Category Archive: Mortgages

Traditional versus Non-Traditional Credit

If you’re trying to get a Brevard County mortgage, you’ll need to prove that you can handle it by showing a solid credit rating. Typically, mortgage lenders pull credit reports from the three main credit reporting bureaus – Experian, TransUnion, and Equifax – and use the middle score as your qualifying credit score. This is called a “tri-merge credit report,” and it’s the traditional way to provide a very clear picture of your creditworthiness.

But what happens if you don’t have much traditional credit? Traditional credit includes credit cards, bank loans, auto finance companies, and mortgage lenders, all of which report your payments to the three main credit bureaus. However, many people have non-traditional credit, which doesn’t show up on the traditional credit reports. And that means your Brevard County mortgage application could be questioned.

What types of non-traditional credit might you have, and how can you get your mortgage lender to consider it? One way is to document your payment histories.

Here are some tips:

Rental Payments

Often, single-family rental homes are owned by individuals who don’t report rent payments to the credit bureaus. If you’re in that situation, pay your rent by check, and keep at least 12 months of canceled checks that you can show to lenders. If you haven’t done that, check with your bank. You can obtain copies of canceled checks if you need them, and if you use online banking, you may be able to access them easily at no charge. If you pay with cash, get a receipt (which you should do anyway) and keep at least one year’s worth.

Utility Bills

While credit reports are increasingly including power, cable, and telephone payment histories, it’s a relatively new development. Again, keep one year of canceled checks to prove you’ve made all your payments, or check with your bank to verify how you can document your payments. Document cash payments with receipts.

Savings Deposits

A pattern of regular saving can also be considered when you’re applying for credit. Periodic wage deposits into a savings account can be documented to prove financial responsibility.

Check Your Credit

You can request a free credit report at www.annualcreditreport.com, and check it to see how your credit stacks up. Make sure you dispute any errors and omissions with the credit reporting agencies.

If you’ve got a “thin” credit file, check with your Brevard County mortgage lender, and ask if you can provide non-traditional credit documentation. At Embrace Home Loans, we’re experts in mortgage lending. We can help you review your credit and determine if you can qualify for a mortgage with non-traditional credit. Call us today at 407-733-6425.

Four Ways to Tell if a VA Loan is Right for You

Mortgage loans guaranteed by the Department of Veterans Affairs (VA), or VA mortgages, offer a number of incredible benefits including no down payment, no mortgage insurance, flexible underwriting, and limits on closing costs and fees. Other mortgage options typically can’t match these benefits. If you’re a Florida home buyer, how can you tell if a VA loan is right for you?

You’re eligible: For starters, you have to be eligible. Typically, that means you’ve served in the military for 90 consecutive days during war, 181 consecutive days during peacetime, or at least six years in the National Guard or Reserves. There are some other beneficiaries, like surviving spouses or cadets at different military academies, so you should double-check if you think you might be eligible. You’ll need to get a Certificate of Eligibility (COE) from the VA, but lenders will often help you get the COE.

You plan to live in the home you buy: The VA loan program is for people who plan to live in the homes they buy full-time. You can’t use VA loans to buy investment property or vacation homes. However, in some cases, your spouse may be able to fulfill this requirement.

You don’t want to make a down payment: The main benefit of a VA loan is buying a home without a down payment. You also won’t have to pay mortgage insurance. If you want, you can certainly make a down payment. But it’s not required.

You don’t want a fixer-upper: VA loans require safe and structurally-sound houses, and there is an appraisal process to verify that the home you’re buying meets the minimum property requirements. So, you can’t buy a fixer-upper property with a VA mortgage.

Learn more about VA loans

If you fit the profile outlined about, give Embrace Home Loans a call at 407-733-6425. We’re experts in VA mortgage lending, and we’ve helped veterans in Florida determine their eligibility and obtain VA loans. We’d be happy to answer your questions and work with you to get the financing you need for your home.

