FHA Mortgage Expert - Tri-State Area - New Jersey/PA/Delaware

 

ADVERTISING – Those ads that seem too good to be true.

 

 

I have been in the mortgage business for 17 + years.  I have seen so much advertising when it came to mortgage companies and how many of the ads were misleading or just flat out lies.  Those companies advertising low rates that didn't happen.  This easily went on from 1992 to 2002. I always wondered why this wasn't regulated as strongly as it should have been.  I found out that some of these companies had 100's of complaints, yet they still operated for those 10 years. I think this is misleading and I call it Shark Advertising.  It's dangerously misleading, yet it worked for many companies, at the expense of the borrower.

 

 

 

If anyone has noticed, we haven't see as much advertising from mortgage companies or large banks in the last 18 months or so. I am now seeing a few mortgage companies advertise on the radio and as of lately, a few advertise on TV, especially ESPN. The ads are misleading because they appear to make you believe that it's being backed by the government.  (Miriam Bernstein made this comment below that explains this part..  - Comment # 30 -)Has anyone seen a few ads on tv that look like a news update, a spokesperson telling you about government funded programs or that the government is helping in sponsoring these programs. Yet if you read the fine print, it's a mortgage company, disguising this ad very carefully, spinning it as thought the government is putting this out to the public??

I am even seeing this more and more in such places as Facebook. Below are a few that I am seeing on Facebook now.

 

 

 

 

 

Here are some ads found on facebook and comcast.net. As you can see, these mortgage companies and or companies that are lead generators, make you think that the government is behind this.  Obama hasn't asked homeowners to refinance. The first one on the left, upper left, is from a company called Lower My Bills.  They sell leads to other mortgage companies, after they have gathered your information online. Then you have like 4 to 10 lenders call you, sometimes daily.

 

 

 

 

 

 

 

 

People on Facebook that give basic information – eye catchers to pull you in.

 

Here is a loan officer on Facebook that placed this on his Wall, to capture the attention of others. You just need to be aware of what you read. Sure, this can happen, but there are some unknowns not mentioned. And sometimes the loan officer will raise that unknown, so you can't obtain that great rate and get the next best thing.  Keeping in mind, it's not always about the Best Rate.  How service?  Integrity?  Educating the borrower? And so much more....  Please read : I want the same deal that my friend receivd...  &  Mortgage payment vs Interest Rate

 

 

 

 

Web Sites that are deceiving !!!!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As I explained in this blog post, deceptive web sites, here is a great example above. Doesn't this look like it could come from the USDA themselves?  But it isn't. It acts as a lead catcher, catching your info to call you and or sell you about USDA loans or any other type of mortgage loan. No Cost Obligation is mentioned on the site. - We always love to hear about free things, but are they free overall?

 

 

 

 

 

Here is a FAVORITE of mine !!!

 

 

 

 

 

 

 

 

 

 

 

I am sure many of you have seen this one on tv, FreeCreditReport.com. The commercial announces a free credit report. But at the very end, it says that you need to enroll in their Triple Advantage program.

A free credit report?  They have tons of commercials &  commercials cost money to display on TV. They also have like 3 to 4 different kinds of commercials and.  producing commercials cost money.

 

Well, I feel like an investigative reporter for the news. I filled out my info online, trying to see what I get. It says that it takes 3 to 5 days for me to obtain these credit reports from the 3 credit agencies. (giving my credit card #) And then there is a button that says, to obtain your 3 reports now, click here. Imagine that, it's asking for $24.95 now. See the 2nd paragraph on the left, highlighted in yellow?  It talks about the new Federal Law and I am wondering if that is what they are sending me now, because that is free. But from what I know, you have to go to annual credit report to get the free reports.

All 6 commericals - Free Credit Report.com

 

 

 

Conclusion :   Just be very careful of what you read and what says free, when it might not be free.  I always have said, someone has to pay for it from some where. Is it you?  Is it me who pays for it?

Overall....No matter what, consumers will fall for some of these ads.  It's called false hope.  Especially when desperate, you just want to believe that someone can help you.. or, that it's cheaper with them than the others.  thanks

 

 

• Shopping for mortgages - The Public Image of Advertising that is misleading !!!! - Part 1 of 2

• Shopping for mortgages - The Lending Trees of the World (lead generators) - Part 2 of 2

 

 

Advertisements - Is the grass greener on the other side?

