Cooking Corner

Ever wonder what the secret is to a great steak from a nice restaurant?  

This recipe for a filet mignon has inspired me to give it a try.  Even better would be to buy fresh beef from a local farm.

Bon appetit!

News You Can Use

“How soon after a bankruptcy can I purchase a home?”  This is a common question I hear from prospective home buyers.  They may have had a bankruptcy and whether it’s recent or old, questions surrounding the necessary waiting period come up.  Assuming the borrower has reestablished credit after the bankruptcy general time frames (since there are exceptions to everything) for purchasing a home after bankruptcy are as follows:

Conventional loans will allow for a borrower to purchase a primary residence 2 to 4 years after their bankruptcy is discharged.  The waiting period depends on whether the bankruptcy was the result of extenuating circumstances or financial mismanagement. Per Fannie Mae, extenuating circumstances are “nonrecurring events that are beyond the borrower’s control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.” Borrowers would also have to provide documentation to support the extenuating circumstances such as a divorce decree, medical reports/bills, notice of job layoff, etc.

If there have been multiple bankruptcies during the last seven years, a borrower would have to wait 5 years from the most recent discharge or dismissal date.

With FHA financing a borrower may purchase a new home 2 years from the date of discharge of a Chapter 7 bankruptcy.   If they have filed for a Chapter 13, their loan may be considered during the payout period as long as 12 months have elapsed with good payout history & recommendation of Bankruptcy Trustee.

Borrowers using USDA financing may purchase a new home 3 years from the date of discharge of a Chapter 7 bankruptcy.   If they have filed for a Chapter 13, they may be approved during payout as long as 12 months have elapsed with good payout history & recommendation of Bankruptcy Trustee.

Veterans may use a VA loan to purchase a home 2 years after a bankruptcy has been discharged.

Keep in mind that these are general time frames and the clock doesn’t start on the ‘recovery period’ until the bankruptcy has been discharged.  By understanding common underwriting guidelines, a bankruptcy doesn’t have to be an obstacle when purchasing a home.

Cooking Corner

Looking for an easy but healthy and slightly addictive new snack?  This Roasted Edamame will be what you’re looking for! 

News You Can Use

The Obama Administration has sent its FY 2013 budget to Congress.  It includes two mortgage insurance increases and raises the prospects for additional premium increases if that becomes necessary (i.e. because of additional increases in seriously delinquent loans).  

The increase that affects buyers in the Charlotte area is that the annual premium goes to 1.25% (a 10 basis point increase).  The annual premium is what borrowers pay monthly in MI on FHA loans.   So for a $135,000 purchase price with a 3.5% down payment, the monthly MI is currently $123.80.  Under this change the MI would increase by about $11/mo. 

When will these increases be implemented?
The Budget indicates these changes will be implemented “soon”.  Based off previous increase announcements we expect the mortgagee letter with implementation details to be published within a few days with an effective date in mid-April. 

What are the prospects for further increases?
FHA has left the door open for future increases to compensate for defaulted loans.  While FHA defaults are on the rise (from 584,822 loans in June 2011 to over 711,000 loans in December 2011) only about 6.5% of FHA’s seriously delinquent loans were originated in the last two years.   The New York Federal Reserve Bank William Dudley recently addressed this when he said “But the guarantee fees (referring to the GSEs) for new purchase mortgages should be based on the expected losses on these mortgages – not the realized losses on loans of earlier vintages.”    So while the opportunity for future increases remains, we’re hopeful FHA doesn’t penalize future buyers for previous buyers’ defaults.

Please make any clients aware of this upcoming change if they intend to use FHA to buy in the next few months.  The mortgage insurance rate is determined by when their case number is ordered for their loan so it behooves clients to make loan application before the upcoming MI change date.

Cooking Corner

Looking for another crowd pleasing appetizer for this weekend’s big game?  How about one that leaves you feeling a little less guilty?  

Check out this recipe for Crunchy Oven-Fried Cheese Ravioli.

