making an extra mortgage payment every month - dnj mortgage

Today we’ll look at the strategy behind making extra mortgage payments. This process basically does two things; it saves you money by knocking your principal down quicker which effectively reduces the amount of interest you have to pay and it reduces your loan’s payoff period. I think that a good first step in this discussion would be to understand how exactly your monthly mortgage payments are broken down. To do this, we’ll use an amortization schedule. This table is simply a loan repayment schedule of sorts; it breaks down each payment so you can see how much of the payment is going toward the principal and how much is interest. You can also see the effects of extra payments and rate changes on the overall amount of interest you’ll pay over the life of the loan.

For our example, we’re going to use a 30yr fixed rate mortgage at 5.5% and a loan amount of $200k - you’ll see these figures in the top row highlighted in yellow. To the right, in the same row, you’ll see the monthly payment for this mortgage in BLUE, this is your minimum required payment. Beside that, in GREEN, is the total amount of money that comes out of your pocket to pay off that $200k mortgage (principal plus total interest paid) over the 30 year period. And lastly, in ORANGE, you’ll see the total amount of interest you’ll pay over the course of the loan. If you’re turned around on how exactly interest and payments are calculated, you can visit our mortgage calculators page to get yourself oriented.

If you look at the second line, in PURPLE, you’ll see how the first payment is broken down. Of the $1135.58 – $218.91 (19%) goes toward your principal, and the rest ($916.67) covers the interest. Now take a look at the loan balance in line one – that $218.91 barely made a scratch in the principal. Next, let’s move down to the fourth mortgage payment on line two (4). The required payment is the same but the principal and interest portions have shifted slightly. As the months go by, you’ll see that more of your monthly payment is going toward the principal as the overall loan balance decreases. So that’s the basics of an amortization schedule. If you want me to email you a blank excel spreadsheet that you can fool around with on your own, just email me at derek at dnjmortgage dot com.

Now let’s look at how making extra payments will affect these numbers. Let’s just say, that after running over your monthly budget, things are looking good and you have $200 extra that you’d like to put toward your mortgage every month. So you make the commitment and start adding that 200 onto your payment. If you stick with it until the end, below is what your updated amortization table will look like. Check out the principal column – you’re nearly doubling the contribution with that extra $200 during the months shown. The percentage of your payment going to the principal goes from 19% to 37%. MOST importantly, compare the total payments (green) and the total interest paid (orange) – by making these extra payments –you’re skipping out on $97,826 worth of interest – not bad at all.

Lastly, let’s look at the affect of these payments on the payoff period. Typically the 30 yr fixed rate loan would take 360 payments to pay off – 12 per year for 30 years. But, because we’ve made our extra payments, we’ve almost cut the loan term in half – from 30 years to 17 years and two months.

The long and short of it is this: we’ve put quite a bit of money toward the mortgage than we had to, but we saved a ton and shortened the term of the loan. I really suggest this strategy to those who plan on staying in their home for quite a while and who really want to get this monthly payment off their books. It’s definitely not for everyone and there are some other (better) ways your money could be working for you, but regardless, lots of folks want to pursue this avenue and I thought I’d give a clear explanation of how what affects it has on your loan.

Questions? Comments? – just shoot me an email at derek at dnjmortgage dot com
For More Information Call:

DNJ Mortgage
1350 Sunday Drive
Raleigh, NC 27607
919.459.6560
www.integritylender.com

how a no closting cost loan works – raleigh nc – dnj mortgage

Today I will provide some background on how exactly no cost loans work.  There are a lot of potential clients of ours that are completely skeptical and are convinced that there’s some sort of sleight of hand involved, but I assure you, it’s a great way to lower your rate with minimal to no out of pocket expenses.  This type of loan scenario was much more popular and possible about a year or two ago; ever since the market slowdown, wholesale pricing has tightened quite a bit and we’re not really able to offer this for too many situations anymore.  With that said, let’s begin.
You’ll most often be offered this closing scenario by brokers and that’s the perspective I’ll be explaining things from.  We start with the wholesale lender; these are large banks like BB&T or Suntrust that not only sell their mortgages in their own branches, but have wholesale divisions that offer products to third-party sales professionals -ie. brokers.  There are also wholesalers like Fidelity and Myers Park who don’t have any focus on retail banking and therefore don’t have any walk-in banking locations.  Wholesalers offer a variety of loan products that brokers can sell; the product eligibility guidelines and requirements may differ for retail sales opposed to wholesale sales (you may have problems qualifying in the bank but not with the broker, and vice versa – weird I know, but often true).
So here’s where the explanation of the no cost loan begins.  A typical loan costs anywhere from $3k to $4k to close, these are the closing costs (origination fees, attorney fees, etc).  The broker in no way is going to walk away from the transaction with $3k, don’t get me wrong.  There’s a processing fee, a title insurance fee, a credit report fee, an appraisal fee, an attorney fee, a recording fee, yada “>yada “>yada “>yada yada yada.  Moving on.  Let’s get another thing straight before we continue – mortgage folks talk about everything in points, or percentage points ||  1 point = 1% ||.  Now let’s create an example so we can walk through the pricing process.  How about an example for a refinance where the loan amount is $250k and it’s going to cost $3k to close.  The $3k translates to 1.4 points or 1.4% of the loan amount, are you with me?  (250,000 x 1.4% = $3500).  So it’s going to take 1.4% of the loan amount to cover the closing costs.
Now, wholesalers offer premiums to their brokers to sell their loans.  (small disclaimer - this is semi-realistic example – I chose these numbers to make our example make sense) In our example, let’s say that the wholesaler is offering a .75% premium (known officially as theYield Spread Premium) on a 30yr fixed rate loan at a 5% rate.  So any broker that sells this 30yr fixed rate, on top of their other charges, will make .75% of the loan amount.  In our example, .75% of the loan amount is $1875.  If the broker is trying to price out a no-cost loan, they’re going to consider that amount ($1875) and adjust the rate upward until they’ve moved it enough to cover the rest of the $3k they need.  In this case, bringing the rate up .5% will create another$1250 in yield spread premiums.   So with this loan amount, a .5% increase in the rate has covered the costs to close the loan.  The rate increase creates a difference in payments of only $77/month. ($250k @ 5% = $1342/mo   –   $250k @ 5.5% = $1419/mo)
So why does this make sense?
1. Do you know exactly how long you’re going to be in your home? No?  If you decide you want a lower rate and you want to either pay for it out-of-pocket or roll those costs back into your loan amount, you’re going to be waiting a little while until you start to realize the savings from the rate drop.  It may be as little as 8 months or as long as five years, either way – you’re waiting for those savings.
2. Do you have the cash on hand? Not everyone has $3k for a non-emergency situation.  The no-cost option provides a great way to lower your monthly payment without having to bring a ton of money to the closing table.  ALSO – another way to handle the closing cost issue would be to roll them back into the loan – a very common practice to curb the overall out-of-pocket cost of a refinance.  Unfortunately, not everyone has enough equity to do that and in these cases, a no-cost option is the way to go.
There will always be those people who say “So there are costs! I knew it; I do have to pay closing costs!  This isn’t no-cost at all!  The costs are just built into the rate – what a scam!” To these people I say the same thing.
“You want to refinance into a lower rate.  This is a service that we provide.  One of your options is to have a lower rate than you have now for $0 and see monthly savings instantly.  This isn’t the lowest rate available, but we’ll provide this service for you for $0.  Now if you could, explain to me what cost is being incurred by you in this situation?”
A tad bit frank?  Yes, but it really makes you think about the transaction with regards to cost and benefit.  Plus people get quite bent out of shape thinking that it’s a scam.  Trust me, our clients are some of the brightest and successful people in the Triangle – some have been with us for over 10 years.  You don’t get this far and acquire the talent that we have by being anything but a customer oriented firm that is serious about quality and top notch service.
For More Information Call:
DNJ Mortgage
1350 Sunday Drive
Raleigh, NC 27607
919.459.6560
www.integritylender.com

