Scott Swinford - Your Northwest Indiana Loan Guy
Home Mortgages and Refinance Loans Made Simple
From Lake Michigan to the Ohio River and everywhere in between, Indiana offers a diverse landscape of areas to call home. Whether you like living in the city or prefer the suburbs, or you are looking for lakefront property to rest and relax or country living to farm or raise livestock, Indiana offers it all in an affordable package that you can call Home!
Are you ready to stop paying rent forever? A first-time homebuyer? This is where you should start your search!
With interest rates hovering just above their thirty-year lows, a multitude of flexible and low-cost loan programs are available that can help many past renters and first-time buyers experience the joy of homeownership. In short, the economic environment simply couldn’t be better to buy your first or next home. However, if you have always been a renter then you probably aren’t as well informed of the intimate processes of obtaining a home mortgage as you’d like to be.
To guide you through this exciting but often confusing time, this report details six tips that will help make your purchase a much smoother experience, save you money and eliminate your anxieties.
Before you begin your home search, before you make one single decision regarding a home purchase, get preapproved by a mortgage professional. Preapproval is free and will give you a definite advantage in the buying process.
During the evaluation stage, it will clarify your financial situation, indicating how much home you can afford. This may influence your decision for location, narrowing your search. You’ll also know exactly how much home you can afford, further clarifying your search.
Preapproval will also give you a step up on your competition. Homebuyers that are preapproved have increased leverage with Realtors and sellers over buyers who are not. Essentially a preapproved buyer becomes a “cash” buyer.
Like most industries, the quality of mortgage professionals can and does vary significantly. With the advancements in lending practices, consolidation between companies and aggressive start-ups, there is significant awareness of the value of your business.
A few unscrupulous lenders will make promises that they are unable to keep just to get you in their door, then hit you with a higher rate or charge you discount points at closing. They know that many borrowers are uncomfortable walking away from the closing or disputing the lender’s agreement with the seller, the Realtors and others in attendance and the documents on the table.
Since a home is often the largest purchase you will ever make, be sure that your chosen loan officer follows a Code of Ethics and that you choose one that you completely and unconditionally trust.
Be careful! The lowest interest rate does not always translate to the best deal. Look at the loan programs that are being offered, not just the rate. There are several factors that have to be taken into account when evaluating programs – the loan type (fixed or adjustable), the loan term (15 year or 30 year), the rate and the down payment requirement. The 2 most important questions to ask are “How much will I pay at closing?” and “What is the monthly payment?”
Adjustable Rate Mortgage’s (ARM’s) are typically lower at the beginning but can escalate quickly. These are good for short-term purchases. Traditionally, long-term mortgage holders may be better off with a fixed rate if it will help them sleep better at night knowing that their principal and interest payment will always be the same.
An applicant who has very good credit (over 760 FICO) may find their monthly out-of-pocket costs below someone with a 620 score. The phrase to remember is that “higher risk equals higher rates”, meaning that your credit score is very important.
In the past, a potential homebuyer would have needed 20% down before a lender would even consider giving them a loan. Now there are programs that offer 100% financing for someone with decent credit. The key is to make sure that your loan officer is getting you into the best loan program for your particular situation.
By getting prequalified, you will be made aware of any potential problems in your credit history. Don’t despair if the credit report is not stellar. Even if an incident cannot be taken off the report, by knowing the background of your financial history your lender may be able to put your financial situation in a better light when submitting the actual loan application.
Review your credit report carefully. A large number (about 79%) of credit reports contain errors and identity theft is on the rise. Your mortgage professional will help you address problems that show up on the credit report. Many times, a simple letter to the creditor explaining the circumstances at the time of the incident will rectify the situation. However this may take a few months, so start early.
A good mortgage professional will take the time to carefully go over your credit report with you and can provide tips and hints that may help you raise your score. They will also tell you not to make any large purchases that can lower your score before you complete the purchase of your home.
As a first time homebuyer, the biggest mistake you can make is believing that you can save money if you do not use a Realtor ®. Although the seller pays the commissions, some listing agents will tell you they can represent both you and the seller fairly.
While in some cases this may certainly be true, it’s better to be safe than sorry. Get a real estate agent that represents your interests solely. A buyer agent will make sure the home is inspected properly, do the due diligence on any hidden issues, and more times than not, the money they save you on negotiating the price of your new home will more than offset any reduction in price due to the commissions not being paid by the seller.
