Salt Lake City Mortgage Has Moved

Salt Lake City Mortgage has moved to a new home at www.HomeLoansSLC.com. Please visit me there for mortgage loan information, to apply for a mortgage loan in Salt Lake City or other areas in Utah, or just to read the latest news and my commentary about mortgage, real estate and living in Utah.

Employment requirements and FHA Loans

Logo of the Federal Housing Administration.

Image via Wikipedia

With the recently high unemployment rate one question I get asked quite often is: “Have I been at my job long enough to qualify for a mortgage loan?” So here is the rundown of FHA guidelines for employment history:

The borrower should have a consecutive two (2) year history of income with the same employer. However less than two years is acceptable if changes in employers are within the same field or industry. This is common with many Union employees who may work for several contractors in a year period.

The borrower must be able to document the reason for gaps in employment of longer than 30 days.

A newly employed borrower with less than a two year history of employment can provide documentation that they were attending school or a training program for the field of work they are presently employed in. Examples of such would be an person who just got a job as an engineer and just received their degree in engineering or a mechanic that just started working for a dealership and was in specialized training for their vocation prior to their employment.

Borrowers returning to the workforce after a leave of absence must be employed by the same employer prior to their leave.

Borrowers returning to the workforce after a leave of absence and working for a different employer or field of work must wait six (6) months before they are eligible for employment.

Review your situation with your loan officer if you have any question as to whether or not you’ll qualify.

Foreclosures in the neighborhood

While walking this morning I noticed the house two doors down had a notice on the door: This home is owned by Fannie Mae.

I know, it’s all over these days. I’m sure many of you have had a neighbor lose their home recently, also. It’s sad. He and his family have lived there since 2004. This house is very cute and was cared for and loved by my neighbor. It was built in 1938 and has been thoroughly remodeled and the landscaping updated.

Like so many others though, he’s not losing his home because he bought more house than he could afford – living there for seven years is a testament to that – but because due to the economy he is earning much less than he even last year and he can no longer afford to pay his bills.

And he’s not becoming a renter. He, his wife and kids are all moving-in with other family and sharing expenses.

I guess I’m from a different school of thought about this recession. I am not from the school of  “real estate and mortgage fraud brought down the country”. I’m from the school of thought of “Yeah, there was some fraud in the real estate industry, but the biggest cause of the bubble burst was the economy already being on a downward spiral causing loss of jobs which lead to people losing their homes and cars and other things.”

I feel my position is supported by the fact that it wasn’t only the mortgage industry that saw late payments and defaults. All sectors of the credit industry did: homes, autos, credit cards, etc.

Why did this happen? Well I’m no economist, but I can guarantee that the people really responsible for the mess we’re in have shifted the blame to those without the money and the microphone and are walking away scott-free and richer than they were in 2007.

The VA Loan Funding Fee | Salt Lake City Mortgage

One of the great things about a VA loan is that there is no mortgage insurance (MI), however even the VA Loan Funding Fee can vary or even be waived depending on the amount of down payment, subsequent use or disability of the veteran.

Here is a quick guide to how much you can expect to pay as a funding fee for your VA loan:

Purchase and Construction Loans

Type of Veteran

Down Payment

Percentage for First Time Use

Percentage for Subsequent Use

Regular Military None5% or more (up to 10%)

10% or more

2.15%

1.50%

1.25%

3.3% *

1.50%

1.25%

Reserves/National Guard None5% or more (up to 10%)

10% or more

2.4%

1.75%

1.5%

3.3% *

1.75%

1.5%

 Cash-Out Refinance Loans

Type of Veteran

Percentage for First Time Use

Percentage for Subsequent Use

Regular Military

2.15%

3.3%

Reserves/National Guard

2.4%

3.3%

Type of Loan

Percentage for Either Type of Veteran Whether First Time or Subsequent Use

Interest Rate Reduction Refinancing Loans

.50%

Manufactured Home Loans (NOT permanently affixed)

1.00%

Loan Assumptions

.50%

 The following persons are exempt from paying the VA funding fee:

  • Veterans who are receiving VA compensation for service-connected disabilities.
  • Veterans who would be entitled to receive compensation for service-connected disabilities if they did not receive retirement pay.
  • Veterans who are rated by VA as eligible to receive compensation as a result of pre-discharge disability examination and rating and,
  • Surviving spouses of veterans who died in service or from service-connected disabilities.

