On Friday, August 2, Residential Home Funding held the Semi Annual Sales Meeting at The Greycliff in Moonachie, NJ. It was a great day for all the branches to come together, hear from the partners, and be inspired! After the meeting, Residential Home Funding Corp.’s had our Annual Night at the Races where everyone had fun at the Meadowlands Racetrack!
A good credit score translates into lower interest rates for home-shopping borrowers. In a mortgage lender’s eyes, the higher your score is, the less risk you are, and the more likely it is you will pay off your debt. For this reason, borrowers with lower scores usually end up paying higher interest rates on their loans.
If this is you, don’t panic. There are a number of things you can do to adjust your credit score to receive a favorable review from the underwriter. Here are a few suggestions:
Should I pay off all my past due balances and charge-offs?
This is usually a good idea, but you only need to worry about the past due balances and charge-offs that have occurred in the last two years. Items more than two years old have little effect on your current credit score. In fact, if you pay off delinquent items over two years old, it can actually bring your credit score down – something you don’t want to do. Bringing that score up means you’ll get a better interest rate on your loan.
Should I close existing credit card accounts that I don’t use?
No. Part of your credit score is based upon credit history. If you have old credit cards that you don’t use very much, you still have the benefit of the credit history they represent.
Rather than trying to pay off all your credit cards, you can move part of the debt from one card to another to even out the distribution of debt. Try to keep balances as close to zero as possible, and definitely below 30% of the available credit limit when trying to purchase a home. Also, if your credit provider will increase your line of credit, the ratio of debt to available credit is automatically reduced.
When married couples have separate credit card accounts, the debt can be transferred from one spouse to another to clear up credit issues for the other spouse. That spouse with clean credit can be designated as the sole borrower on the loan, but ownership of the home can still go in both names.
What about errors on my credit report?
If you have items that are showing up on your credit report that you know you have already paid, request that these items be removed by the credit bureau. They are obligated to rectify this within 30 days.
If there are items on your credit report that are less than two years old, send in your payment if possible and mark the back of the check with the following notation: “Accepting this check is evidence that the transaction is complete and this charge will be deleted from my credit record.” If necessary, the cancelled check will be proof that this should be promptly removed from your credit report if it interferes with the closing of your loan.
Call Residential Home Funding today for a free consultation with one of our loan officers.
©2013 Mortgage Success Source, LLC. All rights reserved
Congratulations to Residential Home Funding Corp. The Renegades, Residential Home Funding Corp.’s co-ed softball team made it into the playoffs last night! Stay tuned because this Thursday they have their first playoff game!
Dave Stein COO at Residential Home Funding, was quoted in the Record on underwater mortgages. The article below, was written by Record reporter Kathleen Lynn.
How Underwater Homeowners Can Get A Cheaper Interest Rate
When mortgage rates dropped below 4 percent, Noorus Khan and her father, Badrul Khan, wanted to refinance their loan to lower their monthly payment. But there was a problem: They had bought their Pompton Lakes house in early 2007, and the housing crash had wiped out most of their equity, making them ineligible for a typical refinance.
They found their answer in the Home Affordable Refinance Program (HARP), introduced by the federal government in response to the housing crisis. By lowering their rate from 4.8 percent to 3.8 percent earlier this year, the family freed up $261 a month, said Noorus Khan, an accountant.
“We can use it toward other expenses,” said Khan, who lives with her father, a college professor, and two siblings in their home.
The HARP program was designed for homeowners who wanted to take advantage of the drop in interest rates over the last several years, but couldn’t under traditional lending rules because they owed too much on their mortgages — or were even underwater, owing more than the property was worth.
Ever since HARP was created in 2009, more than 2.5 million homeowners have used it to refinance. Although it got off to a slow start, the number of homeowners using the program rose after the government expanded eligibility. In April, the most recent figures available, about one in four refinances of Freddie Mac and Fannie Mae loans were HARP transactions.
