Ingrid B. Quinn

NMLS ID #211652 Arizona, Loan Consultant


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Paying Off Your Mortgage Loan and FHA rules

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Why Is the Payoff Balance on a Loan Usually Higher than the Current Balance on your Statement?

When you receive your monthly statement from your mortgage lender, the unpaid balance IS NOT the amount necessary to pay the loan in full. This is merely the principal balance as of the first day of the previous month.

Your March statement shows a balance owing of $200,000. This figure is what is owed as of February 1 – not March 1. Why? Because when you made your February payment to the mortgage lender, you were paying interest in arrears – you pay the interest for the previous month – in this case interest that was due from January 1 through January 31.
You will pay interest to the lender until it receives the payoff from your settlement agent. The settlement agent will determine the amount to collect for payoff. At times there will be a few days interest as a cushion. Keep in mind that the lender being paid-off will refund to you any overpayment in daily interest.

So how do you determine your payoff amount?
The title company will order a payoff letter from your mortgage servicer to find out the precise payoff amount.

What if you’re trying to prepare an estimate and would like a figure?
You can always call your lender and obtain a payoff from them over the phone. Some lenders will calculate a payoff amount for you online as well. Just remember to add a few days to the closing date so that you have allowed for a cushion.

To estimate, use this trick: take your principal balance and add to it a monthly payment. Assuming that you are on time with your payments, this number should always be a bit higher than your actual payoff, but at least this way you will be overestimating instead of underestimating, which is typically the case when you use the principal balance as the payoff amount.

Paying Off an FHA Loan
The daily interest covers the period until the payoff date, except on FHA mortgages, where the payment covers the entire month. Evidently FHA’s accounting system can’t deal with days, only months. That means that it is a good idea for borrowers refinancing out of an FHA to close as close to the end of the month as possible. This rule may be changed in 2015.

For questions or comments please contact me at Ingrid.quinn@cobaltmortgage.com or visit http://www.cobaltmortgage.com/ingridquinn or http://www.scottsdalemortgageexpert.com.


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Advantages of Working with a Local Lender

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One of the greatest advantages of working with a local lender is that they are better able to communicate with you.

We live in the age of technology and making use of the newest developments is important in any business, but nothing can replace a good face to face conversation. I maintain an open door policy with my clients. Day or night I am available. I personally get to know each of my borrowers and can update them within moments on their loan status and what, if anything is required. Accessibility is an important ingredient for success.

Another advantage of a local mortgage professional is knowledge of the local market.
When you use a local lender, they have expert knowledge of the local market. Why would you use a lender that doesn’t know your area? There are intricacies to the mortgage process that are very area specific; it’s very difficult for a national lender to know all of them for every state. Every area of the country has regional differences, when it comes to closing home loans and purchasing real estate.

Finally, your local mortgage lender will likely be connected to the other professionals involved in the purchase or refinance.

There are many different aspects to a home purchase or refinance. The major people involved are the borrower(s), the lender, the real estate agent, and the title company and inspection professionals. When you work with a local lender, you will receive help navigating the process. By knowing the ins and outs of each part of the process, a local lender is able to keep things on schedule, identify issues and communicate more effectively each step of the way.

If you have any questions or comments please feel free to email me at Ingird.Quinn@cobaltmortgage.com or visit me at http://www.ScottsdaleMortgageExpert.com or http://www.CobaltMortgage.com/IngridQuinn.


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Fannie Mae Closing Cost Assistance

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FNMA has announced that homebuyers may receive up to 3.5% of the sales price in closing cost assistance on purchase offers submitted on HomePath properties between 2/14/14 and 3/31/14 when purchasing during the First Look period. During the First Look period, owner-occupied buyers are able to submit offers, giving them the opportunity to purchase homes without competition from investors. The First Look period has recently been extended from 15 days to 20 days. Purchases must close on or before 5/31/14.

The incentive will offer qualified buyers up to 3.5% of the final sales price to pay closing costs. If closing costs do not total the 3.5%, the buyer is not able to take the left over amount as a credit back. The incentive is not available on second homes or investment properties.

