Recently, the Consumer Financial Protection Bureau issued an “Advance Notice of Proposed Rulemaking (ANPR) seeking information relating to the expiration of the temporary qualified mortgage provision applicable to certain mortgage loans eligible for purchase or guarantee by the Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac...” The ANPR notes that the CFPB is planning to allow the temporary qualified mortgage provision, known as the GSE Patch, to expire in January 2021.
So, what does this mean? CFPB Director Kathleen L. Kraninger explains, “The national mortgage market readjusting away from the Patch can facilitate a more transparent, level playing field that ultimately benefits consumers through stronger consumer protection.” Furthermore, “With the large percentage of loans being sold presently to Fannie and Freddie in excess of 43% debt-to-income ratio [the threshold typically required for loans to obtain qualified mortgage status], the outcome of what will happen to the GSE Patch is very important to our industry” says Norcom Mortgage President, Phil DeFronzo.
To read more about this, please visit the CFPB’s press release here:
Spring is near and with the weather we’ve had, you would think it was already here. However, the spring housing market is just beginning and before anyone goes out looking for a home, consider getting pre-approved first. You might be wondering why getting pre-approved is so important. It’s actually surprising to know how many people searching for a home don’t bother getting pre-approved. They end up wasting their time which makes them put house hunting to the side because they realized what they thought they can afford, isn’t going to work. This is a type of issue where getting pre-approved can help you avoid altogether.
Getting pre-approved allows you to shop for a home with confidence. You will already know how much you can afford and your time won’t be wasted looking at houses that are way out of your budget. Norcom’s pre-approval program allows you to tackle the loan process before you even begin your hunt for a new home. This will give you complete confidence to shop in your price range and even allows the seller to feel confident knowing your offer won’t fall through when it comes time for closing.
When you have an idea of how much you can afford before buying a home, the search for a new place becomes a lot more exciting. You’ll know that every house you visit can potentially be yours. Your realtor will help you find the perfect house in your price range, which will end up saving you a lot of time and frustration that those buyers who don’t get pre-approved go through.
Online calculators can be deceiving. You might be able to get a rough estimate of what you can afford but it won’t be as accurate as getting an official pre-approval from your lender. Getting pre-approved gives you the confidence in knowing that your offer will be accepted on a house you dream of owning.
A pre-approval will verify not only your credit, but bank statements and tax returns as well. This is a crucial step when it comes to getting pre-approved because you and your realtor will know that the amount you get pre-approved for, is completely accurate. Knowing that your key information has been reviewed by an underwriter ahead of time will give you, and the seller, confidence that you’re offer won’t fall through.
The Norcom JumpStart pre-approval program allows you to tackle the loan process before you even start house hunting, so you can shop with total Norconfidence. Every JumpStart pre-approval is reviewed by an underwriter to prepare you for success and get you closer to finding the right home for you and your family.
Visit our website, https://norcommortgage.com/pages/jumpstart-pre-approval, to learn more about our program or you can call us today to get started!
Private mortgage insurance (PMI) is required by lenders when a homebuyer makes a down payment on their home of less than 20%. It is a type of insurance policy that protects the lender from losing any money if your home ends up in foreclosure. PMI is also required if you decide to refinance your home with less than 20% equity.
Borrower-paid PMI (BPMI) is when you have monthly PMI payments, you are required to continue paying PMI until your loan balance reaches 78% of the original value of your home. If you would like to cancel your PMI, you must obtain approval from your lender in doing so and your home must reach 20% of the purchase price or appraised value. It is also required to have adequate equity as well as a good payment history.
Single-premium PMI means that the premium is paid upfront in a single lump sum. This does not require any monthly payments and can be paid at full at closing or financed into the loan.
Lender-paid PMI (LPMI) is a permanent part of your loan. The cost of the PMI is included into the mortgage interest rate and allows for lower monthly mortgage payments. However, with this type, you will end up paying more interest in the life of the loan.
Payments for PMI can be avoided entirely if you originally make a down payment of 20% of the purchase price of your home.
The mortgage industry is full of acronyms, and when you aren’t familiar with the meanings, a conversation can sound like a foreign language. Don’t stress when you hear your loan officer say acronyms you do not understand; we’re here to help! Here is a list of common acronyms, and their definitions, so you can sound like a pro when applying for a mortgage.
FHA: Federal Housing Administration. The Federal Government Agency that oversees the US Housing Market. FHA mortgages are guaranteed by the Federal Government and offered by banks/lenders.