“For underwater borrowers, just having access to the ability to refinance is very valuable,” said Keith Gumbinger, vice president of HSH.com, a Riverdale publisher of mortgage information.
About 356,000 homeowners in New Jersey — and 9.7 million nationwide — owe more on their mortgages than their homes are worth, according to CoreLogic, a real estate data and analytics firm. That’s about one in five homeowners with mortgages, both nationally and in the state.
With so many homeowners still underwater, HARP, which was scheduled to end at the end of this year, has been extended through 2015.
HARP can be used for condos, second homes and investment properties, as well as single-family homes. One big drawback is that it’s available only to homeowners whose loans have been purchased by Fannie Mae or Freddie Mac, leaving millions of borrowers out of luck. (Freddie Mac and Fannie Mae are government-sponsored entities that don’t make loans directly, but purchase them from lenders, guarantee them and package them for sale to investors.) And HARPs can be used only on mortgages bought by Fannie and Freddie before June 1, 2009.
Homeowners may not realize that their mortgages are owned by Fannie or Freddie, because they make their monthly payments to a different company, said David Stein, chief operating officer of Residential Home Funding, the Parsippany-based company that refinanced the Khans’ loan. But the loan may well have been sold to Fannie or Freddie, even if it is being serviced by another company.
HARP has recently lost some of its appeal as mortgage rates have rebounded to over 4 percent.
“If interest rates are at 4.5 percent and you have a mortgage at 4.5 percent, what’s the point?” said Gumbinger. “But if you’ve got a 5.5 percent loan, there’s nothing wrong with refinancing to a 4.5 percent.”
Figuring out if a refinance is worthwhile is basically just a math problem: How much will it cost you to refinance, and how long will it take to break even? If you can save only a small amount each month, or you’re planning to move soon, it’s probably not worth the time and money to refinance.
For example, let’s say refinancing will run around $3,000, which mortgage companies say is a reasonable rough estimate. (Some lenders also offer low- or no-cost options, which they can do by either adding the closing costs to the mortgage amount or charging a slightly higher interest rate.) If the refinance will save you $200 a month, that means it will take about 15 months to break even. If you plan to stay in the house longer than that, it’s worth considering.
“You’d like to recapture your costs within a two-year time frame,” advised Robert Wilderotter, a vice president with Real Estate Mortgage Network Inc. in Hackensack.
The next step in a HARP refinance is to find out if you qualify, by checking to see if your mortgage is backed by Fannie Mae or Freddie Mac. You can look it up on two websites (see box).
Then, Freddie Mac advises you to check to see if your current mortgage servicer offers HARP refinancings, which could streamline the process because that company already has your files and may not need as much new paperwork. But you’re not required to use your current company for the refinance, according to Fannie Mae and Freddie Mac. As with any loan, it’s a good idea to comparison-shop for the best fees and rates. Not every lender offers HARP refinances, so you may have to call around.
Stein said HARP refinances are easier to get than standard refinances, because they typically don’t require home appraisals or proof of assets. He also said that to encourage lenders to make these loans, Fannie and Freddie have assumed some of the risks that otherwise would fall on the lenders.
Although the HARP program doesn’t put any limit on how big the mortgage can be, compared to the home’s value, some individual lenders set their own limits — often refusing to lend more than, say, 125 percent of the home’s value. Others have no limits.
“If homeowners get turned down, they should find out why and call somewhere else,” said Matt Hackett, underwriting and operations manager of Equity Now, a direct mortgage lender in New York that lends in six states, including New Jersey. “Someone else might be able to do the loan.”
Bank of America, New Jersey’s largest bank by deposits, says that HARP loans represent about 25 percent of its refinance transactions. The company does HARP loans only for current customers, according to a spokesman. Wells Fargo, New Jersey’s second largest bank by deposits, also does HARP loans only for its current customers.
