Jeremiah Phillips of First Mutual Corp

Jeremiah Phillips Announces 2006/2007 Compliance Checklist

Jeremiah Phillips of Custom Mortgage Solutions announced today it has released an industry leading 2006/2007 Mortgage Company Compliance Checklist. This checklist was designed as a buyer’s guide to help consumers select a mortgage company with an unbiased scorecard. meets their needs.

A First In The Mortgage Industry. . .

“The industry standards for mortgage companies and their loan officers weren’t stringent enough for Custom Mortgage Solutions so we were forced to develop a 16-point compliance checklist for all mortgage professionals! And with the recent explosion of mortgage companies charging excessive fees for marginal service, it’s become a welcome buyer’s guide by hundreds of consumers and realtors. said Jeremiah Phillips, Senior Vice President of Sales for Custom Mortgage Solutions.
He went on to further say. . .

“Our philosophy is to help our clients make the best possible buying decision when selecting a mortgage. We offer world-class customer service, fast processing speed that literally save our clients thousands. Because of this, we’ve quickly grown to be one of the most recommended mortgage companies by local realtors, CPAs and lawyers in the Southern New Jersey and Philadelphia area.”

Click here for the 2006/2007 Compliance Checklist

Learn more…

About Custom Mortgage Solutions
With more than 10,000 customers and thousands of professionals recommending them, Custom Mortgage Solutions is now known by many experts as the standard in the mortgage industry to follow. Today, more than at any time in the past, the success of any mortgage company hinges on one thing: honesty.

Custom Mortgage Solutions offers various mortgage programs to fit their diverse needs of most potential home owners - such as:

Self Employed
Stated Income and/or Stated Assets
No Income/No Asset/No Employment
Mortgage History Only Program
Bank Statement Only
Rental History Only

Website http://www.todayslendingrates.com

Custom Mortgage Solutions
Jeremiah Phillips
Sr. Vice President
email: jphillips@cmslending.com
phone: (800) 869-2631 Ext 208

How To Avoid The 7 Biggest Mistakes Refinance Shoppers Make

The word count for this e-newsletter is: 460; Approximate time to read: About 2.5 - 3.0 minutes.

Refinancing can be very stressful and costly if you don’t take the time to do your homework. We simplified the process by helping you avoid these mistakes shoppers make in refinancing.
1. Is Your New Interest Rate Low Enough

Make sure that you savings on the new interest rate is low enough to justify the process of refinancing. It is best to decrease your interest rate by at least .75% to 1%. For example, this will save you about $100.00 a month on a $150,000.00 mortgage.

2. Know Your Closing Costs Up Front

By law, closing costs must be disclosed within 3 days of the loan application; however, there are different approaches to calculating them. Closing costs are initially estimated until the details of your specific loan are clear. It is wise to use a worst case scenario and be pleasantly surprised.

3. Be Sure You Fully Understand Your Reason(s) For Refinancing

Some refinance simply to reduce their interest rate. You should be aware that simply reducing your interest rate is not always to your advantage, so make sure that the gains from your rate reduction more than cover the related fees. There are, however, other legitimate reasons to refinance that may not be related to interest rates. Some are debt consolidation, home improvements, or a major purchase. Some of these choices may offer other financial or personal advantages, such as taking cash out to buy a car. In this example, you may be able to deduct your interest payments on your tax return. Always consult an accountant or tax attorney before making these types of decisions.

4. Beware Of “APR” Advertising

“APR” stands for Annual Percentage Rate. Some mortgage brokers use “APR” teaser rates to get your attention; however, they may actually end up costing you more. Such rates are often derived by using a 30 year mortgage coupled with an accelerated payment plan. Most lenders allow you to select such a plan, if you chose. Know your actual interest rate that you will be paying when comparing mortgages.

5. Should I Consider An Adjustable Rate

Adjustable rate mortgages or “ARM’s,” can be very helpful in assisting people into the housing market. They can help minimize your monthly payment, however, in the long run they can cost you more money if additional refinancing occurs.

6. Beware Of The Quality Of Service Provided

You want your refinance to be accomplished with as little hassle and in the shortest period of time. Ask your mortgage broker details of their service plan and performance guarantees and make sure you get them in writing.

