thought possible.

These changes now mean that anyone who wants to do a FHA streamline is going to be bringing in money to close your FHA loan under the FHA streamline no appraisal program — unless — interest rates drop significantly.

And interest rates have dropped to historic low levels.

Which means that you can now do a FHA streamline refinance without an appraisal and have it still make sense financially.

So if you are in the situation where you want to lower your interest rate and monthly payment but are worried that you can’t refinance because you owe more on your mortgage than your home is worth – don’t worry.

Just ask your loan officer about the FHA streamline without appraisal program.

More information about the Arizona FHA streamline refinance program

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Don’t just shop homes, shop lenders too. Doing so shows you ways to save on your mortgage, and every penny counts. Seize every money-saving opportunity.

To help you save your hard-earned money, consider these tips:

Be a credit expert. Lenders look at your credit score to help assign an interest rate to your mortgage. You’re at a serious disadvantage if you’re one of four people whose credit report is erroneous. Inaccuracies may block you from getting a mortgage, and will make your interest rate soar.
You’re responsible for meticulously picking apart your credit report. If you find mistakes, document them clearly so you can make a case to the credit agency. Do not let inaccuracies ruin your credit score and mortgage terms. Otherwise you will pay for it.

Choose a loan type that suits you. Most conventional mortgages require down payments of up to 20 percent. Paying that 20 percent up front likely means you won’t have to pay private mortgage insurance every month.

However, a few government loans eliminate hefty down payments and PMI. Qualifying veterans and active-duty military members have access to the VA home loan program, which greatly reduces or removes down payments. The Department of Veterans Affairs insures these loans that are loaded with financial benefits. USDA loans serve mostly rural homebuyers, but like VA loans they often feature no money down.

Buyers who saved money for a down payment may be better off going for a conventional mortgage. Nevertheless, there’s no harm in finding out for which government-backed programs you qualify.

Find a favorable loan length. Go for the shortest mortgage life that you can afford. First-time homebuyers spend years paying off the interest before they get a chance to chip away at the principal. You can get 15- or 30-year fixed-rate mortgages, while most adjustable rate mortgages run 5-1 and 7-1.

With interest rate increases imminent fixed-rate mortgages may be best, but it depends on how much money you have now and how much you’ll be making. Regardless, always shoot for the shortest mortgage. It will save you money in the long run. For example, financing $80,000 with 7 percent interest costs $42,000 less with a 20-year mortgage than with a 30-year one.

Pay in advance. Make an effort to put an extra $100 each month toward your monthly payment. No matter what these little extras save thousands in the long run, but might cost you in the short run assuming your mortgage has prepayment penalties.

Making these payments shorten the life of the mortgage and save you money. The savings for a 20-year, $100,000 mortgage with 7 percent interest are considerable. You’d save $20,000 and trim the mortgage by four years. When you send the extra payment, tell the mortgage holder that it goes toward the loan principal.

Befriend your lender. Do not settle for a lender who fails to work with you or doesn’t do everything to save you money. Be suspect of lenders who ignore your questions. It seems like common sense, but some prospective homebuyers get stuck with questionable lenders.

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But based on past performance, one of the best investments for retirement is an Individual Retirement Account – IRA. There are many types of IRA’s and one of the first questions I know I asked when I started looking at them was which is better: Roth vs. Traditional IRAs.

What are the differences between them? Which one is better for you? Although I can’t tell you which one to choose, I can give you a mortgage guy’s rundown on what I know about each one to help you make your own decision. After you read this, your next step ought to be to call a financial planner or tax professional to fill in the gaps from what I have written about here.

Let’s start with Traditional IRAs

Basically, a Traditional IRA is a tax-deferred retirement account. That means contributions to a Traditional IRA may be tax deductible, depending on your income.

One advantage of the Traditional IRA is that, because the money is invested before taxes are paid on it, it potentially allows you to lower your tax bracket at the time of investments. Another advantage is that, when you retire you usually make less money and therefore the taxes you have to pay on your withdrawals will be less. Also, the money grows tax free until you withdraw it.

Here are a few more facts about the Traditional IRA:

• Income limits – Everyone is eligible to own a Traditional IRA, but there are limits on tax deductions you can take.

• Withdrawals – You can start withdrawing from your IRA at age 59 1/2, and your withdrawals will be taxed as regular income. You will pay a 10% penalty for early withdrawal, although there are exemptions to this rule.

• Required minimum distributions – You must make withdrawals starting at age 70 1/2.

Disadvantages of the Traditional IRA include the required minimum distribution, which must be taken whether you need the money or not, and the fact that it isn’t easy to know in advance what your tax rate may be in retirement.

Now, let’s look at the Roth IRA

While the Traditional IRA is tax deductible, the Roth IRA is tax exempt. That means that, while contributions to the Roth are taxed, withdrawals made during retirement are tax-free. Another advantage is that there is no required minimum distribution.

• Income limits – Unlike a traditional IRA, the Roth has income limits that limit who can participate in the program. Income limits can change every year. You will need to check with your financial planner to see whether you exceed the Roth IRA income limits in any given year.

