Fannie Mae loosens guidelines on student loans

New rules for student loans that were announced by Fannie Mae earlier this year allow people who have income based repayment plans and graduated payment plans to qualify for more house!   The old way: if the student loan was an income based or graduated payment, the lender would consider the payment to be 1% of the balance on the loan despite whatever the actual payment is.  New way: use the actual income based program.  These rules will make it possible for people who would have previously been shut out or limited to a lower sales price to qualify for more!  In one example the borrower had $85,000 in student loan debt and an income based repayment plan of $300 but a payment of $850 had to be used in qualifying (1% of the balance on the loans).  Under the new rules, the borrower can use the $300 payment and qualifies for $550 more per month in housing payment!!  If you know anyone who tried to get a mortgage in the past couple of years but their student loan debt got in the way, let them know that things have improved!  Click here to see a recap of the new loan guidelines.

Additionally Fannie Mae’s automated underwriting system is being updated on July 29, 2017.  At that time it is expected that more people will be approved for total debt ratios (housing + debt / income) up to 50%. Most loan programs, including Fannie Mae, require the loan to be run through automated underwriting successfully.   For most the cap for debt ratio has been 45% or less but the new guidelines anticipate that more, but not all loans, will be capped at 50%  Now a person with income of $5000/month will potentially qualify for $250/month more in a housing payment!

And there’s more good news!  Many housing agencies use Fannie Mae automated underwriting, including the NH Housing Finance Authority!

Author: Renee Duval – A Certified Mortgage Professional (CMP) with the NH Mortgage Bankers & Brokers Association.  NMLS# 97937.  Merrimack Mortgage Company, NMLS#2561, is an Equal Housing Opportunity lender.  The views expressed in this blog are those of the author, Renee Duval,and do not reflect those of her employer, colleagues or its clients.  The information provided is for informational purposes only and is not intended as legal or tax advise.  Programs are subject to change without notice and underwriting approval. 

Check out www.nhmortgages.com for more info on mortgage loans and qualifying for a mortgage.

What happens after the sales agreement is signed?

Congratulations!  You found the house you want to buy.  You’ve negotiated a sales agreement – you have a signed offer.   What next?

1. You need to give the sales agreement to your lender.   Your lender will create a property-specific loan application and forward the applications and disclosures for you to sign.  Once you have signed these documents you will have officially applied for your mortgage loan.  Note that the sales agreement will specify that this step must occur within “X” number of days from the time an agreement is reached.  Typically you are required to apply for the loan within 5 days of agreement but that # is negotiable.
2. Arrange for the home inspection(s).  You will need to arrange for the required and optional inspections.  Your sales agreement has an area where you specify which inspections you have a right to do.  The only required inspection is a water quality test if there is well water.  Most people do a general building inspection and a septic inspection if public sewer is not available.  You will be required to provide copies of any invoices for any inspections done.  Please do not pay for this in cash — if the seller is paying your closing costs you cannot be reimbursed for things paid for with cash.   If the seller is paying your closing costs you may need to document that the payment for the home inspection came out of your checking/savings.
3. Order the appraisal.  You will be required to pay for the appraisal early in the process.   The appraisal determines the value of the home (must equal or exceed the sales price) and whether the property complies with the minimum property standards for the type of mortgage you are taking.  The appraiser meets the listing agent at the house and writes up a detailed report.  You will receive a copy of the appraisal report.   Occasionally an appraisal comes in below the sales price or comes back with required repairs.   If this happens, your lender and REALTOR will help you identify the options!
4. Submit all requested information.  You may be asked to provide updated bank statements, paystubs and other information.   You may be asked to explain and/or document large deposits, payroll deductions, things on your credit report and a hundred other possible things.  Most people find this annoying.  The reason the lender requires so much documentation is that the lender needs to defend its decision to give you a loan.   Lenders are under extreme regulatory control following the housing crash of 2009.   Work with your lender to get them everything they ask for and keep smiling.   There will come a time when your loan is fully approved and you do not need to provide another stitch of information.
5. Cleared to Close!  In mortgage terms these are the three best words you can hear!  It means we are at that point where the lender is fully satisfied with the documentation in the file.  The closing can be scheduled!   The lender must provide you with a preliminary Closing Disclosure which you must receive and acknowledge at least 3 days before closing.
6. Consummate the Transaction!  Finally it’s closing day.  A third party vendor will be the closing agent.  Before the closing date they will do a lot of behind the scene work to make sure title is clear and the current liens will be paid off, etc.   The actual  closing could be at the closing agent’s office, at the REALTOR’s office or any other mutually agreed upon place.  The required parties are the Buyers, Sellers and the closing agent.  Most often both REALTORs are present and your loan officer will check in to make sure everyone is happy!
7. Move in!  Of course there is more to moving than getting the keys.  You will need to line up all of the appropriate utilities and services.
8. Start making payments!!  Typically the first payment is due on the first of the month starting after the first full month you have lived in the house.  So if you close in January, your first payment would be due on March 1.  Mortgage interest is paid in arrears meaning that the payment made on March 1 is paying for interest charges that accrued in the month of February.
9. Enjoy your new home.

NH Housing issuing tax credits for home buyers!

The Home Start Homebuyer Tax Credit of up to $2000/year for first time buyers (or second time buyers buying in targeted communities) is available through NHHFA (NH Housing Finance Authority).   In order to participate, you must apply for a Mortgage Credit Certificate through NH Housing at the time you are purchasing your home.  The fee is up to $550 (discounted to $250 if your mortgage is a NH Housing product).  You must appy for the MCC before you close on your loan!   

