Friday, December 19, 2014

The Skinny On FHA Loans

The FHA, or Federal Housing Administration, provides mortgage insurance on loans made by FHA-approved lenders. FHA insures these loans on single family and multi-family homes and has insured tens of millions of properties since it was created in 1934. It's important to note that the Federal Housing Administration does not issue the home loan - this is done by your mortgage lender. However, if you default or stop making your mortgage payments, your home loan lender receives financial recourse from the FHA, therefore reducing the lenders' risk and making them more willing to loan money, while also keeping borrowers' costs down.

The combination of low rates, low down payment, and flexible lending guidelines have made it one of most attractive loans for home buyers today. It may help you save money and possibly qualify for a larger mortgage.


The FHA is more lenient and understanding about credit issues and personal problems. If you had a previous bankruptcy, you can usually get an FHA loan only two years after the discharge date. If you had a foreclosure, you'll have to wait 3 years to apply. If you had late payments within a distinct time frame and had a good payment history the rest of the time, they may overlook that. Collections are usually not a problem. However, you will not be eligible for the FHA loan if you have had federal liens such as tax liens or defaults on student loans. Your credit score needs to be only a 620 when putting down the minimum three percent unlike other conventional loans that require a score of no less than 680 and sometimes in the 700s.

Down Payment

The super part of the FHA loan over conventional loans is the low amount of cash needed at closing. With an FHA mortgage, you can make a down payment as small as 3.5%. This benefits those home buyers who don't have a lot of money saved up for a down payment; and, home buyers who don't want to give up all their cash, but would rather save some of their money for moving costs or emergency funds.

Few loan programs will allow your entire down payment for a home to come from a gift. The FHA loan program allows your entire down payment to be a gift from a parent or relative an employer, an approved charitable group, or a government home buyer program.

This program will also allow seller concessions. This means you can ask the seller to pay up to 6 percent of the closing costs. Closing costs are additional expenses associated with buying a house such as; loan origination fee, title search fee, recording fee, survey fee, prepaid interest, prorated taxes, and insurances.


FHA loans have very competitive rates, which means a lower payment each month. Having a lower interest rate means you will pay less over the life of the loan.

Debt to Income

The FHA loan does allow a high debt-to-income ratio. Having a car payment and student loans will still allow you to qualify. Still feel that you can afford the payment? The FHA will allow a maximum of 43 percent debt-to-income ratio, whereas conventional mortgages allow a maximum of 36 percent debt-to-income ratio. Figure your debt-to-income ratio by adding up all of your current debt, including your proposed new mortgage payment (including taxes and insurance), and divide it by your monthly income. The answer will be your percentage.

Basic Documentation Required To Apply

Copies of paycheck stubs for the past 30 days

Copies of W-2 forms or 1099 forms for the last two years

Complete tax returns, including all schedules, for the past two years (if self-employed)

Copies of all bank statements and investment account statements for the past two months
Identification (driver's license, passport, or military ID)

Year-to-date profit and loss statement (if self-employed)

The FHA is pretty lenient about whom they will lend to. If you meet the credit requirements, have the 3.5 percent down payment, and have steady employment, you will probably be approved. Like any other loan, you will be required to provide all information related to your assets (personal property, cash in the bank, and investment account statements), which helps lenders determine the source of your down payment and closing costs. All-in-all, it can be an easier process than a conventional loan.

Let's do it YOUR way! Buying a home in Kokomo or Lafayette areas? Let me know your dream home and the kind community you wish to live in. Tell me your wants and needs. Let me know what's important to YOU, and we'll find the community and home that you desire. Selling your home in Kokomo or Lafayette Areas? Let me help you to make you the most money possible in the shortest amount of time. I offer sellers a professional, written marketing plan, the most progressive marketing strategies in the industry, consulting, and staging. I am a mobile agent committed to helping you around YOUR schedule. Can't drive to my office? No worries... Let me come to you. I am here to help YOU make this transition and this transaction as convenient and smooth as possible. Gena can be reached at 765-210-5582 or you can email her at
You can also visit Gena's website:
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Tuesday, December 16, 2014

Planning on Buying a Home or Refinancing? Avoid These Top 10 Mortgage Mistakes

Getting a mortgage or refinancing a home isn't always easy; besides being one of the most significant events in our lives, at least financially, it can also be a time consuming, complex process. To make things easier, avoid the following 10 mortgage mistakes and keep your credit score high; if you do, you can avoid qualification problems, higher than necessary rates and even getting declined altogether.