Great Rates Available for Jumbo Mortgages

In the not-too-distant past, jumbo mortgages were almost impossible to find. After the financial crisis of 2008, many lenders shied away from any mortgage loans that weren’t backed by the government, like FHA or VA mortgage loans. And Brevard County jumbo mortgage loans aren’t backed by the government.

Jumbo mortgage loans are loans that exceed the “conforming limit” – which is the maximum loan amount that the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac will buy. In most housing markets, that limit is $417,000. So, any mortgage bigger than that is a jumbo. Some expensive housing markets have higher conforming limits. In Florida, for example, Collier County’s limit is $448,500, and Monroe County is $529,000.

Jumbos are Back

Jumbo mortgages are much easier to find now, but there are more requirements than before. While some lenders may be flexible, you will probably be required to:

  • make a down payment of at least 10 percent.
  • thoroughly document your income.
  • have a credit score of 720 or higher.
  • make sure your new monthly mortgage payment is no more than 43 percent of your income before taxes.

Don’t forget to ask for both fixed rate options as well as adjustable, each has its own advantages.

Shop Around

Since jumbo loans are too big for government agencies, they’re handled by private lenders. That means each lender sets their own rates and establishes their own requirements. Conforming loans, on the other hand, often have the same rates and similar closing costs from lender to lender. Jumbo lenders also often have different requirements for the type of home (such as house or condominium), whether or not it’s your primary dwelling, whether or not it’s investment property, and so on. So it’s important to shop around to get the best mortgage that meets your individual needs.

Know Your Options

At Embrace Home Loans, we understand Brevard County jumbo mortgages, and we’ll work with you to get you the mortgage you need. With today’s low interest rate environment, jumbo loans are available at extremely attractive rates. To find out more about how a jumbo mortgage can benefit you, call us at 407-733-6425.

How to Clean Up Your Credit to Qualify for a Florida Mortgage

You probably know that it’s a good idea to check your credit report when you’re planning on making a big purchase, like a house. However, that really isn’t enough for most people. Mistakes on your credit report can take months to correct, and that means your purchase could be delayed or even completely derailed if your lender doesn’t like what’s on your report.

    • Start by Requesting Your Credit Report: The three major credit agencies, Equifax, Experian, and TransUnion, are required to provide you with a free credit report every year. You can easily request them online. You can request one from each company, or all three at once. If you’ve never done it before, you should probably request all three at once. People who are familiar with their reports often space them out, ordering one every few months, to keep tabs on their credit.
    • Check Your Personal Information: It seems obvious, but many people don’t verify their names, address, Social Security numbers, and account numbers.
    • Verify Your Accounts: Make sure that every account is actually yours and doesn’t belong to someone else. Check all the balances as well; an unusually high balance could be a simple mistake, or something more serious, like identity theft.
    • Watch for Old Information: Negative credit information (including Chapter 13 bankruptcies) stays on your report for seven years, and Chapter 7 bankruptcies stay for 10 years. With Chapter 13 bankruptcies, you repay at least a portion of the debt, so they are removed sooner. If there’s old negative information on your report, ask to have it removed. Closed accounts in good standing, though, don’t need to be removed. They can help your credit score.
    • Double-Check Double Entries: If one of your accounts has been sold to a collection agency, it could show up on your report twice. If it was resold several times, you may have several entries.
    • Dispute the Errors: All the credit agencies have online dispute forms, which is usually faster than phone calls or postal mail. If that fails, you may need to contact the lender directly, but start with the credit agency. Follow up to make sure the correction was made, and document any conversations you have with the credit agency or lenders.
    • State Your Case: If you disputed an item and it wasn’t resolved, you can add a 100-word consumer statement to your credit file, explaining disputes or problems. Anyone who looks at your file will see your explanation.
    • Making the Grade: If you’ve corrected your credit report, you should receive a free copy of the correct report. In addition, the credit agency must send corrected reports to anyone who inquired about your credit in the last six months. Cleaning up your credit report can help your score, which in turn will improve your ability to qualify for a mortgage loans and help get you a better interest rate.

