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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Pre-Qualification Vs. Pre-Approval

mortgage-prequalification

There seems to be a misunderstanding of the difference between a pre-qualification letter and a pre –approval letter. Both letters are given to a home buyer by a lender and it is usually suggested that a buyer gets this letter prior to shopping for their home. These allow clients to know exactly what their price range is and what they realistically can be approved for.

When in Arizona, both of these letters are documented with the same form, a PQF/ Pre-Qualification Form.

A pre-qualification letter can be created by simply having a conversation over the phone with a lender and having a credit check run. All this letter states is that from the information you have given the lender, you are qualified for up to a specific amount. If you are getting a pre-qualification letter, please take the time to be specific and honest with your lender. This will allow you to get the most accurate results possible.

On the other hand, there is also the option of getting a Pre-Approval letter. This letter is completed with the same form as a pre-qualification letter only with additional comments/notes made on it. This means that the file has been sent through a desktop underwriting (DU/LP) engine and documentation has been collected & reviewed by processing as well as an underwriter. This is usually marked with a TBD “to be determined” address. This is an approved loan simply requiring an appraisal, contract & title work.

Realtors appreciate when clients take the time to go through this process because it allows them to properly determine which homes to show and what is going to be best for that specific client. Yes, a pre-approval does take a little more effort and time, but in the end it can really give you the edge when looking to buy! For questions or comments please feel free to email me at Ingrid.Quinn@cobaltmortgage.com or visit me at scottsdalemortgageexpert.com .


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Rumor: Loans Are Hard to Get

rumors

I receive phone calls on a daily basis from people looking for a mortgage. They want to get prequalified to purchase a home and most want to have the rumor “It’s hard to get a loan nowadays” dispelled. There are a lot of mortgage options available:

1. Conventional conforming loans- up to 97% loan to values to $417,000 or higher depending on area of the country loan is placed
2. FHA loans- 96.5% loan to values
3. VA loans- 100% loan to values for veterans & military personnel
4. Jumbo loans- loan amounts over conventional conforming loan limits
5. UDSA- 100% loan to value rural area loans
6. Private/hard money loans
7. Home Equity loans

So where is this bad information coming from? Media, banks, mom & dad, professionals in your life? Getting a loan is not that hard. You need decent credit (not super excellent), a job, and cash for a down payment and closing costs potentially, depending on the type of financing you are eligible for.

Many times the clients I talk to are referred from agents that were supposed to take the client out to look at a rental. If they can afford an $800-$3500 rent payment for example, they may be able to buy a home.

It is important for the consumer to get re-educated on the market today when they are looking to make any kind of move, renting or purchasing, so they know their options and have a plan in place. Many people are surprised when I tell them you can qualify to purchase now. With the market improving and interest rates at historic lows still, now is a great time to buy a home! If you have any questions or comments, I would love to hear from you. I can be reached at Ingrid.quinn@cobaltmortgage.com or http://www.scottsdalemortgageexpert.com or http://www.cobaltmortgage.com/ingridquinn.


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Where did that Money Come From!? Documenting Cash to Close

  Cash to Close

    It seems like recently I have been running into the same issue with many of my clients. Where is their cash to close coming from to purchase a new home? I have a couple in particular that just got married and, of course, received a stack of cash and checks as gifts from their guests.

   On their January bank statement a $10,000 lump sum deposit appeared and in turn questions arose. Luckily for them we are now in April.

   Loan requirements are your most recent 1-2 months bank statements. If we had needed to use January’s bank statement my clients would have been in a bit of a predicament. Can you imagine being required to hunt down gift letters from every single guest at your wedding?

   Another instance was a young man was selling his ATV for cash to close. I’m glad he informed me of this so we could take the proper steps to document the funds.

   When you have an asset that there is a title or a document showing your ownership prior to selling or transferring ownership, please take the time to make a copy! We need a copy of the bill of sale and to fully cover your bases have the buyer pay in a cashiers check. Any cash transaction is not documentable.

   If any of the bank statements show deposits that are not payroll deposits & are over 25% of you monthly gross income, the source of those deposits should be documented (For example: gifts, inheritance, liquidation of stocks, etc.). All mortgage program guidelines require a full paper trail on where these deposits originated, copies of checks, deposit slips, etc. If any of the bank statements have more than one page, a copy of all pages are required, even if the other pages don’t show anything important or are blank. Depending on how long the transaction takes you may need to send in updated statements as you get them.

   Copies of the most recent statements (or most recent quarterly statement) on any other asset accounts (like stocks, CD’s, 401k, IRA, etc.) are required. If these assets are going to be liquidated or borrowed against evidence of that is needed, and evidence of the deposit of the funds into the new account (such as deposit slips and copies of the check).

   You are entering into a major financial transaction when purchasing a home! The best thing for you to do is to be upfront and honest with your loan officer from the very beginning because anything that is not disclosed upfront tends to cause problems near the end of the transaction process. Your loan officer is your advocate and will fight for you to get the loan you need to buy your home. Be honest with them and let them work for you! For questions or comments, please contact me at Ingrid.quinn@cobaltmortgage.com or visit my websites at www.scottsdalemortgageexpert.com or www.cobaltmortgage.com/ingridquinn.


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Closing Costs, What Are you Paying For?!

  Buyer-Seller-Rd-SignWhen you purchase a home, there are many things to keep in mind, especially pertaining to financing. As a buyer, you need to be prepared for not only your down payment on the home but also closing costs. These are the fees affiliated with the loan and the purchase transaction being processed and closed.

   You pay closing costs to the Title Company, state/county/city, lender, and you also pay tax and insurance escrows, and per diem interest. The closing costs that you pay the lender are usually far less expensive than you pay to the other parties. All costs and down payment funds are paid at the closing table to the Title Company and they are then dispersed to the various entities/vendors that the fees are owed to.

