WHAT YOU NEED TO KNOW ABOUT MORTGAGE FORBEARANCE

 

In light of recent world events, President Donald Trump signed a $2.2 trillion economic rescue package into law on March 27th. The Coronavirus Aid, Relief, and Economic Security (CARES) Act put two protections in place for homeowners with federally backed mortgages:

  1. Foreclosure moratorium
  2. A right to forbearance for homeowners experiencing financial hardship due to COVID-19

The first protection is straight to the point. Under the CARES Act, your lender or loan servicer may not foreclose on you for 60 days after March 18th, 2020. According to the Consumer Finance website, the CARES Act also prohibits lenders and servicers from beginning a judicial or non-judicial foreclosure against you, or from finalizing a foreclosure judgment or sale during this period.

Mortgage forbearance, on the other hand, requires further explanation. Homeowners considering forbearance should contact their lender or loan servicer for more information regarding their specific options.

What is Mortgage Forbearance?

You’ve probably heard this term more in the past two weeks than you have in your entire time as a homeowner. So, what does it mean? Is it a good idea? Do all homeowners qualify? Let’s break down the details.

MORTGAGE TERM: Forbearance is when your mortgage servicer or lender allows you to pause or reduce your mortgage payments for a limited period of time.

It’s important to note than forbearance does not erase what you owe. You must pay the payment reduction or unpaid payments later, once your income has been restored. Depending on the type of loan you have, the owner or investor requirements in your loan, and your servicer, the forbearance options will vary.

If your mortgage is federally backed…

For a homeowner to be eligible for protections under the CARES Act, your mortgage must be federally owned or back by one of the following agencies:

  • U.S. Department of Housing and Urban Development (HUD)
  • U.S. Department of Agriculture
  • Federal Housing Administration (FHA)
  • U.S. Department of Veterans Affairs (VA)
  • Fannie Mae
  • Freddie Mac

If you’re granted forbearance to delay making your monthly mortgage payments during the 180 days, you won’t acquire late fees or have delinquencies reported to credit reporting companies.

If your mortgage is not federally backed…

We recommend contacting your servicer. Many financial regulators have encouraged financial institutions to work with borrowers over the next few months. You may not be granted forbearance, but your servicer should be able to help identify other alternatives for your financial circumstances.

Requesting Forbearance

Under the CARES Act, homeowners experiencing financial hardship due to the COVID-19 pandemic have the right to request forbearance for up to 180 days. If you’re still facing financial difficulties after the initial 180 days, you may request an additional 180 days extension. Homeowners must contact their lender or loan servicer to request a forbearance.

Depending on your financial situation, you may be asked to explain:

  • Why you’re unable to make your payment
  • Details about your income, expenses, and other assets
  • Whether your financial standing is temporary or permanent

It’s essential to keep other financial relief options in mind; you may not need to suspend payments entirely. Ask your servicer about the possibility of waiving late fees, loan modification, or other options that may be available for you.

PRO TIP: If you’re able to secure mortgage relief (forbearance, modification, etc.), ask your servicer to provide written documentation that contains the details of your agreement.

Once your income is restored, you can request to resume payments as usual, instead of waiting for the full 180-day period. Make sure to keep an eye on your mortgage payments and credit score throughout this period in case you see any changes that shouldn’t have occurred.

Wondering what your next steps are? Contact us today for more information.

 

List of banks offering help to customers impacted by the coronavirus

Banks across the country are taking steps to help consumers impacted by the deadly coronavirus.

As of March 19, there are more than 10,000 confirmed cases of the virus in the United States and nearly 230,000 people infected with COVID-19 around the world, according to data provided by John Hopkins University.

As retailers temporarily close up shop and employers cut back on hours, consumers should find out whether their banks are included on the list of those making policy adjustments.

Here’s a running list of decisions some banks have made to support customers with CDs, checking accounts and other types of savings products who are struggling to make ends meet. (This list will be updated on a regular basis as banks make changes to their policies for customers impacted by the coronavirus outbreak. For information on what credit card issuers are doing to help their customers during this crisis, you can check this updated list.)

Summit Funding

Please reach out to the servicing team for the most up-to-date information on forbearance.

Email:  loanservicing@summitfunding.net

Toll-Free #:  888.850.0021.

Ally Bank

In an email sent on March 18, the online-only bank reminded customers with deposit accounts that they have no minimum balance requirements or monthly service fees to worry about. Ally Bank also said that for the next 120 days, it will not charge savings and money market account holders excessive transaction fees or charge customers for overdrafts. Furthermore, there will be no fees for expedited shipping of checks or debit cards.

