Ingrid B. Quinn

NMLS ID #211652 Arizona, Loan Consultant


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No Down Payment Means No House? Think Again

No Down Payment Means No House? Think Again

Arizona Down Payment Assistance Programs Are a Great Option

You want to buy a house and you’ve been trying to save the down payment for years. But something always gets in the way. Your car breaks down. Your eight-year-old needs braces. Rent keeps going up.

You’re beginning to think you’ll never own a home.

Think again.

Arizona has three great down payment assistance (DPA) programs for middle income borrowers. And they’re not just for first-time home buyers.
What is down payment assistance? Down payment assistance is a grant or a forgivable loan. Once you qualify for a first loan to buy a house, you receive the assistance money to pay the down payment and closing costs (prepaid taxes, home owners and mortgage insurance, and so on).

Two of the DPA programs are offered by the Arizona Department of Housing (ADOH) and the third by the Industrial Development Authority of the County of Maricopa (IDA). Note that the lender’s requirements may trump some of the assistance programs’ requirements based on the loan programs the buyer qualifies for.

Pathway to Purchase

The Pathway to Purchase program (P2P) helps home buyers in certain cities in Arizona put together a down payment. It works like this. You apply for a first loan through the Pathway program, which is a 30-year fixed-interest rate loan. Once you apply for the loan, you also receive a 2nd loan for the down payment and closing costs up to 10% of the purchase price with a max of $20,000. If the first loan is $100,000, for example, then the second loan will be $10,000. This second loan is forgivable—it has no payments and no interest, and after five years, it is forgiven.

There are a few stipulations. You can’t own another residential property at the time of close; your annual income can’t be more than $89,088; the purchase price can’t be more than $356,352; and your credit score must be 640 or greater.

This program is available only in these Arizona cities:

Arizona City, Avondale, Buckeye, Case Grande,
Coolidge, Douglas, El Mirage, Fort Mohave,
Goodyear, Huachuca City, Laveen, Maricopa,
Red Rock, Sierra Vista, Snowflake, Tucson,
Yuma

Arizona Home Plus HFA Preferred Loan Program

If you are eligible for the Home Plus program, you can get up to 5% of the loan amount (not purchase price) for down payment assistance, depending on the type of loan you qualify for—and as much as 6% if you are qualified military personnel, such as a veteran, active duty military, active reservist, and active National Guard. This program is not available in Pima County, and with some types of loans, it is not available in Maricopa County.

As with the Pathway program, the first mortgage is a 30-year-fixed loan, with no minimum loan amount. Your income can’t be more than $89,088, the purchase price can’t be more than $356,352, and your credit score must be higher than 640. If your credit score is higher than 680, however, you’ll get a higher percentage of the maximum assistance.

Arizona Home In 5 Advantage Loan Program

The Industrial Development Authority offers the Home in Five program, which is strictly for homes purchased in Maricopa County. Home in Five provides down payment assistance up to 4% of the loan amount for eligible buyers and up to 5% for “hero” buyers: qualified military personnel, first responders, and teachers. The actual amount depends on the type of loan and the buyer’s credit score. The first loan is a 30-year-fixed interest rate loan.

This program has certain requirements as well. Your income can’t be more than $88,340, the purchase price can’t be more than $300,000, and your credit score should be at least 640—but the higher your credit score, the higher the assistance up to the program’s maximum.

What Do the Programs Have in Common?

In all three programs, the loans must be for purchases of owner-occupied, primary residences. They cannot be for refinance or new construction loans or for manufactured or mobile homes, and buyers cannot receive cash back after the loan closes. Each type of loan and each program have their own requirements about the type of property allowed: new or existing homes, single family, multi-unit, condos, townhomes, and so forth.

All programs require a DTI of 45%. DTI is debt-to-income ratio—your total monthly debts divided by your gross monthly income. If you have a $1,000 mortgage payment, $200 in credit card payments, and a $300 car payment, for example, and a $5,000 monthly income, your DTI is $1,000 + $200 + $300 / $5,000 = 30%.

