Tacoma's #1 Mortgage Expert

Conventional Loans 

The Homeowner's Protection Act (HPA) of 1998  

What Loans Are Covered? 

Generally, the HPA applies to residential mortgage transactions obtained on or after July 29, 1999, but it also has requirements for loans obtained before that date. This new law does not cover VA and FHA government-guaranteed loans. - see below 

How Do You Cancel or Terminate PMI?

Cancellation

Under HPA, you have the right to request cancellation of PMI when you pay down your mortgage to the point that it equals 80 percent of the original purchase price or appraised value of your home at the time the loan was obtained, whichever is less. You also need a good payment history, meaning that you have not been 30 days late with your mortgage payment within a year of your request, or 60 days late within two years. Your lender may require evidence that the value of the property has not declined below its original value and that the property does not have a second mortgage, such as a home equity loan.

Automatic Termination

Under HPA, mortgage lenders or servicers must automatically cancel PMI coverage on most loans, once you pay down your mortgage to 78 percent of the value if you are current on your loan. If the loan is delinquent on the date of automatic termination, the lender must terminate the coverage as soon thereafter as the loan becomes current. Lenders must terminate the coverage within 30 days of cancellation or the automatic termination date, and are not permitted to require PMI premiums after this date. Any unearned premiums must be returned to you within 45 days of the cancellation or termination date.

FHA Loans:

Canceling FHA's Annual Mortgage Insurance Premiums

Cancellation based on Initial Amortization Schedule:  Effective for all loans closed on or after January 1, 2001, FHA's annual mortgage insurance premium will automatically be canceled-once the unpaid principal balance, excluding the upfront MIP, reaches 78 percent of the lower of the initial sales price or appraised value based on the initial amortization schedule and pursuant to instructions contained in ML 00-38.  Although the annual mortgage insurance premium will be canceled as described, the contract of insurance will remain in force for the loan's full term.  This mortgage insurance premium cancellation provision applies only to loans insured under the Mutual Mortgage Insurance (MMI) fund.  The MMI fund does not include mortgages on condominiums or Section 203(k) rehabilitation loans, among others. 

Once the mortgage amortizes to a loan-to-value ratio of 78 percent, collection of the annual MIP will cease.  FHA will determine when the mortgage reaches the amortized 78 percent loan-to-value threshold based on the contract interest rate (initial note rate on adjustable rate mortgages) and the loan-to-value information provided to CHUMS by the originating lender, and will cease billing the servicing lender accordingly.  FHA's calculation of the 78 percent threshold will be predicated on the loan amount excluding the upfront MIP. 

Effective May 1, 2001, FHA will provide the date at which the annual MIP will end.  The cancellation date will be available to lenders via the Case Query Screen located in the FHA Connection Single, Family Origination section and the Portfolio and Advance Notice reports located in the FHA connection SF Servicing section.  Lenders utilizing HUD's Frame Relay will be able to obtain the same information through the Portfolio Report and Advance Notice applications. 

Borrower Initiated Cancellation:  In addition to mortgages that reach the 78 percent loan-to-value ratio threshold through initial scheduled amortization, borrowers can also request through their lenders cancellation of the collection of the annual mortgage insurance premium for those mortgages that reach the 78 percent threshold in advance due to prepayments (principal curtailment).  Those loans reaching the 78 percent loan to value threshold sooner than projected (but not sooner than five years from the date of origination except for 15-year term mortgages) due to advanced payments of principal will have the annual premium collections canceled upon the servicing lender submitting supporting information to FHA following the borrower's request provided that the borrower has not been more than 30 days delinquent on the mortgage during the previous twelve months.  As part of their annual disclosures to homeowners, servicers are to notify borrowers of their option to cancel the annual MIP in advance of the projected date by making additional payments of mortgage principal.  As stated in ML 00-38, the 78 percent threshold will be predicated only upon the initial sales price or appraised value, whichever was less.

