Advantage Lending Corp BLOG

Recently FHA announced that it will be increasing the programs down payment requirements, increasing the Up Front Mortgage Insurance Premiums (UDMIP) it charges and lowering the amount of seller credits that a borrower may receive to offset their closing costs.  With all these changes many potential home buyers will no longer be able to qualify for a FHA loan which is the second lowest down payment program available, which currently is only a 3.5% down payment.  After April 5th this year some borrowers will have to come up with as much as 10% down for this very same loan. 

Although FHA is changing, Rural Housing loans backed by the USDA are not!  Rural Housing still allows borrowers to buy a home without a down payment, and will allow 6% seller concessions to pay for the buyers closing costs.  Many times borrowers buying a home with a Rural Housing loan get into the home with little to no money out of pocket.  So for now, the zero down home loan is here to stay!

The long awaited 2010 GFE is here and is now required to be issued on all residential mortgage transactions beginning January 1^st 2010.  The newly revamped Good Faith Estimate is supposed to clearly show potential borrowers what their costs and rate would be.  Two new additional items that are now included in the 2010 GFE are the transfer taxes and owners title policy.  Although it is normal and customary for the seller of the property to pay both these items, it is now required to be disclosed to the buyer at the time of the mortgage application. 

The new good faith estimate does a good job letting the mortgage applicants know what the lump sum of all possible costs may be for a specific transaction, but it fails in other critical areas.  First, nowhere in the 2010 GFE does it let the borrower know how much money they will need to bring in to closing.  Next it does not show the borrower what their combined mortgage payment will be (Principal + interest + taxes + insurance).  Lastly there isn’t even a place for the borrower to sign the 2010 GFE. 

The new 2010 GFE is also now binding.  What this means to the consumer is that your rate or costs will not increase at all from this initial GFE.  What this means to the lender is that they have gotten to be razor sharp with knowing every cost (80% of them third party fees) or they will end up paying them on behalf of the borrower  / seller if they are above what was stated in the initial 2010 GFE.  Basically this means to a lender “Pad it or Pay it”. 

May 5th 2009 HUD approved Advantage Lending Corp as a FHA approved lender.  “Since the time of the approval we have successfully changed our ratio of conventional loans to primarily FHA insured loans” says President Daniel Litvin.  “FHA has allowed Advantage Lending Corp to be a very competitive and growing player in the origination of government loans.  The FHA 203K Streamline or Baby K as it is sometimes referred to is a specialty niche section of the FHA loan that allows borrowers to borrow up to $35,000 to repair the home in addition to the monies needed for the purchase of the property.  This has been a huge boost to our number of closed loans in this economy since it seems that so many homes need some sort of renovation due to the condition they were left in”.  Many lenders do not offer this product, and some that do are not very well versed in it or know how to explain it properly as we do. 

Since the company’s inception in July 2007 Advantage Lending Corp has been growing and heading in the right direction.  HUD’s approval of Advantage Lending Corp as a FHA lender proves this. 

As our company grows, so does our need to have the most diverse product portfolio available.  Recently Advantage Lending Corp gained approval as an authorized  lender for the Department of Veterans Affairs more commonly known as VA.  This will now allow our company to service our military veterans purchase and finance needs.  As a qualifying veteran, you can purchase a home with no down payment, and if you already own a home you can refinance (even cash out) to 100% of your homes current value.  One additional benefit is the Interest Rate Reduction Refinance Loan or IRRRL.  This loan allows existing veterans the ability to do a rate and term (no cash out) refinance with out credit qualifying or the need for a current appraisal.  We are very excited to be able to offer this very specialized type of financing and servicing the needs of the United States Military. 

Daniel Litvin

President

Lately lenders are not the only ones tightening their belts when it comes to underwriting requirements, PMI companies are pulling in the slack as well.  It use to be that PMI was a given, or just something that a loan automatically got when a borrower had less than 20% equity, but those days are gone.  PMI companies are now underwriting their policies so tightly that even though the bank may approve your loan the PMI company may not, making it impossible for your transaction to close. 