7. Not All Loan Officers Are Created Equally

Be sure to ask your mortgage loan officer about all their available loan products, terms and rates. A subtle difference can save or cost you thousands.

Finding The Right Home Loan Has Never Been Easier!

As the #1 most recommended mortgage professional by local realtors, CPAs and lawyers in the southern New Jersey and Philadelphia area, we specialize in finding ways to say “yes”!

Whether you’re dealing with a new home buyer or an existing home owner, a credit superstar or credit challenged – Custom Mortgage Solutions has hundreds of home loan options.

Call today and we can discuss their loan needs sooner vs. later.

Greetings From Jeremiah Phillips,
The word count for this blog is: 351; Approximate time to read: About 3.0 - 3.5 minutes.

Sometimes getting approved for a mortgage can be harder than finding that perfect home. With that in mind, we put together a list of 5 tips to help you get the mortgage you want.
1. Increased Ability To Finance Your Closing Costs

You can now finance up to 100% of your closing costs thanks to recent changes in Federal Housing Administration (FHA) guidelines, compared to the old limit of 97%. This is very good news for the first time home buyer who typically has less cash available at the time of closing.

2. Increased FHA Limits

There FHA loan amount maximums have increased, which is particularly helpful for people living in high cost housing markets. FHA ‘s mortgage limit is now tied to local housing costs. The limit is now 95% of the median home price, or 75% of the Fannie Mae maximum loan amount, which ever is lower. This is another avenue for the first time home buyer to achieve the dream of home ownership.

3. Increased Accessibility To Down Payment Assistance Programs

With the rapid increase in home prices over recent years, more and more people are having the dream of home ownership ripped from their hands. Typically one had to go through a rigorous process to qualify for a down payment assistance program. Today, there are now programs which have very little hassle. Ask your mortgage broker if they have access to such options.

4. Rapid Loan Approval

One of the latest innovations in the mortgage industry is the advent of computerized loan approval. These programs provide both rapid loan approval and more uniform loan approval practices. This type of approval is done by scoring a borrower’s credit worthiness which quantifies the risk they will default on the loan. Does your mortgage broker use such a program?

5. Affordable Mortgages Which Don‘t Verify Income

These loans are perfect for those people who are self employed, real estate investors, retired persons and anyone who doesn’t want to have to prove their income. It is essential to have a good credit score in order to qualify for non income verified loan.

Finding The Right Home Loan Has Never Been Easier!

Whether you’re dealing with a new home buyer or an existing home owner, a credit superstar or credit challenged – Custom Mortgage Solutions has hundreds of home loan options.

Visit my web site or call today and we can discuss their loan needs sooner vs. later.

Happy 4th of July!!!

Remember not so long ago, when you could make your fortune in real estate. It was nothing then to buy a home, wait a short while, and then sell it at a tidy profit.
It’s more critical than ever to learn how to avoid costly seller mistakes in order to sell your home fast and for the most amount of money.

Selling your home is one of the most important steps in your life. This 9 step system will give you the tools you need to maximize your profits, maintain control, and reduce the stress that comes with the home- selling process:

1. Know Why You’re Selling, And Keep It To Yourself

The reasons behind your decision to sell affect everything from setting a price to deciding how much time and money to invest in getting your home ready for sale. What’s more important to you: the money you walk away with, or the length of time your property is on the market? Different goals will dictate different strategies.

However, don’t reveal your motivation to anyone else or they may use it against you at the negotiating table. When asked, simply say that your housing needs have changed.

2. Do Your Homework Before Setting A Price

Settling on an offering price shouldn’t be done lightly. Once you’ve set your price, you’ve told buyers the absolute maximum they have to pay for your home, but pricing too high is as dangerous as pricing too low. Remember that the average buyer is looking at 15-20 homes at the same time they are considering yours. This means that they have a basis of comparison, As a result, the home will sit on the market for a long and buyers will think there must be something wrong with your home.

3. Research Current Home Prices In Your Neighborhood

(In fact, your agent should do this for you). Find out what homes in your own and similar neighborhoods have sold for in the past 6-12 months, and research what current homes are listed for. That’s certainly how prospective buyers will assess the worth of your home.

4. Find A Good Real Estate Agent To Represent Your Needs

Nearly three-quarters of homeowners claim that they wouldn’t use the same realtor who sold their last home. Dissatisfaction boils down to poor communication which results in not enough feedback, lower pricing and strained relations.

