Ingrid B. Quinn

NMLS ID #211652 Arizona, Loan Consultant


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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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Buying Without Selling

4412037-handling-multiple-homesMany homeowners would like to buy a new home and not have to manage the timing of a simultaneous close or would like to do some work on the new home without having to live there. The buyers are not sure they would even be able meet lender’s qualification guidelines carrying both properties.

With a strengthening housing market and housing inventory low, why should a seller accept an offer from a buyer that has a house to sell? Who knows if the buyers are realistic and price their current home to sell, or will do all the right things to market and sell it quickly? Sellers wait to get a cash or non-contingent offer, because they know one will come along soon enough.

There are rules to qualifying for a new home without selling your current home. You must be able to make the required down payment from savings or secured borrowing. The easiest way to qualify is to you have the income to carry both homes without the benefit of rental income to offset the payment of the current home. If the current home is owned free & clear, the lender will count the tax, insurance and HOA fees as monthly liabilities. We must receive a Desktop underwriting approval for the income to debt obligation ratios. Then we are good to go. There are asset reserve requirements.

For a Fannie Mae or Freddie Mac conforming loan up to $417,000 or $625,500 in high cost areas of the country, and a buyer is converting their current home to an investment or 2nd home the reserve requirements for assets after close are if there is 30% equity in the converted residence, then 2 months of the new home payment and 2 months of the converted home payments are required. If there is not 30% equity, then 6 months payments for each is required to be in reserves. There are additional reserve requirements if the homebuyer will own more than 2 properties.
Please feel free to contact me for additional information at ingrid.quinn@cobaltmortgage.com or visit me at scottsdalemortgageexpert.com or cobaltmortgage.com/ingridquinn


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How Much Do You Really Make?

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Recently, I have had clients who are hourly wage earners and new to their current job. I decided that maybe touching on the subject of regular wage earning income documentation might be appropriate to discuss. Underwriting guidelines require a two year job history. If you have a set salary then we simply divide that number by 12 to determine your monthly income. If you get paid an hourly wage, we ask for verification of hours worked. This is so that we may determine your monthly income based on current pay and average hours worked.
If the hours you work in a week can be verified via pay stubs and those hours are constant week after week, then we will take your current hourly pay and your set number of hours to determine your monthly income. On the other hand, if your hours fluctuate from week to week, then we will need to collect information from your employer to determine your average hours worked in a week. From there we can once again determine and verify your average monthly income for the past two years.
If there have been job changes during the past two years, we will verify a few things, such as, if you are making a lateral move or if you are moving to improve your position. It is important for you to stay in the same/similar line of work or that you at least have experience/education in that job line and the experience/education must be documented. Some people have obtained the training/education for a specific job, but work a job that doesn’t correlate until a position is open. If you change employers we are required to show 30 days of income on your new pay stubs.
There are different stipulations for commission, bonus and overtime income. These types of income will be averaged over the past two year because it is income that is based on performance. This will be verified with your current employer that it is likely to continue.
Above all else you should speak to your lender and be forthcoming with them. They will ask you for all of this documentation. We want to get you the best loan possible. If you have any questions or comments please feel 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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Sellers Where Are You?!

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Markets go up. Markets go down. Markets react. Markets change. Knowing all of this, it makes you wonder what sellers are waiting for! Where are all the sellers? All we hear about in most real estate markets is about the lack of inventory. We hear that sellers are still stung by the real estate correction and waiting “a bit longer” for values to recover before selling. I would advise sellers that are thinking of selling, to repeat the above statements about the market a few dozens times, and then call a Realtor and list their property for sale.

A perfect example of how markets react, change and fill holes is found in articles I have been reading recently about the resurgence of new home construction, as well as by investors who are buying, renovating and flipping properties. Just turn on HGTV and check out the shows! In other words, builders and investor/flippers are stepping in where the average seller will not! That is a signal to sellers that the market will find housing without them.

Sales of new homes in the US are surging. Builders are business people, they identify opportunities, and they are forward looking. New-home sales rose 18.5% compared to a year earlier. Sales of previously owned homes has actually fallen 20% in the Western region of the US because of lack of inventory. What is even more striking is that this difference in sales exists even though a typical new home costs 37% more than one already built. Builders are responding to buyers needs! Where are the sellers of existing homes?