Mortgage Loan Tip: Closing Costs – Salt Lake City, UT

Typically real estate agents will negotiate for the seller of a home to contribute up to 3% of the purchase price of the home towards the buyer’s closing costs. What many don’t know though is that this really is the minimum amount that can be contributed. This is especially important when purchasing a home under $150,000 because closing costs can many times exceed the 3% and the buyer will have to come to the closing table with money above their down payment.

The reason this happens is that there are both fixed and variable closing costs. Some fees are fixed regardless of the loan amount (such as underwriting, processing, tax fees, appraisal, etc.) and others are based on a percentage of the loan amount or purchase price (origination fee, points paid to buy down the rate, title insurance, property taxes, per diem interest, etc.). Those fixed costs represent a larger percentage of a smaller loan than they do a larger loan.

So to that end, here are the guidelines for allowable seller contributions toward closing costs:

Conventional loans:

  • Primary residence
    • 3% for LTV/CLTV > 90%
    • 6% for LTV/CLTV > 75% to 89.99%
    • 9% for LTV/CLTV < 74.99%
  • Investment properties
    • 2%

FHA

  • 6%

VA

  • Seller can pay 100% of discount points and borrower’s non-recurring closing costs.
  • Seller can provide an additional amount not to exceed 4% of the estimated reasonable value to assist the borrower’s payment of buydown  points, prepaid expenses and funding fee.

Be sure your Realtor talks with your loan officer prior to putting an offer on a house. You want to make sure that enough seller concessions are negotiated to cover all your closing costs so that you don’t have to pay anything more than your down payment.

Another Good Faith Estimate

The Consumer Protection Bureau is thinking about overhauling the Good Faith Estimate they introduced just 18 months ago because even that seem too difficult for most to understand. Heck, it’s been a year-and-a-half and I’m just starting to like it and understand what the CPB was trying to get at with GFE2010. Of course it takes the government to take a 1 page Good Faith Estimate form and turn it into a 3 page document.

According to a survey conducted by ING Direct consumers polled about the new GFE had this to say:

  • More than one in three (36 percent) homeowners described the GFE as being “complicated” or a “waste of time.”
  • 68 percent of homeowners surveyed were unable to correctly identify the purpose of the “Title Services” charge on the GFE. In other words they didn’t know what they were paying for.
  • 53 percent of homeowners spent 30 minutes or less reading and reviewing the GFE.
  • One in ten (11 percent) homeowners never even looked at the document their loan officer sent them.

As a loan officer the things I get asked the most are:

  1. What is my interest rate?
  2. What is my payment?
  3. How much cash do I have to bring to the closing?

#3 is not addressed on the current GFE2010 or either of the two new documents being proposed. #3 is VERY important also. In many purchase transactions the seller pays all of the borrowers closing costs so all the borrower needs to bring to the closing table is their down payment. It would be good to know that, huh? I usually end-up sending the “Fees Worksheet” (the old Good Faith Estimate) along with the GFE2010 because it addresses all the above and breaks the fees out into easier to understand terms than the new one.

Unlike last time though, this time the CPB is asking our opinion on what is easiest to understand and what we’d like to see. Check-out the two finalist forms in PDF format then vote for the one that makes most sense to you. You can also add notes after you vote if you feel the form is missing some information you feel is important to the loan disclosure and shopping process.

See the new forms here:

Harris Interactive releases it’s list of the 10 worst companies in America

The 12th Annual Harris Interactive Reputation Quotient Study, a survey of American’s perceptions of businesses is always interesting. The number one company in U.S. in the American public’s eye: Google. Apple placed 6th. Here though, for your viewing (and moaning pleasure) is the 10 worst companies in America:

10. Delta Airlines
9. JP Morgan Chase
8. ExxonMobil
7. General Motors
6. Bank of America
5. Chrysler
4. Citigroup
3. Goldman Sachs
2. BP

And the worst company in America?

1. AIG

I don’t think it comes as surprise that 5 of these are financial institutions that contributed to the current economic meltdown AND took bail-out money to reward themselves with. I also don’t think it comes as any surprise that not a single one of them care what you think or the results of this survey.