In an effort to attract more eligible borrowers who could benefit from the Home Affordable Refinance Program, the Federal Housing Finance Agency (FHFA) recently announced changes to the HARP Program.

The HARP refinance options are designed to assist Fannie Mae home borrowers who have demonstrated  acceptable payment history on their existing Fannie Mae mortgage loan, but may not have been able to refinance to obtain a lower payment because they are underwater.

Another purpose of HARP is to help homeowners to move their mortgage from a less stable loan program to a more stable loan program. For example – from an adjustable rate mortgage to a fixed rate mortgage.

The First HARP Refinance Modification – Loan To Value

Fannie Mae is removing the maximum LTV ratio limit for Refi Plus mortgage loans secured by fixed-rate mortgages with terms up to 30 years. This includes loans with terms of 15 years, which were previously restricted to a maximum LTV ratio of 105%. There continue to be no limits on the CLTV or HCLTV ratios.

• The maximum LTV ratio limits for all occupancy and property types are:
• no maximum for fixed-rate mortgages with terms up to 30 years,
• 105% for fixed-rate loans with terms greater than 30 years up to 40 years, and
• 105% for ARMs with initial fixed periods greater than or equal to five years and terms up to 40 years (as permitted by the ARM plan).

HARP Refinance Effective Date

You must apply for the new program after Dec 1, 2011.

New Underwriting Requirements for the HARP Refi Extension

To make the HARP program available to more US homeowners the program underwriting requirements have been expanded to include:

• Mortgage payment history requirements: you cannot have had any mortgage delinquencies on your existing mortgage in the most recent six month period, and no more than one 30-day delinquency in months 7 – 12.

• Requalification requirements for large payment increases: A new policy is being introduced that requires the borrower to be requalified for the new loan if there is a large payment increase. The following requirements must be met when the principal and interest payment increases by more than 20% of the current contractually obligated payment under the note:- minimum FICO credit score of 620;
  - maximum DTI ratio of 45%;
  - verification of income sources; and
  - verification of assets to close if the you arerequired to bring funds to closing.

Removal of bankruptcy and foreclosure policy: Fannie Mae is removing the requirement that the borrower (on the new loan) meet the standard waiting period and re-establishment of credit criteria in the Selling Guide following a bankruptcy or foreclosure. The requirement that the original loan must have met the bankruptcy and foreclosure policies in effect at the time the loan was originated is also being removed.

Borrower benefit requirement: To be eligible for Refi Plus and DU Refi Plus, the borrower must receive a benefit in the form of either a reduced monthly mortgage payment (principal and interest) or a more stable product, such as a move to a fixed-rate mortgage from an ARM. Fannie Mae is updating the borrower benefit criteria to also include a reduction in the interest rate or a reduction in the loan amortization term as eligible borrower benefits.

With this said, the Internet is a big place and there are a ton of retail consumer centric websites to visit for starting the process. Below is a summary of some of the major websites to check out as well as a few gems that might not be as well know but offer excellent information and help.

First of all, HUD.gov is a great resource to learn all about government mortgage programs like VA loans, FHA loans, and USDA mortgage programs. These programs alone serve a lot of home buyers in the US because they are not so tight on credit history and they have lower down payment requirements while still offering competitive interest rates.

LowVARates.com. LowVARates.com is a website dedicated to serving the nation’s Vet’s. VA loans offer a great loan program for those who are eligible. You can get mortgage information and you can get actually financing help no matter where you live in the US.

Zillow.com. Zillow is a huge repository of homes for sale all over the US. You can reach loan officers and real estate agents as well as get property information for just about every address in the US. You can also get home value estimates from Zillow, but be careful as these estimates should be taken with a grain of salt. It is very difficult to really determine the value of a home if you don’t physically visit it.

Bestplaces.net. Bert Sperling’s best places website has an exhaustive amount of information including census data, health reports, property value trends, crime stats, etc.

Realtor.org and Realtor.com. Both of these websites are operated by the National Association of Realtors. You can get regional and industry wide information from here for just about any topic you want. You can also get home listing information based on state, zip, and or city, as well as mortgage rates and mortgage calculators.

