4 Types Of PMI: Which One Is Right For You?

Thanks to PMI, You Don’t Need 20% Down

For many home buyers, one of the biggest challenges to enjoying homeownership is the downpayment.
Thanks to private mortgage insurance, or PMI, U.S. home buyers have a number of low, or even no downpayment options available to them.
Home buyers often try to avoid PMI because they think it's "bad." But consider this: PMI allows buyers to own a home much sooner, capitalize on home appreciation, and avoid rising rents.
Sure, home buyers can wait to save up 20%, or exhaust their savings, but PMI could be a much better alternative.
Private mortgage insurance is nothing to be afraid of. It's simply an insurance policy issued by a private company that lowers risk for the lender.
In turn, lenders can approve a mortgage at well below the 20% down mark. Thanks to PMI, buyers can own a home sooner.
Click to see today's rates (Jul 13th, 2016)

Choosing Between 4 Types Of PMI

Mortgage insurance typically reduces the upfront cost of the home and spreads it out via slightly higher monthly payments. The type of mortgage insurance will determine the length of time for which the homeowner will make the higher payment.
The four types of mortgage insurance does not include those offered with government-backed loans such as FHA MIP, or "mortgage insurance premium." Rather, these are private mortgage insurance types which are issued with conventional loans, and they come in four varieties:

1. Borrower-paid (BPMI)
2. Lender-paid (LPMI)
3. Single premium
4. Split premium

Each type comes with its own advantages that suit various situations. Choosing the right one can put you in an ideal home buying position.

1. Borrower-paid monthly PMI

Borrower-paid monthly mortgage insurance (BPMI) is the most common type and is often known simply as "PMI." It is the “default” type of PMI, and the payment is tacked onto the regular mortgage payment.
BPMI can be canceled. You pay it until your loan principal drops to 78% of the home’s value. In other words, it drops off when you reach 22% equity in your home.
This percentage is based on the lesser of the original purchase price or current appraised value.
BPMI might be the right choice for a buyer who is unsure how long they will stay in the home or keep the mortgage. There is no upfront cost to this type of PMI, and no waiting period to cancel it via a refinance or lump-sum payment to your principal loan balance.
Click to see today's rates (Jul 13th, 2016)

2. Lender-paid PMI (LPMI)

With LPMI, the lender “pays” your mortgage insurance for you. But they don’t do it for free. Instead, they raise your mortgage rate. A higher rate enables the lender to cover the cost of a lump-sum buyout of your mortgage insurance.
Home buyers who choose lender-paid mortgage insurance might have a lower mortgage payment than if they paid PMI monthly. Having a lower monthly mortgage payment could mean qualifying for more home.
It’s important to note however, that LPMI cannot be canceled. The mortgage insurance is built into the interest rate, and the rate does not go down when the homeowner reaches 22% equity.
So, LPMI might be a good solution for a home buyer planning to stay in the home or keeping the mortgage for five to ten years. It typically takes 11 years to build enough equity to cancel a borrower-paid mortgage insurance policy.

3. Single premium PMI

Single premium PMI allows the homeowner pay the mortgage insurance premium upfront in one lump sum, eliminating the need for a monthly PMI payment.
It’s somewhat like lender-paid mortgage insurance in that there’s a buyout of PMI in the beginning. But instead of receiving the higher rate like with LPMI, the home buyer pays for the buyout in cash, or by financing it into the loan amount.
Single premium PMI results in a lower monthly payment compared to paying PMI monthly, which helps the buyer qualify for more home.
The risk, however, is that you will only keep the mortgage or home for a few years. The single premium is non-refundable.
If rates drop and you refinance in a few years, for instance, you lose that upfront payment, or have a higher loan amount because of it.
Click to see today's rates (Jul 13th, 2016)

4. Split premium PMI

Probably the least common type of private mortgage insurance is split premium mortgage insurance. While uncommon, it is a good option, allowing the homeowner to pay a portion of the insurance in a lump sum at closing.
The remaining amount is then paid in monthly installments. The home buyer gets a sharp discount on their monthly PMI since a portion was paid upfront.
For instance, a home buyer purchases a home for $250,000. He pays 1.0% upfront ($2,500) to the mortgage insurance company. His monthly mortgage insurance drops to $83 per month, from $123. In this case, it would take five years to make back the upfront payment. Split premium PMI might prove useful to someone who has extra cash, but is above the typical 43 percent debt-to-income ratio maximum.
Making a partial upfront payment could help them bring down their monthly payment enough to qualify.
Click to see today's rates (Jul 13th, 2016)

How Much Does PMI Cost?

