Ingrid B. Quinn

NMLS ID #211652 Arizona, Loan Consultant


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APR vs. Interest Rate, What’s the Difference?

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Recently one of the Realtors I work closely with asked me what the actual difference between APR (annual percentage rate) and the Interest rate. Well, there is a big difference and when you are shopping for a home mortgage you are going to want to pay attention to a lot more than just the APR that is being offered by a lender. The short answer to this question is that simple interest is only the interest you pay on the loan whereas the APR is an informational number that covers some of costs of obtaining a residential loan, including points, interest, lender administration fees, mortgage insurance and various title fees.
In the case of a mortgage, the annual percentage rate, or APR, is the total yearly cost of financing a home, expressed as a percentage of the amount financed.
The federal Truth in Lending Act requires the lender to disclose both the nominal rate and the APR. Loans are frequently offered on different terms. Loan terms from different lenders can make it hard to figure out which offer is truly the best one.
The APR disclosed can be rounded up or down to the nearest one-eighth of a percentage point. Both the APR & simple interest rate must be advertised in the same font size or APR may be larger in print.
What this all means is that the APR of a loan is essentially a consumer tool designed to assist people when looking to make a major purchase. On the other hand, you have your simple interest rate. This is a very straight forward percentage that will be applied to your loan and determines your monthly payment.
People can use APR to get a general idea of what you will be looking at long term, but when it comes down to it people need to not be hesitant to ask lenders questions. Call them and find out what exactly their APR includes and what other fees are to be expected. You can also talk to your realtor and ask them about different lenders they have worked with. It’s never a bad thing to get a second opinion. Especially from a professional who is there to get you into your new home or assist you your refinance transaction.
For any questions or suggestions please feel free to email me at Ingrid.Quinn@CobaltMortage.com or visit me at http://www.CobaltMortgage.com/IngridQuinn or http://www.ScottsdaleMortgageExpert.com .


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How Much Can I Qualify For? DTI, What is it?

canada-cut-interest-rateIf you talk to a lender, they are going to drill down to the 4 most important aspects of your loan when trying to purchase or refinance a home. What do you make, Who do you owe, How much cash do you have to work with and What is the property value?
I am going to focus this blog on the numbers involved in qualifying income and what the rules are to get someone an approved loan. Growing up in the mortgage business, I learned the rule of 28/36. Back in the 80s those were important numbers. What do they mean? They stand for the debt to income (DTI) ratios that lenders use as a basic qualifying guideline.
28% of someone’s gross monthly income (or determined self employed income or passive income of some kind) could be tied up in housing expense. That includes principal, interest, taxes, insurance, HOA/condo fees, and possible 2nd mortgage, if applicable. 36% of your income could be tied up in total debt. That includes house expense plus monthly debt like car payments, student loan debt (see Student Loan blog) or credit card payments.
Now, we hear how the mortgage market has tightened up, but the ratios we work with have relaxed over the years surprisingly. It is not uncommon to see ratios in the 35/45 range or even 35/55. Different types of loans, such as FHA, Conventional, VA or Jumbo have different thresholds for approval. You will see more flexibility when the quality of the loan is stronger. Larger down payments, high credit scores and/or cash reserves after closing are all qualities that could command a lower risk loan and therefore allow a higher DTI.
Many loans are run through automated underwriting systems such as DU (Desktop Underwriter) or LP (Loan Prospector) that measure the risk of a loan. Lenders take those results and continue to process the loan if an acceptable response/approval has been received. Knowledgeable loan officers and processors can work with these systems and try to figure what characteristic of the file may need to be improved to reach an acceptable response. Then the loan officer will be able to tell the borrower how much of a loan they are qualified for.
For further questions or suggestions, please feel free to email me at Ingrid.Quinn@cobaltmortgage.com or visit me at http://www.ScottsdaleMortgageExpert.com or http://www.CobaltMortgage.com/IngridQuinn.


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There’s Nothing to Fear, Real Estate Rebound Is Here!

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“We are keeping a very close eye on the effect of rising mortgage rates on the housing market and the economy, but our July forecast is little changed from last month,” said Fannie Mae Chief Economist Doug Duncan. Fannie Mae does not fear the increase in mortgage rates and feels that the housing market is going to continue to grow. People will always need to buy homes, so a rate increase will not deter many homebuyers. We are always writing mortgage loans.
With the latest jobs report showing job creation still on the rise and consumer confidence leading the climb, we should see the housing market continue to grow and thrive. “We continue to see growth in housing, partly due to an increase in existing home sales as buyers choose to act while rates remain near historic lows,” Fannie Mae Chief Economist Doug Duncan said. “Consumer attitudes are improving amid a strengthening employment sector and we should begin to see a moderate pickup in consumer spending.”
Even with the increase in mortgage rates, we are still seeing great rates. Fannie Mae did make note of the fact that even with mortgage rates increasing we are still seeing a steady flow of mortgage applications, however we are seeing a significant slow down in refinances. This is to be expected and the number to homes being built and coming on the market is still increasing.
All of these factors are pushing home values forward and it truly looks like we are seeing the light at the end of this tunnel. FNMA is expecting economic growth of 2% this year and for that to continue to increase in the coming year.
For any questions or comments, please contact me at Ingrid.Quinn@cobaltmortgage.com or visit my websites http://www.cobaltmortgage.com/ingridquinn or http://www.scottsdalemortgageexpert.com.


