HLM Mortgage Blog

Well, we knew it was too good to be true!  Over the past couple of years, tightening guidelines implemented by Fannie Mae and Freddie Mac have caused a dramatic increase in applications by homebuyers for FHA loans.  These Federally-backed loans still allow up to 96.5% financing for qualified buyers.  Homebuyers have been able to purchase homes with low down payments and still have the seller pay up to 6% (of the sales price) toward their closing and escrow costs.   

In today's article published on money.cnn.com, it has been determined that FHA loans experience higher past due rates (about 5.0 % higher) than non-FHA loans.  As a result, it appears that the mortgage insurance premiums required to insure these loans are about to increase from 1.75% of the loan amount to 2.25% of the loan amount.  This would result in a $750.00 higher premium on a $150,000 loan amount.  Most buyers finance this premium, however it important to note that whether one finances this premium or pays it out of pocket, ultimately the cost is going up.  The other main change is the reduction of seller-paid closing costs from 6% to 3%.  For more information, please click on the following link:  http://money.cnn.com/2010/01/19/real_estate/fha_loan_requirements/index.htm

The bottom line is that in this industry, change is happening at lightning speed.  As a result, it is extremely important that you work with a dedicated mortgage professional who constantly seeks to keep you informed throughout the process.  The days of treating a mortgage like a commodity are over.  Without an experienced, knowledgeable advisor on your side, you will likely be disappointed with your service and more importantly, incompetence by a loan officer can cost you big bucks!  At HLM Mortgage, we set realistic expectations, provide valuable, timely information, and we always watch out for your best interests.  If you would like to speak with one of our professionals, please call 404-836-1120 today. 

HLM Mortgage Company NMLS ID 152777

Georgia Res License 17140

FHA Lender ID 26417-0000-2

Housing Market Gets Help Just Under The Wire!

With the previous Homebuyer Tax Credit Program (for first time homebuyers) set to expire on 11/30/2009, Congress has extended the expiration date to homes with a contract date on or before 04/30/2010 (must close by 06/30/2010).

Additionally, Congress had expanded the program to include allow for existing homeowners to participate in the program if they close on a home between 11/6/2009 and 6/30/2010.  Existing first time homebuyers must have owned a home for 5 consecutive years (out of the last 8) prior to the home purchase. 

There are some limitations on the program, so we recommend that you visit  http://www.irs.gov/newsroom/article/0,,id=204671,00.html or consult your CPA for full details. 

Basically, first time homebuyers may qualify for up to $8,000 and existing homeowners may qualify for up to $6,500.  This is expected to help increase activity in the sluggish housing market. 

HLM Mortgage Company has a team of professionals ready to help you explore financing alternatives.

HLM has recently partnered with a lender who offers 'outside the box' thinking!

HLM now has access to a lender who will allow you to refinance your home, pay off an existing second mortgage, and get up to $20,000 in cash (up to 90% of your appraised value).  Most conforming lenders will limit your loan amount to 80% of the appraised value if you are either getting 'cash back' or paying off a home equity line of credit.  With home values declining in some markets, this has prevented many people from refinancing. 

We are happy to say that we now have access to four different loan types that allow up to 90% financing and also do not require mortgage insurance (PMI).  Please call one of our experts today for more details.  Jason Conn can be reached by calling 404-836-1120 ext 205. 

Federal Tax Day,T.1Refunds Cannot Go Directly to Lenders Monetizing First-Time Homebuyer Credit, Geithner Says,(Jun. 25, 2009)

The IRS will not send first-time homebuyer credit refunds to government entities that monetize the credit to help purchasers with downpayments, Treasury Secretary Timothy F. Geithner said in a June 16 letter to a member of Congress. The U.S. Department of Housing and Urban Development (HUD) is allowing certain lenders to offer bridge loans based on the expected amount of the credit to use as a downpayment on a home purchase. However, refunds must go the qualifying homebuyer, Geithner said.

