Logan Utah Mortgages and Real Estate

I found the following article about mortgage insurance alternatives on the website MortgagesExplained.net. I received permission from the author to post it. It is one of the most comprehensive articles that I have found on alternatives to mortgage insurance.

I had one of the worst experiences of my career as a loan officer last month. I had been helping a first time home buyer purchase a short sale home for the past month. Everything had gone smoothly as the borrowers were very solid with good credit, a large down payment, and a stable job. The closing went smoothly and everybody was happy.

The day after closing, I get a call from the funder expecting the good news that the loan had funded and the title company could record. Instead, I receive the dreaded news that the funder did a final verification of employment for the main borrower and his employer said that he had resigned the same day as the closing.

"What?!! Are you kidding me?!!"were the first things that came out of my mouth. You can imagine my disbelief. The result was that the loan did not fund and it won't until the borrower can provide 30 days worth of pay stubs from his new job.

You can imagine how much heartburn this caused everybody involved in the transaction and the phone calls that I had to make is not something that I ever want to do again. For this reason I have decided to make a "DO" and "DO NOT" list for my clients at the initial loan application. Because whether I like it or not, it's my fault that I didn't tell my clients not to make such a major change until the loan funded and recorded.

The Borrower "DO" list for a smooth loan process

• DO provide all documentation in a timely manner.
• DO provide all pages of bank statements, even if pg. 4 has nothing on it.
• DO keep a copy of all pay stubs and bank statements received before closing
• DO keep a paper trail of large deposits in your bank account
• DO file your 2010 tax returns on time
• DO continue working full time

The Borrower "DO NOT" list for a smooth loan process

• DO NOT quit your job before the loan closes, funds, and records!!!
• DO NOT make any large purchases (especially not on credit).
• DO NOT make any large cash deposits into your bank accounts.
• DO NOTmake any large deposits without keeping a paper trail.
• DO NOT transfer money from one account to another without asking your loan officer first.
• DO NOT be late on any debt obligations or rent payments for that matter.
• DO NOT make any large financial decisions without consulting with your loan officer
• DO NOT black out account #'s or anything else on your bank account statements

I will be adding to this list as I think about it some more and I hope that I can get some feedback from the Active Rain community. What are some other things that borrowers should or should not do during the loan process?

I came across a new website the other day called RefinanceMortgageDebt.com and I thought that it deserved a mention. This website has tons of information about refinancing and goes into specific detail about the mortgage programs available to the public for refinancing their mortgage. It discusses the advantages and disadvantages of refinancing with an FHA loan, conventional loan, USDA Rural Housing Loan, and VA Home Loan. I highly recommend that you check out this website if you are interested in refinancing your mortgage.

Even though interest rates have come up in recent weeks, there are still many borrowers for whom it may still make sens to refinance. Thus, I write this blog post for those that are late to the party but haven't missed the boat entirely. When it comes to refinancing your home there are some things you should and shouldn't do.

Do...

-your "shopping around" on the same day. Mortgage rates can change a few times daily and so if you want a true apples to apples comparison, you should try to get all of your mortgage quotes on the same day and within a few hours if possible.

-ask lenders to give you a quote for a specific rate. This is the easiest way to see which lender has the least expensive closing costs.

-get referrals from friends and family. If your friend of family member had a good experience, it is likely that you will have a good experience as well.

Do NOT...

-refinance if your break even point is greater than 5 years. If your break-even point is greater than 5 years, even if you plan on being in the home longer than that, you would be better off to take the dollar amount of the closing costs and paying down your principal balance.

-trust a loan officer that tells you to float your interest rate. If the numbers add up and the refinance makes sense, your best option is to lock your interest rate and not worry about it. Besides, a good lender will have a free float-down option or renegotiation policy if rates drop significantly.

-refinance a mortgage to pay off student loans or car loans that may have a lower interest rate. Most mortgage terms are 15 to 30 years where student loans and cars are usually much shorter. Unless you need the extra cash flow and you are already being as frugal as possible, it is usually a better idea to leave these other loans alone.