 Effective May 1, 2001, FHA will also provide the amount the loan balance must reach in order to cancel the annual MIP.  FHA will determine the loan balance at which the 78 percent threshold is met by excluding the upfront MIP.  The required loan balance data will be available to lenders via the Case Query Screen located in the FHA Connection Single Family Origination section and the Portfolio and Advance Notice reports located in the FHA connection SF Servicing section.  Lenders utilizing HUD's Frame Relay will be able to obtain the same information through the Portfolio Report and Advance Notice applications.  Servicing lenders should use the formula provided by SFPCS-Periodic described in Mortgagee Letter 98-22.                                           ​                                                  ​                                                  ​    

When applying for a home loan, one item that will be requested is a copy of your one or two most recent bank statements.  Ever wonder what the underwriter (person who says yes or no on your loan) looks for on your bank statement?  First they will make sure it's the actual bank statement.  Not an Internet print out.  The statement should have your name, account number and the bank logo on it.  Also if there are four pages to your statement, you will need to provide all four pages, even if page 4 is blank. 

Once the underwriters is comfortable it's the actual statement, they will look at the ending balances from the previous statement and compare it to the new ending balance.  Is there a large difference between the balances?  If so, be prepared to document and explain any large deposits.

A good idea is to scan through all the deposits and see if they can be explained by the notations.  Like a payroll deposit, or social security deposit etc.  In this example, you will see a deposit of $1,250.00 on 4/15 which is a direct deposit.  By providing a copy of your recent paycheck stub to match the deposit will provide proof of it's origin.  If you see a transfer in from another account, be prepared to provide that statement as well.  If you see any deposit that's not explained, be prepared to verify and document the source. 

If you are planning to purchase a home in Tacoma, WA in 2011, we can help with your mortgage pre-approval.  Visit us online at http://www.alltechmortgage.com

Your Access to Free Credit Reports

The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies - Equifax, Experian, and TransUnion - to provide you with a free copy of your credit report, at your request, once every 12 months. The FCRA promotes the accuracy and privacy of information in the files of the nation's consumer reporting companies. The Federal Trade Commission (FTC), the nation's consumer protection agency, enforces the FCRA with respect to consumer reporting companies.

A credit report includes information on where you live, how you pay your bills, and whether you've been sued or arrested, or have filed for bankruptcy. Nationwide consumer reporting companies sell the information in your report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home.

Here are the details about your rights under the FCRA and the Fair and Accurate Credit Transactions (FACT) Act, which established the free annual credit report program.

Q: How do I order my free report?

A: The three nationwide consumer reporting companies have set up a central website, a toll-free telephone number, and a mailing address through which you can order your free annual report.

To order, visit annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. The form is on the back of this brochure; or you can print it from ftc.gov/credit. Do not contact the three nationwide consumer reporting companies individually. They are providing free annual credit reports only through annualcreditreport.com, 1-877-322-8228, and Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

You may order your reports from each of the three nationwide consumer reporting companies at the same time, or you can order your report from each of the companies one at a time. The law allows you to order one free copy of your report from each of the nationwide consumer reporting companies every 12 months.

Paying attention to your credit score today can save you thousand of dollars on your next mortgage transaction.  Fannie Mae recently updated their Loan Level Price Adjustments (used to determine the final mortgage rate) and increased mortgage costs for most borrowers.

How to read this chart?

Step 1 What is your middle credit score?  If you are married or applying jointly with another party, what is the lowest of the two middle scores?

Step 2 What is the loan to value ratio?  Are you putting down 5%, 10% or 20% down?  ex. 5% down would put you in the 90.01-95.00 bracket

Step 3 Is the additional fee you pay when pricing out a mortgage today.

* It gets even more expensive, when you do a cash out refinance, buy a multifamily or investment property.

As you can see the difference between 1 credit score point can be costly.  I'm using the 75.01-80% LTV column for this example.

679 v 680 = .875% higher cost
200,000 loan * .875% = $1,750 higher cost

699 v 700 = .75% higher cost
200,000 * .75% = $1,500 higher cost

719 v 720 = .5% higher cost
200,000 * .50% = $1,000 higher cost

Click Here for an article from MyFico.com to improve your credit score.

Searching for VA Mortgage or Home Loan in DuPont, WA - Call DuPont's #1 VA Mortgage Expert - Kevin Tinsley. Centrally located close to JBLM Joint Base Lewis McChord. 

www.DuPontHomeValues.com

Freddie Mac Open Access and Fannie Mae DU Refi Plus Refinance Programs

Both programs offer the opportunity for homeowners to refinance their existing first mortgage loans at these historic low rates.  Even if the value of the home has declined, and you did not have mortgage insurance when you purchased or last refinanced, you will not have mortgage insurance when you refinance.  With rates in the low 4's, this program may help you save hundreds of dollars per month. 