FICO: Fair Isaac Corporation. The company that created the industry standard credit scores used by almost all lenders. The FICO score is a numeric summary of the information in your credit reports that represents your potential credit risk.
APR: Annual Percentage Rate. The APR calculates the annual percentage rate you would pay on the loan once the costs of getting the loan are factored in.
ARM: Adjustable Rate Mortgage. An Adjustable rate mortgage is a mortgage that will have a fixed rate for a set period of time and then the rate is adjusted. The rate will normally be adjusted once or twice a year.
ECOA: Equal Credit Opportunity Act. A law in the U.S. that makes it illegal for any creditor to discriminate against any applicant on the basis of race, religion, national origin, sex, etc.
FHLMC: Federal Home Loan Mortgage Corporation. A corporation authorized by Congress to provide a secondary market for residential mortgages.
GFE: Good Faith Estimate. A GFE is a document that the lender is required to give a prospective borrower when they apply for a loan. The GFE is an estimate of all closing costs and fees required for the proposed mortgage loan.
GPM: Graduated Payment Mortgage. This is a type of mortgage on which the payment starts low and rises over time.
HARP: Home Affordable Refinance Program. HARP is a refinance program that allows eligible borrowers, with little to no equity in their homes, to take advantage of low interest rates and other refinancing benefits.
HELOC: Home Equity Line of Credit. HELOC is a loan in which the lender agrees to lend a maximum amount within an agreed loan term, where the collateral is the borrower’s equity in his or her house.
HUD: U.S. Department of Housing and Urban Development. HUD is the primary housing and lending regulatory authority in the U.S.
IRRRL: VA Interest Rate Reduction Refinance Loan. This refinance loan allows you to lower your interest rate on an existing VA home loan.
LTV: Loan-to-Value. LTV is a ratio used by the lender that divides the amount of money borrowed by the appraised value of the home expressed as a percentage. For example, a borrower may purchase a home appraised at $200,000 with a down payment of $40,000. This means he has a loan-to-value ratio of 80%.
P&I: Principal and Interest. Principal and interest are the two elements that go towards repaying your loan.
PITI: Principle, Interest, Taxes and Insurance. These are the four main components of your monthly mortgage payment. Principal is the loan amount. Interest is the rate at which the finance charge you pay for borrowing is calculated. Taxes are the real estate taxes for which you are responsible, and insurance is the homeowners insurance that your lender requires you to have.
PMI: Private Mortgage Insurance. If you put down less than 20% most lenders or banks require you to have private mortgage insurance. This can be put into your monthly mortgage payment or calculated into your rate.
TIL: Truth in Lending. TIL is an important document you will receive from the lender or bank within three days of your application. Within the document certain disclosures are set forth. Such as, finance charges, annual percentage rate (APR), amount financed, total of payments, and total sales price will be disclosed.
VA: Department of Veterans Affairs. This federal government agency guarantees mortgages that assist eligible veterans in buying homes.
The 15-year, fixed-rate mortgage can appeal to many people. There are two groups in particular, however, that this mortgage type may appeal to more. Older homebuyers, who are settled in their careers with higher incomes, are first. These are people who plan on paying off the home before retirement. Young homebuyers, who have substantial income and wish to make higher payments and pay off the home before paying for their children’s tuition, are second. So what makes this mortgage type so appealing to these two groups of homebuyers?
Lower Interest Rates
The shorter the mortgage term, the lower the interest rate. Therefore, the 15-year fixed rate loans will have lower interest rates than 30-year mortgages. Having a fixed rate mortgage means you will be paying this lower rate for the entire term of your mortgage.
Less Interest Paid Over Time
Going along with the lower interest rates associated with 15-year mortgages, is the amount of interest you will be paying over the life of the loan. If you can afford to make higher monthly payments, you will end up saving thousands of dollars compared to if you were to have a 30-year mortgage.
Predictable Monthly Payment
Your monthly payment will be the same every month with a fixed-rate mortgage. This makes it much easier to plan for the future and keep to a budget. If you have small children and hope to pay off your home before you have to pay for college tuition, having a set monthly payment makes it easier to see where you may be financially at that time.
Pay Off Your Mortgage Faster
The shorter mortgage term obviously means that you will pay off your mortgage faster than a longer-term loan. This also means that you will be building equity faster than you would with a 30-year mortgage.
If you this may be the type of mortgage for you, and are interested in learning more about a 15-year fixed rate mortgage you can apply online today!