 

 

If you need more information about your credit score, your credit report, or qualifying for a mortgage, call Embrace Home Loans at 407-733-6425, or contact us online.

Florida First-Time Homebuyers Taking Advantage of Tax Credit

Some homebuyers in the state of Florida may be eligible for a tax credit of up to $2,000 each year on their mortgages, but many first-time homebuyers don’t know about the program. The Mortgage Credit Certificate (MCC) program was established by the Florida Housing Finance Corporation to reduce eligible borrowers’ federal income taxes. The program was originally launched in 2005 but was suspended until 2013 because of the housing crisis.

How it works

Homeowners who have the credit are allowed to use half of their annual mortgage interest (up to $2,000) as a direct federal tax credit. The rest of their mortgage interest will still continue to qualify as a tax deduction for federal income tax purposes.

As an example, consider a borrower with a $100,000 mortgage at 5 percent interest for 30 years. That borrower would pay approximately $5,000 in mortgage interest in the first year of the loan. But with an MCC, the borrower gets a tax credit of $2,000. 50% of $5,000 is $2,500, but the maximum allowance is $2,000. So the homeowner gets to subtract $2,000 from his or her taxable income. In addition, the remaining $3,000 of mortgage interest can be deducted.

The program is good for the life of the mortgage, which could amount to 30 years of tax credits. The program offers another advantage: eligible borrowers can use that extra “income” as part of their loan qualification. That could help those buyers qualify for a higher mortgage.

Find out more

The eligibility requirements vary from county to county in Florida, and also by the number of persons in the household. The maximum purchase prices for a new home under the program also vary by county, and whether an area is “targeted” or “non-targeted.” Targeted areas are based on household incomes in a specific area. While this may seem confusing, the Florida mortgage experts at Embrace Loans can help you determine your first-time homebuyer eligibility and how the MCC can help you with your existing mortgage or with buying a new home. Contact us today at 407-733-6425.

Get Help for Your First Home with a Florida HFA Preferred Conventional Loan

People looking for their first home in the State of Florida may have the option of applying for a Florida Housing Finance Agency (FL HFA) Preferred Conventional Loan. Many first-time buyers don’t consider conventional loans because they believe conventional loans are difficult to qualify for and require more up-front cash. However, the FL HFA Preferred Conventional Loan Program offers qualified buyers help with those initial costs and can provide some long-term savings.

These loans consist of 30-year, fixed-rate mortgage loans offered to all borrowers who meet the program’s guidelines. These standards include:

  • The buyer must be a first-time home buyer or not have owned property for at least three years or be a qualified veteran.
  • The buyer must occupy the property as his or her primary residence within 60 days of closing.
  • The property must be a single-family home or townhouse. Condominiums with a 95 percent or lower loan-to-value ratio may also qualify.
  • The buyer must fall within certain income limits that vary by county and household size.
  • The home’s purchase price must fall within certain limits that vary by county.
  • The buyer must take an eight-hour buyer education program, either online or in-person.

Help with your down payment

Buyers who qualify for the FL HFA Preferred Conventional Loan program also qualify to receive down-payment assistance. The down-payment assistance comes in the form of a $10,000, 30-year, zero percent second mortgage. That means you don’t have to make payments on this loan until your home is sold, refinanced or paid in full. None of this cash will be given to the borrower at closing; any leftover amounts after the down payment and closing costs will be applied to the principal of the first mortgage.

Lower mortgage insurance

Because these are conventional loans, they require less expensive mortgage insurance than government-backed loans. That means borrowers will typically get lower mortgage insurance rates and lower monthly or upfront mortgage insurance costs. In addition, private mortgage insurance (PMI) payments do not last throughout the entire life of the mortgage. PMI can be ended by the borrower as soon as the loan balance hits 80 percent of the home’s purchase (or appraised) price. This could save borrowers thousands of dollars over the life of the mortgage.

Find out if you qualify

If you think you could benefit from a FL HFA Preferred Conventional Loan, contact Embrace Home Loans today at 800-333-3004, extension 3560 or visit our website. We’ll review your financial situation and help you become a homeowner in Florida.