If you are buying in NH and want to know more about the tax credit call Renee Duval from Merrimack Mortgage Company at 603-225-LOAN (5626).   Or email Renee Duval using this link.

You can find more info on mortgages at Renee's blog -  Click On and enjoy!  

The tax credit is a direct dollar-for-dollar reduction in your federal taxes -- up to $2000/year!!  You receive the credit for as long as you continue to live in the home and remain eligible.   The actual credit is equal to 35% of the interest paid or $2000 (whichever is less).

Income Limits apply and maximum sales prices apply.  Click here for link to find those limitations.

The following targeted areas allow the tax credit to go to people who are not first time buyers: Berlin, Claremont, Concord, Dover, Gofftstown,  Laconia, Lancaster, Littleton, Manchester, Newmarket, Pittsfield, Portsmouth, Rochester, Somersworth & Whitefield.

You are required to take on online course (about 15 minutes long) in order to apply for the Homebuyer tax credit.   Use this link to access that course.

Author: Renee Duval – A Certified Mortgage Professional (CMP) with the NH Mortgage Bankers & Brokers Association.  NMLS# 97937.  Merrimack Mortgage Company is an Equal Housing Lender, Licensed by Massachusetts and the NH Banking Department . Mass Lender MC2561-119.  The blog is Renee's opinion and not necessarily the opinion of her employer.  This is not meant to be tax or legal advise.

Ability to Repay

What is the Ability to Repay all about?  

The Consumer Finance Protection Bureau (CFPB) -  www.consumerfinance.gov - wants to make sure that lenders are lending to borrowers who can afford the homes they are buying.  As a result new rules regarding “Qualified Mortgages" and the “Ability to Repay” went into effect in January 2014.   These rules are meant to protect homebuyers and effectively will also protect lenders by giving additional guidance on mortgage loan fees and costs and underwriting.

How does 'Ability to Repay' effect a home buyer?     Well in very general terms, the new rules may cause underwriting to be more strict than it had been.  But in many cases the underwriting has not changed at all. 

One underwriting standard getting alot of attention is the maximum total debt ratio of 43%.  The translation of this formula is simple math:  borrowers’ gross monthly income X 43% is the maximum they can get for housing & other debt (car loans, student loans, other loans, minimum payments on credit cards, monthly child support & alimony payments).   This rule does not apply broadly across the board and in some cases, loans can still be approved with total debt ratios as high as 55%.    ATR (ability to repay) rules are mostly basic underwriting standards that many mortgage lenders having been using all along.  So what do  home buyers need to know about ATR?  If you are considering a home purchase, contact a mortgage lender and prequalify or preapprove for the mortgage before you make an offer to purchase a home. Make sure you have the ability to repay!

If you are considering a home purchase, we would be happy to assist you in determining what you qualify for and what your best options are.  Pick up the phone and call 225-LOAN or find more interesting info at www.nhmortgages.com 

Author: Renee Duval – A Certified Mortgage Professional (CMP) with the NH Mortgage Bankers & Brokers Association.  NMLS# 97937.  Merrimack Mortgage Company is an Equal Housing Lender, Licensed by Massachusetts and the New Hampshire Banking Department . Mass Lender MC2561-119

The Home Financing Process Step by Step

So you are thinking of buying a house.  This is a big decision.  You want to get it right.  Lets break it down step by step into digestible pieces. 

Here are the main topics we will go over:
1) understanding and comparing the basic loan types and which is best for you.
2) understanding the costs involved in financing a home and the options to reduce those costs
3) understanding how credit has a large influence on the terms available to you and techniques you can employ now to get your credit as mortgage ready as possible
4) understanding the difference between prequalified and preapproved
5) tools to help you figure this out all on your own
6) the opportunity to work with a professional to determine your own qualifications.

There's so much to know!  www.nhmortgages.com is a good resource for basic info.
Please feel free to email me with specific questions; I love to chat about mortgages!
email: Blog@NHmortgages.com

Author: Renee Duval – A Certified Mortgage Professional (CMP) with the NH Mortgage Bankers & Brokers Association.  NMLS# 97937.  Merrimack Mortgage Company is an Equal Housing Lender, Licensed by Massachusetts and the NH Banking Department . Mass Lender MC2561-119

Am I eligible for a mortgage tax credit?

If you are purchasing in NH an you are a first time buyer (haven't owned in the past 3 years) or are buying in a targeted area (those in bold font below) and you meet the income requirements, you may qualify for up to $2000/year for the next four years (up to $8000) in tax credits.   Ask your lender about this.  The MCC (mortgage credit certificate) program is the best kept secret.   If you have not been informed about this, then ask!  

Home Start Homebuyer Tax Credit

INCOME LIMITS

Belknap County
Laconia $96,600 income for a 1-2 person household;  $112,700 for 3+ person household
All other communities $80,500 for a 1-2 person household  $ 92,500 for 3+ person household

Carroll County
All Communities $80,500income for a 1-2 person household; $ 92,500 for 3+ person household

Cheshire
All Communities $80,500 income for a 1-2 person household; $ 92,500 for 3+ person household

Coos
Berlin, Lancaster, Whitefield $96,600 income for a 1-2 person household; $112,700 for 3+ persons
All other Communities $80,500 income for a 1-2 person household; $ 92,500 for 3+ persons

Grafton
Littleton $96,600 income for a 1-2 person household; $112,700 for 3+ person household
All other Communities $80,500 income for a 1-2 person household; $ 92,500 for 3+ persons

Hillsborough
Goffstown, Manchester $96,600 income for a 1-2 person household; $112,700 for 3+ persons
All other Communities $80,500 income for a 1-2 person household; $ 92,500 for 3+ persons

