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Chicagomortgage's Blog

By Chicago Mortgage (JP Marzano) | Mortgage Broker
or Lender in Chicago, IL
  • Is Getting A Mortgage Really That Hard?

    Posted Under: Home Buying in Chicago, Financing in Chicago, Property Q&A in Chicago  |  July 25, 2014 2:40 PM  |  25 views  |  No comments
    The answer is yes...and no.

    Mortgage lending guidelines have gotten stricter over the last few years. It's no secret that some of the programs available in the 2000's, coupled with much less restrictive and lax underwriting practices, enabled many people to finance a home when they really weren't qualified to do so.

    Fast forward to the present...and after years of record defaults, modifications, etc., it's easy to see why Fannie and Freddie have raised the caution level to the highest degree. Lenders have lost untold millions in loan buybacks due to erroneous information, borrowers' inability to pay, or refusal to pay. So they've instituted additional guideliens above and beyond what Fannie and Freddie want, as they can't afford to take as much risk anymore. 

    When you apply for a loan, your full application is looked at in 4 parts:
     - Credit - how good your credit is, and what does the history say about your ability to repay debt
     - Capacity - how much do you make vs how much your liabilities are
     - Collateral - how much equity do you have in the property
     - Cash - how much do you have in reserves 

    These days, all 4 things have to check out. Every loan is underwritten the same way and there are no "breaks" given if one bucket is lacking substance, no matter how strong the others are. Lenders leave absolutely no stone unturned. Everything is reviewed, verified, then verified again. I've seen instances where a client has almost ruined their chances of getting a loan, due to something they either didn't know was a problem, or didn't think it would be a big deal. 

    The "yes" response to this blog title question is because there are certain loans that are difficult in nature, whether it's the clients' application particulars that are very complex, or there are issues with the property, or both. The more complex the deal, the more documenation is required. It isn't very often that lenders will ask for something that's not attainable. Rather, it's just that it can be tedious and time consuming

    The "no" response is because if all your buckets look good (which starts by applying for a loan you can afford - on paper) and you can supply the documenation required, then it really isn't that difficult. I can say that clients who keep good records and are organized have a much easier time during the loan process than those that aren't. Sending complete, legible copies of all documents requested also saves a lot of time and energy.

    I go through a whole spiel with every client before we take the application as it's important to make sure expectations are propertly aligned. If you are in the market to purchase or refinance, I'd be happy to discuss some "do's and don'ts" to help you prepare for the process. 

    Here's an article that prompted me to write this post:

    http://blogs.wsj.com/economics/2014/07/24/standards-are-tighter-sure-but-is-it-really-that-hard-to-get-a-mortgage/

    Thanks and have a great weekend...








  • Beautiful Condo For Sale in an FHA Approved Building. What A Price!

    Posted Under: Home Buying in Chicago, Financing in Chicago  |  July 23, 2014 1:55 PM  |  7 views  |  No comments
    Take a look at this great condo located just a few blocks away from the University of Chicago. The owner is a friend of mine and I'm helping him get the word out. FHA financing is available at a minimum of 3.5% down. This is a large, top floor unit that is priced to sell. 

  • Why Rates Have Stayed Low...And Why The Trend Should Continue

    Posted Under: Home Buying in Chicago, Financing in Chicago, Property Q&A in Chicago  |  July 17, 2014 2:49 PM  |  21 views  |  No comments
    It's been heavily speculated since last year (and in some cases, even longer) that mortgage rates would eventually rise. Honestly, it will happen, as there's only one place for them to go. At some point, inflation will rise to a point that will make low interest rates unfeasible for a workable economy. 

    But it seems like the economists and other market watchers are always saying this rate increase is just around the corner. And we in the mortgage industry, along with consumers, seem to hold our breath for a while...and then nothing happens. We look at reports weekly for manufacturing, housing, home sales, GDP, consumer confidence, and especially the big market movers like the Fed announcements and monthly unemployment numbers. 

    Many factors have contributed to the status quo of mortgage rates, including the governmen't keen watch on the housing industry, the supply and demand curves of homes themselves, and of course government issues both domestic and international. 

    Events such as today's apparent shooting down of a commercial airliner in the Ukraine will only exacerbate the issues in that region, and have left the markets reeling. Usually, bad news is good for mortgage rates...and there's been bad news by the truck load in regards to global issues. 

    Here's a quick read on the state of mortgage rates and what you should think about if you're in the market to refinance or purchase a home:

    http://www.marketwatch.com/story/why-mortgage-rates-havent-risen-as-expected-2014-07-15-101035257?dist=lcountdown

    I think rates will actually drop even more. But eventually will rise as the Fed continues to taper their monthly asset-purchase program. If you're in the market for financing, now is a great time to get a very, very low rate. 


    Have a great day everyone...









  • 6 Great Home Buying Tips - Keep These Handy!

