The other day my 5 year old son was playing on the computer and told me he wanted to play on the White game.  I know all the games that he plays, but there was no game called the White Game.  So, we went through all his usual games so he could show me the White Game.

Sure enough it was one of the usual games that he plays.  The thing is, the game is actually called Y8.  I had never connected the acronym, but Y8 = White.  There are so many acronym’s used in the Mortgage business, that have little meaning to most consumers.

A Sticky I don’t Need No Stinking Sticky

When I first started in the mortgage industry I worked at a company that kept track of mortgage payments on ledger cards, 5 x 7 white cards.  These cards had all the customers information.  Every time a customer would make a payment, we would write on the ledger card:  the date of the payment, the amount, amount applied to interest, the amount applied to principal, and the new balance.

Eventually our home office took over the processing of payments, as our main goal was origination of new loans.  Some customers would still send the payments to us; however, it was not an official payment until the home office processed the payment.  The home office would process the payments, and then every other day send us a sheet of stickers with all the information that we used to hand write, our administrative assistant then had to place the stickers on each customers ledger card.

Internally we called these stickers with the payment and new balance information “sticky’s”.  Because the payment wasn’t considered official until we received the “sticky” from home office, we couldn’t give out mortgage payoff’s.  One day we had a customer come into the office and request a payoff, our administrative assistant was talking to the customer, I was not sitting far from her so I could hear what she was saying.

The administrative assistant told the customer that she could not give him the payoff on his mortgage because the sticky’s hadn’t come in yet.  The customer was clearly getting agitated because he had no idea what a sticky was, or why it would hold up getting the payoff on his loan.  I went up and explained what a sticky is and explained we would get his payoff as soon as possible.

There’s an Acronym For That

In order to help avoid confusion here are some common acronym’s and their definition:

I thoroughly believe I have succeeded in answering all your questions.  However, some of the answers only led to more questions.  To sum it all up, I feel I am more confused than ever, but about more important issues, and on a higher plain.

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3. The Benefits of a USDA Guaranteed Loan to Purchase

The first step in securing an FHA loan is to use a mortgage broker who deals with FHA loans. Not all do, but there are a number of brokers who are well versed in approaching lenders for this type of loan. They know the requirements and can often help to push a loan through for a new homebuyer fairly quickly providing all the conditions are met.

While an FHA loan is not for everyone, there are quite a few benefits that make it an ideal choice for many people who would like to own their own home but do not have the cash reserves, or a good enough financial score to qualify for a regular home loan. Perhaps one of the biggest obstacles to many people who would like to own their own home is that they simply do not have enough cash reserves for a down payment. A regular mortgage loan often requires a very minimal down payment, sometimes more depending on the person’s FICO score. You can usually apply for an FHA loan with as little as a three percent down payment. Coupled with this, is stipulation that the loan amount that is approved is relative to the cost of buying a home in your area. Thus the loan amount that is approved is usually not that high, just enough to buy a home similar to those where the person already resides. Consequently, the 3% down payment is usually quite a reasonable amount.

There are no actual income limits when applying for a loan, although you do need to have a regular source of income; it just does not need to be a lot. You also need to prove that you have a good debt to income ratio, in other words that you are not spending more than you are earning. While your credit score may be taken into account, it is not a major consideration when applying for an FHA loan. In fact, you can qualify for a loan as soon as two years after declaring bankruptcy.

There are also other programs associated with FHA loans that can help subsidize home repairs and improvements, as well as an easing of regulations such as pre-payment penalties. While an FHA loan may not be ideal, or even necessary, for everybody it does provide many people with the opportunity to own their own homes and thus better their own financial situation. If you are interested in applying for one and you have a regular source of income, your first step should be to find a suitable mortgage broker who can help you secure the loan and advise you on what requirements are needed.

Related posts from Indiana's USDA Home Loan Expert:

1. 5 Benefits to Using FHA
2. How To Use A FHA Loan To Refinance
3. What Goes On At Loan Closing

The Federal Housing Administration (FHA) has a very popular refinance option that is suited to most home owners, whether you have an FHA mortgage loan or not. Refinancing your mortgage with an FHA loan has many benefits, including the main benefit of needing a very minimal down payment in order to qualify. Other benefits to apply for an FHA refinance loan include the fact that there are no pre-payment penalties and the qualification standards including your credit score are much more relaxed than they are with other refinancing options. They are readily available, easy to process and have good terms. It is a great way to refinance your current mortgage into more reasonable and easily reachable monthly payments.

If you are interested in applying for an FHA loan, it is recommended that you use a mortgage broker who deals with FHA refinancing. Brokers who are willing to take on this type of refinance loan with the added benefit being that they also know which lenders are willing to refinance you through and FHA loan.

