Home Loan APR and Interest Rates

We understand that the mortgage process can be complex. Two key aspects of a mortgage – or really any loan – are the annual percentage rate (APR) and the interest rate. Many homebuyers, especially first-time homebuyers, may not know the difference between APR and interest rate, but with our guidance, understanding these two different costs of a home loan will be a breeze.

Interest Rate vs. APR

Interest Rate: The cost of borrowing the principal loan amount (the amount of money you are being loaned) is called the interest rate. It can be fixed or variable, but it is always expressed as a percentage.

APR: Includes the interest rate plus other costs such as fees, discount points, and some closing costs. Simply put, it is a broader measure of the cost of a mortgage. Like the interest rate, APR is always expressed as a percentage.

How does this affect your mortgage?

The interest rate calculates what your actual monthly mortgage payment will be. The APR on a loan measures the total cost of a loan. For example:

Staying for a while: Given a 30-year fixed rate loan, it makes more sense to take out a loan that has the lowest APR possible, if you plan on staying in your home for the 30-year term. You will end up paying a lower amount over the 30 years.

Not ready to settle down: It may make sense to pay fewer upfront fees at a higher rate, and a higher APR, if you don’t plan on staying in the home for more than a few years. That way the total cost will be less over the short time you are in the home.

If you have any questions about APR or interest rates, don’t hesitate to contact us!

Unmarried Home Purchase: What You Need To Know

It’s common for unmarried couples to want to buy a home. Married or not, it is possible. Buying a home is one of the most significant financial decisions of your life, so it’s important to understand the details of buying a house as a couple.

Here are four things you should plan for when buying a home as an unmarried couple:

Thoroughly Discuss Your Finances

It’s very beneficial for couples to discuss each other’s financial situations in detail. Before meeting with a lender or realtor, it’s imperative that you review each other’s credit score, income, debts, and financial history. Most differences between your finances can be accommodated, so it’s important to know the details of each other’s finances in case any surprises arise. This step will prevent any conflict during or after the mortgage process.

Determine Your Costs and How to Split Them

It’s essential to have a system in place to split bills and other expenses. This is even more critical when buying a home. First, figure out how to divide the down payment and closing costs when purchasing the home. Then, discuss and decide how to handle the monthly mortgage payments, utilities, and other costs associated with owning a home (emergency repairs, maintenance, taxes, etc.).

You may want to work this out together with a real estate attorney and get the details in writing to keep things on record. If you don’t already have a joint bank account, it may be a good idea to at least create one for funding the home while keeping your other funds separate.

Understand Your Ownership Options

You may not have known that there are options for the purchase of your home. Deciding on which ownership option suits you may be one of the most important decisions in the process. Your home’s title can be configured in a few different ways, depending on which state you live in:

Joint Tenancy: You both equally own the property. Common between husbands and wives, joint tenancy allows one of you to inherit the property if something should happen to the other.

Tenancy in Common: You both own a specific percentage of the property. For example, you may own 40% of the property while your significant other owns the other 60%. If something happens to one of you, the ownership will transfer to whoever is denoted in a living will or trust. If there is no will or trust, ownership goes to the next of kin and not your significant other.

Sole Ownership: Some couples may find that it’s better just one of you to have full ownership of the home. If you have better credit than your significant other or are in a better place financially, this may work for you.

Create a Backup Plan

Sometimes things don’t work out as planned and, legally speaking, there are no protections in place for unmarried couples who co-own a home. We recommend creating a partnership agreement. Similar to a prenuptial agreement this will detail what happens to the home if you two split up. Written contracts are the best way to plan so we recommend you take any chance you get to draw up your agreements in writing.

Do you have questions or would you like to sit down for a complimentary no-obligation consultation? We are your Home Loan Experts, at your services. Give us a call 520-495-0222.

How To Win A Multiple Offer Situation

How To Win A Multiple Offer Situation

The real estate market is hot right now, and the competition for homes is rising with little inventory to satisfy the demand. Homes are being sold with multiple offers on the table within days, and even hours, after listing. This may be ideal for sellers, but for buyers, this could mean trouble if they don’t have a skillful real estate and lending team representing them to snatch the perfect home.

Get Pre-Approved!

Make sure your borrower is in the strongest financial position possible; in today’s market, you’re going to need every card on the table. This means your client’s financing decision needs to be strategic. You need a lender who will match your client with financing that puts them in the best bargaining position possible. Get a pre-approval in hand so your client can shop with confidence.

Understand the Seller.

Find out what the seller’s experience has been like so far. If they have placed the house on the market several times only to have the deal fall through, your client can use this to their advantage by differentiating themselves from previous and current prospective buyers.

