Access Real Estate LendingHome
Toll Free: 1-877-89-ACCESS
Northern California's Premier Retail Banker
with over $800 million in funded loans
*As the industry changes, so do programs, regulations, requirements ect…The definitions below are subject to change. Keep up with the market by following our blog. Use the search engine on the left, to find all articles or other terms.
Bonds or Trend Lines
When Bond prices go up (their yields move down), home loan rates improve, and when Bond prices go down (their yields move up), home loan rates worsen. A good mortgage broker will follow these movements and know when it’s a good time to lock in an interest rate. There are also “trends” that bonds (mortgage backed securities) follow. For example bonds will make a 25 day, 50 day, or 100 day moving average that they like to stay close to. By watching and measuring these “averages” or “trends” you can generally tell where bonds (and therefore interest rates) will move.
Percentage of loan applications begun in the previous 90-day cycle that have closed.
A loan eligible for purchase by the two major Federal agencies that buy mortgages, Fannie Mae and Freddie Mac. The loan limits are currently $417,000 for a single family house.
Core Consumer Price Index (CPI)
The Consumer Price Index (CPI) is a measure of the average price level paid by urban consumer (80% of population) for a fixed basket of goods and services. Core CPI takes out food and energy costs. CPI reports price changes in over 200 categories. The CPI includes various user fees and taxes directly associated withthe prices of specific goods and services.
Debt-to-Income Ratio (DTI)
A personal finance measure that compares an individual’s debt payments to the income he or she generates. Includes front-end ratio/back-end ratio.
Loan applications denied as indicated by lender for Home Mortgage
Difference between a Mortgage Broker and a Lender
A mortgage broker counsels you on the loans available from different wholesalers, takes your application, and usually processes the loan which involves putting together the complete file of information about your transaction including the credit report, appraisal, verification of your employment and assets, and so on. When the file is complete, but sometimes sooner, the lender “underwrites” the loan which means deciding whether or not you are an acceptable risk.
(HMDA) reporting purposes. Loan applications not reported as denied or as originated (closed) may include active applications, applications withdrawn by consumers, or files closed for incompleteness.
An instrument that signifies an ownership position, or equity, in a corporation, and represents a claim on its proportionate share in the corporation’s assets and profits.
Federal Housing Act
1968 act (amended in 1974 and 1988) providing HUD Secretary with fair housing enforcement and investigation responsibilities
Fannie Mae (FNMA)
Federal National Mortgage Association. Federally chartered, stockholder owned corporation supporting secondary market for FHA, VA, and conventional mortgages.
FHA 203(k) Streamline Loan
Sure sometimes it just take a little paint and some carpet to clean up the deluge of distressed properties that are hitting the market like a tsunami, but often it takes more. That’s where Federap Housing Administration’s 203(k) comes to the rescue.
FHA 203(k) is a cost-effective way for borrowers to purchase or refinance a home that needs repairs or improvements. This program provides renovation funds by financing the “as-completed” value of the home, rather than the present value. Qualified borrowers receive a single loan with one closing and underwriting review for both rehab construction and permanent financing.
FHA 203((k) is to facilitate homes for which plans, consultants, engineers, and/or architects are not required. Eligible improvements are limited. Standard FHA 203(k) improvements would be needed to include any major rehabilitation or remodeling, new construction such as room addition, repairs to structural damage, or site amenity improvements
A type of credit score that makes up a substantial portion of the credit report that lenders use to assess an applicant’s credit risk and determine whether to extend a loan. FICO is an acronym for the Fair Isaac Corporation, the creators of the FICO score.
Federal Home Loan Mortgage Corporation (FHLMC). Federally chartered stockholder owned corporation supporting secondary market for conventional mortgages.
