Ingrid B. Quinn

NMLS ID #211652 Arizona, Loan Consultant


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Moving Up! Some Things You Should Know

moveup-1So, you have been in your current home for a while and you are looking for something a little different. Maybe you are starting a family or you recently married and want to build a home together. There are many reasons why people “move up”. No matter what your reasons are for purchasing your next home, there are some things you need to be prepared for.

I did touch on some of this information in my previous blog “Buying Without Selling”. So if you are looking to purchase a new home while retaining your current home, please feel free to take a peek at that post, but for right now I’m going to write about selling your current home to purchase a new one!

The ideal situation would be for you to simultaneously sell you current home and purchase your new home. This is possible; however the timing is a little tricky. In order to complete this type of transaction smoothly you are going to need a good realtor and loan officer working on your side.

In our current AZ market, selling your home before buying can be easily done. Home values are up and inventory is down, so if a home is priced properly you can sell quickly. Many people have been in their homes for about 7+ years and now have just enough equity, if equity was previously an issue, in their home to move up. However, many people choose to take different routes when looking to move up.

There is an option known as Bridge Financing and what this entails is technically owning two homes for a brief period of time. Bridge Financing is through a financial institution. You will take out an equity loan similar to a home equity loan but the bank will know it is temporary and the repayment structure will be different. It will not carry an early termination fee like home equity loans. There will be a limit on the amount you can borrow on the current home depending on how much equity there is. This loan will give you the funds to make the down payment and pay closing costs for your new home, then repay the loan once the current home is sold. Generally, bridge lenders give you 6 months for the loan with the possibility of extending an additional 6 months. Payments on a Bridge can be deferred but when applying for the new 1st mortgage; the lender will qualify you carrying quite a bit of debt.

I know this sounds a little complicated, but it is actually simpler than you’d think. When it comes down to it there are many ways to “move up” and where there’s a will there’s a way. In the end no matter what you want to do you should always consult a professional. Don’t hesitate to call your loan officer, ask questions and look into what is going to be your best option to get you into that new home. If you have any questions or concerns please feel free to contact me at Ingrid.Quinn@cobaltmortgage.com or visit me at http://www.coblatmortage.com/ingridquinn .


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Summer in Arizona

extreme_heat_signAside from lifeguarding, life slows down in Arizona. It’s too hot to move at a fast pace. Many industries in the Phoenix area slow down. Restaurants are slower, hotels are offering staycation discounts to the locals stuck hanging in the valley, and it’s too hot to hold Open Houses. Granted there are the dedicated agents who go out on Saturday and Sunday and place their signs on street corners risking heat exhaustion.

We have started to see a housing recovery though a slow down of homes listed is likely in the summer months. Sellers will consider listing homes again in late August or early September and the batch of buyers who need to move their families in the summer are already doing so.

Home values have increase, rates have gone up some but a mortgage in the 4%s is still a great deal! I remember the summer of 2000 selling interest rates at 8.75%. Below is a historical graph of where mortgage rates have been in the last since 1992.

historical_rates
(Provided by mortgage-x.com)

I would like to show appreciation by thanking those buyers, sellers and Realtors who push through the heat of the Valley’s summer. Please feel free to share a comment about how you beat the summer heat when working in our Phoenix market. Visit me at http://www.scottsdalemortgageexpert.com or http://www.cobaltmortgage.com/ingridquinn. My email is Ingrid.quinn@cobaltmortgage.com.


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PMI vs MIP. What are the differences?

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Many homeowners pay it and many home buyers try to avoid it…mortgage insurance. You may be wondering, “What is mortgage insurance and why do I have to pay for it?” Conventional mortgages have private mortgage insurance (PMI) and FHA loans have what is termed mortgage insurance premium (MIP). Here’s more information on both and how they may affect your payments when you purchase a home or closing on a refinance.

Private Mortgage Insurance (PMI)As part of the loan qualifications set out by Fannie Mae and most investors, a borrower is required to pay PMI when at least 20 percent of a home’s purchase price is not provided as a down payment. Private mortgage insurance is paid by the borrower, but it benefits the lender. It protects the lender against loss if a borrower defaults on a loan.
PMI rates vary depending on down payment and FICO scores. You may find the annual premiums (divided by 12 to make monthly payments) on a minimum down payment conventional loan to run from 1.20% to .59% a year. Conventional loans also have a variety of ways to pay for the mortgage insurance. It can be paid in one lump sum, paid monthly only, or split in lump sum and monthly in one transaction.
Mortgage insurance will also drop off automatically at a certain point in the loan life. You may have to get a mortgage that requires paying PMI, but it’s also possible to obtain more than one loan (Home equity loan/2nd mortgage) and avoid paying PMI. When obtaining a mortgage, it’s important that you find a loan that fits your specific situation and goals.