The costs of PMI can vary from one lender to the next, but is typically based on the costs passed along from the actual insurance companies.
The amount paid for mortgage insurance premiums are based on the following:

• Loan amount
• Terms of the loan
• Loan-to-value ratio
• Type of loan
• Credit score

PMI premiums can range from 0.2% to over 1% of the loan amount per year, paid in monthly installments.
As an example, a $200,000 loan amount at an annual premium of 0.5% would cost $83 per month.
PMI payments are heavily based on credit score. For instance, a buyer with a 640 score will pay more than $300 per month with a 5% down loan at an average home price. The same borrower with a 740 score would pay just over $100 per month.
Home buyers with lower credit scores should consider an FHA loan. Mortgage insurance for FHA loans does not rise due to credit score.

Which Kind Of PMI Is Best?

Because there are substantial benefits to each type of mortgage insurance, home buyers should consider the different options and how they relate to their current situation and long-term goals.
Generally, home buyers who plan to stay in the home and don’t plan to refinance might consider buying out their mortgage insurance via LPMI or a borrower-paid single premium.
However, it’s very difficult to predict the future. The PMI policy that comes with the lowest risk is the standard borrower-paid variety in which you pay a premium each month with your payment.
Most home buyers keep their mortgages less than 7 years, at which point they sell or refinance. And, as home values rise, many buyers refinance out of PMI after just a few years.
Think long-term when considering your mortgage insurance options.

What Are Today’s Rates?

Current mortgage rates are low and it’s an ideal time to buy a home, no matter which type of PMI you choose.
Get a quote for your home mortgage. Quotes are easy to get, take just minutes, and don’t require a social security number to start.
Show Me Today's Rates (Jul 13th, 2016)

Contact The Mortgage Mark with any Questions! 

8 Behaviors That Will Kill Your Mortgage Approval — After You’ve Already Been Approved

67% OF ALL PURCHASE LOANS "APPROVED"

Current mortgage rates are down nearly 100 basis points (1.00%) since September 2013 and have approached their lowest levels of all-time. 

The drop in rates has contributed to a rise in U.S. home sales and has sparked a home refinance boomlet, led by homeowners jumping on new, lower interest rates.

Even better -- it's getting easier to get approved for a mortgage. 

In February, mortgage lenders approved 67% of all purchase loans applications, which is four percentage points higher as compared to last year's average. More than half of all refinances applications went to closing, too.

For many applicants, though, it's not the mortgage approval that's the hard part -- it'skeeping it.

There are plenty of land mines in the mortgage approval process. You'll want to stay clear of them.

Click to see today's rates.

WHEN THINGS GO WRONG WITH YOUR MORTGAGE

Mortgage approvals take time. In a typical home loan market, 45 days is normal time frame.

The time to get an approval, though, can change based on the market environment or how "complicated" a loan might be. For example, when mortgage rates are low and there's a refi boom on-going, closing on a loan take as long as two months. Loans for the 5-10 Properties Program, which require additional paperwork, may delay the process further.

Sometimes, banks just can't work that fast.

Closing times can also be delayed for buyers of short sales and foreclosures. Loans for distressed sales and REO can take 6 months or longer to get to settlement.

Thing is, during that "extra time" it takes to close -- whether it's 3 weeks, 3 months or longer -- your life is subject to unexpected change. When your life changes, your loan can change, too.

For example, if lose your job, become ill, or have your home damaged by storms, your lender can rightfully revoke your mortgage approval -- even if your loan was previously cleared-to-close.

Some life events are beyond your control. You can't control sickness any more than you can control Mother Nature. But some events are within your control.

In the world of mortgages, good behavior does matter.

Click to see today's rates.

SPOTTING YOUR OWN "BAD MORTGAGE BEHAVIORS"

Keeping "good behavior" in mind, here are 8 things you should absolutely not do between your date of application and your date of funding. Any one of them could force a revocation of your mortgage approval.

Ignore these rules at your own peril. 

1. Don't buy a new car or trade-up to a bigger lease
2. Don't quit your job to change industries or start a new company
3. Don't switch from a salaried job to a heavily-commissioned job
4. Don't transfer large sums of money between bank accounts
5. Don't forget to pay your bills -- even the ones in dispute
6. Don't open new credit cards -- even if you're getting 20% off
7. Don't accept a cash gift without filing the proper "gift" paperwork
8. Don't make random, undocumented deposits into your bank account

And that's it.

Now, you may find it 100% impractical to have follow these rules to the letter. I know that.

For example, if your car lease is expiring, you have to do what you have to do. Renew the lease. Before doing it, though, check with your loan officer -- spreading your lease over 60 or 72 months may be better for your debt-to-income (DTI) ratio. 

The same goes for accepting cash gifts from parents. 

There's a right way and a wrong way to accept a cash gift for a purchase and if you do it the "wrong way", your lender may disallow the gift and deny the loan.

These are just 8 of the behaviors which could sabotage your loan. There are more, of course, and your lender will help you identify them. 

GET A COMPLIMENTARY MORTGAGE RATE QUOTE

Today's mortgage rates are low. Demand from home buyers and refinancing households is strong. As a result, the number of days required to close a loan is increasing. This leaves more opportunity for "things to go wrong".