Stand Out with a Powerful Introduction Letter.

This will humanize your client and their situation to the seller. Let’s say your client can’t beat the best offer, but they can at least match it. That is when a humanizing touch can be enough to sway things in your favor. Help your clients craft a letter that tells their story; you want the seller to feel like your clients deserve the house.

Be Flexible.

Counsel your client on flexibility whenever possible. Be ready to yield to the seller’s desires, from the close date, to concessions, to who will pay for minor repairs. The more ideal and uncomplicated you make the offer, the easier it is to choose you over the next guy.

Have a Lender Who Won’t Let You Down.

Let’s say you do manage to get the offer accepted. Congratulations! But now is the most crucial part; delivering on those promises. If your lender fails to meet deadlines, doesn’t communicate proactively, or worse, didn’t really pre-qualify the client, your reputation could take a serious blow. Help your client choose a lender who makes you look good. Allow us to be that trusted partner!

If you have questions about how to get your client pre-approved with a lender you can trust, please feel free to reach out to The Polder Group at Summit Funding at your earliest convenience. We would love to work with you!

CFPB investigates Zillow’s Co-Marketing Program: What Agents Should Know

 

The CFPB’s recent action against Zillow speaks volumes about the mortgage industry’s regulatory atmosphere when it comes to advertising compliance. With costly fines and other serious penalties for marketing rule breakers, loan officers and their business partners can’t afford to ignore the signs of the times.

To help you navigate this arena with confidence, we have gathered the following information detailing the most common compliance blunders they encounter, with 3 ideas on how you can avoid potentially disastrous mistakes.

Always split payment, and show proof

All co-marketing material/expenses must be split based on pro-rata share, and be documented. This means if I pay for half of a co-marketing flier with you, the flier needs to show both of us, with an equal share of the marketing space. You also need to retain copies of checks, co-op forms, etc. when marketing with another person.

Get use to the verbiage

Unfortunately, mortgage compliance can take the fun and elegance out of marketing. We cannot boast about having the best rates or guarantee to close a loan within a set number of days. If your referral partner is engaged in these kinds of promises, it could be best to have a conversation with them, or if need be, steer clear of them altogether since this kind of rhetoric is inviting trouble.

Get use to the disclaimers

Our disclaimers are required by law. We know how ugly some of the long regulatory verbiages can be, or how picky marketing materials have to be to avoid triggering massive disclosures. However, as frustrating as these can be, there is no room for flexibility. The disclosures have to be there to protect everyone involved. If we don’t include these on our advertisements, it will be a serious reason for concern.

If you have questions about our industry, please let us know. We’d be happy to assist you in any way we can! The Polder Group at Summit Funding

Your HomeReady

 

Segments of the potential mortgage market are completely ignored by some lenders. Not only is this a poor business choice, but ignoring certain populations can be seen as a discriminatory practice by regulators. At PRM, we want to serve all communities and bring the dream of home ownership within reach. Through Fannie Mae’s HomeReady program, we can help you to grow your business in underserved communities for credit-worthy clients with low to moderate income. With flexible income guidelines not seen in other conventional programs, HomeReady helps PRM to assist you in bridging the gap for clients who otherwise would have limited financial options. Segments of the potential mortgage market are completely ignored by some lenders. Not only is this a poor business choice, but ignoring certain populations can be seen as a discriminatory practice by regulators. At The Polder Group, we want to serve all communities and bring the dream of home ownership within reach. Through Fannie Mae’s HomeReady program, we can help you to grow your business in underserved communities for credit-worthy clients with low to moderate income. With flexible income guidelines not seen in other conventional programs, HomeReady helps The Polder Group to assist you in bridging the gap for clients who otherwise would have limited financial options.

 

HomeReady Flexible Income Guidelines

 

  • Rental income acceptable
  • Boarder income acceptable
  • Non-Occupant Co-Borrowers acceptable
  • Expanded eligibility for lower income families by potentially using income derived from occupants other than the borrower as a compensating factor
  • Flexible DTI requirements
  • HomeReady increased home affordability in other ways, with low down payment options, which can be less than the required amounts for FHA loans. Additionally, your client also doesn’t have to be a first-time homebuyer, and properties can be more than 1 unit.

 

In order to qualify for the HomeReady program, your client must meet income requirements for the area the subject property is located in.  For low-income census tracts, there are now income limitations. Income limitations by area can be viewed

Here.

https://www.fanniemae.com/singlefamily/homeready-income-eligibility-maps

 

 

If you have a client you think might benefit from the flexibility of the HomeReady Program, contact The Polder Group Today.

