Mortgage Application Tips #5: Required Information

We briefly mentioned some of the things that you may need to bring with you before you start your application, but here is a more detailed list of the information mortgage lenders will use to consider your loan application.

For all loans:

• Social Security Number, for borrower and co-borrower if any
• Employment History for the last two years, employment dates, addresses, salary.
• Current pay stubs or W-2 forms.
• Check and Savings Accounts and Certificates of Deposit. Location of bank accounts, account numbers and balances, address of bank if out of town, last 3 months' statements.
• Stocks, Bonds, and Investment Accounts.  Broker's name and address, description of stocks, bonds, etc.  Last 3 months' statements or copies of stock certificates.
• Life Insurance Policies. Insurance company, policy number, face amount, cash value, if any.
• Retirement Plan. Approximate vested interest value. Copy of latest statement.
• Automobiles.  Make and model of automobiles, their resale value.
• Other Assets.  Market value of personal and household property
• Liabilities and Other Non-Mortgage Debt. Creditors names, addresses, account numbers, monthly payments and balances, other income information you may need.

If you're self-employed you'll need two years tax returns, profit and loss statements, both company and personal if separate. Current balance sheet and profit and loss statement if more than two months into the new fiscal year, signed by CPA.

If you have income from any of the following, you'll need two years' personal federal tax returns:

• Commission
• Overtime
• Bonus
• Partnership
• Rental Property
• Trust
• Notes Receivable
• Interest/Dividends

If employed in family business, you'll need personal federal income tax returns and all schedules for the past two years.

If divorced or separated:

• Complete executed divorce decree and settlement agreement
• Payment history of alimony/child support over the past 12 months, if it is a financial obligation.
• If you choose to have this be considered as part of your income (you don't have to), be prepared to provide 12 months canceled checks or bank statements reflecting income deposits.

If you own real estate you'll need the name and address of all mortgage lenders for the past 24 months, account numbers, monthly payments and balances

If you've sold your home but not closed you'll need a copy of the sales contract.

If you've sold your home, closed, and you will use the proceeds for your new down payment you'll need a copy of the HUD-1 Uniform Settlement Statement.

If you rent you'll need the name, address and phone number of landlords for the past 24 months.

If you're buying a home you'll need purchase sales contract or offer to purchase and all addenda. Furnish contract with original signatures of buyer and seller.

If a source of your down payment is a gift, you'll need  the name, address and relationship of donor. Gift funds will be verified in both the donor and recipient's accounts. Note: Not all loan programs allow gifts to be part of your down payment.

For FHA Financing, you'll need evidence of Social Security Number and photo identification.

For VA Financing, you'll need your DD214 and Certificate of Eligibility.

For Construction/Perm Loan, you'll need signed construction with cost breakdown, builder plan and specifications.

If you have any questions at all about the above information, we would love to help you! Call us at 877-828-8851 and we can get you on that path to homeownership! Remember, this is what we do everyday. While this process may seem a bit daunting to a first time buyer, we want you to know that we have your back. We will get you through this as quickly and easily as possible!

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Mortgage Application Tips #4 - Credit Scores

Before they decide on the terms of your loan, lenders want to know two things about you: your ability to repay the loan, and if you will pay it back. To assess whether you can pay back the loan, they look at your income to debt ratio which we talked about last week. In order to assess your willingness to pay back the loan, they look at your credit score.

To learn how to improve your credit score, view this article.

The most widely used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. The FICO score ranges from 350 (high risk) to 850 (low risk).

Your credit score comes from your history of repayment. They never take into account your income, savings, amount of down payment, or demographic factors like gender, ethnicity, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was developed as a way to consider solely what was relevant to a borrower's likelihood to repay the lender.

Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score results from both positive and negative items in your credit report. Late payments lower your score, but consistently making future payments on time will improve your score.

For the agencies to calculate a credit score, you must have an active credit account with a payment history of at least six months. This payment history ensures that there is sufficient information in your credit to assign an accurate score. Should you not meet the criteria for getting a credit score, you may need to establish your credit history before you apply for a mortgage.

For assistance on applying for your mortgage, give us a call. 887-828-8851.

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Mortgage Application Tips #3 - Debt to Income Ratio

The debt to income ratio is a formula lenders use to determine how much of your income is available for a monthly mortgage payment after you meet your other monthly debt payments. This is an important aspect of the mortgage application process. Without a good number, you won't be able to qualify for your new home.