Retail banking customers with questions can call Ally Bank customer care 24/7 (1-877-247-2559). On its hub page with information about the coronavirus, Ally Bank encourages customers to download the bank’s mobile app and enroll in online services. There’s also relief for Ally’s auto loan and home loan customers in the form of payment deferrals for up to 120 days, without late fees.

Bank of America

The bank noted that employees are trained to help decide what the right support for an individual customer looks like. A spokesperson for the bank also notes that “As part of our regular practice, we offer assistance to qualifying consumer and small business clients facing hardships, including forbearance with certain fees.”

Account-holders are welcome to contact the bank if they need financial assistance. Through the bank’s Financial Center and ATM locator, you can find out whether the nearest Bank of America facility is open or closed for now. Its page noting the steps they’re taking in light of the spread of the virus also reminds customers that online banking and the Bank of America mobile app are also options.

Capital One

The McLean, Virginia-based bank has a page that’s dedicated to addressing questions and concerns related to the coronavirus. It’s asking customers to reach out if they’re going through a difficult financial situation. The customer support section of their website lists various phone numbers account holders can use depending on the product or account they have.

Effective Monday, March 16, Capital One Cafes nationwide are temporarily closing, the bank’s website says, “due to growing public health concern and in an effort to be proactive.” Branches in certain areas are also temporarily closing.

If you need to access a branch, check online first using the Locations Finder tool to find out if there’s one open near you. In the meantime, the bank recommends using its mobile app and other digital tools. Capital One ATMs, including most of the machines in the cafes and branches that are momentarily unavailable, are still accessible 24/7.

Chase

The CEO of Chase consumer banking has a message for customers listed on the bank’s website, noting that it’s donating $50 million to nonprofits to “help address immediate public health needs as well as long-term economic challenges.” The message also recommends that customers reach out to the bank if they need assistance as a result of the coronavirus outbreak.

Effective March 19, Chase is temporarily closing 20 percent of its locations  (1,000 branches). The remaining branches will continue to operate, but will close early. Customers who need branch access should visit the Chase website to find the nearest open location. Otherwise, customers should use the Chase mobile app and its other digital features.

Citi

On March 9, Citi agreed for at least 30 days to waive monthly service fees for retail banking customers and waive penalties for early CD withdrawals. These fee waivers and an additional one for remote deposit capture fees are also waived for retail bank small business customers.

Mortgage customers may be eligible for a hardship program and Citi credit card holders may be able to increase their credit lines and benefit from collection forbearance programs. Customers should reach out to the bank to find out if they qualify for assistance.

In its branches, Citi is providing plenty of hand sanitizer and ensuring that workers are aware of health and safety guidelines released by the Centers for Disease Control and Prevention (CDC).

Goldman Sachs

The company announced via email that customers using the online banking platform and lender, known as Marcus, would be allowed to delay making payments for a month. And users with an Apple Credit Card — which is issued by Goldman Sachs — will be able to avoid making payments for the month of March entirely without worrying about accruing any interest.

In addition to offering personal loans, Marcus by Goldman Sachs is an online bank that provides access to high-yield CDs and savings accounts and no-penalty CDs that don’t charge customers for withdrawals beginning seven days after opening an account.

PNC

The bank, which is headquartered in Pittsburgh, also has a page dedicated to answering questions customers may have related to the coronavirus. Effective March 20, the bank will close one-quarter of its branches until further notice and leave the rest open, operating mainly in a “drive-up only mode.” Hours for the remaining locations will be reduced and will be open during the week from 10 a.m. to 5 p.m. and from 9 a.m. to 1 p.m. on Saturdays.

Customers who need to visit a branch to access safe deposit boxes or other services not accessible via an ATM, a drive-up window or through the bank’s digital channels can make appointments. A PNC branch locator is available to see which branches remain open.

The bank also says it’s willing to assist account holders experiencing financial hardship and has a customer service phone number listed (1-888-762-2265).

Truist

The bank, which formed out of a recent merger between SunTrust and BB&T banks, says on its website that it’s taking extra precautions to ensure the safety of its customers, including disinfecting ATMs, door handles, elevator touchpads and other surfaces that visitors frequently come into contact with at branches. There are also more hand sanitizers available now at the bank.

Other steps taken by the bank include waiving ATM surcharge fees temporarily for consumers and business owners and offering payment relief assistance for customers with credit cards, business loans, and consumer loans. In addition, SunTrust and BB&T consumer credit cardholders can get 5 percent cash back through Apr. 15 when they purchase certain items at pharmacies and grocery stores. There are also phone numbers listed on the Truist website that retail and business clients can call.

On Mar. 17, the Truist Financial Corp. pledged that it intends to donate $25 million through its Truist Cares initiative to provide aid and supplies to clients, employees, and communities across the U.S. impacted by the coronavirus. Through the Truist Charitable Fund, a $1 million donation is immediately going to the CDC Foundation and Johns Hopkins Medicine. Through the Truist Foundation, a $3 million donation will be given to United Way organizations that support local communities.

