FHA VA Blog

We just had another success story with a client who needed a little boost to her credit score to be able to write an offer and close on her first home. The client came our way because she wants a 203K mortgage on her home. We are seeing more first time home buyers in Denver tackle buying a home and adding in the remodel costs up front. So if you are looking to buy your first home you should seriously look into the 203K loan.

She came my way because her real estate agent's lender didn't offer 203K mortgages. As a result I needed to pull her credit, but when I did so, she was short on points to qualify. Now you can imagine the disappointment for someone who thought they were ready. Given her credit report was pulled 4 months back (when she started looking), it had expired and of course the score changed.

Why did it change? Well given I never saw the original report I couldn't tell you this part. But I can say I reviewed her new report and gave her a couple quick things to do in order to re-score her credit. She did it that day and sent me documentation the next. I sent it off for a re-score and within a week we received the expected results. Not only did she find out today that she was awarded the HUD home she put in a contract on, but I was also able to share with her that her score is now high enough to qualify. Yes, a week of emotion, but when working with an experienced lender you will get the advice you need to be able to qualify. This is just one example of things that can come up when you are getting ready to buy a house. So make sure you sit with a lender early and make sure you look your credit over in advance of looking at houses.

If you are looking to refinance your home, or to get pre-approved to buy a home , apply here

Ray Williams

Branch Manager , Summit Home Mortgage Denver, 303-779-0591 x101

Are you thinking of buying this spring? How prepared are you? Credit? income? taxes? are you self-employed? Do you know if a Conventional or FHA or VA is better for you? Check this video out.

If you have questions or want to sit and chat get in touch.

Ray Williams, Branch Manager , Summit Home Mortgage, Denver

303.779.0591 x101

Are you thinking or planning on buying a home in Denver this spring or year? Check out this video with some helpful information.

Let me know if you need to get pre-approved to buy

Ray Williams, Branch Manager, Summit Home Mortgage

303.779.0591 x101

There may be a reason to use FHA for a 15 year fixed refinance when you have more than 22% equity at the time you refinance. While there would be a 1% one time fee to HUD paid(financed) at closing. The likelihood is that your interest rate could wind up lower than even a conventional 15 year fixed rate, if you would like to apply go ahead and fill out an application and I will get back to you. ~ Ray

The chart below is effective for case numbers assigned on or after April 18, 2011 for forward mortgage amortization terms. Mortgage Insurance Premiums Loan Terms < / = 15 years and loan to value ≤ 78.00 percent Upfront mortgage insurance = 1.00% Annual mortgage insurance = None Loan to value 78.01 percent - 90.00 percent Annual mortgage insurance = 25 bps Loan to value > 90.00 percent Annual mortgage insurance = 50 bps

I have been seeing more returning veterans call to inquire about VA home loans in Denver. I am excited to see this. As a veteran myself who uses the VA home loan on my own house, I am honored to help my fellow brothers and sisters get a VA loan . Qualifying for a VA loan is not that difficult and there is even a little more tolerance with credit scores than on an FHA or Conventional mortgage. But do know that the VA factors in taxes to your families residual income to determine in part eligibility for loan approval.

If you have any questions about VA mortgages and are buying or want to refinance and live in Colorado or Denver, reach out I would love to help. You can even apply here and I will personally call you back.

Ray

Ok, so a while back you read my post about the lowering of loan limits in Colorado for FHA mortgages. Well that has been reversed, so those loan limits are back up to where they were..... What does that means, on average about $30,000 more financing available for FHA users.

My opinion is , that it shows the Government is committed to FHA and keeping homeownership affordable. Why? Because they didn't add Fannie Mae or Freddie Mac to the increased loan limits. I think they are preparing for stepping away from backing these two giants in the future. So long as they back FHA and VA we will be fine.

To apply for an FHA or VA mortgage click here

Ray

So you may have heard that there is an ability to put down $100 and buy a HUD home. However, there are a few details , one in particular to pay attention to. Whenever you take out an FHA mortgage you finance a 1% upfront mortgage insurance to your loan. On a traditional FHA loan, that is added in after your down payment, so you effectively finance 97.5% of the house.

However, on the $100 with HUD you are only capable of financing this in when the addition of this 1% upfront mortgage insurance to your total loan amount will not cause your loan to exceed 100% of the value of the house. I would possibly be prepared to bring this to closing, or work with your lender on an alternative solution. A smart lender will propose an alternative solution in case you aren't financially prepared to deal with this extra cost.

To find a HUD home click here: and then you can apply for the loan program to make sure you are working with a seasoned HUD home lender through our online application and we'll get in touch with you from there.

~Ray

Previously, VA issued Circular 26-11-12 announcing the reduction of funding fees effective on October 1, 2011. We have been notified that the President signed H.R. 2646: Veterans Health Care Facilities Improvement Act of 2011, which reverts the VA Funding Fees back to the higher, pre-October 1^st percentages. The reduced VA Funding Fee Schedule in Circular 26-11-12 would apply for a very short period of time, theoretically for loans that closed during October 1^st through October 4^th. The VA is expected to provide guidance on the exact validity period for the VA Funding Fee schedule set forth in Circular 26-11-12, but it is likely that the guidance will come first via the VA Funding Fee payment process.