About your qualifying ratio:

Typically, underwriting for conventional mortgages requires a qualifying ratio of 28/36. FHA loans are a little less strict, requiring a 29/41 ratio.

The first number in a qualifying ratio is the maximum percentage of gross monthly income that can be applied to housing (this includes mortgage principal and interest, private mortgage insurance, hazard insurance, property tax, and homeowners' association dues).

The second number in the ratio is the maximum percentage of your gross monthly income that should be applied to housing costs and recurring debt together. For purposes of this ratio, debt includes payments on credit cards, auto/boat loans, child support, and the like.

For example: 


28/36 (Conventional):
Gross monthly income of $8,000 x .28 = $2,240 can be applied to housing
Gross monthly income of $8,000 x .36 = $2,280 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio :
Gross monthly income of $8,000 x .29 = $2,320 can be applied to housing
Gross monthly income of $8,000 x .41 = $3,280 can be applied to recurring debt plus housing expenses

Remember these are only guidelines. We will be happy to pre-qualify you to help you determine how much you can afford. Give us a call at 877-828-8851.

Be sure to view last week's article about proving your employment and income for a home loan.

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Mortgage Application Tips #2 - Proving your Employment and Income

Last week we discussed the basic information that you would need to bring with you in order to begin filling out your mortgage application.  Among those things is proof of your employment and income. These are very important things to lenders. Your ability to make the monthly payments on the mortgage and to afford the costs associated with owning a home are vital to the approval process.

Things to prove:

• At least two years employment history. We will want to know all about your job including your employer's name and address, your job title or position, length of time of the job, salary, bonuses, commissions, and average overtime pay.
• Recent one full month's paycheck stubs and Federal W-2 forms for the past two years. Keep in mind that you might also need to show full Federal tax returns if you own rental property, are self-employed or are commission based.
• Records of dividends and interest received from investment.
• If you are self employed, we will need full tax returns and financial statements for two years. Also, you will need to have your profit-and-loss statement for the current year to date.
• A written explanation for any possible gaps in your employment record. This may be due to illness or layoff or other circumstances.
• If you are relying on income from other sources, proof of this will be needed. This may include rental property, Social Security, disability payments, child support, etc.

Once we have all that information, we will have you sign a general credit authorization, which will be sent to your employer to verify that everything you told us is true. We may also do this over the phone. Remember to bring all of those things and we will take care of the rest!

If you have any questions or would like our help in getting this process going, we can be reached at 877-828-8851.

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Mortgage Application Tips #1 -The Basics

Are you planning on purchasing a home soon?  When applying for a loan or a mortgage, there is a lot of information that you will need to fill out the forms. You can't get the loan until you are approved and that can be a very intense process for some. We are here to make it more simple for you.

Here are the basics of what you need to know prior to starting the loan application process:

Be sure to gather all of your information together in one place so you have it easily accessible. This includes your personal finances, your bank account numbers and their balances, your current loan amounts and payments, and your credit card account numbers. Also bring your employment and financial history, and forms of identification such as your driver's license and your SSN card.

You will need all the information possible about the property that you are wanting to purchase as well. This includes a complete copy of the sales contract for the property, a set of plans if the house is to be built, the mailing address, age and legal description of the property, and contact info for your real estate agent who will assist in the appraising process.

You may be asked to bring more information than this, but these are the most important to get your application started.

More information is to come in our next blog post. Please check back again soon to learn more!  If you have an immediate question, feel free to call us at 877-828-8851.

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To Refinance or Not To Refinance?

Have you ever heard the pearl of wisdom that states you should only consider refinancing if the new interest rate is at least 2 points lower than your current one? Maybe that was good advice several years ago, but since refinance costs have been falling recently, it could be a good time to take a serious look. A refinanced loan is often worth its cost many times over, considering the advantages that it brings, in addition to a reduced interest rate.

Advantages

When you refinance, you may be able to lower your interest rate and mortgage payment , perhaps significantly. You might also have the option to "cash out" a portion of your equity, which you will be able use to take care of higher interest debt, make home improvements, or plan a vacation. You could be able to refinance to a shorter-term mortgage loan, enabling you to add to your home equity faster.