News You Can Use

“How soon after a foreclosure can I purchase a home?”  This is a question I’m being asked more frequently.   The answer is: it depends.  As a general rule and assuming a positive credit history since the foreclosure:

Conventional loans will allow for a borrower to purchase a primary residence 3 to 7 years depending on whether the foreclosure was a result of extenuating circumstances or financial mismanagement.  Per Fannie Mae extenuating circumstances are “nonrecurring events that are beyond the borrower’s control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.” Borrowers would also have to provide documentation to support the extenuating circumstances such as a divorce decree, medical reports/bills, notice of job layoff, etc.

With FHA and USDA financing a borrower may purchase a new home 3 years from the date of the foreclosure sale. 

VA financing is the most lenient because they will allow for a new home purchase after two years have passed since a foreclosure.

Keep in mind that these are general time frames and the clock doesn’t start on the ‘recovery period’ until the foreclosure is finalized, not when the borrower moved out, was served foreclosure papers, etc.    A previous foreclosure doesn’t make future home ownership impossible, you just need to understand the options.

Cooking Corner

I am always on the hunt for new appetizers to try while entertaining family and friends.   This Guacamole Bruschetta caught my eye because it looks delicious and easy.  

With the Super Bowl just around the corner, it’s a perfect opportunity to serve it and I wanted to share in case you’d enjoy as well!

News You Can Use

You are probably familiar with USDA as a loan option for prospective home buyers.  As a reminder this program offers 100% financing with minimal mortgage insurance and there are geographic and income guidelines dictating when this loan can be used.  

Last fall USDA introduced monthly mortgage insurance into their program while simultaneously lowering the upfront guarantee fee that’s financed into the loan. Even with the addition of MI, USDA loans offer a low monthly payment for borrowers seeking a loan with 0% down payment.

A recent helpful update to the program was a slight increase to the income guidelines.  Now a family of four can have up to $78,800 in household income and qualify for a USDA loan.  Families with five or more members can have up to $104,000 in household income and be eligible. 

Keep in mind that the income calculated for USDA’s guidelines is total household income, not just what may be used to qualify for the loan.  In other words the loan may be approved based solely on a husband’s salary but his wife’s income must be accounted for in the USDA calculations even if she isn’t on the loan. 

You might not think many clients in the Charlotte area use USDA funding but with three areas of Mecklenburg County and large areas of surrounding counties falling in eligible areas, USDA loans can be an advantageous way for someone to purchase their next home.

Cooking Corner

When life gets crazy and I can’t even think about “What’s for dinner?” I love finding easy meals that are fast and make everyone happy. 

Here is a recipe that saves time (and sanity).  It goes perfect with a simple salad and crusty garlic bread.

News You Can Use

We’re seeing a strong start to the year – lots of purchases – including increased interest in new construction. Building permits have been on the rise lately which means new homes are on the horizon.  One example of a new community with renewed buzz is Crooked Creek Estates in Union County.   This is a perfect example of a great neighborhood that presents well built homes sold at incredible prices.
 
Current low rates present a fantastic affordability opportunity when purchasing a new home.   One concern people have with building new construction is wondering what rates will do.  While they may get an incredible deal on the price of the home, the cost of the home is variable until they lock in their rate.   But do you know you can lock in your interest rate for up to a year?  You can with our extended rate lock program.

How does an extended lock work?  Basically, you take a 60 day rate lock (for example 3.75%) and add a rate cap based off the length of the lock.  The 30 year fixed rate’s capped rate would be 4.125% for a 120 day lock.  Once we’re within 30 days of closing, a client can ‘float down’ their rate if the market is more favorable at that time resulting in their final loan terms being even lower than at the intital loan application.  

For borrowers interested in ARMs, the terms are slightly different.  If the current 60 day lock for a 10 year ARM is 3.125%, then the capped rate for a 120 day lock would be 3.25%.  The same float down option within 30 days of closing applies as well.

The cost for this program is ½% of the loan amount.  This is not an additional charge but simply a portion of the closing costs paid upfront.   The upfront lock in fee is credited towards the borrower’s closing costs at closing – similar to earnest money or appraisal fees that are collected at the beginning of the loan process.   If a borrower decides to cancel the loan or change the loan type then the upfront fee is forfeited. 

In most cases, an extended lock is simply a great way to purchase insurance against potential rate increases in the coming months.  It also provides peace of mind while the home is being built that the loan terms will not increase while maintaining possibility of them decreasing.

Would you like more information about extended locks?  Give me a call and I’d be happy to provide more details.