Bridge Loans

The first-time homebuyer credit can be as much as $8,000 for qualified home sales before December 1, 2009. Taxpayers claim the credit on Form 5405, First-Time Homebuyer Credit.

The IRS will not allow taxpayers to claim the first-time homebuyer credit in advance of a purchase (TAXDAY, 2009/04/14, I.5). However, HUD will permit taxpayers financing a purchase through a state housing agency to monetize 100 percent of the credit as a downpayment (TAXDAY, 2009/06/04, M.2). Taxpayers using Federal Housing Administration (FHA) lenders can apply the credit to closing costs or make a larger downpayment above the FHA-required 3.5-percent minimum.

Refunds

Rep. Cathy McMorris Rodgers, R-Wash., asked Geithner if the IRS could send a taxpayer’s first-time homebuyer credit directly to the state housing agency that made the bridge loan. "The Internal Revenue Code requires the IRS to pay tax refunds to the person who made the overpayment, in this case, the homebuyer. This process ensures that taxpayers expeditiously receive the appropriate tax refund while also protecting against fraud and abuse of the tax system," Geithner explained.

By George L. Yaksick, Jr., CCH News Staff

So, you've just left a dinner party where someone was bragging about refinancing and getting a 4.5% interest rate.  Your rate is much higher than this and you wonder if it makes sense for you to refinance.  After all, you have to keep up with the Joneses right?  I'd like to provide you with a few simple tools to help you figure out if refinancing is in your best interest.

1)  How long do you plan on owning the home? 

If you plan on moving within the next 3 years, it most likely does not make sense to refinance.  If you are not in the home long enough to recover the closing costs (in the form of a lower payment), a refinance will not make sense for you.

2)  How much will you save? 

The whole idea behind a refinance is to save money.  In order to calculate your payment savings, you will want to get your most recent mortgage statement and figure out how much of your payment is going toward principal and interest (exclude the escrows for taxes and insurance for now).  Then take the current balance on your mortgage and multiply the dollar amount (in thousands) that you owe times 5.29 and this will tell you your new payment amount.  For example, if you owe $200,000, multiply 200 times 5.29 and this gives you your principal and interest payment.  Then, compare the new payment with your current (principal and interest portion only) payment to see how much you will save monthly.  Please note this 5.29 factor is based on the interest rate of 4.875% (current 30 year interest rate at the time this blog is being published). 

3)  How much will it cost you to refinance and what is your "Break Even Point"?

The amount of closing costs for a loan depend on both the loan amount and the interest rate you choose.  Higher loan amounts (up to a $417,000 loan size) typically carry lower interest rates than smaller loan amounts.  Also, higher loan amounts usually result in a quicker break even point because the interest savings is more with a higher loan size.  Typically closing costs are approximately $2200.00 plus 1.25% of the loan amount (you may decide to choose a slightly higher interest rate that will reduce the 1.25% portion of the closing costs).  So, after calculating the total amount of closing costs, divide this by your monthly payment savings (from # 2 above) to determine your "Break Even Point".  As long as this figure is less than your estimated time in the home, you will want to look into this further.  Naturally, if you have a larger loan balance, you won't have to see a very large drop in interest rate for it to make sense (because even a small drop in rate can have a bigger impact on the payment on larger loan balances). 

To see if it makes sense for you to refinance, please call Jason at 404-210-6663 or send him an e-mail at jasonconn@hlmmortgage.com. 

Do you feel like you need to schedule a therapy appointment after watching the evening news?  The struggling economy, banks failing, unemployment on the rise, etc...  One common theme that we are all hearing is that banks are tightening up and not lending money.  When it comes to mortgage lending, this is simply untrue. 

The majority of mortgages are backed by Governmental or Semi-Governmental Agencies like Fannie Mae, Freddie Mac and HUD.  This means that (as long as a loan conforms to certain criteria) banks are not on the hook if a loan goes bad...the Federal Government is!  This helps make financing available to most applicants.  People typically only have difficulty with financing if they cannot put at least 3.5% down on a home or if they cannot document their income.  For the most part, all other underwriting guidelines remain unchanged. 

