Aside from that, consumer spending has caused millions of unemployment, which led to homeowners’ inability to pay for their mortgages. Lending companies and banks have tightened lending procedures which even made things worse.

Banks have the option to lend money to their customers who wants to buy houses and other properties they desire. The amount of money they lend are controlled by mortgage rates and this usually varies based on the bank’s ability to lend money from the reserve bank. Nowadays, mortgage rates are depreciating because of economic instability. You might think that this is a bad thing, but what you must know is that this mortgage rate fluctuation can be used to your advantage.

Choosing the right kind of mortgage loan is key. When mortgage rates are low, you must apply for a fixed rate loan because this stabilizes your repayments for a certain period of time. This will save you a lot of money because you won’t have to increase your repayments if mortgage rates inflate.

You can also opt for a variable rate loan which allows you to change repayment values depending on existing mortgage rates. Apply for a variable rate mortgage loan when mortgage rates are high. Here, your repayments will depend both on interest and mortgage rates. Falling interest rates will result to a decreasing mortgage rate, and this will lower your loan repayments.

Choosing between fixed and variable rate loans will make you create a good financial save-up. You must also not forget to choose among different mortgage packages offered by different companies to check who among these can give you a more competitive deal. A loan broker can help you with this inquiry. Going for fixed-rate mortgages will be more beneficial for you in the long run.

Aside from the mortgage rate fluctuation, it’s also wise to check your credit score because this affects how much you pay for mortgage rates. Improve your credit rating before applying for a loan to qualify for better mortgage rates.

Finding your way through mortgage rates is easy if you are aware of the factors affecting it. To better help you out, consult with a mortgage loan broker to know what mortgage type is best for you. Save money, pay your bills, and improve your credit scores—these will help you qualify for a better mortgage rate.

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There are several different loan types that a person can look into.  The first type of loan is a traditional Conventional Loan.  Conventional loans are fixed rate mortgages that are not backed or insured by the federal government.  These types of loans can be difficult to obtain because of their strict requirements when it comes to down payment, your credit score, your income, and costs like private mortgage insurance.

Conventional loans are either conforming loans or non conforming loans.  A conforming loan complies with guidelines that are set by Freddie Mac or Fannie Mae.  Both of these companies are owned by stockholders and they create guidelines for mortgage lending.  One of these guidelines is the loan limit of $417,000 for single family homes (like I talked about in my last post).  Non conforming loans are usually provided by portfolio lenders and have a set of guidelines that are regulated by a particular lending institution.

FHA Loans (My personal favorite, if you can’t tell) are backed by the federal government.  An FHA home loan offers lower down payment requirements and are much easier to obtain than traditional conventional loans.  They are perfect for first time home buyers not only because of the low down payment option, but flexible credit requirements and they look at your whole financial situation to determine if you qualify.

VA Loans are unique because they are only available to veterans and The U.S. Department of Veterans Affairs guarantees all VA loans.  The VA is not the one who lends the money to borrowers, instead, they guarantee mortgages made by approved lenders.  These types of loans make it easy for veterans to obtain home loans with no down payment and they are so much easier to obtain than any other type of loan.  Before you apply for your mortgage, you need to request eligibility from the VA.  If you are accepted they will send you a qualifying certificate.

If you are  first time home buyer, I hope that this has been enlightening and very informational.  If you are ready to pursue financing for your mortgage needs, please contact us right now and we can get started!

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• Low minimum down payment (about 3% of the value of the home)
• Very reasonable credit requirements
• Very flexible income requirements

Compared to conventional loans, FHA lenders tend to look at the entire picture instead of a few of the most important things that would generally qualify or in some cases reject someone from obtaining a mortgage loan.

Just to be perfectly clear, an FHA home loan is not perfect for everyone and in some cases, you cannot qualify for FHA financing.  I wanted to take some time today to help you understand the basic requirements for this type of loan.

Background

The money given to you for your FHA loan is not given by the FHA.  Instead, borrowers will receive their loan funds from FHA Approved Lenders and the FHA guarantees the loan amount.  Because of this, many different lenders might be offering you the exact same mortgage since the guidelines don’t change from lender to lender.  Let’s have a look at what makes a borrower eligible for this type of financing.

Dwellings Eligible For FHA Financing

To begin, the property that you are looking to obtain a mortgage for must by your primary residence and must be owner occupied.  This type of loan is not an option for anyone looking at investment or rental properties.

• Detached Houses
• Semi Detached Houses
• Townhomes
• Row Houses
• Condos (within FHA approved condo projects)

Are all eligible for FHA financing.

Maximum Mortgage Amount

The maximum amount of financing that a borrower can receive for an FHA home loan, assuming that the borrower meets the income requirements is based on two things, one, the maximum loan limit for the geographical area that the home is located in, and two, the maximum loan to value (LTV) ratio.  As of the middle of 2007, the maximum loan limits for most states is $417,000.

Credit Score

Now this is where most people take a deep sigh of relief.  The FHA doesn’t have a minimum credit score that you must meet to be eligible for financing.  That being said, borrowers with poor credit scores can and will be disqualified for activities that caused the poor credit score, such as not paying your bills on time.