Nearly one in four homeowners and renters say now is a good time to sell a home, according to a survey released recently by Fannie Mae. What are you waiting for…sellers? The economy almost collapsed 5 years ago. Real estate got severely damaged. We have seen a lot of recovery and strength.
And as far as timing, I’d sell now. Don’t wait for “when you have time to repaint the bedrooms”, or for spring, or the summer when the flowers are in full bloom. Inventory is low now; buyers are frenzied for inventory now. While trends certainly vary by region, according to a Trulia study, buyer search activity generally peaks in March and April, while seller listings peak in July. Most sellers would be better off if they pushed the process to now. Sellers could face problems if mortgage rates jump or the economy worsens. And let’s face it, at some point the supply of homes for sale will increase.

Sellers would be wise to be forward thinking, and realize that markets are reacting, people will buy a new home with or without them, other sellers may beat them to the punch, and most importantly that real estate prices which have been strong and rising. So my advice to sellers is, “inventory is low, prices are going up, sell now while things are strong.”


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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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No Down Payment VA Loans

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VA loans:

The VA loan program is available to military borrowers nationwide. Guaranteed by the U.S. Department of Veteran Affairs, VA loans work in a similar fashion as FHA loans — the VA is a guarantor of loans not a maker of them.

In general, active duty and honorably discharged service personnel are eligible for the VA program. Public Health Servants are also eligible. In addition, home buyers who have spent at least 6 years in the Reserves or National Guard are eligible, as are spouses of service members killed in the line of duty.

Bankruptcy and other derogatory credit do not immediately disqualify a buyer. If you have had a foreclosure or short sale, the waiting period to obtain a new mortgage is generally 2 years.

Funding fees are collected at closing, but no monthly premiums are required. If you have been discharged with a disability, you may be exempt from the VA funding fee.

There is no down payment required and a VA buyer can use his/her entitlement more than once and possibly even get a 100% loan if a home is currently owned and has a VA loan on it. Check with your lender about the circumstances pertaining to your situation.

The first time use charge of the VA funding fee is 2.15% of the loan amount. Subsequent use fee is 3.3% of loan amount. The lender will finance the fee into your loan. It is the only closing cost than can be directly financed into the mortgage. A seller can also pay all closing costs for a VA buyer.

And, similar to FHA loans, VA loans allow for loan sizes of up to $729,750 in high-cost areas. This can be helpful in areas such as San Diego, California; and Honolulu, Hawaii which are home to U.S. military bases.

For more information or to make comments, please feel free to contact Ingrid Quinn by email Ingrid.quinn@cobaltmortgage.com or visit my websites http://www.scottsdalemortgageexpert.com or http://www.cobaltmortgage.com/ingridquinn.


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Financing Your Home with a HomePath Mortgage

what-is-the-HomePath-mortgage-loan-option A HomePath Mortgage allows a buyer to purchase a Fannie-Mae owned property with a low down payment. The down payment can be as low as 3% for an owner occupant. It is a conventional loan. Investment properties can be purchased with a HomePath loan also without the typical 20-25% down payment. Down payments for an investment property can be as little as 10% down.

Other benefits of purchasing a HomePath property are:
*Private mortgage insurance is not required when the down payment is less than 20%
*An appraisal is not required which reduces the buyers closing costs over $400
*Owner occupant purchasers are given a First Look opportunity. When a new listing comes on the market, an owner occupant buyer has the first 15 days to make an offer before Fannie Mae opens the property up to investor buyers.
*Fixed-rate & Adjustable Rate mortgage options available based on down payment
*Seller contributions allowed for closing costs
*Gifts from immediate family members for owner occupied buyers allowed

HomePath also offers a mortgage option which is for renovation purchases. Some of the benefits are:
*Renovation amount based on appraisal “as completed value”
*Available for primary residence, second homes, and investment properties

When doing a home renovation mortgage through HomePath you are able to purchase a home that needs light renovations. The loan amount will include both funds for the purchase as well as the work to be done. This is only up to 35% of completed value and no more than $35,000.
For more information and to see properties available, login to http://www.homepath.com. I also recommend that buyers have a realtor represent them in a HomePath purchase. If you have questions about this information, please contact Ingrid Quinn at http://www.ScottsdaleMortgageExpert.com or email Ingrid.quinn@cobaltmortgage.com.