VA Loan eligibility and guidelines raleigh nc – dnj mortgage

Today we'll be reviewing the eligibility requirements and guidelines for VA Loans in North Carolina.  We're going to go through a very brief overview and history then roll into the specifics point by point so if you are eligible, you'll know your options.
In 1944, FDR signed into law the GI Bill, or the Serviceman's Readjustment Act.  The purpose of the bill was to support soldiers coming back from the Second World War; it provided loans for college, vocational training, business, and home purchases.  The home loan provision was, what some think, the most important aspect of the bill.  It provided no-down payment home loans which quickly let servicemen enjoy the sprawl of the suburbs which were once a luxury reserved for the upper class.  This no-down payment loan has put millions of veterans and their families into homes all around the country.  NC State University has a fairly rich history with regards to the GI Bill, you can read about it here - the NCSU library had a wonderful exhibit a few years back chronicling their influx of GI's onto campus and how the bill helped build a better NCSU.

The basic eligibility requirements are as follows: The VA deems you an eligible veteran if you've: 1. You were on active duty and had a non-dishonorable discharge after a minimum of 90 days of service during wartime - or - 2. Served during peacetime for a minimum of 181 days.   If you joined the service after 9/7/1980, you must have served for a minimum of two years, AND if you were an officer who started after 10/16/1981.  For the National Guard folks, there's a 6 year requirement with some additional guidelines for surviving spouses.  Just like conventional loans, you must qualify (credit, income, debt ratios, etc).  A larger list of VA eligibility guidelines are on our site at www.integritylender.com/va_eligibility_guidelines.

The VA home loans are made by quite a few lending institutions around the US.  The Veterans Administration role is to guarantee a certain amount of the home loan, generally 25% up to around $105k.  So if for some unforeseen reason the borrower defaults on the loan, the bank is covered by the VA guarantee.  This is fairly similar to the USDA program where the cost of the home and the funding fees can be financed while the lender has some guarantee that they will be protected from default.

The funding fees that I just mentioned were basically instated to help lessen the tax burden with regards to the cost of the transaction.  Fees for those who are obtaining a VA loan for the second time are generally higher because these veterans have already used this benefit and because of the assumption that they've had time to save up some money and generate some equity in their previous purchase.  Below you'll see the funding fee sheet I pulled off the VA home loan website.

Those exempt from this funding fee include:

1. Those veterans who, because of service related disabilities, are receiving VA compensation
2. Veterans who do not receive retirement pay but are eligible to receive compensation for service related disabilities.
3. Often times surviving spouses of veterans who have died in service or from service related disabilities are exempt, but they must meet certain other VA qualifications.

Debt to income ratio requirements 
will have some lender guideline overlays, but generally if you're at around 41%, you'll be eligible.  This is calculated by dividing your total fixed monthly payments for liabilities by your total effective monthly income.  [mortgage payment(including principal/interest/escrowed taxes/hazard/hoa dues) + all monthly revolving debt (credit cards, student loans, car loans, etc)] divided by your [gross monthly income (income before taxes are taken)] and you'll have your debt ratio.

Occupancy Law - VA purchase loans do require the borrower to live in the property within 60 days of closing.

Closing costs are usually at par with other loan programs - but often times are a bit less.  The loan origination fee is typically 1% of the loan amount - the lender may charge the flat 1% or charge for an itemized list of fees, but they can't exceed the 1%.  A quick list of these fees:

image copyright NCSU

1. Application and Processing Fee
2. Document Preparation Fee
3. Loan Closing or Settlement Fee
4. Notary Fee
5. Interest Rate Lock Fee
6. Tax Service Fee
7. D elivery / Wire Fees
8. Commitment or Marketing Fee
9. Trustee's Fees or Charges

Other allowable fees include:

1. Loan discount points- Up to 2 discount points is considered reasonable - this equals 2% of the loan amount.
2. Credit report - credit report fees are non-refundable and will usually be required right when you apply.  Fees for this run anywhere from $20 to $65 depending on the lender.
3. Appraisal fee - depending on your lender, you may have to provide payment for this up front.  This is usually from $425-$475.
4. Hazard insurance and real estate taxes are collected when you close your loan.  Depending on when you close, you'll be responsible for x number of months of property taxes and insurance premiums.  Taxes are traditionally accrued in an escrow account so you have sufficient funds to pay your property tax bill and hazard premium at the end of the year.
5. VA funding fee - see explanation above; this is the only fee that can be added to the loan amount or you can pay it in cash at closing time.
6. Title insurance - a title company prepares a title search to make sure that there are no existing liens on the home you're purchasing (if you purchase a home with a lien, said lien is now your problem).  After their title search, they issue a title insurance policy which may cost anywhere from $500-$800.
7. Recording fees are charged to have your deed recorded at the register of deeds in your city/county.  Basic fees range from $25 to $85 depending on the lender.

