Dan Polimino's Blog

As always, accurate information is critical to help you manage your finances. While we all know the importance of a good credit score, the many factors that determine a good credit score are often not understandable to the average consumer. When questions come up about what happens when a person gets married or divorced, I see a lot of myths and inaccurate information.

The experts at Advantage credit have done a great job addressing this subject. The best explanation I have seen on this is at http://www.advcredit.com/ under Yours, Mine and Ours: Marriage, divorce and credit.

Your questions and comments are always welcome.

Chip Allen

Crestline Mortgage Bankers

A Division of Universal Lending Corp                                   

Direct: 303.947.2109

Fax: 303.987.0676

Loanchip@hotmail.com

Colorado Mortgage Broker License # 100019831

NMLS# 378621

Your Lender for Life!

When people you care about need a mortgage,

for purchase or refinance, please do not keep me a secret. 

While FHA fees for purchase mortgages will be going up sharply on April 1st, it appears that fees for FHA "streamline" mortgages will be going down soon. A streamline refinance is for borrowers who have an existing FHA mortgage and wish to reduce the rate, or change from an Adjustable Rate Mortgage (ARM), with a minimum of paperwork and WITHOUT an appraisal. Many borrowers have not been able to take advantage of this because of the increase in the monthly mortgage insurance premiums offset any of the gains produced by refinancing.

The proposed changes for FHA refinances is to reduce the current upfront mortgage insurance premium from 1% to .01%, and the annual premiums paid monthly from 1.15 to .55%. On a $200,000 mortgage, the upfront premium would decrease from $2,000 to $200, and the monthly mortgage insurance would decrease from $192 per month to around $92.

The only catch, so far, is that the new fees only apply to loans taken out before June 1, 2009. I have no clue why this cutoff date was chosen.

Chip Allen

Crestline Mortgage Bankers

A Division of Universal Lending Corp                                   

Direct: 303.947.2109

Fax: 303.987.0676

Loanchip@hotmail.com

Colorado Mortgage Broker License # 100019831

NMLS# 378621

Your Lender for Life!

When people you care about need a mortgage,

for purchase or refinance, please do not keep me a secret. 

FHA will increase the upfront mortgage insurance premium by 75% on April 1, 2012. The current upfront fee is 1% and will be increasing to 1.75%. This means that the upfront mortgage insurance on a $300,000 FHA mortgage will increase from $3,000 to $5,250. Additionally, the monthly mortgage insurance, which is currently 1.15% for a mortgage with a loan to value over 95%, will be increasing by 0.1% to 1.25% annually.

At a Senate Hearing last week on the state of the housing market, Secretary Donovan indicated that FHA would be reducing premiums for FHA loans that were endorsed on or before May 31, 2009. The logic behind this is to help people, who have demonstrated a track record of performance, refinance their FHA loans.

Chip Allen

Crestline Mortgage Bankers

A Division of Universal Lending Corp                                   

Direct: 303.947.2109

Fax: 303.987.0676

Loanchip@hotmail.com

Colorado Mortgage Broker License # 100019831

NMLS# 378621

Your Lender for Life!

When people you care about need a mortgage,

for purchase or refinance, please do not keep me a secret. 

Refinancing an existing mortgage that is either a Federal Housing Administration (FHA) or Veterans Administration (VA) loan it is far simpler than a property that currently has a conventional mortgage. The main reason is that in most cases it will not require a project approval of the Homeowners Owners Association. But the situation may not be hopeless, even if you have a "condotel".

Non agency portfolio products are a great option for someone who has a condo with a mortgage that is not FHA or VA. A portfolio product is a mortgage that a company will hold and service, giving them more flexibility in the underwriting requirements. Examples of this flexibility are: a loan to value up to 90% without mortgage insurance, projects up to 8 stories may be acceptable, etc. While project approval will still be a consideration, the guidelines are often less stringent than required to for other mortgage options.

A "condotel" is a building that is used both as a condominium and a hotel, which are popular in resort areas. Condotels are characterized by a "front desk" to rent the unit out when the owners are not using it. They are different than a time share because the owner is not restricted to using the property for specified time frames. Condotel financing is a rare product, but available. A consumer should be very careful to identify this upfront so that they do not waste time and money on appraisals and application fees only to find out the property is ineligible.

Chip Allen

Crestline Mortgage Bankers

A Division of Universal Lending Corp                                   

Direct: 303.947.2109

Fax: 303.987.0676

Loanchip@hotmail.com

Colorado Mortgage Broker License # 100019831

NMLS# 378621

Your Lender for Life!

When people you care about need a mortgage,

for purchase or refinance, please do not keep me a secret. 

