Ingrid B. Quinn

NMLS ID #211652 Arizona, Loan Consultant


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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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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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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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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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Renting Vs. Owning a Home

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Many people today are debating whether to purchase or continue to rent a home. You might be surprised that in the long run homeownership can be very cost effective. Each payment can be broken down into 4 basic parts. You have your principal & interest payment, property taxes, hazard insurance and in some cases, a mortgage insurance payment.

Committing to a mortgage however does raise some anxiety. It is a long term commitment. People need to be looking at how long they plan on staying in the home. Are you looking for something for the next year or are you looking for a place to settle down in and stay a while?

Currently, with mortgage rates at historic lows and home prices still affordable, mortgage payments are possibly lower than rents. Homeownership also provides tax benefits because a portion of their mortgage payment is deductible on their federal tax returns. This benefit is not applicable to those who rent their home.

If we look at with a 30-year FHA fixed rate mortgage with a 3.75% rate and 3.5% down payment on a $250,000 home we can see the benefits easily. See enclosed graphs.

Many people also say that they simply can not afford the down payment on a home right, but there are many options to purchase a home with no or low money down. Feel free to read my previous post “No Down Payment Home Loans” for more information on the subject. There are good low down payment loan options too. FHA is one of them.

There are a few considerations such as cash to close, income to qualify, credit needed & length of time in home when contemplating purchasing a home. You should never hesitate to consult a professional on the matter. If you have and questions, you can contact me at ingrid.quinn@cobaltmortgage.com.