Prospective buyers can search for properties and easily identify how many days remain on a property’s First Look period by visiting http://www.HomePath.com. “For more information regarding this incentive, please visit the Fannie Mae website for complete details:

http://www.fanniemae.com/portal/about-us/media/corporate-news/2014/6079.htm

Consult your local Realtor for additional information on how to submit an offer to HomePath.

For questions about the Fannie Mae HomePath mortgage financing, please contact me at Ingrid.quinn@cobaltmortgage.com or visit my website at http://www.cobaltmortgage.com/ingridquinn or http://www.scottsdalemortgageexpert.com.


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Tax Time and Staying In Touch

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It’s that time of year again, when everyone is gathering their paperwork from 2013 and preparing to file their tax returns. Clients, who have either purchased a home or refinanced a current home mortgage in 2013, need to retain their final closing statement from their transaction for tax purposes.

Their tax preparer or online self preparing system will ask them for information from their settlement/closing statement. Clients will need to keep this paperwork handy to determine the amount of charges in relation to their recent transaction that can be used as a deduction on their taxes.
Tax payers have questions about what is going to be deductible and it’s always good to have them ask their preparer for that information. The http://www.irs.gov website is also very helpful. Also, remind them that they will get a year end summary 1098 from their mortgage company about interest, property taxes and mortgage insurance paid for the tax year. If the loan has been sold to a new servicer, it is also good to remind them that they will receive more than one 1098.

This is a great time for realtors to reconnect with their clients from the previous year. Sending your client a copy of their final HUD (closing statement) is a helpful service you can provide and is one of the activities you can plan on an annual basis when doing your yearly business plan. You can securely retain the final HUDs throughout the year and when January 2015 rolls around, you have them at your fingertips to forward to each client with a thank you and a reminder for referrals.

What else are you doing to stay in touch with your client during the year? I appreciate your feedback. To contact me please, email Ingrid.quinn@cobaltmortgage.com or visit my website at http://www.scottsdalemortgageexpert.com or http://www.cobaltmortgage.com/ingridquinn.


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Qualified Mortgage (Q.M.) What is it?

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Qualified Mortgage (QM) and Ability to Repay rules are in effect on loan applications received on or after January 10, 2014. Part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the new rules are designed to protect buyers from purchasing homes they can’t afford and provide lenders protection from liability when originating loans that meet the Qualified Mortgage standard.
What is a Qualified Mortgage?

A qualified mortgage is a home loan that has:
• Regular periodic payments in substantially equal amounts
• Been underwritten based on a fully amortizing payment schedule using the maximum rate allowable for the first five years after the date of the first periodic payment
• Verified the borrower’s income and assets; and current debts, including alimony and child support
• A borrower’s total debt-to-income ratio of no more than 43% (see “Temporary QM” for exceptions to this requirement)
• Met points and fees limitations
• None of the following features: negative-amortization, interest-only or balloon-payment features

Points and Fees

A loan must not exceed the limits listed below for points and fees for either Temporary or Standard Qualified Mortgages. These fees typically do not include those that are paid to third parties such as appraisers or title companies unless those companies are affiliated with the lender.

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Higher-Priced Mortgage Loans

For a lender to originate a Qualified Mortgage with safe harbor legal protections, the lender must ensure that the Annual Percentage Rate (APR) does not exceed certain thresholds. For 1st lien mortgage loans, the APR cannot exceed an index called the Average Prime Offered Rate (APOR) by more than 1.5%. For 2nd lien mortgage loans, the APR cannot exceed the APOR by more than 3.5%. FHA APR cannot exceed APOR +1.15% + annual NI%.

What does the Qualified Mortgage mean for you and your buyers?

Most loan programs today already adhere to the standards that make up the QM rule. The new rule simply formalizes that lenders must make – and document – a good-faith determination before closing the loan that the borrower has a reasonable Ability to Repay the loan. At minimum, this determination is made based on eight factors, which are already the tenets of mortgage underwriting:
• Current income or assets
• Current employment status
• Monthly mortgage payment
• Monthly payment on any simultaneous loan
• Monthly payment for mortgage-related obligations (taxes, insurance, HOA, etc.)
• Current debt obligations, alimony and child support
• Monthly debt-to-income ratio and residual income
• Credit history

There will not be a significant impact for loans that are eligible for Fannie Mae, Freddie Mac, FHA, VA or USDA. Although some jumbo and non-conforming programs will tighten their standards to the 43% debt-to-income threshold, most customers using these programs will still qualify.