There are six major PMI companies out there. 

1. MGIC
2. RADIAN
3. GENWORTH
4. RMIC
5. UGI
6. PMI

Each one has similar guide lines to follow but some are more stringent than others.  for example, UGI and PMI will not offer PMI on second homes.  Genworth no longer underwrites PMI for any loans that are originated by brokers.  The loans that are being turned down are not your bruised credit, not sure if we’re going to get paid loans.  No sir, they won’t Evin underwrite those kind of loans any more.  The loans that are getting denied PMI coverage are the top of the credit food chain, the good, no, the great borrowers.  Simply having an 800 credit score putting down 5-10% of your own money and having a low Debit to Income ratio may no longer be enough. 

2008 was one of the toughest, most volatile years our financial systems have ever experienced – but we don’t have to tell you that. In some way or another, everyone has felt the effects of this global financial crisis. So, let’s skip the painful details. Let’s avoid as well the impossible task of trying to predict the end of it, and let’s try something different. Let’s spend the first month of 2009 looking at solutions to the mortgage and real estate markets – actual viable solutions that you can use right now to help turn things around. If you’re a homeowner or looking to be one in 2009, keep reading. You’ll be glad that you did.

Face Your Fears
As human beings, we crave certainty, consistency, something we can really count on or believe in. It’s comforting, it’s consoling, and it’s completely natural. But it’s also extremely fragile, and always the first casualty of turmoil, especially in the financial markets.

In 2008, one could argue that the biggest market movers were not just the credit crunch or a pending global recession. It was fear, a sweeping lack of confidence that suddenly gripped everyone, from major financial companies and individual investors, to consumers and governments alike. The result was not only the unprecedented financial turmoil that we’re not going to discuss in this article, but also an amazing opportunity for those who aren’t afraid to face that fear as the real estate and mortgage markets begin to turn – and they will turn. Perhaps they already have.

For instance, mortgage rates are currently the lowest they’ve been in a generation, and home prices have dropped significantly in many areas. For new buyers and homeowners looking to save on monthly payments, this is great news. Homes you might not have been able to afford just 2 or 3 years ago are now well within your reach at a rate that makes much more sense than renting, in many instances. What’s more, the Federal Reserve, the Treasury Department, and even the Federal Deposit Insurance Corporation (FDIC) are using all of their tools to address the ailing economy, which many experts believe could lead to even lower rates in the near future.

For homeowners with enough equity, this means now may be the time to lock in a low rate. At the time of the writing of this article, the Mortgage Bankers Association reported that mortgage applications jumped 2.9 percent in one week in December, 77% of which were refinances with an average interest rate of 5.18% for a 30-year fixed and an average rate of 4.93% for a 15-year fixed mortgage.

If the experts are wrong and rates increase, you made a great deal. If the experts are right and rates continue to drop, just ask your mortgage professional about a “no closing cost loan”. This type of loan allows borrowers to lock in today’s low rate and to refinance again if the rates fall further. Just make sure there’s no prepayment penalty if you’re not going to stay in the home long enough to recoup your investment.

The Waiting Game
Trying to time the bottom of any market is like trying to catch a falling knife with your bare hands. You’re going to lose every time. Instead, consider how long you’re going to be in the home before making any home financing decision. If the home you’re looking to purchase is below market value with rates are near historical lows and you’re planning to stay in your home for more than five years, you owe it to yourself to at least consider your options before it’s too late.

While it may not be the right time to try and flip a home for a quick profit, if you’re planning on a longer-term investment, it makes a lot of sense to take advantage of this rare combination of discounted prices and lower rates – especially for first-time home buyers.

