My New Blog

We discussed shopping for a home, how to pick a real estate professional and the pre-approval process.  Today, we are going to speak about the loan process and why it could take a full 30 days for you to own your home.

Let's assume you have an agreement of sale signed and dated.  The next thing you need to do is contact the loan officer at Allied Mortgage Group.   We will ask you to update all your information that you provided us for the pre-approval. Besides the updatd information, we will need a copy of the canceled checks (front & back) you gave for the earnest funds (deposit) when you signed the agreement of sale.  We will update the information on the application and meet with you in person to sign the loan application and all the disclosures.   The processor at Allied Mortgage Group will order the appraisal for the property and inform the title company we are the mortgage lender handling the financing.  Once we have all the documents in the file that is needed, the file is sent electronically to the underwriting department.  The head underwriter assigns the file to a underwriter.  The underwriter is responsible to make sure the loan abides by the laws and guidelines issued by several entities.  These entities are Fannie Mae and Freddie Mac, VA, Federal Housing Agency (HUD), and the wall street investors. 

The underwriter gives a conditional approval and issues the mortgage commitment letter.  On the mortgage commitment letter the underwriter issues additional conditions of what you, the borrower, is 1. either missing or 2. needs additional information in order to fully approve the loan. The conditions are, what we call, the laundry list of items.  Once you obtain everything that is asked for it can take anywhere from 24-48 hrs for the underwriter to approve the conditions.  Sometimes, the underwriter sees conditions and it may evoke more conditions or questions concerning what he or she has in front of them.  Many times it is a simple explanation, whereas, it can wreak havoc on the entire loan process and the mortgage denied.  In this case scenario we are perfect.  The underwriter likes the loan and approves it. 

The loan now approved is sent to the closing department.  The closing department issues the closing documents which is given to the title company.  The title company must send to the closing department a preliminary HUD 1 or Settlement statement.  This statement breaks down the entire charges for both seller and buyer.  Of course we are merely interested in the buyers side of the transaction.  Once the preliminary HUD is approved the closing department sends the closing instructions and documents to the title company.  The closing department electronically sends the funds to the title companies bank account. 

Now we are at the table and all papers are signed and the title clerk says "Congratulations". You are given the keys to the house.  Your Allied Mortgage Loan Officer congratulates you and puts all your mortgage papers in nice folder. 

I hope this answers all your questions. Visit our web site www.loansbyallied.com

Today, there are many finance options when it comes to refinancing your home.  I will discuss the VA Home Loan Refinancing options. Below are general descriptions and guidelines concerning both options and the Energy Efficient Mortgages (EEMs) add-on. 

The first is called the Interest Rate Reduction Refinance Loan. This loan is a strictly a streamlined no cashout loan.  The VA does not require an appraisal to be done on the property.  You are paying off the balance of your existing mortgage to reduce your monthly payment. The loan term (ie: 30, 25,20 and 15-year) will remain the same plus 10 years unless the term of your loan is already a 30-year term.  If your Principle & Interest (P & I) payment increases by 20% Allied Mortgage Group's underwriter will determine if you would qualify for the increased payment.  The closing costs are incorporated into the loan with certain charges allowable by the VA.    

The second refinance option is the Cash-out Refinance.  This is a true cash out program.  This will allow you to refinance your loan into a lower interest rate and get cash back at the closing table.  This loan requires an appraisal. An appraisal is to see if your house appreciated in value within the neighborhood of where you live.  The appraiser will look for comparables of similar properties that have settled within a 1 mile radius and closed in the last 6-12 months.  If your home is in a rural area the comparables might be further away and would have to be explained why the comparables are not within the 1 mile radius. 

The maximum loan amount for the Cash Out Refinance has been changed to meet 100 percent of the Notice to Value amount plus the closing costs and funding fees which do not exceed the maximum loan amount as set by Freddie Mac in the Philadelphia Metro area is $417,000.   

The last option of refinancing is an add-on to both types of loans that is allowable by the VA.  This is called the Energy Efficient Mortgage program.  The following is quoted directly from the VA handbook as I was instructed by the Regional Loan Servicing Center. 

