Real Estate | Mortgage Watch

USDA Reduced Their Fees

Texas: USDA announced they are reducing the upfront Guarantee fee and the Annual mortgage insurance fee (paid monthly) for refinance and purchase loans.  Lower costs for the ZERO down USDA loan will help make USDA financing for rural home buyers even more affordable (as if they weren’t already), 

The lowered USDA insurance fee began October 1st, 2016 and extend out through out the future.

The USDA Guarantee Fee is similar to what FHA calls their upfront mortgage insurance premium (UFMIP) and VA calls a funding fee.

The USDA Annual fee, which is actually paid monthly, is similar to FHA’s annual mortgage insurance premium (MIP), basically the same thing but different name.

The USDA Rural Development home loan is a zero down payment (100% financing)government insured mortgage program for people buying in rural designated areas who meet the family household income limit.

USDA eligible borrowers do not have to first time homebuyers.

  USDA GUARANTEE FEE USDA ANNUAL FEE
2016-2017 1.0% .35%
2015-2016 2.75% .5%

How Much Will the Lower USDA Fees Save You?

On a $125,000 home, the new lower USDA upfront Guarantee fee of 1.0% will save you $2,187.50!  This will help keep your loan balance lower because the USDA upfront Guarantee fee is normally added to the loan balance.

The new .35% annual fee (paid monthly) will reduce the payment by approximately $375/year or $31.25/month.

Why Would USDA Reduce Their Fees?

The USDA said the primary reason for lowering the Guarantee and Annual fee is the delinquency and foreclosure rates have gone down significantly, thus reducing the risk associate with 100% financing.

Less risk means lower fees for USDA homebuyers, so they pass on their savings to you!

You Have Options – Get the Facts!

The fact is, USDA is a loan program that very few banks and loan officers offer their borrowers.  In fact, Bank of America and many other large retail banking giants no longer offer the USDA loan.

Banks that don’t offer USDA or the other ‘niche’ loan programs that we offer, will often purposely withhold educating and informing their customers in hopes they don’t go elsewhere for their mortgage.

And don’t think USDA is the only low down payment option you have.

If you would like to find out of you can qualify for a USDA loan and interested in comparing that option with several other homebuyer assistance programs that offer down payment and closing cost assistance, call me at 512-799-0133, or email me at freddiesellshomes@gmail.com.

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Mortgage Qualifying with Student Loan Debts

Texas Residents:

For home buyers or homeowners with student loan debt in planning to purchase or refinance a home, it’s important to know that the type of mortgage you apply and the type of repayment plan your student loans are set up on can impact qualifying for a mortgage.  

For example, the student loan repayment calculation guidelines for Income Based Repayment (IBR), Income Driven (IDR), Graduated, PAYE or REPAYE plan can vary widely depending on if you are apply for Conventional (Fannie Mae or Freddie Mac), FHAVA, or USDA home.

Currently, there is quite a bit of confusion about what payment amount should be included in a buyers debt to income, DTI ratio, when student loans are in an Income-Based plan.

The primary reasons for so much confusion is from extremely outdated and inaccurate information on the Internet, lender’s additional conditions, underwriters interpreting the published rules differently, and Mortgage Loan Officers not keeping up with the changes.

This article includes the MOST UPDATED mortgage qualifying guidelines for buyers with student loans in some sort of Income Based Repayment Plan (IBR), Income Driven Repayment (IDR) plan, Graduated, PAYE or REPAYE plan.

Fannie Mae and IBR Student Loan Guidelines

Fannie Mae insures Conventional loans.

If Payment Reports on Credit: The reported amount can be used for qualifying purposes.  This includes IBR/IDR/PAYE/REPAYE repayment plans.

If No Payment (or $0 payment) Reports on Credit: Lender must use either 1% of the outstanding student loan balance or a calculated payment that will fully amortize the loan based on the documented loan repayment terms.

Special Note: If a parent, grandparent, relative, fiance/boyfriend/girlfriend has been making the payment on a student loan debt (or any installment debt) for the last 12 months, that payment can be excluded from the applicants DTI ratios.  This applies even if the person is not obligated on the student loan or installment debt but cannot be an interested party (seller, Realtor or Lender) to the transaction

Reference: Selling Guide Announcement SEL 2017-04 and Selling Guide B#-06-05

Freddie Mac and IBR Student Loan Guidelines

Freddie Mac insures Conventional loans.

If Payment Reports on Credit: The reported amount can be used for qualifying purposes.  This includes IBR/IDR/PAYE/REPAYE repayment plans.  If $0 payment reports we may be able to use that payment in qualifying.

If No Payment Reports on Credit: Lender must use either 1% of the outstanding student loan balance, the proposed payment, or a calculated payment that will fully amortize the loan based on the documented loan repayment terms.

