Tag Archives: mortgage

The Lowdown on Low-down-payments Loans

Posted on August 31, 2013 | Leave a comment

WASHINGTON — Mortgage down payments as low as 3 percent — and even 100 percent loans — are returning. That may be good news for buyers who haven’t accumulated a lot of savings.

But there are trade-offs: Mortgage payments will be higher because more money is being borrowed and because private mortgage insurance is required for down payments less than 20 percent.

With that in mind, buyers may want to consider renting for a longer time and saving more for a larger down payment to make sure they can truly afford a home.

If after careful consideration, buyers settle on a low down payment, it’s best to go in with eyes wide open. It’s important to know the details of the loan program and their possible ramifications on finances. The interest rate on a loan with 5 percent down will typically be slightly higher (one-eighth to one-quarter of a percent) than one with 10 or 20 percent down because the loan-to-value ratio is higher.

Before the housing bubble burst, many lenders offered borrowers 100 percent financing. Some lenders even allowed buyers to finance 105 percent of the home value.

Disclaimer: for information and entertainment purposes only

Self-Employed Homeowner Gets Better Interest Rate by Waiting

Posted on July 6, 2013 | Leave a comment

Argo was introduced to his clients in the fall of 2012, and they came to him with a specific problem. Due to the changed income classification of the lead borrower at his closely held firm, he was getting declined for financing elsewhere.

Their actual income was clearly more than adequate. But due to changing the compensation plan earlier in the 2012 tax year, many lenders weren’t accepting it.

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After meeting with the borrowers and studying the situation, he understood their income and compensation and how to interpret that to a lender.

Their current rate was almost 6 percent, so their frustration with getting turned down in a 3 percent rate world was understandable.

Their credit scores were fine; the property value was not an issue and considering the increases in San Francisco property prices, this was becoming an ally that would only improve the likelihood for lower interest rates.

Essentially, to be effective and successful for them, he had to push their timing out to a window of perhaps some four or five months away from their initial 2012 consultation.

Argo counseled his clients to wait 3 1/2 months, allowing 2012 to come to an end so they could immediately file their taxes and show the final 2012 income to satisfy the “consistent and ongoing nature” of lending rules for income.

An additional time hurdle taken into account and awaiting them was the IRS’s typical annual slowness in processing Form 4506T.

Disclaimer: For information and entertainment purposes only

High Closing Fees? Maybe Kickbacks are to Blame

Posted on June 6, 2013 | Leave a comment

Advice to homebuyers from CAARE

• Always shop for title insurance and settlement service alternatives to the in-house deals you’re offered.

• Ask your realty agent to help you shop beyond the affiliation network. Agents have a duty to help you get the best deals and best service, and they often know where they are. If you find better prices from unaffiliated vendors, don’t let anybody pressure you to go with the in-house, preferred provider. It’s your legal right to choose.

A settlement between the federal Consumer Financial Protection Bureau and a Texas homebuilder is drawing renewed attention to a controversial issue that was prominent during the years preceding the housing bubble: kickbacks in home real estate transactions.

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Put another way, do you know where your money is really going when you pay thousands of dollars in loan fees and closing charges? Is your realty broker or builder getting an extra piece of the action through side deals with lenders or title agencies — all at your expense through higher charges?

The CFPB’s allegations in its case against Dallas-based Paul Taylor Homes illustrate how these arrangements can work: According to the settlement, the builder created partnerships with two lenders — one a bank, the other a mortgage company. In reality, however, according to the CFPB, “both entities were shams” designed to funnel kickbacks to Taylor for referrals of home purchasers needing mortgages.

Though the partnership entities had names — Stratford Mortgage Services and PTH Mortgage — and appeared to be the funding sources for the loans, they in fact were shells with no separate employees, office space or real substance, the CFPB alleged. They did not advertise their mortgage businesses to the general public, instead servicing only Taylor purchasers.