There are several different types of FHA refinance loans available. The FHA Rate/Term refinance option is available to people who currently have a conventional mortgage that is not and FHA mortgage. Best of all a Rate and Term refinance is available up to 96.5% of your homes value.  It simply allows you to refinance your loan into an FHA mortgage loan. The Streamline Refinance option allows you to switch to a fixed rate FHA mortgage or to lower your rates on your current FHA mortgage. This is the simplest type of refinance option, requiring very little paperwork. Finally, the Cash out FHA Refinance loan is of main benefit to homeowners whose equity has built up on their loan since their last mortgage. With this type of refinancing you can actually get up to, 85% of your home’s value to use in whichever way you chooses, including using the cash itself.

Options for an FHA refinance loan are available to any homeowner needing to refinance in order to lower your monthly mortgage payments. It is best to try to find a mortgage broker who can help you decide which type of FHA refinance loan best suits, before you proceed with taking one out. They will be able to advise you on what is best for your situation, based on your current financial status, and then help you to find a lender who will give you the refinance loan.

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1. The Basics of A FHA Loan
2. 5 Benefits to Using FHA
3. What Goes On At Loan Closing

www.youtube.com/watch?v=iW4nERUuVxM

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The Federal Housing Administration (FHA) has several programs in place in order to promote and encourage homeownership. These are especially useful for people who may otherwise have difficulty in obtaining a home own, especially lower to middle income earners. The FHA guarantees lenders that they will pay the loan back to the lender should the person taking out the loan somehow default on their payments.

If a person qualifies for this type of loan, it is usually recommended that they seek out a mortgage broker who can help negotiate the loan for them. Though you should use a mortgage broker, not all will work with FHA loans, so the very first step in securing one is to find a broker who is willing to help secure one.  Once they have found a suitable mortgage broker, they will not need to worry about approaching lenders themselves but can leave it in the brokers hands.

Minimal Down-Payment

One of the main benefits is that FHA loans will allow a potential homeowner to buy a home with a very minimal down payment, oftentimes as low as three percent. This is to help people while they have secure fairly well paying employment, do not have sufficient cash reserves to offer a very big down payment.

No Income Limits

In other words, providing you have a regular source of income the actual amount of money you earn monthly is not as important as it is when taking out a regular mortgage loan. This benefit is balanced out by the fact that FHA loan amounts are limited and are usually relative to the average cost of housing in the area where you currently reside.

Lenient Credit Standards

If you do not have a perfect credit record, you do not need to worry that it disqualifies you from taking out an FHA loan. In fact, while a prospective homeowner’s credit rating plays a big part in being able to receive a regular mortgage loan, FICO scores can be much lower when applying for an FHA loan.

No Prepayment Penalty

This means that if you are able to pay off your loan early there are no financial penalties applied. This means that should your financial situation improve dramatically to the point that you can pay off your loan sooner than you had originally planned, you can do so without having to pay extra fees for doing so.

Property Standards

Before a property is allowed to be bought using an FHA loan, it must meet minimum condition standards. This protects the new homeowner from buying into a home that will need a lot of maintenance. Along the same line, there are also programs that will provide additional funding for any home improvements that need to be made.

Related posts from Indiana's USDA Home Loan Expert:

1. The Basics of A FHA Loan
2. How To Use A FHA Loan To Refinance
3. The Benefits of a USDA Guaranteed Loan to Purchase

Having credit is like having a golden ticket to financial freedom. But if you have not established credit yet, it’s OK-I can show you where you need to start. Check out the video I have included for you and you’ll learn how easy it is to establish credit and secure your financial future. Take action and implement the quick tips in this lesson and in less than six months, you’ll be on your way to having your very own golden ticket!

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The economy sure has thrown us all for a loop this year, but did you know how many consumers have been taken on a wild ride by those who claim to be financial gurus and credit repair specialists? Far too many have gotten caught in this tangled web, and as your trusted advisor, I am committed to making sure that you are armed with the information you need to protect your finances and your family from such predators. This is why I want to share with you, the top 10 credit myths- so that you can avoid the credit advice that can potentially damage your credit.

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Contained in this legislation is the authority needed to raise the guarantee fee in the USDA Section 502 Guaranteed Rural Housing Program to an amount not to exceed 3.50% of the loan amount. This change in the guarantee fee has already been referenced on USDA Rural Development loan approvals (RD Form 1980-18) that were issued “subject to Congressional action.”

This legislation also increases the funding authorization level for the USDA Section 502 Guaranteed Program to an amount that is sufficient “to meet the remaining fiscal year 2010 demand.” Therefore, no additional funding shortfalls in the program are expected for the remainder of fiscal year 2010.

With the passage of this legislation that addresses the current funding lapse in the USDA Section 502 Guaranteed Program, USDA Rural Development will begin the implementation process; which will eventually lead to the elimination of the “subject to Congressional action” language on loan approvals that has been in effect since May 27^th . Following the completion of all of the Agency’s internal requirements, USDA Rural Development is then expected to announce the restoration of funding for the USDA Section 502 Guaranteed Program.

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In 1971 Housing Affordability was at its highest prior to this year. Meaning that this is the best time possible to buy.