Bankruptcy and Credit Issues - Generally, your credit history will be reviewed through standard underwriting guidelines.  Your account balances, number of revolving accounts, number of outstanding collections, etc will be considered and weighed against your other qualifying items.  As a general rule, it's fairly standard that you'll be required to have a clean 12 month history of on-time payments for your accounts.  Not having a credit history won't completely undermine your chances of becoming qualified, but other timely payment activities may be considered (power/internet bills).  If you've filed a Chapter 7 Bankruptcy, you must let a minimum of 2 years elapse after the discharge date (NOT the filing date).  You'll need several letters of explanation from certain figures involved in the bankruptcy as well as to have rebuilt your credit to required levels.  For Chapter 13, you'll need a letter from your court appointed trustee as well as have proof that you've made 12 months of on-time payments to the court.  You'll need to have re-built your credit to the required levels, have the required financial levels (debt ratio, etc), and have a stable job to qualify.  Foreclosure will prevent you from qualifying, especially if the loan was VA insured.

Certificate of Eligibility and DD214 - These are two documents that you'll need, along with a list of others, before you can start the loan process.  The DD form 214 can be requested a few ways, listed here on the archives.gov website.  Or you can access the form SF-180 here which you can print and mail off.  The certificate of eligibility can be found here, its official form name is the VA form 26-1880.  We'll also need to collect that other information that I previously stated which includes but is not limited to:

1. Income Information - Generally we'll need your W2's from the last two years and your last month's worth of pay stubs, employer information for the last two years, and any other income information.  ((Self employed folks need to provide their last two years worth of tax returns.))
2. Personal Information - Full names, social security numbers, your place of residence for the last two years, your bank account(s) statements for the last month, and any investment statements for the last month.

Loan Amounts - Most of the counties in North Carolina have the same loan amount limits.  Instead of listing them all, I'm just going to list the odd-men out.  Unless you see your county in the list below, the maximum no money down loan you can get is $417k - anything over that amount will require a VA jumbo loan (call for more details).

camden - 812500

currituck - 498750

dare - 425

hyde - 525

PASQUOTANK - 812500

PERQUIMANS - 812500

Camden - $812,500

Currituck - $498,750

Dare - $425,000

Hyde - $525,000

Pasquotank - $812,500
Perquimans - $812,500

Refinancing - If you're currently in a VA loan now and you're looking to move into a lower rate, the VA provides an IRRL Refi or an Interest Rate Reduction Refinance, most often called a Streamline Refinance.  This program was created so borrowers can move into lower interest rates with the least amount of cost and trouble.  This is like the EZpass lane for loan refinancing.  The following are not required:

1. Appraisal
2. Credit Underwriting
3. Credit Checks
4. Income Varification
5. Debt Ratio Consideration

The IRRL Streamline doesn't allow you to take cash out and the borrower must be up to date on their mortgage with no lates in the past 12 months.  To hedge the overall cost of this transaction, you can roll the costs back into the loan or you can have your lender use their earned yield spread to pay for the transaction.

So how do you get started?

1. First, contact a real estate professional and begin your search.  Find a home that fits your needs and is within your budget.
2. Get your certificate of eligibility taken care of.  You'll need to refer to the previous section on this page as to how to obtain it and your dd214 form.  Your loan professional won't need the real deals, just copies.
3. Visit your preferred mortgage lender, whether it be a bank or a broker, or us!  You'll get sorted with the proper paperwork and get the ball rolling with your appraisal and approval process.


For More Information Call:
DNJ Mortgage
1350 Sunday Drive
Raleigh, NC 27607
919.459.6560
www.integritylender.com

how mortgage backed securities work – dnj mortgage

Today I wanted to write up a brief explanation of how mortgage backed securities worked.  I was going to provide a graphical flow map so you could try and make sense out of the secondary market (ie. where your mortgage goes off to live and work after you’ve signed the papers).  But, before I dove into Photoshop for an hour, I took a quick run through what was already available on the net.  I found a great image from a wonderful post by Noah Rosenblatt on urbandigs.com.  His post provides a more detailed look at the secondary market, so check it out if you want to read more.  So now with a great graphic, let’s get going.
Step 1-2:  Let’s consider a fake bank for our example, Bank123, and let’s say it has been selling mortgages in the Raleigh area all quarter.  Bank123 has amassed quite a few loans and is ready to package them up for re-sale.  Why would they sell their mortgages?- I don’t get it.  [[ Think about what your mortgage actually is - it's a promissory note that states that you'll repay the bank $x over a certain time period at a certain %rate.  If you simply paid your mortgage for 30 years without taking any cash out and without refinancing, you'd be paying almost double what you borrowed.  Here's a quick example - a 30yr fixed rate mortgage for $200k at 5%.  If you paid it off completely over the course of 30 years, you'd be paying a little over $185,500 in interest - meaning you're borrowing $200k and paying back about $386.5k. ]] So your mortgage turns out to be quite a valuable long term investment that the bank has created.  But in order for Bank123 to keep providing mortgages, they’ll need some more money to lend.  Look at all those loans they’ve provided this quarter (step1).  If we say, for example, that all those mortgages are $200k loans, then they’ve given out about $3.8million.  So, to get new capital to lend, and to hedge some risk with regards to these loans defaulting, Bank123 needs to pool and sell them.
Step 3-4:  ”So who’s going to buy these pools of loans?” – you must be asking by now.  It depends – it could be Fannie Mae or Freddie Mac or it could be a large bank.  The buyer, let’s say Fannie in this example, takes a solid look at the pool and chops it up into different pieces called tranches.  You’ll see in step 3 the different layers from AAA to b/b.  A super simplistic way of looking at this is to consider all the loans in that pool – they’re all different loan types, amounts, and have different risk levels.  Fannie considers what’s what and then sells these tranches as securities – the riskier tranches are expected to have better returns but are a much higher risk, and vice versa for the AAA rated section.  These securities are then bought up by investors and that’s that. Depending on what your investor puts your money into, there’s is a chance, albeit small, that you own part of your mortgage as an investment.
A very simple view of the secondary market and how your mortgage becomes an investment security.  It also provides some insight to how the secondary market affects you.  Let’s say for example that Fannie Mae decides it’s changing its buying guidelines for loans.  To make sure their loans are still marketable, the primary market players (your local banks/brokers/other lenders) adjust their underwriting criteria so their newly originated loans meet Fannie’s new guidelines.  This in turn affects the criteria that you must meet to qualify for a loan.  The old ‘from the top down’ effect.  This is what happened to sub-prime loans – at one point Fannie and Freddie were buying – then when problems started to arise, they ceased buying activities for these types of loans – now they’re pretty much off the market.  I’ll leave things here for now, maybe we’ll look back into the credit crisis and the secondary market at some other time.  Thanks for reading and I hope everyone enjoyed their long holiday weekend.
DNJ Mortgage
1350 Sunday Drive
Raleigh, NC 27607
919.459.6560
www.integritylender.com