U.S. Bank

Customers of U.S. Bank will also find a message from the CEO on the bank’s website. It outlines what the bank has done to protect its clients and retail bank customers, like providing extra hand sanitizer, wipes and spray in branches.

On March 13, U.S. Bank temporarily lowered costs for borrowers interested in personal loans and the bank’s Simple Loan product, which has been touted as a payday loan alternative for low-income Americans who need access to small-dollar credit options. Customers are also reminded that they can use the bank’s digital capabilities to bank at home.

Wells Fargo

Customers of Wells Fargo also have a hub page to access for all updates regarding the coronavirus. Wells Fargo lists a phone number (1-800-869-3557) account holders can call if they need financial assistance and want to discuss their options.

The bank is encouraging account holders to use Wells Fargo’s digital tools, but branches and contact centers are still open.

The Wells Fargo Foundation has agreed to donate up to $6.25 million to public health aid efforts being made abroad and here in the U.S. It will also soon donate up to $5 million to support local communities.

TD Bank

The Cherry Hill, New Jersey-based bank has a list of bank stores on its website that are temporarily closed. It also says that it is reducing hours at some locations and sending hand sanitizing kits as needed.

Account-holders facing financial hardship due to the coronavirus should call customer service (1-888-751-9000), which is available 24/7. Customers who cannot visit a physical location are being directed to TD Bank’s online and mobile banking platforms. They can also stop by ATMs to make withdrawals and deposits.

Fifth Third Bank

Consumers experiencing financial difficulties as a result of the coronavirus should contact Fifth Third to find out whether they qualify for any of the hardship and payment loan assistance listed on the bank’s website, such as the vehicle and credit card payment deferral programs. Payment forbearance is available for Fifth Third mortgage and home equity loan customers. There are phone numbers listed to get in touch with representatives (800-972-3030) and a dedicated hardship assistance line (866-601-6391).

There’s a fee waiver program, too, that will ensure that Fifth Third consumers and small business owners with deposit accounts won’t be charged any fees for up to 90 days. Foreclosure actions on residential properties and repossessions of vehicles will also cease for the next 60 days.

Customers can check the branch and ATM locator to get the status of their nearest Fifth Third facility. Within the branches, the staff is using cleaning procedures recommended by the CDC.

BBVA

Customers of the regional bank based in Birmingham, Alabama should contact a representative to find out whether they qualify for any assistance the bank is providing.

CDs opened before March 1 can be withdrawn without penalty upon request. A number is listed (1-844-222-3862) for customers who might benefit from a line of credit, credit card or loan payment extension or deferral. Upon request, BBVA is also waiving and refunding ATM fees charged by out-of-network banks and ATMs. The existing offers only apply through April 17, but this end date may be extended if needed.

BBVA advises that customers use this tool to check the status of their local branch or ATM. Branches are being kept clean and supplied with latex gloves for the banking staff and hand sanitizing stations for customers.

If you should have any questions feel free to contact us (520) 495-0222

What Is An FHA Loan?

There’s no perfect time to buy a home. There will always be outside factors that affect your home buying experience, no matter how much you plan ahead. Thankfully, there are a variety of home loan solutions to meet you right where you are financially.

If you need a loan with flexible income, debt, and credit requirements, an FHA loan could be the solution you’ve been looking for.

The Benefits of an FHA Loan

The government-insured Federal Housing Administration (FHA) loan is a beneficial option for those who are looking for more financial flexibility from their home loan.

Loan Details

  • Low down payment (as low as 3.5%)
  • Minimum 580 credit score required
  • non-occupant co-borrowers may be on the loan
  • 100% of the down payment can be from gift funds
  • The seller can pay closing costs up to 6%
  • Qualification with less than two-year rental history

2020 Loan Limits

Increased loan limits, no matter what loan you qualify for, put more power into the consumers’ hands. It also allows those who already own a home to take more cash out of their home’s equity. For many, FHA mortgages offer an opportunity for homeownership that would otherwise be unavailable

FHA loan limits will vary and change as the housing market does. Although there is no guarantee that rates will change from year-to-year, it’s common that they will. To find out what FHA loan limits look like in your county, you can search by location here.

FHA Manual Underwriting

An estimated 4-5% of FHA loans are flagged during the initial assessment, requiring them to be manually underwritten. However, the majority of FHA loans fall under TOTAL Scorecard approval unless the application triggers the system based on risk factors such as the following:

Cash Lifestyles

People like to say, “cash is king,” until they need a high credit score. Although it seems like the most responsible choice, a debt-free lifestyle tends to leave even people with excellent cash flows in a tight credit score spot. Lacking sufficient credit history to generate a score will trigger a manual underwriting with the FHA.