    Posted Under: Home Buying in Chicago, Financing in Chicago, Property Q&A in Chicago  |  July 2, 2014 1:43 PM  |  79 views  |  No comments
    If you're in the market for a home, make sure to remember these great tips while going through the process. And don't forget to ask questions!

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  • Mortgage Financing Getting Easier To Obtain?

    Posted Under: Home Buying in Chicago, Financing in Chicago, Property Q&A in Chicago  |  May 14, 2014 2:20 PM  |  243 views  |  No comments
    Not quite yet...

    But the new director of the Federal Housing Finance Agency (FHFA) intends to update the agency's strategy to focus on making credit more available to borrowers.

    But there should be some loosening of the guidelines soon. Don't expect too much, but let's say the pendulum should hopefully be swinging back from "overkill" to "makes sense." 

    The FHFA is taking steps to reduce lenders' repurchase risk. With less gray area do deal with, lenders should be able to eliminate some frivolous guidelines and ease up on overlays overall, therefore increasing the amount of credit they can extend to borrowers.

    We won't go back to the days of lax guidelines and I doubt that stated income and/or stated asset loans will ever be available again. But by eliminating guideline ambiguity and grey areas in underwriting, there'll be a more consistent approach to approving borrowers. 

    Let's hope these changes are implemented as soon as possible...

    http://www.cnbc.com/id/101668062#_gus

    Thanks for reading...
  • Need Down Payment Assistance?

    Posted Under: Home Buying in Chicago, Financing in Chicago  |  May 12, 2014 2:01 PM  |  252 views  |  1 comment
    More info on the new Welcome Home program from the IHDA. Other programs available too!

     


    $7,500 Down Payment Assistance
    May 7, 2014

    The Illinois Housing Development Authority (IHDA) offers several streamlined and affordable loan options to help potential home buyers achieve their goal of homeownership. The newest program, Welcome Home Illinois, offers $7,500 down payment assistance as well as below-market interest rates to help out first time home buyers.

    The $7,500 down payment assistance is a five year 0% interest loan with no monthly payment, which is forgivable after five years. To qualify for a Welcome Home Illinois loan you must be a first time homebuyer or anyone who has not owned a home in the last three years. You will also be required to contribute, one percent of the purchase price or $1,000, whichever is greater. This program is subject to certain income and credit limits.

    To learn more about a Welcome Home Illinois loan contact me today.

    JP Marzano
    Sr. Loan Officer

    312-608-1555 (Mobile)
    312-654-7216 (Office)

    jp.marzano@1amllc.com
    www.1amllc.com/marzano

       

     

     Equal Housing Lender
    James Marzano (IL:31.0032216 NMLS:574681) is an agent of Draper and Kramer Mortgage Corp., dba 1st Advantage Mortgage (IL:MB.0004263-011 NMLS:2551) an Illinois Residential Mortgage Licensee located at 701 E. 22nd St. Suite 125, Lombard, IL 60148. Telephone 630-376-2100. Regulated by IDFPR, 122 S. Michigan Ave., Chicago, IL 60603. Telephone 312-793-3000. Copyright © 2014 Draper and Kramer Mortgage Corp. dba 1st Advantage Mortgage. All Rights Reserved. 01304-13. 05/2014.

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  • How IRS Form 2106 Can Really Hurt Your Buying Power...

    Posted Under: Home Buying in Chicago, Financing in Chicago, Property Q&A in Chicago  |  May 2, 2014 11:49 AM  |  328 views  |  No comments

    In a nutshell, if you are doing things on your tax returns to alleviate any tax burden, it might work against you when trying to finance a home. 

    The biggest burden, for example, is IRS Form 2106 (Employee Business Expenses). If your employer does not reimburse you for business expenses you incur, this is the form you use to write them off. These expenses are considered costs you have to pay in order to make a living. It’s really an option for claiming expenses incurred that your employer won’t reimburse you for.

    Why is that a problem? 

    All underwriting guidelines (Fannie, FHA, etc..) 
    will consider your income to the extent of the amount you were actually taxed on. You’re not paying taxes on these expenses so that number comes off your total earnings, which reduces your income. 

    For example...

    Let's say you make $100,000/year in salary, or $8333/month in gross pay.

    Your 2106 expenses in 2012 were $8000 and $10,000 in 2013.

    Since a 24 month average is used, ($8k + $10k / 24), you have $750 month in reduced income.

    So you aren't qualifed at $8333/month, you're qualifed at $7583/month ($8333 - $750)

    As you can see, this can really dampen your buying power. In the scenario above I'm estimating that it could decrease it by as much as $50,000. 

    Essentially, if you're going to be buying or refinacing a home, you might want to avoid writing these expenses off. Yes, you'll have more tax to pay, but your buying power won't be as greatly effected. It's best to talk to your tax professional to plan this out. 

    Have a great weekend...









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