FHA mortgage basics - raleigh nc

Today I will provide you with a fun FHA fact filled post.  I can’t cover everything in one post but I’ll get to the most important items.  You can obtain an FHA loan for a single family residence up to a four-plex (where four families would be able to live) but to simplify things, we’ll stick with the single family unit guidelines for they’re the most common.
Ready to explore a FHA purchase? Let’s go.
1. Required Down payment- The minimum down payment for FHA loans is 3.5% of the purchase price.  This isn’t too bad considering that most conventional loans require anywhere from 10-20% down.
2. Loan Limits- Like I just stated, FHA loans are available for 1-4 unit homes/buildings.  Loan limits are determined on a county by county basis – you can find your specific county here.  In Wake County, you’re looking at a $295k limit which is fairly high; this basically means that if you want to get an FHA loan, the amount must be under $295k.  Most buyers looking to take advantage of an FHA loan are shopping in the $200s.
3. MI or Mortgage Insurance - A quick note on MI – this is the insurance that the lender pays to protect themselves against your loan defaulting.  Most conventional loans require you to pay mortgage insurance until you reach the 78% LTV point which they then deem you to be less of a risk and are satisfied with the amount of equity in the home and the MI requirement is dropped.  For FHA loans, the same basic situation exists – you’re required to pay MI unless you’re putting down 20% or more.  There are two items you need to consider about FHA MI – you’re charged a 1.75% upfront fee (which is rolled into the loan amount) and a .55% fee per year for the total loan amount.  That second part is what determines the amount that you’ll be paying every month.  A quick example would be if you had a $200k loan, your MI fee would be (200k x .0055)/12months= $91.67/month.  Get it? Good, we’re moving on.
4. Closing Costs - For an FHA purchase you can expect to see the following costs: Origination Fee, Attorney’s Fees, Appraisal Fee, Title fees, Credit Report, and a Home Inspection Fee.
5. Credit Requirements - The credit requirement for FHA loans is usually 620 but each lender will have their own requirement overlays.  You must have at least two lines of credit, 2 revolving accounts, to be eligible for an FHA loan.  These accounts must have a pretty good history of on-time payments – your FHA loan will be inspected closely by underwriters and any questionable bill pay habits will be viewed quite negatively.  You can still obtain a FHA loan if you’ve gone through a chapter 7 bankruptcy in the past; you just have to wait a minimum of two years after the discharge date (not the filing date).  You do not have to wait, however, to apply if you’re currently paying off a chapter 13, as long as you’ve made on-time payments for the past year.  You will need a written letter of explanation and a letter from your appointed court trustee.  You'll also have had to have rebuilt your credit to the required levels.
6.  Debt to Income Ratios - Every time you apply for a loan, there are debt ratio requirements.  For FHA, they’re a bit stricter; they want to make sure you’re getting yourself into a situation that you can afford.  Also, with regards to ratios, all lenders have their own requirement overlays that will affect these numbers.  You have two ratios that lenders are interested in:

1. your Mortgage Payment Ratio - This is your monthly mortgage proposed payment over your overall monthly income.  So if your proposed mortgage payment is $700 and your overall gross income for the month is $2500 – you’re at $700/$2500=32%.  FHA requires a maximum ratio of 29% to qualify.

2. your Total Expenses Ratio - This ratio is calculated by adding your monthly proposed mortgage payment to any monthly revolving debt (credit cards bills, car loan, etc) and dividing that by your total gross monthly income.  FHA requires a maximum ratio of 41% to qualify.

So that was a brief rundown on what to expect as far as requirements go – things change quite often so if you find conflicting information or you’re confused about a certain item, just give me a call.