Financial Shortfalls

Following a financial problem such as bankruptcy or foreclosure, getting a mortgage approval may be difficult. You will have to meet requirements for a waiting period after significant derogatory credit events. If you have satisfied the seasoning requirements, a manual underwrite may lead to loan approval in situations where an automated approval would still be off the table.

Debt-to-Income

The amount of total debt you have in comparison to your overall income is your debt-to-income ratio. Although this factor has a bearing on FHA approval, manual underwriting allows for balancing the ratio against compensating factors that may support an approval. In some cases, home loans can be approved at ratios of 40-50 percent.

It’s important to keep in mind that a manual underwriting review does not necessarily result in a rejection. However, your application could require further discussion, so it will be in your best interest to work with your Mortgage Advisor to demonstrate an ability to pay.

Should You Consider Conventional Financing Instead?

For strong borrowers with great credit, and/or substantial down payments, conventional (a.k.a. conforming) home loans may be a better option for you. It pays to check with both programs and to discuss both options with your Mortgage Advisor to decide which mortgage option will save you the most money in the short and long term.

We understand that no two clients are the same. That’s why we sit down to find the best possible solution for your home loan needs. At The Polder Group, we offer a variety of loans to meet an array of financial differences. Contact Us Today!

5 Tax Breaks for First Time Homeowners

Property Tax Deductions

Property taxes are paid to the state and/or county and are deductible from federal income taxes. These can include real estate taxes as well. Before the TCJA was passed, you could deduct an unlimited amount for these taxes, as long as you could document that the deduction matched the actual amount of the taxes you paid. For tax years 2018 through 2025, the new cap is a maximum deduction of ten thousand dollars.

State Incentives

Each state offers a specific incentive for buying a new house. These are most often in the form of programs for first-time homebuyers and will most likely help you subsidize the down payment on your mortgage. In addition to statewide offers, some states also have targeted funds or special programs aimed at certain geographic or metropolitan areas in the state, so be sure to visit your state’s housing agency website to see if there is additional help available to you.

Tax Credit for Mortgage Credit Certificate Holders

This credit is to help people in lower-income brackets buy a home. Since it’s a tax credit, it’s beneficial because it lowers the overall amount of taxes you owe. In order to qualify for this tax credit, you need to have a state-issued Mortgage Credit Certificate. The amount varies based on financial need and the price of the home. You can claim this mortgage interest credit even if you take the standard deduction, whereas a home mortgage interest deduction can only be taken if you itemize your deductions instead of taking the standard deduction. For example, Pima County offers 20% back! Say you paid $1,000 in interest, you would get a credit back of $2,000!

Tax Credit for Home Improvements

There are certain improvements you can make to your new home that qualify for the Residential Renewable Energy Tax Credit. If you install solar panels or other sources of solar energy, you could qualify for this credit on your tax return.

Penalty-Free IRA Payouts

If you have an IRA or other pre-tax retirement savings accounts, you could withdraw money from those accounts to help you pay for your first house. Typically there are fees for early withdrawals (before the age of 60), but if you are buying your first house, you can deduct up to $10,000 from your traditional IRA without penalty. If you’re married and your spouse also has a traditional IRA, they can also withdraw $10,000 for the same home purchase. Additionally, if you have a Roth IRA, you could withdraw contributions you’ve made without penalties, regardless of your age. If you’ve had your account for at least five years, the withdrawal would also be tax-free. Finally, if you are withdrawing from your retirement accounts in order to purchase a home, you should consider the amount of time it will take to recoup those funds so that you do not negatively impact your future retirement income.

All potential tax benefits should be verified with a professionally licensed tax advisor if you have questions about these or other tax benefits for first-time homebuyers, contact your tax advisor.

If you’d like a referral for a tax advisor or have questions about anything related to the home-buying process

 

How To Find The Right Real Estate Agent For You

Sometimes the most difficult part of buying a home is simply knowing where to start. That’s why it’s crucial to have a team of professionals guiding you every step of the way. Your real estate agent and mortgage lender should be educated, informed, and willing to find the ideal long-term solution that meets your wants and needs.

So, where do you begin? Should you get a loan? Talk with an agent? Let’s break it down.

Start with a Lender

The first step toward owning the home of your dreams is knowing exactly what you can afford. This is why you should meet with a lender before doing anything else. Having a good idea of what homes are within your budget will save you time, and possibly money, in the end.

Not to mention, having an approval letter from a lender can increase your bargaining and buying power when it comes time to make an offer, especially in bigger cities and booming markets.

Do Your Research

If your lender is local, they’ll most likely have a list of recommended real estate agents in your area. The Polder Group only works with all the top agents in Arizona and can give you the best recommendation for your needs.