EEMs are loans to cover the cost of making energy efficiency improvements to a dwelling. They can be made in conjunction with a VA refinancing loan secured by the dwelling. Acceptable energy efficiency improvements include, but are not limited to · solar heating and cooling systems, including solar systems for heating water for domestic use · caulking and weather-stripping · furnace efficiency modifications limited to replacement burners, boilers, or furnaces designed to reduce the firing rate or to achieve a reduction in the amount of fuel consumed as a result of increased combustion efficiency, devices for modifying flue openings which will increase the efficiency of the heating system, and electrical or mechanical furnace ignition systems which replace standing gas pilot lights · clock thermostats · new or additional ceiling, attic, wall and floor insulation · water heater insulation · storm windows and/or doors, including thermal windows and/or doors · heat pumps, and · vapor barriers.

The requirements are as follows for the EEM.

Funds for energy efficiency improvements are considered part of the total loan, which must be secured by a first lien. If the labor is to be performed by the veteran, the loan increase will be limited to the amount necessary to pay for materials. 

A loan for existing property may be increased by up to $6,000 for energy efficiency improvements at the option of the lender and veteran at any time up to loan closing without VA’s prior approval. Allied Mortgage Group's underwriter must determine that the proposed weatherization and/or energy conservation improvements are reasonable for the particular property.

Allied Mortgage Group's loan professional will evaluate the veteran’s ability to pay the increased loan payments caused by addition of energy efficiency improvements.

For energy efficiency improvements that will increase a loan amount by more than $6,000, the amount of the increase must be supported by an increased valuation in an equal amount.

Information on EEMs is provided to a veteran who applies for a loan which requires a Notice Of Valuation (NOV) (that is, a loan for a home purchase or cash-out refinance). The NOV includes the following notice to the veteran:

“The buyer may wish to contact a qualified person/firm for a home energy audit to identify needed energy efficiency improvements to the property. In some localities, the utility company may perform this service. The mortgage amount may be increased as a result of making energy efficiency improvements such as: Solar or conventional heating/cooling systems, water heaters, insulation, weather-stripping/caulking, and storm windows/doors. Other energy related improvements may also be considered."

The mortgage may be increased by:

· up to $3,000 based solely on the documented costs

· up to $6,000 provided the increase in monthly mortgage payment does not exceed the likely reduction in monthly utility costs, or

more than $6,000 subject to a value determination by VA.

If you have any questions about the VA refinance programs contact Allied Mortgage Group or contact the Veterans Administration Regional center. You can find information online at www.homeloans.va.gov

The VA Home Loan Program was established for Vets and their immediate families to obtain a home with little to no money down after serving their country during World War II.  This was  the first time in our countries history where so many people wanted to own their own home.

The VA Home Loan Program is sponsored and guaranteed by the federal government.  The loan amount cannot exceed $417,000.  This loan limit is set by the Federal Housing Agency (FHA) and Freddie Mac.  There are several loan programs the VA offers.  These loan programs are:

• Purchase of a Single family residence, Townhome, Condo, and a Multi-unit property (up to 4 units)  
• Purchase of a property and improve a home consecutively.
• Energy Efficient Improvement loans
• Cash-out Refinance
• Streamline Refinance aka Interest Rate Reduction Refinancing Loan (IRRRL)

To qualify for a VA Home Loan you must meet eligiblity requirements.  To find out if you are eligible for the entitlements you must mail to the VA Administration the application for the Certificate of Eligibilty (COE) (VA Form 26-1880). You must provide proof of military service through discharge papers. To obtain VA Form 26-1880 go to http://www.vba.va.gov/pubs/forms/VBA-26-1880-ARE.pdf  After you recieve the COE you can fax it to Allied Mortgage Group and one of our loan officers will be glad to pre-approve you. 

The basic entitlement all Veterans receives is $36,000.  This basic entitlement is based on a home loan of $144,000. This is exactly 25% of the guaranty loan amount.  If you were  to purchase a home that costs more the guaranty will be calculated as such:

Loan amount:  $250,000   Basic Entitlement: $36,000

(Loan amount x 25%= )-$36,000=Bonus entitlement for 2010 

You are allowed up to 4x the amount of basic and or bonus entitlement. 