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Investment Purchase Options

Purchasing an Investment Property?With recent media attention and television shows that focus on buying and/or flipping (buying distressed properties and remodeling), there has been an increase in property investment purchases. These investors know the benefits of buying an investment property. Whether they rent them out to tenants or they flip a distressed property, buying another home can generate passive income for a homeowner. Because restrictions or tightened guidelines have come to mortgage lending companies, many investors are looking for alternative ways to finance their purchase. By researching all of your available options, you will be able to find a way to finance your potential investment property. Below are some options that may be available to you:

Conventional Conforming Mortgages

The rules will vary depending on whether an investor owns 4 or less financed residential properties or 5-10 financed residential properties. Before applying for a loan, make sure that you have your bank/asset and income paperwork in order. Lenders will require your last 2 years personal Federal tax returns. If you currently own rental property and will need to use rental income as qualifying income, it should be reported on your tax returns. Many investors set up LLCs or partnerships for managing rental property income and expenses. Copies of those returns will be required as well. Also, it is a good idea to obtain a current copy of your credit report as lenders will also have FICO requirements for investment mortgages that may be higher than those scores required for a simple owner occupied transaction.

Private Portfolio & Hard Money Lenders
Investors that flip properties must have short term cash to complete the majority of their purchases. Often, they are attending courthouse auctions to buy foreclosed homes. Many times, they obtain loans from private lenders at high interest rates and costs. With this type of loan, investors are under pressure to sell the house as quickly as possible.
You may choose to finance your investment purchase by using the equity in your primary residence as collateral. You can borrow the money from your primary home to pay cash for your investment property.
If you own additional properties, you can use the equity in multiple homes to finance your next purchase by using cross-collateralization. Some lenders will use your primary residence, as well as second home equity as security when buying an investment property.

How have you financed an investment purchase?
Please comment or email me at Ingrid.Quinn@cobaltmortgage.com or visit my websites at http://www.scottsdalemortgageexpert.com or http://www.cobaltmortgage.com/ingridquinn.


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Life After Short Sale

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Over the past couple of years, Short Sales have become more prevalent. Banks have been more receptive to short sales and have opted to negotiate instead of foreclose. Several clients who have called to be prequalified have had a Short Sale in their recent past. They have asked me when they can get back into the buying pool again. The rules to obtaining a mortgage after a short sale differ depending on the type of financing a buyer wants to use for their next purchase.

CONVENTIONAL FINANCING

With a 20% Down Payment, a Buyer can purchase a home using Conventional Financing after a 2 year waiting period from the Short Sale date (which can be found on their final HUD settlement statement). With 10% Down Payment, a buyer must wait 4 years from their Short Sale.

FHA FINANCING

Using FHA financing, a buyer must wait for 3 years to have passed from the Short Sale date.

VA FINANCING

The waiting time with VA financing will be 2 years.

USDA FINANCING

USDA financing will be a 3 year wait from the Short Sale date.

It is a good idea to great prequalified with your lender from 6 months to a year out before you purchase another home. Many times there could be some credit repair work that may need to be done on your credit history to make sure that your credit score and history are reporting accurately.

Do you have a Short Sale experience you would like to share? Please comment or contact me at Ingrid.Quinn@cobaltmortgage.com or visit my website at http://www.cobaltmortgage.com/ingridquinn.


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In House Lenders Pros & Cons

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Often times a Realtor will suggest to a homebuyer that they use the real estate company’s “in-house” lender. Realtors don’t usually push these lenders on their buyers, but they are definitely suggested and buyers will sign a disclosure that the real estate company does have affiliations and receives some compensation for that referral. Every wonder why? It is important to know how these lenders are structured, and how they operate. I have been on both sides of the table with this. I was an in-house loan officer for a couple of years about 7 years ago. That was before licensing became mandatory and the mortgage meltdown.
These in-house lenders are a joint venture between the Real Estate firm and an outside lender. The Real Estate firm takes a piece of the profits (most for the firm, a small amount for the Realtor) in trade for allowing the lender to be an “in-house” lender.
An in-house lender has trouble retaining quality loan officers because they offer low pay. Because there is a captured audience the loan officer does not have to pound the pavement for business but it is important that they establish a quality relationship with the Realtors in their office and are accessible to them.
An in house loan officer is only as good as their supporting backroom. If processing is out of state, the loan officer has limited control over the process and relies on a strong team to take care of his/her deal. I had that benefit when I was working for a Realty office, thank goodness, but most in house lenders have the kind of a system that follows the retail bank model, and the service can be less than par. In today’s hyper complicated mortgage environment, everyone needs a top notch mortgage representative, who is full time, who will make things as smooth as possible, and who will fight for their loan; all while providing competitive market terms.
It’s an understatement to say the financial world is getting complicated. You can still hire the best mortgage loan officer, and also get the best terms. Simply stay away from online lenders, and lead aggregation websites. Use local referrals, which are accountable, experienced, systemized, and have a vested interest in maintaining their reputation.
Have you had experience with an in house lender? I would love to hear about it. Contact me at Ingrid.Quinn@cobaltmortgage.com or visit my website at http://www.scottsdalemortgageexpert.com or http://www.cobaltmortgage.com/ingridquinn.