Ask the "Mortgage Man": BUYERS WITH CREDIT SCORES BELOW 620 ARE FINANCABLE...

Ask the "Mortgage Man": BUYERS WITH CREDIT SCORES BELOW 620 ARE FINANCABLE...: Does your lender finance anything  below a 620/640? FHA/VA/ USDA loans are all regulated by the government.  They don't truly have minim...

Ask the "Mortgage Man": Effective Financing for Foreclosures with NO PMI i...

Ask the "Mortgage Man": Effective Financing for Foreclosures with NO PMI i...: Do you ever see a property cheap enough to buy, but needs thousands of dollars in minor cosmetic repairs?  You don't have much money for...

Effective Financing for Foreclosures with NO PMI insurance!

Do you ever see a property cheap enough to buy, but needs thousands of dollars in minor cosmetic repairs?  You don't have much money for a down payment because you want to save some of your money to fix up the home.  Usually an FHA loan is the best way to finance a property so that you can keep your down payment to a minimum. FHA requires certain repairs and defects to be completed prior to a new buyer taking ownership of a property.  Perhaps it is a bank-owned property who won't allow you to make any repairs or alterations to the property prior to taking ownership.  A simple solution would be an FHA 203K loan.  This product allows a buyer to finance the required repairs into the mortgage, with all of the work being done after the closing.
Lately, more and more people are upset about FHA's version of PMI insurance.  It is called Risk Premium.  It is the most expensive monthly PMI insurance on all types of mortgages.  The cost is anywhere between 125% to 250% higher than PMI insurance on conventional mortgages.  We offer conventional loans with as little as 5% down with NO PMI insurance.  Since most conventional mortgage underwriters normally don't call for cosmetic repairs to be completed prior to closing, this is a better alternative with properties that don't need major structural repairs.  So if you don't want PMI insurance on your loan, and wish to do as little as 5% down payment, this is a better alternative for many buyers.

Andy Williams
NMLS #118317
President
Abacus Regional Mortgage
NMLS # 113984
(484) 695 -5972
www.abacusmort.com

What is with this QM change to lending?

I've been in the lending business since 1986 and I've found out that things are always changing in this industry. Although guidelines sometimes change, we adapt and find new ways to help people buy homes.  In 1980-1982, the interest rates were a staggering 18%+ yet buyers still purchased homes.  In March 2009, the Governor abolished all types of "No income verification" loans to be written in the state of Pennsylvania.  The latest change is the new QM changes in effect since January 10, 2014.  This QM ( Qualified Mortgage)
change means all lenders must prove that anyone they are lending to must qualify for the mortgage. Certain protocol, verifications, and other steps must be followed in order to comply with this new law.  For those of us who've always performed these steps there is not going to be any significant change in our day to day operations.  More importantly, the buyers who now are buying will continue to be able to buy.  Very few people will be affected by the new guidelines.  The hilarious part is that there is a period of adjustment where the government will allow status quo with no changes.  The deadline is the year 2021! This means that they can revamp the guidelines again or abolish them anytime within the next 7 years.  We've been able to overcome high interest rates, major program changes, a current glut of foreclosures and short sales, and we will continue to prosper in the future.

Andy Williams NMLS 118317
President
Abacus Regional Mortgage
NMLS 113984
484-695-5972

END TO AN OLD TRICK

Have you or anyone you know ever moved into a different home without selling the current residence?   Did you claim to be renting your residence or selling it, all to get the best terms for a mortgage on an investment property? For years, many people used this ploy to get better terms for their loans.  This went on for years before lenders became smart.  When I got into the industry in 1986 as an underwriter, I was taught what to look for to determine true occupancy in a property.  With a few general questions you can determine a borrower's intentions with regards to the property.  If their commute distance from their current job to the subject property is 2- 3 hours away from the property, it is obvious that they are looking at the property as either a 2nd home or an investment property.  If they claim that the home will be a 2nd home, but it is located in downtown Allentown, you can conclude that it is to be used for investment.  To be considered as a 2nd home, the property must be located in a resort area or community where it is common for home owners to use them on weekends. If a buyer is moving from a home in which they owe more than the total price of the new home being purchased,  you can assume that the are either going to let their current home go into a short sale or foreclosure.  In 1983 in Houston Texas, the oil industry suffered a bad slump.  Many workers in that area were effected by the slump, and may lost their jobs.  Prices of homes dropped significantly, where many builders went bankrupt.  Buyers were purchasing the exact same home to theirs, in the same development, for 60% less money.  Why pay on a mortgage for a home that is worth 1/3 of what they owe on the home? Many claimed they were renting their current home and purchasing a new home.  When they completed the sale, they walked away from their old mortgage; therefore, the banks lost significant amounts of money. This trick worked well for a time, but the banks eventually put a stop to that.