So if your bonus entitlement is $68,000. You can recieve $272,000. 

Some areas of the country the loan limits will be higher.  Allied Mortgage Group is a national direct lender.  To apply for VA Loans go to www.loansbyallied.com

Tomorrow we will discuss the IRRRL program.

I just returned from a seminar on VA Lending in Atlantic City, NJ.  I learned some valuable information that I like to pass onto you concerning how savvy mortgage lenders market their services to you, the Vet. 

The majority of the lenders, who process and approve VA loans are honest. The small minority of those lenders use tactics to get you in their door because they do not know how to honestly advertise to you.  They use several types of deceptive practices.  If you come across any of these deceptive devices call the Veterans Administration Loan Center and report them.  They will be fined and could lose their rights to lend to Vets. 

Lenders cannot use the VA logo on any letterhead giving you the impression it is official business from the VA.  This is ethically wrong and deceptive.  The VA administration does not partner with mortgage lenders in advertising. 

Another deceptive vice used is how the envelope looks. Sometimes you might see a picture of a soldier with the words written in bold type "Veteran Services Administration" or "Veterans Loan Processing Center", and/or "Veterans Benefits".  This is very deceiving since the VA Loan Center will never send out these types of mailers. If the VA was to send any type of letter it would be in an official business envelope on their letterhead. 

In the letter itself some of these unethical mortgage lenders will put "we have a special relationship with the VA" or "have an exclusive...". This is not true.  The VA does not allow exclusive agreements. 

Some lenders will make statements on receiving cash back on an Interest Rate Reduction Refinance Loan program when in fact the program is a streamline refinance program and does not allow you to receive cash.  Another deception some lenders advertise stating you can miss 2 payments on an IRRRL. If you miss 2 payments on your loan it will lower your credit score and be reported late.  Do not listen.

Some will advertise an interest rate that may only give you an 1/8th percent lower than your current rate.  This rate will most likely not save you money on your monthly payment. It could cost you more in the long run.  Unless you reduce your loan term with the interest rate. 

Allied Mortgage Group cares about our veterans and will not give you false information on VA or any other type of loan programs.  We have experienced loan professionals that are committed to long term relationships with our clients.  To learn more about VA Loan programs click on "Special Programs" tab and move your cursor over to VA FAQ.  If you still have questions or want to get prequalified call us at 215-355-5626.

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This policy is valid from 15 March 2010

 This blog is a sponsored blog created or supported by a company, organization or group of organizations. For questions about this blog, please contact  Steve Salzman (ssalzman@alliedmg.com).

 This blog does not accept any form of advertising, sponsorship, or paid insertions. We write for our own purposes. However, we may be influenced by our background, occupation, religion, political affiliation or experience.

 The owner(s) of this blog will never receive compensation in any way from this blog.

 The owner(s) of this blog is not compensated to provide opinion on products, services, websites and various other topics. The views and opinions expressed on this blog are purely the blog owners. If we claim or appear to be experts on a certain topic or product or service area, we will only endorse products or services that we believe, based on our expertise, are worthy of such endorsement. Any product claim, statistic, quote or other representation about a product or service should be verified with the manufacturer or provider.

 The owner(s) of this blog would like to disclose the following existing relationships. These are companies, organizations or individuals that may have a significant impact on the content of this blog. We are employed by or consult with: Allied Mortgage Group, Inc.. We blog about people to whom we are related. The most interesting such people are: Homeowners, 1st Time Homebuyers, Homebuyers, Realtors, Builders, Trades, Home Inspectors, etc . We have a financial interest in the following that are relevant to our blogging: mortgages.

Today' blog is about mortgage fraud.  Allied Mortgage Group, Inc. and other types of lenders run into those unsavory, unethical, and mischievous types of people trying to find different ways to commit fraud.  They eventually get caught.  Another reason why I am writing about fraud is the Dept. of Housing and Urban Development (HUD) has a form,which is part of the FHA paperwork you have to sign.  It clearly states on this form ways to commit mortgage fraud.  This form is called the "Important Notice to Homebuyers". 

