What Are Your Options If Your Home Appraises For Less Than The Sale Price?

What Do You Do When A Home Appraises For Less Than The Sale Price?

To be honest, in today's market a home's appraised value is unlikely to fall short of its sale price. It can happen, but buyers and sellers are more savvy about "the going price of a home", and the U.S. housing markets have exhibited steady growth since 2011. These factors are something that home appraisers are likely to consider when assigning a home's Fair Market Value.


Knowing a home's Fair Market Value, can help set the downpayment amount on a purchase. Mortgage lenders use home appraisals as the "value" portion of the your mortgage's loan-to-value (LTV) calculation, where "value" is equal to the lower of your home's purchase price or its appraised value.

If your home appraises for less than its sale price, there are three potential outcomes :

• Buyer and seller renegotiate a new, lower home sale price

• Buyer increases downpayment to meet new LTV and downpayment minimums

• Buyer chooses neither option, and cancels home purchase contract

The possibility of a "bad appraisal" is one of the reasons why the most home purchase contracts are written with an appraisal contingency. In the event that the home fails to appraise for its purchase price, the contingency clause gives buyers an opportunity to re-evaluate. Protecting the buyer.

Appraisal contingencies can also be used to renegotiate or exit contracts if an appraiser identifies required home repairs, such as chipped paint or cracked windows. 

If you plan to buy a home consider your household budget and your expected home downpayment. An appraisal can change your math, and so can rising home prices. It's best to know how much home you can afford -- it's free and there's no obligation whatsoever.

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How To Avoid Paying Double Interest On FHA Streamline. Tips On FHA Streamline Refinance.

Tips On FHA Streamline Refinance.

What Is An FHA Streamline Refinance?
The FHA Streamline Refinance is a reduced-paperwork, verification-free, appraisal-less refinance program meant to lower a homeowner's monthly mortgage payment by 5 percent or more monthly. FHA Streamline Refinance is a special refinance program available only to homeowners with FHA-insured mortgages. Homeowners must be current on their mortgage to use the FHA Streamline Refinance, and must have made at least 6 payments on their FHA-insured loan in order to be eligible. 

The FHA Streamline Refinance is available in all 50 states and allows for loan sizes of up to $729,750 in certain high-cost areas including Loudoun County, Virginia; San Jose, California; and Montgomery County, Maryland. In high-cost areas in which multi-unit homes are common, maximum FHA loan sizes are even larger. In Brooklyn, New York, for example, a 3-unit home can be financed up to $1,129,250; financing for a 4-unit home is available up to $1,403,400.

The date you set your FHA Streamline Refinance closing matters. So, when should you close your FHA Streamline Refinance? The best time to close your FHA Streamline Refinance is absolutely at the end of the month.

Time Your FHA Streamline Refinance Closing
FHA Streamline Refinance can be one of the simplest, fastest refinance programs available. According to FHA guidelines, there is no appraisal to commission; no income to verify; and no credit to review (however, some lenders may ask for tax returns as a risk precaution). 

Although there is limited paperwork, and the nature of the product is easy-breezy, you do need to keep in mind that, in order to close on a FHA Streamline Refinance it requires attention to details. Specifically, refinancing homeowners should pay special attention to their expected mortgage closing date. 

You could be paying up to 30 days of prepaid mortgage interest which may be double-paid without your knowledge. This is because of an FHA rule which gives mortgage lenders permission to collect a full month of mortgage interest, regardless of whether the loan's been paid off prior to the month's end. This differs from a conventional refinance for which a mortgage lender will only collect through the payoff date. 

For example, assume you are a homeowner in Columbus, Ohio who is using the FHA Streamline Refinance to refinance a $250,000 mortgage; and assume your new FHA loan will fund on the 15th of the month.

· 15 days of per diem interest paid to new lender, to cover the rest of the month 

· 30 days of per diem interest paid to old lender, because the FHA prescribes it 

Funding an FHA Streamline Refinance on the 15th day of the month, would have you paying 45 days of mortgage interest for a 30-day month (a waste of 15 days of extra interest). Or, in this case, $360. If you fund the loan on 30th of the month, only 1 day of mortgage interest is paid to the new lender. This would save $335. 