To apply for a VA home loan, click here.

Ray

More recently people have been looking at options to streamline their FHA mortgage in Denver and Colorado. So does it make sense, can you do it? Do you need an appraisal? How long do you have to wait since you last took an FHA mortgage? When does it make sense to do an FHA streamline refinance?

There are some basic requirements:

1.  We will verify your ability to repay the mortgage
2.  You have to have made your last 12 payments on time, and current when you close.
3. There is a 6-month waiting period from your last FHA  (210 days from the closing date)
4. There must be a "net benefit" (your principal , interest, and mortgage insurance must go down by 5%)
5. An appraisal may be required (if you are adding in anything on top of your principal, interest (current only), and difference of old upfront mortgage insurance, and new upfront mortgage insurance
6. Credit score- we require you have a 640 credit score to do a streamline refinance
7. If assets are needed to close with, we will want to see the money in the bank

To apply for an FHA streamline refinance click here 

Ray

Many people are seeking to buy houses right now. Some are in need of down payment assistance, and some would like it to keep their savings set aside. So what can you do? How do you qualify? What is available?

It all starts with your lender and their ability to be approved for as many of the options as are available in your community. For example, in most communities there are multiple types of down payment assistance programs available.

Some have stricter income (lower) qualifications, while others allow higher incomes. Some allow us to couple their down payment assistance for you with market rates on FHA loans, others conventional. Some lend the whole amount including servicing your first mortgage as well.

Needless to say it is a maze when it comes to learning the ropes on what you may be eligible for. Is it going to be CHAC, HOAP, ACHA, CHFA, DCHP, and are you going to get a tax credit on top of that? Even those lenders that can help you with down payment assistance, can't all offer you the tax credit. That has to be an approved lender.

Make sure that you talk to an experienced mortgage originator to get all of your options and that you get approved for everything you are eligible for.

Best of luck and feel free to call with questions

Ray Williams

303.779.0591 x 101

You may have heard the buzz. Right now unless congress takes action we will see lower FHA loan limits in Colorado . This will affect about 5% of prospective homebuyers in Colorado once that happens. It is set to go into effect October 1, 2011 unless it is stopped.

It won't effect you if you do an FHA streamline on a mortgage you took out prior to the change, even if your balance remains above the loan limits in effect at that time. And it won't effect you if you are doing a reverse mortgage or Home Equity Conversion Mortgage either (these two are established under a different legal authority).

Here are the proposed changes in Colorado by county:

 County / Current  /. Proposed  / Difference

 Adams County  $ 406,250          $ 368,000                 -$38,250

 Arapahoe County$ 406,250          $ 368,000                 -$38,250

 Archuleta County $ 317,500         $ 285,200                 -$32,300

 Boulder County   $ 460,000         $ 402,500                 -$57,500

 Broomfield County  $ 406,250         $ 368,000              -$38,250 

 Chaffee County      $ 280,000         $ 274,850                -$5,150  

 Clear Creek County  $ 406,250       $ 368,000               -$38,250 

 Denver County      $ 406,250          $ 368,000               -$38,250 

 Douglas County    $ 406,250          $ 368,000                -$38,250 

 Eagle County        $ 729,750         $ 625,500               -$104,250 

 El Paso County    $ 325,000          $ 271,050                -$53,950 

 Elbert County       $ 406,250         $ 368,000                -$38,250 

 Garfield County   $ 425,000          $ 414,000                -$11,000

Gilpin County        $ 406,250       $ 368,000                 -$38,250

 Grand County         $ 356,250      $ 333,500                -$22,750 

 Gunnison County  $ 433,750         $ 357,650               -$76,100

Hinsdale County      $ 557,500        $ 427,800              -$129,700  

 Jefferson County     $ 406,250        $ 368,000                -$38,250 

 La Plata County     $ 443,750        $ 379,500                 -$64,250

Lake County           $ 729,750        $ 625,500               -$104,250

Larimer County       $ 312,500        $ 271,050                -$41,450

Mesa County          $ 371,250        $ 271,050                -$100,200 

 Mineral County      $ 300,000        $ 271,050                 -$28,950 

 Ouray County        $ 482,500         $ 425,500                 -$57,000

Interesting stuff~ Ray

By Tara-Nicholle Nelson

In a recent study, 19 percent of American consumers who reported finding an error in their credit reports opted not to dispute the error, even when they were offered $5 to file the dispute!  Why not?  Well, some said they thought the error was too minor to impact their score, while others said the dispute process seemed too difficult to tackle.

The fact is, when you’re trying to qualify for a home loan, some of the items on your credit report that can pose a threat to your home finance plans might surprise you. Here are 5 surprising credit report entries you absolutely must fix, especially when you are in the process of buying or refinancing a home.