 

 

 

                    

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_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

 

 

Copyright © 2009 by Jeff Belonger of Infinity Home Mortgage Company, Inc

 

HUD released a new mortgagee letter on September 18th, 2009, mortgagee letter 2009-28, that is titled Appraiser Independence. HUD wanted to clarify a few things in regards to FHA loans and adopt some of the guidelines from the HVCC guidelines for conventional loans. HVCC - Home Valuation Code of Conduct

 

FYI – I read a blog from Friday that was title, FHA is adopting HVCC as of January 1^st.

 

This is misleading and I wanted to clarify this. HUD is adopting some of the rules & guidelines set within the HVCC. In the new FHA mortgagee letter, it specifically stated this :

"FHA does not require the use of AMCs or other third party organizations for appraisal ordering, but recognizes that some lenders use AMCs and/or other third party organizations to help ensure appraiser independence."  

This came directly from page 2 of mortgagee letter 2009-28.

 

 

 

What are some of the key changes or things to keep in mind from the mortgagee letters mentioned? -

• Mortgage Brokers & commissioned lender staff - Hence the mortgagee letter, Appraiser Independence, "FHA approved lenders are now prohibited from accepting appraisals prepared by FHA roster appraisals who are selected, retained or compensated in any manner by a mortgage broker or any member of a lender's staff who is compensated on a commission basis tied to the successful completion of a loan." - directly from mortgagee letter 2009-28 - My opinion, many lenders will just order FHA appraisals through AMC companies. (appraisal management companies) - This will ensure any confusion and or finger pointing.
  

• Appraiser Engagement - An appraiser should or must have knowledge of the area or type of properties that they are appraising. The lender should not assume such knowledge and it's also the lenders responsibility to ensure accuracy and quality, along with that FHA appraiser. This is on page 4.

• Prevention of Improper Influences on Appraisers - This has been addressed in mortgagee letter 1996-26. HUD wanted to reaffirm that no member of the lender's staff or anyone commissioned that oversees the completion of that loan, be allowed to have such communications that would have any impact of the valuation, to include having the ability to order or manage the appraisal assignment.  The DE underwriter is allowed to request clarifications and discuss with the appraiser components of that appraisal that influence its quality. Bottom of page 2.  

• Appraisal Portability - FHA appraisals were always allowed to be transferred to another lender, when the FHA case number was assigned.. This new mortgagee letter, mortgagee letter 2009-29, is clarifying that it is allowed, but adding some new rules if the first lender is delaying the transfer of the original appraisal. It just says that a second appraisal can be ordered under certain circumstances, which is listed on page 1 of mortgagee letter 2009-29.

• Appraisal Validity Periods - Mentioned in mortgagee letter 2009-30, it states that the appraisal is only valid for 4 months from the date of the appraisal, no matter if it is an existing property, proposed property, and even under construction.
  

 

 

 

 

My opinion : I know how many realtors are in an uproar about the HVCC issues and how they are affecting the conventional loans. Even though it's not mandatory that FHA loans are done the same way, HUD is just implementing safe guards. I think many of the HVCC issues stem from brokers that have to rely on the banking institution that they are passing the loan to and those larger banks that are just so busy, that they just pass it to a management company that might not be organized. As a mid-sized banker, I have not seen any problems from neither side, even if I have ordered my appraisals through the AMC company. Yes, we started to implement this already on the FHA loans, in fear of some issues. But it has not slowed down the process of my loans one bit. Just food for thought.

On another note, most things mentioned in mortgagee letter 2009-28, are just repeated from prior mortgagee letters from over 12-14 years ago. If any new changes, it was the appraisal validity period and the appraisal portablity, which were mentioned in 2 new mortgagee letters, mortgagee letters 2009-29 & 2009-30.

 

All guidelines/rules go into effect for all FHA case numbers assigned on or after January 01, 2010.

 

 

 

DISCLOSURE :  I am not a certified appraiser.  The information that I obtained came directly from HUD's new mortgagee letter. Being the first out there with any new changes, is not always the best, especially when it's misleading or not correct.

 

 

 

                    

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Experience & Knowledge at its BEST !!!

 

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger of Infinity Home Mortgage Company, Inc

 

 

FHA loans seem to be one of the main choice of mortgages in the last 12 months or so. There are many reasons for this. And FHA loans will definitely be the main choice for anyone buying a condo now. More on that later.. What I hate hearing is that FHA mortgages have taken the spot of the subprime loans. This is not true by any part of the imagination. This statement is from those that are inexperienced in both the mortgage and the real estate industries. The realization has been that 30% of the subprime mortgages from 2002 to 2006, should have been FHA mortgages, not subprime.