You can also search for investment properties, fixer uppers, HUD homes, Short Sale approved homes, homes with pools, casitas in the Phoenix area. For all you real estate agents out there, Dave is using a new indexable IDX offered by Pro-Found Marketing, LLC.

If you have any questions about the mortgage process in general or more specifically Arizona you can find a lot of information her at GetPrequalified.com or you can contact Dave direct on his home search site. Contact Dave for help with AZ home buying process

Payment Matters

For starters, there’s almost no limit on late fees. In 1996, the Supreme Court ruled in Smiley v. Citibank that credit card late fees are classified as interest and therefore can’t be limited by the states when those fees are being issued by nationally chartered institutions. What does that mean in plain English? That credit card companies can assess whatever penalty they deem fit if your bill is paid after its due date, and there’s nothing anyone can do to stop them. As a result of the case, fees that had previously been $10 or less jumped to as high as $39, with many analysts predicting they’ll go even higher.

Another obvious lesson but one that lenders are often reluctant to discuss is that making only the minimum required payment on your credit card balance will lead to years of additional debt and wildly inflated prices on purchases. Here’s a graphic that breaks down a handy sample. Imagine buying a computer for $1,500 and charging it to a credit card that carries an 18% interest rate. Your minimum monthly payment is just a fraction of what’s owed, in this case 4%, and after each small payment the amount owed is recalculated and your payment period is lengthened. Paying just the minimum, it’ll take you 87 months — more than 7 years — to have paid off that debt, and in the end you’ll have paid $2,274 for a $1,500 item. However, if you pay $100 a month, every month, you’ll have the debt eliminated in 18 months and only have paid $1,712 in total. You can be a slave to the lending agency for seven years and pay a 50% markup, or you can knock the debt out in a year and a half and pay only a 14% premium. It took a federal statute, 2009′s Credit Card Accountability Responsibility and Disclosure Act, to make lenders clearly explain to consumers the cost of only paying the minimum required amount. Statements now have to include timelines that tell users how long it would take them to eliminate their bills if they only paid the minimum amount. It’s vital that you monitor this information.

Everything Is Negotiable

Credit card companies are a business, which means they have to balance their own financial interests with your happiness to keep you as a customer. Lenders don’t want you to pay off your balance. They’d rather you always have some amount of revolving debt. Because of that, they’re usually far more willing to work with you on things like interest rates and due dates than you might imagine. There’s no guarantee they’ll meet your request, and it might take a few tries to get them to play ball. But a little effort on your part will save you hundreds, if not thousands, in fees and charges. Interest rates fluctuate with time. Based on your financial status and payment history, it’s possible you could qualify for a better interest rate than the one currently attached to your card, but the lending institution isn’t exactly going to go out of its way to tell you that. (They’re not dumb.) In order to take advantage of better rates, it’s up to you to call and talk to the bank. This is also a chance to plead your case to another human being, which always yields better results than applying for breaks online. A 2002 survey found that more than half of those respondents who requested lower rates actually got them. To be sure, the economy’s in different shape than it was a year ago, but the rules and principles are the same.

You’re in Control

No matter how much you owe, you can make payments at any time. It’s true. Most people with credit card debt make payments on their monthly due date, whether they’re paying the minimum required amount or a larger sum designed to whittle down the total due. But you can actually make payments at any time, not just on the bill’s due date. And what’s more, doing so will help you eliminate your debt faster.

The reason this works is because the finance charges are determined by a calculation of your average daily balance, which is just what it sounds like: a breakdown of how much debt you had on the card during the month in question. If you had the same amount over a 30-day period, like $500, then your average daily balance would be $500. But if you had $500 on the card for 15 days and then nothing for the other 15, then your average daily balance would only be $250. It’s that average daily balance that combines with your interest rate to determine your relevant finance charges and what your bill will be. Therefore, it’s in your best interest to make that average balance as low as possible before the bill is tabulated. Make regular payments of any size to shave down the amount you owe, which will in turn reduce your average balance, finance charges, total due, minimum due, and the amount of time it’ll take you to wipe out that debt. It’s that easy.