If you are unethical and have a criminal-like mind, you might be thinking of ways to commit fraud. The U.S. government has probably tackled every concievable scam and ways people can commit loan fraud.  Allied Mortgage Group, Inc.'s underwriters are trained in catching fraud. AMG has software that detects fraudulent documents such as W-2's, paystubs, altered ID's, etc. This software is made specifically for lenders and it is accurate. 

The following is from the "Notice to Homebuyers" from the section "Don't Commit Loan Fraud".

"It is important for you to understand that you are required to provide complete and accurate information when applying for a mortgage loan.

   Do not falsify information about your income or assets.

   Disclose all loans and debts (including money that may have been borrowed to make the downpayment).

   Do not provide false letters-of-credit, cash-on-hand statements, gift letters or sweat equity letters.

   Do not accept funds to be used for your downpayment from any other party (seller, real estate salesperson, builder, etc.).

   Do not falsely certify that a property will be used for your primary residence when you actually going to use it as a rental property.

   Do not act as a "strawbuyer" (somebody who purchases a property for another person and then transfers title of the property to that person), nor should you give that person personal or credit information for them to use in any such scheme.

   Do not apply for a loan by assuming the identity of another person.

   Do not sign an incomplete or blank document; that is, one missing the name and address of the recipient and/or other important identifying information. "

The section below will discuss the penalties for loan fraud. The penalties are severe. I am going to highlight the penalties in bold print.

Penalties for Loan Fraud are:

 "Federal laws provide severe penalties for fraud, misrepresentation, or conspiracy to influence wrongly the issuance of mortgage insurance by HUD.  You can be subject to a possible prison term and fine of up to $10,000 for providing false information. Additionally, you could be prohibited from obtaining a HUD-insured loan for an indefinite period. "

If you suspect anyone committing fraud or someone tries to persuade you to make false representations in an application call the local HUD office or the Regional Inspector General at 1-800-347-3735. 

Commiting fraud and misrepresentations on any loan application can result in severe penalties. Why take the chance and lose everything in the end.  I have read many cases where loan officers and realtors commit fraud thinking they will get away with it.  They do not think about the people they are hurting including their own families.  Fraud hurts everyone. It is like shoplifting.  Lenders have to compensate by creating stiffer underwriting guidelines and making it harder for those that are honest and hardworking individuals.  In the long run it will take longer for loans to get approved and discourage homebuyers to purchase homes and those who want to refinance their homes if they have to provide more documentation. 

_________________________________________________________________

This policy is valid from 15 March 2010

 This blog is a sponsored blog created or supported by a company, organization or group of organizations. For questions about this blog, please contact  Steve Salzman (ssalzman@alliedmg.com).

 This blog does not accept any form of advertising, sponsorship, or paid insertions. We write for our own purposes. However, we may be influenced by our background, occupation, religion, political affiliation or experience.

 The owner(s) of this blog will never receive compensation in any way from this blog.

 The owner(s) of this blog is not compensated to provide opinion on products, services, websites and various other topics. The views and opinions expressed on this blog are purely the blog owners. If we claim or appear to be experts on a certain topic or product or service area, we will only endorse products or services that we believe, based on our expertise, are worthy of such endorsement. Any product claim, statistic, quote or other representation about a product or service should be verified with the manufacturer or provider.

 The owner(s) of this blog would like to disclose the following existing relationships. These are companies, organizations or individuals that may have a significant impact on the content of this blog. We are employed by or consult with: Allied Mortgage Group, Inc.. We blog about people to whom we are related. The most interesting such people are: Homeowners, 1st Time Homebuyers, Homebuyers, Realtors, Builders, Trades, Home Inspectors, etc . We have a financial interest in the following that are relevant to our blogging: mortgages.