Don't get your mortgage get un-approved. Take steps to protect your approval. Avoid the bad behaviors which can cost you time and money and that great, low rate.

Get a complimentary mortgage rate quote now. Rates are available at no cost and with no obligation to proceed. Your social security number is not required to get started.

Show Me Today's Rates.

Contact The Mortgage Mark with any Questions!!!

www.themortgagemark.com  mark@themortgagemark.com  

Downpayment Gifts: How To Give And Receive A Cash Downpayment Gift For A Home

• MORTGAGE STRATEGY

GIFTS OF DOWNPAYMENT FOR HOME BUYERS

Receiving a cash downpayment gift for the purchase of your next home? You're not alone. Many U.S. home buyers do it.

Gifts for downpayment sometimes come from parents, grandparents, siblings, or children. They sometimes come from spouses, too. 

Mortgage lenders allow cash gifts for downpayment on a huge array of loan programs including FHA loans, VA loans, USDA loans, conventional loans, and jumbo loans, too.

However, if you're getting a cash gift for downpayment, you'll want to make sure that you "receive" your cash gift properly.

There's a specific way to receive money for a downpayment. Should you receive your gift improperly, your lender is likely to reject your home loan application.

It's imperative that you follow the rules of cash-gifting for a home.

Click to see today's rates.

"DOWNPAYMENT GIFTS" ARE COMMON

It's common for today's U.S. buyers to receive cash downpayment gifts. First-time home buyers are most likely to receive a cash gift among all buyer types, but repeat- and move-up buyers receive them, too.

The largest driver for today's gifts of equity is the want of U.S. buyers to make a 20% downpayment.

With a 20% downpayment, home buyers can often qualify for the lowest mortgage rates offered by their bank; and with 20% down, there is no accompanying private mortgage insurance (PMI).

Furthermore, with 20% down, buyers can seek loans backed by Fannie Mae and Freddie Mac which, over thirty years, may offer lower costs than a comparable FHA-backed mortgage.

2015 conforming loan limits cap at $417,000 nationwide except within designated "high-cost areas" where home prices exceed the national average by some multiple.

High-cost areas are determined by the government and include such cities as San Francisco and Los Angeles, California; Washington, D.C. and its surrounding counties (Montgomery, Fairfax and Loudoun); as well as New York City and San Diego.

In high-cost areas, conventional loans are capped at $625,500 for single-family homes, and multi-unit homes (i.e. 2-unit, 3-unit, 4-unit) can range to $1,202,925.

Not everyone receiving a cash gifts want to make a 20% downpayment, though.

Cash gifts are also allowed for low-downpayment mortgages including the FHA purchase mortgage, which requires a 3.5% downpayment; and the Conventional 97 mortgage from Fannie Mae and Freddie Mac which requires just 3% down.

Excess gift monies can be used for furnishing a home; making repairs; or the establishment of an emergency fund.

STEP 1 : DOWNLOAD YOUR "DOWNPAYMENT GIFT LETTER"

When you accept a downpayment gift, remember that there's a right way and a wrong way to do it. For example, you cannot randomly deposit your cash gift into a bank account. Doing so will get your loan denied.

There's a 3-step process when accepting a cash downpayment gift and no matter what your loan type -- Conventional, FHA, VA, or other -- the 3-step process is the same. Follow the rules to the letter.

First, write a gift letter that follows the includes the following information :

• The amount of the gift
• The subject property address
• The relationship of the gifter to the giftee
• A note that the gift is actually a gift and not a loan and will not be repaid

The gift letter should be only as long as needed and should not contain "extra" information. Have all parties sign and date the letter. Set the letter aside -- you'll come back to it in the section below.

STEP 2 : WHAT THE GIVER OF THE GIFT NEEDS TO DO

With your mortgage downpayment gift letter written, you'll want to make sure you don't violate the rules of "taking a gift". In order to do that, make sure to keep an extra-strong paper trail for the money being gifted.

If you are the person who is gifting funds to the buyer, for example, and you sell your personal stock holding as part of the downpayment gift process, you will want to make sure that you document the sale of your stock as well as the transfer of funds from your brokerage account into the account from which you're making the gift.

Do not make the transfer without a proper paper trail.

Next, you'll want to write a check to the home buyer for the exact dollar amountspecified in the gift letter you've written. Photocopy the check. Keep one copy for your records and give one copy to the buyer -- the lender will want to see it as part of the process.

Note that writing a check is will require more steps and will require more effort than simply wiring funds to the buyer. Be okay with these extra steps. It's simpler for a lender to document and track a personal check than it is to track a wire; and it's good to make things simple for the bank.

STEP 3 : WHAT THE RECEIVER OF THE GIFT NEEDS TO DO

Now that the gifter has handed, in the form of a check, a downpayment gift to the buyer, the following steps are required.