The points and fees limitations and higher-priced mortgage loan limits are generally seen as a positive for homebuyers, as they will prevent many lenders from charging high ancillary fees, large amounts of discount points, and higher interest rates. However, there will be a small amount of riskier loan products that will be difficult to offer without violating the QM thresholds. Some lenders may decide to offer those mortgage products that are not eligible for QM safe harbor legal protection, but doing so will expose them to greater legal risks.


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First and Second Combo Mortgages are Making a Come Back!

983077351003885_mortgage-applicationI have recently come across loan pre-qualifications where a 1st and 2nd combination mortgage loan option may be the right solution for a client. One main reason that a client may wish to separate their total mortgage amount into two loans; avoiding P.M.I. (private mortgage insurance). Many lenders including Cobalt Mortgage offer these types of loan scenarios when buying a home. Use of the combination of a 1st mortgage and 2nd mortgage is when the total amount to be borrowed is to be separated in to two loans. This is typically done with the first mortgage being within conforming loan guidelines (loan amount depending on location of the home) and a secondary retail or private loan being is set up for the remaining amount. A conforming (Fannie Mae or Freddie Mac) first mortgage will typically have more favorable interest rates than a non-conforming loan. Second mortgages can be taken in typically 2 forms, as a Home Equity Line of Credit (HELOC) or a fixed rate mortgage.
PMI or Private Mortgage Insurance is required by Fannie Mae and Freddie Mac as well as most investors when a 20% down payment is not made. Private mortgage insurance is paid to protect the lender against loss if a borrower defaults on a loan. Some borrowers choose to use a 1st and 2nd mortgage loan option when they have money for a down payment; however it is not enough to meet the 20% requirement. I have discussed P.M.I. in detail in my previous blog “P.M.I. vs. M.I.P. What’s the Difference?” (Please feel free to visit that blog for further information on that subject) PMI may also be tax deductible for some clients but for those who it is not, may want the 2nd mortgage for the purpose of having tax deductible interest.
It is best to discuss your options with your mortgage lender and your tax professional for guidance on the options right for you. For questions or suggestions please feel free to contact me at Ingrid.Quinn@CobaltMortgage.com or visit me at http://www.ScottsdaleMortgageExpert.com or http://www.CobaltMortgage.com/IngridQuinn .


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Flood Insurance Changes and How They Effect Your Home Purchase

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A few months ago F.E.M.A. made some significant changes to the National Flood Insurance Program (NFIP) that was originally established in 1968. For details on this subject refer to the F.E.M.A website, http://www.FEMA.gov , but I felt that there are a few key points that people need to know about. Typically, a homeowner’s insurance policy is shopped for towards the closing date of a purchase transaction. At that time, a purchaser finds out they will need to purchase flood insurance if their new home is located in a flood zone. An issue that clients have been running into is the lack of an elevation certificate on the home they are purchasing and effective October 1, 2013 an insurance agent must quote worst case premiums which can reach into the thousands of dollars if an elevation certificate is not available on the home they are buying.

The elevation certificate is an important administrative tool of the NFIP. It is to be used to provide the elevation information necessary to ensure compliance with community floodplain management ordinances, to determine the proper insurance premium rate. The surveyed elevation data, typically the elevation of the lowest adjacent grade of the structure in question, is provided by a Licensed Land Surveyor. If you are looking to buy a home that is in a flood zone and requires flood insurance to be purchased, this should not be left to the end of the loan process because it may take a week, two or three to obtain the certificate and closing may be delayed.

The cost of obtaining an elevation certificate is usually the responsibility of the buyer. Maximum coverage through the NFIP is for $250,000. For full details and changes made to the National Flood Insurance Program please visit: http://www.fema.gov/media-library-data/7c1b0352fe3987c36569fccc492ab2ca/change_package_508_oct2013.pdf. For questions, please contact me by email at Ingrid.quinn@cobaltmortgage.com or visit my website http://www.scottsdalemortgageexpert.com or http://www.cobaltmortgage.com/ingridquinn.