New Lower FHA Monthly Mortgage Insurance Premium May Help More People Buy Homes

The Federal Housing Administration (FHA) announced that it is dropping its monthly mortgage insurance premium (MIP) by half a percentage point, from 1.35 percent to .85 percent. According to a fact sheet released by the White House, the average first-time homebuyer will save approximately $900 each year on mortgage payments. The reduction goes into effect January 26, 2015. Existing homeowners who refinance into an FHA mortgage should see similar savings.

What’s the MIP?

The MIP is paid monthly by FHA home buyers as part of their mortgage payments. Because loans insured by the FHA have low down payment requirements, borrowers must pay an MIP to insure against any losses if the homeowner defaults on his or her mortgage. The FHA does not lend money directly to consumers – it insures the loans made by lenders that meet FHA guidelines. Because of borrower defaults, the FHA had a deficit of more than $16 billion in 2012, but has now eliminated that deficit and is operating in the black.

Making home ownership more affordable

Reducing the MIP is intended to make home ownership more affordable, and encourage first-time buyers to shop for homes. The housing market has been sluggish lately, and first-time buyer levels are at their lowest in 27 years, according to the National Association of Realtors. The White House estimates that the new rate will allow more than 800,000 people to save on their existing mortgages through refinancing, and let some 250,000 people buy a new first home over the next three years.

Take advantage of these new rates

If you’re a first-time home buyer or if you’re interested in refinancing your existing home, Embrace Home Loans can help you understand what the new FHA mortgage insurance premium rates could mean to you. Your personal mortgage specialist will help you evaluate your loan options, and make sure you get the financing you need. Contact us today at 800-333-3004, extension 3560 or visit our website at http://www.embracehomeloans.com/stephen-thaggard.

What’s the word on 3 percent down mortgages?

Freddie Mac and Fannie Mae announced in December that they will start buying conventional mortgages with down payments as low as 3 percent of the home’s price, allowing more borrowers to get mortgages.

To understand how this affects the mortgage market, you need to know what the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) do. Both entities are government-sponsored enterprises (GSEs), which are backed by the government but aren’t part of the government. They don’t offer loans directly to the public but buy mortgages from banks and other lenders. That means those lenders then have more money to loan to other borrowers.

Both Fannie Mae and Freddie Mac buy only loans that “conform” to the guidelines they set, which typically involve minimum, down-payment amounts, debt-to-income ratios, credit scores and other requirements. By lowering the down-payment requirements, the GSEs are making home loans available to credit-worthy borrowers who may not be able to come up with large down payments.

More access to home loans

The GSEs want to give more people access to home ownership, particularly first-time home buyers. Both programs are for fixed-rate loans for first-time homebuyers and people looking to refinance their existing mortgages. Both programs will require borrowers to attend home-ownership education courses.

Fannie Mae’s program, which began in December, is available to qualified borrowers who haven’t owned a home in the last three years, and can only be used to by a single-unit primary residence. Homeowners can refinance up to 97 percent of the value of their homes, and can use up to $2,000 of their home’s equity to pay closing costs. Freddie Mac’s program won’t be available until March 23. Freddie Mac will offer a refinance option, but homeowners won’t be able to use equity to cover closing costs.

These loans will differ from Federal Housing Authority (FHA) loans, which typically require a 3.5 percent down payment. FHA loans must carry private-mortgage insurance (PMI), which lasts for the life of the loan. The new 3 percent down loans will allow borrowers to cancel their PMI once the balance of the mortgage drops below 80 percent of the home’s value, either because they’ve made enough payments or the home’s value has gone up. That could save borrowers thousands of dollars in PMI payments.

Let us help

If you want to purchase a new home or want to refinance your existing mortgage, a 3 percent down mortgage may be right for you. Embrace Home Loans can work with you to qualify and determine what type of loan will work best for your financial situation. Contact us today at 800-333-3004, extension 3560 or visit our website at http://www.embracehomeloans.com/stephen-thaggard for more information about loan options available for you.