Lending Guidelines

What You Need To Know About Mortgage Insurance

September 13, 2013 by · Leave a Comment 

What You Need to Know About Private Mortgage InsuranceIf you are on the verge of buying real estate, you’ve probably heard the term Private Mortgage Insurance (PMI).

Mortgage professionals talk about PMI a great deal, but you may be asking, “What is it exactly? And why should I care?”

Private Mortgage Insurance Defined

PMI is required by lenders if the down payment of a purchase is less than 20 percent of the home’s value. It protects the lender if the borrower defaults on the loan.

It also makes the lender more apt to loan, even if the down payment is as low as 3%, because in the long run, the lender’s investment is protected.

You Pay For It

Unlike other types of insurance which you pay to protect your interest in an asset, you pay Private Mortgage Insurance to the mortgage company to protect its interest in your new real estate. (Note that PMI is not usually tax-deductible. Check with a tax professional for details.)

Make It Go Away: PMI Can Be Terminated Once You’ve Paid Down Your Loan

Once you pay down your mortgage to the point where it hits the magical 80% of the original purchase price or appraised value, whichever is less, you can request cancellation of PMI.

The Homeowners Protection Act requires that loans made after 1999 include notifications to the borrower when you arrive at this point in your payments. Your PMI payments must be automatically canceled once you pay down your loan to 78%. At closing, and on a yearly basis, you should receive information from your lender about when you can request cancellation.

Whether you’re ready to buy real estate or need more information before taking the plunge, we can help. Contact your trusted mortgage professional today.

WelcomeHomeNWI

WelcomeHomeNWI.com was created to demystify the national real estate headlines and to provide unbiased real estate trends and statistics relevant to Northwest Indiana. Our mission is facilitated through a collaboration of professionals who are dedicated to the Northwest Indiana real estate industry. Welcome Home NW Indiana! Welcome Home! WelcomeHomeNWI.com is Your Home for Real Estate and Mortgage News for the Best Communities in Northwest Indiana.

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6 Tips On Getting A New Mortgage After Bankruptcy

September 3, 2013 by · Leave a Comment 

7 Tips On Getting A Mortgage After BankruptcyYou have found your dream home and you are eager to get a mortgage, move into the property and start enjoying life there.

However, there is only one problem standing in your way – the fact that you have been through some hard financial times in the past.

If you (or your partner) have a previous bankruptcy, will this affect your chances of being able to buy the home you want?

The good news is that it is still possible to obtain a mortgage even if you have been bankrupt before.

Here are 6 tips that will help you to increase your chances of mortgage success:

  • Choose the right lender. Some lenders may not approve your new mortgage if a bankruptcy shows up on your credit history. However, there are some that do as long as you are able to prove that you have the income to make your payments.
  • If your bankruptcy was caused by factors that are beyond your control, it may be easier to get a new mortgage as opposed to a bankruptcy that was caused by poor money management. Explain the circumstances of your credit history to your mortgage loan officer.
  • When you are buying a home after bankruptcy, try to save up as much of a down payment as possible. Your lender may want to see a minimum of 10% as a down payment, but more is better.
  • Build up your credit again by always paying your credit card bills each month along with any other debt. The higher your credit score, the better chance you will have of being able to obtain a mortgage.
  • Avoid writing checks that you think might bounce, as this shows up poorly on your credit report as well. Any retirement plans or 401(k) assets will make your credit look good, so if you can set these up it may help you to obtain a mortgage.
  • Don’t switch jobs right before applying for the mortgage, the lender wants to be able to see that you have a reliable source of income and that you have been at the same line of work for a good amount of time.

Keeping these 6 tips in mind will help you to obtain a mortgage even if you have been bankrupt before.

For more information about buying a home and securing your next mortgage please contact your trusted and qualified mortgage professional today.

James K Barath, CMPS®

James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, Certified Military Housing Specialist® and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval !  His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!

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Potential Deal-Killers For Your Mortgage Application

August 15, 2013 by · Leave a Comment 

These Overlooked Issues Can Become Deal-Killers For Your Mortgage ApplicationA mortgage loan approval is never final until it’s funded. And that means after you’ve signed the final paperwork and the bank has wired funds to escrow.