Mortgage Rates held steady today with not much movement in the bond market. Historically speaking, mortgage rates are still very low. Here are a few examples...

30 year fixed conventional 4.625% (APR 4.766%)
15 year fixed conventional 3.875% (APR 3.987%)
5/1 ARM conventional 3.5% (APR 3.445%)

FHA 30 year fixed 4.75% (APR 5.233%)
FHA 15 year fixed 4.0% (APR 4.445%)

USDA Rural Housing 30 year fixed 4.75% (APR 5.322%)

Recently, the Rural Housing mortgage program received more government funding. The purpose of this article is to highlight several of the wonderful benefits of the Rural Housing Loan for Cache Valley and some of the surrounding areas of Logan, Utah.

1. The Rural Housing Loan allows 100% financing. The Rural Housing mortgage is one of a few mortgage programs left that allow a borrower to purchase a home in Cache Valley, Utah with no down payment. This allows the borrower to keep some of their money in their bank accounts for a rainy day fund.
2. The Rural Housing Loan does not require monthly mortgage insurance. Besides the VA loan, there isn't a loan program available that doesn't require monthly mortgage insurance without a 20% down payment. This means that the Rural Housing loan will offer one of the lowest monthly payments per dollar borrowed for home buyers in Cache Valley, Utah.
3. The Rural Housing Loan still allows credit scores down to 620. With many FHA lenders raising their minimum credit score requirement to 640, Rural Housing is one of the few loan programs left that will allow borrowers to have a credit score down to 620.
4. The Rural Housing Loan allows the seller to pay for the buyers closing costs. Sellers can pay up to 6% of the buyers closing costs. Because of this, many Cache Valley home buyers can buy a home without bringing any money to the closing table.
5. The Rural Housing Loan has higher income limits than other first time home buyer programs. The annual income limit for a family size up to 4 in Cache Valley is $74,050, and $97,750 for a family of 5 or more. Visit this website to find out if you qualify for the Rural Housing loan in Cache Valley.
6. The Rural Housing Loan is not just for first time home buyers. There is a common misconception that the Rural Housing loan is just for 1st time buyers. This is not true. It works great for 1st time buyers because of the 100% financing but it also works great for any buyer that doesn't have 20% down.
7. The Rural Housing Loan is available for most of Cache Valley, Utah. Cache Valley has so many incredible places to live. With the Rural Housing mortgage, home buyers can purchase in cities such as Smithfield, Hyde Park, Nibley, Millville, Hyrum, Wellsville, Mendon, Paradise, Benson, Amalga, Newton, Clarkston, Trenton, Richmond, and Petersboro. Visit this website to type in an address and see if it is eligible for Rural Housing financing.

I personally love this program because it makes it possible for many Cache Valley home buyers with out a significant down payment to purchase a home. I can also be contacted at 435-755-2177 if you have any questions about the Rural Housing mortgage loan program.

Every time I do a loan application with a client I have to bring up the topic of locking or floating their interest rate. I ask them, "Do you want to lock in this rate or would you like to see if rates go lower?" My response hasn't changed for the past couple of years now. I tell them that if they are comfortable with the rate and their payments it is best to just lock it and not worry about it, whether it goes up or down.

There are experts who supposedly have an edge in predicting mortgage rates but my experience with these so-called experts is that their guess isn't any better than mine or my clients.

Maybe it will help to give you my understanding of how mortgage rates are determined. My understanding is that the yield on the 10 year bond is a benchmark that mortgage lenders use to set the daily rates. If the yield on the 10 year bond goes up than chances are that mortgage rates will go up.

However, the mortgage lenders also put a margin on top of the 10 year bond yield. For example, as of right now the yield on the 10 year bond is 3.46% but mortgage rates on a 30 year fixed are around 4.75%. This means that the current margin is around 1.3%.

