Notes on Various Mortgage Loan Products (as of 4/25/2018)

FHA vs. FHA-GSFA (Cal HF) vs. FHA-203k

All 3 FHA programs require Mortgage Insurance of 1.75% up-front plus a monthly MI premium, which varies.

FHA & FHA 203k have these features in common:
--Non-occupant Co-Borrower is allowed with 3.5% down.
--Don't have to be 1st time homebuyer.
--100% gift allowed.
--ratios up to 57%
--max loan amount $679,650.

FHA GSFA is different from the FHA & FHA 203k in that GSFA has these aspects:
--Must be 1st time homebuyer (1st time actually means not on title for at least the past 3yrs)
--Zero-down (100% financing) is available
--Income cannot be over 115% of Adjusted Median Income (AMI) for that county
--Max loan amount depends on the county

Tax plan caps property deduction at $10,000, puts new limit on mortgage deduction

A sweeping overhaul of the tax code unveiled by House Republicans on Thursday would cap the deduction for property taxes at $10,000 and preserve the mortgage interest deduction only for existing mortgages and new purchases with loans of $500,000 or less. 

Those changes will amount to a tax increase on high-income taxpayers with pricey homes, even if they get lower income tax rates.

We must reverse the decline in California’s homeownership rate. For over 100 years Congress has incentivized home-ownership with the tax code; currently through the mortgage interest deduction.  Any effort at reforming the tax code should maintain and prioritize this incentive. The current proposal only pays lip service to incentivizing home-ownership. The proposed changes will result in only top earners itemizing their deductions. Therefore, the vast majority of people will no longer receive any tax incentive to purchase a home. So, while the proposal keeps the mortgage interest deduction, the incentive effect of the deduction for Americans to become homeowners disappears.

It weakens the mortgage interest deduction.

• It caps the mortgage interest deduction to the interest on a mortgage principle of $500,000.
• Homeowners would no longer be able to deduct the interest they pay on home equity loans.
• The deductibility would be eliminated for second homes and limited to loans on a family’s primary residence.

Families build wealth through home-ownership. According to a report by the Federal Reserve in 2016, homeowners amassed wealth at a greater rate than renters. Renters had a median net worth of $5,200 while homeowners had a net worth of $231,400.

Week of 2017 October 30th Mortgage Rate Summary

This Week's Mortgage Rate Summary

How Rates Move: Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market.  This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events.  When MBS pricing goes up, mortgage rates or pricing generally goes down.  When they fall, mortgage pricing goes up.  Tracking these securities real-time is critical.  For more information about the rate market, contact me directly.  I’m among few mortgage professionals who have access to live trading screens during market hours. Rates Currently Trending: Lower Mortgage rates are trending lower so far today.  Last week the MBS market worsened by -1bps.  This caused mortgage rates to move sideways.  Mortgage rates were actually very volatile for the week. This Week's Rate Forecast: Neutral Three Things: These are the three areas that have the greatest ability to impact mortgage rates this week. 1) Central Bank, 2) Geopolitical and 3) Domestic. 1) Central Bank: Believe it or not, we have a Fed meeting this week. The market keeps talking about a potential December meeting rate hike, but you never hear about the November 1 meeting. That is because unlike the December meeting, this one is not followed by a live press conference with Janet Yellen. Since they just announced their "taper" last time around, look for no change to that plan. The bond market will be looking for forward guidance on rate hikes. The BofE (Bank of England) will also be in the spotlight as they are widely expected to raise their rates. Fed Chair: We are supposed to learn who President Trump's nomination for Fed Chair on Thursday. 2) Geopolitical: Domestically, we are supposed to get the official Tax Reform bill and will learn what the proposed plan includes. This can have a significant impact on mortgage rates depending on how stimulative bond traders perceive it. Overseas, Spain/Catalonia, as well as North Korea, are still providing upward momentum on long bonds. 3) Domestic: While the markets are expecting a "pass" by the FOMC this week, we have plenty of economic data with the gravitas to shift expectations of their next action with ISM Manufacturing and Services, PCE and Consumer Confidence. But its Friday's Jobs report that will carry the most weight as we look for a major rebound from -33K jobs in the last report to +300K in this report. As usual, Average Hourly Wages will get a lot of attention. This Week's Potential Volatility: High There are a lot of events this week that can move mortgage rates and cause volatility. The Fed Chair announcement and the tax plan being the two big ones, but Friday's jobs report could undoubtedly move rates as well. Bottom Line: If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Waiting period to buy again after foreclosure or short sale