Mortgages are made up of many moving parts, any of which might “go wrong” while your home loan is underway.

Some are in your control, like deciding to purchase new items on credit during the mortgage process, many more are not. These “not in your control” items are the ones that you may not be thinking of.

Just being aware of some potential pitfalls could help save your loan down the road, and your peace of mind today.

What Many Mortgage Articles Don’t Say

Many mortgage related articles offer similar things like buying a car before closing, or opening a bunch of new credit cards, but there are more uncommon factors that can lead to a similar loan turn-down.

For example, a home not be able to get approved if it’s unsuitable, or unsafe, for human habitation — a condition you may not discover until after a thorough home inspection’s been made.

Broken windows, lack of plumbing, major electrical code violations and/or major foundation damage are all deal-breakers with a lender.

You’ll either have to fix the home prior to your loan closing, or don’t close at all.

More Mortgage Pitfalls To Avoid

There are others ways in which a mortgage approval can go bad, too:

  • You’re self-employed and your income was declining over the years leading up to your application
  • Your tax return shows large amounts of unreimbursed employee expenses
  • You have switched lines of work or had unexplained breaks of employment in recent years

Mortgage approvals are delicate and, despite an improving economy, lenders still operate with caution. Talk with your real estate agent and your loan officer and put together a game plan.

The best way to beat the mortgage system is to know the rules before you start to play. And the best way to know the rules is to speak with your trusted mortgage professional today!

James K Barath, CMPS®

James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, Certified Military Housing Specialist® and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval !  His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!

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Three Tips To Help Finance Your Second Home Purchase

June 20, 2013 by · Leave a Comment 

Three Tips To Get The Best Financing On Your Second HomeAre you buying a property as your second home? Perhaps you are looking for a small cottage or apartment where you can escape to for your vacations, or maybe you want to have another home closer to your relatives?

Maybe you want to rent out your second property and make a steady income from your investment. Whatever the reason, a second piece of real estate can be a fantastic investment. However, sometimes getting a mortgage on your second home can present a challenge.

Generally, a mortgage lender will have tougher standards for vacation home — or second home — loans than primary home loans. This is because usually when you are buying a second home your finances will be stretched thinner and you will have less money to spare due to already paying a mortgage on your primary home.

This additional risk may mean that your second home mortgage can be more difficult to close and likely could carry a higher interest rate.

Here are three tips to keep in mind that will help you to get the best mortgage on your second property:

Build up a decent amount of savings.

Your mortgage lender will want to be able to see that you have a large amount of savings in reserve so that you will have enough to pay for the mortgage even if you were to lose your job or other income source.

Pay off any credit card or installment debt.

Many lenders will be hesitant to approve your second home mortgage if they see that you have a lot of debt on your credit card. They will want to see that you have a low debt to income ratio so that you will be able to pay back the loan.

Use your primary home as a resource.

If you have always made your payments on time and you are well on your way through paying off your first house, you may have equity to borrow against for some or all of your second home purchase. Be careful here though. There is a little known IRS regulation that requires the second home be financed under its own home loan within 90 days of closing to get the best tax advantages.

Click here to apply for your FREE home loan approval.

These are just a few tips to keep in mind in order to make getting a mortgage for your second property as easy as possible. To find out more about investing in a second home or vacation property, contact your trusted real estate professional today.

James K Barath, CMPS®

James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, Certified Military Housing Specialist® and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval !  His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!

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Simplified Home Loan Modification Program Announced

April 4, 2013 by · Leave a Comment 

Simplified Modification Initiative AnnouncedThe Federal Housing Finance Agency (FHFA) recently announced a new, streamlined home loan modification program to help Northwest Indiana home owners who are behind in their payments or own a home with a mortgage that is under water.

The purpose of the recently announced program continues to focus on helping troubled borrowers avoid foreclosure and stay in their homes.

Beginning this summer, on July 1st to be exact, the new Streamlined Modification Initiative will be available to home owners that meet certain criteria.