You should also know that it takes a lot more effort to exercise control over credit cards than most people seem willing to exercise. People who buy on credit instead of paying cash spend more than they would have if they’d just used their own money. Some people’s purchase amounts jumped by 20% just because they were using credit cards and able to trick themselves into thinking they had more money or would be able to afford more lavish purchases. That mindset is a boon for credit card companies, but it’s deadly to consumers. People with credit cards think that luxury items are more attainable or worthwhile, when they’re not: Thanks to interest rates, those items are even more expensive when you buy them on credit. So you spend more in general, then spend again on top of that. Lenders might not like it, but you have to remember that you’re in control, and you don’t have to buy anything with your card that you don’t want to.

Another way to flex your muscle is to change your due date. This is one that most banks will work with you on, especially because you’re not asking to adjust the amount due, just when it’s submitted. Most people make this call in order to make their payment plan line up more easily with their employer’s payroll schedule. For instance, if you get paid on the 1st and 15th of the month, but your credit card bill is due on the 10th, it might be worth asking the bank to push that due date back a week if you want to apply funds from a different pay period toward your bill. It all goes back to demonstrating what kind of customer you can be, and what you’re willing to do to honor your debts. Many banks have little trouble with this change.

Further, it’s in your best interest to keep the balance on your cards as low as possible. Banks like to entice potential clients with high credit limits, offering $6,000 or $10,000 just for looking like a good spender. But they also know that this inflated limit will trigger a consumer’s habit to spend more with credit than they would with cash, and to spend even more than usual because the idea of a high credit limit makes the card sound safe and impossible to abuse when it’s actually a trap for gullible consumers.

The House Always Wins

The biggest mistake people make in thinking about credit cards is forgetting where the money comes from. You’re not actually borrowing from a lender. You’re borrowing from yourself based on the money you imagine you’ll have in the future, and the lender is placing a wager on your ability to actually come up with money owed. In other words, you’re never actually taking into account how much things cost, only how much you can reasonably part with at the moment. This, it should go without saying, is wildly dangerous and the first step on the path to bankruptcy. (Spoiler alert: even employed college grads go bankrupt thanks, in part, to credit cards.) Lending agencies don’t want you thinking like this because living within your means will mean putting small or vital items on a credit card and then paying off the balance in full before the month is out. That’s great for you because it builds your credit and proves that you’re responsible, but it’s bad for the banks because it shows that you’re not dependent on their credit cards to survive. Remember: Cards are just a tool. They have to be used correctly to work.

Article and research performed by the BusinessInsurance.org team.

You may be one of those people who think that bankruptcy is a life long problem for your credit and that you’ll never be able to refinance or get a mortgage after the fact. Well this is simply not true. It is especially not true if you are one of the fortunate ones to have a VA loan and you want to refinance.

There two ways to think about refinancing your VA loan with a Chapter 13 bankruptcy. First you can consider it from the perspective of that it is completed. If this is the case, then you are most likely fine to refinance with either a full refinance or a streamline refinance. For either loan program you will be able to take advantage of low streamline VA rates. Next, if you are currently in your Chapter 13 bankruptcy then you’ll need to know the date of your first payment to your trustee. You’ll have to wait 1 year from your first payment to be in a position to qualify.

If you are over a year on your Chapter 13 payment plan you will also need to have not missed any payments to have any shot at qualifying for a VA loan. Incidentally, this requirement applies not matter whether you have a VA loan and you are looking to refinance or if you are looking to buy a home. Best thing to do if you are in a Chapter 13, or are considering it, you should talk to a VA loan officer to get all of your options and time frames.

Other documents you may need to buy a home – get a mortgage include:

• At least 2 months of bank statements
• Two pay stubs covering at least 30 days of income and showing year to date totals
• Statements to show your assets like 401K’s, IRA’s, Money Markets, CD’s, and Savings Bonds to name a few – you will mostly likely have to show your last quarterly statement
• If applicable, bankruptcy paperwork (if your B/K has been less than 10 years)
• Be prepared to show divorce paperwork – including the settlement papers as well as custody papers if applicable
• Credit report showing all three credit bureaus – you don’t need to worry about providing this as your lender will get their own. What you need to worry about is getting your own copy long before your lender gets one so you can see what your scores and to see if there are any problems on your report that you need to address.
• If you are getting social security checks you’ll need to provide your award letter(s) as well as proof that you receive the payments (this is typically shown in your bank statements).
• If you are using income from an annuity or other forms of monthly interest income be prepared to show the statements proving the income will last at least 3 years.
• If you are receiving any child support or alimony be prepared to show your legal documents to prove that you’ll be receiving that income for at least three years. In the event of child support you may have to provide birth certificates to prove your child’s (children’s) age(s).
• You will need to show proof of your identity – this is typically covered with a driver’s license and a social security card. You may also show a green card if you have one. Check with your loan officer about what forms of ID you may need if you have questions.