Two researchers from the Federal Reserve Bank of New York said recently that HARP could benefit hundreds of thousands more homeowners if some of its restrictions were lifted — for example, if the 2009 cutoff date was lifted, or if homeowners could use HARP more than once, which is not currently allowed.
“Many borrowers are still trapped paying interest rates far above the current market rate,” Joshua Abel and Joseph Tracy wrote in a recent report. Changes to HARP, they wrote, could “provide ongoing support for the housing market recovery.”
Article was copied from: http://www.northjersey.com/realestate/217270921_How_underwater_homeowners_can_get_a_cheaper_interest_rate.html?c=y&page=3#sthash.IqwlDn6p.dpuf
Each year one of the biggest homeowner property insurance claims is water damage – and this is not just in those areas of the country where flooding is common. Many times the water damage is actually caused by slow leaks from appliances and the house’s plumbing that simply go unnoticed until it’s too late. With this in mind, here are a few water maintenance tips that in the long run could save you thousands of dollars in repairs. That is why our team at Residential Home Funding thought that it was very imperative to provide you all with tips for preventing water damage before it happens to you!
Study your water bill – One of the easiest ways to detect water leaks is to pay close attention to your water bill. Major fluctuations in water usage from one month to the next could mean that you have a problem.
Check your water pressure – Experts suggest testing your home’s water pressure annually. This is easier than it sounds. Simply purchase a pressure gauge and attach it to the hose faucet. Normal results should range from 45 to 65 pounds per square inch (psi). A reading above 65 psi is considered high and could lead to problems down the line.
Inspect appliances – While much of your home’s plumbing can be hidden behind walls and cabinets, most of your appliances that use water can be easily inspected for potential leaks. Each month, take the time to inspect areas around your water heater, dishwasher, refrigerator, washing machine, sinks, and toilets. If any hoses or seals appear old or damaged, replace them. Take the time to inspect and repair obvious caulking and tile grout damage. It’s a small price to pay now for what could be expensive repairs later.
Find and fix leaks quickly – Make a habit of checking the main fixtures regularly so that when something out of the ordinary occurs you will notice it and take action immediately. Sometimes, however, slow water leaks aren’t very obvious. A great way to discover hidden leaks is to look for stains in areas where water is often used. For example, if you see even small stains on the cabinet floors beneath the sink in the kitchen or bathrooms, you could have a problem. Experts suggest that warm spots in the floor or tiles could also be an indication of hidden water damage.
Inspect the sewer line – Clear away build-up and roots from around your sewer line. Obstructions to the sewer line could create major plumbing problems in the future.
Take a vacation – The worst thing to come home to after a great vacation is major water damage. On your next trip, try turning off your water while you’re gone. For many homeowners there is a separate shut-off valve for the home that doesn’t affect your irrigation system.
Being prepared and regular home maintenance are key factors to keeping your house, your investment, in prime condition and at the highest potential value. If you want to invest in minor home improvements, a cash-out refinance might be a great option for you. Contact us today, and one of our loan specialists can give you a free consultation and discuss your options.
©2013 Mortgage Success Source, LLC. All rights reserved
“Don’t be trapped into thinking that with little money for down payment, FHA financing is your only option. With 1.75% Upfront Mortgage Insurance Premium required, and monthly Mortgage Insurance Premium lasting for the duration of the loan, it pays to explore other options.
Conventional financing allow a client to put as little as 5% down, mortgage insurance is available down to a 660 credit score. The mortgage insurance is less expensive and can drop off when the home builds up just over 20% equity.”
This is not a commitment to lend. All rates, fees and loan terms are subject to a formal loan application, credit risk, appraisal evaluation and other lending criteria. Programs, rates, terms and conditions are subject to change without notice. Other restrictions may apply. The views and opinions expressed on this web site are solely those of the original authors and other contributors.
Buyers waiting to close on a mortgage should avoid doing anything that might change their credit picture until after the documents are signed and the money is delivered.