5. Maximize Your Home’s Sales Potential

You may not be able to change your home’s location or floor plan, but you can do a lot to improve its appearance. The look and feel of your home generates a greater emotional response than any other factor. Clean like you’ve never cleaned before and fix everything, no matter how insignificant it may appear. Present your home to get a “wow” response.

Allow the buyers to imagine themselves living in your home. The decision to buy a home is based on emotion, not logic. If you follow them around pointing out improvements or if your decor is so different that it’s difficult for a buyer to strip it away in his or her mind, you make it difficult for them to feel comfortable enough to imagine themselves an owner.

6. Make It Easy For Prospects To Get Information On Your Home

You may be surprised to know that some marketing tools that most agents use to sell homes (eg. traditional open houses) are actually not very effective. In fact only 1% of homes are sold at an open house.

Furthermore, the prospects calling for information on your home probably value their time as much as you do. Make sure the ads your agent places for your home are attached to a 24 hour prerecorded hotline with a specific ID# for your home which gives buyers access to detailed information about your property day or night 7 days a week without having to talk to anyone. It’s been proven that 3 times as many buyers call for information on your home under this system.

7. Know Your Buyer

In the negotiation process, your objective is to control the pace and set the duration. What is your buyer’s motivation? Does s/he need to move quickly? Does s/he have enough money to pay you your asking price? Knowing this information gives you the upper hand in the negotiation because you know how far you can push to get what you want.

8. Make Sure The Contract Is Complete

For your part as a seller, make sure you disclose everything. Smart sellers proactively go above and beyond the laws to disclose all known defects to their buyers in writing. If the buyer knows about a problem, s/he can’t come back with a lawsuit later on.

Make sure all terms, costs and responsibilities are spelled out in the contract of sale, and resist the temptation to diverge from the contract. For example, if the buyer requests a move-in prior to closing, just say “no”.

9. Don’t Move Out Before You Sell

Studies have shown that it is more difficult to sell a home that is vacant because it looks forlorn, forgotten, simply not appealing. It could even cost you thousands. If you move, you’re also telling buyers that you have a new home and are probably highly motivated to sell fast. This, of course, will give them the advantage at the negotiating table.

Finding The Right Home Loan Has Never Been Easier!

As the #1 most recommended mortgage professional by local realtors, CPAs and lawyers in the southern New Jersey and Philadelphia area, we specialize in finding ways to say “yes”!

Whether you’re dealing with a new home buyer or an existing home owner, a credit superstar or credit challenged – Custom Mortgage Solutions has hundreds of home loan options.

Call today and we can discuss their loan needs sooner vs. later.

What are values in your area doing??

Across the board as a lender and someone who sees a lot of appraisals - we have seen the trend of 10-15% increases in values in a one year term deminishing to a point and current homeowners trying to sell there home having to decrease the sales price of there home just to be able for a buyer to get financing. In order to get financing someone looking to purchase a home the home has to appraise for the sales price in most cases for the buyer to be able to afford to buy the house.

Here are some ways to help improve the value of your home.

Like most Americans, your home is probably your single largest investment. While the value of your home is largely determined by such things as location, size, condition and amenities, there are still steps you can take to maximize its worth.

First, you need to evaluate your plans carefully if you’re improving your home to put it on the market. Cutting corners could hurt rather than help your prospects, but you don’t want to go overboard either. Your home’s value should be no more than 20% above the average. That means a $10,000 kitchen improvement project might be a better idea than a $10,000 hot tub, especially if no other homes in your area have hot tubs.

In other words, it’s best to keep changes simple.

Here’s a list of remodeled projects that buyers are likely to find valuable:

Add a bedroom: Three- and four-bedroom homes are most desirable.

Install a master bathroom: When a bedroom has a bathroom, it means extra value.

Install a new shower: A new shower says a modern home.

Change your fixtures: Get a faucet that adds a decorative element to the bathroom.

Re-grout the tile: If the tiles are in good shape a new grouting does wonders.

Install new kitchen cabinets: Even just a paint job and some new handles will give your cabinets a fresh look.

Improve functionality: If you’ve got the space, an island is the way to go. New appliances make a difference too.