Click here to apply for your FREE home loan approval.

Interestingly, this new program will require home loan servicers to provide eligible home owners whose loans are owned or guaranteed by Freddie Mac or Fannie Mae with a 90 day trial modification without requiring financial or hardship documentation.

The terms of this new program have been disclosed as a way for borrowers who are at least 90 days past due on their mortgages to convert their home loan to a fixed rate mortgage with the term of the loan extended to 40 years for the lowest amortized monthly payment.

Eligible borrowers will receive this short-term modification program in order to show “good faith” by making 3 on-time monthly payments. Upon successful completion of this trial modification period, the Streamlined Modification Initiative will direct the loan servicer to extend the home loan modification permanently.

Click here to apply for your FREE home loan approval.

Home Affordable Modification Program Still Available

The new home loan modification program was developed to become an alternative to the already established Home Affordable Modification Program (HAMP).

One important note is that homeowners who continue to investigate all loan modification options with their loan servicer may save even more than the savings offered through the new Simplified Modification Initiative.

Click here to apply for your FREE home loan approval.

Potential For Principal Reductions

Language in the Streamlined Modification Initiative mentions that some home owners who are under water with regard to their mortgage may be entitled to principal reduction as a component of their home loan modification.

The specific details and criteria for these principal reductions have not been specified, although contacting your trusted, licensed mortgage loan professional would be an excellent way to uncover the details.

Click here to apply for your FREE home loan approval.

James K Barath, CMPS®

James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, Certified Military Housing Specialist® and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval !  His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!

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3 Tips To Improve Your Odds Of A Mortgage Loan Approval

March 8, 2013 by · Leave a Comment 

Home Loan Approval TipsAlthough the financial markets have tightened lending guidelines and financing requirements over the last few years, the right advice when applying for your home loan can make a big difference.

Not all loans are approved. And even when they aren’t approved immediately, it doesn’t have to be the end of your real estate dreams.

There are many reasons why a mortgage loan for the purchase of your real estate could be declined.

Click here to apply for your FREE home loan approval.

Here are a few things to understand and prepare for when applying for a mortgage:

Loan-to-Value Ratio
The loan-to-value ratio (LTV) is the percentage of the appraised value of the real estate that you are trying to finance. For example, if you are trying to finance a home that costs $100,000, and want to borrow $75,000, your LTV is 75%.

Lenders generally don’t like a high LTV ratio. The higher the ratio, the harder it normally is to qualify for a mortgage. You can positively affect the LTV by saving for a larger down payment.

Click here to apply for your FREE home loan approval.

Credit-to-Debt Ratio
Your credit score can be affected negatively, which in turn affects your mortgage loan if you have a high credit-to-debt ratio. The ratio is figured by dividing the amount of credit available to you on a credit card or auto loan, and dividing it by how much you are currently owe.

High debt loads make a borrower less attractive to many lenders. Try to keep your debt to under 50% of what is available to you. Lenders will appreciate it, and you will be more likely to get approved for a mortgage.

Click here to apply for your FREE home loan approval.

No Credit or Bad Credit
Few things can derail your mortgage loan approval like negative credit issues. Having no credit record can sometimes present as much difficulty with your loan approval as having negative credit.

With no record of timely loan payments in your credit history, a lender is unable to determine your likelihood to repay the new mortgage. Some lenders and loan programs may consider other records of payment, like utility bills and rent reports from your landlord.

Talk to qualified mortgage loan originator to determine which of these issues might apply to you, and take the steps to correct them. Then and only then, will you be able to finance the home of your dreams.

Click here to apply for your FREE home loan approval.

James K Barath, CMPS®

James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, Certified Military Housing Specialist® and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval !  His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!

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When and Why Do You Need Private Mortgage Insurance

February 22, 2013 by · Leave a Comment 

Private Mortgage InsuranceHave you heard the term Private Mortgage Insurance (PMI) when looking to finance real estate?

You may be wondering what PMI is and how you know when you need to purchase it in Northwest Indiana.

These answers can be hard to find among all the real estate jargon you might be hearing lately. Below is the short version of what you need to know.

