Ingrid B. Quinn

NMLS ID #211652 Arizona, Loan Consultant


Leave a comment

Mortgage Points, What are They?

mortgage-points-600cs041712

Mortgage points generally refer to a loan origination fee and/or discount points. Discount points refer to the amount of money that a person pays to a lender to get a loan at a specific rate. Points are paid when discounting the rate for a loan. A lender usually has a menu of rates available on any given day at a variety of costs. Par pricing is when no discount points are required.
An origination fee is what a borrower will pay the lender for their services. Since the change in lending and disclosure rules in 2009, the term origination fee was changed to origination charge. The origination charge will include any lender admin fees and an origination point if applicable.
Before you can even consider whether or not purchasing points is a good idea, you have to make sure that you will have the extra cash because points will increase your total closing costs. Points can be financed into a refinance transaction but not into a purchase. Sellers can pay points for a buyer as part of a closing cost concession.
Positive mortgage points can be viewed as a form of pre-paid interest. Each point is equal to 1% total loan amount. Why would you want to pre-pay a part of your interest? The buyer is offering to pay an up front fee to receive a discount on the interest rate. The reduction in interest will give the buyer lower monthly mortgage payments. With mortgages duration of typically 15, 20 or even 30 years, the discount points will help save you a huge amount of interest over the life span of the loan. Positive discount points are usually worthwhile to a home buyer if he or she will maintain the mortgage for a while.
There is a second type of mortgage points, negative mortgage points or as termed, Yield Spread, work very much like positive mortgage points except in reverse. Instead of you paying the bank to lower your rate, the bank will pay you to take a higher rate. As an example, if you were offered a rate of 5.5 percent on your $100,000 loan. The bank is now offering you one point to raise your rate to 5.75 percent. Therefore, they are basically giving you $1,000 in order to raise your interest rate. This will also result in you paying a higher mortgage payment every month. These points don’t end up as a written check for the money. The yield will just be applied to your total closing costs on the loan.
Closing costs can result in a few thousand dollars of out-of-pocket expense. Amounts for closing cost vary by state, location and amount of loan requested. Purchase transactions and refinances can have a difference in costs too.
“Breaking even is a major factor in deciding what to do with points. Something the buyer will want to inquire about is how long it will take to “break even” in regards to possibly selling the home before their loan is paid in full. You will want to have retained the mortgage at least until you “break even”, if not longer, to make it worthwhile to reap benefits from discount points. Keep in mind there may also be a tax benefit to paying points and you will want to consult a tax advisor on this subject and what may be beneficial to your individual circumstance.
For questions of suggestions please feel free to email me at Ingrid.Quinn@cobaltmortgae.com or visit me at http://www.ScottsdaleMortgageExpert.com or http://www.CobaltMortgage.com/IngridQuinn


Leave a comment

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 .


Leave a comment

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.


1 Comment

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.


Leave a comment

You Can Qualify to Buy a Home with a 620 FICO & 3.5% Down Payment!

home-loan

All too often I hear the response that mortgages are hard to come by, there isn’t money available, lenders want too much down, etc. There is plenty of mortgage money available! You can get an FHA loan for as little as 3.5% down with a FICO (credit score) of 620, a Conventional loan for 3% down with a 680 FICO or a 5% down Conventional Loan with a 620 FICO.

The key ingredient is how the loan package is put together and what are risk factors involved, such as where is cash to close coming from, are there cash reserves after closing, payment shock, job stability etc. If you find that you will be on the lower end of the spectrum, the most important thing to do is be honest with your lender, disclose why you are where you are and work together to build a good case for why an underwriter should approve you.

I tell clients I am writing a book about them. I get to talk to you and get to know you. An underwriter reviews you on paper. They read your story like a book. With each page turned they want answers to questions. They review your credit report. Why are their credit scores low? An underwriter sees your bank statement. Why do they need a gift for closing costs or down payment? Can they manage their bank account? It is important to put your best case forward and make sure you have a loan officer that can write your book to show the best you possible.

These guidelines are specific to my company. FHA will allow lower scores but you must find a lender who will do that loan. For more information please contact me at Ingrid.quinn@cobaltmortgage.com or visit my website http://www.Scottsdalemortgageexpert.com.