Fees and Expenses

All of these advantages do cost something, though. You will pay the same kinds of expenses and fees as you did with your current mortgage loan. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You might consider paying points to reduce your interest rate. Your savings on the life of the loan might be significant if you've paid up front about three percent of the new loan total. You might be told that points may be tax deductible, but because tax regulations can be ever-changing, we urge you to consult with your tax professional before making decisions based on this.
Another thing about taxes is that when your interest rate is reduced, naturally you'll also be lowering the interest amount that you can deduct on your taxes. This is another expense that some borrowers take into account. We can help you do the math.

In the end, for most borrowers the total of initial costs to refinance are paid back very quickly in savings each month. We'll work with you to figure out what mortgage loan program is ideal for you, considering your cash on hand, how likely you are to sell your house in the next few years, and how refinancing might effect your taxes. We would love to get you started.

For even more information about why you should consider refinancing, view this article here.

If you'd like to know more about refinancing your home,  call us at 877-828-8851.

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Tax Tip #7: Home Equity Loans

This is the last tax tip in this series of posts. Thank you for reading. If you have more questions, we urge you to seek the counsel of an experienced tax professional.

#7:  Home Equity Loans

Unfortunately in this economy, people sometimes need to take out a home equity loan to pay for things other than their home that they couldn't normally afford, such as tuition. Can you get a tax break for that? Perhaps. It depends on the situation. Part or all of the interest that you pay on the loan could be deductible for up to $100,000 ($50,000 if you are married filing separately).

The amount that you can deduct interest on is the difference between what your home is worth and what you owe on your mortgage. (Example: if your home is worth $250,000, and your mortgage is worth $200,000, you are able to deduct interest on $50,000. If you take out a loan larger than that, such as $80,000, you cannot deduct interest on the extra $30,000.)

If you are faced with the alternative minimum tax (AMT), you won't be able to deduct any of the interest on a home equity loan. This applies if you use the money for tuition or something else not related to your property.

If you did use the money to renovate and improve your property, you will be able to deduct all of the interest whether you are faced with the AMT or not. (But still only the $50,000, not the full $80,000, as per the example above.)

Click here to view Tax Tip #6.

Once again, if you have any questions about your own specific mortgage situation, call us at 877-828-8851. We can help!

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Tax Tip #6 - Mortgage Discount Points

#6 - Mortgage Discount Points

Sometimes people choose to pay a point toward their mortgage upfront at closing so they can get a lower interest rate. Each point is the equivalent of 1 percentage of your loan. This can save you money in the long run, even if it doesn't go toward actually paying off the loan. Many people do this. If you opted to go this route too, you may able to deduct them if you meet all of the following criteria:

• The loan was used to buy, improve or build the home
• The loan is secured by your primary residence
• Paying points is normal where you live
• The points are calculated as a percentage of the loan principal
• The points are clearly outlined on the buyer's settlement statement
• The amount of cash you put into buying your home is as least equal to the amount you were charged for the points you paid on the loan

Also, if you paid points to refinance your home, you are able to deduct a portion of what you paid each year, spread out over the life of the loan. Ask a tax professional for more specific details about this if you need help calculating it for your own specific situation. To learn more about mortgage discount points or any other mortgage-related topics, feel free to call us at 877-828-8851.

Click here to view Tax Tip #5.

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Tax Tip #5: Disaster Damage to your Home

#5 - Home Damage Caused by a Disaster

If your home experienced damage from a disaster, such as a tornado, hurricane or fire, you may be able to deduct the amount that was not reimbursed by your home insurance. To find out how much you are able to deduct, first figure out what your Adjusted Gross Income is. This refers to the amount that you will actually be taxed on after you subtract all of your expenses and deductions. These are also known as your "above the line" deductions.

Once you know what your AGI is, multiply it by 10%. Add $100. Then subtract that from the amount of damage not reimbursed. This gives you your damage deductible. If you need help, seek the advice of a tax professional.

For any mortgage-related questions, feel free to call Mortgage Jive at 877-828-8851. Click here to view Tax Tip #4.

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Tax Tip #4: Adding "Green" Home Improvements

#4 - Energy Efficient Home Improvements

Did you have a big remodeling project this year? You may be able to deduct some of those expenses if they were energy-efficient improvements by way of the Nonbusiness Energy Property Credit. Doing things like installing insulation, new windows or furnaces qualify. However, you can only claim $500 over your lifetime.