   The following are the seller concessions that the seller can pay on top of splitting the transfer & recordation taxes (if applicable, splitting these taxes is customary in many areas) In Arizona, it is standard in the resale contract for the seller to pay the Owner’s Title Insurance. Sellers may pay up to 3% of the sale price towards a buyer’s closing costs, escrows, and per diem interest, on a conventional loan with a 5% down payment.

   Sellers can pay up to 6% of the sale price to the borrower’s closing costs, escrows, and per diem interest on a loan with a 10% or 20% down payment. On FHA loans a seller is allowed to pay up to 6%. On VA loans, the seller may pay all closing costs for the veteran.

   On an investment property the maximum seller credit for closing costs is 2% of the sales price.

 

   Here is a list of some fees that are included in closing costs:

-Application Fee (if any)

-Loan Origination Charges

-Points

-Appraisal Fee

-Prepaid Interest

-Private Mortgage Insurance

-FHA, VA and Rural Housing Fees

-Home Owners Insurance

-Flood Determination Fee

-Property Survey Costs

-Title/Escrow Fees/Title Insurance

 

   Your lender will give you an estimate of closing costs on the purchase of a particular house you’ve selected. This is called a “Good Faith Estimate” (“GFE”) and it is required by law to be given to a buyer. Then, the day or before closing, the Title Company will give you an actual “Settlement Statement” (aka “the HUD” or “the HUD-1”), which is the final and complete form with all the numbers for the sale, including the actual closing costs.

   There are many different ways of handling the cost to close, including “buyer assist”. The best idea you can do is sit down with either your realtor, financial adviser or a loan officer and simply ask. They will be more than willing to answer any questions and make sure you are truly ready to buy! If you have any questions please feel free to email me at Ingrid.quinn@cobalmortgage.com


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How A Refinance Can Change Your Life

I continue to get calls for refinancing. A lot of people who were eligible for HARP (Home Affordable Refinance Program) refinancing have already done so. Hopefully, if they haven’t yet they will do so and take advantage of what I believe is a great opportunity for negative equity clients. But, there is renewed interest in other refinance programs because home values have rebounded in many markets.

Homeowners who have equity in their homes can do a regular refinance without HARP and lower their rate or they can get out of their FHA Mortgage Insurance Premiums to possible lower conventional premiums or they are opting to reduce the term of their mortgage.

A client should consider what their goal is with a refinance:

• Do they need to lower monthly payments and/or interest rate?
• How long will they be in the home?
• What are their long term wealth management/ equity position goals?
• What are the tax benefits or ramifications of a refinance?
• Do they want to build equity and lower rate?

An example of an analysis between staying with a current 30 year fixed loan Vs. a 15 year or 30 year refinance is outlined below. Please be advised this is not a rate quote. :
Say for example, you have a 30 year loan taken out for $150,000 with a rate of 5.25% 5 years ago. You have a balance now of about $140,000. The loan over 30 years would cost $150,000 in interest charges when finally paid back. The monthly P& I payment is $828 a month.

The same loan refinanced today with a $140,000 loan amount for a 15 year loan at 3% will have total interest paid of $36,000 over the term and the payment will only rise by $139 a month. HUGE savings!

The other alternative is to take the $140,000 and refinance for 30 years again at a rate of 4%. The loan will cost over the 30 years $102,000 in interest charge and the payment will drop by $160.

Wouldn’t you rather have the extra $100,000 in another form of investment or have your home paid off when you retire or when the kids go to college? Rumor has it 15 year loans have payments that are not manageable. It is not true. Speak to a mortgage professional about your options and don’t completely rule out a 15 year mortgage. It can change your life. For more information or to comment please contact me at Ingrid.Quinn@cobaltmortgage or visit my website at http://www.ScottsdaleMortgageExpert.com.


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What Can You Do to Improve Your Credit Score?

Credit ScoreMany people suffer with “poor to fair credit” or in the last 5 years have suffered some kind of credit incident and this can affect your future for a long time. There are many companies that claim they can repair your credit however; with a little bit of knowledge you can do the same things for yourself. Here are some tips on how to accomplish this.

1. Get a full credit report from the approved free site. Be careful not to sign up for 3rd party monitoring that offers a free report with your membership:
a. This can be easily obtained ….go to http://www.annualcreditreport.com and obtain a free report from each of the 3 credit bureaus
b. Check all of the information on the credit report to verify that the information is accurate and all about you. Do not enter a bunch of disputes about addresses, name, etc. Disputes are a detriment when applying for a home loan.

2. Pay off your negatives:
a. If the poorly rated items have occurred in the last 12 months, pay or settle them.

3. Start to rebuild!
a. Keep credit balances between 30-50% of the credit limit of the card.
i. Never max out your credit card even if you make payments on time.
ii. You should never allow a card to become fully inactive.
b. Retain accounts you’ve had the longest:
i. This shows longevity in your credit profile
ii. A good rule of thumb is to have 3 open trade lines at all times

4. Use a secured credit card:
a. A secured credit card is one of the easiest ways to build credit.
b. Apply for a small installment loan. Some banks offer credit builder loans and at the end of the term you have a small CD.
c. Put a sizable down payment down for a car and borrow a small amount instead of paying cash for a car and then pay off within 12 months or more.

5. NEVER pay 30 days late on any credit account.
a. This will automatically drop your credit score

6. If you are looking to make a major purchase such as buying a home, keep credit inquiries at a minimum.

For any questions or comments feel free to contact me at Ingrid.quinn@cobaltmortgage.com or visit my website http://www.scottsdalemortgageexpert.com.