Mortgage Rates & Trends: Mortgage Blog

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  1. Coming Soon: DU Refi Plus

    By Robert Hyder on February 27, 2009

    by Robert Hyder

    Fannie Mae has scheduled the release of their newest version of Desktop Underwriter (version 7.1) for on or after the weekend of April 4, 2009. As part of this new release, DU Refi Plus is the enhanced automated underwriting program that will allow DU underwriting flexibilities to include expanded eligibility criteria and reduced documentation requirements for borrowers who are refinancing existing Fannie Mae loans. DU Refi Plus will also feature updated appraisal requirements on purchase transactions.

    The enhanced flexibility available within DU Refi Plus for the refinancing of existing Fannie Mae loans will allow lenders increased capability so their borrowers can take full advantage of the low interest rates now being offered in this ever-demanding economy. An important footnote is that these improvements within DU Refi Plus will be applied only to the implementation of the underwriting of limited cash-out refinances, meaning the cash back to the borrower at closing cannot exceed 2% of the loan size, or $2,000, whichever is less. This includes the prohibition of subordinate financing being paid off, as well closing fees, prepaid costs and points being paid with the proceeds of the new mortgage.

    Other restrictions within DU Refi Plus include:

    • No new subordinate financing

    • No adjustable-rate mortgages (ARMs) with fixed terms less than 5 years

    • No interest-only mortgages

    • No balloon mortgages

    • No HomeStyle Renovation mortgages

    • No MyCommunityMortgage (MCM) mortgages

    The following expanded eligibility guidelines will be applied to limited cash-out refinances:

    • If a loan-to-value (LTV) is 80% or less, the minimum credit score of 580 will not be required

    • If an ARM has an LTV of 80% or less, the minimum credit score of 680 will not be required

    • Properties (2-unit primary residences with high-balance loans, 3- to 4-unit primary residences, second homes on co-ops and investment properties. NOTE: subordinate financing is not allowed for second home co-ops) limited to 75% LTV/CLTV/HCLTV will now be eligible up to 80% LTV/CLTV/HCLTV

    As for reduced employment documentation, DU Refi Plus will only require one current pay stub and a verbal verification of employment (VOE) for employees who receive a salary, bonus and overtime. For commissioned and self-employed borrowers, only one federal income tax return is required. DU Refi Plus will also waive the requirement for an appraisal or exterior-only inspections for certain loans.

    When DU Version 7.1 recognizes the file as being eligible for DU Refi Plus, the following message will be issued: “This loan casefile was underwritten according to the DU Refi Plus expanded eligibility guidelines offered on certain limited cash-out refinance loan casefiles where the borrower’s existing loan is identified by DU as a Fannie Mae loan. This loan casefile must be delivered with Special Feature Code 147.”

    Category: What's new at Total Mortgage

  2. Why an FHA Mortgage? Why Not an FHA Mortgage?

    By Robert Hyder on February 27, 2009

    by Robert Hyder

    There are a variety of reasons why securing an FHA mortgage loan is more advantageous than getting a conventional mortgage loan. Why not benefit from the protection that only FHA provides? FHA mortgages have been around since 1934, when Congress decisively concluded that the housing industry was in urgent need of support. Since 1934, FHA has weathered every recession, standing the test of time with strength and durability. By supporting tens of millions of Americans to either buy new homes or avoid foreclosure, an FHA mortgage makes perfect sense for many reasons.

    Advantages of an FHA mortgage are:

    • Low Down Payment Requirement - Conventional loans require a down payment of 10 to 20% of a homes loan-to-value. FHA loans require a minimal 3.5% down payment. This flexibility eliminates the necessity for a sizeable cash investment.

    • Low Interest Rates - The competitive rates offered by FHA mortgages are often times lower than conventional loans because they are insured by the federal government.

    • Refinancing Made Easy - FHA offers their FHA Streamline Refinance program to considerably reduce the requirements of underwriting documentation. When compared to the underwriting requirements of a conventional loan, an FHA Streamline Refinance simply makes sense.

    • Easy to Qualify - Because the federal government is backing the mortgage, lenders are more agreeable to approve loans with less-stringent guidelines.

    • Imperfect Credit - Credit problems, including bankruptcy, are oftentimes not an issue. FHA possesses reduced credit score requirements.

    Based on the five basic reasons outlined above, FHA is a wise choice for American homeowners. Because everyone’s financial needs differ, there are several FHA programs from which to choose.