In addition, to participate in these programs, you must take a homebuyer education course. Generally, you can take the course online, in person, or by phone.

Next Step

Give us a call to see which program is best for you. We’ll walk you through the process, find you the right program, and get you into a home before you know it.

 

 


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Down Payment of Your Home Purchase

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Where is my money better spent if I have to make a choice, down payment or discount points? When it comes to putting a down payment on a home there are a number of different options available and each individual has a unique situation. It is best to weigh the options and determine what is going to be best for you in the long run. Different loan programs offer different down payment options:

VA Loans: 100% financing maybe available

USDA Loans: 100% financing maybe available

FHA Loans: minimum down payment is 3.5% of the sales price to FHA’s county maximum. Check your local market for FHA maximum loan limits. https://entp.hud.gov/idapp/html/hicostlook.cfm

Conventional Conforming Loans: 5% down payment is the minimum required for a Conforming Loan.

Non-Conforming Loans: check with your mortgage professional (programs may vary)

3 Things to Keep in Mind:

Larger Down Payment – Just remember, the larger your down payment means the less money you have to borrow. This also means you’ll have more equity already available in your new home. This is important for borrowers in many ways, including lower monthly payments, potentially better loan terms, and the possibility of not having to purchase mortgage insurance.

Discount points – The easiest way to think of discount points is that in order to lower or discount your interest rate, you pay a premium. This increases your closing costs and may have an impact on the money you have available for your down payment. Before you agree to pay discount points, you should consult your mortgage professional about the amount of money you are going to save monthly. From there you can decide if this route will benefit you in the long run. I have written in detail on the subject of discount/mortgage points. For more information on this subject please visit my blog Mortgage Points, What Are They?

Qualifying for a Loan- qualifying for a loan can be tricky, but with the help of a mortgage professional you can look at your options and determine what will be the best way for you to qualify. In some cases you may need to work with a combination of things to fully qualify for the loan you need.

There is no answer that is right for every borrower. Many factors play into a home loan and a mortgage professional is there assist you with the decision making process by laying out your options. Never hesitate to ask questions.

For questions or suggestions please feel free to email me at Ingrid.Quinn@CobaltMortgage.com or visit me at http://www.CobaltMortgage.com/IngridQuinn or http://www.ScottsdaleMortgageExpert.com


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Jumbo Loans vs Conforming Loans

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I recently began working with a client on a home loan that requires Jumbo financing. I was surprised to hear that the realtor was running into trouble finding a lender to provide the financing her clients needs. So I felt that an explanation of the two types of programs was required. Every client has a unique situation and should speak with a professional about their specific needs. So back to the subject at hand, a jumbo loan!

There are conforming loans and non-conforming loans. Conforming loans are loans that adhere to guidelines set by Fannie Mae and Freddie Mac and the amounts vary, depending on where you live and what the median prices for homes are. In most of the areas of the country, $417,000 is the Fannie Mae and Freddie Mac conforming loan limit. In higher cost areas of the country such as California, Hawaii and the Washington, DC metropolitan area, there are Conforming-Jumbo Loans (also called Conforming “High Balance” loans). They range from $417,001 up to $625,500 for a single unit property (single family homes, condos, townhouses), 10% is the minimum down payment. These loans have rates approximately .25% to .375% higher than Conforming loans. And condos have higher rates by approximately .25% on these as well. Multifamily properties also have higher rates by approximately .25%, and higher down payment requirements of 20% to 25% down.

A home loan that goes over either of these types of loans is considered non-conforming and is referred to as a Jumbo loan. Jumbo loans (also called Non-Conforming) are from $625,501 and up for high cost areas and $417,001 and up for the rest of the country. The minimum down payment required is usually 20% though there are select programs that may offer a lower down payment. An example may be a doctor’s loan. These loans have rates approximately .5% higher than Conforming loans. Condos and multifamily properties may or may not have higher rates depending on the lender.

Jumbo loans are for the luxury or higher priced market. They are designed to meet the needs of the high income, high asset and high credit score client or in certain cases the just high asset, high credit score client. For more information about Jumbo loans, please contact me at Ingrid.Quinn@cobaltmortgage.com or visit my websites http://www.scottsdalemortgageexpert.com or http://www.cobaltmortgage.com/ingridquinn.