I have seen some occurrences where the yield on the 10 year bond has decreased significantly but mortgage rates did not go down at all. The only assumption that I can make is that lenders increased the margin that they are making on mortgage rates. They might do this when they feel that the risk for mortgage financing has increased and they need a greater return on their investment to compensate.

My point is that it really is impossible to predict mortgage rates on a day to day basis. Obviously there will be certain trends when rates go up or down for weeks or months at a time and its important that my clients understand this. For example, as of the last few weeks mortgage rates have definitely been trending upwards. But nobody can know if they will go up or down tomorrow or the next day or if the trend will reverse next Monday.

This is why I recommend to my clients to lock in the rate assuming they are comfortable and happy with the rate on the table.

I am finding lately that some of my clients that may have bought a home a few years ago and are now buying a home again are stressing quite a bit about some of the "hurdles" that they have to go through to get a mortgage.

I am trying to think of ways that I can prepare these people for the new way of processing loans versus the way it was done in 2006. Let me first give you a summary of how loans were processed in 2006 versus today...

Loan Process in 2006

1. Meet with your loan officer
2. Underwriter then has you breathe on a mirror. (Foggy = approved)
3. Loan closes in 3-5 days

Loan Process Today

1. Meet with loan officer to take loan application.
2. Sign loan application and disclosures.
3. Provide income and asset documentation such as paystubs,  tax returns with all schedules and W'2s,  checking and savings account statements, copy of drivers license, divorce decree if applicable, etc. etc.
4. Loan officer submits loan package to underwriter who will review and either approve, conditionally approve, counter, or deny the file. (Most common is conditional approval)
5. Meet the requirements of the conditional approval (This is usually what borrowers find to be tedious).
6. Order an appraisal and make repairs if required by underwriter.

My point is that it takes a lot more to process a loan today than it did a few years ago and I think we all (Realtors, Escrow agents, Loan officers, etc) need to do a better job of preparing our clients for this. When my clients have 2006 expectations it makes my job much more difficult. Is there anything that you say or do to help your clients prepare for some of the hoops and hurdles they may encounter? I'd love to hear your feedback.

Mortgage rates have been trending upwards for a couple of weeks now. I imagine it is a result of the weakness in the bond market lately. I imagine that this will continue if there are signs that the economy is improving and there is more fear of inflation in the market. Nevertheless, mortgage rates are still incredible and it may make sense for a lot of people at this time to refinance their current mortgage...

Conventional 30 year fixed 4.375% (APR 4.445%)
Conventional 15 year fixed 3.625% (APR 3.758%)
Conventional 5/1 ARM 3.25% (APR 3.119%)

FHA 30 year fixed 4.25% (APR 4.634%)
FHA 15 year fixed 4.0% (APR 4.332%)
FHA 5/1 ARM 3.25% (APR 3.435%)

USDA Rural Housing 30 year 4.25% (APR 4.635%)

Please feel free to give me a call at 435-755-2177 for a free consultation.

I came across an amazing mortgage loan program the other day that I think deserves a blog post. It's the Fannie Mae Home Path program, which is mortgage financing for properties that are owned by Fannie Mae. These are homes that Fannie Mae has repossessed due to people not making their mortgage payments and they offer this special mortgage program as an incentive to home buyers.

Some of the features of this program are...

     - minimum down payment option of 3%
     - No monthly mortgage insurance, even with just 3% down
     - No appraisal or inspections required
     - 10% down payment option for investors (no monthly mortgage insurance!!)
     - Gift funds for owner-occupied properties allowed
     - 30 year fixed, 15 year fixed, 3/1, 5/1, 7/1 ARMS available
    

Some of the requirements of this program are...

     - 660 fico credit score if over 80% LTV
     - 620 minimum fico score minimum
     - 45% maximum DTI (50% max with strong compensating factors)
     - property must be on this website to qualify

In Cache County, Utah there are currently 12 homes that are available to purchase through this program. They can be found here. Some of these home are very nice homes and through the homepath financing program, they are more affordable than ever. Give me a call at 435-755-2177 or 435-770-2709 if you are interested in this program or would like to get pre-approved.