Expose the floors: Remove old carpet and show off the original floor. If you don’t have hardwood floors, consider new carpeting.

Install new doors: Doors set off a room and make a great difference.

Paint the interior: A new paint job speaks volumes. Good colors to use are white, off-white, and a light yellow.

Add new light fixtures: Replace any that are damaged or out-of-style.

Add a fireplace: Even if you don’t plan on using it much, it adds great value.

Take advantage of unused or underused space: If you can convert a basement or attic into a useful room, do it.

Landscape: A few strategically located plants and a neat-looking yard will impress.

Add a deck: It’s a great use of exterior space because it increases your total entertainment area.

Dress up your porch and entrance: A freshly painted door with a new door handle can bake a great first impression.

Replace the windows: New windows not only give your home a new look, they can also lower your energy bill.

Remember, when it comes to your home, it’s important to keep pace with your neighbors. Don’t let your home become the most expensive on the block - but don’t fall behind either. This is a case where it’s best to be right in the middle!

Rates are on the rise and nobody likes it. Being able to offer someone a low 6% rate has quickly vanished. Also seeing the prime interest rate continuing to rise is hurting even me with a Home Equity Line of Credit. Luckily there are ways around it?

Do you see the rates leveling off anytime soon? What are your thoughts.

Here are six ways to prepare yourself to come out ahead:

1. If you’re only making minimum payments on your credit cards, start paying more. If you can’t come up with the money to increase your payments, start budgeting or tighten your existing budget, cut spending, and pay down credit card debt with the money you save.

2. Don’t be fooled by your “fixed rate” credit cards. Your credit card company legally must only give 15 days written notice before raising your rate. Even so, if interest rates are expected to increase and you haven’t already transferred your balances to lower-rate cards, you should consider doing so, looking for those that promise a low rate for a specific period of time. For advice on the fastest way to reduce your credit card debt, see Get Out of Debt Now.

3. If you have a home equity line of credit, consider taking out a home equity loan to repay it if interesst rates are expected to rise. Since interest rates on home equity lines of credit are tied to the prime rate, if rates rise, so will the interest on your loan. Depending on how much you borrowed, this could quickly become a payment you can’t afford, and your house is at risk. By replacing the home equity line of credit with a home equity loan, you lock in a lower interest rate.

4. If you have an adjustable rate mortgage, and you plan to be in your home for at least five years, consider refinancing to a fixed rate mortgage when rates are expected to rise.

5. As mortgage interest rates rise, you’ll be able to afford less house for your money, so if rates are expected to rise and you’re in the market for a house, consider stepping up your house-hunting efforts. Be sure to research real estate trends in your area so you don’t buy at a period of inflated home prices.

6. If you’re in the market for a new car, consider accelerating your plans before interest rates rise, possibly taking advantage of zero percent financing. These offers often disappear as rates rise.

Homeowners and renters feel differently about managing their credit, with more renters than homeowners saying they believe they have more debt than they should, according to an industry survey released today.

More than 81 percent of homeowners and 65 percent of renters believe that they manage their credit extremely well, according to a survey of more than 1,200 people conducted by the Mortgage Bankers Association, an industry trade group. The survey on consumer credit habits also revealed that 54 percent of renters feel that they have more debt than they should, compared to 39 percent of homeowners.

While renters report that they are generally familiar with important mortgage terminology, homeowners are significantly more knowledgeable about these mortgage terms. Of the renters surveyed, 45 percent say that they are considering buying a home in the next year or two.

“Renters reported being less confident about managing their credit extremely well, but 75 percent of them have recently requested a copy of their credit report,” said Doug Duncan, senior vice president and chief economist at MBA. “Both renters and homeowners are checking their credit reports, and for those 45 percent of renters hoping to become homeowners in the next few years, this is a key first step toward home-ownership.”

“The majority of homeowners who refinanced used the money to improve their overall financial situation by paying off or consolidating debt, or using the funds for home improvements,” said Regina Lowrie, MBA’s chairman. “This research provides value to lenders and demonstrates that consumers are more sophisticated with their finances than we may have believed.”

Key findings of the survey include:

Eighty-one percent of homeowners and 79 percent of renters know someone who has been in serious trouble with their credit. When asked if they personally had been in serious trouble with their credit, 40 percent of homeowners and 54 percent of renters said yes.