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Condo Project Eligibility

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When looking to purchase a home in a condominium project, there are a few things to consider. Condominiums are treated a little differently than a single family detached or even an attached home in a homeowner’s association subdivision. The overall financial health of the condominium association is scrutinized. As a result, the project must be acceptable by guidelines put in place by Fannie Mae, Freddie Mac, FHA or VA. The scope of the guidelines and the specific eligibility criteria are dependent upon whether the condo project reviewed is an established community or new construction. I am going to focus on established projects and conventional guidelines. Below are guidelines for such condo projects:
• at least 90% of the total units in the project have been conveyed to the unit purchasers;
• the project is 100% complete, including all units and common elements;
• the project is not subject to additional phasing or annexation; and
• Control of the homeowners’ association has been turned over to the unit owners.
Some General Questions to ask about the Condominium Association
• Is there current litigation involving the association?
• How many units are investor units out of total count?
• Are there more than 15% homeowners 30 days or more delinquent in association fees?
• Does any single entity own more than 10% of the units?
By getting answers to these few questions, you may find out sooner than later whether you will have difficulty obtaining financing for the home you want to purchase.
Condo Insurance Requirements
The condo project insurance policy must ensure the homeowners’ association maintains a master or blanket type of insurance policy, with premiums being paid as a common expense. The insurance requirements vary based on the type of homeowners’ association master or blanket insurance policy. Also, be aware there must be a fidelity bond coverage or employee dishonesty coverage which covers against theft by those entities handling community funds. As for unit coverage, there are a couple of types available and you must check with your lender for what is required:
“All-In/Single Entity” (sometimes known as an “all-inclusive”): The policy must cover all of the general and limited common elements that are normally included in coverage. These include fixtures, building service equipment, and common personal property and supplies belonging to the homeowners’ association. The policy also must cover fixtures, equipment, and replacement of improvements and betterments that have been made inside the individual unit being financed. If the unit interior improvements are not included under the terms of this policy type, the borrower is required to have an HO-6 policy with coverage, as determined by the insurer, which is sufficient to repair the condo unit to its condition prior to a loss claim event.
“Bare Walls”: This policy typically provides no coverage for the unit interior, which includes fixtures, equipment, and replacement of interior improvements and betterments. As a result, the borrower must obtain an individual HO-6 policy that provides coverage sufficient to repair the condo unit to its condition prior to a loss claim event, as determined by the insurer. Depending on the type of loan you choose there can be a requirement for flood insurance.
Buyers need to know this information when looking into purchasing a condo. To determine eligibility for your condominium contact your lender and discuss what information you have and need to obtain for a smooth transaction. This adds an additional step to your mortgage process so make sure you have sufficient time to process your loan application.
For questions or suggestions please feel free to email me at Ingrid.Quinn@CobaltMortgage.com or visit me at either http://www.ScottsdaleMortgageExpert.com or http://www.CobaltMortgage.com/IngridQuinn


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Don’t Kill Your Credit Score!