This is a good list of information you’ll need to get approved. If helps to gather this information and have it close at hand as you start your home buying process and get a mortgage. The first step to buying a home is to get your credit report in advance and then get in touch with a mortgage company to get prequalified and preapproved.

For VA loans and FHA loans you won’t need to have your credit scores that high to qualify, but if you plan on going through Fannie Mae or Freddie Mac you’ll need to have your scores better than say 660 to have a chance at getting a mortgage. Don’t count on great rates with lower credit scores for any type of loan program. Again, the one exception to this rule is if you are going with a FHA loan home purchase or refinance or a VA loan. With a VA loan especially, you will most likely have an opportunity to get low streamline VA rates if you try to refinance using their streamline refinance program.

Car loans as well as mortgages will tend to have higher interest rates for lower scores. With this in mind and knowing that you have lower credit scores you may now be asking “how do I get a good credit score?” Below you will find some characteristics of those folks who have higher credit scores. You should be able to identify with any or all of these characteristics which if you can get them in order should do wonders for getting your credit scores up.

Get A Good Credit Score

• Keep the number of credit inquiries on your credit report to a minimum – credit inquiries can lower your scores and they can cause a red flag with someone looking at your credit profile. Be prepared to explain all of your recent credit inquiries if you plan to apply for a mortgage. Your potential lender doesn’t want any credit payment surprises to pop up which could limit your ability to make payments on your mortgage. It is a good idea that if you are going to be looking for a mortgage that you don’t open any new lines of credit within at least 3 months and most favorably at least 6 months before your apply.

• Let your credit report age with you – what we mean by this is that you should keep your credit card accounts open if you can help it. If you can get a card when you turn 18 get one. It is a good idea to get one earlier in life so that your account can age. One factor to higher scores is the age of your credit accounts – especially those accounts that you keep paid on time over the long haul.

• Keep your account open – keeping credit card accounts open once you pay them off is a good idea. One key factor to good credit scores is open lines of credit with little balances one them. If you can keep you balances under 30% of the limit your scores should be really good. Work hard to keep your balances low.

• Get a variety of credit accounts – you’ll want a mix of credit accounts like a car loan, a few credit cards, a student loan etc. A mix of credit will show that you can manage several different types of accounts. As long as you keep your payments, having a good range of accounts your credit scores will be good.

• Keep a clean payment record – in addition to making your payments on time, you’ll want to do what you can to avoid any repossession leading to public judgments like tax liens or collection accounts. These can kill your credit scores and can get in the way of getting approved for a mortgage. For sure if you have credit problems that fall into this category you’ll get higher rates – especially if you are trying to finance a car.

Hopefully with these tips in mind and applying them to your unique credit situation you should be able to raise your credit scores from poor or average to a good credit score.

Once you are pre-approved (we recommend you get pre-approved because this will put you in a better bargaining position with the seller) your next step will likely be searching online and working with a real estate agent. No matter whether you are working with a real estate agent now or in the future here are a few suggestions we have to get the most out of your working relationship with one.

Some of these suggestions you can do on your own but we’ll leave you to the job of deciding which things you can and want to do on your own when the time comes to it.

Tips To Getting The Most From Your Real Estate Agent

• Drive Around
• Get The Neighborhood Numbers
• Is The Neighborhood Safe
• Ask Around – Parents and Police

Once you start getting your neighborhoods down you’ll want to drive around with your agent (or yourself) to see them at different times of the day and you’ll want to look for all the different entrances. Don’t let your agent get away with showing you only the nicest – front – grand entrance. Pay attention to the number of cars parked on the street. Does it matter to you or not? Are kids playing outside? Put yourself in the community and see if feels right for you. If not, don’t force a purchase and keep looking.