1. Charging up any of your current credit lines or applying new credit cards prior to and during your loan application process. This could end up with your loan getting disqualified because you'll be increasing your debt load which will have a negative effect on your credit score.

2. Avoid foreclosure and bankruptcy. Also, a no brainer is to avoid making late mortgage payments. Even with a good credit score, if you're late on your mortgage payments it will affect your credit score and can end up disqualifying you with lenders and banks.

3. Not locking in your mortgage rate. If you don't lock your mortgage's interest rate, it could go up and significantly. Just make sure you understand all your options as well as all their benefits and possible pitfalls and keep an eye on interest rates prior to and throughout the home loan process.

4. Not having enough funds to put down. Typically, for an FHA loan, you need at least 3.5% of the purchase price. With Conventional loan, you need at least 5% of the purchase price. Don't go all the way to the closing table without enough funds!

5. Less than 2 years of consecutive employment history. This isn't an end-all be-all situation. But underwriters typically want to see 2 years of consecutive employment.

6. Not having an established credit history. Generally, you'll need a minimum of three credit trade lines that appear on your credit report with an at least a two year history on both.

7. Bad credit. Applying for a mortgage with collections and charge offs on your credit report will ruin your FICO score. Make it a point to review your credit report from time to time to make sure there aren't any surprises listed before you start the mortgage process. If you see something that doesn't belong there in many cases you can get it removed.

8. Not enough verified assets. Lenders will want to know that you have the money in the bank to cover at least a couple of mortgage payments and that in the past you paid your rent on time.

9. Not calculating how much you can afford before starting your property search. You should get pre-approved and/or pre-qualified before you actually start looking at homes. If you don't, you'll not only end up wasting your time, but setting yourself up for disappointment.

10. Not shopping around. You'd comparison shop for a car, big screen TV, heck, even vacations, so why wouldn't you shop around for the right mortgage company or other financial institution to work with? If you don't shop around, you'll be doing yourself a major disservice. A good rule of thumb is to ask for a referral from family, friends, business associates or your real estate agent.

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Saturday, December 13, 2014

Loli and Alix - Porter Report

This weeks Porter Report is about one of our fantastic loan officer teams: Loli Martinez Lonso and Alix Branson

Wednesday, December 10, 2014

Books on Tape - Porter Report

This weeks Porter Report is about coaching and using books on tape to learn new techniques for better managing your business and life.

Sunday, December 7, 2014

Applying For A VA Loan - Is It Difficult?

The home mortgage loans guaranteed by the U.S. Department of Veterans Affairs have been a popular way for veterans and active duty service members to afford their first homes for over 70 years. Because the home loans are guaranteed, many lenders are eager to offer these low-cost home loans for veterans. Though not difficult, the application process is somewhat different than the one for conventional loans, and many lending institutions have departments or specially trained personnel to help with the required documentation.


If you are a member of the military on active duty for at least 90 days, you are eligible for a VA guaranteed mortgage loan. Similarly, veterans who have served between 90 and 181 days of continuous service, depending on the time period, are eligible to apply for these loans. National Guard service members are also eligible for a home loan if they are currently serving or have served for six years, have been discharged or on the retired or stand-by list. Under certain circumstances, the spouses of military members may also be eligible for a VA loan.