Why Expertise Matters for A VA Loan

 

Most industry professionals know that VA Loans can be a great option for some clients, offering a simple and smart solution to their financing needs. However, as beneficial as the VA loan program can be, these transactions still possess traits which require knowledge and finesse to navigate confidently. Over-eager or inexperienced lenders can turn the underwriting process into a nightmare for your client, so it’s important to have an expert on your side.

 

Mishandling of VA loans is more common than you think.  In November of 2016, the CFPB released a report detailing how many consumers had felt cheated or mislead during the course of a VA Loan. You can read the report here.  In the best of cases, the borrowers felt stressed out or confused by the processes. While some unfortunate clients suffered from buyer’s remorse at the closing table or were declined all together when they were already in contract. The question becomes, why did this happen, and how can you help your clients avoid a situation like this?  We can take a look at the data to see how we can avoid repeating these mistakes.

 

VA Loans – Mistakes and Solutions

 

Mistake 1: For some clients, loan terms were not in the borrower’s best interest. Just because a borrower is a Veteran, doesn’t mean that a VA loan is the right choice for them. Without a qualified Mortgage Banker looking out for the borrower’s best interest, borrower’s found themselves in new mortgages that presented new financial difficulties, instead of making their lives easier.

Solution:  You need a mortgage banker who looks at your client holistically, not just as a commission check with legs.  I treat every client with respect and put their goals and needs first. Like you, I want clients for life, with a relationship based on trust.

 

Mistake 2: In many cases, a thorough examination of the borrower’s financial profile was never performed, so qualification-threatening issues were discovered at underwriting, instead of upfront. A lender may lack a deep understanding of VA guidelines which cause the borrower to be declined.

Solution: This is why my team and I request full documentation upfront from the borrower, so issues aren’t caught in the end or the middle of the underwriting process. I work closely with our underwriters so no one is surprised by guideline changes. No one should sell something they don’t fully understand.

 

Mistake 3: For other clients, communication with the lender was either delayed, or non-existent, causing the process to stretch on endlessly, blowing the borrower’s rate lock period, or allowing sensitive documents to expire.

Solution: My team and I engage our clients with clear, transparent communication at every step of the mortgage process. We update both the client and you, so there is never a need to request the status of the loan. The process can be stressful enough without being left in the dark.

 

All of these errors highlight why expertise in lending matters. You need a lender who knows how to work within the VA system, who can set realistic expectations for all parties involved, and who provides one-on-one, personal service with the history and experience to back it up. And most importantly, you can trust I have your client’s best interest in mind during every step of the process.

 

Contact The Polder Group today if you have questions with how we can help your clients obtain smart and confident VA financing!

POTENTIAL DELAYS IN CLOSING DURING TAX SEASON

With tax season in full swing, many of your clients are working to collect, organize and file their 2016 tax returns. Because final tax information must be received before final loan approval, tax season is an important time in the mortgage industry. Here are some potential delays in closing during tax season:

Delays in Closing during Tax Season

After April 18, 2017, the previous year’s tax returns are required and lenders must have a copy of their transcripts or their filed extension in order to close their loan.

The closer we get to the tax deadline, the slower requests are returned by the IRS because of the high demand. This can delay closing for those borrowers that do not keep records of their taxes or are filing their taxes too close to their closing date.

Requesting Previous Tax Returns

During this tax season, many home closings are subject to delay because clients may not have their most recent tax returns on file. Requesting previous years’ tax returns electronically will help speed up the process and allow for a smoother closing when the client is purchasing a home this season.

 Filing Electronically

Filing electronic tax returns with the IRS may be able to help your clients accelerate the documentation process considerably when buying a home in 2017. For buyers hoping to use their 2016 income to qualify, filing their taxes electronically allows lenders to verify their transcripts much sooner; qualifying them with their most recent income.

If you have clients actively looking for homes, please give us a call so we can figure out if their latest tax returns will be required to qualify. We are happy to help our referral partners proactively account for any IRS tax return delays when writing the purchase contract. We would also love to help educate your clients on the timeline of the loan process. Please don’t hesitate to give The Polder Group a call!

Hidden Cost for First-Time Homebuyers

 

There are many things home buyers learn throughout their first home buying experience. Much shock and disappointment could be avoided if buyers understood the additional expenses which come along when buying a home; not just the down payment and mortgage payment. Yes, all upfront costs in a loan transaction will be laid out with the Closing Disclosure form; but borrowers should truly know what they are getting themselves into financially before they’ve signed on the dotted line.