DNJ Mortgage
1350 Sunday Drive
Raleigh, NC 27607
919.459.6560
www.integritylender.com

what affects available interest rates

Often when I provide clients with rate quotes for refinances, they are astonished that my rates are completely different from what they see on the internet (lendingtree for example).  So I just want to take a few minutes/words to explain all the elements that affect the rate that you’re eligible for.  The one thing I want to clear up before I begin is that I work for a broker and my particular company has access to 20+ wholesale lenders (large moneylines).  Each lender has their own rules and guidelines and will require different scores, ratios, etc for different tiers of borrowers.  If you’re refinancing through a bank, it’s their money and they measure risk and determine loan variables differently.  So, with that said, let’s go through the pricing adjustors  for a regular 30yr fixed conventional loan (we’ll do an FHA/USDA some other day).  Lets start out with a 5% rate and adjust as we go for a $200k loan on a home valued at $300k.
1. Loan Amount – The bad news, the size of the loan you have or that you’re looking to get, will affect your rate.  The good news, you really only get hit for loans under $90k.  ”Good you say?” Well yeah, even some of the lower priced townhomes in the greater Raleigh area are right at $99k.  A lender may have a negative pricing adjustment of .25 or .5 for loans less than $90k, but since our example for a $200k loan, we’re out of harm’s way – our rate is still at 5%. If we were under $90k, we’d be at 5.5% now.
2. FICO & LTV - Next, a duo of price adjustors working together to hedge risk for the lender.  Lenders adjust on a sliding scale, more adjustments for higher LTV and lower FICO, and vice-versa.  Nowadays, any score under 720 gets a pricing hit – which stinks I know but banks are stricter these days.   The LTV is simply your loan to value or your loan/value – which in our case is 200/300 or 66.7%.  Let’s say we only have a 700 FICO and with our LTV at 66.7%, we’d most likely be looking at a .5% hit – moving our rate up to 5.5%.
3. Property Type - There are pricing adjustments for different property types, mainly condos and 2+ unit buildings.  These hits range from .5% to a whole 1%.  Since we’re refinancing a single family home, there won’t be any adjustment – we’re still at 5.5%.
4. Cash-Out -Looking to take out a few thousand in cash at closing?  This will definitely affect your rate.  The cash-out pricing adjustments are also based on the LTV and FICO scores.  If you’re over 60% LTV with anything less than a 700 FICO, you can expect a .5 or greater hit for taking cash out (taking us to a 6% rate).  In our example, we’re not looking to take any cash out and thus our rate remains the same.
5. Second Mortgages – If you’ve got a second mortgage that you want to leave be either because of the rate or just as a preference, there will be an adjustment on pricing (usually .25-.75%).  This is super dependent on the lender and it’s hard to make any general statements about this adjuster.  If we had a second, we may be looking at a 6% or 6.25% rate.
These are the basic price adjustors that you’ll most likely run into; there are separate and additional rules for FHA and USDA loans as well as adjustable rate products.  So jeeze you say, that darn FICO score hurt my rate a .5% – I wish there was something I could do to get that 5% rate.  Well there most definitely is – have you ever heard of buying down a rate?  That’s exactly what you can do.  If you’ve got the extra cash and are looking to stay in your home for a long period of time, you can put some extra money into the transaction and your mortgage professional can move you into a lower rate.  I’ll post later on this week about buy-downs – but considering a $200k loan at 5.5%- if you buy the rate down .5%, you’ll be saving close to $21k in interest over the life of the loan.  Feel that that’s worth the approx $1k that it would cost? – A lot of people would agree.
All these examples were general estimates that assume many elements of the transaction – like I said at the beginning of the post, every lender and bank have completely different rules and adjusters, all % examples were just basic guestimates to give you a general idea of how your specific rate estimate was calculated.
Want your own rate quote?  Just visit our website – no obligation or cost.  http://www.integritylender.com/raterequest
As with any of my blog posts, if you’ve got questions, I can help. (919)459.6533
DNJ Mortgage
1350 Sunday Drive
Raleigh, NC 27607
919.459.6560
www.integritylender.com

Mortgage Assistance Raleigh NC

I’ve been fielding quite a few calls lately from people wanting to get their mortgage modified.  Although we don’t provide loan modification services, I quickly realized that the majority of the callers really didn’t need their loans completely altered by their servicer/provider – they just needed to refinance.  The one problem that was preventing them from doing so was their value.  Either they experienced a drop in the home values in their specific area, or they had a higher rate and hadn’t been in the home long enough to accrue any equity.  Either way would prevent most people from refinancing, but through some not so new programs, the value obstacle is eliminated.  The programs at hand: theFreddie Mac Relief Refinance & the Fannie Mae DU Refi Plus.  Each has slightly different eligibility requirements but both will help you move down to a lower rate effectively lowering your monthly payments.  These are not standard transactions; much of the usually considered information may be ignored while lots of additional non-standard requirements will be weighed.
1. The main item that needs to be looked at before even considering either of the programs is the owner of your loan.  To qualify for either of these programs, your loan must be owned by either Fannie or Freddie - not sure about your loan?  Not a problem; you can check both entities on these two websites.

• Check with Fannie Mae.  http://loanlookup.fanniemae.com/loanlookup/
• Check with Freddie Mac. https://ww3.freddiemac.com/corporate/

2. The next most important item is your current payment status. You must be up to date with regards to your payments and cannot have any late payments over the last 12 months.  This item really represents a simple risk evaluation on their part – up to date?~~not much of a risk , a couple lates?~~more likely (in theory) to default.
3. The loan to value considerations are quite lenient.  Both programs allow up to 105% loan to value and if you’re slightly over that, you’ll have to pay the balance down to 105% with your own funds and provide documentation to show that you did.
4. Neither of these programs offer much relief for those with run-awayseconds.  Both do not allow new subordinate financing or replacement financing.  What this basically means is you’re not going to be able to roll both loans together and if you’re having trouble paying your mortgage because of a high rate second, these programs won’t be much help.  There are other ways to deal with situations like this – give us a ring and we’ll help you find a solution.
5. Some other limitations and items to note:

• Mortgage Insurance is not always required
• Unlimited CLTV
• Limited Cash-Out

There are plenty of other requirements and caveats, but if you’re good on these first four – you’re definitely on the right track.  We’ll need to gather a full loan application from you in order to qualify you, but total time needed for that is around 30min (20 filling out the loan application on-line and about 10-15 minutes on the phone speaking with one of our loan consultants.
As with any of my blog posts, if you’ve got questions, I can help. (919)459.6533
DNJ Mortgage
1350 Sunday Drive
Raleigh, NC 27607
919.459.6560
www.integritylender.com
http://www.integritylender.com/loan-modification-mortgage-assistance-raleigh-nc