If you have installed a solar electric system, solar hot water heaters, wind turbines, fuel cell property, or geothermal heat pumps in your home, look into the Residential Energy Efficient Property Credit. This credit will give back 30% of what you spend on running those features. There is currently no cap on the amount of credit, except for on the fuel cell property. Find out if your home qualifies!

In fact, the IRS is suggesting that before you purchase energy-saving home improvement items, make sure to check for a certification statement first. You can find these on the packaging of the item, or through the company that sells them. For more information, view form 5695. Going green can really pay off!

If you have any questions, call us at 877-828-8851! Click here to view Tax Tip #3!

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Tax Tip #3: Paying Property Tax

#3: Paying Property Tax

If you own a home, you were definitely responsible for property tax. The good news is that it is deductible. You usually pay these taxes as part of your monthly mortgage payments, so your lender will have all the information you need spelled out on your annual statement. Sometimes real estate taxes can be deducted on your federal tax return whether they are deductible by the state's rules or not.

If you happened to buy a house this year, you no doubt paid plenty of property tax upfront. Be sure to find out how much of that you can deduct. It can be found on your settlement documents. Ask a tax professional for help if you have any questions.

Click here to view Tax Tip #2.  If you have any questions regarding your mortgage or a future mortgage, Crosscountry Mortgage can help! Give us a call at 877-828-8851.

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Tax Tip #2: Paying Interest on a Mortgage

With the tax deadline around the corner, we thought we would provide a few homeowner-related tax break tips over the next couple weeks that may help you.

#2: Paying Interest on a Mortgage

Your lender will be sending you a 1098 form that details how much interest you paid last year. Most likely your loan is less than $1 million (or $500,000 for those married but filing separately). In that case, you are allowed to deduct 100% of your interest and property taxes.

If your mortgage exceeds this, the IRS will limit the amount that you can deduct. In order to claim this deduction, however, a bit of itemization is required. To do this, you must calculate your total itemized deduction, compare it to the standard deduction from the IRS and then take whichever is higher.

Click here to view Tax Tip #1.  As always, if you have any mortgage-related questions, Crosscountry Mortgage would gladly answer them! 877-828-8851.

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Tax Tip #1: Selling your home and making a profit

The tax season is now upon us. We will be posting homeowner-related tax break tips over the next couple weeks that may help you.

#1: Selling your home and making a profit:

Congratulations! This is hard to do in this economy. Selling your home for more than you paid gives you a "capital gain". This gain that you made on your home is exempt from income taxes as long as you meet the following criteria:

• The gain is less than $250,000 single, or $500,000 for married couples filing jointly
• You owned the home for at least two years
• You lived in it for two out of the last five years before selling

If you do not meet these requirements, the IRS will only partially tax you if you had to sell your home because of one of the following:

• Death
• Divorce or legal separation
• Multiple births from one pregnancy
• Damage from a natural or man-made disaster
• Loss of a job that grants you unemployment compensation
• Change in employment that makes paying the mortgage and other basic expenses difficult
• Involuntary conversion under eminent domain law by the local government

For more specific information about this, please visit the IRS website directly.  If you have any mortgage-related questions, call Crosscountry Mortgage at 877-828-8851.

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How To Improve Your Credit Score

How can you improve your credit score?

It's virtually impossible to change your score in the time between when most people decide to buy a home or refinance their mortgage and when they apply. So the short answer is, you really can't do so "on the spot." But there are strategies you can live with to make sure when you apply for a loan your score is as high as possible.

Make sure that the information each of the three credit reporting bureaus has on you is consistent and up to date. Order a copy of your credit report about once a year, and dispute any inaccuracies.

Note: Theoretically, if a series of credit reports is requested on your behalf during a limited amount of time, your score goes down until time passes without any inquiries. Changes in the law though have made "consumer-originating" credit report requests not count so much. Also, a series of requests in relation to getting a mortgage or car loan is not treated the same as a number of credit card requests in a limited time. This is because the credit bureaus, and lenders, realize that people request their own credit reports to keep up with what's on them, and smart consumers shop around for the best mortgage and car loans.