Merrimack
Concord, Pittsfield $96,600 income for a 1-2 person household; $112,700 for 3+ person household
All other Communities $80,500 income for a 1-2 person household; $ 92,500 for 3+ persons

Rockingham
Newmarket, Portsmouth $96,600 income for a 1-2 person household; $112,700 for 3+ persons
All other Communities $80,500 income for a 1-2 person household; $ 92,500 for 3+ persons

Strafford
Dover, Rochester, Somersworth $96,600 income for a 1-2 persons; $112,700 for 3+ persons
All other Communities $80,500 income for a 1-2 person household; $ 92,500 for 3+ persons

Sullivan
Claremont $96,600 $112,700 income for a 1-2 person household; for 3+ person household
All other Communities $80,500 income for a 1-2 person household; $ 92,500 for 3+ persons

PLEASE NOTE:
Targeted Communities are in bold: first-time home buyer requirement does not apply.

For more info on this and other mortgage types visit: www.NHmortgages.com

Author: Renee Duval – A Certified Mortgage Professional (CMP) with the NH Mortgage Bankers & Brokers Association.  NMLS# 97937.  Merrimack Mortgage Company is an Equal Housing Lender, Licensed by Massachusetts and the NH Banking Department . Mass Lender MC2561-119

What if the house needs repair?

Thinking of  purchasing a distressed property in need of repair?  Do you already own a home that needs repair and you don't have the cash?  You may be able to use a rehab loan to get cash to fix it up after closing.   These options include FHA 203K and FHA 203Ks programs.   For purchases in eligible areas (more rural areas) RD/USDA also has provisions for a minor amount of rehab money (under $10K).  State housing agencies like NH Housing, also often have rehab programs (in NH it is possible to get up to $40K in rehab funds thru NH Housing Finance Authority).
Generally the buyer or owner of the home must have contractors look at the project and give a written proposal to do the work.  The contractor must be appropriately licensed (or use licensed subcontractors) and insured. Much paperwork does apply!
The rehab loan process is more complex than obtaining a regular loan but it doesn't have to be too difficult if your lender has the knowledge and experience to guide you through it.   I prefer not to accept an application for a rehab loan from the buyer or owner until they have the contractor's bid(s) in hand.   It is imperative to get the contractors out to the property as soon as possible to get those bids.   Sometimes they will determine the cost is less or more than you thought and this can really influence your decision on financing (and/or your ability to qualify).  It is normally recommended that you have 3 contractors bid on any project.  Doing so will really help you to see the project more clearly.  As you meet with each contractor, each will have ideas which will enlighten you.   So you need to be prepared to spend many hours within the first ten days of your offer being accepted, meeting with contractors and making important decisions on what you want to include in your rehab.   Carpeting allowances, appliance allowances, etc are really important.  If your contractor gives you $500 for flooring and the flooring you want is $1500 then you may end up having a problem down the road.   So if you are considering a rehab loan, consider the upfront time necessary to do it right and surround yourself with good people who know what they are doing!
Author: Renee Duval -- a top ten loan officer for NH Housing loans and a Certified Mortgage Professional (CMP) with the NH Mortgage Bankers & Brokers Association.  NMLS# 97937.  Merrimack Mortgage Company is an Equal Housing Lender, Licensed by Massachusetts and the NH Banking Department . Mass Lender MC2561-119

3% grant available thru NH Housing

NH Housing will provide a cash assistance grant equal to a maximum of 3% of the loan amount to help borrowers defray the cost of down payment, closing costs, and prepaid escrow expenses associated with purchasing a home. Borrowers must contribute a minimum of 1% (based on purchase price) using their own funds (excluding gifts). Seller can help with closing costs (as long as the borrower has their required 1% into the transaction). No cash back is allowed at closing. 
Income limits and all other NH Housing guidelines apply. Borrowers do not need to be first time homebuyers but you cannot own other real estate (ok to sell and buy on the same day). 
There is no monthly payment on the cash assistance grant portion. If the homeowner stays in the house then after 48 months, the full amount of the grant is forgiven.
For more information, go to www.nhmortgages.com   I am happy to provide you with an estimate of what financing would look like using this program if you have a particular home or price range in mind!  
NH Housing loans can be used in combination with FHA or RD (aka Rural Development or USDA), FHA 203Ks, RD rehab or VA.   
Author:   Renee Duval -- I am a top ten loan officer for NH Housing loans and I am a Certified Mortgage Professional (CMP) with the NH Mortgage Bankers & Brokers Association.  I am licensed to originate loans in both NH and Massachusetts.  NMLS# 97937

Mortgage Loan Types & Terms

If you are thinking of purchasing a home or refinancing, I have described mortgage options in terms of terms and types in this article. For more interesting mortgage info, please check out my website at www.NHmortgages.com or feel free to email me at Renee@NHmortgages.com

TERMS  – the term of a mortgage is the number of years to repay the loan 

30 Year Fixed Rate Mortgage 

 This loan program is fixed for 30 years; your interest rate will not change during the term of the loan. This is ideal for people who plan to stay at their present property for a long period of time or just simply want the lower payment or need the lower payment to qualify for the mortgage.

20 Year Fixed Rate Mortgage

 Fixed for 20 years. Your payment will be higher than 30 year fixed loan because your loan term is only for 20 years. The interest rate will not change during the term of the loan.

15 Year Fixed Rate Mortgage

 15 year fixed loan has a loan term of 15 years and will not change during this period. Your monthly payment on this loan program will be much higher than 20 years fixed or 30 years fixed but you will pay your loan balance down much more quickly. The interest rate will not change during the term of this loan. If you can afford the higher payment and you plan to sell your home in 5-8 years, this may be a great option for you. The interest rate will not change during the term of the loan.