While obtaining a mortgage to purchase a condominium may present an interesting challenge because of the required project approval on the Home Owners Association (HOA), refinancing a condo could be easier than you would think.

If you have an existing government loan, either FHA or VA, project approval is not required for either a Federal Housing Administration (FHA) "streamline" refinance or VA Internal Rate Reduction Refinancing Loan (IRRRL). Both loans are designed to help people refinance to either a lower interest rate or change from an Adjustable Rate Mortgage (ARM) to a fixed rate mortgage. These loans do not allow for taking cash out. While both FHA and VA mortgages do have programs to provide for cash out, the standards are higher, and will include project approval and other criteria such as an appraisal, full income documentation, etc.

In addition to not requiring project approval for a VA or FHA rate reduction refinance, an appraisal is usually not required. Credit score requirements are reasonable, and debt to income ratios are not a factor in qualifying. In most mortgages, closing costs may be rolled into the new mortgage. A caveat I must mention is that borrowers should closely examine how much is being rolled into the loan. I have seen predatory lenders roll costs into a mortgage that would take the borrower over 15 years to recapture. The borrowers were so focused on rate that they forgot that the interest rate is only half of the equation. Rate and fees are what counts.

Next week I will discuss refinancing a condo that has an existing conventional mortgage. Your comments and questions are always welcome.

Chip Allen

Crestline Mortgage Bankers

A Division of Universal Lending Corp                                   

Direct: 303.947.2109

Fax: 303.987.0676

Loanchip@hotmail.com

Colorado Mortgage Broker License # 100019831

NMLS# 378621

Your Lender for Life!

When people you care about need a mortgage,

for purchase or refinance, please do not keep me a secret. 

In the Denver metro area a trend, that is further depressing home sales, is the increased standards required for a condominium project to have Federal Housing Administration (FHA) approval. Thankfully, these standards do not currently apply to townhomes. Astute real estate agents will verify the exact status of what appears to be a townhome, however some townhomes have a condo legal description which makes it fall under FHA rules for a condo. Not a good situation to see a buyer pay for an inspection and appraisal, then find out that the buyer is approved, but the property is not.

One recent study showed that only one third of the condominium developments in the Denver area were eligible for FHA financing because of the more stringent requirements. In Commerce City the situation is even more depressing, with only one out of fourteen condo developments being approved. As FHA financing is by far the most common option for buyers under $200,000, this presents a real challenge for sellers.

We should remember that if FHA financing is not an option, buyers have other choices such as VA loans, conventional mortgages, AND portfolio products. While VA and FHA mortgages are both government loans, the standards for FHA condominium projects are much higher than for VA loans. Keep in mind that because a project is not FHA approved does not always mean it is ineligible for VA financing. Portfolio products are mortgages that a lender keeps in their own portfolio and do not sell on the secondary market. Hence the lender has more flexibility in designing qualification standards. Portfolio products, in most cases, will have higher borrower standards such as credit score, down payment, etc, but they are a viable option.

Chip Allen

Crestline Mortgage Bankers

A Division of Universal Lending Corp                                   

Direct: 303.947.2109

Fax: 303.987.0676

Loanchip@hotmail.com

Colorado Mortgage Broker License # 100019831

NMLS# 378621

Your Lender for Life!

When people you care about need a mortgage,

for purchase or refinance, please do not keep me a secret. 

An unfortunate trend that we are seeing is mature couples getting a divorce. Sometimes the remaining spouse takes out a new mortgage to payoff the departing spouse for their equity or agrees to make the monthly payments. The problem is that many mature people do not have the necessary income, etc. to obtain a new mortgage or the ability to live comfortably after they make the mortgage payment. When you consider selling in a down market, costs associated with selling and moving, etc, a Home Equity Conversion Mortgage (HECM) could be a good option.

A HECM is usually utilized as a refinance option to help people, over 62, who have substantial equity in their home live better. More commonly known as a reverse mortgage, it may also be the best option for a couple that is divorcing. The remaining spouse keeps the home and will only have to pay property taxes and hazard insurance. The departing spouse can receive cash for their equity to help them get a fresh start and not be encumbered with a mortgage payment for a property they no longer occupy.

All in all, this a win-win option for people in a sad situation. As always, your mortgage professional should take the time to see what mortgage option is best for your unique personal situation.

Chip Allen

Crestline Mortgage Bankers

A Division of Universal Lending Corp                                   

Direct: 303.947.2109

Fax: 303.987.0676

Loanchip@hotmail.com

Colorado Mortgage Broker License # 100019831

NMLS# 378621

Your Lender for Life!

When people you care about need a mortgage,

for purchase or refinance, please do not keep me a secret.