 

To compound this, so many said just because you had a conventional loan, you had the better loan. This was not always true when putting 3% or even 5% down. In most cases, you were told this, because that particular lender was not FHA approved. Now?  Even with 10% down and credit scores less than 680, FHA loans in many cases, will be the best mortgage for you. You want to see a shocking example?  

And sellers, don't listen to your agents on how bad FHA loans are.

 

 

 

The example below is based on a $300,000 purchase price with 10% down. One reason why conventional rates are a little higher in this scenario as in FHA rates is because Fannie Mae and Freddie Mac have added penalties per se. If you are putting down less than 30% and your credit score is less than 720, certain fee penalties would apply to you, which would increase your rate and or points.  The FICO (credit score) that I am going to use is 659 and I will still show in this example that FHA loans are cheaper, even with 10% down.  

 

 

 

***And keep in mind, some lenders have penalties on FHA mortgages with credit scores under 660. And many lenders can't do FHA loans under 620. Just beware of those that promise you a mortgage with scores under 620. It can happen, but they aren't as easy as advertised. Please read - Credit scores/FICO scores - I need a 700 credit score? ***

 

 

 

 

 

 

 

 

 

 

Disclaimer :  These rates are examples of today's pricing, and the spread shown in the example is real with the same profit margin for both sides. To compare this scenario apples to apples, there are no lender fees and with a half of a point. The conventional rate also includes the penalty for the 659 credit score, hence why there is a half of a point charge, because of the large pricing penalty for the credit score.

 

 

Some of you might be saying that you will be adding $4,725.00 onto your principal balance if you did the FHA mortgage because of the FHA one-time mortgage insurance premium. This is correct and I don't want to confuse you with more numbers and charts. But here is a quick breakdown. If you kept your house for 5 years, you would have saved $12,646.20 in payments in 5 years. Subtract the Upfront Mortgage Insurance premium from the monies saved in 5 years and you have saved a difference of $7,921.21!!!   And one other thing that is very small, but still makes a difference. You will be subtracting a few more dollars per month from your principal because your interest rate is lower, which would offset the interest that you would write off on the 6.25% rate. Just something else to remember, but consult your tax consultant or CPA.

 

 

 

Lastly, keep in mind, depending on the area that you are buying or refinancing in, that you might not be able to get a conventional loan unless you have 10% down or a 90% LTV. The reason being is the mortgage insurance companies and how they view certain geographical areas and declining market areas.

Which leads me to the issues about Condos. Not only are there restrictions from the MI companies (Mortgage Insurance companies) in regards to what area you live in, but that many lenders won't go above 80% LTV's now on conventional mortgages. On a FHA mortgage for condos, you can still go up to 96.5%, depending on the state, but you still have to make sure that the condo association has been FHA approved. There has been a major change on FHA condo spot approvals.  Please read : FHA condo changes for spot approvals -

 

 

 

 

For more FHA loans vs conventional loans comparisons :

• FHA loans vs Conventional loans - A true numbers comparison with 5% down -  12-20-08 -Using a 710 credit score
  

• FHA loans vs Conventional loans - A real comparison with 5% down - 11-15-08 - Using a 659 credit score
  

• FHA Loans vs Conventional Loans - 20% down - A Rude Reality Check -  04-03-09  - Would you believe that FHA loans could be cheaper even with 20% down?  Come see why and how.

• FHA Loans vs Conventional Loans - 5% - 4 comparisons that you need to know - 05-02-09 -Comparing a FHA loan against 3 types of conventional loans with different types of monthly mortgage insurance. Guess who won while still using a 679 credit score.....

• FHA loans vs Conventional loans - Knowing the true comparisons - 07-10-09  - A great comparison with a 679 credit score and 5% down.  This example will still show that even with a better than average credit score, that FHA loans are still better in many cases.

• FHA loans vs Conventional loans - Things you need to know with 10% down, especially in regards to Condos - 09-19-09 -
  

 

 

 

 

 

                    

                                                                                               FOLLOW ME ON FACEBOOK

 

 

- FHA Loans - USDA Loans - VA Loans -

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- Conventional Loans - 203 k loans -

- Mortgages -

 

Experience & Knowledge at its BEST !!!

 

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger of Infinity Home Mortgage Company, Inc

 

There has been a lot of buzz about extending the First Time Homebuyers Tax Credit. Why?  For two reasons...

1. Because the $8,000 Tax Credit expires on November 30th, 2009.
2. And because many have stated that these tax credits have stimulated the housing market and our economy.