Having no credit history is not a problem either.  Instead, the lender will look at other payment histories such as utilities, cell phone bills, rent payments, etc.  In addition, if you have foreclosed, done a short sale, or filed for bankruptcy, it will not disqualify the borrower from obtaining a loan as long as enough time has passed and the borrower has established a documented track record of managing their finances since the incident.  Here are the time frames for each of the violations above.

• 3 years for a foreclosure or short sale
• 2 years for a bankruptcy

Employment and Income

Only stable and documentable income can be considered for an FHA home loan.  So if you were planning on doing a stated income loan, you need to look elsewhere for financing.  The general rule of thumb is that lenders like to see a steady track record of employment, generally two years in the same field of work with no more than a one month gap of unemployment in between jobs.  The job that you have when applying for the loan must be expected to continue for at least three years after you obtain FHA financing.

Part time employment cannot be counted toward those two years required for this type of loan, unless that employment has continued for at the very least, two years. Those with full time, contract positions that will be ending soon will have a hard time getting a loan as well.

However, if a borrower has changed jobs frequently in order to move up in their field of work and to increase their income are looked upon very positively.  There are also special considerations for individuals who work seasonal jobs and who have taken time off to raise a family or to pursue an education.

For those of you who are self employed, you will have a harder time getting an FHA mortgage.  I’m not saying it is impossible, but it requires some documentation.  First off, you will need at least a two year history of self employment, documented by tax returns, balance sheet, and profit and loss statements.  For those of you who are self employed and haven’t gotten two years under their belts, they can qualify as long as they have been self employed for at least a year and have been working in the same field prior to self employment.

Debt To Income Ratios

Currently, the FHA doesn’t set a limit to the amount of debt you can carry in relation to your gross monthly income, however, it is recommended that you don’t exceed 45%.  If you do, you can still get an FHA home loan, but it takes special consideration and some hefty cash reserves.  The 45% can include…

• Mortgage Payment
• Interest
• Taxes
• Insurance
• Car Payments
• Student Loans
• Credit Card Payments

Down Payment

One thing that makes FHA loans very desirable by first time home buyers is their very low minimum downpayment requirement, it is currently 3% of the purchase price.  However, this percentage is expected to increase at the beginning of 2009.  So, if you need an FHA home loan, you better get it before the end of this year.

Mortgage Insurance

FHA loans definitely require mortgage insurance because they require such a small down payment.  Up-front mortgage insurance is due at the time of signing and is equal to 1.5% of the value of the home.  This is usually rolled into the mortgage so the borrower doesn’t have to come up with any extra cash to close.  The monthly mortgage payment will also a montly mortgage insurance premium which is 0.55% of the loan amount on an annual basis.  This mortgage insurance premium is usually lower than mortgage insurance on a conventional loan.

You can clearly see that this type of mortgage is a very flexible solution for not only first time home buyers, but anyone looking to obtain a mortgage loan.  I highly suggest that if you are looking for a mortgage, to see if you qualify for an FHA home loan.  On one last note, not only are these great loans, but, they are easy to refinance with an FHA Streamline Refinance.  FHA Streamlines are quick, easy, and a hastle free way to lower your interest rate and lower your monthly payments.  This is truly a great program!!

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Well, the major reason why we close FHA loans the last week of the month, especially FHA Streamlines is because on FHA home loans, interest is calculated and paid on a monthly basis.  With conventional loans, interested is calculated and paid on a daily basis.

You see, if we were to streamline your current mortgage in the middle of the month and you have already paid all of your interest for the month up front, and then streamlines in the middle of the month, you would have to pay all of your interest again!  That is just no good.  We are trying to save you money, not have you spend anymore.

So, for anyone interested in a FHA Streamline, contact us and we will take your loan application, get your documents, get them to our amazing processor, find out what interest rate you are trying to get, once we can get your rate, we will lock the loan, and then we will close at the end of the month.  It is honestly as simple as that.

To get your steamline started or to find out what interest rates are, click here.

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I just got done helping a woman streamline their FHA home loan. It was a very easy loan and very beneficial for our client. When speaking with her about the possibility of a streamline refinance, she asked me a few questions that I though everyone considering this type of refinance would probably like to know.

The first thing that she asked me was “How would I know if an FHA Streamline be good for me?” That was an excellent question and one that we often get from our clients.

The answer is very simple! If you can reduce your interest rate by at least 1/2%, an FHA Streamline is for you! Most of the time, we can reduce it even more than 1/2%, but that is a good guideline to go by.

The next question that she asked me was about her interest rate and what it might be. Well, this gets a little harder to pin point, unlike traditional 30 year mortgages. There are a ton of factors that go into calculating an streamline interest rate.

• How long you have had your current loan
• What is the payoff amount
• If you want to skip some payments
• If you want to tie your closing costs into your loan

These are just a few of the major things that will influence your interest rate on a streamline refinance.