Reference: Freddie Mac Loan Product Advisor Guideline Matrix

FHA Mortgage and IBR Student Loan Guidelines

Regardless of the payment status, the lender must use either:

  • The Greater of:
    • 1% of the outstanding student loan balance
    • the monthly payment reported on credit
    • Actual documented payment that will amortize (pay off) the loan over it’s term

FHA HUD 4000.1 manual (994 pages)

VA Mortgage and IBR Student Loan Guidelines

  • Lender may use the Income Based Repayment (IBR) payment if it is verified (including $0.00) when the payment is fixed for a minimum of 12 months from the closing date.
  • When the payment is fixed for less than 12 months from the closing date, the lender must use the regularly calculated payment once the IBR ends.
  • When no payment is reported or available, the lender must use a payment calculation using 5% of the current balance, divided by 12 (months) as the qualifying payment.

Reference: VA Circular 26-17-02

USDA Mortgage and IBR Student Loan Guidelines

If Payment is Not Fixed:  If a student loan repayment is based on the borrowers income (IBR/IDR) and adjustable, or graduated USDA requires all lenders use 1% of the student loan balance be used for calculation in the DTI ratio.

If Payment is Fixed: The lender may use the fixed payment established on student loans when the lender obtains documentation verifying the payment, interest rate, and loan term will not adjust. The borrower must provide evidence from the student loan servicer that the payment will not change.

Reference: USDA Rural Development (RD) 3555 Handbook

Get the Facts & Know Your Options

Contact me at (512) 799-0133 if you would like to ask a question about how much you will qualify for with your student loan debt, or ask to learn more about the various down payment assistance programs you may be eligible for.

The Best Time to Buy Big Ticket Items

Texas Residents: The best time to buy 15 big ticket items

You can see BIG savings by buying high priced items at the right time. Here’s what the shopping experts say…   

Airline Tickets : You’ll get the lowest price for a domestic flight approximately 47 days in advance. The prime booking window is from 114-27 days before departure. Fares are highest within 14 days of departure.

Appliances:  New models hit stores in September and October, so older models are cleared out at big discounts. Presidents’ Day, Memorial Day, Labor Day, and Black Friday also have good sales.

Cars and Trucks: You’ll get the best price on a new vehicle early in the fall, when new models arrive and dealers offer discounts, cash rebates, and low- or no-interest financing on prior models. Also, negotiate your deal at the end of the month, when dealers need to make sales quotas.

Bicycles: You’ll get the best deals in January and February and good markdowns in September.

Big Screen TVs : Thanksgiving week has great prices on high-definition TVs, plus door-busters at up to 50% off. Name brands run deals around the Super Bowl to make room for new models.

Computers:  Laptops are discounted in late March and early April, as the Asian manufacturing cycle ends; August and September, for back-to-school; and Thanksgiving (Black Friday and Cyber Monday). Get deals on Apple gear when new models come out, or save on a refurbished model no more than a year old.

Cruises:  Booking nine months to a year ahead will get you the best price on a good cabin, especially if you use an agent with cruise experience.

Furniture:  Best prices are in January, July, and Presidents’ Day.

Grills:  Prices drop after Labor Day, with the best deals in October, although there’s less selection.

Jewelry:  Forget Valentine’s Day, the best sales are in May (after Mother’s Day), as well as July and August.

Lawnmowers:  Retailers cut prices in early spring, with deals peaking in April. There are good discounts for Father’s Day, then clearance prices after Labor Day.

Mattresses:  Shop Presidents’ Day and Labor Day, with Memorial Day offering the best selection and biggest discounts.

Outdoor Furniture:  Prices are rock-bottom in October and November, but if you want selection, pay a little more at late summer sales.

Refrigerators : May is the best month, especially Mother’s Day and Memorial Day.

Wedding Dresses:  Bridal shops cut prices in early December to make room for new inventory, so proposals should be made before the holidays!

Now may be the best time to buy a new home or to refinance your current one at a lower rate, or to fund improvements while rates are still low. There are a wide range of financing options—feel free to contact us any time…. Have a great day!

P.S.: Mortgage rates are still at attractive levels, but it’s smart to start the process early. Please call me at (512) 799-0133 or email me at freddiesellshomes@gmail.com to explore the attractive options now available.

Buy Now, Gloat Later!

Rare 4 bedroom, 3 bath in South West Lubbock

This home sports over 2500 square feet, 2 living areas, saltillo tile in kitchen/dining area, and well maintained interior and landscaping.

This home is Melonie Park South so you have access to the swimming pool!

This home won’t last long, so text/call me for your very own private tour (512) 799-0133

Cheers!