 

We have heard mention of recession, great depression, inflation, economic default, hard times, etc, etc. Has the First Time Homebuyers Tax Credit helped the economy and the housing market? Yes, in some cases. But people, it's another gov't band aide.

 

 

 

 

In regards to the tax credit, many have argued that it has gotten them more clients that would have never bought. My thought?  Home buying can be an emotional process. It can also lead to misinformation on why one might buy. I am a frim believer that people will buy anyhow. Did it get some off the fence?  Sure it did. Keep in mind, many real estate markets are different from each other.

But let me pose a question to everyone out there. Where do you think this money is coming from? Who do you think will be paying for this? Is our society a welfare mentality, just printing money that we don't have?  Should we run our Country like a business or as a soup kitchen?  Brian Brady added to my thought process with this eye opening post. Suspend the practice of flesh devouring : let the tax credit expire.

 

 

 

 

You can’t have your CAKE and EAT it too..

 

What inspired me to write this post, was after reading the comments on Loreena Yeo's blog, Would Congress please extend the $8,000 tax credit.

People, let's be honest with ourselves. Are we also scared if the tax credit is not extended, that it could also hurt our commissions?  Just think about this. But what caught my attention were many of the comments on Loreena's post that said, "Please extend the tax credit", yet most of them didn't state why. And if they did, they said because it's helping the housing market. Based on whose facts?  Yes, this can be debated.

But what about this... many of these same realtors wanting to extend the tax credit, were the same ones that said one of two things... 

  1. You should have skin in the game (by Lenn Harley) or

  2. knocked the seller funded downpayment program, such as Nehemiah or AmeriDream

Shouldn't these same arguments be applied to the tax credit then, for those that are able to use the tax credit at closing?  Let me explain further....

 

 

 

So how do we get out of this mess and and have an Economic Recovery, which the real estate market is a big part of.

How about starting with unemployment.  Loreena argued that buying houses creates 100's of jobs, specific products would be bought.  I agree and disagree. Because you will also lose jobs in the process.

But let me get to my point. Shouldn't we find ways to a recovery that wouldn't cost the tax payers money?  I also read in many of the comments that the tax credit helps increase multiple offers in many areas, driving up the price of the home. Will many of you agree with this?

So prices have increased. Is this a ghost price?  A real price?  An inflationary price? If we accept this, why not bring back the seller funded down payment programs then? Known as the DPA programs.

 

 

 

 

Conclusion :  The argument on Capital Hill and amongst many realtors and loan officers has been that you need skin in the game. And then the next wave would argue against the DPA program, because it could inflate the price of the home. But we have established that the tax credit does the same. But wait, it is costing us tax payers money for the tax credit, yet the DPA program doesn't cost the tax payer any monies.

Overall, aren't we a powerful country?  With some of the smartest individuals, yet we are way in over our heads. What happened to common sense?  Are we just mere puppets of a gov't that says they know best for us?  Is our society a welfare mentality, just printing money that we don't have?  I thought I found some common sense solutions that I wrote about in June 2009. Call to Action - We must fix the real estate market ourselves.  Keeping in mind, that all of this is of my opinion, but with careful thinking and not of that of my pockets.

 

 

 

For other view points on this topic, please read :

• The Press is On : By Lane Bailey -  I think this is a very good read and we should pay attention to this. He talks about stopping the tax credit.

• Would Congress please extend the $8,000 tax credit - By Loreena Yeo - Even though I am opposite of Loreena, read the comments. One needs to understand Economics, supply & demand, but also that hand outs have crippled us in the past.
  

• Suspend the practice of flesh devouring : Let the first time homebuyer tax credit expire. By Brian Brady - A great twist and creative view point of our children's future.
  

• We are going 35 mph, and about to hit the wall. - By Alan May - His complaint is that many people are rushing to take advantage of the tax credit. And that lenders with their delays will hurt buyers chances. Hey, I love helping first time homebuyers, but the tax credit has been around since 2008. If buyers waited last minute, do we keep extending, yet costing us millions of dollars in the future. What about inflation?  Inflation vs deflation - Is it criminal?
  

• Why devouring flesh is morally wrong. By Brian Brady - Brian extended his argument and included a great video. Maybe this will open some eyes?
  

• Are first time hombuyer mortgage programs ending soon? - By Steve Kappre - Steve talks about how some states were able to get you the $8,000 tax credit at closing. But keep this in mind, less than 50% of all states has this type of program.
  