Below are optimal 2013 FHA Streamline Refinance closing dates. You can use this as a guide to minimize your "double interest". These dates assumes that your home is your primary residence such that the 3-day right of rescission applies. If you're closings for FHA non-owner occupied properties, rental homes, and other properties not subject to the 3-day right of rescission should be scheduled for the last business day of the month.

· May 2013 : A Friday, May 24 closing will fund May 30, 2013

· June 2013 : A Monday, June 24 closing will fund June 28, 2013

· July 2013 : A Friday, July 26 closing will fund July 31, 2013

· August 2013 : A Monday, August 25 closing will fund August 29, 2013

· September 2013 : A Wednesday, September 25 closing will fund September 30, 2013

· October 2013 : A Friday, October 25 closing will fund October 30, 2013

· November 2013 : A Monday, November 25 closing will fund November 29, 2013 

· December 2013 : A Thursday, December 26 closing will fund December 31, 2015

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What Is Refinancing? What Types Of Refinancing Are Available?

What Is Refinancing? 
What Types Of Refinancing Are Available?

What is a Refinance?
Replacing a current mortgage loan with a new mortgage loan is referred to as refinance. Common reasons to refinance include: lower mortgage rate, obtain cash out, consolidate other debt, reduce or increase term, refinance from ARM to FIXED, satisfy a divorce agreement, etc...



Qualifying Criteria
Because a refinance amounts to establishing a brand-new loan with brand-new terms, it follows that refinance applicants are subject to the same approval process as for the initial mortgage which was given at the time of purchase. A refinanced mortgage represents a brand-new debt and must be underwritten accordingly.

There are three basic areas against which a refinance applicant is evaluated :
• Credit Score and Payment History
• Income and Employment History
• Equity (home value vs amount owed on mortgage loan)

      2 Types of Mortgage Refinance

      Rate-and-term, & cash-out. The refinance type that's best for you will depend on your individual circumstance.

Rate-And-Term Refinance

In a rate-and-term refinance, the only terms of the new loan which differ from the original one are either the mortgage rate, the loan term, or both. Loan term is the length of the mortgage. For example, in a rate-and-term refinance, a homeowner may refinance from a 30-year fixed rate mortgage into a 15-year fixed rate mortgage; or, may refinance from a 30-year fixed rate mortgage at 6 percent mortgage rate to a new, 30-year fixed rate mortgage at 4 percent. With a rate-and-term refinance, a refinancing homeowner may not walk away from closing with more than $2,000 in cash. Closing costs and escrow reserves may be added to the loan balance.

Cash-Out Refinance

In a cash-out refinance, the new mortgage may have a lower mortgage rate or shorter term as compared to the original home loan. However, the defining characteristic of a cash-out mortgage is that the loan balance of the original mortgage is increased to account for cash-in-hand at closing of more than $2,000; for debt consolidation; or, to combine an existing first and second mortgage, or to add to savings, etc...

"Special" Refinance Programs For Homeowners

With respect to refinancing, there are four mortgage programs for which the mortgage approval process is different. Collectively, these programs are known as "streamline" programs because their respective underwriting requirements are grossly simplified. With a streamline refinance, lender often waive large chunks of the "typical" mortgage approval process which may include waiving appraisals, waiving income verification, and waiving credit score minimums.

Four common streamline refinance programs are :

·     • FHA Streamline Refinance: For homeowners with an existing FHA mortgage

·     • VA Interest Rate Reduction Refinancing Loan (VA IRRRL): For homeowners with an existing VA mortgage

·     • Home Affordable Refinance Program (HARP): For homeowners with an existing Fannie Mae or Freddie Mac mortgage

        • USDA Streamline Refinance: For homeowners with an existing USDA mortgage

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Reverse Mortgage. Is It Right For You?

Reverse Mortgage. Is It Right For You?

What is a Reverse Mortgage?

A reverse mortgage is a form of equity release (or lifetime mortgage). It is a loan available to home owners or home buyers, enabling them to access a portion of the home's equity. The home owners can draw the mortgage principal in a lump sum, by receiving monthly payments over a specified term or over their (joint) lifetimes, as a revolving line of credit.  