Comparison of different terms

 For a $100,000 loan, at a rate of 4%: P&I Payment on 30 yr term = $518.83;   P&I Payment on 20 yr term = $658.55;  P&I Payment on 15 yr term = $803.86
 P&I = principal & interest (the amount required to repay the loan over the given term)

 LOAN TYPES

The type of mortgage you get will probably be based on what is best for you and your situation in terms of down payment, qualifying criteria, etc

 Conventional 

A conventional loan is also known as a conforming loan and is generally a loan underwritten to the guidelines of Fannie Mae or Freddie Mac. Conventional loans do not have income limits and are generally available through all mortgage companies, brokers and banks who give mortgages. Conventional loans are used for the purchase of primary residences, second homes and investment properties. Conventional loans are available on single family homes and 2-4 unit properties and condos. The required down payment ranges from 3% to 25% depending the purpose of the loan and the type of property being financed. Generally a minimum credit score of 620 is required but conventional loan rates, generally, will be higher for people with lower credit scores and a little lower for people with higher scores (740 or above). The loan limits for conventional loans start at $417,000 for a One-Family (single family homes) $417,000; Two-Family $533,850; Three-Family $645,300 and Four-Family $801,950.

 FHA

 Federal Housing Administration - an FHA loan is not limited to first time home buyers and can be obtained by people who already own another property. There are no income limits but loan limits apply (county by county). Check out the loan limits. FHA loans are readily available through mortgage companies, brokers and banks who give mortgages. FHA loans are available for owner occupied properties only and for single family homes, 2-4 unit properties and condos that are prior approved by FHA. One of the features that makes FHA loans so attractive is that they require only a 3.5% down payment for all property types. Generally a 640 credit score is required but the loan rate will be higher for people with scores below 680. FHA does allow non-occupying co-signers allowed for purchases of single family properties. FHA 203K and 203Ks – FHA has provisions to allow a borrower to purchase a home and receive funds to complete repairs after closing. The amount and type of renovation needed will dictate if the loan is a full 203K rehab loan or a streamlined rehab loan (203Ks). Basically the streamlined product is for repairs needed under $35,000 that don’t involve structural work. For renovations exceeding $35,000 or that include structural repairs then the full 203K loan is applicable.

 RD - Rural Development

These loans have both income limits and geographical limits. As the name implies they are not available in cities but are for more rural areas. Check RD’s property eligibility website to see if any particular town you are interested in is eligible for RD financing. RD financing is available for owner occupied single family properties and approved condos only. RD cannot be used to finance 2-4 family homes or homes with in-law apartments. Although buyers using an RD loan do not have to be first time buyers, they cannot own other real estate at the time of closing. It is ok to sell a house and buy another using an RD loan as long as the closing for the sale of the first home happens before the closing on the new home (can be same day). The beauty of RD is that it allows for no money down and the seller can pay the borrower’s reasonable closing costs! This is an excellent way to finance a home located in an eligible area.

 VA – Veteran’s Administration

If you have served in the armed forces then you may be eligible for a VA loan. This type of loan allows the Veteran to purchase a home with no down payment and the seller can pay all the closing costs. There are no income limits but there are some loan limitations. For a no down payment VA loan the max loan is $417,000 but higher loan limits may be available with a down payment.

 ARM (Adjustable Rate Mortgage) 

 ARM Loans are fixed for a certain period of time, then become an adjustable loan. The most common ARM products are 1/1, 3/1, 5/1, 7/1 and 10/1 ARMS. 1/1 means the interest rate is only fixed for the first year then the loan will adjust every year thereafter. 10/1 means the interest rate is fixed for 10 years then the loan will adjust every year thereafter. Theoretically, the lowest starting rate should be found with a 1/1 ARM. Typically the rates on ARMS are lower than the current fixed rates. However, ARMS are often used to finance borrowers and/or properties that do fit into the guidelines of conventional loans. In these scenarios, the ARM rates may be higher than the going fixed rate. Each ARM Loan Program has these features 1) Index: this is an agreed upon starting point to base future changes on. Common indexes used in ARM products are the 1-yr constant-maturity treasury security(CMT), the cost of fund index (COFI) or the London Interbank Offered Rate (LIBOR) 2) Margin: a fixed amount that will be added to the index to determine the new rate when the ARM adjusts. 3) Caps: the loan will usually have two caps; the amount the rate can change (up or down) at any given change and the amount the loan can change during the life of the loan. When it is time for an ARM to adjust, the margin will be added to the applicable index to determine the new rate. If that rate is higher than the cap then the rate will be adjusted only to the cap. ARMs are available in conventional loans, FHA, VA and nonconforming loans. For more info on ARMs check out this website: http://files.consumerfinance.gov/f/201204_CFPB_ARMs-brochure.pdf

 Author 

The author of this article is Renee Duval from Merrimack Mortgage Company, NMLS # 97958. Renee has been a mortgage originator since 1987. She is licensed in New Hampshire and Massachusetts. She is a Certified Mortgage Professional – a designation given by the NH Bankers & Brokers Association. She is a top 10 originator for NH Housing. She is a top producer with Merrimack Mortgage Company and branch manager of their Concord, NH branch. Merrimack Mortgage Company is an equal opportunity lender.   Find me at www.NHmortgages.com 