Mortgage Insurance Premium (MIP)FHA guidelines allow for a small amount of cash down payment to close a loan. As a result, all borrowers must pay a MIP to insure the lender against loss if the homeowner defaults on the mortgage. While there are ways to avoid PMI with conventional loans, there is no way to avoid MIP on FHA loans because that is how the program is set up.
The MIP has increased in the last 3 years, on 4 occasions to a current level for 30 year mortgages of 1.75% in an upfront premium financed on top of the loan and an annual premium of 1.35% a year with the minimum required down payment. The annual premiums can vary depending on down payment and the term of the loan (30 year vs 15 year loans). MIP has also undergone a significant change in that the mortgage insurance premium will stay on for the life of the loan no matter how much equity the owner has in the property.

It is important to explore the differences between Conventional and FHA loans because the mortgage insurance has a significant impact on your monthly payments. It is important to find a knowledgeable loan officer that can explain your options to you.
If you have any questions or comments, please contact 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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Closing Costs, What Are you Paying For?!

  Buyer-Seller-Rd-SignWhen you purchase a home, there are many things to keep in mind, especially pertaining to financing. As a buyer, you need to be prepared for not only your down payment on the home but also closing costs. These are the fees affiliated with the loan and the purchase transaction being processed and closed.

   You pay closing costs to the Title Company, state/county/city, lender, and you also pay tax and insurance escrows, and per diem interest. The closing costs that you pay the lender are usually far less expensive than you pay to the other parties. All costs and down payment funds are paid at the closing table to the Title Company and they are then dispersed to the various entities/vendors that the fees are owed to.

   The following are the seller concessions that the seller can pay on top of splitting the transfer & recordation taxes (if applicable, splitting these taxes is customary in many areas) In Arizona, it is standard in the resale contract for the seller to pay the Owner’s Title Insurance. Sellers may pay up to 3% of the sale price towards a buyer’s closing costs, escrows, and per diem interest, on a conventional loan with a 5% down payment.

   Sellers can pay up to 6% of the sale price to the borrower’s closing costs, escrows, and per diem interest on a loan with a 10% or 20% down payment. On FHA loans a seller is allowed to pay up to 6%. On VA loans, the seller may pay all closing costs for the veteran.

   On an investment property the maximum seller credit for closing costs is 2% of the sales price.

 

   Here is a list of some fees that are included in closing costs:

-Application Fee (if any)

-Loan Origination Charges

-Points

-Appraisal Fee

-Prepaid Interest

-Private Mortgage Insurance

-FHA, VA and Rural Housing Fees

-Home Owners Insurance

-Flood Determination Fee

-Property Survey Costs

-Title/Escrow Fees/Title Insurance

 

   Your lender will give you an estimate of closing costs on the purchase of a particular house you’ve selected. This is called a “Good Faith Estimate” (“GFE”) and it is required by law to be given to a buyer. Then, the day or before closing, the Title Company will give you an actual “Settlement Statement” (aka “the HUD” or “the HUD-1”), which is the final and complete form with all the numbers for the sale, including the actual closing costs.

   There are many different ways of handling the cost to close, including “buyer assist”. The best idea you can do is sit down with either your realtor, financial adviser or a loan officer and simply ask. They will be more than willing to answer any questions and make sure you are truly ready to buy! If you have any questions please feel free to email me at Ingrid.quinn@cobalmortgage.com


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No Down Payment Home Loans

Open House sign if front of house for sale

Are you in the market to buy a home? There are a few options to purchase a home with no money down. Here are some of the options out there today and remember each option has its own particular guidelines and terms that will vary form loan to loan.

• VA loans: This is offered to active, honorably discharged, retired and widowed military personnel. You do still need a 620 credit score to qualify and there is a funding fee that varies depending on military status type.

• The Office of Housing & Development (HUD): HUD REOs (Real Estate Owned) Homes owned by HUD can be purchased for as little as $100.

• HUD programs: There are federal programs for public service healthcare professionals, firefighters, police force and teachers.

• USDA Rural Housing loan: This loan is designed for people who live in rural areas.

• Lease-Purchase: The seller agrees to sell the home to the person leasing it at a specific date in the future. When this is done the person leasing the home will usually pay an amount
in excess of what rent would normally be. This extra money is set aside with an escrow company as a “down payment savings plan”. When the selling date arrives the extra money will
be used as a down payment on purchasing the home.

These are some of the no money down options when purchasing a home and please keep in mind that terms of each agreement do slightly vary form situation to situation. If you have any questions or comment please feel free to email me at Ingrid.quinn@cobaltmotgage.com