Seventy-one percent of homeowners and 72 percent of renters believe that Americans don’t manage their credit responsibly. Seventy percent of homeowners and 74 percent of renters also feel that Americans don’t pay off their debt in a timely fashion. Additionally, 93 percent of homeowners and renters think that Americans have too much consumer debt.

Seventy-six percent of homeowners and 54 percent of renters have no debt or pay off debts in full every month, while 12 percent of homeowners and 31 percent of renters find it very difficult to pay the minimum monthly payments and make ends meet.

Of the homeowners who had a cash-out refinance, more than three-quarters used the funds to pay off or consolidate debt or make home improvements. Seventy-one percent believe that this action helped improve their overall financial situation. Fifty percent of respondents who have a HELOC feel the same way.

More than two-thirds of homeowners and renters believe that credit cards are the most difficult type of debt for consumers to pay off.

Of the 50 percent of homeowners and 52 percent of renters who discovered errors in their credit report, 78 percent of homeowners and 73 percent of renters were able to correct those errors.

Average U.S. home prices climbed 12.5 percent in the last year, but a slower rate of appreciation shows signs the market is softening, according to a government report released today.

Appreciation for the first quarter was 2.03 percent, or an annualized rate of 8.12 percent, the lowest rate since the first quarter 2004 and about one percentage point below the rate from the previous quarter.

“These data show average housing prices still growing stronger than some might have expected,” OFHEO Acting Director James Lockhart said in a statement. “They do indicate, however, that price growth is moderating in some parts of the country, particularly in areas where prices have been rising the most.”

OFHEO, which stands for the Office of Federal Housing Enterprise Oversight, released the home-price report today.

While house prices climbed in many areas in the first quarter, some regions saw prices decline, according to the report.

For the first time since the fourth quarter of 2002, negative quarterly appreciation rates were observed for some states. Iowa and South Dakota both experienced small price declines between the fourth quarter of 2005 and the first quarter of 2006, OFHEO said.

Appreciation rates over the past year remain lowest in the East North Central Census Division, which includes Wisconsin, Illinois, Indiana, Ohio, and Michigan. Both the four-quarter and the quarter-over-quarter appreciation rates declined by more than half a percent in that division.

Arizona continues to exhibit the greatest appreciation rate, although price growth has dropped significantly in that state. Quarterly appreciation in Arizona dipped from approximately 7.4 percent to 3.8 percent, while its four-quarter appreciation dropped from over 35.5 percent to 32.8 percent. Quarterly appreciation rates were off significantly in the Tucson and Phoenix-Mesa-Scottsdale metropolitan statistical areas.

Rapid increases continue to be widespread in Florida, the report said. Out of the 20 metro areas with the largest percentage house price gains in the past year, 10 were in Florida.

Also, prices continue to rise in some areas affected by Hurricane Katrina, and appreciation rates were particularly robust in New Orleans-Metairie- Kenner, La., and Hattiesburg, Miss.

The Pacific Census Division has regained its position as the fastest appreciating division, overtaking the Mountain Division, the report said.

“Increasing sales inventories are apparently giving buyers greater bargaining power, while increasing interest rates are dampening demand,” said OFHEO Chief Economist Patrick Lawler.

OFHEO’s house-price index is based on analysis of data obtained from Fannie Mae and Freddie Mac from more than 31 million repeat transactions over the pat 31 years. OFHEO is the federal regulator of government housing enterprises Fannie Mae and Freddie Mac.

Greetings From Jeremiah Phillips,
As the hot weather quickly approaches, you have been tempted, or if you are like me, we’ve kicked on the AC to stay cool.

To help reduce your energy bill, we’ve listed some quick tips to make your home more efficient.

4 Simple, Cheap Energy-Saving Tricks

If you can’t swing new windows or more efficient appliances, here are inexpensive ways to save — along with some ideas about how to turn your home into a modern wonder – and with energy prices the way they are, you need to do something.
For most homeowners, it doesn’t pay to bore holes in the walls of a drafty, 30-year-old tract home to add some insulation, and perhaps you can’t really afford to replace your old air-conditioning system to save a few dollars on your monthly utility bill. But as a homeowner, there are some relatively easy moves that even the most cash-strapped homeowners can make to yield an immediate payback. And those committed to a more capital-intensive remodeling or addition should know about a few new lending programs that credit owners for anticipated future energy savings.