100% Financing Raleigh NC

The United States Department of Agriculture: not just an organization for developing farming and agricultural policy.  The USDA’s Rural Development office has the goal of attempting to “improve the economy and the quality of life in rural America.”  Near the end of 2007, RD had provided over $80 billion in loans and grants which by now, the total amount is probably in the 90’s.  It all makes sense if you think about it – not many people want to live far away from the city and all of its amenities but if there’s 100% financing for the homes out there, why not?  Hey, I just personally bought a home in USDA territory with 100% financing, so I’m the perfect person to tell you what to expect and how to qualify.  First we’ll start with a useful link that you’ll need to orient yourself and because of the coding of the site, you’ll need it as a starting point to access all the points of eligibility. [ USDA Eligibility Page ] Go ahead and click on the link and take a quick look – you’ll see a navigation bar on the left, we’re going to be focusing on the property and income eligibility pages.
[Credit Scores] Like any loan program, a borrower must meet certain requirements to be eligible.  USDA loans require a good/fair credit score, much lower than traditional conforming loans, but still basically in check.  As of today, the majority of lenders that offer USDA loans require a 620 minimum credit score; not too bad – even with some dried up collections or lack of available credit, 620 is pretty achievable.  There are situations where your broker/loan representative can provide a written letter of credit explanation to the lender in case you’re close to the 620 cut-off.
[Income] There are income requirements or guidelines that you must fall in line with.  This program is primarily designed for those who have a median income.  A quick example: the income limit for two adults (no children or other residents) is $88,400.  If you’re unsure of your income eligibility – go to the USDA Eligibility Page, look for the first “Income Eligibility” section and click on the “Single Family Housing” link.  This will bring you to an income form that you’ll be able to perform an income calculation with.  Back to the example: just because you may be moving into a home with your significant other, doesn’t mean you have to both be on the loan- call us and we’ll get into the details a bit more.
[PMI] A great aspect of this program is the fact that you’re not going to have to pay PMI or private mortgage insurance.  When financing a home for more than 80% of its value, you have to pay mortgage insurance until you’ve accrued 20% equity in the home.  The PMI payment can range from $50 to $150 depending on the amount borrowed and the terms of the loan.  This is definitely a chunk of your monthly mortgage payment and when it’s gone you notice.  A definite plus to the USDA option.
[Interest Rates] The rates that are available for this program are fairly aggressive and very similar to what’s available for conventional rate products.  If you’re super curious to what an available USDA rate would be today, just ring us and we’ll let you know.
[Area Eligibility] You’ll be quite surprised how much of our lovely state is eligible for USDA programs – around 92% of North Carolina.  I recently helped a friend search for properties in and around Salisbury NC.  She had her eye on a bungalow in a small neighborhood on the west side of town.  After we consulted the eligibility map, we saw that thehome was just outside the eligibility zone, about 1 block away from being eligible.  She quickly spotted a similar home up the road and the rest is history.  The map is a bit tricky to use, but it should work in any browser and if you take a minute, you’ll be able to see what’s what.  There’s also an address finder application that you can use – do note however that it doesn’t find EVERY address on the map – you may want to contact us if you’re not completely sure.  Most Realtors will advertise USDA eligibility prominently on their listings, so you may not have to dig too much.
[$8,000 Credit] I mentioned the tax credit a few times previous, but it IS available to those who purchase a home with a USDA loan before November 30th.
So there you go, the basics on what’s required, what’s provided and what to expect.   The loan process runs parallel to that of conventional products – inspections, appraisals, etc.  This is definitely a solid way to buy smart and own in some really wonderful parts of NC.  I brushed the surface so if you’ve got any questions or have any comments, just contact us – we’re always available to talk in person or over the phone.
DNJ Mortgage
1350 Sunday Drive
Raleigh, NC 27607
919.459.6560
www.integritylender.com
http://www.integritylender.com/100-financing-no-money-down-loan

daily mortgage interest rates from DNJ Mortgage Raleigh NC

I set up a twitter account awhile ago, mainly just to secure the DNJ mortgage name from would-be fakers. I recently realized that it's a perfect opportunity to help our clients and our prospective borrowers keep in touch with current interest rates, our current rates. Because we have amazing relationships with a healthy portfolio of wholesale lenders, our rates are almost always lower than what you'd find at your local bank. I'm definitely not doing this so I can be lazy and just point rate calls to the twitter page - not at all. In reality, you can obtain any rate you'd like, as long as you have the $$. The rates that will be updated daily are full cost - ie. they are the lowest rates that you can get without paying points, that is, as long as you qualify. Loan to value, FICO scores, loan amounts, etc will still weigh in on the rate that is ultimately available for your certain situation, but regardless, we're still keeping you informed with what is available. I'm going to try and do a fixed 30yr rate and some arm products and whatever is amazingly low during that given day. After some thought, it seems like rates would be the only thing that I'd personally want to see tweeted from my mortgage company, so I think people will find it quite useful. So join up and follow us as we help keep you in the loop.

DNJ Mortgage
1350 Sunday Drive
Raleigh, NC 27607
919.459.6560
www.integritylender.com
http://twitter.com/dnjmortgage

What is your home's value? DNJ Mortgage Raleigh NC

The low down
Figuring out your home's value is a bit more difficult than ever, and doing it for free is darn near impossible.  But to get a basic idea, you can approach the situation with some info from this post.  But to disclaim up front, no value from these methods should be relied upon when making a serious decision about your mortgage or financing situation.
Traditionally, like I explained in a previous entry about the HVCC, appraisers would stick to certain areas of town and would slowly develop their expertise with regards to the homes and neighborhoods in that area.  They could often provide some idea of a home's value in a certain area just by considering its location relative to other homes they've appraised.  This guestimate would help the borrower determine if moving forward with the refinance was worth the cost involved.  Because of the HVCC, this practice isn't an option anymore.  Recently, people have started to pay closer attention to their tax values when attempting to determine their value.  The tax value of most homes is a fair to good indicator of the value but I've noticed in the last two years that these values are farther and farther from realistic figures.  So I'm going to give you some alternate methods of exploring your home's perceived value.  None of these will include any value increases that may be expected from remodeling or updates.  When major home renovations are done, only a full appraisal will provide an accurate value.  You should not make any decisions just based off of these methods - the market in Raleigh as well as everywhere else is quite turbulent and determining the true value of your home should be left to a professional appraisal.
-Some Quick and Easy (& not so accurate) Methods-

1. Zillow

Zillow.com provides estimates of home values and real estate trends for most US cities.  Zillow accomplishes this by purchasing large quantities of real estate data, mapping lot sizes, and comparing recently sold comparable sized homes in that area.  Because its system is run primarily from purchased data that is not always 100% accurate, its estimates are sometimes completely off the mark.  I've used it and the majority of the time the estimate provided is plus or minus $8,000 from the tax value of the home.