Did you know that a $7,500 tax credit is now available to first-time home buyers? This special tax incentive was created as part of the Housing and Economic Recovery Act of 2008 to help stimulate the housing market, and yet very few people seem to know about it. This program provides qualified first-time home buyers (anyone who hasn’t owned a home in the last 3 years) a tax credit of up to $7,500 on either the 2008 or 2009 return. Add this to the list, and waiting any longer to jump in on today’s buyers’ market just doesn’t make a lot of sense.

There are, of course, income limits and other qualifying factors involved in this special tax incentive, but you can always call one of the mortgage professionals at Advantage Lending Corp and run the numbers. See what makes sense for your individual goals and needs.

Sure, home prices could drop even further, but they could just as easily begin to increase again in the next few months – no one knows for sure. But for those looking to refinance, playing the waiting game could prevent you from moving forward if home prices do continue to show weakness and your home fails to appraise. More importantly, you need to review your credit now, and make sure there are no issues that will force you to miss out on a great deal.

With increasing default rates for mortgage and other consumer debt, great credit management is rewarded with the lowest rates available and higher rates can be expected for others. Take a look at your credit report. Experts state that errors can be found in over 80% of all credit reports which can impact your FICO scores. In many cases, the information can be easily corrected but the time to discover an error is not within 30 days of an expected closing. Be prepared, act early, and seek advice and direction where warranted.

It’s important to note that mortgage rates are based on the performance of mortgage-backed securities (MBS) and rates can change several times throughout the course of a single day. In fact, MBSs have been so volatile recently that movements in the markets that used to take weeks or months now take only days or even hours to make.

The best path to follow is to complete a loan application with an experienced mortgage professional you trust, someone who has experience and access to up-to-the-minute MBS data. Agree on a target rate beforehand and authorize him or her to lock it in when he or she deems appropriate. If rates reach that level or appear to be going higher, he or she can lock it for you without having to track you down first to get your permission.

Remember, buying a home is the largest, most important investment most Americans will ever make. But it is also unlike any other investment available today. After all, you can’t live in a mutual fund, and you can’t raise your children in a money market account. Buying a home is still the best long-term investment you can make today – the turmoil of 2008 doesn’t change that fact. And by buying or refinancing now you could be getting in near the very bottom of the market.

Winning Strategies
The two biggest challenges of buying a new home in today’s market are the same as they’ve always been: qualifying for the mortgage and coming up with the down payment.

Well, that’s not exactly true. From about 2000 to 2007, increasing home prices made financing a home very easy for just about anyone. Even for borrowers with a low credit score, mortgages were available with no down payment, and some programs didn’t require any documentation at all.

Those days are gone. The exotic mortgage products that fueled the last real estate boom no longer exist, for the most part. Also missing from the mix are “sub-prime” loans. Until stability is seen in the housing markets, don’t expect these to return.

Today’s mortgage market looks more like it did ten years ago, before the rise and fall of exotic mortgages and the sub-prime collapse. That means you will have to have a good credit score, be able to fully document your income, and, with the exception of some government loan programs, you will likely need to put some money down.

The good news is that there are options available to help you overcome these challenges and take advantage of today’s buyers’ market. Yes, credit standards have tightened a bit, but with a solid credit score, home financing is absolutely available and affordable to everyone. Documentation will definitely be required, and expect that you will have to provide your last two years’ tax returns, W-2s, paystubs for the most recent 30 days, and three months bank statements.

The following is  details on one mortgage program that will help you succeed in today’s market.

FHA Mortgages
Mortgages from the Federal Housing Administration (FHA) have increased dramatically over the last two or three years – and there’s a good reason. FHA loans are fully backed by the government and offer consumers who qualify the best of both worlds: low interest rates and low down payment requirements.