1. Buy a programmable thermostat.

his is especially helpful if your home is unattended during daytime hours. They cost about $30 and are relatively easy to install. We suggest setting it to turn on a half-hour before the first person gets home. The payback is usually seen in the first 30 days.

2. Upgrade your attic’s insulation.

Look at what you have in your attack now and see it is comparable to a resistance rating of R-21 to R-30.

3. Caulk over cracks around your doors and windows.

Sure sounds easy and it is! And while you are in this mode, invest in some weather stripping around an old drafty door. Did you know a quarter-inch gap at the bottom of a standard door can equal the energy loss of a 9 square inch hole in the wall!

4. Change Your lighting.

This is one of the easiest things to do. The new compact fluorescent bulbs are much more energy- efficient than standard bulbs and usually last for years instead of months. You can buy a 12 to 15 watt bulb that is comparable to a 60 watt one - and they will last from 7,000 to 15,000 hours (these bulbs generate little heat, so you’re not paying for your air conditioner to remove that heat).

Because such energy-saving homeowners will have a lower utility bill, there is more cash at the end of the month – so you can afford a larger mortgage payment. A lower utility bill means you’ll have a more marketable home.

Finding the right home loan has never been easier!

As the #1 most recommended mortgage professional by local realtors, CPAs and lawyers in the southern New Jersey and Philadelphia area, we specialize in finding ways to say “yes!”

Whether you’re a new home buyer or an existing home owner, a credit superstar or credit challenged – Custom Mortgage Solutions has hundreds of home loan options.

Call today and we can discuss your loan needs at no- cost or obligation.

Sincerely,

Do you want to get the best house you can for the least amount of
money? Then make sure you are in the strongest negotiating position
possible. Price is only one bargaining chip in the negotiations, and
not necessarily the most important one. Often other terms, such as the
strength of the buyer or the length of escrow, are critical to a
seller. In years past, I always recommended that buyers get “pre-
qualified” by a lender. This means that you spend a few minutes on
the phone with a lender who asks you a few questions. Based on the
answers, the lender pronounces you “pre-qualified” and issues a
certificate that you can show to a seller. Sellers are aware that
such certificates are WORTHLESS, and here’s why! None of the
information has been verified! Oftentimes-unknown problems surface!
Some of the problems I’ve seen include recorded judgments, child
support payments due, glitches on the credit report due to any number
of reasons both accurately and inaccurately, down payments that have
not been in the clients’ bank account long enough, etc.

So the way to make a strong offer today is to get “Pre-Approved”.

This happens AFTER all information has been checked and verified. You are actually
APPROVED for the loan and the only loose end is the appraisal on the
property. This process takes anywhere from a few days to a few weeks
depending on your situation. It’s VERY POWERFUL and a weapon I
recommend all my clients have in their negotiating arsenal.

To be considered for a low down payment loan, you generally need to have:

* Sufficient income to support the monthly mortgage payment
* Enough cash to cover the down payment
* Sufficient cash to cover normal closing costs and related expenses (explained below)
* A good credit background that indicates your payment history or “willingness to pay”
* Sufficient appraisal value, which shows the house is at least equal to the purchase price
* In some instances, a cash reserve equivalent to two monthly mortgage payments

Closing costs, or settlement costs, are paid when the home buyer and the seller meet to exchange the necessary papers for the house to be legally transferred. On the average, closing costs run approximately 2% to 3% of the house price. This percentage may vary, depending on where you live.

Closing costs include the loan origination fee (if not already paid), points, prepaid homeowner’s insurance, appraisal fee, lawyer’s fee, recording fee, title search and insurance, tax adjustments, agent commissions, mortgage insurance (if you are putting less than 20% down) and other expenses. Your mortgage professional will give you a more exact estimate of your closing costs.

Points are finance charges that are calculated at closing. Each point equals 1% of the loan amount. For example, 2 points on a $100,000 loan equals $2,000. Companies may charge 1, 2 or 3 points in upfront costs in addition to the down payment. The more points you pay, the lower your interest rate will be. In some cases, you may be able to finance the points.