So alert your clients of these hidden costs for first-time buyers:

Down Payment

Down payments are one aspect of financing that first-time homeowners may not fully understand before purchasing a home. The standard down payment for conventional financing is 20% of the purchase price of the home, though this is not the only way! Most people still believe that a 20% down payment is required to get into their first home. In fact, 76% of individuals in a recent Fannie Mae study say they were unaware of low down payment options such as a 3 or a 5% down payment program. The Polder Group at Summit Funding’s low down payment programs can significantly help first-time home buyers get into the home they love.

Private Mortgage Insurance (PMI)

PMI is an added insurance policy to protect the lender in the event that the buyer cannot pay their mortgage and the loan winds up in foreclosure. Private Mortgage Insurance can be paid for all at once, when the loan is closed, or in monthly installments that are added to the mortgage payment for the loan.  If the borrower cannot make a 20% down payment, paying for PMI can help them get into a home when they may not have been able to before.

Inspections

Before closing on the house, it is generally a good idea to get a home inspection. A Home inspection will verify if there are hidden issues and will provide an in-depth analysis of the home, bringing to light things which might otherwise be missed. These inspections generally run a couple hundred dollars, but are widely considered worth it to the buyer as the information could save hundreds, if not thousands of dollars, in the end. Find limitations and exclusions to home inspections here.

Appraisals

Home Appraisals are unbiased, professional opinions on how much the home is worth. Appraisals must be done before closing so the lender can verify that the value of the home is at least the amount the buyer is paying for it. While also ensuring the subject is structurally safe, sound and secure. These can cost a few hundred dollars, but can often be rolled into the loan amount.

Closing Costs

Closing costs, sometimes called settlement fees, are paid when closing on a home. These are fees charged by people taking care of the purchase process, including the lender, real estate agent, and other third parties involved in the transaction. Some of these costs can be rolled into the loan, allowing less cash out of pocket to be needed at closing.

Closing Costs can include:

Government recording costs, appraisal fees, credit report fees, lender origination fees, title services, tax service fees, survey fees, attorney fees, underwriting fees, etc.

Earnest money

Earnest money is a deposit which the buyer submits at the time they make an offer to show that they have a serious intent to purchase the home. Most often, the amount is between 1-3% and the funds are generally held in escrow with the Title Company or closing agent. Earnest money is not a separate expense as it will be applied to either the buyer’s down payment or closing costs. However, it is worth mentioning because the funds are typically paid when the offer to purchase is made rather than when the loan closes.  Depending on the terms and conditions of the contract, the buyers could possibly get this money back if the sale does not go through. So it is important to review these terms carefully before making an earnest money deposit.

Homeowners Insurance

A buyer will need proof of homeowner’s insurance before the mortgage loan can be completed. Not only is it a wise thing to have, but insurance is required by the lender to ensure that the mortgage will be paid off, or the property will be repaired or rebuilt to its current value, in the case of disaster.  A buyer may also consider flood insurance, even if they don’t live in a flood zone, just in case.

Taxes

Buyers should always check the property tax rate for the new home. Local rates can vary by area depending on school, fire districts, etc. The buyer may owe the previous homeowner for some portion of fees already paid as they are paid yearly and are split when the home is sold.

Cost to Move In

First-time homeowners often forget how all the little things add up; make sure the buyers know to consider these in their budget as well:

Moving expenses – moving truck, boxes, hiring movers, feeding friends to help with the move.

Appliances/Furnishings – many homes don’t come with appliances or furnishings which are other expenses buyers need to keep in mind before deciding to purchase.

Maintenance costs – unless the home is a fixer-upper, buyers may not have too much work to do, but they should budget in small fixes and adjustments in their total budget.

Monthly Bills – many buyers don’t consider the change in monthly bills they will have with their new home, not only mortgage, but utilities, water, garbage, etc.

If you or your clients have any questions about the hidden costs for first-time buyers, please have them give The Polder Group at Summit Funding a call!

Tucson P2P Program

 

Tucson P2P Program

Good afternoon,

The IDAs of Tucson/Pima would like to thank you for originating a very successful Tucson P2P program!  As of this afternoon, the program has been fully originated.

So what does this mean?  No new reservations will be accepted in the program.  No additional funds will be made available. And a waitlist will not be created.  If you have reserved funds it is extremely important to follow the program timeline.  There is no guarantee that if a loan cancels that it can be reinstated.  Loans must be Underwriter Certified within 25 days of reservation.  And loans must be purchased by US Bank within 70 days of reservation.

As a reminder, the Homebuyer’s Solution Program is continuously funded and still available.

 

Thank you,

eHousingPlus

 

Other Great Programs Available

Call or Text us Today To Get Started: (520) 495-0222