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Credit, Credit, Credit! Your credit score is a crucial part of your financial future and present. Whether you are looking to open a credit card, buy a home/vehicle your credit score will not only dictate your ability to make that purchase, but also what interest rate you will have. You have three different credit scores, but for this article I am going to focus in on one and that is your FICO credit score. It registers on a range of 300 to 850.
You should strive to have a score of 780 or higher to be in the best shape to make major purchases with the best interest rates. In the mortgage industry we suggest that our clients hold a minimum of a 620 credit score. This is primarily the lowest score most, not all, lenders have as a threshold for a mortgage.
Now let’s get down to what this article is all about. What can damage your credit score and what you should look out for. I will discuss seven different things that can greatly affect your credit score.
Carrying Large Balances:
You should never accumulate large amounts of debt. Yes, keeping a large balance on a credit card can enable you to increase that cards limit. However, you need to be aware that your debt effects about 30% of your overall credit score.
Closing Credit Cards:
This may seem like a smart move if you are having credit issues, but the length of time you hold a line of credit also effects your credit score. If you are able to maintain a credit card for many years it looks much better on your credit as opposed to quickly paying off balances and closing cards.
Paying Late:
Nobody wants to see a late payment charge on their account and payment history is a major factor that lenders look into. For your FICO credit score, payment history makes up about 35% of the score.
Defaulting:
It may seem obvious, but failing to pay back an owed amount to a lender will severely damage your credit score. The largest form of default is bankruptcy or foreclosure on a home. Both of these situations can easily cut your credit score by 100 points.
Having to many lines of open credit:
This is when the age old phrase “to much of a good thing,” comes into play. Applying for a loan or credit card with numerous creditors can cause your credit score take a small hit. If you apply for multiple lines of credit at the same time, those little hits will add up quickly.
Not Having a Credit Card:
Many people are cutting up their cards and closing their accounts in hopes of helping to keep them out of debt, but this is a double edged sword. On the one side you are not accumulating more debt and in turn do not have to worry about payment. On the other hand, you are not showing payment/credit history and are not helping your credit. Having a small credit card that you use for something specific like fuel or groceries is smart to have as long as you are able to make your payment at the end of the month.
Co-Signing:
We all have friends and family we care about. There are times where those people may need our help to qualify to receive a line of credit. You must take precautions when choosing to co-sign on anything. If you are not fully capable of taking on that debt alone it may not be the best choice to help. You should always prepare for the worst and if for some reason the person you co-sign with is not able to make the payment it will become your responsibility. You don’t want to be faced with a collection agency looking for money from you because you tried to help someone out.

These are all great examples of what can hurt your credit score and things you should look out for. You should always be diligent about keeping up with your credit score and know what’s going on. Work smarter so you don’t have to work harder in the long run.
If you have any questions regarding a home mortgage or suggestions please feel free to email me at Ingrid.Quinn@CobaltMortgage.com or visit me at http://www.CobaltMortgage.com/IngridQuinn or http://www.ScottsdaleMortgageExpert.com


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Locking, What is it?!

Lock on Chains
In today’s volatile market, consumers need to understand what a lender offers as options for locking in their loan. Many consumers think that when they begin speaking to a lender, the rate they discuss that day will be the rate they carry from there on. However, this is not the case. Laws govern what constitutes a loan application. An actual loan application requires that 6 pieces of information are received, which triggers disclosures for the good faith estimate and the ability to lock in loans. These items are social security number to pull credit, borrower name, estimated value, monthly income, loan amount sought & property address. These six things are important because without these six items a lending company is not able to give a borrower a locked rate.
A borrower is required to give all of the information except the address when prequalifying. Once you have a property under contract then you have the ability to lock in a rate for the loan. Loan rates are locked in for a specific period of time. This time frame is based upon the close of escrow date. Typically loans are locked 15, 30, 45 or 60 days. There is the option of locking in rate for a longer period of time, but this is mainly used when you are purchasing a home that is being built for you and will not be completed with in 60 days.
What does locking in a rate/loan actually mean? When you lock your loan your lender should provide you the rate and/or points as well as the specific date of expiration of those terms. Regardless of how the market changes, your rate will continue to hold as it was locked. This can be both a good and bad thing.
Whether the market improves and rates lower or the market worsens and rates increase you are guaranteed to have the rate you have in writing. There can be an exception to these rules, but only with some lenders. This is called a renegotiation policy. This can typically occur when the market improves at least .25%(depending on your lender’s rules) and your lender will allow you to change your locking contract. Keep in mind that when you choose to lock in your rate, you are asking the lender to protect you and you are making a commitment to do the loan with your lender. The shopping rate time is over. Renegotiation is a courtesy provided by your lender.
Borrowers need to make sure that when they go to lock in their rate, that their lender gives them their terms in writing. You should never assume something has been done without seeing it in writing. Be safe, talk to your lender about locking and what their renegotiating options are. Never hesitate to ask questions and learn as much as you can.
For questions for 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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Mortgage Points, What are They?

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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