Ingrid B. Quinn

NMLS ID #211652 Arizona, Loan Consultant


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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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The Mortgage Business-Not How It Was

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It’s been a 30 year ride for me in this business. I thought it was time to reflect where the industry has been and where it may go. It certainly is not a boring job. I find it an exciting challenge to daily talk to people and work with them towards their goal of buying a home.

The industry has been in the news a lot in the last 7-8 years and there has not been a dull moment. There have been a lot of changes in the rules and just keeping up with those has been a huge undertaking, but it just takes me back to when I first started out. We verify everything. It’s the way it should be.

I have been through real estate booms and busts, trends come and go and so do people I have worked with. The industry has done some weeding out and hopefully most of the bad apples are gone and hopefully industry standards are where they should be.

What remains the same is that Americans still want to own their homes. I find that people place an enormous amount of trust in my hands and I do everything I can to make their homeownership goal a reality. What has changed, though, is the difference about how a mortgage is originated. The online channel has grown and the mortgage industry has finally automated the process to an almost paperless process. Yea!! Gone are the file folders of 3-8 inch thick loan files and pdf versions of documents loaded into our processing system has make copying and faxing a near thing of the past.

What I still feel is important is the relationship of the quality referral to an experienced and trusted lender. Though online access is readily available, the referral to your mortgage lender is important because they are handling all of your personal information and the trust factor is imperative as to who has your information.

A home purchase is close to if not the largest personal purchase you will make. Take the time to find your trusted advisor in this process. It will make the experience a smoother one. For questions or suggestions please feel free to 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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Locking, What is it?!

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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


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Interest Rates Are Up!

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Interest rates are now up about 1.25% from their rock bottom lows in October 2012 and again in May 2013. The inevitable interest rate increase from all-time lows is continuing. Following the Federal Reserve meeting last week, it seems that if the economy performs as expected, then the Fed plans to taper its bond purchases as early as later this year. Over the past few years, the Federal Reserve bond purchase program has helped mortgage rates drop and stay at historically low levels.

However, even though interest rates are volatile, they do not move in a straight line up or down. They have been moving so fast the last few days, as a reaction to the Fed news of possible pull back that we may see some correction. However, that is conjecture, and anyone contemplating a mortgage these days needs to be aware that the mortgage market is highly volatile right now. It seems the Federal Reserve believes the economy is no longer in recession, and as a result the Fed has indicated that it appears ready to scale back its bond purchases.

The rapid rise in mortgage rates has been shocking, but it had to happen at some point. To boost the economy during the financial crisis, the Federal Reserve undertook an unprecedented program to purchase enormous quantities of mortgage backed securities and U.S. Treasuries in an attempt to push rates down. Before the Fed started this program, rates were about 1.5% to 2% higher, so it looks like that is where we are headed again. We are already a good bit of the way there!

So, what you are witnessing with the rise in rates is the market trying to determine the realistic range of mortgage rates without the intervention of the Federal Reserve. Lots of people try and guess the direction of the market and react in advance for their own benefit.. The market buys on rumor and sells on news.

So clearly the market is signaling that it believes the Fed is done with this part of the stimulus. Now it seems we will see the market reconfigure to the new reality.


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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 .