FHA Benefits:

• Increased loan limits throughout the country
• As little as 3.5% down payment requirement
• Not typically credit-score driven
• Sellers may finance up to 6% of buyer’s costs to close
• Allows many down-payment assistance programs, including gifts
• $7,500 tax credit is available for FHA loans for qualifying buyers

FHA Streamline Refinances
FHA has provided streamline refinances on insured mortgages for almost 30 years. The “streamline” refers only to the amount of documentation and underwriting that needs to be performed by the lender. If you have a qualifying FHA loan, a streamline refinance can help you lower your rate and requires:

• No income verification
• No bank account verification
• No minimum credit score
• No appraisal in most cases

USDA Mortgages
Yes, the US Department of Agriculture is the same governmental agency that certifies the quality of the beef you buy. But it also has a mortgage program that supplies $16 billion in funding to Americans in what they call “rural” areas.

But don’t be fooled by the “rural” part. You don’t have to live on a farm or in the country to utilize this amazingly affordable program. In fact, there are a surprising number of qualifying areas in both large and small states and cities, so this is definitely an option that’s worth investigating if you’re looking to buy a home – and here’s why:

• No down payment is required
• No monthly mortgage insurance
• Seller can pay 100% of the buyer’s reasonable closing costs and prepaid expenses
• No reserves are required

While the mortgage market continues to generate a lot of chatter in both the media and in Washington, interest rates are currently near or at all-time lows. If you or anyone you know are looking to take advantage of these low rates, let me explain why now is the time to act.

Lately there has been talk about the 4.5% 30-year fixed rate mortgage. Will it become a reality though? Right now, no one really knows. Homeowners who could benefit from a lower interest rate need to know that even if 4.5% becomes a reality from Washington’s actions, it would only be available to home buyers, not homeowners seeking to better their rate. If you need to refinance, you may be left out.

You also may have heard about Hope for Homeowners, which is a program approved by legislators to help distressed homeowners. However, regardless of its best intentions, the program has not been embraced by investors, and it is not available to many it could help.

The bottom line is, the Fed announced recently that they are going to buy up to $600 billion in mortgage-backed securities. This has already driven rates to historical lows. In January, the SEC is meeting and information may be released that could have a significant bearing on rates, potentially for the worse.

Waiting to obtain the best rate is only possible for those with loan applications already in process. Interest rates are incredibly volatile and fluctuations that used to take months are now occurring in just days or even hours. If you don’t have an application in process, you could lose out.

We are already seeing lender backlog due to low interest rates. In 2003, with rates at these same low levels, we saw some lenders taking up to 90 days to close a loan.

Home loan rates are currently in the mid- to low-5% range. Home values are currently at 2003-2004 levels, coming down significantly from their high point. If you–or friends and family members you know–are contemplating seeking financing, now is the time to act.

With a first time home buyer tax credit of up to $7,500 and low or no money down programs available for many people today, now is a great time to buy a home.

Freddie Mac has issued it’s newly revised lending guidelines early this November stating that all borrowers will have to have a 45% or less total debit to income ratio.  Further more that all borrowers will have to have a 620 or higher credit score.  The deadline for all deals currently in process will be December 19Th and will have to be closed and funded by this date.  Loans insured by Fannie Mae, Rural Housing, FHA, and VA have not adopted these guidelines as of yet. 

http://activerain.com/gr8r8  

So many banks are requiring more money down, better credit scores and previous home ownership experience.  In this environment many people are wondering “Can I still get a home with nothing down and little to no money out of pocket for closing costs?”  The answer is yes you can! 

Daniel Litvin of Advantage Lending Corp has been a long time advocate of the Rural Housing loan and is the premiere specialist of zero down home loan financing in Michigan.  “I can get some one into a house with no money down and usually $300 out of pocket just to pay for the appraisal”  says Daniel Litvin. 

Advantage Lending Corp, Michigan’s premiere zero down home loan mortgage broker has moved its operation to Rochester MI.  The move came as the result of needing more room to grow as its niche lending of providing no money down home loans has exploded.  We now have a much larger facility to house more employees, processors, and general office space. 

Our new location is 415 S Main St. Suite B  Rochester, MI 48307.  Our new phone number is            248-608-9120. 

We are extremely exicted about our expansion and are currently looking to hire eight new loan officers, and a loan processor.  Please contact Daniel Litvin to apply.