Further Detail into Trend Lines
A little reminder: interest rates follow the yields from mortgaged-backed securities. These yields move upwardly and downwardly just as the stock market does. And when they move from value to value, and from day to day, they create trend lines. For example, let’s say that yields on Monday read 1.0% and they increased steadily for the entire week. At the end of the week, the yield read 1.5%. If you drew a line from 1.0% to 1.5% the trend would be slightly upward. Conversely, if the next week you ended at 1.3%, the curve would move down slightly. Rates work in this manner and they like to stay close to the trend lines. Any move, drastically in one direction or another, is uncomfortable to the trend line. It happens, occasionally, with economic information that the market is not expecting, but all in the same, interest rates like to stay close to these trend lines. So, this past week we have remained above a tough layer of support and the 25-day moving average (or trend line). However, it has been awfully difficult to pass through a very tough level of resistance at the 50-day moving average (or trend line). So, interest rates have been bouncing back and forth, trying to stay in between these two trend lines with not much economic information coming out to break rates through either of these lines.
Good Faith Estimate
Settlement charges that the lender is obliged to provide the borrower within three business days of receiving the loan application.
Home Affordable Refinance Program (HARP) Loans
HARP is a refinance option. It consists of Fannie Mae and Freddie Mac loans whereby borrowers may refinance their existing mortgage, lower the interest rate, and therefore payments, even if they were under water or had no equity in their homes. HARP is unique in that it is the only refinance program thatenables borrowers who owe more than their home is worth to take advantage of low interest rates and otherrefinancing benefits.
The Federal Housing Finance Agency (FHFA) and the Department of the Treasury introduced HARP in early 2009 as part of the Obama Administration’s Making Home Affordable program. HARP provides borrowers, who may not otherwise qualify for refinancing because of declining home values or reduced access to mortgageinsurance, the ability to refinance their mortgages into a lower interest rate and/or more stable mortgage product.
Homeowners Helped Since Program Inception
As of August 31, 2011, nearly 894,000 borrowers had refinanced through HARP. Since April 2009 when HARP began, Fannie Mae and Freddie Mac have helped approximately nine million families refinance into a lowercost or more sustainable mortgage product.
HomePath Renovations are specifically for borrowers purchasing a Fannie Mae-owned property and funding moderate renovation.
Home Remodel Program
Our Home Remodel Program allows borrowers to combine the purchase or refinance of a home with the costs to renovate or extensively remodel the property. At closing all funds for renovation will be escrowed in an interest earning account. After all renovation work is complete, any remaining funds in the renovation escrow account will be used to pay down the principal balance of the mortgage. Soft costs such as architectural services, engineering and permit fees may be financed. Full builder third-party contracts only. More Information
Home Valuation Code of Conduct (HVCC)
On May 4, 2009, the Home Valuation Code of Conduct laws went into effect. This change was implemented to prevent Loan Originators (Banks, Brokers, Credit Unions, etc.) from ordering appraisals from their “in-house” or commonly used appraisers. In some markets, unscrupulous lenders were working with appraisers to increase the value of some homes, just to make a transaction work, as opposed to generating a true, appraised, “real,” value. HVCC developed the formation of Appraisal Management Companies (AMC’s) requiring that lenders use these AMC’s to order their appraisals from a “panel” of appraiser “experts,” that the AMC had “hired.” In essence, this removed the potential unrealistic valuations by putting a divider between the relationships. Sounds like a good thing, right? In some aspects, of course, it was a good thing. The problem was that the AMC panels consisted of anyone that would do the job. At first, we had appraisers from Texas, reviewing appraisals in Chico, and lowering values. We had derelicts, that shouldn’t be operating carnival rides, appraising properties and adjusting values non-consistent with the experts that scrupulous lenders were used to dealing with in the past. Estimates, into the trillions of dollars, were lost on real estate transactions that didn’t have careful, thought-provoking, legitimately adjusted calculations by professional, competent, knowledgeable appraisers. More information
HVCC in the Loan Process
Due to HVCC Laws, effective 5/4/09, proper disclosures have been delivered. An appraisal has, now, legally been ordered. Processing times for appraisals are typically 7 business Days. The appraisal is returned to the Appraisal Management Company (AMC), and sometimes e-mailed directly to the borrower before we receive notification. The appraisal must still be signed off by an underwriter. Occasionally, the underwriter would like more information on the appraisal and may ask for a review of said appraisal. Don’t be too alarmed. It’s a sign of the economic times and environment that lending is experiencing, after the mortgage credit crisis.