2. eppraisal & Yahoo

Eppraisal and Yahoo just report an average of the values given on other websites (zillow and cyberhomes).  The values on these sites seem a bit on the high end and aren't very reliable or realistic, in my opinion.  Comparing my home, there's a $30k difference between the tax value and the eppraisal estimated value.  I'm not sure about you, but my financial planning doesn't work with that kind of variance.  The only good aspect of these two services is that they provide recent sales data for you to compare.

3. Cyberhomes

This runs closer to what zillow has to offer but tends to estimate more conservatively.

-Determining the value via a per sqaure footage calculation-

If all the free home valuation websites have narrowed your value down to a $50k+ range and you're ready to explore some more serious calculations, you may want to get out a sheet of graph paper and log into your County government tax & property website.  I'm going to use Wake County's as an example.  The property search page where you enter your address can be found here.  After you've got the account summary for your home opened, you'll see what value the city has determined your taxes be based from (image #1).  At the top in blue you'll see a series of links.  What you're wanting to consider is what you'll find on the recent sales page (image #2).  This page will show you all the data on the most recent sales in the immediate area (image #3).  Now here's where your work begins.  To find a semi-accurate value to work from, you'll need to 1. calculate the per square foot price of your home (tax value/sqft) and 2. compare it to the per square foot price of homes that were recently sold, dates for these sales are in the very last column on the right.  Make sure you're comparing the sqft price for homes that are close to your home's size, location, and amenities (garage, pool, etc).  If you're calculation brings you to a $180/sqft price and the identical home next-door just sold for $150/sqft, then you know that your tax value doesn't represent your actual value.  And again, if you've updated all your fixtures to solid gold marble accented pieces, this method will not reflect those upgrades.  This process isn't totally accurate and shouldn't be used to base any of your decisions off of, but it will provide a much closer estimate of your value than just dialing up your address on zillow.

image #1

image #2

image #3

DNJ Mortgage
1350 Sunday Drive
Raleigh, NC 27607
919.459.6560
www.integritylender.com

first time home buyer tax credit raleigh nc

The $8,000 Tax Credit Breakdown For First Time Buyers 
Available until December 1st 2009 with some speculation, although no rumors have been confirmed, that the credit will be extended through 2010.

The Basics - 
1. This program provides a credit worth 10% of the purchase price with a maximum amount of $8,000.
2. This credit doesn't have to be repaid.
3. Only first time home buyers are eligible for this credit. Technically, by IRS standards, a first time buyer hasn't owned a primary residence for the last three years.
4. Any home qualifies, whether you're building or even considering a houseboat!

Am I Eligible?
1. You must have purchased a home this year or plan on finalizing a purchase on a home before December 1st 2009.
2. Are you a first time home buyer? Technically, you're not a first time buyer if you owned your primary residence in the last three years. If you file jointly with your spouse, neither of you could have owned a primary residence in the last 3 years. But, if it's an unmarried or joint purchase, the credit is available for the eligible person. A great example of this would be if a home is being purchased jointly by a parent and their son or daughter. Owning a vacation or rental property wont disqualify an applicant.

What are the income limits?
The single taxpayer income limit is $75,000 and for married taxpayers who file jointly, the limit is $150,000. There are some provisions for people with modified adjusted gross income above these two points. We can provide you an estimate of the amount of tax credit you're eligible if your income falls outside these ranges.

I swear I heard that this credit had to be paid back!
Nope; that tax credit was put forth by Congress in 2008 and because it had to be paid back was really just an interest free loan. This program provides a true tax credit as long as you keep the house for your primary property for no less than three years (if you dont, you'll have to repay the credit). This credit isn't a tax deduction; those are discounts subtracted from your income to calculate a decreased tax amount (not the same deal).

Do I have to wait until I file my taxes to get this tax credit? 
No! Talk to your tax professional about amending your last tax return.

Can I get this tax credit with a FHA or USDA loan? 
Yes - this credit is available for almost any loan product.

For non-US citizens 
As long as you're a non-resident alien and you've owned a principal residence in the last three years, then you should be able to claim the tax credit.Do make sure you meet all IRS requirements set forth in the IRS Publication 519.


Overview of the first-time homebuyer credit on the IRS's website. http://www.irs.gov/newsroom/article/0,,id=204671,00.html




DNJ Mortgage
1350 Sunday Dr
Raleigh NC 27607
919.459.6560
integritylender.com

getting ready for a new home purchase - raleigh nc

I just got off the phone with a friend who's ready to start shopping for a new home and I thought I'd do a brief recap of the recommendations that I provided him. I blogged previously about getting yourself prepared for a refinance, and this post will run along the same lines. Doing your due-diligence goes quite a long way with regards to financial situations like this. When you initially speak to a loan officer, they will "pre-qualify" your situation. What they're basically doing is considering your stated income and debt levels and possibly doing a credit check to estimate what dollar amount you would be qualified to borrow. It's a "in theory" type of situation. In theory, if your income and the rest is what you're saying it is, here's the $amount you're qualified t

o borrow. When you're ready to actually move forward and make an offer on a home, you'll need to get pre-approved. This is when the loan officer will request items that will verify your financial situation and calculate your exact debt ratios and the result is that you're basically approved on the broker's side for the loan (pending underwriting by the lender).

