Affordable Advantage program is being offered through Minnesota Housing and Finance Angency (MHFA).

Here is a brief overview of the program:

• 100% financing with competitive rates available to qualified borrowers
• NO MORTGAGE INSURANCE REQUIRED!! (Yes, I am shouting this! This can make a HUGE difference in your monthly payments!!!)
• Up to 3% of the purchase price allowed in seller-paid closing costs for the buyer.
• May not be combined with any other down payment assistance programs

I know I haven’t told you yet if you can qualify for the Affordable Advantage program through Minnesota Housing yet, so lets cover a few of the main points right now:

• First Time Home Buyer (meaning you cannot have owned a home in the previous 3 years)
• Must have a minimum credit score of 680
• Debt-to-income ratio must be no more than 45%
• Contribute at least $1,000 out of your own funds (this can be earnerst money, closing costs, etc)
• You must not earn more than $83,900 in annual income (this is total household income for families/households with 4 or less people)
• Complete the pre-purchase home buyer education course

In numerous situations, this 100% financing program, Affordable Advantage, will actually have a lower payment than a FHA loan with 3.5% down. This is because of the mortgage insurance costs that are tacked on top of your payment. There is no mortgage insurance to be paid with the Affordable Advantage program.

To get started and see if you qualify for this program, fill out the online prequalification form here.

In addition, for clients who are ready to buy and interested in 100% LTV financing, consider using the new Affordable Advantage product, now at 4.500%.

If you are looking at buying a home, call us as we can offer you safe loans with below-market interest rates today.

Please note, these rates are subject to change at any time, and this is not an offer to enter into an interest rate agreement. Such an agreement may only be made pursuant to Minnesota Statutes Section 47.206, Subds. 3 and 4.

The message below about refinancing homes that are “upside down” or “underwater” and a new program that MAY end up helping a few of the responsible homeowners who have been limited in their ability to refinance due to declining market value of their homes.

Courtesy of Donnell Bowen, Regional Operations Manager, Cornerstone Mortgage Company:

“I wanted to put a word out about the refi  program that is set to release on September 7^th.  This is another enhancement to the Making Home Affordable  (MHA) Program .  I consulted with our Corporate Underwriting Team this morning about it.  NOT ONE investor has issued any directive regarding the program yet but we are waiting with bated breath!

Here is a link to the mortgagee letter detailing the Eligibility Requirements:  http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/10-23ml.pdf

Here are the highlights:

·         The home must be underwater

·         The borrower must be current on payments

·         The borrower must not be in a temporary or trial modification period

·         The existing mortgage lender must discount their mortgage by at least 10%

·         This is OPTIONAL for the existing mortgage lender

·         The total loan-to-value ration (LTV) must not exceed 97.75% after refinance

·         If there is a 2^nd mortgage, that lender must agree to forfeit their loan and take a $500 incentive

Or

·         If there is a 2^nd mortgage that gets Subordinated, the total combined loan-to-value ratios (CLTV) cannot exceed 115% of the value

·         If a borrower completes one of these refinances it will be reported to the credit bureaus in the same way that a short sale would

Given these requirements I don’t expect to see investors clamoring to offer this product…but then again I see new things on a hourly basis these days! Please stay tuned and the Operations Department here at Cornerstone will keep you updated with the latest developments.”

Time will tell whether or not this program will end up being accepted by the current secondary market investors (which is the only way the loan product can hit the streets and be offered to the public) or whether it will flatline before launch.

If you think you would qualify for this FHA “Underwater” refinance, contact Carrie or fill out the online prequalification worksheet to be ready for this loan product to become available.

Please check out the blog post written  on Minnesota Home Ownership Center’s blog to read the rest of the story.

Owning a home can be one of the best things you can do to invest in your future. Not only financially, but emotionally as well. I agree that is isn’t a decision to be taken lightly, but with the proper education and expectations, making a house a “home” is a positively wonderful experience.

Decide what price range you want to spend on your home. You can usually afford a home that equals your gross income multiplied by 2.5. Remember to add in taxes and insurance to your principal and interest payment. Know what a comfortable monthly mortgage payment is.
Write down your ‘Needs’ for your home. List the features that you want your home to have, then put in order from ‘Most Important’ to ‘Would Be Nice’.

Narrow your desired location to 3 or 4 neighborhoods. Make sure to take schools, future expansion plans, traffic and commute, and safety all into consideration.

Look at your available funds. Do you have enough to cover earnest money, down payment and closing costs? Most loan programs will require 3.5% down-payment at closing. There are down-payment assistance programs available for first time home buyers who qualify. Be sure you ask your loan officer what may be available to you.