Simply call our office and we will run the numbers, look to see if you have a Fannie Mae or Freddie Mac loan, run your file through an automated underwriting system and give you a good faith estimate of the all costs to refinance.  We have several refinance options ranging from our No Closing Cost option &  Low Closing Cost options.

Announced FHA Policy Changes:

1. Mortgage insurance premium (MIP) will be increased to build up capital reserves and bring back private lending
   • The first step will be to raise the up-front MIP by 50 bps to 2.25% and request legislative authority to increase the maximum annual MIP that the FHA can charge.
   • If this authority is granted, then the second step will be to shift some of the premium increase from the up-front MIP to the annual MIP.
   • This shift will allow for the capital reserves to increase with less impact to the consumer, because the annual MIP is paid over the life of the loan instead of at the time of closing
   • The initial up-front increase is included in a Mortgagee Letter to be released tomorrow, January 21st, and will go into effect in the spring.
     
     
2. Update the combination of FICO scores and down payments for new borrowers.
   • New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA's 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%.
   • This allows the FHA to better balance its risk and continue to provide access for those borrowers who have historically performed well.
   • This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.
     
     
3. Reduce allowable seller concessions from 6% to 3%
   • The current level exposes the FHA to excess risk by creating incentives to inflate appraised value. This change will bring FHA into conformity with industry standards on seller concessions.
   • This change will be posted in the Federal Register in February, and after a notice and comment period, would go into effect in the early summer.
     
     
4. Increase enforcement on FHA lenders
   • Publicly report lender performance rankings to complement currently available Neighborhood Watch data - Will be available on the HUD website on February 1.
     • This is an operational change to make information more user-friendly and hold lenders more accountable; it does not require new regulatory action as Neighborhood Watch data is currently publicly available.
   • Enhance monitoring of lender performance and compliance with FHA guidelines and standards.
     • Implement Credit Watch termination through lender underwriting ID in addition to originating ID.
     • This change is included in a Mortgagee Letter to be released tomorrow, January 21st, and is effective immediately.
   • Implement statutory authority through regulation of section 256 of the National Housing Act to enforce indemnification provisions for lenders using delegated insuring process
     • Specifications of this change will be posted in March, and after a notice and comment period, would go into effect in early summer.
   • HUD is pursuing legislative authority to increase enforcement on FHA lenders. Specific authority includes:
     • Amendment of section 256 of the National Housing Act to apply indemnification provisions to all Direct Endorsement lenders. This would require all approved mortgagees to assume liability for all of the loans that they originate and underwrite
     • Legislative authority permitting HUD maximum flexibility to establish separate "areas" for purposes of review and termination under the Credit Watch initiative. This would provide authority to withdraw originating and underwriting approval for a lender nationwide on the basis of the performance of its regional branches

In addition to the changes proposed today, the FHA is continuing to review its overall response to housing market conditions, and continuing to evaluate its mortgage insurance underwriting standards and its measures to help distressed and underwater borrowers through FHA/HAMP and other FHA initiatives going forward.

With interest rates at historic lows, many homeowners are considering refinancing. One question that seems to come up often is, should I pay closing costs or not? Here is a list of options to consider when looking at refinancing. Each option has it's benefits, so there's no one size fits all answer.

Interest Rate Points/Origination Fee
4.25% .875%
4.50% -.875% *
4.875% (-1.50%)*
* indicates a payment to your lender or broker - known as a "premium"

1. No Closing Cost Refinance - 4.875% with a 1.50% Premium Paid To Your Lender or Broker: Like the title says, it means you do not pay closing costs. The next question is who is paying them? Indirectly you are. By taking an interest rate higher than the market rate, the lender or broker can use the "Premium" in the interest rate to pay all your costs. For the purposes of this example, let's take a look at how this no cost refinance works.

Your lender or broker will be paid 1.50% of $400,000 * 1.5% = $6,000. They will then use this money and pay all your closing costs of approximately $2,500. Leaving them $3,500 in gross revenue, before their office expenses and overhead.

2. Low Closing Cost - 4.50% with a .875% Premium Paid To Your Lender or Broker: This is a combination of the No Closing Cost & Full Closing Cost Option. The lender or broker is paid their origination fees, and you are paying 3rd party costs, like title, escrow fee, credit reports, appraisal etc. In the above example your lender is being paid 400,000 * .875% = $3,500 gross revenue before their office expenses and overhead. You are responsible for the third party costs of $2,500.