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Good Debt vs Bad Debt: What’s the Difference?

If you’ve ever struggled to keep up with all those darn payments-including the credit card and car payments-you’ll want to tune in to this important article…

More and more people are getting swallowed up by debt. I’m sure you’ve read and heard many of the statistics and stories in the news. One of the keys to financial independence is to get rid of your bad debt and acquire good debt.

Bad debt is debt that makes you poor, such as credit card debt, car loans, etc. – this is consumer debt. Good debt is debt you acquire that actually works for you. The best example of good debt is a mortgage loan on a rental property that throws off positive cash flow every month. Good debt is money that you borrow to purchase assets that put money in your pocket.   images

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5 Steps to Eliminate Your Bad Debt and Acquire More Good Debt

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Step 1 – Stop accumulating bad debt. Whatever you purchase via credit cards must be paid off in full at the end of each month. No exceptions.

Step 2 – Make a list of all your consumer (bad) debts. This includes each credit card, car loans, and any other bad debts you have acquired.

Step 3 – Refinance your mortgage to consolidate your high interest debts. Chances are you’ve built up enough equity in your home to pay off your high interest credit cards and consumer loans.

As your mortgage advisor, I can help determine how much equity is available and how much you can save by increasing your mortgage balance to pay off bad debts at lower interest rates.

Step 4 – Explore the option of using additional equity in your home to increase cash flow. After you consolidate your bad debts you may still have equity left over to invest in a secure cash flow producing asset.

For example, the equity could be invested in a good growth stock mutual fund (check with your financial investment advisor) that earns 9% interest. With a home mortgage interest of 5% the net return on this investment would be 4%. That return can be left to compound or withdrawn every month.

Step 5 – Pay yourself first.  Put aside a set percentage from each paycheck or each payment you receive from other sources. Deposit that money into an investment savings account. Once your money goes into the account, NEVER take it out, until you are ready to invest it. Now – instead of just paying creditors – you’re paying yourself for only one type of purchase: assets that give you positive cash flow each month. By adopting this as a consistent habit you will be out of the Rat Race faster than you ever dreamed!

We look forward to hearing about your success stories as you apply these financial principles to your life….Dedicated to your success.

Lubbock (806) 300-0899

Austin (512) 799-0133

Dallas | Fort Worth (512) 799-0133

9 Genius Closet Hacks

The Hardworking Home: Explore these ways to store your clothes, shoes and accessories to make the most of your space

Lubbock | Austin: Whether your Texas home is spacious or practically pocket size, the clothing closet is a space that can nearly always use some improvement. Here are tips for adjusting the layout, choosing the right closet components and finding extra space.

Hardworking space: The clothes closet.
The challenge: When the clothes closet is working well, it makes getting ready (and getting on with your day) a breeze; when it’s not, mornings can become a hassle. These ideas can help you find the right storage and organizing plan for your space.
Good to know: It helps to measure your stuff before investing in a closet system — that way you can be sure you’re getting exactly the right storage for your wardrobe.

Mortgage: How to Use Your Equity to Accumulate Wealth

If you’re like most people, you may think paying down your mortgage by making extra principal payments is the best way to achieve financial security. But this isn’t usually the case! By paying off your mortgage, you’re eliminating one of your best partners in achieving financial security–Uncle Sam’s mortgage interest deduction. Plus, the equity in your home pays zero return and isn’t easy to access if you need it in a hurry, especially in today’s mortgage environment. A better strategy is to keep your mortgage balance as high as possible and put the equity into secure, collateralized liquid investments that pay a return. This is known as equity repositioning, and it offers several advantages: Money hand out

* You have quick access to money.

* Your equity generates income instead of just sitting there.

* You earn substantial tax deductions which can be

used to increase your investments further.

* You can save even more tax by investing in tax-free retirement accounts.

* You’ll eventually save enough to fund your retirement AND pay off your mortgage!

For a free analysis to see if equity repositioning is right for you, give us a call today at (512) 799-0133

Better Places to Stash That Soap

Every bathroom needs soap next to the sink. But soap dishes can become unsightly and a breeding ground for soggy scum. The dispensers that liquid soap are sold in aren’t particularly sturdy or attractive, either. So what’s the stylish and stable alternative?

There are plenty of attractive soap dispensers out there; you simply want to match the design to the style of the room. Or find an unconventional container and adapt it to liquid soap. Or consider some ways to get that bar soap off the vanity, so the only things you’ll need to clean are your hands.

7 Things Banks and Mortgage Lenders Won’t Tell You

#1. You Don’t Need a High Credit Score.