When searching, it’s important to know the difference between a real estate agent and a Realtor. (That’s right— there’s a difference.) You’ve most likely heard these two terms used interchangeably, but there are actually distinctive requirements for each role.

A real estate agent is a professional who has obtained a real estate license to assist in the buying and selling of properties. In some cases, agents will have a specific focus, either listing or buying.

A Realtor, on the other hand, is a real estate agent who is also an active member of the National Association of Realtors (NAR).  Agents within this organization are required to adhere to an extensive Code of Ethics, which can be an attractive quality to buyers who want to know the agent they’re working with has their best interest in mind.

Interview Your Agents

Once you’ve found a few agents that meet your basic standards, it’s a good idea to interview them. This is your opportunity to learn more about the agent’s style, personality, and willingness to work with you.

You’ll want to hit on these topics while interviewing potential agents:

How long have you been in the business? A young agent could have more time to focus on your transaction, but most real estate agents learn as they go. A seasoned agent will have experience more speedbumps and will know how to avoid them.

 

What is your intended strategy to buy/sell my house? As a buyer, you need to know how willing your agent is to spend time searching for a home that meets your needs. As the seller, it wouldn’t hurt to know ahead of time what their average listing price to sales price ratio is. Does their selling strategy support your financial needs, and if not, do you need to reconsider?

Can you provide a list of references? Any agent worth their salt will have a long list of references willing to speak on behalf of them.

How much do you charge? Most real estate agent fees are negotiable. According to The Balance, agents will typically charge from 1% to 6% to represent one side of a transaction, either the seller or the buyer. A listing agent might charge 3.5% for herself and another 3.5% for the buyer’s agent, for a total of 7%. Percentages will vary. Keep in mind, a top agent might charge more for their services.

Trust Yourself

At the end of the day, you should go with an agent that you trust and know will help you in any way possible. But don’t forget to:

  • Review your contract
  • Double-check any references
  • Take time to consider all options

Ready to begin the journey to homeownership? Contact The Polder Group Today and let us help you get started on the best foot possible

USING RENTAL INCOME TO QUALIFY FOR A MORTGAGE

One of the key factors in your mortgage approval while buying a home is your debt-to-income ratio (DTI). Aside from your job, there are other sources of income that could impact your DTI. One that you may not have considered yet is the potential for rental income from property you already own, or even from the home you are buying. Is that even possible? Yes! There are a few different scenarios where this could work for you.

 

The answers to these questions may vary depending on what kind of financing you use. So, we’ll focus on conventional financing.

The home I’m buying is an investment property. Can I use rental income to offset the mortgage payment?

Purchasing a home specifically to rent out is a common scenario. How is the rental income calculated, and how much of it can be used toward your DTI?

Your mortgage advisor will order an appraisal of the home, including an appraiser’s opinion of market rent. We will then use 75% of the appraiser’s opinion of rent toward the qualifying income for your new property.

For example, if the appraiser’s opinion of market rent for the home is $2,000 per month, your lender would use $1,500 per month toward your qualifying income. But why not use the full $2,000? The remaining 25% that is not being used is to account for periods of vacancy and the costs of maintenance on the home.

The home I’m buying is two or more units. I’ll be renting out the unit(s) that I’m not living in. Can I use the rental income from the other unit(s)?

This is another common scenario. You’ll be occupying a portion of the dwelling yourself, so the loan is treated as an “owner-occupied” transaction. But you can still use potential rental income toward your qualifying income.

Your mortgage advisor will order an appraisal, and you can count 75% of the appraiser’s opinion of market rent toward your qualifying income, for the unit(s) you will not be occupying yourself. The appraisal will be specifically for a 2-4 unit property and will break out the rental value per unit, so you won’t have to get a mathematics degree to figure out how much rental income can be used.

The home I’m interested in buying for myself has a small additional living space; can I use the rental income from that toward qualifying?

Accessory Dwelling Units (ADU), also known as “mother-in-law apartments,” “studio above the garage,” “basement apartments,” “granny flats,” and many other terms, are increasingly common. These are a secondary smaller dwelling adjacent to the main home on one lot.

It’s common to advertise the additional unit as a source of additional revenue for someone to rent out while they live in the main home. While this may be possible (check with the city for local zoning restrictions), potential rental payments from an ADU cannot be used as a source of rental income to help you qualify for a larger home loan.

 

I’m buying a new home to use as my primary residence, and I plan on converting my current residence into a rental— can I use the rental income from my current residence toward qualifying?

Yes, you can! Your mortgage advisor will need you to provide a copy of an executed lease agreement and the security deposit check or first month’s rent check. In some cases, you will be able to use 75% of the lease amount toward your qualifying income.