First, with the gift check in hand, the buyer should physically walk into a preferred depository bank (e.g.; Wells Fargo, Bank of America, Chase, Huntington) to make the deposit in-person. Do not deposit the check online using an iPhone or Android app; or at an ATM machine.

In addition, into whichever bank account you deposit your gift money, make sure it's the same bank account from which all of your money at closing will be drawn. You do not want to bring money to closing from multiple savings accounts. This, too, can make things difficult on a bank and the goal is to keep things simple.

When you get to your branch, do the following :

1. Deposit the gift funds into a bank account
2. End your transaction
3. Collect a receipt for your deposit

Under no circumstances whatsoever should you "co-mingle" your gift deposit with other monies, nor with other gifts. The amount specified on your teller receipt should matchexactly the dollar amount on the certified downpayment gift letter.

If the amount is off by even a penny, the lender will likely reject your letter and the funds that came with it.

Note that if you are receiving multiple cash gifts for downpayment, you should follow this process for each gift independently. Again, do not co-mingle your gifts. Be guided by your gift letter.

TAX NOTES ON CASH DOWNPAYMENT GIFTS

It should be noted that there may be tax implications for givers of a cash gifts for downpayment, and receivers of them. These are discussion points with your accountant.

And, remember that your lender will not report cash gifts to the IRS; it's not the lenders responsibility to report such things. Your lender will use your gift letter(s) for underwriting only, in an attempt to approve your loan.

Everybody's tax situation is different and personal circumstances are rarely addressed in-full by websites or web resources. Speak to your tax professional prior to making or receiving a cash gift for downpayment.

GET A COMPLIMENTARY MORTGAGE RATE QUOTE

Mortgage rates are near their lowest point in history. Homes are affordable and lenders have simplified the process of getting approved for a low- and no-downpayment mortgages.

Get a complimentary mortgage rate quote today. Rates are available online at no cost, with no obligation to proceed, and with no social security number required to get started.

Click to open today's rates.

Contact The Mortgage Mark with Any Questions!!   www.themortgagemark.com   mark@themortgagemark.com 

VA Streamline Refinance: About The VA IRRRL Mortgage Program & VA Mortgage Rates

VA Streamline Refinance: About The VA IRRRL Mortgage Program & VA Mortgage Rates (Updated For 2015)

• VA MORTGAGES

Update (February 12, 2015) : This VA Streamline Refinance information has been revised to include new information. Loan guidelines change constantly. If you get your VA Streamline Refinance information somewhere else on the internet, make sure it's current and accurate.

WHAT IS A VA STREAMLINE REFINANCE/VA LOAN?

VA loans are a special loan program designed specifically for veterans, issued by approved lenders and guaranteed by the federal government.

The VA Streamline Refinance is the most common loan type within the VA loan umbrella, and is officially known as an Interest Rate Reduction Refinance Loan (IRRRL) by the government.

The program is also known as a VA-to-VA Loan.

The VA loan’s definitive characteristic is that veterans with qualifying credit and income can purchase a home with no money down, which makes buying a home extremely attractive for those who have served in the military. In addition, VA loans also offer feature flexible requirements, no private mortgage insurance (PMI), and extremely competitive mortgage rates.

In order to qualify for a VA Loan, a veteran must have served 181 days during peacetime, 90 days during war time, or 6 years in the Reserves or National Guard. You may also qualify as the spouse of a service member who was killed in the line of duty.

Generally speaking, almost all active duty and/or honorably discharged service members are eligible for a VA purchase or streamline refinance loan.

Click to see today's rates

THE VA STREAMLINE REFINANCE (IRRRL) LOAN

The VA Streamline Refinance is also known as the Interest Rate Reduction Refinance Loan (IRRRL). The IRRRL allows you to refinance your current mortgage interest rate to a lower rate than you are currently paying.

The Streamline loan is extremely popular because of its ease of use: once you have already been approved for your initial VA purchase loan, it is relatively simple to lower your interest rate and experience considerable savings. In most cases, a loan officer or lender with expertise in VA loans should be able to complete the loan within a month’s time in most cases.

Click to see today's rates.

VA loan closing costs can be rolled into the cost of the loan, allowing veterans to refinance with no out-of-pocket expenses. Sometimes it is also possible for the lender to take the brunt of the cost in exchange for a higher interest rate on your loan.

In order to qualify for a VA Streamline, you must meet the following requirements:

• Be current on your mortgage with no more than one 30-day late payment within the past year.
• Your new monthly payment for the IRRRL must also be lower than the previous loan’s monthly payment. (The only time this condition does not apply is if you refinance an ARM to a fixed rate mortgage.)
• You must not receive any cash from the IRRRL.
• You must certify that you previously occupied the property.
• You must have previously used your VA Loan eligibility on the property you intend to refinance. (You may see this referred to as a VA to VA refinance.)