When speaking to clients who are interested in this kind of mortgage, I usually just tell them that it is wise to take the 1003 loan application, pull together their documentation, get everything to the processor, then all of us get on the phone and pound out exactly what YOU want from this loan. Then we can tweak things to get your rate down at least 1/2% or lower. Once we do that, we can lock in the rate and finalize things.

FHA Streamlines are very easy and fast to take care of and when you tie in your closing costs, you have nothing to lose, only gain by reducing your mortgage payment and increasing the amount of money you keep in your bank account.

To get started on your streamline, click here now!

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I just got done checking interest rates and they are the lowest that I have seen them in about four weeks so now is an excellent time to purchase a home!

It is also a great time to purchase because housing prices in Utah and all over the country have plummeted and they are the lowest they have been in the last 4-5 years.

For those of you who are looking at purchasing a home, I would highly recommend that you do it before the end of the year, December 31, 2008 because of the amazing tax credit that the government is offering first time home buyers or those individuals and families who haven’t owned a home for the last three years.

If you have the ability to qualify for a home, you need to take action now and reap the benefits that I have listed above and stated in the video.  Contact us now for the most current interest rates and to get your mortgage underway.

P.S. For those of you who are not from Utah, dispite the name of our website we can do your mortgage for you!!  So please keep that in mind when searching for your mortage lender.

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As a result of the banking liquidity crisis, banks have become afraid to lend to each other, and so LIBOR has risen independently of the Federal Funds Rate. The Fed is desperately trying to lower LIBOR so banks can get back to lending to each other but it is not working nearly as well as the government would like. Many believe that LIBOR will not get back down to matching the Federal Funds Rate until the financial markets stabilize and who knows how long that will be.

In the New York Times articles today there were two different writers with very different views on the drop LIBOR experienced yesterday. One of the writers believed that confidence among banks is way up after the bailout by the world governments and believes that the banks are slowly starting to feel more and more comfortable lending to each other. We saw Citi and JP Morgan Chase lend money to banks in Europe, which is a big step in the right direction. The other writer saw things differently. He believed that it was just a one-day thing. One day does not start a trend. He believes that things will continue to worsen and that our worst days are not behind us.

The reason LIBOR should matter to everyday people like you and me is simple. Most credit cards and adjustable rate mortgages are based on LIBOR. When LIBOR goes up, our rates also go up. Banks charge us an interest rate by adding LIBOR, the rate they are paying to get the money, plus the margin, the amount that they are making by lending us the money. So the rate we pay on adjustable interest rates are typically

LIBOR+Margin=Interest Rate. So banks are very nervous about lending to each other which is making it very difficult for consumers to obtain credit and when and if they do the rate they have to pay are often times higher than they are used to. There is a liquidity crisis which is causing a lot of the problems we are facing. Banks are having a very difficult time obtaining capital and therefore are unable and unwilling to lend to businesses and consumers. This is one of the main reasons we are currently in a recession.

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Elder Perry talked a lot about debt and not getting yourself in over your head.  He also spoke about only purchasing a home that you can afford according to your income not according to your neighbors home across the street.  This really struck home since I have the opportunity to help so many people obtain mortgages on a regular basis.  It also caused me to reflect on the current mortgage industry, credit crunch, and the economy that we now live in.

One of the biggest reasons we are facing hard economic times and seeing all of the big banks and mortgage lenders go out of business is because of people who want to purchase a much bigger home than they can afford with their current income.  Have you ever heard of interest-only loans or adjustable rate mortgages?  I’m sure you have and I’m sure you probably know that they are pretty much obselete as of the beginning of the mortgage meltdown.  Most interest only loans and adjustable rate mortgages were used by individuals and families who could not afford the home that they wanted to purchase.  So, they made the terrible decision to obtain one of these loans and it ended up being detrimental to their personal finances, most times ending in foreclosure because they could not afford the payments.

For anyone looking at purchasing a home in the near future, I urge you to only look and consider homes that are within your income range.  No one wants to be “house poor” and no one wants to get in trouble and risk the possibility of losing their home.

Please contact us right now so we can pre-qualify you for a mortgage so you know exactly how much home you can afford.

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In the past, some people have gotten around this rule by obtaining two mortgages, one for 80% of the home and the other for how ever much they needed, I saw many get 100% financing so the other loan would be 20%.  Today, in with our economy the way it is, it is almost impossible to get 100% financing for any loan that you are considering.

If you are one of the lucky individuals who get to have private mortgage insurance (if you can’t tell, I’m being sarcastic), here is a very slick tool that I like to use to find out how much PMI you are going to pay each month.  To access this tool, click here.  I like this tool because it is very accurate, fast, and easy to use.  Much better than figuring it out by hand.

Hope you enjoy this tool and keep checking back for more mortgage news in the state of Utah and all around the nation.

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This had been the first time I had heard about it and I was sick for them and every other person whose identity was stolen (which was around 2 million people).  I immediately jumped on the local news website to read about this disaster, you can read about it here.  I guess this post kind of goes hand in hand with my post yesterday about your credit scores.

If you have secured a loan over the last year or so through Countrywide, I would definitely hop on the internet today and check your credit score.  It is much easier to clean up your credit in the beginning phases of identity theft than a few years down the road.

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