Most people in the home buying process took some time with a professional and have narrowed their purchase range to a certain $ amount and have shopped around a bit. Whether you're ready to move on a home or not, you're still going to need to dig some items up, so here's a quick list.

1. Most recent paystubs for the past 1 month. (The person processing your loan will need to make sure that your gross income figure is correct so they'll need a full 30 days of income proof. Most larger companies provide an online system that you can simply export a screen capture or email a pdf of your previous stubs. Brokers do not need the original copies, but if provided, we'll make copies for your file.
2. W2's for the last two years. (People do move jobs quite a bit, and pay rates fluctuate depending on what type of profession you're in; these w2's will help us calculate any additional non-salaried pay, bonuses, etc. into your income calculation.)
3. Signed copies of your tax returns for the last two years (Lenders are getting stricter with their underwriting process. These tax returns aren't always required but as the industry continues to tighten their restrictions, you may want to dig them up just in case. The tax returns you provide will help to not only verify your income, but your overall expenses and deductions helping the underwriter to gain a more complete picture of your financial profile. Tax returns are absolutely necessary for those who are self employed or independent contractors.
4. Bank statements for the last 60 days. (This helps to verify your cash flow and your assets on hand. These are only useful when printed out right before you're about to submit the remainder of the paperwork to the lender/broker.)
5. Any retirement or investment account statements.(Same as above)

The best advice that I can give

is that if you're unsure of how your unique situation may affecta purchase or refinance, dig up these documents, and go see your mortgage professional. A little face time and number crunching can save you a lot of trouble. I'll continue with some additional info related to this post with regards to the costs that you can expect to see for closing a purchase.

Today's market was mixed. Stocks recovered a bit from yesterday's slide. Rates are holding

steady right around 4.9% -

DNJ Mortgage
1350 Sunday Drive.
Raleigh, NC 27607
919.459.6533
integritylender.com

what is a buydown and how can it save me money - ralegh nc

This is a partial re-blog of something my associate Cari DeCandia wrote.

There are two types of buy-down programs: temporary and permanent.

A permanent buy-down is where the borrower or seller pays discount points to the lender to have a lower interest rate for the term of the loan. Often a permanent buy-down does not make financial sense due to the amount of time needed in that loan to recoup the costs of the buy-down.

A temporary buy-down is where the borrower, seller, or lender pre-pays interest for the first one to three years in order to have a lower interest rate. The most common types of temporary buy-downs are:

3-2-1 buy-down
2-1 buy-down
1-0 buy-down

With a 3-2-1 buy-down...if your note rate is 6.5%, for the first year your interest rate would be 3.5%, 4.5% the second year, 5.5% the third year and 6.5% years four through thirty.

With a 2-1 buy-down...if your note rate if 6.5%, for the first year your interest rate would be 4.5%, 5.5% the second year and 6.5% for the remaining years in the term.

With a 1-0 buy-down...if your note rate is 6.5%, you would have an interest rate of 5.5% for the first year and 6.5% years two through thirty.

Temporary buy-downs have been most commonly used by sellers/ builders that are trying to entice buyers with lower than market interest rates for the first few years resulting in a lower monthly mortgage payment.

Why temporary buy-downs and the "No Closing Cost Loan" are perfect together?

If your loan amount is greater than $200,000, DNJ Mortgage has the ability to use the commission the bank pays us for originating the loan to pay for the buy-down cost as well as closing costs. This gives our customers a better than market interest rate at no cost to them. We can continue to refinance at no cost using a buy-down program to maintain the lower than market interest rate.

Example:Customer has a current loan amount of $250,000 with an interest rate of 6.625% on a 30 yr fixed. Current monthly payment is $1600.78.

Based on current market conditions we are able to offer them a no closing cost rate of 6.5% with a one year buy-down. This gives them an interest rate of 5.5% for the first year and then the loan converts to a 30 yr fixed at 6.5% after the first year. By refinancing at no cost, they received an interest savings of $2500 in just one year. At the end of the year, they have three options:

Keep the loan and maintain the 6.5% interest rate.

Refinance again with no closing costs into another one year buy-down.

Refinance with no closing costs into a different loan product (ARM, 15 yr fixed, etc).

As you can see, using the no closing cost loan along with a temporary buy-down provides are customers with several benefits including:

Lower than market interest rate at no cost them resulting in lower monthly payments.

Increased interest savings

A hedge against higher interest rates during periods of economic strength.

DNJ Mortgage
1350 Sunday Dr
Raleigh, NC 27607
919-459-6560
integritylender.com

203(K) home renovation purchase loan - raleigh nc

Today's topic - the 203 (k) - HUD's tool to help revitalize and rejuvenate provides a great opportunity for those people who have the ability, but not necessarily the funding. I've recently been property shopping inside the beltline - and have found plenty of great bungalows that would be perfect for me. Upon closure inspection, even though these homes are in my price range, they need some serious repair to make them a comfortable and inhabitable home. All over the nation there's streets of great homes, in convenient areas of town, that need some renovation before they can become homes again. That's where this 31 year old program comes into play. The basic idea is to provide funding for both the purchase and the renovation of a home. The loan is a FHA product, so any purchase will require a 3.5% down payment. The repairs can be simple cosmetic improvements like new kitchen appliances or floor covering replacements, or serious items like plumbing or HVAC. There's a minimum of $5k worth of required improvements but additional costs like work permits, inspections, etc can be financed into this amount. The max amount you can finance for repairs is around $30k, which goes a long way when you're looking to replace and repair the roof, windows, etc. If you can't live in the property while the renovations are taking place, some lenders will allow up to 6 months of payments to be financed in.

This program is quite popular with non-profit organizations- providing low cost housing with repair and rehab provisions paints a perfect option for transitional housing needs. One (1) to four (4) unit residences are eligible but FHA loan limits still apply. The 203(k) program is not available through all lenders, so considering, check your area for availability.

Today's market notes: rates were down a bit, par showing at 4.875-5.00% (avg. of our lender's rates & may not reflect national averages).

DNJ Mortgage

1350 Sunday Drive

Raleigh, NC 27607
919-459-6533

integritylender.com