Getting Your Credit Ready to Qualify for a Mortgage

Basic Steps to Being Credit Ready to Buy or Refinance a House Summary: Article details the things you should do several months before you get a mortgage loan. By being informed and proactive, a consumer will qualify for the best rates and terms for their mortgage. Article Body: Some people who are buying their first home or who wish to refinance their existing mortgage are so well qualified that any bank or mortgage company would give them a loan. These people tend to have excellent credit and high credit scores, job stability and more than adequate income to support the proposed mortgage payment. A quick conversation with a loan officer will let them know they are in this category. Other would-be borrowers may have a more marginal situation. This article is geared toward those people who may not be totally confident and/or who want to prepare for the future so they will be considered well qualified when it is time to purchase or refinance. There are important things a consumer can do before applying for a loan, in order to get their credit profile acceptable to mortgage lenders. It can take time to get it all done, so start now and you'll be ready for the future. Check your credit reports. Under the Fair and Accurate Credit Transactions Act, consumers can request and obtain a free credit report once every 12 months from each of the three nationwide consumer credit reporting companies (Equifax, Experian, and TransUnion). You can go to www.annualcreditreport.com to request a free copy of your credit reports. This is the only site authorized by the three major credit bureaus for the purpose of obtaining a free copy of your credit report. Each of the three reports will need to be requested separately (3 different requests). The free reports received from the site will not provide you with a credit score but it will give you a complete copy of your credit history and that's a good place to start. As you go through the process of requesting your credit reports, you may be asked if you want to get the credit scores (for a fee). While this is an option, please note that the consumer score they give you is usually different (usually higher) than the score you get when a mortgage lender obtains your credit report. This is because the model for a mortgage credit score is different than the model for a consumer credit score. The model for a mortgage credit score is designed to predict the likeliness that you will be successful in making mortgage payments. Note: if you know a mortgage loan officer, you can usually prequalify and have them obtain a 3-bureau report with credit scores. Most mortgage programs do have a minimum credit score requirement. Also, the interest rate you will be charged is often affected by your credit score (higher credit scores may get better rates). Also, for people with lower credit scores, the underwriting criteria may be stricter. Now that you have the credit report, take some time to review each entry. Do you have any late payments in the past 12 months? If so, then you must start making all payments on time. There is a very low tolerance for recent late payments. Are there any current delinquencies with past due balances or collection accounts? If you are currently delinquent on an open/active account, you must bring that account current immediately and then you need to keep paying it on time. Generally you need to have all accounts paid on time for a minimum of 12 months. If you have unpaid balances on collection accounts, medical collections, judgments or accounts that were charged to P&L or an unpaid balance from a car repossession, etc, then this can be an issue if the outstanding balances total $1000 or more. Most lenders will require these accounts to be paid in full prior to closing or you will need to prove that you have a written payment agreement and have been making payments per the terms of that agreement for a minimum of 3 months. If you do have outstanding balances on older accounts, please try and determine the actual date the account went into a collection status. These accounts are supposed to come off your credit report after seven year but often they do not because the way they are reported makes them appear to be more recent than they are. You may need to do some digging and some research to get the date(s) the account(s) went delinquent. If the creditor is not able to provide this information, you may have a case to dispute the account and get it off your report! Are there any errors? If so you will want to dispute this information too. Each credit bureau has procedures in place for making disputes. Is there any unfavorable public record information such as bankruptcy? Lenders and mortgage programs have specific guidelines on dealing with these types of issues and may require anywhere from 2 years to 7 years from the date of discharge of a bankruptcy or foreclosure before they will give another mortgage loan. Decide whether to resolve or dispute every negative item on your credit report. Even small items such as a past due account with a utility company can show up and adversely affect your credit so take care of it now. There may be some merit to using a professional credit repair company to assist you in disputing negative items on your report. Lenders are generally looking for 3 open lines of credit that have been paid on time for a minimum of 12 months. If you do not have 3 open lines of credit, then you probably should obtain additional credit. It is hard to achieve a maximum credit score with an insufficient credit profile. Next, look at the balances on your credit cards. To get the ideal credit score, the balance on a credit card should be around 30% of the credit limit. As the balance on a credit card starts to approach the credit limit, your credit score goes down. If the balance on the credit card exceeds the credit limit, then you are probably losing a lot of points! If you are unable to pay down the balances on your credit cards, consider requesting a credit limit increase. This can help separate your balance from the credit limit. If you are thinking of buying a home or refinancing in the future, then watching the balances on your credit cards is a very important step. Aim to get the balances down to at least 50% of the credit limit (or lower if you can). If you cannot get the balances that low then do the best you can; keep in mind that the balance of the cards compared to the credit limit is a big credit score driver. Other rules of thumb are do not open any new accounts and do not close any accounts. One exception, of course, is that if you do not have at least 3 open accounts then you should open new accounts so that you do have 3 accounts reporting on your credit bureau. Also, if you have more than five accounts, then closing one or more of your newer accounts is ok (leave at least five open). If you are going to close an account, it is better to close newer accounts and leave older ones open, when feasible. If you have student loans then understand that the lender will qualify you based on the minimum payment due – even if the loan is deferred. So check the student loans listed on your credit report and make sure that the information is accurate and that each loan reports a payment. If deferred loans are not showing a minimum payment due (this is the norm) then you will need to request something in writing from the student loan companies stating what the minimum due will be. This can get interesting because, for deferred student loans, the student loan company will give a statement showing what the payment will be for a regular repayment schedule. In other cases the student loan company will show a choice of different payments but there is a notation that the loan is scheduled for regular payments (which means the lender will not choose to accept the lower payments available). For some borrowers, the student loan payment(s) will affect the amount they can be qualified for and sometimes causes them to qualify for less than they want. One way that some borrowers have resolved this problem is to literally take their loan(s) out of deferment and choose the payment plan with the lowest payment then put it back in deferment. By taking these steps, the payment used by the lender to qualify you will be the lowest possible payment. Also, if your credit history is marginal, it is quite common for mortgage lenders to ask you to provide 12 months’ cancelled rent checks. If you do not pay by check, start! If you do not always pay on time, start paying on time. If you are asked to provide 12 months’ cancelled rent checks, this documentation could be the difference between your loan being approved and not being approved. Not only is the lender looking at your payment history for housing but they are looking at what you have been paying versus what your new payment will be. If you cannot document a history of paying rent, it could adversely affect your ability to get approved. While these steps may not be all inclusive – it is hard to cover every possible scenario in a short article - they will put you on the right track to qualifying for the best mortgage possible. The months before buying a home are an important time to be frugal, avoid any negative impacts on your credit report, and make efforts to improve your credit score and history. If you are purchasing or refinancing in New Hampshire or Massachusetts, contact Renee Duval at (603) 225-5626 or visit our blog at www.NHmortgages.com