    • First Time Homebuyers - With low down payment requirements, first-time homebuyers can contribute as little as 3.5%. In addition, closing costs can be incorporated into the loan size. If a first-time homebuyer would rather have a lower rate, that can be done too by paying some closing costs upfront.

    • FHA Streamline Refinance - Since the early 1980s, refinancing an existing FHA mortgage is very straightforward. The underwriting process is quicker and easier because less documentation is required than a conventional loan. As long as the existing mortgage being refinanced is FHA insured, the monthly principal and interest payments are being reduced, all mortgage payments are current and there is no cash back at closing, an FHA Streamline Refinance is the answer.

    • Fixer-Upper – A little work never hurt. FHA will allow homeowners to incorporate any and all of the repair costs in one simple loan.

    • FHA Reverse Mortgage – If your mortgage is paid in full, or you have minimal payments remaining, why not have your home start to pay you back? Homeowners who have reached the age of 62 can begin leveraging the equity in their home to supplement their income.

    • FHA Energy-Efficient Mortgages (EEMs) - FHA has been insuring homes for borrowers who want to make energy-saving improvements to their homes since 1992. Without having to qualify for any additional funds, borrowers can incorporate the cost of the energy-saving improvements directly into the FHA mortgage. FHA recognizes that reducing energy expenses in homes will allow homeowners to pay a higher monthly mortgage payment to cover the excess loan amount that does not need to be qualified for.

    • Manufactured Homes & Mobile Homes - Several guideline requirements must be met, however, FHA will gladly provide insurance for both manufactured homes and mobile homes.

    The advantages of FHA are time-tested and established. Click here for current FHA mortgage limits. So instead of asking why an FHA mortgage, instead ask, why not an FHA mortgage?

    Category: FHA

  3. Tax Credit: Do I Qualify?

    By Robert Hyder on February 27, 2009

    by Robert Hyder

    If you’ve been considering purchasing your first home, there probably hasn’t been a better time than now, and there may not be again for some time. Many first-time homebuyers are now eligible to receive up to $8,000 in a tax credit, a considerable amount, courtesy of President Obama’s American Recovery and Reinvestment Act that was signed into law last Tuesday.

    In a recent news release, IRS Commissioner Doug Shulman said, “For first-time homebuyers this year, this special feature can put money in their pockets right now rather than waiting another year to claim the tax credit … This important change gives qualifying homebuyers cash they do not have to pay back.”

    The change Shulman is referring to is the tax credit of $7,500 that was already available to many homeowners under the Bush Administration’s Housing and Economic Recovery Act of 2008. Under Bush’s plan, the tax credit was essentially an interest-free loan, repayable over a 15-year period. Under Obama’s restructured tax credit plan, the tax credit is increased by $500, and this tax credit does not have to be repaid.

    Along with the increased tax credit comes a list of requirements for qualifying for the tax credit. These tax credit stipulations include:

    • Available to first-time homebuyers only, which includes buyers who have not owned a primary residence, or have not owned an interest in a primary residence, within three years of the purchase

    • The home must be a primary residence, which must be purchased and closed between January 1, 2009 and November 30, 2009

    • Primary residences in which the tax credit is equal to 10% of the homes value, up to a maximum of $8,000 (Married couples filing separately are eligible for a maximum of $4,000 each)

    • First-time homebuyers must live in the primary residence for at least three years (If the homeowner moves, sells or leaves the primary residence for any other reason within the first three years, the tax credit must be repaid)

    • Single, first-time homebuyers with an income up to $75,000, or couples filing jointly with an adjusted gross income up to $150,000, qualify for the full $8,000

    • The tax credit does not have to be repaid, unless the homeowner moves, sells or leaves the primary residence for any other reason

    Category: Stimulus

  4. Total Mortgage Blog

    1 By admin on February 25, 2009

    Welcome to the Total Mortgage Blog.

    Total Mortgage provides some of the lowest mortgage rates for new purchase and refinance transactions. We offer fixed rate mortgages, adjustable rate mortgages (ARMs), FHA Home Loans, FHA Refinances, along with some of the best Jumbo mortgage rates in the country. Check our current mortgage rates and get free rate quotes for all different types of mortgage loans, and use our mortgage calculators, as well. Total Mortgage is a direct mortgage lender and a mortgage broker, equipped with in-house underwriting that enables us with quick approval flexibility. Because of our large volume of business, we can service virtually all real estate needs for mortgages, including home purchases for first time buyers, refinancing, home equity or debt consolidation.

    Category: General
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