• Withdrawals – The minimum age to withdraw from a Roth IRA is 59 1/2. The principal can be withdrawn at any time without penalty, however if the interest is withdrawn early there can be penalties. One exemption to early withdrawal penalties is if the IRA owner uses the money as a down payment on a first home (I have had several mortgage customers take advantage of this program feature to buy a home). This is true for both the Roth and Traditional IRA.

So which one is better? Well, there are pros and cons to each. I can’t tell you what is going to be more advantageous to you, so maybe the best course of action would be to discuss it with a financial planner or tax professional.

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Courtesy WSJ

According to the WSJ:

Just a year ago, the average rate on a 30-year jumbo mortgage—a loan of more than $729,750 not backed by government-sponsored agencies Fannie Mae or Freddie Mac—was 6.86%, according to Greg McBride, a senior financial analyst at Bankrate.com. Now it is 5.48%—a rate that rivals those available during the height of the credit bonanza.

“In just the past couple of months, jumbo loans have really started to be competitively priced,” says Keith Gumbinger of HSH Associates, a publisher of consumer-loan information.

The recent low rates on jumbo loans has caused an uptick in refinancing activity – with some jumbo lenders reporting that jumbo refinancing up as much as 50% vs. what it was last year.

Arizona Jumbo Loan Refinancing: Big Savings

If you have a $2 million loan on a  home in Paradise Valley and refinance where you can save a full percentage point on your rate – your savings will be dramatic.  Even using a smaller loan amount as an example illustrates substantial savings: a homeowner with a 30-year fixed-rate $800,000 mortgage at 6.86% pays $5,247 a month. If he were to refinance at 5%, his monthly payments would be reduced by $952.

Arizona Jumbo Lender: Now Available

The jumbo market has tightened up quite a bit and here in Arizona, it can be difficult to find a lender who can help you with your jumbo loan financing. We are jumbo loan experts and are happy to help you figure out if refinancing your jumbo loan makes sense or not – call us anytime!

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And there are also investors coming in and buying properties “on the cheap” (?) who are first time investors and have never actually managed a property as an investment before.

And at different times in the last few weeks, people from both of these groups have asked me “should I use a property management firm?” And based on my many conversations with my friend who happens to run a Las Vegas Property Management company, my answer has been “well, it depends on what kinds of things you care about”. There is no one right reason to use a property management firm (or not) — there are only shades of gray, so to speak.

But here are just a few of the benefits of using a property management firm…

For Investors:

• When you work with a quality property management company, they take care of all of the accounting. Don’t under-estimate this. Things like rent collection, deposits and pretty much all-things accounting.
• Finding tenants. Many times finding tenants can be painful. Finding the “right” tenants is what you really want – and a property management company takes care of this.
• Managing the maintenance. Broken toilet at 2am? If you have a property management company in place, they are taking care of it – not you. If you don’t have a property management company in place, be ready for that call because it will come sooner or later.

For Tenants:

• Most of the time, if you work with a property management company, they will be local. Which means that even if the landlord lives out-of-state, you will still have someone who can respond in person when needed.
• A property management company has experience – they are not someone who has just bought their first investment property and is making-it-up-as-they-go-along.

Should you use a property management firm?

It depends.

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But did you know that there are also several “hot spots” in the state for Veterans to live?

Let’s just pick a few – and all of them have homes that you can finance with an Arizona VA loan.

Gilbert is one of the fastest growing cities in the East Valley and is popular for many Veterans who have families. The population there is growing and you can easily find a home that meets the criteria for a Gilbert AZ VA loan.

Mesa has long been popular – and prior to the Gilbert growth explosion, Mesa was a hot area for many Veterans with the airfield so close as well as a major Boeing factory. And yes, there are also plenty of homes that you can easily finance with a Mesa AZ VA loan because home values are not through-the-roof.

Chandler is a sister city to Gilbert and is popular with Veterans who have retired – not to mention some of the Veterans who now work at any one of the high-tech facilities at companies like Intel. It is a little harder to find a home that meets guidelines of a VA loan in Chandler, but it isn’t extremely difficult.

If you are a Veteran and thinking about moving to Arizona or just moving from one city to another in Arizona, be sure to ask your loan officer about your Arizona VA loan options… it is one of the best ways to finance your home.

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There is more than one person right now who is frustrated with how difficult it can be to get financing for jumbo loans in today’s market.

Some lenders are doing them but have high down payment requirements and/or pristine credit score requirements – and the truth is that many lenders are not even doing jumbo loans at all.

But there is a program that may make sense to look more into if you are in the market for jumbo financing – the FHA jumbo loan program.

It is somewhat new – and it is even possible that it won’t be around very long.  The FHA jumbo loan program is that it was part of the legislation passed which was created by HUD. It is actually at risk of going away at any time.

But while it is available, the FHA jumbo loan program is great for people who are in the market for jumbo financing — the rates are low and depending on where you live in the country, FHA will allow you to finance up to $729,000 with just 3.5% down.