Certificate of Eligibility

Applicants are required to document their service in the military with a Certificate of Eligibility. The certificate is issued with a number of different types of evidence:

  • A DD Form 214 for veterans that indicates the character of the service and the reason for separation from service
  • For current service members, a current statement of service signed by a commander of the unit, adjutant or personnel office
  • For current National Guard members, a statement of service signed by a commander of the unit, adjutant or personnel office
  • For discharged National Guard members who were never activated, an NGB Form 22, Report of Separation and Record of Service
  • Surviving Spouse not receiving benefits must submit a VA Form 21-534
  • Surviving Spouse receiving benefits must submit a VA Form 26-1817

Additional Requirements

In addition to the Certificate of Eligibility, applicants for a VA guaranteed mortgage loan must provide:

  • Documentation of sufficient income to afford payments on the loan
  • A good credit record - VA lenders set their own minimum credit record requirements for a loan
  • Proof that the property can be occupied - VA loan benefits must go to properties that are suitable for occupation, such as single-family homes, condominiums, townhomes and multi-family residences.
  • Intention to occupy the property - First time home loan applicants must assure their intention to occupy the property.
  • A property appraisal to ensure that the property is valued sufficiently for the loan amount.

Closing the Sale

Applicants are encouraged to compare the loans of a number of lenders to ensure the best terms. After the applicant has been approved for the VA guaranteed mortgage loan, he or she must close on the sale of the property, provide proof of homeowners insurance for the property and pay closing costs. These closing costs are regulated by the VA. The title is then issued and insured by a title insurance company to prevent any other claims on the property.

Although the process may seem daunting to first-time borrowers, lending institutions have created protocols for VA loans that facilitate the application process so that veterans and active duty service members can take advantage of this valuable benefit.

Our VA Loan Specialist helps veterans obtain the loans they are entitled to. He served in the United States Marine Corps, and now devotes himself to the Veteran home buyer in the Phoenix area, fulfilling a passion of his while at the same time helping others achieve home ownership. Be a proud homeowner today. For more details call 480-351-5904 or visit the site
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Monday, December 1, 2014

With a USDA Rural Home Loan You Could Own the Home of Your Dreams

The United States Department of Agriculture (USDA) offers a home loan program that can help you achieve your dream of home ownership. This program is geared toward helping people without adequate housing, but still able to carry a mortgage, purchase homes in rural areas. America's small towns are the backbone of the country and the USDA developed this program to help breathe new life into the country's small towns and rural areas, and to help low to moderate income families realize home ownership.

Qualification for This Loan

In order to qualify for a USDA Rural Home Loan you are permitted to earn 115 percent of the median income for the area in which you live. Your debt to income ration must not exceed 41 percent with 29 percent allotted for housing costs. You must be without adequate housing, but you must be able to afford the payments, insurance, and taxes. You must also have reasonably good credit rating although lenders may be able to work with less than desirable credit.

Qualifying Properties

You don't have to be a first time homeowner to qualify for this loan and several types of properties qualify. The property may be a new build, and existing home, qualifying condo, modular homes, and planned unit developments.
According to the USDA site, "Manufactured homes which already exist must be already financed with an HCFP direct or guaranteed loan, or it is Real Estate Owned formerly secured by an HCFP direct or guaranteed loan."
The single family home must meet the voluntary national model building code of the state and HCFP thermal and site standards. The home must be modest in design, cost, and size.

Approved Lenders

There are many approved lenders for this type of loan.

  • A state housing agency
  • Lenders approved by HUD
  • Ginnie Mae
  • US Veterans Administration
  • Fannie Mae
  • Freddie Mac
  • Any Farm Credit System institution with direct lending authority
  • Any lender participating in this program

Loans are for 30 years and require no down payment. You must meet the lender's requirements for this loan and the promissory note interest is set by the lender. Closing costs and lender's fees may be rolled into the mortgage amount. Eligible repair costs may also be included in the mortgage amount. The amount of the mortgage may not exceed the appraised cost of the property.

If you meet the qualifications for a USDA Rural Home Loan you may be able to realize your dream as a homeowner through this program. Whether you are planning on building a new home or have your sights set on a country farm, look into this loan program to see if you can take advantage of it and own your own home.

Kathryn McDowell is a homeowner and recommends you seek the advice of a qualified mortgage service is you are in the market for a new home. There are several programs to help you obtain a mortgage and become a homeowner.
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