• Unsolicited credit card solicitations in the mail didn't used to count against your credit report, but they might now. Learn how you may be able to opt-out of these.
• The two main components of your credit score are your payment history and the amounts you owe. Bankruptcy filings and foreclosures, which can stay on your credit report for as long as 10 years, can significantly lower your score. It's never a good idea to take on more credit than you can handle.
• Late payments work against you. It's extremely important to pay bills on time, even if it's only the monthly payment.
• Don't "max out" your credit lines. Since the size of the balance on your open accounts is a factor, lower balances are better.
• It's said that by carefully managing your credit, it's possible to add as much as 50 points per year to your score!

Remember, it is vital that you have a decent credit score if you hope to purchase a home. If you have any credit or mortgage-related questions, including how to apply for a home loan, feel free to give Crosscountry Mortgage a call at 877-828-8851!  We will answer your questions and help you in any way that we can.

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Is your Lender Licensed or just Registered? What's the difference?

When you have found the perfect home and are ready to go through the mortgage process, you will need to contact a loan originator. What many people don't know is that there is a big difference between a State-Licensed Mortgage Loan Originator and one that's only been registered. If they have been state licensed, then they've also passed a series of exams and received their own NMLS number. If your lender does not have an NMLS number, they're most likely registered under their Lending Institutions License and may not have completed the training to be officially licensed in their state.

As of July 1, 2010, new policies were set in place that require Mortgage Bankers and Brokers to be licensed through the Nationwide Mortgage Licensing System. The requirement for being licensed includes passing state and federal tests, background checks, finger printing, pre-eduation and continuing education. They must complete 20 hours of educational classes and pass two separate and lengthy tests.

If they've failed the test, they must wait 30 days before retesting. If you fail 4 times, you have to wait 6 months. Those that are simply registered do not have any of this. The Secure and Fair Enforcement for Mortgage Licensing Act of 2008, or the S.A.F.E. Act, requires the Agencies to maintain a system for loan origination to protect consumers. Some 60% of registered lenders do not pass their exams. Before you begin working with an originator, take the time to check if they are correctly licensed by visiting the NMLS consumer access page.

You can also call us at Crosscountry Mortgage if you have any questions. 877-828-8851.

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How To Apply for a Home Loan

Is your family growing? Are you tired of renting and would like to own your home? Now would be a great time to buy! Once you find that perfect new house, next comes applying for a home loan so you can officially purchase it. To do that, there are a few things you will need first.

1.) Check your credit score. In order to apply for a loan, your credit will be checked to ensure that you are reliable about paying your dues. Importantly, having a good credit score can actually help you save money sometimes if you qualify for a lower interest rate and a lower monthly payment.

2.) Know exactly what you can afford. Make sure the house that you are aiming to buy is truly within your budget. Aiming too high can put stress on you and your wallet, even if you qualify for the loan. Your debt-to-income ratio will be taken into consideration.

3.) Pick the right mortgage. We can help you decide between a Fixed Rate or an Adjustable Rate, and whether you want it to be short term or long term.

4.) Call Crosscountry Mortgage today and we can help you get started on your loan application. We aim to suit your specific needs so that you are happy with your loan and you can afford it.  (877) 828-8851

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What is the Home Affordable Refinance Program (HARP)?

HARP is a federal government program that was introduced in March 2009. It is designed to help homeowners who are underwater with their mortgage payments. It allows them to refinance their home into a fixed loan with a lower monthly payment, thus avoiding foreclosure. In October 2011, President Obama announced a change for HARP that would allow it to reach even more underwater homeowners. It is now known as HARP 2.0. 

Are you having difficulty making your current mortgage payment? Do you owe more on your mortgage than your home is worth? Perhaps HARP is right for you! In order to qualify, you must meet all of the following requirements:

• Your mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae, and it must have been sold to one of these before June 1, 2009.
• It cannot have been previously refinanced with HARP.
• The current loan-to-value (LTV) ratio of your loan must be greater than 80%
• The borrower must be current on the mortgage at the time of refinancing, having not missed a payment in the past 6 months. One late payment is allowed in the past 12 months.
• You must have a minimum credit score of 620 to qualify.
• You must have a debt-to-income (DTI) ratio of 45% or less

If you would like more information about this program, Crosscountry Mortgage would be happy to help! Give us a call at (877) 828-8851.