I own an investment property already— can I use the rental income from that property toward qualifying for a home loan?

Your mortgage advisor will ask you for your most recent tax returns to use in calculating how much rental income we can use from that property. This is not a set percentage, and won’t be based on a current lease agreement. So, you will need to work directly with your mortgage advisor to find out how much money can be used toward qualifying in your specific scenario.

I own an investment property that I purchased in the middle of last year. My tax returns don’t show an accurate reflection of the income I would’ve made if I’d owned the full year. Is that going to impact how much rental income can be used toward qualifying for a home loan?

If your rental property was acquired during or after the most recent tax filing year or was out of service for an extended period of time, it is possible to use more income than what is reported on your tax returns.

Work directly with your mortgage advisor to explain your specific scenario. We can help you determine how much income can be used toward qualifying. You should prepare to provide documentation, such as a settlement statement to prove when the home was acquired, a current lease agreement to show what it’s being rented for, and/or documentation to explain why the rental property was out of service for a specific amount of time.

These are just a few of the questions we have seen about rental income and qualifying for a home loan. Our experienced team of Home Loan Experts are ready to answer any additional questions you may have. 520-495-0222.

Benefits of a VA Loan

Did you know that if you are a Veteran, you can qualify for a VA Loan? A VA Loan is a mortgage loan guaranteed by the U.S. Department of Veterans Affairs and was created to make housing affordable for eligible U.S. veterans and members of the military.

VA home loans are available to veterans, reservists, active-duty military personnel, and surviving spouses of veterans with 100% entitlement. Eligible veterans may be able to buy a home with no down payment, refinance up to 100% of the home’s value and pay no private mortgage insurance.

These loans carry a number of benefits (such as no down payment) that make them far more appealing than conventional loans in most cases for those who qualify.

Benefits of a VA Loan

The biggest benefit of a VA loan, for many borrowers, is that there is no need for a down payment. There aren’t many loan types that don’t require a down payment, and VA is one of them. There is no need to pay Private Mortgage Insurance (PMI) or arrange for a “piggyback” mortgage to cover your down payment.

Another significant benefit of a VA home loan is the competitive interest rate. Many times with a lower down payment, the interest rate will increase. But VA loans don’t have that problem!

What Can You Do With a VA Loan?

  • Specifically, a VA home loan can help veterans:
  • Buy a home or residential condominium
  • Build a home
  • Repair, alter or improve a home
  • Refinance an existing home loan
  • Buy and improve a manufactured home lot
  • Add energy-efficient improvements to a home
  • Purchase and improve a home simultaneously with energy-efficient improvements
  • Refinance an existing VA loan to reduce the interest rate

VA Loan Limits for 2019

If you want to purchase a home, condominium or manufactured home, the VA can guarantee up to the conforming loan limit of the total loan – with additional benefits such as no down payment and no private mortgage insurance (PMI). Keep in mind, your VA loan may have a funding fee depending on which benefits you qualify for.

VA Refi

If you are considering refinancing an existing loan, VA offers you two options. You can either refinance to reduce your current interest rate. This is also known as a “streamline loan” or “Interest Rate Reduction Refinancing Loan (IRRRL).”

Veterans also have the option to take equity out (a “cash-out” loan). You can obtain a VA cash-out loan for up to 100 percent of your home’s value.

VA Jumbo 

Veterans can use a Jumbo VA loan to purchase or refinance when the loan amount exceeds the conventional loan limits. Jumbo VA loans require a down payment. The amount of the down payment is determined using a calculation that factors in the county loan limits for the area the home is in, and the portion of the amount exceeding that loan limit which the VA will guarantee.

Our expert mortgage advisors can explain the details on how much of a down payment would be based on your specific scenario. Typically, the amount of down payment required on a VA Jumbo loan will be significantly lower than what’s required on a conventional jumbo loan. VA Jumbo loans also do not require mortgage insurance, regardless of the down payment amount, whereas conventional loans with down payments less than 20% always require mortgage insurance.

Do You Qualify?

Reach out to us on The Polder Group at Summit Funding. We are here to help.

Mortgage Process Paperwork

At The Polder Group, we find that borrowers often comment about the amount of paperwork mandated for mortgage loan applications. Many buyers are told that the process was much less complicated fifteen or twenty years ago.

There are two main reasons for the change: government guidelines, and the fact that banks do not want to be in the real estate business.

Turning Problems into Solutions

During the run-up to the housing crisis, many people “qualified” for mortgages they could never payback. This led to millions of families losing their homes, and something the government wants to make sure won’t ever happen again.

As a result of that foreclosure crisis, banks were forced to take on the responsibility of liquidating millions of foreclosed homes and negotiating millions of short sales. Just like the government, they don’t want more foreclosures. The combination of those factors spurred the banks to tighten up their lending practices.