Borrowers may assume that the lender is satisfied with their financial status once their loan has been approved. But since 2010, Fannie Mae has required lenders to recheck a borrower’s credit right before closing the mortgage. And if new liabilities pop up, the loan may be delayed or even canceled.
“We tell our clients about this upfront, and keep reminding them through the entire process not to go buy a new bed or a refrigerator,” said Michael Daversa, the president and founder of Atlantic Residential Mortgage, which is based in Westport, Conn. “What you’re supposed to do is keep everything status quo.”
It seems reasonable enough that if you’re buying a home, you might want to buy a flat-screen television in time for move-in day. But if your purchase shows up as a new credit card account with a $3,000 balance, the loan might be sent back to underwriting in order to redo the calculations, Mr. Daversa said. A new loan could potentially have a higher interest rate.
Mortgage lenders are also on the lookout for new credit inquiries. A credit inquiry from, say, Toyota signals that the borrower is probably in the process of buying a car — making the kind of large purchase that is another red flag.
Such purchases just before closing may not affect the loan status of the most creditworthy borrowers, said David Stein, the chief operating officer and a partner of Residential Home Funding, which is based in White Plains. Borrowers with high debt-to-income ratios, and therefore tighter finances, are the ones who need to be careful.
The maximum debt-to-income ratio allowed by Fannie Mae is 45 percent (meaning that a maximum 45 percent of your gross monthly income can go to cover debt, mortgage and housing expenses).
“It’s more of an issue for people on the cusp of approval where they just get in under the wire,” Mr. Stein said. “If someone was a 44 percent at the approval, if they incurred more debt at the credit refresh, and the debt goes over 45, we can’t close that loan.”
Mr. Stein has also seen the credit recheck cause problems for working couples when only one spouse is named on the loan, usually because the other spouse has a low credit score. Basing the loan on one spouse’s income instead of two means the lender will see a higher debt-to-income ratio. In reality, the couple may easily be able to afford buying new furniture, but because the bank isn’t seeing both incomes, a rise in debt could still cause problems with their loan before the closing.
To avoid any last-minute problem, Mr. Stein advises that all borrowers check with their loan officer before taking on any new debt.
Borrowers should also be aware that lenders now routinely reverify their employment status just before closing. This has long been a standard practice in the industry, but it fell by the wayside when the housing market was hot and mortgages were a lot easier to come by, Mr. Stein said.
Now that it is once again routine, borrowers cannot expect to hide a job loss or change of employment from their lender.
A borrower should immediately alert his or her loan officer of any change in job status. Further, Mr. Stein says, if a borrower’s employer is being subsumed into another company, and the company name will no longer match the name on the borrower’s loan application, that, too, should be reported to the lender in order to avoid delays at closing time.
Residential Home Funding Corps. was an exhibitor at the 3rd Annual Hispanic Business Expo, the largest Hispanic showcase in New Jersey for both Hispanic and Non Hispanic business leaders. The expo was held at Pines Manor in Edison, NJ on July 16th. The Residential Home Funding Corp. booth was run by Jon Ortiz, one of our bilingual loan officers, said the event was filled with live music, a lot of entertainment, and tons of delicious Latin American food.
Fun fact- Did you you know that it is estimated that Hispanic will contribute over $1.2 trillion to the general U.S economy and U.S. Hispanic spending is doubling every ten years?!
Dave Stein, one of the partners at Residential Home Funding Corps., was quoted in the Sunday Star Ledger this past week. He spoke about a little known mortgage loan program, the 203(k) loan. We have loan officers who specialize in the 203(k) loan program here at Residential Home Funding Corp. on standby who will give you a free consultation. Check out the Article below.
There’s a little-known loan for fixer-uppers
By Tom De Poto/The Star-Ledger
Marcus Gaither lives in East Orange, but he saw a three-family home in Newark he thought would be a good investment. Unfortunately, it was not fit to be lived in.
“It needed windows, doors, sinks, kitchen cabinets,” he said. “It needed pretty much everything. It was a total rehab.”