A minimum credit score of 660 is required by most mortgage lenders in today’s housing market. This is a far contrast from five or six years ago when anyone with a pulse could qualify for financing. This minimum is necessary to comply with guidelines set forth by Fannie Mae and Freddie Mac, the two largest suppliers of home mortgage funds, and is not a problem if you maintain a high score. But if you’ve experienced credit problems in the past, there’s another option that your lender may not tell you about. Bangster

FHA mortgage loans, which are insured by the Federal Housing Administration, do NOT require a minimum credit score; it is various mortgage lenders who set their own credit score (and other criteria) requirements (a.k.a. investor overlays). This is perfect if you’re in the process of rebuilding your credit. You can qualify for a home loan at a competitive rate with less-than-perfect credit. Plus, the down payment requirement on an FHA mortgage is less than a conventional mortgage.

#2. Loan Fees and Rates Can Vary Among Banks

The good faith estimate a lender provides once you’re approved for a home loan details the various costs, such as the credit report fee and the title search fee. Plus, mortgage lenders typically charge a 1% – 2% loan origination fee, which is essentially their profit. The majority of these fees are paid on your closing date, and depending on where you live, closing costs can range between 3% and 6% of the sale price. This is a huge chunk of cash, and if you don’t have the money, this can kill the mortgage deal. However, you can shop around and look for cheaper fees.

A lender may charge higher fees betting on the fact that you will not shop around. Don’t go along with the first mortgage loan quote you receive. Shopping around doesn’t hurt your credit score. As a matter of fact, multiple mortgage applications completed within a 30-day span count as a single inquiry, according to MyFICO.

#3. It’s Cheaper to Close at the End of the Month

You can choose any day of the month to close on your home loan, but there’s something your lender might not share. Another mortgage secret exposed: Closing at the beginning of the month actually increases the amount of “prepaid interest” that’s due at closing.

Let’s say you close on November 6th. In this case, your first mortgage payment isn’t due until January 1st. This mortgage payment includes December’s interest. But since interest accrues from the date your transaction closes, you’re also responsible for the  interest until December 1st. Thus, you’re required to prepay 24 days of interest at closing. This increases your closing costs, but if you wait until the end of the month, you lower your amount of prepaid interest. For example, someone who closes on November 27th only pays three days of interest at closing.

#5. How Much You’re Actually Paying in Interest

Some mortgage lenders push 30-year mortgages due to their affordability factor. However, you can save on mortgage interest rates and build equity faster with a shorter mortgage term. The more interest you pay, the more money your mortgage lender receives. Personally, I like the 20year mortgage because it allows you to build equity more quickly and still allows affordability. For example, on a $100,000 loan amount with 4.5% interest the payment difference is only $125.96.  If you choose the 15 year loan, that payment difference increases to $258.30. I’m a BIG believer by leveraging your cash into investment vehicles, such as a good growth stock mutual fund (with a good 10 year track record) with a history of at least an 8% return*. Even after your tax liability, you are still earning more than the 4.5% interest the lender is charging you.  (*Consult your financial adviser)

#6. You Can Take a Mortgage Break

Most homeowners are familiar with government modification programs and short sale options, which can stop a mortgage foreclosure. Yet, there’s another hardship provision that isn’t heavily advertised. Unknown to many, some mortgage lenders offer a skip payment or forbearance option to help borrowers who experience financial hardship. Depending on the severity of the situation, a bank may suspend payments for several months. With this mortgage secret revealed, you can contact your lender for mortgage relief the next time you endure severe economic hardship.

#7. “No Closing Costs” is a Gimmick

Mortgage lenders advertise no-closing cost mortgages and refinances to bring in new customers. Understand, however, that lenders have to make money somehow. You might avoid out-of-pocket costs at closing, but in situations like this, lenders typically charge higher mortgage interest rates. This is how they compensate for offering a no-cost home loan.

Got Questions? We’re here to help. Simply call or click and our team of experienced loan officers will help you  (with ANY situation).

(512) 799-0133 Dallas | Ft. Worth metroplex

(512) 799-0133 Austin metroplex

(806) 300-0899 Lubbock | Midland | Odessa and surrounding areas

10 Tricks to Sell Your House

Buyers love the allure of a fresh, beautiful bathroom that reminds them of luxury hotels or soothing spas they have enjoyed. And, most important, buyers want to envision themselves enjoying this luxury every day in their new home.

However, the reality is that most of us do not have the perfect bathroom. And we know that, in most instances, it is not a wise investment to do a full, costly renovation just for a home sale. It simply doesn’t translate into profit.

A better strategy is to maximize what you already have, on a budget. You want to transform your real-life, everyday bathroom into a five-star hotel experience that prospective buyers will love, without overcapitalizing. Here are simple ways to create havens with a wow factor.