Click to see today's rates

THE VA CASH-OUT REFINANCE LOAN

A secondary VA refinance loan type is the VA Cash-Out refinance loan. The Cash-Out refinance allows borrowers to refinance their conventional or VA loan into a lower rate while also taking cash from the home’s value.

Functionally, the VA Cash-Out refinance loan replaces your existing mortgage instead of functioning like a home equity loan, which it is often confused for. A qualified borrower can refinance up to 100 percent of their home’s value in some cases.

The Cash-Out refinance loan is a loan type available in any form – whether USDA, FHA, or conventional. Veterans generally choose to use the VA Cash-Out over other loan types because the period to pay off the loan is extended, and also, generally comes with a lower interest rate.

Just like the VA Streamline Refinance loan, the home must be used as a principal dwelling by the owner. There is no set period of time that you must have owned your home, however, you must have sufficient equity to qualify for the loan.

Click to see today's rates

VA STREAMLINE REFINANCE FREQUENTLY ASKED QUESTIONS

Do I need my Certificate of Eligibility (COE) for a Streamline Refinance?

Since you used your Certificate of Eligibility to get your first VA loan, it isn’t needed to qualify for a streamline refinance of your existing VA mortgage.

Does the VA control mortgage interest rates for VA loan types?

No, they do not. Although the VA offers an easy, straightforward process for veterans, VA mortgage rates are set by the banks who buy and sell mortgages. Click to see today's rates

Do I have to use my current lender to refinance my VA loan?

No, you do not. In fact, it is encouraged that you shop around between various lenders, as each will offer various interest rates for you VA loan. All that matters is that the lender is VA-approved. Because so many lenders out there finance VA loans, it makes sense to shop around. You can use this form to Click to see today's rates.

Do I have to go through the credit check and appraisal process again when refinancing?

There is no requirement from the VA for another credit check or appraisal process, because you have already been approved for a loan. However, many lenders require a credit check and appraisal to guarantee that you are still financially stable enough to pay for your mortgage and also, that the house’s market value is still higher than their maximum loan amount.

Do I have to be eligible for a better interest rate to qualify for a Streamline Refinance?

Not if you meet certain conditions. If you are going from a fixed mortgage to another fixed mortgage, the VA requires that your IRRRL be of a lower interest rate, but if you are moving from an adjustable rate mortgage (ARM) to a fixed rate mortgage, the VA will allow you to refinance to a higher interest rate. Click to see today's rates

Can I receive cash-in-hand at my VA Streamline Refinance closing?

Yes, you may receive up to $6,000 cash-in-hand at your IRRRL closing. The cash, however, must be used for energy-efficiency improvements, and must be a reimbursement for improvements made within 90 days prior to closing. Some VA borrowers will receive a cash disbursement of "old" escrow funds, too.

What is the maximum allowable VA IRRRL loan size?

There is no maximum loan size limit for a VA loan. However, a VA Streamline Refinance will be limited to the existing loan balance plus any accrued late fees and late charges, plus typical loan costs and the cost of any energy efficiency improvements.

Can I change the borrower-of-record with a VA Streamline Refinance?

In general, the borrower(s) obligated on the original VA loan must be the same as borrower(s) obligated on the refinance. However, this is not always possible. As an example, assume that a veteran and spouse are obligated on an existing VA loan. An IRRRL is possible in all of the following scenarios: Divorced veteran alone; Veteran and different spouse; and, spouse alone because the veteran died. An IRRRL is not possible for a divorced spouse alone, or a different spouse alone because the veteran died.

Can I use the VA Streamline Refinance for an investment property?

Yes, you can use the VA Streamline Refinance for an investment property. You must only certify that you previously occupied the property as your home. The property does not have to be your primary residence.

Can I use the VA IRRRL if my loan is behind or delinquent?

Yes, you can VA Streamline Refinance a loan which is behind in payments or delinquent. Your lender will want to know that the cause of the delinquency has been resolved; and you must be willing and able to make the payments on the new VA loan. Lastly, you will be asked to provide a letter to explain the delinquency along with additional supporting documentation. The Department of Veterans Affairs will make a final determination whether the IRRRL should be approved.

Do VA loans qualify for the HARP 2.0 program?

No, the HARP 2.0 mortgage is separate from a VA loan, and HARP 2 loans must be currently backed by Fannie Mae or Freddie Mac.

Can I use VA loans for a no money down mortgage?

Yes. The VA loan allows for 100% financing with no downpayment.

Contact The Mortgage Mark with any Questions! www.themortgagemark.com   mark@themortgagemark.com

5 Ways To Raise Your FICO Credit Score Today

• CREDIT SCORING FOR MORTGAGES

RAISE YOUR CREDIT SCORE TODAY

It's always a good time to set new goals and every consumer should consider making time to improve their FICO credit score.

