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Fannie Mae is set to release the Home Saver Advance program in May of 2008. This is their latest example of their commitment to homeowner preservation. The Advance program is an unsecured personal loan, available to approved fannie mae servicers for eligible borrowers to help bring a delinduent loan current. It provides funds to cure arrearages of principal, interest, taxes, and insurance. The advance is documented by a promissory note signed by the borrower, payable over 15 years at 5% interest! No payments or interest accrual for the first 6 months.

The program is designed for borrowers who have fallen behind on their mortgage, but are able to resume regular payments once their loan is brought current. It will streamline the workout process for applicable loans, as it provides an option for earlier resolution for delinquent loans.

•Loan amounts up to the lesser of 15% or $15,000 of the original unpaid balance for delinquent PITI(principle, interest, taxes, insurance), escrow advances, & advances of attorney fees and costs plus up to 6 months of unpaid HOA fees or 12 months if the HOA fees are paid once per year

•Advances may not include late charges or other ancillary fees

•The full loan amount is applied directly to arrearage(borrower never receives funds in hand)

•Truth in Lending and promissory note are executed at time of agreement w/ borrower

•Note rate fixed at 5% with 6 month period of no interest/no payment period

•Amortization period of 14.5 years after the initial 6 month period

•Workout fee paid to servicer is $600

•Fannie Mae will contract w/ a 3rd party to service the promissory notes

Eligibility

Advance can be made in connection with any mortgage loan that is purchased by Fannie Mae, including portfolio loans, if the mortgage meets the following:

•Mortgage is delinquent in an amount equal to or greater than 2 full payments of PITI

•Mortgage must be seasoned with a minimum of 6 monthly payments made since the closing of the loan

•Mortgage may secure a principal residence, 2nd home, or investment property-owner occupied is not required

•Mortgage may generally be any type of loan(fixed, adjustable-rate, interest only, etc.)

There are NO LTV restrictions or property valuation requirements

Borrower Eligibilty

•Borrower has successfully resolved reason for delinquency

•Demonstrates a long-term financial ability to resume making payments on 1st mortgage and other debts, including any subordinate loans.(verbal confirmation is acceptable)

•Borrower has surplus income to support an additional monthly payment of at least $200 but does not have the ability to cure the arrearage using a repayment plan within a period of 9 months

•The borrower is willing to participate in program

•Borrower does not have a current outstanding Homesaver note. Homesaver option can only be used once during the life of the particular first mortgage loan

Borrowers involved in an active bancruptcy proceeding or who have had the debt previously discharged in bancruptcy are not eligible.

The credit scoring system we have all become accustomed to is about to change.  A few things to keep in mind if you are working on cleaning up your credit are:

Scores range from 300 points to 850 points

Minor random late payments will no longer cause a huge drop in the score

Consistently late payments will be given more weight

Authorized user accounts will no longer be used to determine scores (this will eliminate "buying" good credit by having some one with a great credit history add a person onto their accounts for a fee)

Credit scores will be better for those who have a blend of credit, such as a mortgage, car payment and credit cards instead of having all credit cards or only a mortgage, etc.

Look for more updates on this in the future.

First came the subprime fallout mess and now the after effects are coming. After everyone bought homes based on a credit score rather than true factors, such as employment and ability to repay, the housing market is in it's adjustment phase. Now there is such a surplus of homes compared to buyers the home values are falling off. As more and more foreclosures take place over the next 6-12 months the home values will fall at a forecasted rate of 13-15%. According to Moodys Economy Report, there isn't an expected measurable recovery until 2010!

What this means to the average "joe" is get out of your adjustable or use your equity while you can. If you are one of the millions who have an adjustable mortgage that will reset in 08-09, you could wind up with a higher rate than you thought if yo wait. For instance, if you have a 75% loan to value loan right now and you refinance in 4-6 months, your new loan to value will be between 85-90% causing you to pay mortgage insurance or a higher rate to avoid the insurance. If you have plenty of equity and can afford to pay a little extra each month, you may want to think about taking some of that cash and investing it rather than taking a 15% hit on that money. Most investment firms can set up a portfolio earning between 12-15% per year.

There are many people who bought homes between 05-06 for $0 down and will soon owe much more on their homes than they are even worth. If you're not sure about your position call today and find out what your next step should be. Don't wait until it's too late and become a casualty of the market.

It's only natural to assume with the Federal Reserve dropping the interest rate, for people to think it will affect their adjustable rate mortgage.  Unfortunately, that is not the case!  When the Feds rate drops, it affects people who have a home equity line of credit on their home.  Home Equity lines of credit are based on the Prime Rate, and adjust accordingly.  Other financing affected by the decrease in the Fed rate would be credit cards, and auto loans.

The thirty year mortgage rates are affected by the treasuries.  One that I pay particular attention to is the 10 year bond.  When the bonds move, the rates move.  So don't be waiting for the Feds to continue to bring the rate down before purchasing or refinancing your home.  The thirty year interest rates are well below prime, keeping around 6.375 & 6.5 during the month of September.

