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The Importance of the NMLS

Many of you proudly list your designations in your signatures – CPA, CFP, ABR, CRS, GRI, SFR, e-Pro.  You do so because they demonstrate your dedication to your profession and distinction in your field.

You may have noticed my signature has ‘NMLS# 91445’ after my name.   What is ‘NMLS’ anyway?   It is the National Mortgage Licensing System – a Federal database required by the Secure and Fair Enforcement for Mortgage Licensing Act of 2008.   

The SAFE Act’s purpose is to create a uniform standard for mortgage originators.   All mortgage loan originators must register with the NMLS, obtain a unique identifier number, provide personal history/experience and pass a background check.   

Originators who work for a mortgage broker or an independent lender (like Cunningham & Company) must meet additional requirements.  Beyond the requirements listed above, we must do the following to be a licensed mortgage originator:
- Complete or document prior completion of 20 hours of industry education which includes Federal lending laws and ethics
- In NC complete an additional four hours of NC specific education
- Demonstrate financial responsibility via review of our credit report
- Pass a national test (75%+ score)
- Pass a test for each state in which we lend (in my case – NC, SC and VA)
- Complete 8 hours of continuing education annually

Bank loan officers are not mandated to complete any of these additional requirements.

Not sure of your originator’s status?  The NMLS has a consumer access site so you can verify a mortgage company or individual.

Who would you rather assist your clients?  A professional who meets a higher standard of licensure or one who is simply registered?

Enjoy this info?  Would you like to receive Monday Money Matters – a weekly newsletter with useful mortgage and Charlotte area real estate information?  Subscribe here or visit www.RebeccaMadej.com to learn more.

News You Can Use

Converting Your Home Into a Rental Property

I currently own a home but want convert it to a rental property and purchase a new home …what do I need to know?

The housing market and home values are certainly not what they used to be.  Many homeowners are finding themselves with a loan balance similar to or more than the current value.  What if you want to purchase another home and can’t afford to take a loss?  Renting your current home is a popular solution but there are factors to consider.

CONVENTIONAL

With a Conventional mortgage, you will need at least 30% equity in your existing property to factor in the rental income. In addition, you will need to document either two or six months existing and proposed payments set aside for reserves.  For example, if the home is worth $100,000 and you owe $80,000 (20% equity), both the existing and proposed payments are included in qualification calculations and you must document six months payment reserves.  If you owe $70,000 or less, you can count the rental income towards your current mortgage payment and only need to document 2 months reserves. 

FHA

Another alternative is FHA since it doesn’t have the reserve requirement.    The simplest route is get qualified for your new home with both the mortgage payment for your existing home and the new home’s proposed payment.   If you need the rental income to qualify, FHA has two conditions where the 75% of the rental payments can be factored into your qualification.  If  you are relocating to an area “not within reasonable commuting distance” or you are purchasing in the same city as your existing property and have “sufficient equity” in the current home (25% or more), the rental income can be used to offset your existing property’s mortgage payment.  

For both financing options, a fully executed lease agreement and proof the security deposit has been received is required.  Also, an appraisal or automated value opinion to prove the amount of equity in the home may be needed.

It is also advisable to discuss your plans with your tax professional.

Are you interested in learning how to take advantage of this market but not sure how your current home factors in?  Contact me– I enjoy helping clients find solutions that get them what they want.

Enjoy this info?  Would you like to receive Monday Money Matters – a weekly newsletter with useful mortgage and Charlotte area real estate information?  Subscribe here or visit www.RebeccaMadej.com to learn more.