Ingrid B. Quinn

NMLS ID #211652 Arizona, Loan Consultant


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Talking Down Payment

There seems to be misunderstandings about what it takes in down payment to purchase a home. Well, I will give you valuable information. You can purchase a home with very little down payment and at times, no money down.  Down payments come in all sizes.

VA loans: If qualified for a VA loan you are eligible for a zero down payment loan. Determining this will be based on service time, discharge type and whether you have used your VA benefit before. VA loans are also available in higher loan balances which depend on location in the country. In the higher loan balances (JUMBO) you may receive better terms for down payment than what is available through other types of JUMBO financing.

FHA loans: The minimum required down payment is 3.5% for a typical FHA loan. Maximum loan amounts are determined by county. All FHA loans require mortgage insurance, so no matter how much you put down, you will have mortgage insurance in some amount for a specified time period.

CONVENTIONAL CONFORMING loans: Following Fannie Mae guidelines a 1st time home buyers can get in for as little as 3% down payment. The maximum loan amount in most markets is currently $453,100. Check your area for your maximum loan amount. Mortgage insurance most likely is required for loans that have a less than 20% down payment but there are many ways to handle how mortgage insurance is paid through the loan. What I mean is, it can be paid for in cash at closing so that it is not included in your monthly payment. It can be financed into the interest rate, or paid monthly or a sum can be paid for in cash and the balance paid monthly. Check with your lender what options are available to you.

There are a number of other types of programs, USDA, JUMBO Conventional, Down Payment Assistant Loans, RENOVATION Loans and lender PORTFOLIO products. Each have their own set of guidelines. If you have questions about what is available for your situation please let me know and leave a comment below.


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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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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.