Let’s Talk Affordability

The chart below plots two things: National Association of Realtors Affordability Index (green line) and 30 Year Fixed Rates (blue line). As you can see on the far right side you have the highest Housing Affordability and the lowest Rates. So, you have the lowest prices, lowest rates, and highest affordability.

What About the ’80′s?

In the period of 1979 to 1984 you have some of the highest interest rates on record.  Yet, still a lot of people purchased homes during that period.  The people that bought homes during that time did well 15 – 30 years later.  My Mother purchased her first home during that time period even though rates where in the 12′s to 18′s.  In 1982 Housing affordability was at its lowest ever.  Inflation kicked in 1975, and rates continued an upward trend through 1979.  So, the Gap between housing affordability and Interest Rates was very wide, the widest of record.

The Best of All Scenario’s

Today we have a very wide gap as well, but in a good way.  Presently because interest rates are so low, home prices are low, and housing affordability is up, the overall risk is greatly reduced.  If the risk was so great in 1982 and homebuyers did okay, how can someone look at the chart today and say that it is riskier than in 1982.

What About the Negative News?

That’s the best part if you are a homebuyer.  Trulia recently release a report Showing Sellers Continuing to Slash Home Prices.  This means you are getting an even better price on an already reduced house.  The Department of Housing and Urban Development (HUD) just released there July report card, “The Obama Administration’s Efforts To Stabilize the Housing Market and Help American Homeowners.”  This report card shows continued affordability in the U.S. Market.

Historic low rates continue to promote affordability: Families continue to benefit from the lowest rates in history on 30-year fixed mortgages.  Since April of 2009, record low rates have helped more than 7.2 million homeowners to refinance, resulting in more stable home prices and $12.9 billion in total borrower savings.

Simple supply and Demand suggest that since there is not as great of demand now, compared to during the tax credit, housing prices will decrease thus further increasing the affordability (Read Better Deal!)  There are still large amount of houses on the market and many more still in foreclosure.  Both Federal Housing Finance Agency and Standard and Poor’s believe that House Prices are showing signs of stabilizing.

What do you think housing prices and interest rates will do in the next 12 months?

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You’ll see an interest rate and an Annual Percentage Rate (APR) for each mortgage loan you see advertised. The easy answer to “why” is that federal law requires the lender to tell you both.  By showing both this can lead to confusion, especially to those First Time Homebuyers.

The Federal Reserve wants the APR to be a tool for comparing different loans, which will include different interest rates but also different points, fees, and other terms. The APR is designed to represent the “true cost of a loan” to the borrower, expressed in the form of a yearly rate. The problem is that there are many costs associated with a loan, that are not considered in APR.

What Fees Are Included In The APR?

• Loan Origination Fee
• Loan Discount Fee
• Other Lender/Broker Fees (Application, Underwriting, Processing, Tax Service Fee, etc.) – Anything paid to the broker or lender or affiliate of the broker or lender
• Odd Days Interest
• Mortgage Insurance Premium
• Title Closing Fee

While APR was designed as an attempt to make it easier to compare loans, it’s sometimes confusing because the APR includes some, but not all, of the  costs associated with a mortgage. And since the federal law that requires lenders to disclose the APR does not specifically declare what goes into the calculation, APR’s can vary from lender to lender and loan to loan.

What Fees Are Not Included In The APR Calculation

• Escrow Setup
• Appraisal Fee
• Title Insurance

Let’s Throw Adjustable Rate Mortgages In The Mix

The APR on an Adjustable Rate Mortgage (ARM), a loan tied to a financial index, like a 5/1 ARM, assumes the index will never change. The interest rate on an ARM is composed of the index and margin.  Because of the underlying assumption that the index will not move over the life of the loan, the APR can be grossly under or over stated on an ARM depending upon if the index moves up or down over the life of the mortgage.  ARM’s loans were created because the Bank does not have to assume the interest rate risk of a Fixed 30 Year Mortgage, allowing the consumer to get a slightly lower rate, and assume the risk that rates will rise.  These financial indexes have always moved over the course of a 30 year mortgage thus making the APR a difficult tool to compare a fixed rate mortgage to an ARM.

So, APR’s are at best inexact. The lesson is that APR can be a guide, but you need a mortgage professional to help you find the truly best loan for you.

Show What Should You Do?

You as a consumer need to look at two things when considering a mortgage loan

• The front end costs associated with obtaining the loan, not just those deemed pre-paid finance charges, and thus included in the APR calculation
• The interest rate, and the total cost of the loan over time.

Here is a Comparison of two different mortgages, both 30 year fixed rate mortgage.

The first mortgage has an APR of 5.03%, and the 2nd has an APR of 5.25%.  So, if you were to choose a loan simply based on the APR the typical choice would be the 1st mortgage; however, if you will be staying in the home less than 90 months (most loans are only held for 60 months) then the best choice is Loan 2, because the total cost is cheaper.

Make sure you are dealing with a mortgage professional that doesn’t just throw rates and fees at you over the phone. I’ll take the time to prepare a total cost illustration and determine that the loan you select meets your long term objective.

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