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Congress Allows Mortgage Forgiveness Tax Break to Expire

For the past 6 years, Americans have had access to a mortgage forgiveness tax break that was designed to help those who lost their homes in a foreclosure. However, when 2013 ended, so did this tax break and Congress is under fire for allowing it to slip past them without an extension. This is particularly bad news for struggling homeowners who could have continued to benefit from it. Without it, anyone currently selling their home could get dinged with very large tax bills. There was plenty of bipartisan support for extending this law, however, lawmakers failed to do so before its expiration date was reached on December 31, 2013.

This tax break, called the Mortgage Forgiveness Debt Relief Act, was enacted by Congress in 2007 when the housing market was collapsing. It allowed homeowners to waive taxes related to aid that they received from banks in the form of lessened mortgage debt and short sales. As a result of this law, each household was allowed as much as $2 million in forgiven debt to be exempted from their federal taxes. After all, if they couldn't afford to keep their homes, they probably couldn't afford to be slapped with a large tax bill as well.

The LA Times interviewed Kevin Stein, the associate director of the California Reinvestment Coalition about this law's expiration. He described it as a "hit on people who are meant to be helped." Homeowners will no doubt feel it in 2014. He continued, "it is a big deal and it would be very unfortunate if, due to Congress' inability to act, people will suffer."

While there is still plenty of pending legislation that could potentially extend this tax break through 2015, it is entirely up to lawmakers to make it happen. They will be considering extending dozens of other tax provisions that also expired at the end of 2013. This means that there could be a mortgage forgiveness tax break passed even though it expired. It was originally set to expire in 2009 but was extended twice.

There are critics who say that it is time to move on from this tax break because waiving all these fees means that the federal government is missing out on revenue that could be put right back into the economy. However, there are many others who feel that this tax break is so vital that it should be immediately restored. Even though housing prices are on the rise and there are fewer homeowners currently underwater, there are still more than 1.2 million properties currently in some stage of foreclosure. The National Association of Attorneys General pointed out that there are approximately 7.1 million homes with mortgages with negative equity.

It is good to remember that the housing market has not yet fully recovered. Millions of people will be greatly affected by the loss of this tax break and they will continue to struggle without financial aid.

However, there is a slight silver lining for some homeowners who live in California. The state enacted a law in 2010 that protects homeowners from paying taxes on any benefit from a short sale. This means that any mortgage debt forgiven as part of a lender-approved short sale is not taxable income. However, anyone with a modified mortgage that had part of the principle forgiven would still be hurt by the federal law's expiration.

Generally, money that is borrowed and then canceled because of foreclosure or short sale counts as income and that is what is taxed. For example, if you owe $300,000 on a home and can only sell it for $225,000, the $75,000 difference is considered taxable income. Without the tax break, you would owe on that amount.

Without the tax break, the only possible loophole to avoid owing taxes on forgiven debt would be qualifying for an insolvency exclusion. This may not require you to include your forgiven debts as income if you can prove that your total liabilities exceed your total assets, but again, this is a specific loophole that not everyone will qualify for. Be sure to talk to a tax professional to discover any and all options you may have.

There were 42 attorneys general who wrote letters to congressional leaders in an effort to persuade them to extend the mortgage debt forgiveness tax break and understandably, these same attorney generals are outraged that it was allowed to expire. Senator Debbie Stabenow (D-Mich.) said "it makes absolutely no sense. It is, frankly, outrageous. This is not just about fairness for homeowners. This is about keeping the housing recovery alive."

Despite such passionate and high-powered backing of this tax break, it is a shame that Congress allowed it to expire. According to Jaret Seiberg, a senior policy analyst at financial services firm Guggenheim Partners, Washington is basically tired of lending government support for housing. "As a result," he said, "there is a real risk that the government will prematurely pull back support for housing." However, Seiberg believes that there is still a 60% chance that Congress could change their minds and extend the break once more.

We can only wait to see what happens.

If you are concerned about the loss of this tax break and want more information about your options, feel free to call us at Crosscountry Mortgage at (877) 828-8851. We would love to answer your questions and help you evaluate your situation, if needed.

Source | Source

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5 Reasons Why You Should Refinance Your Home!

What are the reasons and benefits of refinancing? 

• Lowering your interest rate: Securing a lower interest rate is one of the top reasons for refinancing. This can make a big difference in your monthly out-of-pocket costs for housing and save money on financing fees.
  
• Convert a an adjustable rate mortgage to a fixed term: converting an ARM to a fixed rate mortgage will allow you to keep payments constant and avoid balloon and spiked payments due to interest rate fluctuations.