Consider this scenario: If you loan your friend $20 to cover dinner, you expect them to eventually pay you back. There’s no paperwork, and you know they’re good for the money. On the other hand, loaning a friend $5,000 to buy a car is something entirely different. It’s not quite the same easy transaction as a bar tab.

Now imagine you have to loan your friend $500,000 to buy a home! You can see why all lenders, including PG at Summit Funding, want to make sure the property is valued correctly, the seller is the legal owner, and the buyers earn what they say they earn.

Paperwork You’ll Need

What kind of paperwork will you expect to see throughout the process? Things usually start with the loan application. Underwriting your loan requires documents and signatures, and you may be required to produce, in hard copy or electronically:

Tax Returns

Pay Stubs

W-2s (or other proof of income)

Bank Statements (and other assets)

Credit History

Gift Letters

Photo ID

Renting History

When your loan closes, you’ll also be asked to sign the loan documents, and vouch that you have received the loan and title documents.

The good news is that stricter paperwork means lenders, feel more comfortable offering low mortgage interest rates. People who bought homes fifteen or twenty years ago experienced a simpler mortgage application process but also paid a higher interest rate. The average 30-year fixed-rate mortgage was 8.12 percent in the 1990s and 6.29 percent in the 2000s.

Important Documents to Save

The busyness of life can quickly cause things in our lives to pile up— especially when it comes to mail, statements, and other important documentation. Although it may be tempting to just throw all of this clutter out, there are important mortgage documents you should hold on to, rather than toss out.

Mortgage Statements

A mortgage statement is a document prepared by your mortgage holder. It’s then provided to you with the current status of your loan. You’ll receive these on a monthly basis after you close your loan. You’ll want to hold on to these statements for the life of the loan, at the very least.

Deed

Your deed is the document you need to prove you have a claim to your property. It’s recommended that you keep this document for as long as you own your home. Even though most municipalities keep online land records with a virtual deed, you should still hold on to your personal paper copy in case you need to quickly prove ownership of your home.

Purchase Contract & Seller Disclosures

A real estate purchase contract is a binding agreement between two parties for the transfer of a home or other property. Equally important is the seller disclosure, which is a set of documents completed by the seller of the home that lists any known issues with the property during the time of ownership.

Both of these documents provide the new owner with written evidence of the home’s condition in case a problem is discovered that was not originally disclosed by the seller. Keep these documents for as long as you own your home.

Home Warranty

In the unfortunate event that you need to replace or repair a portion of your house, the home warranty will include all the information you need. This form can be thought of as a written record of protection. Keep this document for as long as you own your home.

Final Settlement Statement

After closing a buyer (and seller) will receive a copy of their final settlement statement. It’s a good idea to keep this document since it lists out the distribution of all the fees and who paid for what, as well as confirms the official settlement date.

 

Do you still have questions about getting a mortgage? Contact The Polder Group at Summit Funding To Learn More.

DO CREDIT PULLS LOWER MY SCORE?

It’s a common misconception among borrowers that multiple credit pulls will drop their credit score. However, the three big credit bureaus (Experian, TransUnion, and Equifax) state it plainly: a borrower’s score will not drop when a mortgage lender pulls their credit more than once in a two-week period. So, why is this the case?

Not all credit checks are weighted equally. A credit card application carries more weight on credit than a mortgage loan. Credit card debts have a tendency to increase over time, make for larger risk which lowers credit. Mortgage debt, by contrast, eventually pays down to $0, so mortgage loan checks don’t have as much weight on overall credit score.

Soft Inquiries

Soft credit inquiries usually happen when a person who is not a potential lender, looks at someone’s credit score. This happens when you check your own credit score, an employer looks at your credit for a background check, or a lender pre-approves you for a credit card or loan offers. However, there may be instances where your lender will need to do a soft inquiry at the end of your loan transaction. (Ask your lender for more information about this.)

These credit checks can be done without permission and are not customer driven so they will not affect the credit score.

Hard Inquiries

A hard credit inquiry is when a financial institution, such as a lender or credit card company checks a person’s credit while deciding whether or not to extend an offer of credit. They most often take place when a person is making a large financial decision such as applying for a mortgage, loan, or credit card.

Typically, a person must authorize the third party to do this, so you should always be aware of any record of hard inquiry on your credit report. Hard inquiries can lower a credit score and can remain on the credit report for two years. But with time, the damage to the credit score decreases or disappears altogether.

A hard inquiry will happen when you apply for:

A mortgage

Credit cards

Auto loans

Student loans

Business loans

If you’re going through the home buying process, but still shopping around for the right lender for you, avoid hard inquiries at all costs. You’ll want your credit to be as high as possible when you decide on your lender, and credit inquiries make up 10% of your credit score.