We also hear a lot about the decline of home values.  Atlanta has fared much better than many markets across the US!  Florida and California markets experienced a dramatic decline following a rapid increase in values over the past several years.  With housing starts nearly non-existent, we will see existing inventories come down as fewer new homes are in the pipeline.  This should eventually lead to price stabilization as the oversupply will become less of an issue.  Interest rates remain near 40 year lows (at the time of this blog) at 5.625% for a 30 year fixed rate loan. 

So, when you're at the holiday dinner party and someone starts talking about how bad everything is, perhaps you can provide them a different perspective.  While there may be clouds in the sky, the sky is truly not falling!

There has been some confusion on the first time home buyer credit that is allowed for those who have not owned a home in the last 3 years.  This is not a loan, but a tax credit.  There is no application for the credit.  Instead, those individuals who purchase a home between April 2008 and July 1, 2009 will receive up to $7500 in tax credit when they file thier tax return with IRS.  They will do this by filing the proper form with their tax return.  This credit will effectively reduce the amount of tax due to or due from the tax payer at the time of filing.  Those people who normally receive a refund will have an even larger refund with the credit.  There are income limitations as this is a credit for those with an adjusted gross income of less than 95k and joint filers with income less than 170k.

Also, if the home is sold within a specified time frame, then the tax payer will have to pay back IRS a prorated share of the credit.  This will also be done at the time of filing the tax return.

For more information visit this very informative site: http://www.federalhousingtaxcredit.com/faq.php#3

If you are a first time buyer and would like to know more about this and the various loan options available, please give Mercedes Pasqualetti at call at 404-836-1120 ext. 110.

If you listen to the media, the real estate market is all doom and gloom.  Foreclosures are at high levels and people are unable to refinance their exitings homes or buy new ones.

I say baloney!  Now is an excellent time to buy and the market in my area is doing very well.  One of my agents was in my office for a closing last week and actually told me she has tons of buyers, but not enough inventory to show them!  She has people not only ready, but willing to buy and nothing decent to sell them.  What a dilema.  Many people are waiting to place thier homes on the market until the market gets better, but that seems short sighted now with the growing need for inventory.

I am keeping my figner on the pulse of the market and would be happy to share my insight with you.  If you are thinking about buying or selling, please give me a call to discuss your options and the pros and cons.

Have a happy 4th of July!

Today I received a phone call from a senior I worked with last month.  HLM helped her obtain a reverse mortgage on her home and she called to thank me.  The past couple of weeks I have been pondering what it is about the mortgage industry that makes me tick and the phone call I received today made me realize it is helping people.  My client called just to tell me that she did not realize how much a reverse mortgage would change her life.  She said that before she closed on her reverse mortgage, she had to count every penny down to the last 15 cents each month and now she does not.  Her reverse loan has given her peace of mind. 

This call could not have come at a better time for me as lately I have been a little disenchanted with the mortgage industry.  Thank you to this client for breathing fresh life into my mortgage career!

Sometimes it is not the path we choose for ourselves but the one that is chosen for us.  Keep following the path to the end of the rainbow!

Thanks for listening,

Mercedes

We are all aware by now that the IRS is issuing the stimulus payments promised.  They are ahead of schedule and are actually beginning to transmit payments to those individuals who direct deposited their refunds beginning today.  For more info visit www.irs.gov.

Many people will be receiving $300 or more from this payment.  Did you know that if you purchased a HUD repo, all you would need to buy a home is $100 from your stimulus payment?  Yes, it is true!  What other investment could you purchase for as little as $100 of you own funds and earn appreciation and future profit?

If you are a first time buyer or even an individual looking to move up to a new home, now is the time!  Put that stimulus money to good use and call us today to get pre-approved for a purchase.

Happy day to you all!