3. Full Closing Costs - 4.25% with a .875% Loan Fee: In this example, you will pay the origination fee plus the 3rd party closing costs. That means you pay $3,500 loan fee + $2,500 in 3rd party fees or $6,000 total closing costs.

Now look at the monthly payments:

$400,000 Loan Amount * payments exclude taxes and insurance

4.25% = 1,967 Cost: $6,000
4.50% = 2,026 Cost: $2,500
4.875% = 2,116 Cost: $ 0.00

Compare: 4.25% v 4.875%
monthly savings: 2,116 - 1967 = 149 lower payment by selecting the 4.25% rate. Now look at the total costs divided by the savings: $6,000/149 = 40.26 months or 3.35 years to break even. That means after 3.35 years, the lower rate and paying the closing cost would have paid off.

Compare 4.875% v 4.50%
monthly savings: 2116 - 2026 = 90 lower payment by selecting the 4.50% rate. Now look at the total costs divided by the savings: $2,500/90 = 27.78 months or or 2.3 years to break even. That means after 2.3 years, the lower rate and paying the closing cost would have paid off.

Compare 4.50% v 4.25%
monthly savings: 2026 - 1967 = 59 lower payment by selecting the 4.25% rate. Now look at the total costs divided by the savings: $3,500/59 = 59.32 months or or 4.9 years to break even. That means after 4.90 years, the lower rate and paying the closing cost would have paid off.

A few other factors to consider is the loan to value ratio of the new loan to your home's value. If for example, adding closing costs to your loan puts you into a higher loan to value bracket, you may opt to go with the lower closing cost or no cost option. Or if you have to pay private mortgage insurance by adding in closings cost, you may opt to go with the low or no closing cost option.

For additional refinancing question, feel free to contact me directly at (253) 472-1500. Ask for Kevin or visit us online at www.mortgageratesgigharbor.com

New FHA Short Sale Rule - December 16, 2009

Q: How do I apply for a VA guaranteed loan?

A: You can apply for a VA loan with any mortgage lender that participates in the VA home loan program. At some point, you will need to get a Certificate of Eligibility from VA to prove to the lender that you are eligible for a VA loan.

Q: How do I get a Certificate of Eligibility?

A: Complete a VA Form 26-1880, Request for a Certificate of Eligibility: You can apply for a Certificate of Eligibility by submitting a completed VA Form 26-1880, Request For A Certificate of Eligibility For Home Loan Benefits, to the Winston-Salem Eligibility Center, along with proof of military service. In some cases it may be possible for VA to establish eligibility without your proof of service. However, to avoid any possible delays, it's best to provide such evidence.

Q: Can my lender get my Certificate of Eligibility for me?

A: Yes, it's called Web LGY. Most lenders have access to the Web LGY system. This Internet based application can establish eligibility and issue an online Certificate of Eligibility in a matter of seconds. Not all cases can be processed through Web LGY - only those for which VA has sufficient data in our records. However, veterans are encouraged to ask their lenders about this method of obtaining a certificate.

Q: What is acceptable proof of military service?

A: If you are still serving on regular active duty, you must include an original statement of service signed by, or by direction of, the adjutant, personnel officer, or commander of your unit or higher headquarters which identifies you and your social security number, and provides your date of entry on your current active duty period and the duration of any time lost.

If you were discharged from regular active duty after January 1, 1950, a copy of DD Form 214, Certificate of Release or Discharge From Active Duty should be included with your VA Form 26-1880. If you were discharged after October 1, 1979, DD Form 214 copy 4 should be included. A PHOTOCOPY OF DD214 WILL SUFFICE.....DO NOT SUBMIT AN ORIGINAL DOCUMENT.

If you are still serving on regular active duty, you must include an original statement of service signed by, or by direction of, the adjutant, personnel officer, or commander of your unit or higher headquarters which shows your date of entry on your current active duty period and the duration of any time lost.

If you were discharged from the Selected Reserves or the National Guard, you must include copies of adequate documentation of at least 6 years of honorable service. If you were discharged from the Army or Air Force National Guard, you may submit NGB Form 22, Report of Separation and Record of Service, or NGB Form 23, Retirement Points Accounting, or it's equivalent. If you were discharged from the Selected Reserve, you may submit a copy of your latest annual points statement and evidence of honorable service. Unfortunately, there is no single form used by the Reserves or National Guard similar to the DD Form 214. It is your responsibility to furnish adequate documentation of at least 6 years of honorable service.