• Extending the First Time Home Buyer Tax Credit Now?.... What's the rush? - By Lenn Harely -

  I think this is an excellent article, because it's shorter than mine and too the point. Yet it brings up some easy to understand issues.

• Call to Action - We must fix the real estate market ourselves.  - By Jeff Belonger - I wrote this a few months ago. I think some of the solutions mentioned by myself and in the comments, seem to be common sense, and in many cases, not cost the tax payers money.

• For god's sake, let's move on - By Paul Henderson - Paul offers a few more opinions...
  

 

 

 

 

                    

                                                                                               FOLLOW ME ON FACEBOOK

 

 

- FHA Loans - USDA Loans - VA Loans -

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- Conventional Loans - 203 k loans -

- Mortgages -

 

Experience & Knowledge at its BEST !!!

 

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger of Infinity Home Mortgage Company, Inc

 

Yes, credit guidelines have gotten tougher, but NO, you don’t need a 700 credit score.

 

 

Here we go again, with realtors making things sound semi easy. There was a question on Trulia last week, and the buyer said that they heard that you needed credit scores of 700.  And what do you do if you have scores from 614 to 620.

 

 

 

 

Here was part of the answer from a realtor answering the question.

"You can actually purchase a home with a credit score in the 500'sdepending on job history, etc. I have several lenders who can assist you."

Sorry, but this answer sounds easy, and it's not that easy if you are under 620. Yes, there are investors out there that are allowing credit scores below 620, even down to 535. But the guidelines are much stricter. You really can't exceed the income ratios, your job history needs to be good, and your credit still needs to be decent and conform to the FHA guidelines.

Keep this in mind, even though it could be done, at what cost to you?  Does your loan officer explain this to you and break this down?  The rates and or add ons for lower credit scores are much higher also. And if loan officers and or realtors say, don't worry, you can refinance later, then WORRY !!!

 

 

 

Let's quickly review your refinance options.

• You can only do a rate and term within the first 12 months after you purchase your home. If you want to pull any equity out, on a normal refinance, you need 12 months or more.

• Let's say rates are now 5.50% with zero points, with a 620 credit score. You currently have a 585 credit score and because of this, your current rate is 6.25% and it's costing you 1 1/2 points. (yes, this is the type of penalty for that kind of credit score) You really can't refinance for about 6 months, and you are working on your credit scores to improve them. Well, in 6 months, rates increase to 6.00% with zero points. You are basically stuck with that higher rate that you originally received.

• Keep in mind, it still costs money to refinance, even if you do a FHA streamline refinance. Yes, there are no cost mortgages, but your rate is much higher.
  

 

 

 

 

What to do with credit scores if they are below 620 :

This is where a true mortgage professional comes into play. I just had a VA client referred to me by Allison Stewart, who was told on Friday that their scores dropped to 617, as a mid score. I spoke to them on Saturday and explained to them that I can work on their credit and get that up 3 points. Well, on Monday, the previous loan officer called them and told them the same thing.  How come she didn't bring this up on Friday?  Maybe she is new and not sure?  Not good with credit? In any case, here are some basics.

• You want to keep your balances below 35% of your credit limit or lower. The higher the percentage, the more it could affect your credit scores. By paying down your balances, this could raise your scores.
• Don't pay off your collection accounts if you are applying for a mortgage. You would then want to pay these at closing. By paying off early, it could actually lower your credit scores. It does depend on how old these collections are.
  
• Lates over 12 months old don't hurt as much. Sometimes you can talk to your creditor to remove a questionable late mark.

 

 

 

Summary :

Most of what is mentioned is for FHA mortgages. If you are doing a conventional mortgage, you do need a 620 or higher, and even this costs a lot more than a FHA loan at 620. Here is a comparison with even 20% down.  FHA loans vs Conventional loans with 20% down - A rude reality.  Besides, you even have MI company issues, that could still deny the loan with a 620 credit score.

Overall, you might want to get into a home as soon as possible. You might have a loan officer that wants to help and can with the lower score, but don't forget, will it cost you more in the long run. You want to deal with a loan officer that will break this down and show you both sides, both comparisons. And be careful of broken promises, because not everyone has integrity and or is truly out for your best interest. This might sound negative, but this is a fact, from examples of past clients that have dealt with broken promises.

 

 

 

                    

                                                                                               FOLLOW ME ON FACEBOOK

 

 

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages - 

- Conventional Loans - 203 k loans -

- Mortgages -

 

Experience & Knowledge at its BEST !!!

 

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger of Infinity Home Mortgage Company, Inc