Since the mortgage crisis of 2008, Fannie and Freddie Mac implemented changes in underwriting
guidelines which help to keep these fraudulent activities from happening.  If a buyer states that they will be vacating their current home and buying a new one, they must qualify with the new home mortgage as well as the old home, too.  If they brandish a lease, underwriters will not count any of the rental income until a borrower can provide proof that the home has been rented for 6 months.  This means that the buyers will have to vacate their home and rent for a minimum of 6 months before they can look to buy unless they qualify with both properties in their name.  Furthermore, if their current home doesn't have at least 30% equity, the borrowers must provide proof that they have 6 months mortgage payments on both properties saved in reserve.  Depending on the cost of the new home, you can be looking at tens of thousands of dollars needing to be shown in savings, 401k plans, IRAs, etc.  What seemed to be a fool-proof plan years ago, is becoming more and more difficult to pull of in today's market.

Andy Williams #118317
President
Abacus Regional Mortgage NMLS #112984
484 695 5972

FREE Mobile App for your I Phone or Droid

This FREE App offers you the ability to calculate total mortgage payments, and offers industry news and current interest rates.  It is all free and offered to you.  All you have to do is download the following:
 Here's a link to Andy Williams's mobile tool kit for mortgages: http://andyw.mortgagemapp.com/mobile.

Contact me with any questions or difficulties loading the app.

Andy Williams
President
Abacus Regional Mortgage
484 695 5972
www.abacusmortgage.com
NMLS # 118317

How is the Government Strike going to effect My Mortgage?

The answer is very little.  Other than the slow down of an already slow mortgage product (USDA), there will be very little delay to new loans and loans currently in progress. Unlike any other type of mortgage, the USDA loans require a full underwritten mortgage packet to be sent to them so that the USDA can rubber stamp the file with their seal of approval.  Assuming the strike continues for another week, this will delay the USDA loan closings for up to 2 weeks.  FHA, VA and other government backed mortgages will continue to get funded without delays.  These loans are insured by the government but not funded by the government, so they will continue without delay.  The only possible hiccup is that most lenders require an income tax transcript from the IRS prior to allowing funding on a loan.  This can be done at the very beginning of the loan process or just before the closing.  Most loans already in process have the transcript  in hand.  New loans that won't be closing for several weeks have plenty of time in which to obtain the transcript before closing.  The transcripts are usually processed within 48 hours, so there still remains plenty of time after the strike has ended, to get these documents from the IRS.  Rest easy, there is a 95% chance your loan will not be effected.

Andy Williams NMLS # 118317
President
Abacus Regional Mortgage
484 695 5972

FHA LOANS WITH 600 SCORES

We are introducing a new program for FHA with scores as low as 600.  There is no catch! Most lenders are requiring a minimum of 640 credit scores to finance FHA, but Abacus can do much lower scores.  These programs are almost the same as the typical FHA mortgages with a few minor differences.  I am outlining the differences for both programs below.

If a borrower's credit score falls between 620-639, a maximum debt ratio of 43% is allowed.  You can't go to 45.  If a borrower's new mortgage payment (PITI) doubles what a borrower is currently paying in rent, they must show an extra 2 months mortgage payments in reserve ( IRA, 401K, etc.)
They can't spend every dollar on buying the house, as a normal FHA program allows.  You can still get the seller to pay 6% of the selling price toward the buyers closing costs, but the buyer's 3.5% down payment CANNOT be a gift.  They must show proof that it is from their own funds. 
If a borrower's credit score falls between 600-619,  maximum debt ratios may not exceed 33/45%.  In addition, the borrower must put 5% down payment, not the standard of 3.5%.  The entire down payment must be the borrower's own funds.  If there is a doubling of the mortgage payment compared to what the borrower is currently paying in rent, they must show proof of an extra 2 months mortgage payments in reserve (IRA, 401K, etc.). 

This is a great opportunity to finance people who have experienced a problem with their credit in the past but have cleaned it up and still show scores below what is the norm.  It also helps to enable borrowers with high credit card debt to be able to purchase a home before having to pay down their revolving debt. 

For more solutions to your mortgage needs please contact me on my cell, email me at andrew.williams@abacusmort.com, find me on twitter at #abacusmort or find me on facebook.

Andy Williams
President
Abacus Regional Mortgage
NMLS # 118317
484 695 5972

Reason no. 45 why to use Abacus Regional Mortgage

Everyone has the problem where a self employed borrower hasn't shown enough income in order to qualify.  This is the time of year when they prepare their tax returns for the previous year.  Everyone is gathering their receipts and deductions to try and pay as little income tax as allowed by the federal government.  The more you pull out of Uncle Sam's pocket, the less house you can afford.  Since lenders use a two year average of income to qualify a self-employed borrower, careful consideration must be used in doing 2012's return.  If the income is high enough, a buyer can boost their buying power greatly. 

The problem lies in what is know as Form 4506.  Because of many cases of loan fraud having occurred in the past, where buyers have given fraudulent 1040s to their lender far different than the actual one they filed with the IRS, lenders won't allow buyers to close on their homes until they receive proof of income from the IRS.  This form when sent to the IRS, verifies the 1040 transcript matches the one given to the lender.  It can take as long as 8 weeks by the IRS to verify a return has been filed by a borrower.  This has delayed many closings, and in some cases causing hardships with families.  I have three lenders who don't send this form to the IRS; therefore, I can close the loan with a newly filed tax return.  No delays means happy customers, and happy realtors.

Call me with your next mortgage loan.

Andy Williams
President
Abacus Regional Mortgage
484 695 5972
NMLS # 118317