Posted under: Home Buying, Financing, Foreclosure  |  August 25, 2014 9:41 AM  |  1 view  |  No comments

After a distressed sale, how long is the wait before you qualify for a new mortgage to help you get back to becoming a homeowner?

a) If you did a short sale for your last house, you normally have to wait for 4 years before you can qualify for a loan to purchase a house again.  However, with Extenuating Circumstance, you might be able to get a loan after 2 years.
b)    If you let your last house go to foreclosure with a valid hardship, then you still need to wait only 4 years to qualify for a conforming loan to get back to becoming a homeowner.
c) If you let your last house go to foreclosures with no valid hardship (i.e. strategic foreclosure), then for both conforming and non conforming loan, you will need to wait 7 years
For an FHA loan, you only need to wait 3 years.

3 precautionary steps before you apply for a loan

I got the following inviting email offer in my SPAM folder: "Reach more Qualified Prospects with Credit Bureau Data". Someone claiming to be Amorena Cervantes from Endless Resources, Inc. was offering to sell me a long list of mortgage leads based on mortgage triggers.

What are Mortgage Triggers?
When you apply for a mortgage, your lender pulls a copy of your credit report,which triggers an inquiry. The credit bureau can then turn around and sell your name to other mortgage companies who may want to compete for your business. This is called a mortgage trigger lead.

Here are some examples of information that may get sold to telemarketers:

• whether or not you've applied for a mortgage recently
• your location
• your credit rating
• your loan-to-value (LTV)
• aggregate balance of your open mortgage trades
• your combined mortgage and HELOC balances
• age of your most recent mortgage trade
• your mortgage lender name
• your current mortgage type

Is this legal?
Yes, the Fair Credit Reporting Act allows the sale of your name. That means credit bureaus can legally sell your information to third-party vendors if you don't do anything to prevent them from doing so. That's why you need to take some action to protect yourself from trigger lead harassment.

1. Sign up for OptOutPrescreen.
Go to http://www.optoutprescreen.com/ and follow the instructions. This will stop the four credit bureaus (Equifax, Experian, Innovis and TransUnion) from selling your name as a trigger lead. Opting out puts a stop to trigger leads for five years.

Furthermore, some lenders say that by opting out, you can add 10 to 15 points to your credit score! For permanent restraint, you will need to mail in your registration, which is also available on the OptOut Web site.

Here is the confirmation message you will receive if you go through the online 5 year opt out procedure. "The following is a confirmation of your 5 year Opt-Out request. Please click here to print this confirmation for your records. Your request will be completed within 5 business days. Although your request becomes effective with Equifax, Experian, Innovis and TransUnion within five business days of your request, you may not see an immediate reduction in the amount of offers you receive. This is because your name may have already been provided to some companies that have not yet mailed their offers to you. You may continue to receive certain firm offers for several months.
While your name will be removed from the lists that Equifax, Experian, Innovis and TransUnion provide to businesses for the purpose of making you a firm offer of credit or insurance, you may continue to receive offers from sources that do not use Consumer Credit Reporting Companies to compile their lists."

2. Put your name and phone number on the National Do Not Call Registry. You can register your cell phone number as well. Do this at least a month before you apply for a loan because it takes 31 days to take effect. You'll have to re-register every five years because the order expires at the end of five years.

3. Register with the Direct Mail Association to prevent mortgage lenders from sending you direct mail. You can register online or through mail. Either way, it will cost you $1.00, which can be charged to your credit card. Register early because the DMA distributes its lists quarterly, so it could take a while to become effective. This registration is good for five years.