1.     Account balances you recently paid down or off. If you’ve just finished paying a bill down or off, you might not dispute the elevated balance that remains on your credit report because it’s not actually an error, per se.  But the whole point of paying the balance down was to bring down your credit utilization ratio, which is a heavily weighted factor in your overall credit score.  

Correcting the actual balances of your outstanding bills downward to account for your recent pay-down efforts poses such a large potential improvement impact for your credit score that it might even be worth paying your mortgage professional the $30 to $50 it will cost for them to initiate a Rapid Rescore, which can update your reports to reflect your slimmed-down balances in about 72 hours, compared with the 30 to 60 days you’d expect to wait to see results from a traditional dispute or update.

2.     Incorrect former addresses. Of the 19 percent of consumers who spotted an error on their report in the study, nearly 40 percent of those errors were in what the credit bureaus call “header data," things like the consumer's previous street address. Many elected not to dispute these sorts of line items because the error doesn't seem like it would impact their credit score.  While an inaccurate address might not have much to do with your score, it can still wave a red flag, signaling issues that can foul-up your mortgage application.

A misspelling in an otherwise correct street name should not cause you grave concern.  But if the previous addresses listed are in the wrong city or state, or otherwise come out of nowhere, they might signal that someone has used your name and/or social security number to obtain credit at a different address.  Credit card fraud and identity theft are difficult to unravel when you’re not seeking credit; they are much more complicated to resolve when the credit stakes are high and the underwriter as picky as they are in the course of applying for a mortgage.   

Also, current and previous addresses that conflict with where you’ve told the lender you live(d) can raise suspicion that you might be buying a second or rental home, rather than the owner-occupied home you say you’re trying to buy; that can provoke a lender to demand that you ante up more down payment dough, make you jump through greater hoops to prove your true address or even stop you from qualifying for the loan altogether.

3.     Bills that were never yours in the first place. As with completely bizarre former addresses, accounts listed on your credit report that you never opened in the first place can be a red flag that tips you to the fact that someone else might have stolen your identity and opened a credit card or account in your name.  If you find one of these items on one credit bureau report, but it’s currently closed or has a zero balance, you might be tempted to let it slide, thinking it can’t move the needle on your credit score.  In reality, though, if someone is using your identity to obtain credit and you fail to dispute that the bills belong to you, they might continue to use it, which can cause you real problems.  Of course, if the bills weren’t paid on time or have been placed in collection, disputing the accounts’ presence on your credit report is a must.  

If they were paid on time every time, though, the analysis might be different.  Unfortunately, instituting a fraud-based credit freeze or fraud alert on your credit reports at the same time as you’re applying for a mortgage can complicate your own loan qualification process significantly.  If you find yourself in this situation, carefully scrutinize the rest of your report and the credit reports you receive from the other bureaus to detect whether other fraudulent accounts exist, then consult with your mortgage professional on exactly when and how you should go about disputing the accounts which weren’t actually yours.

4.     Limits listed as lower than they really are. As with closed accounts that were never yours in the first place, accounts that are listed on your credit report as having limits that are lower than they really are might seem like a battle not worth fighting.  But the fact is that only two inputs go into the credit utilization ratio that comprises about 30 percent of your FICO score: how much credit you have available, and how much credit you have used.  So, if you have account balances that show up on your credit reports as lower than they actually are (i.e., that you have less credit available to use), that inaccuracy can skew your credit score and screw up your mortgage qualifying efforts. Big time.

5.    Derogatory items that should have aged off. Very few of us are perfect, and you might have worked hard to pay your bills on time in an effort to overcome a credit ding from back in the days.  Although the impact a derogatory item has on your credit score wanes over time, it’s still your right (and your responsibility) to make sure negative items disappear from your credit report when they are supposed to – that’s 7 years for a late payment, 10 years for a bankruptcy.  If you are still seeing credit dings on your report after more than the relevant time frame has elapsed, dispute them and claim the rehabbed credit (and score) you’ve since earned.

It’s not very common that credit report disputes cause dramatic changes in credit score, but again, many borrowers aren’t disputing these sorts of items they don’t realize could make a difference in their homebuying or refinancing prospect.  

Beyond that, if you’re close to a credit tier cutoff, like 620-640 or 740-760, depending on your loan type, even a few points’ difference can be the difference in qualifying for a home or not, or paying a higher mortgage interest rate for the life of your loan.  For these reasons, it behooves every potential borrower to be proactive in spotting and correcting these 5 must-dispute errors.

I guess you take imitation as a form of flattery. So when lenders call me and act as if they are buying a house to learn how I do business I take that as a compliment. What it shows me is that I am setting a standard that others are trying to understand and follow. To me this is the best compliment I can receive. And means my clients can rest assured they are getting top notch service and expertise when working with me.

Ray

We received two calls this morning from clients who have closed on their homes and are in construction phase of their 203K loans. They are moving right along and are about a month from having all their remodeling done and very excited about the progress and changes going on with the homes they bought.

Check out the new FHA 203K dedicated website here.

Happy Easter and a Good Friday to you.

Ray