Along with checking out the inside of the neighborhood, make sure you check out what’s around it too. You’ll want to get a sense of how convenient or not you would be living relative to local amenities like shopping, restaurants, dry cleaners, schools, light rail and other forms of mass transit, freeways, and fire/police services (to name a few).

Ask your real estate agent for crime stats and Megan’s law offenders (if this matters to you). There are plenty of resources available to let you know how safe your neighborhood is. Ask some families you see walking around and ask the parents about the neighborhood. Be listening for whether they are really telling the truth because they might not want to say that there is trouble around – but if you listen carefully you’ll hear what you need to hear. A quick stop to the police station nearby can also put you in touch with local information about crime. You’ll also want to pay attention to trends – is it getting better or worse. Don’t be afraid to ask.

Speaking of trends ask your agent about different trends in the neighborhood – time on the market, what are home prices doing, the percentage of renters to home owners etc. Neighborhoods change and you’ll want to find out which way things are headed as you consider different places to live.

The bottom line of all this is that you need to thoroughly checkout where you are considering to live. Liking the house is only one factor that ought to go into your home buying decision. Make sure you kick the tires and look under the hood too. Don’t be afraid to ask your real estate agent for help on looking at all aspects of a neighborhood as you shop around.

30 Yr VS 15 Yr – Pure Financial Perspective

This section is like from your financial planner. 30 year mortgages typically have slightly higher interest rates than 15 year and even 20 year mortgages, which means you will pay more finance charges. Also, 30 year mortgages take 30 years to payback which is twice as long as a 15 year mortgage so over time you will end up paying a lot more interest in the form of finance charges than you will with a 15 year mortgage.

Bottom line – shorter term mortgages means more money in your pocket that you can invest in a 401K, IRA or some other form of savings account.

15 Yr VS 30 Yr Payment – Practical Financial Perspective

This section is like from your practical friend side. The down side of getting a shorter term mortgage is that you will have a larger mortgage payment per month than you would with a 30 year mortgage. While a 15 year mortgage sounds good on paper for saving finance charges, it does force you into having a bigger monthly payment. You may not be concerned with a larger payment because of your current employment situation, but what happens if things change with your job or your income? You may be put int a situation where you have to make a larger payment than you can afford whereas if you would have take a 30 year term mortgage you would have a smaller monthly payment.

You can almost always make a larger mortgage payment if you want. But try cutting back on your mortgage payment if you run into a slow couple of months because of your job. With the current economic fluctuations in 2011, why take a chance on a cheaper, higher risk monthly payment when you can still make that same payment, but cut back if you need to given a change in your financial situation?

The point of the story was that if you fit the mold as a home buyer then you can actually qualify and buy a home fairly easily. The story went on to suggest that the difficulty in buying a home if you fit the mold is that in the Phoenix market here in July 2011 is that you face multiple offers. But most of the multiple offers are cash buyer offers from investors. To a home seller – including bank owned homes – the best offer is typically a cash offer. With a cash offer, there is little room for fallout like there is with financing.

If you don’t fit into the mold, then you are facing a more difficult uphill climb if you intend to buy a home in the near future.

The bottom line – get yourself prepared ahead of time to buy a home so that you do fit into the mold to give yourself the best chance to get your offer accepted.

Buying a Home in Phoenix

• Check out the best loan program for you – is it an FHA mortgage, a VA loan or a Conventional mortgage?
• Do you have enough for 3%, 3.5%, 5%, or even 20% down payment?
• Have you checked for any local or state down payment assistance programs?
• Have you checked your credit report recently?
• Are your credit scores 620 or better? – believe it or not, you can get a mortgage with scores down to a 620 and in some case even as low as 580.
• If you are self-employed have you been in business long enough to show two years of business tax returns and personal tax returns?
• If you are a W-2 employee have you been steadily employed for the past two years? And if not, can you satisfactorily explain any gaps?
• Do you have any recent judgements or large collections?

If you can answer positively to most if not all of these items above then it may be time for you to talk seriously talk to a loan officer about getting pre-approved for a mortgage. If you need to work on any of these items above – start now – the home buying window of opportunity for buying a home in Phoenix is clicking.