So for all of those houses that only a few years ago were $1m + and are now $500k? They might be a perfect candidate for FHA jumbo loans.

FHA Jumbo Loan Guidelines (The Highlights):

• 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%

Heck, there are even lenders who can get your FHA jumbo loan closed in ten days.

So if you are one of those people who have been frustrated by the process of getting “regular” jumbo loan financing, you might want to ask your loan officer about the FHA jumbo loan financing options and whether or not it is right for your situation.

Before it is too late and the program goes away!

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First and foremost, directly from the VA Lender’s Handbook, VA Pamphlet 26-7 Revised, Chapter 4: Credit Underwriting, the VA states:

Income analysis is not an exact science. It requires the lender to underwrite each loan on a case-by-case basis, using:

• judgment,
• common sense, and
• flexibility, when warranted.

With this said, if you are a vet or otherwise are eligible for a veteran home loan and are self employed then there are some requirements you need to know about if you plan to use your eligibility for a veteran home loan.

The most general guideline for being self employed and veteran home loans is that an applicant needs to show stable income. Stable income is typically shown by the income received over a two year period. I like to call this the 2 year employment rule. If you pay attention to mortgage loan requirements you’ll see other 2 year rules in play for other loan requirements. What I am talking about in this post is only relavant to veteran home loans and places

It is because of the broad and misunderstood interpretation of what stable income means that many people say that if you haven’t been self employed for 2 years or more then you won’t qualify for a mortgage as a self employed individual.

The VA stipulates that income from self employment is considered stable when the applicant has been in business for at least 2 years. But if we recall the earlier info from the VA Lenders Handbook from above that says that income analysis is not an exact science we get ourselves into the gray area about being self employed and qualifying for a veteran home loan.

The kicker to the steadfast rule about 2 years needed for self employment is that if you have been self employed for more than 1 year but less than 2 and you have previous related employment you may get an approval. You may also get an exception to the 2 year rule if you received extensive specialized training in your industry/profession.

The VA does state that self employment of less than one year rarely qualifies. They go on to suggest that more “in-depth development is required for a conclusion of stable income on less than 1 year cases.”

With both of these conditions in mind, and the idea that there is no exact science to analyzing income, it will be on you to prove to the VA loan underwriter why your income should be considered stable if you have been self employed for less than 2 years if and when you apply for a veteran home loan.

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Overall, over the last couple of years mortgage guidelines have gotten tougher — and the HomePath mortgage program is one of the few programs that has come out where guidelines have actually gotten more lenient – for example, no appraisal is required and no mortgage insurance is required.

So if you are shopping for homes in the Phoenix area and you have found the perfect home that just happens to be owned by Fannie Mae, you might be in luck — there are actually two different types of HomePath mortgage financing available: The “regular” HomePath mortgage and the HomePath Renovation mortgage.

The “Regular” HomePath Mortgage

When a home is eligible for the regular HomePath mortgage, they will have a logo “HomePath approved” on the MLS or on the sales sheets. You can also check on HomePath.com to see if a home qualifies.

HomePath Mortgage Highlights:

• Low down payment and flexible mortgage terms (fixed-rate, adjustable-rate, or interest-only)
• You may qualify even if your credit is less than perfect
• Available to both owner occupiers and investors
• Down payment (at least 3 percent) can be funded by your own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employer
• No mortgage insurance
• No appraisal required — the sales price is the value
• No declining markets policy
• No loans under $20,000
• No more than 10 financed properties
• No prepayment penalties

If you find a home that is owned by Fannie Mae and it isn’t move-in ready – you may still be in luck. The HomePath Renovation mortgage was designed for home buyers who are looking to do renovations prior to moving in and need financing for those renovations. If the home is going to be your primary residence and needs repairs, it may qualify for the HomePath Renovation mortgage.

HomePath Renovation Highlights:

• Financing to fund both your purchase and light renovation
• Low down payment and flexible mortgage terms (fixed-rate or adjustable-rate)
• Down payment (at least 3 percent) can be funded by your own savings; a gift; a grant; or a loan from a nonprofit, state or local government, or employer
• No mortgage insurance

If you are shopping for a house and you hear “owned by Fannie Mae” anywhere in the conversation – do yourself a favor and ask “does this house qualify for HomePath financing?” You may be surprised at how much money you can save by taking advantage of this program.

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Are mortgages really getting closed in ten days?

And I thought this might be a good time and place to let a branch manager at Academy Mortgage in Mesa talk about why Academy Mortgage can get your loan done fast when needed.

Question: What makes Academy Mortgage different than other lenders?

Answer: Probably the fact that we can actually get a loan done on time and quickly. We didn’t reinvent the wheel, we just do it more efficient and better. We do everything in house (everyone *says* they do everything in house) we really can go from originating a loan to the processor to the underwriter who then can take it to the closer who then sits right by our funder.

We are the only mortgage company that I know of who has that ten day close guarantee.

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