Click here to apply for your FREE home loan approval.

What is Private Mortgage Insurance?

Private Mortgage Insurance is an insurance premium required by some lenders to offset the risk of a borrower defaulting on their home loan.

When you put down less than 20 percent of the real estate’s purchase price, the lender will generally require that PMI is added to the loan.

It is usually added into the monthly mortgage payment until the equity position in the real estate reaches 20 percent. However, there may be other options available in your area.

Click here to apply for your FREE home loan approval.

Under the current law, PMI will be canceled automatically when you reach 22 percent equity in your home, if you are current on your payments.

If you aren’t current, the lender may not be required to cancel the mortgage insurance because the loan is considered high-risk.

After getting caught up on your payments, the PMI will likely be cancelled. Any money that you have overpaid must be refunded to you within 45 days.

Click here to apply for your FREE home loan approval.

What if Your Real Estate Increases in Value?

With a conventional loan, it may take as many as 15 years of a 30-year loan to pay your balance down 20 percent making the minimum monthly payment.

But, if property values in your area rise, you might be able to cancel the PMI sooner.

Click here to apply for your FREE home loan approval.

Some lenders may be willing to consider the new value of your home to determine the equity in your home.

You may, however, be responsible for any fees that are incurred to assess the new value of your property.

In the end, private mortgage insurance is likely a good option if you can’t afford a down payment of 20 percent of the purchase price.

Click here to apply for your FREE home loan approval.

Now May Be A Very Good Time To Take Action

With all of the activity happening in the housing market and scheduled lending guideline changes in the coming months, now may be the best time for you to purchase your new home.

A smart next move would be speaking with a qualified and licensed mortgage loan originator to learn which programs and down payment options are available in the Northwest Indiana area.

Click here to apply for your FREE home loan approval.

James K Barath, CMPS®

James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, Certified Military Housing Specialist® and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval !  His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!

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Waiting Period Required To Buy A Home After Foreclosure

February 8, 2013 by · Leave a Comment 

Waiting Periods After ForeclosureIf you lost your Northwest Indiana home due to foreclosure, you probably haven’t given up on the American dream of owning a new home.

The good news is that a number of guidelines have changed which may allow you an opportunity to buy that new home sooner than you think.

There are a few guidelines that lenders follow to determine when you’ll qualify for financing after foreclosure. Arming yourself with this information may help you qualify again for a mortgage sooner than later.

Click here to apply for your FREE home loan approval.

Foreclosure With Extenuating Circumstances
Generally, lenders will take into consideration any extenuating circumstances surrounding the foreclosure on your Northwest Indiana real estate.

Was there a death or illness that prevented you from earning money to pay your mortgage? Did you have a job transfer that came with a steep pay cut? Were you severely injured and temporarily disabled as a result?

You can add a memo that explains any lapses in credit worthiness to potential lenders. This report can be as long or as short as needed.

Click here to apply for your FREE home loan approval.

Many lenders will shorten the waiting period for documented extenuating circumstances. Traditionally the waiting period after a foreclosure is seven years. However, these waiting period guidelines may change and you would be best served by getting up to date information from a qualified mortgage professional.

Deed-in-Lieu of Foreclosure and Short Sale
You may be wondering what the waiting period for financing is if you have exercised a deed-in-lieu of foreclosure or successfully negotiated a short sale.

Traditionally the waiting period for a deed-in-lieu of foreclosure can be four to seven years. If there were special circumstances surrounding the deal, you might be able to qualify in as little as two years. The lender may have certain down payment or credit score requirements as a condition of approval.

Click here to apply for your FREE home loan approval.

Getting financing after a short sale generally has the shortest waiting time before qualifying for a new home loan. Generally the lender will only require a two-year waiting period before they’ll approve financing.

Once again, a call to a licensed mortgage professional will give you the most up-to-date information.

The good news about financing after foreclosure is that it is possible. Your dreams of owning a home can be fulfilled even if  you have experienced a foreclosure in your past.

Click here to apply for your FREE home loan approval.

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James K Barath, CMPS®

James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, Certified Military Housing Specialist® and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval !  His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!

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