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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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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To Make a Pre-Payment or Not?

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I get this question quite often from clients who would like to make a lump sum payment and reduce their mortgage payment without going through a full refinance. Check with your servicer to find out if they offer this feature in your loan or if you are contemplating a purchase or new refinance, it is a good question to field before you choose a lender for your transaction. The feature initially discussed is a courtesy offered by your servicer and not all lenders or servicers allow for recasting. Prepayment without penalty is allowed on most loan products and a review of your loan documents at closing is important.

Recasting is the process whereby a borrower applies a significant one-time payment to substantially reduce the unpaid principal balance of the loan in order to lower the monthly payment. Although the remaining loan term and interest rate remain unchanged, re-amortizing the loan based on the newly reduced principal amount results in a lower monthly payment. Conventional, conforming Fannie Mae and Freddie Mac loans are generally eligible, but loan recasts are not allowed on FHA and VA loans. Recasting a jumbo loan depends on the individual loan.

Different lenders will require a different minimum principal curtailment. Typically, the minimum is $5,000 or even $10,000. There will be a nominal one time fee ranging from $100-$500 also. The interest rate on the loan will not change and the re-amortization will be over the remaining original term of the loan. The loan will be re-amortized based on the newly reduced principal amount, resulting in a decreased Principal and Interest (P&I) payment and an overall lower monthly payment. New billing statements will be adjusted to reflect the lower payment amount.

This is a good alternative to a refinance when you have a more favorable interest rate than what the current market is offering. Also, there are no typical refinance closing costs related to the re-amortized loan process.
On the other side of this scenario, is a lump sum payment keeping the P & I payment the same and the term of the loan will then be shortened. This is a typical pre-payment. It obviously will depend on your long term reasons for opting for either type of loan restructure and you should consult your financial professional and your mortgage professional for guidance.

For questions please feel free to email me at Ingrid.quinn@cobaltmortgage.com or visit http://www.scottsdalemortgageexpert.com or http://www.cobaltmortgage.com/ingridquinn.


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Student Loans and Qualifying to Buy a Home

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With graduation season upon us, student loan repayment clocks will start ticking. So I decided to tackle a small but significant question in qualifying for a mortgage. Banks and lenders take a look at a borrower’s capacity to repay a mortgage loan along with the rest of their debts.
When analyzing a borrower’s income and debt, we have debt to income (dti) ratios to adhere to. Generally, housing expense to income should not exceed 35% of a borrower’s income. Total debt, including housing expense, car loan payment, and student loan and credit card payments should not exceed 45-50% of income. Again, keep in mind this is a general rule. Just because someone does not have additional obligations over their housing expense does not automatically mean lenders will allow housing expense to go up to 50% of someone’s income. This is a common misconception. Below are the guidelines for those types of loans depending on the type of financing for a home that is requested.

Deferred Installment Debt for Conventional Loan Qualifications
Deferred installment debts, such as deferred student loans, must be included as part of the borrower’s recurring monthly debt obligations. If the borrower’s credit report does not indicate the monthly amount that will be payable at the end of the deferment period, the lender must obtain copies of the borrower’s payment letters or forbearance agreements so that a monthly payment amount can be determined and used in calculating the borrower’s total monthly obligations.
Exception: For a student loan, in lieu of obtaining copies of payment letters or forbearance agreements, the lender can calculate a monthly payment using no less than 2% of the outstanding balance as the borrower’s recurring monthly debt obligation. However, if any documentation is provided by the borrower or obtained by the lender that indicates the actual monthly payment, that figure must be used in qualifying the borrower.

Deferred Installment Debt for FHA Loan Qualifications
Debt payments, such as a student loan or balloon note scheduled to begin or come due within 12 months of the mortgage loan closing, must be included by the lender as anticipated monthly obligations during the underwriting analysis. Debt payments do not have to be classified as projected obligations if the borrower provides written evidence that the debt will be deferred to a period outside the 12 month timeframe.
Deferred Installment Debt for VA Qualifications
If student loan repayments are scheduled to begin within 12 months of the date of VA loan closing, lenders should consider the anticipated monthly obligation in the loan analysis. If the borrower is able to provide evidence that the debt may be deferred for a period outside that timeframe, the debt need not be considered in the analysis.
Student loans can be in deferment for a period of time and many borrowers think they should not be counted in their dti. It is important to check qualifying guidelines with you mortgage lender. If you have any questions or comments, please contact me at Ingrid.quinn@cobaltmortgage.com or visit http://www.scottsdalemortgageexpert.com or http://www.cobaltmortgage.com/ingridquinn.


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What Kind of Lender Are You Using?

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When looking to buy a home, one of the most important things to think about is what type of lender you are going to be working with. You may be surprised by how many different options there are.
Banks, large and small: Due to their size, banks have a tendency to be a bit slower. In general, I have seen the banks take weeks to go through a process that takes other lenders days. There may be the chance that you are working with a Private Banking Associate who may get your file through a bit faster. On the negative side, trying to get a loan through a bank’s branch network, 1-800# call center or a low to middle producing loan officer can be painful.
There can also be a challenge with having the appraisal done through a bank’s system. Due to changes enacted by the CFPB, all lenders must use a 3rd party system of ordering appraisals. Banks use their own Appraisal Management Company (AMC). I equate ordering an appraisal to pulling a number out of a Bingo basket. It is random and the pool of appraisers is quite large. Obtaining a mortgage through a bank tends to be a conveyer belt process, possibly in another state or region. This can cause the loan process to take longer as well as be a bit more complex.

Credit Unions: Credit unions can go either way. From life experience a credit union’s functionality and speed are greatly affected by the loyalty you show. Credit unions also draw from their own AMC, and tend to be similar to a big bank. When it comes down to it Credit Unions are a 50/50 shot on whether you are going to have a great experience or a bad one.

Mortgage Brokers: Mortgage brokerage firms seem to be mostly about the individual broker. This can be a good thing when it comes time to shop rates for the client. If you are thinking of working with a Mortgage Broker, you will want to meet them in person and get to know their work ethic to see what to expect during your transaction. There are some downsides such as, appraisal ordering is subject to the AMC of the institution the broker chooses to go to. Some of these lenders broker to big banks, small banks, wholesale entities, insurance companies, credit unions, private banks and more. Guaranteed before your first payment is due the loan, will have been transferred and may do so a number of times throughout the life of the loan. The broker has very little negotiation power during the underwriting process as far as any hiccups on the file.

Mortgage Bankers: A good mortgage banking firm is a worthwhile contact right now. A mortgage banker is usually set up to underwrite and close loans in-house, which means faster turn times, more control and the underwriting staff, closers, funders personally know the people who are handling your loan . Some mortgage bankers even have their own AMC, populated by a smaller pool of self selected appraisers they know well, which can make for the best results for a tight appraisal situation you may be worried about. Most Mortgage Bankers also have constant contact with your loan and have the ability to check status and in turn give you immediate feedback and updates throughout the process. This keeps the control with your Mortgage Banker and allows you to have more input into the process. They are also very likely to service the loan after it closes, so you have a loan life partner in your loan officer.

Online lenders: When looking at online lenders the best way to think of it is, would you want to place the largest purchase in your life in the hands of a nameless, faceless entity? Online lenders are big, with no knowledge of the local market and are subject to large AMC’s. From my experience, they tend to be slow and cause frustration. If a client wants to take a leap of faith and purchase or refinance with an online lender, I am honestly going to try and talk them out of it. I personally would not risk going to an online lender.


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Pre-Qualification Vs. Pre-Approval

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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

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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.