Department of Housing and Urban Development
A mortgage larger than the maximum eligible for purchase by the two Federal agencies, Fannie Mae and Freddie Mac, currently $417,000.
Loan-to-Value Ratio (LTV)
A lending risk assessment ratio that financial institutions and other lenders examine before approving a mortgage. It is calculated by dividing the mortgage amount by the appraised value of the property.
It is an upfront cash payment required by the lender as part of the charge for the loan, expressed as a percent of the loan amount; e.g., “2 points” means a charge equal to 2% of the loan balance.
This is the process of determining whether a customer has enough cash and sufficient income to meet the qualification requirements set by the lender on a requested loan. A pre-qualification is subject to verification of the information provided by the applicant. A pre-qualification is short of approval because it does not take account of the credit history of the borrower.
Difference between Pre-Approval and Pre-Qualification
The pre-approval process is much more complete than pre-qualification. For pre-qualification, the loan officer asks you a few questions and provides you with a pre-qual letter. Pre-approval includes all the steps of a full approval, except for the appraisal and title search. Pre-approval can put you in a better negotiating position, much like a cash buyer.
A rate lock is a contractual agreement between the lender and buyer. There are four components to a rate lock: loan program, interest rate, points, and the length of the lock.
The option to make adjustments on current mortgage (can lower monthly payments).
When does it make sense to refinance?
Usually people refinance to save money, either by obtaining a lower interest rate or by reducing the term of the loan. Refinancing is also a way to convert an adjustable loan to a fixed loan or to consolidate debts. The decision to refinance can be difficult, since there are several reasons to refinance. However, if you are looking to save money, try this calculation:
1. Calculate the total cost of the refinance
2. Calculate the monthly savings
3. Divide the total cost of the refinance (#1) by the monthly savings (#2). This is the “break even” time. If you own the house longer than this, you will save money by refinancing.
Since refinancing is a complex topic, consult a mortgage professional.
A reverse mortgage is a loan that allows you to take advantage of the hard-earned equity in your home to increase you cash flow, improve your lifestyle or get you closer to financial independence. Eligible seniors (62+) receive a single cash payment, monthly income or a line of credit without the worry of a monthly loan payment. Instead, the bank pays the borrowers, though they continue to be responsible for paying property taxes and homeowner’s insurance. The best part that you can take advantage of these funds TAX FREE as long as you live in your home.
A reverse mortgage is the result of a government-sponsored program. There are limitless possibilities on what you can do with the money you receive. Make your ‘golden’ years truly golden by putting to work the home equity you’ve created.
HUD has reported that in the past 8 months, there have been over 500,000 of these mortgages, an industry of $12.66 billion. A prediction by Harvard Housing study in 2011 this year foresees a 35% rise in senior households.
*Bank of America and Wells Fargo no longer do Reverse Mortgages, however, Access Real Estate Lending does!
Time to Close
Time from loan application to funding
USDA Rural Development
This program is administered by USDA Rural Development, which serves the public through more than 800 field offices nationwide. Sometimes good credit and steady income are not enough to qualify for a home loan at a commercial lending institution, such as a bank or savings and loan. More rural families and individuals may be eligible to become homeowners with the help of a USDA guaranteed home loan. When the federal government agrees to guarantee a loan, lending institutions can help buyers while incurring less risk. Through USDA’s Guaranteed Rural Housing Loan Program, low and moderate-income people can qualify for mortgages even without a down-payment.
Veteran Affair (VA) Loans
Va Home Financing options give our Military Buyers the home buying edge.Affording first time home or needing a larger property can be difficult.But you’re armed with great options that offer extra help to those who help keep our country strong. VA home financing programs smooth the way for qualified veterans, active-duty personnel and reservists, with fixed and adjustable-rate products designed to place their home goals well within reach.
Less Cash Needed-Up to 100% Financing
Seller Contributions-Allows sellers to contribute up to4% in addition to closing costs and discount points
Multiple Properties- Available on 1-4 unit properties, low and high-rise condos and PUDs
No Cash Reserves- Not required unless relying on rental income from anything other than subject property
Leave a Reply
You must be logged in to post a comment.