Not only can improving your FICO credit score improve your chances of obtaining a mortgage, but it could improve your auto insurance premiums and, possibly, make you a more attractive employment candidate.

FICO scores range from 300 to 850. Mortgage applicants get the best mortgage rates and terms when their FICO scores are 720 or higher.

For borrowers of all FICO scores, the best way to improve your credit rating is to understand the factors that make up your FICO score, and to take specific actions that can make a positive impact on your score.

Click to see today's rates.

WHAT'S INCLUDED IN YOUR FICO SCORE

The FICO credit score takes into account a combination of all of the information found in your credit report.

Your FICO score is made up of the following:

• Payment History : 35% of your overall FICO
• Total Amounts Owed : 30%of your overall FICO
• Length of Credit History : 15% of your overall FICO
• New Credit : 10% of your overall FICO
• Type of Credit in Use : 10% of your overall FICO

To find out what is impacting your FICO score you will want to review your credit reports.

You can obtain a free copy of your credit report from each of the three main credit reporting agencies -- Equifax, TransUnion, and Experian -- at www.annualcreditreport.com.

It is important that you order and review the reports from each of the bureaus because different reports may contain different sets of information or errors which could affect your FICO credit score negatively. For example, a settled medical collection may appear on your Experian report, but may be shown as "in collection" with TransUnion and Experian. 

FICO scores are generated based on a snapshot of the information on your credit reportas of the particular moment that the report is pulled. Correcting errors is crucial, therefore, to ensure the highest possible FICO score.

5 STEPS TO IMPROVE YOUR FICO SCORE

Verify your accounts are current

"Payment History" makes the largest impact on your FICO score at 35% of your overall score. It is vital, therefore, that you keep current on all of the accounts reporting to your credit report.

When reviewing your credit report, should you find any accounts that are past due, catch them up as soon as possible and pay at least the minimum payment required by the due date.

With 12 months of clean pay history and no late payments, you can dramatically improve your FICO score. And, with 24 months of clean pay history, the improvements can be even bigger.

FICO considers the number of accounts paid as agreed as compared to the number of accounts with late payments, along with the severity of those delinquencies.

90-day late payments make a more negative impact than 60-day late payments; and 60-day late payments make a mortgage negative impact than 30-day late payments.

Dispute your inaccuracies

Should you detect any errors on your credit report, you will want to request a correction as quickly as possible.

In order to make a correction, use the information on your report to contact the credit bureaus, and also the creditors which provided the erroneous data to the bureaus.

By law, the credit bureaus are usually required to investigate the item in question within 30 days, unless they consider your dispute to be frivolous. You may need to submit documentation that supports your position. Send copies only -- never originals.

Then, within 45 days, the credit bureaus will notify you with the results of your investigation. Getting even one late payment removed from your credit report can improve your FICO score dramatically.

Ask for a little grace

Sometimes, a creditor may be willing to "help you out".

In cases where you make a relatively small slip-up, with a creditor you've never been late with, you can sometimes get a late-payment "waived". It's always a good idea to make a phone call and to ask for a little grace.

There are many examples of creditors removing a late payment from your credit report if there's a legitimate story behind what happened, and if you can explain what steps you've taken to avoid a repeat occurrence.

This works best if you catch the delinquency early and bring the account current right away.

Settle up collections, charge-offs, judgments and liens

Old collection items, credit card charge-offs, and judgments and liens can hurt your FICO score, too. If you've got any of these on your credit report, it's time to contact your creditors and collection agencies and to settle up one-at-a-time.

First, settle the accounts which went delinquent within the last 24 months because these more recent accounts create the biggest drag on your FICO credit scores. Then, in looking at your collection items over 24 months old, proceed with care. This is because FICO puts the most weight on your recent credit history, which encompasses the last two years only.

This is why your FICO score may drop when you pay off a collection account over 24 months old. Once the account is paid, it becomes "recent", causing damage to your score.

In many cases, you can negotiate with your creditors to remove a trade line completely in exchange for settling an account for its full balance. You need to call your credits first, however, to find out. 

Improve your debt utilization ratio

Another way to improve your FICO is to improve your "amounts owed", or debt utilization ratio. Debt utilization makes up 30% of your FICO credit score.

Debt utilization is a measure of how much you money you owe to creditors as compared to how much credit is available to you.

The FICO scoring model takes into account the utilization of each individual credit account; and the utilization of all of your credit accounts combined.

For example, if you have five credit cards, each with a $2,000 limit, you have a total $10,000 available credit over all five accounts. If you carry a $1,000 balance on one of the five accounts, you would have a 50% utilization on one card and a 10% utilization over all of your credit.

In general, debt utilization of 30% of less is good for FICO scores. Utilization over 30% is often bad. 

The best way to improve your debt utilization ratio is to pay off debt. Pay revolving accounts down first, followed by your installment debt.