Take care of your credit! Make sure to obtain a copy of your credit report, complete with scores.
Get prequalified for your mortgage. Talk to Carrie Guarrero at MN Home Loan Partners to determine whether you will qualify for the mortgage amount needed for you to purchase in your desired price range. It is also important to talk about the different loan options that would fit your situation best.

Gather documents. Put together all the information that your mortgage professional has requested. This is an important piece of the prequalification process. A true prequalification cannot be issued unless you have shown documentation to verify your income, assets and debt.

Don’t forget maintenance and utility costs. Depending on your situation you may also have to incur moving costs as well.

The best thing a first time home buyer can do to prepare themselves for a home search is to attend a HomeStretch class provided numerous times and locations throughout Minnesota. The HomeStretch workshop will help prepare buyers for the realities of owning a home. It will better arm you for the wonderful enjoyment of home ownership.

STATEMENT BY DEPUTY ASSISTANT SECRETARY VICKI BOTT

 Tuesday, August 10, 2010

 ”Last week, FHA Commissioner David H. Stevens announced plans for implementing FHA’s new mortgage insurance premium structure. As we work to publish a Mortgagee Letter, it is our intention to announce that based on industry feedback and our desire to have this change implemented successfully in the marketplace, FHA will make the premium fee changes on all new case numbers effective October 4, 2010

“Over this past week, the industry responded with support of the new fee structure,  but voiced strong concern about having system changes ready in time to meet the original September 7, 2010 deadline. Since these system changes impact regulatory disclosures, lenders expressed they must have the additional time to implement and test systems. FHA took this feedback seriously and has accommodated the need for additional time.”

To read about the original announcement on H.R. 5981, click here.

It may be taboo to talk about fall during this summer heat-wave, but let’s talk about it anyway.

MN Home Loan Partners of Cornerstone Mortgage Company cordially invites you to the Fall Festival Client Appreciation. This year we will be hosting the event at our office, 436 Gateway Boulevard in Burnsville, MN. The festivities will take place between noon and 4pm on Saturday, October 2, 2010.

Join us for the fun-filled afternoon! There will be pony rides, a petting zoo, pumpkin painting, giant bouncers and more!

Each year we collect non-perishable food items along with winter clothing and blankets for CAP Agency. Please be sure to bring your children’s gently used winter coats and clothes that they have out-grown! Our goal this year is to collect 900 clothing items along with 1,000 pounds of food.

Everyone who attends will receive a chance to win some amazing door prizes! We have some very dedicated sponsors who donate the goods that range from photography sessions to electronics!  

Again, be sure you bring your gently used winter items (boots, hats, mittens, coats), blankets and/or some canned food goods to help us reach our goal for CAP Agency.

Bring the whole family, there is plenty of fun! Plus you will walk away with a great photo from our Photo Station. We will see you on Saturday, October 2, 2010!

For more information, or sponsorship opportunities, click here.

This announcement below came from the desk of David H. Stevens, Assistant Secretary for Housing/Federal Housing Commissioner earlier today. It was sent to mortgage lenders around the US. It highlights the efforts going on in congress to stabilize the FHA Mutual Mortgage Insurance Fund.

Over the past week, Congress has taken action and passed H.R. 5981. The bill gives FHA the authority to adjust its annual mortgage insurance premium yielding approximately $300 million per month to the FHA Mutual Mortgage Insurance Fund at a time when its reserves are perilously low.

As I have previously stated in my testimony before Congress, FHA will lower its upfront premium simultaneously with the increase of the annual premium. It is our intention that effective on September 7, 2010, FHA’s upfront mortgage insurance premium will be adjusted down to 100 basis points on all amortization terms and the annual mortgage insurance premium will increase to 85-90 basis points on amortization terms greater than 15 years. A Mortgagee Letter will be forthcoming once President Obama signs the bill into law, but with today’s passage of H.R. 5981 and our expedited implementation schedule, I wanted to immediately inform the industry of our plans so the lending community can begin preparing for the operation and system changes required to implement FHA’s new mortgage insurance premium structure on all new case numbers by September 7th, 2010.

While we appreciate and applaud this recent action, there is still work to be done. HUD remains steadfast in its commitment to comprehensive FHA reform legislation, similar to the FHA Reform Act passed earlier this year by the House, which would further enhance FHA’s lender enforcement capabilities and risk management efforts. We hope Congress will take swift action to pass a broader FHA reform bill when they return from the August recess. FHA’s risk management efforts will not be complete without the ability to monitor lender performance and ensure compliance with our rules.