This is still a great time to buy or refinance and get a great 30 year fixed interest rate!

Although the sale of every home is unique, every home owner should get a home inspection. A home inspection not only evaluates the physical condition of a home but can also give you an idea of the lifespan of major items and appliances. For example, the roof, water heater, a/c unit, etc.

Many homebuyers confuse an appraisal with a home inspection. An appraisal simply gives you the current market value of a home and whether or not it meets a lenders financing guidelines. An inspection can pinpoint serious problems with a home that could be very costly down the road. It should always be requested by the buyer. In some cases, there are actually sellers that will order an inspection to find out if they should replace or repair anything before listing their home for sale.

You should expect to pay an average of $300-$500 for a home inspection. For this amount, you should receive a detailed written report of the homes condition and any suggested improvements. What if the home has problems? Keep in mind that no house is perfect. Just because an inspector suggests something in the report doesn't mean you shouldn't buy the home. It makes you aware of repairs that may or may not arise after the purchase. Remember that it is the buyers responsibility and right to order a home inspection.

Well, the damage is done. Lenders have cut all they can and the rates should begin to trend downward over the next year. Guidelines will relax a little more and new programs will be released. People aren't going to stop buying and selling homes. If you are looking to purchase or refinance, make sure you choose a professional that is well versed in whats going on with the market. While I do encourage you to get at least two quotes, now is NOT the time to play the risky game of shopping with ten different lenders looking to save $100. Programs are changing daily and many lenders will promise the world to get your business, only to not follow through. Costs on a good faith estimate can be changed, ask your lender for proof of the rate lock. Once a file is locked, the rate can not be changed for a set period of time. If you have any questions at all, the team at First Choice Mortgage is always happy to help. Give us a call today!

There has been a lot said in the media over the last 2-3 months about the mortgage industry. The best advice I've heard is don't believe everything you hear. The market is definitely slower than a year ago for buying and selling. And, yes, there have been many changes. But there are still many people that will need to refinance out of an ARM or adjustable mortgage. There are still plenty of people looking to buy and sell homes. The limits have come for those who really couldn't afford another home and for those who were trying to buy everything on the market and resell for profit.

These changes are affecting borrowers with very low credit scores due to nonpayment of other bills and those who couldn't prove their income because of no job! How can anyone think that this is a bad thing? Just before August 1, 2007, there were over 63,000 licensed mortgage brokers in the state of florida! My guess is that at least 50%, probably more were never trained to look at a customers financial situation. They were taught, "get your license and you can make a killing". Very sad but true. Many of these sharks have been and are in the process of being weeded out. This is actually great news for most of the people needing to refinance into fixed mortgages and especially those looking to purchase a home.

First, the 30 year fixed rates are still very low at less than 7%. Secondly, if you are looking to purchase a home, there are tons of homes on the market with all sorts of incentives. Builders looking to lighten inventory are offering closing costs, pools, upgrades, etc. Investors who are now carrying a plethora of payments are looking to depart with homes for what they paid for them. The unfortunate ones are the average joe that was simply looking to sell and move to a different area. Now he has to sell his home for less in order to be competitive.

There are still many programs for 100% financing, however you could save nearly 2-3% on your rate if you have a down payment. As for your credit, don't close old accounts after paying them down or off. They are considered tradelines which help your credit score. Try not to carry more than 40% of the high balance on any credit account. Always try to keep at least 3 tradelines or accounts open and active on your credit. Make sure to take advantage of your free credit reports each year and dispute any incorrect items. These are going to become very important for future home buyers.

The last bit of advice is to get at least 2 quotes or good faith estimates. Why is it that when we get our a/c fixed we call 2 or 3 techs for pricing, but when we are considering hundreds of thousands of dollars we talk to 1 person? Be very strict about holding your broker to the costs he quotes. There is NO such thing as a NO COST loan! Ask for references from the last 3-6 months. Clients will not lie if they feel they were treated unfairly. Finally, the cheapest closing costs isnt always the best deal.

The Buyer:

1)Giving incorrect or incomplete information on the application

2)Late payments on mortgage or rent

3)Loss of borrower or coborrower employment

4)Borrowers making large purchases on credit before closing

5)Lack proof of verifiable income

The Seller:

1)Loses motivation to sell/ cant find suitable replacement property

2)Will not allow appraisers or inspectors inside home in timely manner

3)Unable to clear liens on property

4)Misrepresents information about home

5)Isnt sole owner of subject property

The Realtor:

1)Unfamiliar with clients financial situation

2)Contract written incorrectly

3)Does not do sufficient homework on property

4)Takes time off during transaction

5)Will not show property due to bias against particular office

The Property:

1)Termite report reveals surprises

2)Damage to home before closing

3)uninsurable property due to zoning or damage

4)Encroachments on property

5)Easements/Access to property inproperly recorded

These are a few items from different people involved with the closing process that can go wrong. Good communication from start to finish can deter many of these problems. Make sure you do your homework on the people you choose for your mortgage needs. First Choice has 10 years of experience in mortgage lending to get you through the closing process as painless as possible.