So How Much of a Mortgage Can You Afford?
There are two basic formulas commonly used to determine how much of a mortgage you can reasonably afford. These formulas are called qualifying ratios because they estimate the amount of money you should spend on mortgage payments in relation to your income and other expenses.

It is important to remember that the following ratios may vary and each application is handled on an individual basis, so the guidelines are just that — guidelines. There are many affordability programs, both government and conventional, that have more lenient requirements for low and moderate income families.

Many of these programs involve financial counseling for low and moderate income people interested in buying a home and in return, offer more lenient requirements.

Generally speaking, to qualify for conventional loans, housing expenses should not exceed 26% to 28% of your gross monthly income. For FHA loans, the ratio is 29% of gross monthly income. Monthly housing costs include the mortgage principal, interest, taxes and insurance, often abbreviated PITI. For example, if your annual income is $30,000, your gross monthly income is $2,500, times 28% = $700. So you would probably qualify for a conventional home loan that requires monthly payments of $700.

Any expenses that extend 11 months or more into the future are termed long term debt, such as a car loan. Total monthly costs, including PITI and all other long term debt, should equal no greater than 33% to 36% of your gross monthly income for conventional loans. Using the same example, $2,500 x 36% = $900. So the total of your monthly housing expenses plus any long term debts each month cannot exceed $900. For FHA the ratio is 41%.

Maximum Allowable Monthly Housing Expense
26% - 28% of gross monthly income - Conventional
29% of gross monthly income - FHA

Maximum Allowable Monthly Housing Expense and Long Term Debt
33% - 36% of gross monthly income - Conventional
41% of gross monthly income - FHA

One way to determine how much to spend for housing is to compare your monthly income with monthly long term obligations and expenses. Use the worksheet, “Evaluating Your Financial Resources,” to determine how much money you can spend on housing. Be sure to only include income you can definitely count on.

When budgeting to buy a home, it is important to allow enough money for additional expenses such as maintenance and insurance costs. If you are purchasing an existing home, gather information such as utility cost averages and maintenance costs from previous owners or tenants to help you better prepare for home ownership.

Homeowner’s insurance or property insurance is another cost you will have to consider. The lending institution holding the mortgage will require insurance in an amount sufficient to cover the loan. However, to protect the full value of your investment, you might want to consider purchasing insurance that provides the full replacement cost if the home is destroyed. Some insurance only provides a fixed dollar amount which may be insufficient to rebuild a badly damaged house.

My personal goal is to explain how some mortgage companies decide your fate when it comes time for a loan. Understanding this can help reduce a ton of stress while waiting on the “approval” - and also improve your chances of getting it done faster and a better loan rate.

When a lender considers a mortgage loan request, it is commonly referred in the mortgage industry as underwriting the loan. Underwriting is the process of checking all of the information in a loan application with all of the supporting documentation: pay-stubs, W-2’s and so on. In general this “how” is known as the 3 C’s of credit.

The 3 C’s of credit comprise your entire financial life. . .
The first C is Character.

This is the measure of what kind of credit you’ve been extended in the past and more importantly whether or not you’ve paid back money in a timely fashion. Character is by far the most important of the three C’s. The lender also ranks the importance of each of your existing and past debts when measuring capacity. The most important credit you can have is a mortgage, followed by installment loans, such as a car loan, revolving loans with a financial institution and then all other loans. A mortgage lender is primarily going to be concerned with whether or not you’ve made past mortgage payments on time, and then all other loans.

The second C is Capacity.

This is the ratio of how much income you have to debt. Debt is broken down into two categories. First, the mortgage loan size and resulting payments and second, all other debts and your resulting payments. In general, lenders allow mortgage borrowers to use between 28% and 35% of their gross-pretax income for mortgage payments and 33% to 45% for all debts including the mortgage.

The third C is Collateral.

This is where they look at the size of your down-payment in the event of a purchase. In the event of a refinance, it is the amount of equity you have in a home. In general, the larger the down-payment or the greater the equity the more attractive the rates and terms will be for you.

Visit Our Website: www.bullfrogmortgage.com

As a potential borrower, you should be careful when working with any mortgage professionals; should you want to discuss your particilar needs with me call me on my direct line listed below.

One Additional Mortgage Payment a Year