Reverse mortgages are available to all US citizens and Permanent Residents age 62 or older with substantial equity in their home. The maximum loan amount you may qualify for is based on the youngest homeowner’s age, current rates, and home value. There is no income or credit score requirements as there are no monthly repayments. You must continue living in your home as your primary residence and continue to pay your properties taxes and insurance.

Is a Reverse Mortgage Right for You?

Without knowing an Individual's particular situation, it's hard to say if reverse mortgage is right them. The best thing a homebuyer can do is get advice from an experienced mortgage professional to determine if a reverse mortgage is right for them. But, here are some basic requirements that you need to know: 

•The youngest borrower must be at least 62 years of age

•LTV must be in the vicinity of 62% - a bit higher for older borrowers (maybe 70% age 75, maybe 75% age 85)

•Credit score does not matter

•Income does not matter

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Buying A Home Before You've Sold Your Current Home?

Buying A Home Before You've Sold Your Current Home?

So, you've found the perfect home but you haven't sold your current home yet. What are your options? In order to qualify to buy another home while keeping the one you already have, you will need to qualify based on some general guidelines pertaining to income, credit, and assets.




Below are some general guidelines to keep in mind:

Income: Your DTI (debt to income ratio) cannot exceed 56.999% if you’re utilizing a government loan such as an FHA Mortgage or a VA Mortgage. And 45% if utilizing a Conventional loan up to 417K.

Credit: For a VA loan, the minimum credit score is 580. The VA loan allows up to 100% financing, so there is no down payment requirement. For an FHA loan, the minimum credit score is 620, and the minimum down payment is 3.5%. For a conventional loan, the minimum credit score is 620 and the minimum down payment is 5%.

Assets: You will need to show proof of liquid assets to cover the amount needed for down payment and any cost involved with your purchase loan.

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How Do You Determine Your Down Payment On A Home?

What Should Your Down Payment Be?

How much you put down should depend on the purchase price of the home you are looking to buy and the loan type you'll be purchasing with. For example, VA and USDA mortgage loans require ZERO down payment. FHA loans require 3'5% down payment, and conventional loans require 5% down payment. The first step is to speak to an experienced loan officer to determine your overall qualification and pre-approval. Based on your income, assets, and overall debt, the loan officer should be able to give you proper advice on the amount of your down payment, and provide down payment options.

Ultimately, the best thing a homebuyer can do, is get advice from an experienced mortgage professional to determine down payment options that fit their needs.

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How To Get A Certificate Of Eligibility For A VA Loan

VA Loan Certificate of Eligibility – What Is It And How Do You Get It?
A VA loan is an incredible benefit offered to men and women of the armed forces who meet certain eligibility criteria. Not only are the benefits exclusive to veterans, they provide opportunities that you can’t get with other loans, like the ability to refinance your home up to 100% of its worth, no down payments on a home purchase, and much more.

To take advantage of the benefits offered by a VA loan, you have to prove you are eligible. In order to do that, you must meet certain guidelines.


To qualify for a VA loan, you must have one of the following requirements:

• Served 2 years during peacetime (Active Duty)   – Could be less if prior to 1974
• Served 180 days during war time (Active Duty) – WWII and Korean War vets need only 90 days
• Served 6 years in the Reserves or National Guard
• Surviving spouse of a service member who was killed in the line of duty

But in addition to meeting one of the above criteria, you must request a Certificate of Eligibility (COE) from the Veterans Association.

This form will ask you for information about your current living situation and your dates of military service. It is recommended that you provide your proof of service form along with the COE. This is the DD Form 214 (that you can obtain online if you do not have a copy).

COE REQUEST:            Certificate of Eligibility

DD214 REQUEST:        DD Form 214

If they were in the normal military you will need their DD214

If they are still active in the military you need a Select Service Letter from their Commanding Officer with their Full Name, SSN, Enlistment State Date, Enlistment End Date, and any Loss Time if applicable on military letterhead

If they were in the Reserves you will need their DD256 and Point Statement

If they were in the National Guard you will need their NGB-22

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