Tax Credit For Veterans

Tax Credit Extended for Returning Veterans…

You may qualify for up to an $8000 tax credit if you or your spouse were on qualified official extended duty outside the United States for at least 90 days during the period beginning January 1, 2009 and ending before May 1, 2010, and were a member of the uniformed services or Foreign Service or an employee of the intelligence community (defined below) during the time period in above.

In order to qualify for the tax credit you must have an accepted offer to purchase a home by April 30, 2011 and close before July 1, 2011. Get the facts from the IRS: www.IRS.gov Search for Form 5405

 

In addition to receiving the tax credit, eligible Veterans can obtain a VA mortgage. Here's some basic info on VA mortgages:

1. No Down Payment is required.

There is no down payment needed for a VA loan. The veteran can choose to make a down payment. But it is not a requirement

2. All Closing Costs can be paid by the seller.

The VA loan has similar closing costs as other loan programs. Things like Homeowners Insurance, Title Insurance, Inspection Fees, Appraisal Fees, Escrow Fees, Taxes etc. But with a VA loan, the buyer can negotiate for the closing costs to be paid for by the seller. With a VA Loan it is possible to make no down payment and have the seller pay all your closing costs. The Veteran can get in for no money at all!

3. The VA allows up to a 50% debt ratio. Up to 50% of the Veteran's gross monthly income (including a spouse's income if they are on the loan) can go toward the new housing payment, car loan payments, student loan payments, other loan payments, minimum payments due on credit cards and other obligations like child support or alimony. This is a fairly generous guideline. The VA does test this guideline by looking at a minimum residual income for each Veteran and the more conservative guideline applies.

4. Credit scores of just 620 are acceptable. Generally if the Veteran pays his debts on time and does not have past due balances or collection accounts, they are all set. If there is collection debt on the credit report, generally it will be required to be paid off at or before closing.

5. Veterans know if they are qualified because they have a COE (Certificate of Eligibility). If you are not sure if you qualify for a VA loan, you can go to the VA's website and apply for a COE.

6. For more information on VA loans, check out our website at WWW.AmazingLoanLadies.com

Mortgage Loans for Marginal Credit

If you have less than perfect credit, you may assume that you need a large down payment to get approved, but that is not the case. If you are eligible for a VA loan or an RD (Rural Development) loan, you may be able to get approved for a loan with no down payment! Or you may be able to use an FHA loan and purchase with a down payment of just 3.5%! Or there may be other loans available through your state or local housing authorities that allow you to buy with little or no down payment. These types of loans may be better suited for home buyers with less than perfect credit. Conventional loan programs have large adjustments to the interest rate for credit scores below 740 where programs like FHA and RD don't make rate adjustments unless the score is below 660. To find the best mortgage loan for your credit profile, it is essential to select a lender who is comfortable with the less than perfect credit scenarios.

 

How to Get Approved with Marginal Credit

Most lenders today require a minimum credit score of 620. Additionally, the ideal credit report should have 3 open lines of credit and no outstanding past due or collection debt. If your credit score is below 620, your lender should be able to analyze your credit report to determine if there is anything that can be done to immediately improve your credit score. There may be simple actions you can do to get a "rapid rescore". For example, if your current balance on a credit card exceeds the credit limit, you are losing a lot of points. By paying down the balance on the account, you can increase your score. Most lenders use software programs to help them identify if your score can be raised and what you need to do to make it happen –then you can then qualify for a home loan.

Even some people with a credit score above 620 may not be eligible for a mortgage loan because their credit profile is not adequate. That is, if you have less than 3 open credit lines or if you have collection or past due accounts, you may not be able to get a loan even if your score is above 620.

When a potential homebuyer has a credit report that does not meet today's standards for a mortgage loan, they need to create a game plan to get their credit back on track. This means understanding where and what the issues are and then addressing them head on.

Each person is entitled to a free credit report through www.annualcreditreport.com . We recommend starting with that or by obtaining your credit report through a lender you are comfortable with. There is another website you can go to www.creditkarma which will also give you a reading on where your credit stands.

If you do not have 3 open lines of credit, start to improve your credit profile by obtaining one or two or three accounts so you do have 3 open lines of credit. You may also be able to get a relative to add you to one or more of their accounts as a joint user. If you go this route, make sure that the balance on the account is low (because the debt will be counted against you if you are a joint user) and make sure the payment history is excellent (because the payment history will affect your score).