GET YOUR FICO-DRIVEN MORTGAGE RATE

Mortgage rates are FICO score-dependent. In general, the higher your credit score, the lower rate for which you'll be eligible. This is among the reasons why it's good to improve your FICO score to its highest level possible. 

See for what mortgage rate you'd qualify today. Rates are available at no cost, with no social security number required to get started, and with no obligation to proceed whatsoever.

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FHA TO REDUCE ANNUAL INSURANCE PREMIUMS

HUD No. 15-001 Cameron French (202) 708-0685

FOR RELEASE Thursday January 8, 2015

FHA TO REDUCE ANNUAL INSURANCE PREMIUMS
Reduction to increase credit affordability and reflects improved economic health of FHA

WASHINGTON – As the nation’s housing market continues to improve, U.S. Housing and Urban Development Secretary Julián Castro today announced the Federal Housing Administration (FHA) will reduce the annual premiums new borrowers will pay by half of a percent.  This action is projected to save more than two million FHA homeowners an average of $900 annually and spur 250,000 new homebuyers to purchase their first home over the next three years.

Today’s action also reflects the improved economic health of FHA’s Mutual Mortgage Insurance Fund (MMIF).  FHA’s recent annual report to Congress demonstrates the economic condition of the agency’s single-family insurance fund continues to improve, adding $21 billion in value over the past two years. 

“This action will make homeownership more affordable for over two million Americans in the next three years,” said U.S. Department of Housing and Urban Development Secretary Julián Castro.  “Since 2009, the Obama Administration has taken bold steps to reduce risks in the mortgage market and to protect consumers.  These efforts have made it possible to take this prudent measure while also ensuring FHA remains on a positive financial trajectory.  By bringing our premiums down, we’re helping folks lift themselves up so they can open new doors of opportunity and strengthen their financial futures.”

In the wake of the nation’s housing crisis, FHA increased its premium prices to stabilize the health of its MMI Fund.  In addition, the Obama Administration took dramatic steps to safeguard consumers in the mortgage market to ensure responsible borrowers continued to have access to mortgage capital as many private lending sources tightened their lending standards.  

Today’s reduction will significantly expand access to mortgage credit for these families and is expected to lower the cost of housing for the approximately 800,000 households who use FHA annually. 

FHA’s new annual premium prices are expected to take effect towards the end of the month. FHA will publish a mortgagee letter detailing its new pricing structure shortly.

###

HUD's mission is to create strong, sustainable, inclusive communities and quality affordable homes for all.
HUD is working to strengthen the housing market to bolster the economy and protect consumers; meet the
need for quality affordable rental homes: utilize housing as a platform for improving quality of life; build
inclusive and sustainable communities free from discrimination; and transform the way HUD does business.
More information about HUD and its programs is available on the Internet at www.hud.gov and
http://espanol.hud.gov. You can also follow HUD on twitter @HUDGov, on facebook at
www.facebook.com/HUD, or sign up for news alerts on HUD's Email List.

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Fannie Mae’s New 97% LTV Mortgage Loan Requires Just 3% Down

• MORTGAGE PRODUCTS

3% DOWN: A NEW MORTGAGE PROGRAM FOR 2015

There's a new low-downpayment mortgage option available to today's home buyers; and a lower-equity refinance available to refinancing households.

The program, which is available via Fannie Mae today, is not formally named. It's an extension of the existing MyCommunityMortgage (MCM) program; and, in official Fannie Mae documents, is referred to as the "expanded LTV" program.

The 97% loan-to-value program is meant to help home buyers who might other qualify for a loan but lack the resources to make a five percent downpayment or more.

It's also geared at homeowners whose homes have lost value since purchase but who are otherwise ineligible for the Home Affordable Refinance Program (HARP) because their loan start date is after May 31, 2009; or for some other reason.

The 97% LTV program is available beginning December 13, 2014. The program has no set end date.

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THE 97% LTV MORTGAGE AND OTHER LOW-DOWNPAYMENT AND NO-DOWNPAYMENT MORTGAGE OPTIONS

Mortgage lenders are making it easier get approved for a mortgage.

Fannie Mae and Freddie Mac have announced a new low-downpayment mortgage program which requires just 3% down at closing, joining other government agencies in offering loans which require little or no money down.

The 97% mortgage program marks Fannie Mae and Freddie Mac's second foray into low-downpayment lending. It's previous program -- the Conventional 97 -- was discontinued in late-2013 despite popularity among first-time and repeat buyers. 

The new, retooled 97% LTV program is more forgiving toward first-time buyers than was the Conventional 97; and the new program can be used for home refinances, as well, with few restrictions.

In offering a 3 percent down-payment program, Fannie Mae and Freddie Mac bring yet another financing option to today's home buyers wanting to minimize their downpayment.

Among the most popular low-downpayment options in today's market is the FHA loan.