To get your own policy, go to http://www.disclosurepolicy.org

Yesterday, we discussed credit and the reasons why you should contact a mortgage lender such as Allied Mortgage Group before contacting a real estate professional or realtor.  Today, we are going to discuss how to choose a realtor. 

Once you are pre-approved for a mortgage now it is time to call a Realtor and make an appointment. At this appointment you will interview them as if they had just applied for a job with you.  Why should you do this? Great question.  The reason to interview a realtor is to make sure they are a good fit for you. Not every realtor is a good fit and will have your best interest.  You want to ask questions such as "What areas are they most familiar with?", "Are they mostly a listing agent versus a buyers agent?", "Will you email me listings instead of calling", "How many houses should I look at before making a decision?", "What designations do you have and what associations do you belong to?" 

The reason why you want to know the type of designations has to do with their continuing education.  The more educated a Realtor is the better they can serve you.  Not every Realtor is a member of the National Association of Realtors.  This association is an important credential.  They have their own certifications and every member must abide by the code of ethics.  You can call the associations they belong to and research the prospective real estate professional to see if there are any complaints against them, ask how many homes they have sold or listed.  Once you are satisfied with their answers and their professionalism then you and the realtor can begin the relationship. This is where you hand them your pre-approval letter from Allied Mortgage Group. 

During the home search process I recommend for you to carry a small notepad around to make notes on every house the realtor shows you.  This way you do not get confused. Also, on a separate sheet make 2 columns.  The first column should be titled "What I Like About the House", and the 2nd column should be titled "what I do not like about the House".  This will help you to assist the realtor to know what in each home what you liked the best and what you want to stay away from.  This narrows down the amount of houses to see.

During the home search you will be enticed to look at open houses.  Mind you there is nothing wrong with looking at an open house. Take your note pad with you.  When you enter the open house there is a Realtor who will be there showing the home.  When signing in the sign-in book make sure you put your realtors name down to inform the sellers realtor you are represented by a realtor already.  Otherwise, they will call you and try to gain your business to sell that particular home.  Remember, these realtors represent the seller and are looking at their self-interests.  It is hard to be a dual agent. Some states have special contracts for buyers and sellers to sign that state the selling agent is a dual agent representing the buyer. This is why it is best to have another independant realtor represent you. 

Once you have found a house your realtor will help you draft a bid for the home of your dreams. 

Tomorrow we shall discuss what happens from the bid to the loan process. 

Everyone asks the same questions when it comes to buying a home. The tips I am going to provide should help alleviate some of your questions.  If we miss anything just call or email and we be happy to answer your questions more in details.

When looking for a home the first question should be "how good is your credit history". Basically, since you pay the bills you should know if you have been late on bills or have collections and judgements. The way to find out is to apply through annual credit report.com. If you want your credit scores it will cost you. However, you can obtain your credit scores at www.loansbyallied.com/creditscore for only $17.96 single or as a couple $29.36.  If you have any derogatory information that you feel is incorrect you need to dispute the information. Misinformation can hurt your credit scores by at least 30 points if not more.  

The next step is to look at your finances. Look at your savings in all accounts.  These accounts are savings, checking, 401K's, IRA's, personal stock funds.  Do you have at least $10-15,000 saved?  The reason for the larger amount is to have enough money for 2-3 months worth of mortgage payments including your down payment, home inspections, pest inspection, application fees and closing costs.  Once you have calculated your savings and available funds now its time to start looking for a home of your dreams.  Before you contact a realtor or other real estate professional contact a Mortgage Banker such as Allied Mortgage Group.  At Allied Mortgage Group, we can get you pre-approved and not pre-qualified like so many of our competitors hand out.  When meeting with your professional loan officer at Allied Mortgage Group, bring the following items: the last 2-yrs of W-2's from all employers, the last 2-3 months including current bank statements with all the pages (blank ones included), 1 month of current paystubs, and letter of explanation for any derogatory accounts on credit history or excessive credit inquiries.  Being pre-approved is like having your personal banker in your back pocket.   You have buying power! With the pre-approval in hand now you can look for a realtor, who will work for you.

Next we will look at the different types of realtors and how to shop for a home of your dreams.