Gaither is a mortgage broker and had done his research on the lending industry. He knew about a mortgage that would let him buy the house and pay for the repair work before he moved in.
He purchased the property for $120,000 and made it livable.
“Some people are afraid to put themselves out as far as buying a property and making mistakes,” he said. “I’m not afraid of the loan. I think it’s a good one.”
The loan he knows about — and few others do — is the little-heard of 203(k) mortgage. It’s a primary mortgage that isn’t based on what the house is worth, but what it will be worth after repairs are made. It’s available to everyone, including first-time homebuyers, but fewer than 300 have been approved so far this year in New Jersey.
“Most lenders want a house a buyer can move right into without any issues,” said David Stein, a partner in Residential Home Funding. “In the case of 203(k)s, properties can be rehabilitated at the same time the buyer purchases it.”
The 203(k) was begun by the federal government in the 1970s to help rehabilitate distressed neighborhoods.
The loans, which are insured by the Federal Housing Administration, are also available as refinance instruments that can be used for upgrades or purchases such as new windows. The minimum loan amount is $5,000.
Stein said the process is similar to getting a construction loan.
“Once a contractor has submitted an estimate and an appraiser from the Housing and Urban Development signs off,” he said, “the money is placed in an escrow account. The contractor gets paid as he completes the work.”
Stein said a lot of real estate agents don’t know about 203(k)s.
“We try to get the message out to our real estate partners, especially after (Tropical Storm) Irene and (Hurricane) Sandy. Because of those storms, we’re doing more 203(k)s than ever before.”
Stein said the number approved 203(k) loans with his company rose between 2010 and 2011 by 70 percent, but fell in 2012 as homeowners wait for FEMA and insurance funding to come through before making a decision on their home.
Statewide, the number has dropped as well. According to Lemar Woolley, a HUD spokesman, approved loans peaked in New Jersey at 894 in 2010, then fell to 797 in 2011, and 651 in 2012. As of May, 288 loans had been approved by HUD.
By comparison, however, it hardly registers as a drop in the bucket — about 92,700 single-family homes were sold in the first three months alone of this year in New Jersey.
“There might be a misbelief that it’s more difficult to get or it might delay the closing, neither of which is true,” said Doug Radford, a partner with Realty Executives in Fairfield.
The loan requires a 3.5 percent down payment, but that number is based on the total sale price plus rehabilitation costs. Interest rates are comparable to a traditional mortgage. The 203(k) loans require a credit score of 640, which is slightly higher than a standard FHA mortgage.
It can also be used to refinance an existing loan to make improvements on a home.
The home equity loan is still the smarter way to consolidate debt, but it is based on the equity in the home, which is determined by subtracting the amount of debt on the house from the home’s market value. In most cases, the loan is 80 percent of that figure.
With a 203(k) loan, the borrower can request more money because the equity is based on the value of the home after the upgrades are made, not before.
When Radford meets a client he thinks would benefit from this type of loan, he asks them, “Have you heard about the 203(k) mortgage?
“Usually they say ‘no,’ Then I say, ‘You should talk to a lender.’ ”
Is this a program that interests you? Learn More: http://www.rhfunding.com/Loan-Programs/203K-Loans/Home-Rehabilitation-Loans/
http://www.nj.com/business/index.ssf/2013/07/theres_a_little-known_loan_for.html
“Being prepared is imperative when purchasing a home. Know what your monthly obligations would be on obtaining your new home. I always recommend to my clients, especially first time homebuyers, that they should make a list of all of their monthly expenses and do the math to see if they can afford to make their mortgage payment every month before the commit to a contract. ”
This is not a commitment to lend. All rates, fees and loan terms are subject to a formal loan application, credit risk, appraisal evaluation and other lending criteria. Programs, rates, terms and conditions are subject to change without notice. Other restrictions may apply. The views and opinions expressed on this web site are solely those of the original authors and other contributors.