If you have past due accounts, start by getting a grip on each of those accounts. Determine who the original creditor was and when the original default date was (if the default date was 7 years ago or more then you can petition to have the account taken off your credit report). If the creditor sold the debt, it might appear that the default date is more recent than it actually is. You may be required to pay these accounts off in order to obtain a mortgage so you should fully understand what each one is. You may be able to negotiate a settlement for less than the full balance if you are willing/able to pay the collection debt off. Another option is to enter into a payment agreement where you make a small monthly payment each month for a fixed # of months. In extreme cases, where the collection debt is significant, you may want to consult with a debt consolidator or an attorney (to consider bankruptcy). Each loan type has a certain tolerance for outstanding past due collection accounts; you may or may not be required to pay off your collection debt in order to qualify for a mortgage.

If you've sold your house with a short sale or had a foreclosure or bankruptcy, you will probably be facing a minimum of 3 years before you can get a mortgage. Your credit will be looked at carefully once the 3-year period elapses. Be sure that you have paid everything on time every month. Be sure you have at least 3 open credit accounts.

If you've had credit problems, please consult with a mortgage lender who can help you determine what you need to do to get on track. Develop a plan – you may be 3 months away from having acceptable credit or 3 years away – but if you have a plan you will get there.

Renee Duval, an Amazing Loan Lady, Merrimack Mortgage Company, Concord, NH NMLS#97967

NH Housing Offers 4% grant!

NH Housing will now provide a cash assistance grant equal to a maximum of 4% of the base loan amount to help borrowers defray the cost of down payment, closing costs, and prepaid escrow expenses associated with purchasing a home. Borrowers must contribute a minimum of 1% (based on purchase price) using their own funds (excluding gifts). No cash back is allowed at closing. Income, purchase price and all other NH Housing guidelines apply. There is no monthly payment on the cash assistance grant portion. If the mortgage is paid off within the first 48 months, the full amount of the grant is due. After 48 months, the full amount of the grant is forgiven. For more information, go to www.NHmortgages.com

Isn't that affordable?

I've been in the mortgage business for over 20 years and I'm pretty sure that I've never seen a time when home ownership was more affordable than it is right now. These are interesting times with a lot of distressed real estate flooding the market but these properties provide unique opportunities for home buyers. The availability of rehab money through Fannie Mae Homepath, NH Housing and FHA, means that you can get the money to replace the roof or the heating system or reside the house or remodel the kitchen or replace the flooring. You can buy a distressed property at a low price, get the money to fix it up and fix it up the way you want it. What a deal!

Just closed a loan for a nice guy who purchased a single family home for $110,000. Because the house appraised for more than the sales price, we were able to roll in the cost of some repairs that needed to be done. The borrower's only out of pocket expense for the loan was the cost of the appraisal -- $400! He even got back his $1000 deposit at closing! And the best part is his monthly payment is only $916/month including property taxes & insurance! That's way better than rent. And he owns a 3 bedroom home with a yard for his children!

There's another one where the house was listed for $129,900. The borrower offered full price with the seller paying $7000 toward closing. This resulted in the borrower needing just under $1500 total for down payment and closing costs. She was able to get $30,000 in rehab funds to freshen up the house and remodel the kitchen. Her monthly payment -- including tax & insurance - just $1,159/month.

Rates are low - House prices are low - required down payments and cash needed to close is very low (sometimes zero) - now is the time to be considering a purchase of real estate. If you believe in the old adage 'Buy low and sell high then you have to be thinking that now is the time to buy. Once the excess inventory of distressed properties is aborbed, the real estate market will be able to start to gain in value. Do your part to keep things rolling. Consider buying a distressed property today. Call me or write to find out more about the opportunities available.

Visit my website at www.NHmortgages.com for more mortgage facts and figures.

It's so easy to fall in love...

You will fall in love with Sherwood Glen as soon as you visit this awesome 55+ condominium. And now to make things sweeter, Sherwood Glen approved for FHA financing thanks to the Amazing Loan Lady, Renee Duval. FHA loans have a low down payment of only 3.5% ! FHA is not limited to first time buyers and there is no income limit for this program.

When a condo is FHA approved, it also qualifies for RD (Rural Development) financing which means you can purchase the home with no down payment! So now that Sherwood Glen is approved by FHA, buyers can also use RD financing to purchase with no down payment at all! RD does have income limits.

Now that Sherwood Glen is FHA approved, a first time buyer could purchase a home here using NH Housing which offers low, low interest rates! Currently they offer 3.5% fixed rate (1 point paid at closing). NH Housing does have income limits.

If you are over 55 and would the convenience of condominium living in an excellent location, Sherwood Glen may be the place for you!

If you live in a condominium neighborhood that is not currently approved by FHA (Federal Housing Administration) or if you are a REALTOR who has a listing in a condo that is not FHA approved, contact Renee Duval to get approval process started.

203Ks rehab loans in New Hampshire

Merrimack Mortgage Company will be offering, through NH Housing Finance Authority, an FHA rehab program. If you are considering the purchase of a home that is in need of repair, this may be the program for you. The program will allow you to receive up to $35,000 after the closing to complete repairs. With nearly 25% of all home sales being properties that are considered distressed, this is an awesome opportunity!

The benefit of this combination is that a borrower can now purchase a home and receive rehab funds with an initial investment of as little as 1.5% of the acquisition cost of the property (acquisition cost is the sales price + the requested rehab funds). In order for this to occur, the borrower will take advantage of a 2% grant available through the state and use that money for down payment (the required down payment for FHA is 3.5% but the 2% grant can be used for down payment leaving the borrower to need only 1.5%) and the borrower needs to negotiate for the seller to pay all of his/her/their closing costs. Another benefit is that NH Housing offers a lower interest rate than the regular FHA program. Please contact us at AmazingLoans@NHmortgages.com for more details. We would be happy to forward full program specifications.