• Build Equity Faster: if you are in a position to make higher monthly payments as a result of a salary or other good fortune, switching from a 30 year loan to a 15 or 20 year loan structure will allow you build equity faster and save money by paying less interest.

• Improved credit score: If your credit score has improved as a result of making your mortgage payments on time and in full, you may be in a position to take advantage of your improved credit standing. The lender can review your current credit score, the terms of your existing mortgage, and review options for other loan programs that could not only reduce your monthly payment, but also save you money on interest fees paid over the life of the loan.

• Use the equity you have established: A cash-out refinance allows you to tap into the equity you have built up in your home. You may want to pay off revolving credit card accounts, send a child to college, or use the money for home improvements or personal expenses. It is important to consider whether or not you have a prepayment penalty written into your existing loan, and why you are refinancing.  The lender will want to know what the current property value is, how much equity you have built up, and your current credit score

Now that you have the facts, are you ready to get the refinancing process started? Crosscountry Mortgage would be glad to help you! Give us a call at (877) 828-8851! We would love to hear from you!

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What is an FHA loan?

Technically, it itself is not a loan. Rather, it means that the Federal Housing Administration has your back. They will insure your loan even if you have fair or poor credit, a low down payment (at least 3.5%), or have experienced bankruptcy or foreclosure. This makes lenders more inclined to help you out and offer you a loan because it reduces their risk of loss if you default on your payment.

The FHA program has been helping borrowers who normally could not qualify for a loan since the 1930s as a way to stimulate the housing market. Typically, these types of loans have been primarily offered to military families, the elderly, handicapped, or lower-income families, but anyone can get one. They are not just for first-time buyers either.

In fact, the FHA loan is the easiest loan that you can qualify for. They are available for both purchasing a new home and refinancing your existing home. It requires a low down payment and your credit does not have to be perfect, which makes things easier on you. Should you need to sell your home, your loan is "assumable" which means that the buyer can pick up where you left off. 

If this type of loan would benefit your situation, don't hesitate to get the process started! Here is what you need to qualify:

• Have steady employment for the past two years.
• Have a valid Social Security number, be a U.S. citizen and be legally old enough to sign a mortgage depending on your state's age requirements 
• Make a minimum down payment of 3.5% on your new house. Or you can put 10% down if your credit score is between 500 and 579. This money may be gifted, whereas other loans do not allow this.
• Have a property appraisal from an FHA-approved appraiser.
• The mortgage payment will need to be less than 31% of your gross monthly income including principal, interest, property taxes and insurance.
• Monthly debt cannot be more than 43% of your monthly income, including mortgage, credit cards, car payments, student loans, etc.
• Have a minimum credit score of 500.
• Cannot have a bankruptcy within the past two years
• Cannot have foreclosure within last three years

There are a few disadvantages to the FHA loan since it does not hold the same strict standards of a conventional loan. It requires two kinds of mortgage insurance premiums, one of which is paid upfront in full or financed into the mortgage, and the other manifests as a monthly payment. Your house will also need to meet certain conditions and must be appraised.

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Update on Pending Home Sales in November

According to the National Association of Realtors, the month of November saw some stabilization where pending home sales are concerned. They received a slight gain. There were also some monthly increases in the South and the West that managed to make up for certain declines in the Northeast and the Midwest.

Have you ever heard of the Pending Home Sales Index? Well, if not, it is based on contract signings of existing homes on a large national sample that makes up about 20% of all transactions in the country.  According to that index, the number of signings increased by 0.2% to a score of 101.7 in November. Keep in mind that it does not account for closings, just contracts. This is good news for the economy.

NAR's chief economist, Lawrence Yun, had plenty to say about the market in a recent interview. He said, “We may have reached a cyclical low because the positive fundamentals of job creation and household formation are likely to foster a fairly stable level of contract activity in 2014. Although the final months of 2013 are finishing on a soft note, the year as a whole will end with the best sales total in seven years.”

As of now, mortgage interest rates are a bit higher but still relatively low when compared to years past. We have also seen strong gains in home prices that add to the overall market growth that we should expect to continue to see in 2014.

The market is still kind to buyers right now which means that we could see as much as $5.1 million in existing-home sales for 2013. That figure is nearly 10% more than 2012 experienced, and it is expected that 2014 should be similar.

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