If you are still serving in the Selected Reserves or the National Guard, you must include an original statement of service signed by, or by the direction of, the adjutant, personnel officer, or commander of your unit or higher headquarters showing the length of time that you have been a member of the Selected Reserves. Again, at least 6 years of honorable service must be documented.

Q: How can I obtain proof of military service?

A: Standard Form 180, Request Pertaining to Military Records, is used to apply for proof of military service regardless of whether you served on regular active duty or in the selected reserves. This request form is NOT processed by VA. Rather, Standard Form 180 is completed and mailed to the appropriate custodian of military service records. Instructions are provided on the reverse of the form to assist in determining the correct forwarding address.

Q: I have already obtained one VA loan. Can I get another one?

A: Yes, your eligibility is reusable depending on the circumstances. Normally, if you have paid off your prior VA loan and disposed of the property, you can have your used eligibility restored for additional use. Also, on a one-time only basis, you may have your eligibility restored if your prior VA loan has been paid in full but you still own the property. In either case, to obtain restoration of eligibility, the veteran must send a completed VA Form 26-1880 to our Winston-Salem Eligibility Center. To prevent delays in processing, it is also advisable to include evidence that the prior loan has been paid in full and, if applicable, the property disposed of. This evidence can be in the form of a paid-in-full statement from the former lender, or a copy of the HUD-1 settlement statement completed in connection with a sale of the property or refinance of the prior loan.

Q: I sold the property I obtained with my prior VA loan on an assumption. Can I get my eligibility restored to use for a new loan?

A: In this case the veteran's eligibility can be restored only if the qualified assumer is also an eligible veteran who is willing to substitute his or her available eligibility for that of the original veteran. Otherwise, the original veteran cannot have eligibility restored until the assumer has paid off the VA loan.

Q: My prior VA loan was assumed, the assumer defaulted on the loan, and VA paid a claim to the lender. VA said it wasn't my fault and waived the debt. Now I need a new VA loan but I am told that my used eligibility can not be restored. Why?

Or,

Q: My prior loan was foreclosed on, or I gave a deed in lieu of foreclosure, or the VA paid a compromise (partial) claim. Although I was released from liability on the loan and/or the debt was waived, I am told that I cannot have my used eligibility restored. Why?

A: In either case, although the veteran's debt was waived by VA, the Government still suffered a loss on the loan. The law does not permit the used portion of the veteran's eligibility to be restored until the loss has been repaid in full.

Q: Only a portion of my eligibility is available at this time because my prior loan has not been paid in full even though I don't own the property anymore. Can I still obtain a VA guaranteed home loan?

A: Yes, depending on the circumstances. If a veteran has already used a portion of his or her eligibility and the used portion cannot yet be restored, any partial remaining eligibility would be available for use. The veteran would have to discuss with a lender whether the remaining balance would be sufficient for the loan amount sought and whether any down payment would be required.

Q: Is the surviving spouse of a deceased veteran eligible for the home loan benefit?

A: The unmarried surviving spouse of a veteran who died on active duty or as the result of a service-connected disability is eligible for the home loan benefit. If you wish to make application for the home loan benefit as a surviving spouse, contact our Winston-Salem Eligibility Center. In addition, a surviving spouse who obtained a VA home loan with the veteran prior to his or her death (regardless of the cause of death), may obtain a VA guaranteed interest rate reduction refinance loan. For more information, contact our Winston-Salem Eligibility Center.

[NOTE: Also, a surviving spouse who remarries on or after attaining age 57, and on or after December 16, 2003, may be eligible for the home loan benefit. However, a surviving spouse who remarried before December 16, 2003, and on or after attaining age 57, must apply no later than December 15, 2004, to establish home loan eligibility. VA must deny applications from surviving spouses who remarried before December 16, 2003 that are received after December 15, 2004.]

Q: Are the children of a living or deceased veteran eligible for the home loan benefit?

A: No, the children of an eligible veteran are not eligible for the home loan benefit.

for more information on VA Mortgage & Home Loans call the VA Mortgage Experts at (253) 472-1500 Locally based in the Northwest serving homeowners since 1986  - Kevin Tinsley - All Tech Mortgage Inc. http://www.alltechmortgage.com