NH Housing does have income and sales price limits and is restricted to first time buyers in most communities (but not all). These limits are posted on our website for your review (look under programs and then under NH Housing).

For buyers who are not eligible for NH Housing, FHA does not have income limits nor is it limited to first time buyers.

WWW.AmazingLoanLadies.com

Love that dirty water! Recycling waste water...

Private septic systems are a way to recylce waste water and reintroduce it, all cleaned up, into the ground water. There's a science to it. I grew up in a neighborhood where all the houses had private septic systems and it never was a problem for us. Many of the homes I finance for people today have a private septic system. This blog is meant to provide info to potential homeowners considering a home with a private septic system. For info on mortgage programs and general information on the home purchasing process, check out my website at www.NHmortgages.com
If you are considering purchasing a home that has a private septic system, you need not be afraid. A properly functioning septic system will take waste water and recyle it into clean water. Never the less, it’s good to be cautious and have a septic evaluation to make sure the system is operating properly.
Unless there is obvious evidence that the septic system is failing, most lenders do not require a septic evaluation. Some mortgage programs do have requirements that a septic system and well be 100' apart from one another.
I have a business associate,Geoffrey Fossett, who is a GSDIA Certified Evaluator of septic systems and a NH DES permitted installer. He owns Downeast Construction Systems in New Hampshire and services the greater Concord area and the Lakes Region. Geoff's materials and workmanship are guaranteed unconditionally. His phone # is (603) 319-4533.
Buying a house with a septic system? Read about some of the things you should consider. Check out this link from the State of NH... http://des.nh.gov/organization/commissioner/pip/factsheets/ssb/documents/ssb-6.pdf

Staying Warm in New Hampshire

It's cold out there this winter. If you'd like to stay warm this winter for less money, check out the website www.staywarmNH.org This Web site is designed to help you take practical steps to conserve energy so that you can lower your heating bills, and to connect people with assistance if you or someone you know needs help paying your heating bills.By using some of the energy-saving tips on this Web site, you can save on your heating bills now and into the future.There are also several programs that are available to help you upgrade your home to make it more energy efficient in cold and hot weather.If you are buying a home, it may be possible to finance the cost energy efficiency items like new windows, insulation, and/or a new furnace. Call us at (603) 225-LOAN (5626) or e-mail us at Blog@NHmortgages.com to inquire into these programs. If you already own a home, you may be able to refinance for similar types of improvements. Check out our website at www.NHmortgages.com and STAY WARM!!

FHA Changes that Affect Condos

Effective Feb 1, 2010, the way condos are approved by FHA will be changing. First, the lender will be required to recertify certain information on condos that are already approved by FHA and appear on the FHA approval list. Here are some of things lenders will need to verify: 1) no more than 10% of the units are owned by a single investor; 2) no more than 15% of the units are behind (in arrears) on their condo fee; 3) at least 50% of the units must be owner occupied; 4) no more than 30% of the units can have an FHA loan; 5) the budget must have adequate reserves 6) the condo must be properly insured; 7) there can be no pending litigation against the condo; 8) pending special assessments must be analyzed

For condos that have never been approved before, the process of getting a condo approved is actually simplified under the new rules. To get a condo approved by FHA the loan officer will have to gather the condo docs, budget and other supporting documentation and submit it to the HUD office in Philadelphia for approval. Items 1 - 8 mentioned in the previous paragraph all appy.

We are happy to assist in getting condos approved in our market where we are licensed to lend (NH, Mass & Maine). Call us with all of your condo questions.

Contact the Amazing Loan Ladies at NHmortgages.com

Higher Credit Scores on the Horizon

It used to be we could do a loan for anyone with a credit score of 500 or more. Currently the minimum required credit score for Merrimack Mortgage Company is 620. Most of the other mortgage companies in our area are also requiring a minimum score of 620 -- or higher! That's right some have already gone to a minimum of 640!
Rumor on the street is that a 640 minimum is just around the corner and will soon be the standard.
As it turns out, at least 50% of the people who inquire (at our branch) into a first time homebuyer loan do not currently meet the 620 minimum score. We have dozens of people/couples we are coaching to help them raise their scores to the minimum of 620. We have issued preapprovals to dozens more who have credit scores between 620 and 640. So if the minimum score goes up to 640, all of these files will need to be reworked.
The good news is that everyone can have a good score with a little work! So if you are below 620 (or even 640), do the things you need to do to get your score where it needs to be. Here are some helpful hints:
1) You should have a minimum of 3 open and good trade lines. If you don't then apply for credit now and get those 3 minimum tradelines on yoru report.
2) You should have no late payments on anything in the past 12 months. Been late recently? Do what you can to pay on time each and every month!
3) Keep your balances on credit cards close to 50% (or less) of the credit limit. That's how you get a better score. People who are maxed out have lower scores.
4) Do not open any new accounts -- unless you have less than three tradelines.
5) Do not close any accounts -- unless you have way too many. Try to close newer accounts in this case and keep older accounts open. The longer the account has been open, the higher your score is!
6) Pay off all non-medical collection debt, past due amounts, judgements, etc.
7) For medical payments, be sure to negotiate unpaid balances to a zero balance or make payment arrangements. You can't just leave outstanding balances hanging out there. You need to work with the providers so you don't have medical collections on your report. These drive the score down.
8) Contact the Amazing Loan Ladies at www.NHmortgages.com for more help with your credit report if you are in NH, Mass or Maine.