There will be many decisions as you start this process. Your Realtor will take you to several different homes, some you will like, some you won’t, but most will land somewhere in between.
“I love this home except it doesn’t have…” or “That home would be perfect if it only had…” will be common phrases during this process.
Decide now what features you feel are “necessities” in a home and which features are items that would be “nice to have”. This list will no doubt change the farther along you go, but the list will be extremely useful as you begin to look at homes. It will also be useful to the Realtor so he or she can better qualify the homes that he shows you.
If you are ready to begin the process, feel free to contact me. I can be reached at 219-695-0369 or at scott@nwiloanguy.com. You may also click here to fill out an application.
The FHA Streamline Refinance is a newly improved loan for homeowners who have existing FHA loans in good standing. It is currently the fastest and simplest way to refinance an FHA-backed home mortgage.
Well, two things. First, by not requiring an appraisal, the government is allowing you to use the original purchase price of the home. You can now refinance even if you owe more than the property is worth! For underwater homeowners that have not been able to refinance, this is a huge benefit.
Secondly, the costs of Mortgage Insurance (MI) have been greatly reduced in some cases. The upfront amount on a 30-year mortgage has gone from 1.75% to 0.01% and the monthly fee is reduced to .55% from 1.35% as long as the loan was endorsed by FHA prior to June of 2009. This is important, as many homeowners who tried to refinance in the recent past have found that the increased MI they had to pay (which was often much higher than when they originally took out the loan) negated much of the benefits of refinancing into a lower interest rate.
If your loan was endorsed after June 2009, the savings on the MI will not be as significant, but you still may see a reduction in the monthly payment due to interest rate changes.
Update – for loans with case number assignments from FHA after June 23, 2013, the MI was not able to be canceled at a loan-to-value below 80% on 30 years mortgages with a down payment of less than 10% like it was previously. For those borrowers with an initial loan-to-value of less than 90%, the MI was required for only 11 years as opposed to the life of the loan.
Starting January 26, 2015, FHA will decrease the monthly MI premium on 30-year mortgages to just .85%. This drop of .5% will reduce the previous monthly premium by about 35%, or about $62 a month or nearly $750 a year on a $150,000 loan. This may appeal to you if you can take advantage of a lower interest rate, a lower monthly payment, or both.
While most lenders have a few requirements of their own, in general, FHA’s official guidelines allow you to refinance:
In reality, we are seeing lenders that are asking for a good recent history of on-time mortgage payments and minimum credit scores. While there are some exceptions, if you have been making the payments on your mortgage, even if you are unemployed and have a few glitches on your credit report, and owe more than your house is worth, you should be OK. The line of thought is that if you have been making your home loan payments on time in the recent past, why would you not continue if you could save hundreds of dollars each month.
Because FHA doesn’t make the loans, it only insures them, there are some minimum standards that you must meet. These include:
While the savings seen by the borrower requirement should not be an issue because of lower rates and MI costs, the other two above could be. If you have had a late payment in the last 12 months, the best thing to do is to get caught up (if you are not already) and we can refinance you when you have 12 on-time payments in a row!
As far as the closing costs are concerned, the lender’s fees, title charges, and funds to start the escrow will have to be paid at closing. While you should get a refund of any funds held in escrow by the previous lender, it usually comes about 30-45 days after the closing. Often times, we can help you skip a payment and use those funds for closing costs, and/or we may be able to work out a credit from the lender to help pay for the closing costs.
It is important to know that the FHA endorsement date and the closing date of the loan are not the same things. If your previous loan was closed anytime before May 31, 2009, we can look up the actual endorsement date to make sure you qualify for the reduced MI refinance. DO NOT allow anyone to tell you that you qualify without first knowing the correct date of endorsement.
The BEST thing to do is contact me to see what program you will qualify for if you meet the guidelines.
My goal is to help you refinance your home in the easiest and fastest way possible while seeing the biggest reduction in payment available.
Since mortgage rates are at their lowest levels in history, we don’t expect them to move in any direction except up.
Take a few minutes to see what your options are. If you have questions, comments, or concerns, you can contact me by:
Hancock Mortgage is a DBA of City First Mortgage Services LLC #3117
NMLS #138422 | State Lic: IL 031.0045475; IN 12677 | Corp NMLS #3117 | Illinois Residential Mortgage Licensee
Illinois Department of Financial and Professional Regulation, Division of Banking, 100 West Randolph, 9th Floor, Chicago, IL 60601
All loans are subject to Underwriting approval *Certain restrictions apply. *Call for details..