FHA loans require downpayments of 3.5% and provide for flexible underwriting standards. Home buyers with less-than-perfect credit may find FHA loans to be more cost-effective than loans via Fannie Mae or Freddie Mac; and simpler for which to get approved, too.

FHA mortgage rates are typically 25 basis points (0.25%) below rates for a comparable conventional loan.

VA loans are another popular option. Available to veterans and active members of the military, VA loans allow for 100% financing and never require mortgage insurance to be paid. 

VA mortgage rates are typically 37.5 basis points (0.375%) below rates for a comparable conventional loan. VA loans are backed by the Department of Veterans Affairs.

Lastly, there's the USDA loan.

USDA loans are guaranteed by the U.S. Department of Agriculture and, although they're sometimes called "Rural Housing Loans", USDA loans can be used in many suburban locations, too.

USDA loans offer very low rates and allow for 100% financing. They also require just a small mortgage insurance premium as compared to other low- and no-downpayment loans.

Today's home buyer has plenty of financing options.

Click to get today's live rates.

3% DOWN MORTGAGE ELIGIBILITY Q&A

Is the 97% LTV loan the same program as the now-retired Conventional 97?

No, the 97% LTV is different from the Conventional 97 program, which was retired in 2013. The newer version of the 97% loan is more forgiving toward home buyers and allows homeowners to refinance to today's mortgage rates.

Can first-time buyers use the 97% LTV program to purchase a home?

Yes. The 97 percent program can be used by first-time buyers. It can also be used by repeat buyers.

What is the definition of a "first-time home buyer"?

A first-time home buyer is defined as a person who has not owned a home in the last three years. If you previously owned a home, but have not owned a home since three years ago, you are considered to be a "first-time home buyer".

Is the 97% program the same as the MyCommunityMortgage® program?

No, MyCommunityMortgage® is a different program. That program is aimed at certain members of the community including teachers and firefighters; and which may offer more flexible underwriting standards than a traditional mortgage program.

Are downpayments larger than 3% allowed with the 97% LTV program?

Yes, there is no limit to the size of your downpayment with the 97% LTV program. With a downpayment of five percent or more, though, you will no longer be using the 97% program.

Is the low-downpayment mortgage program via Fannie Mae and Freddie Mac better than a FHA loan?

There is no "best" low-downpayment mortgage program. What's best for one home buyer may not be what's best for another. Each program has its benefits.

What mortgage products are available via the 97% mortgage program?

The 97% mortgage program allows mortgage applicants to use the 30-year fixed rate mortgage only. 15-year and 20-year fixed rate mortgages are not available; nor are fixed-rate loans of other terms and ARMs.

Can I use an adjustable-rate mortgage (ARM) with the 97% program?

No, the 97% program allows mortgage applicants to use 30-year fixed rate mortgages only.

What is the loan limit on the 3% down program through Fannie Mae and Freddie Mac?

The 3% downpayment program is limited to loan sizes of $417,000 or less. Loans in high-cost areas are permitted, but loan sizes remain capped at local conforming loan limits.

What is the maximum number of units for a home under the 3% downpayment program?

The 3 percent down-payment program is for single-unit homes only. This includes single-family detached homes and single-family attached homes such as condominiums and town homes. 2-unit homes, 3-unit homes, and 4-unit homes cannot be financed via the program.

Are vacation homes eligible under the 3% downpayment program?

No, the 3% downpayment program is for primary residences only. Vacation and second homes are not allowed.

Can the 3% downpayment program be used for investment properties?

No, the 3 percent down-payment program is for primary homes only. Investment properties are not allowed.

Does the 97% LTV mortgage program require home buyers to attend home-buyer counseling?

No, there is no home-buyer counseling requirement with the 97% LTV mortgage program.

Is private mortgage insurance required with the 97% mortgage program?

Yes, mortgage applicants are required to pay private mortgage insurance (PMI) as part of the 97% mortgage program. Your mortgage lender will arrange for your mortgage insurance policy at the time of application.

Can I refinance a non-Fannie Mae loan with Fannie Mae under the 97% LTV program?

No, Fannie Mae requires loans refinanced under the 97% program to be Fannie Mae-backed.

How do I determine whether my loan is a Fannie Mae-backed loan?

To determine whether your loan is backed by Fannie Mae, you can ask your lender or use Fannie Mae's loan lookup tool.

Are cash-out refinances allowed with the 97% mortgage program?

No, the 97% mortgage program does not allow cash-out refinances. Borrowers may do a cash-in refinance or a "limited cash-out" refinance only. 

GET TODAY'S MORTGAGE RATES NOW

The new 97% mortgage program from Fannie Mae and Freddie Mac is another low-downpayment option for today's home buyer; and a simplified way for existing homeowners to get a refinance.

Get started with today's mortgage rates now. Quotes are available online with no cost and no obligation to proceed. Your social security number is not required to get started.

Contact The Mortgage Mark with Any questions!!   www.themortgagemark.com

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