It’s also important to sort out your mortgage shopping within a 14-day timeframe. If the inquiries are properly managed, the credit bureaus will acknowledge the first credit pull but will ignore each following check.

Another Credit Myth

Credit pulls aren’t the only misconception when it comes to how your credit score impacts your home loan. Some borrowers assume they won’t qualify for a home loan if they don’t have an outstanding score. Although your score is a factor in the approval process, there are loan options specifically for homebuyers with a lower credit score.

The truth is this, you might have more loan options than you think. Each person’s financial situation is different, so it’s important to speak with a Mortgage Advisor about your specific needs. However, The Polder Group at Summit Funding has multiple resources that can help get you started on your journey toward homeownership.

Let’s start with the minimum FICO credit score needed for our low credit score loans:

FHA Loan: 580

USDA Loan*: 600

VA Loan: 580

Government-backed loans remove the risk of default off of the mortgage company because the government insures or guarantees the loan, which in turn allows the minimum credit score to be lower.

Now, what about your down payment? Chances are, if you’re working toward paying off debt, you don’t want to front the traditional down payment amount. Thankfully, loan options that require a lower credit score usually require a lower down payment as well.

FHA Loan: minimum 3.5% down payment required

USDA Loan*: 100% financing

VA Loan: 100% financing

The opportunity to buy a home, despite a low credit score, is a dream come true for many homebuyers. At TPG, our Mortgage Advisors are here to make this dream a reality.

Contact us today to learn more.

Benefits Of Selling During The Holiday

Each year, the holiday season seems to arrive quicker and quicker. Now that we’re officially in October, it’s time to start thinking about what the holiday market looks like.

Are you considering selling your home soon? There’s no denying that spring is one of the best times to sell your home, but there are also benefits to selling during an off-peak season. Let’s break down the benefits of selling in the last few months of the year and look at tips to get your home off the market faster.

The Benefits

Shopping, and baking, and houseguests… oh my. As busy as your holiday season can be, it may be worth it to take a year off from decking the halls to sell your home.

There’s less competition is cooler months. A large reason for seller success in the springtime is due to the warming temperatures and longer days. Both of these benefits actually create a very competitive market, so sellers listing in the cooler months will find fewer homes to compete with.

Buyers are more serious. In the spring and summer, buyers tend to shop without a clear plan to purchase because they know their options are plentiful. During the holidays, on the other hand, buyers are less likely to waste their already limited time browsing multiple homes.

Transfers are looking for housing. As the end of the year draws near, employees who need to transfer to a new city, or even a new state, will be home shopping through the holidays. These homebuyers don’t have time to wait until the spring, so time is on your side in this scenario.

Your neighborhood is decorated. With Thanksgiving just a few weeks away and Christmas shortly after that, homes in your neighborhood will be adorned with plenty of pumpkins, and later, Christmas lights or decorations. As buyers drive by, they will have the chance to experience what their own holiday festivities will look like in the upcoming year. You can also make your home festive on the inside with warm scents and colors that are welcoming to visitors.

Holiday Selling Tips

Are you ready to take the leap and sell your home? Selling in the last few months of the year can be tricky, but we have a few tips to make the process easier.

 Get your finances in order. No matter what time of the year you sell, you’ll need a trusted lender to guide you through the home loan process.

Hire a reliable real estate agent. Your agent will be just as busy, if not busier than you are as they juggle the holidays on top of selling your home. Ask around, read online reviews, or ask your Mortgage Advisor to recommend an agent that will take the time you need to sell your home. We know all the top agents in Tucson.

Seek out, motivated buyers. Request that your Realtor find buyers or investors on specific deadlines to buy if you’re also on a deadline to sell. College students and military personnel are two more recommended groups that sellers target during October through December.

It might also be beneficial to price your home to sell, right off the bat. Rather than slowly dropping the price, list your home at a reasonable price from the get-go.

Decorate… to an extent. Curb appeal should be a top priority of buyers during winter months. This means clearing out dead plants, raking leaves, and keeping gutters cleaned out. On top of yard maintenance, minimal outdoor decorations are welcome. For example, single-colored string lights and door wreaths. Large blow-up displays or overwhelming lights could distract buyers from the house itself.

This rule goes for inside the home as well. By all means, embrace the holiday spirit and decorate, but don’t clutter shelves and walls past the point of enjoyment for potential buyers. Their main focus should still be on the home, rather than your festive display.

Have photos taken of your home? When the cold winds start blowing, no one wants to begin their home shopping journey outside. Listing your home with professional photos will allow buyers to get a good idea of what your home features before ever stepping inside.

Could this holiday season be the time you decide to sell? Contact The Polder Group at Summit Funding Your Real Estate Experts to learn more.