Although the transition timeframe is short, the implementation by September is critical. Thank you in advance for the efforts of you and your organization to make this change happen on such short notice. We appreciate your hard work and continued partnership.

**The upfront and annual premium changes do not apply to the following FHA programs: Title I, HECM, HOPE for Homeowners (H4H), Section 247 (Hawaiian Homelands), Section 248 (Indian Reservations), Section 223(e) (declining neighborhoods), Section 238(c) (Military Impact areas in Georgia and New York). LTV’s <= 95% will increase to 85bps and LTV > 95% will increase to 90 bps

What does this mean for you? Portions of your up-front Mortgage Insurance Premium (MIP) is moving from being included on top of your purchase price to a higher amount financed into your loan, into your monthly premium amounts paid through the period of time you carry MI. For minimum down financing this will result in slightly higher monthly payments. This, combined with the potential for reduced seller paid closing costs from a maximum of 6% down to 3% will mean higher entry cost and higher monthly payments for minimum down buyers. Stay tuned to www.KnowYourHomeLoan.com for more information as it becomes available.

BUT, the good news is that we have solutions and will analyze each borrowers situation to find the best program to meet their needs! We have a new zero down conventional program AND a variety of first time home buyer programs like Minnesota Housing, Dakota County Bond, City Living and many other statewide, county or city specific, programs!

 PENCIL PUSHING: Do the math for yourself:  6% is a pretty normal rate in a normal economy.  Just how good are rates now?  On a $200,000 loan, the difference in 4.25% and 6% is $213 per month!  The 6% rate produces a payment of $1,193 vs. a $980 payment at 4.25%, a difference of 17.85%!

 If  you are wanting to move and has budgeted $1,500 a month for principal and interest on your new home (assuming a 20% down payment), they can buy a home today in the amount of $382,500.  Compare this to when mortage rates are at 6%:  they can afford a home in the amount of $314,375!  

 So, where mortage rates are today, they can buy $68,125 more home – a difference of 21%!

 Keep in mind, this does not take into account inventory levels and the possibility of getting a great home at a much better price today than one might have a couple of years ago.  Pretty cool!!!!!!!!!!!

FHA LOANS ARE ASSUMABLE.  Think about this – five to seven years from now, when you are a home “seller,” nearly every expert in the world envisions higher, more “normal” interest rates over 6%.  An often-overlooked feature of FHA loans is the fact that a new buyer can take over the seller’s loan at the seller’s interest rate (assuming they qualify based on their income, assets and credit). 

 What that means:  If you sell an FHA-mortgaged home in coming years, with a 4.5% FHA mortgage (for example), the “competition” will be handi-capped with higher rates.  That factor alone could make your home 5-15% more valuable (especially for those buyers who are buying payment, rather than price).  Also pretty cool!!!!!!!!

 DID YOU KNOW?   Have you heard so-called “gurus” suggest that it only makes sense to refinance if you can save “x” or “y” amount of dollars? 

 Don’t let all the babble discourage you from checking things out for your own situation.   Obviously, there’s some sense in making sure that for the cost of a refinance, there are some realistic savings.   Closing costs are as varied as the rates (you can have high costs or low costs, depending on the rate chosen).   There’s also no “one-size-fits-all” mortgage, and because every borrower’s objectives are different, the bottom line is that we should run the numbers in every case to see what they tell us.

 Consider this example of many:

 -          $200,000 current loan, 30-year fixed, 5.5% – Worth it to refi?  The “gurus” say “not unless you can save 1% in rate without points.”

 -          What if you could drop to 4.5%, but had to pay some increment of point to get there – let’s assume it was $4k total costs.  By raising your loan to $204,000, here’s what the situation might look like:

 -          Savings = $101.94/mo.  What if the borrower invested that savings:

 At a 4.5% return, they will have:                   At a 6% return, they will have:

$6,782 in 5 years                                            $7,047 in 5 years

$15,271 in 10 years                                        $16,552 in 10 years

$25,897 in 15 years                                        $29,373 in 15 years

$39,210 in 20 years                                        $46,666 in 20 years

$76,698 in 30 years                                        $101,456 in 30 years

 WOW!

 -          If this represented your situation, and you listened to the “gurus” telling you not to bother refinance, you could lose up to $101,456!! 

 -          Do yourself a favor – put that $101,456 back in your pocket by calling me today!  Although I’m not promising that you will qualify for a mortgage to save exactly this much per month, I will help you save as much money as is possible in your situation.  With over 23 years of experience, I am committed, qualified and equipped to help you evaluate your options and make smart choices. 

 Contact me for more information – and call me even if you think that you might not be able to qualify for a mortgage in this credit environment – you may be pleasantly surprised.