Interest Rate and Annual Percentage Rate (APR) – What you need to know.
Every loan officer who has done their job for more than a week or so has heard the question. Some loan officers avoid it altogether by simply not sending the Truth In Lending (TIL) until they absolutely are required by law to do so. Why? Because in the top left corner in prominent font is a number that confuses almost every borrower and non-financial insider – the Annual Percentage Rate (APR).
The APR disclosure requirement was sort of a good idea when it came out back in 1968 when there was pretty much just one type of home loan: a 30 year fixed interest mortgage. With time and exotic mortgage solutions the APR became highly obfuscated and even a tool of obfuscation.
Georgia Dream Disaster Expansion – Down Payment Assistance
The Georgia Dream down payment assistance plan has been extended to higher loan amounts and higher income amounts in the Fall and Winter of 2009. Call me on my cell phone for specific examples of the augmentation to this program – that’s 678-439-8683.
Here is some information directly from Georgia DCA about the Georgia Dream Down Payment Assistance Plan.
Higher Income Limits!
Higher Purchase Price Limits!
No First Time Home-buyer Requirement!
In the 21 counties designated as Federal Disaster Areas.
The 21 Georgia counties are:
Carroll, Catoosa, Chattooga, Cherokee,
Cobb,Crawford, Dawson, DeKalb, Dooly, Douglas, Fulton, Gwinnett, Heard, Houston, Newton, Paulding, Peach, Rockdale, Stephens, Taylor and Walker.
For a limited time ANY HOME BUYER in these counties may qualify for Georgia Dream products with the following special guidelines:
You DO NOT have to be a First Time Home Buyer (For a Georiga Dream? First Mortgage Loan combined with NSP or “PLUS” down payment assistance)
Higher purchase price limits
Catoosa, Chattooga, Crawford, Dooly, Houston, Peach, Stephens, Taylor and Walker – $250,000
Carroll, Cherokee, Cobb, Dawson, Dekalb, Douglas, Fulton, Gwinnett, Heard, Newton, Paulding and Rockdale – $300,000
Higher Household Income limits
Catoosa, Chattooga, Crawford, Dooly, Houston, Peach, Stephens, Taylor and Walker
1 or 2 persons $73,000
3 or more persons $85,000
Carroll, Cherokee, Cobb, Dawson, Dekalb, Douglas, Fulton, Gwinnett, Heard, Newton, Paulding and Rockdale
1 or 2 persons $86,000
3 or more persons $100,000
Marietta, Georgia – Today Show's Top 4 Pick In America
Looking for a great place to live with some of the best values in America? Look no farther because I am sitting in it right now keyboarding this post to you! On October 6th NBC’s Today Show with Al Roker highlighted Marietta, Georgia as the number 4 place in America to buy a home and get the most “bang for your buck”.
I happen to agree with them because I live here, have lived here my entire life except a little college stint, and I am very actively involved in my community and lending here. During the boom builders constructed some very beautiful homes which in turn emptied a number of existing homes and left us with a surplus of larger, newer homes. In fact on October the 12th I wrote about “My Home, Marietta, Georgia” which was a featured article here on Active Rain.
Finance Challenge: Reserves – the right amount, the right type, the right timing
So you have the down payment – sourced and seasoned just like it needs to be. All saved up, stored away nicely in the bank for the last 60 days, and ready to be invested into a home. The closing costs are there, too, and all perfectly documented for the last two months. Great job! Your down payment and closing costs are in order. This is something to be proud of!
It’s always something that needs to be covered right up front. When the loan officer is taking the application and they know what it requires for down payment and the approximate closing costs they also need to calculate in the speficied amount of reserves. What are reserves? Straightforward it is enough to conver the principal, interest, taxes, and insurance (at a minimum).
Most loans require two months of reserves on the purchase of a primary residence and as much as six months (PITIA) on investment property purchases. But it’s not enough they be available they must also be sourced and seasoned just like the down payment and closing costs.
Here’s a little good news, though: reserves don’t have to be in cash form. In fact 100% of the following can be counted for reserves:
- Stocks, bonds, mutual funds, U.S. government securities, and other securities that are traded on an exchange or marketplace general available to the public (such as NYSE, NASDAQ, Midwest SE, CBOT, or OTC) whose price can be readily verified through financial publications.
- Cash-value life insurance (rather than face-value) that is verified. The borrower must be the owner of the policy and not the beneficiary.
- Personal IRA and SEP-IRA accounts that are owned by the borrower and verified.
- The borrower’s portion of undistributed trust funds.
Additionally a portion of the value of the following may be counted as reserves:
- 401(k), KEOGH, 403(b) and other IRS-qualified employer plans may be counted as reserves; however, to account for withdrawal penalties and estimated taxes, 70% of the vested amount of the account should be used to determine the borrower’s available reserves. The borrower will be required to provide documentation that the funds are accessible for withdrawal. If the retirement account only allows for withdrawals in the event of the borrower’s employment termination, retirement, or death, these funds should not be considered as reserves.
- Savings bonds may be counted at 100% of face value if mature. If the bonds are not mature, the amount counted towards reserves is based on the redeemable value at the time of underwriting.
Ask your Loan Officer about reserves. If you are an agent and want help understanding these please never hesitate to call me or have your client call me. I’m more than happy to help even if I do not have the ability to assist in your area.
Ken Cook – Nationwide Specialist – Information/Marketing – FHA Home Loans – 678-439-8683
Finance Challenge: Reserves – the right amount, the right type, the right timing
So you have the down payment – sourced and seasoned just like it needs to be. All saved up, stored away nicely in the bank for the last 60 days, and ready to be invested into a home. The closing costs are there, too, and all perfectly documented for the last two months. Great job! Your down payment and closing costs are in order. This is something to be proud of!
It’s always something that needs to be covered right up front. When the loan officer is taking the application and they know what it requires for down payment and the approximate closing costs they also need to calculate in the specified amount of reserves. What are reserves? Straightforward it is enough to cover the principal, interest, taxes, and insurance (at a minimum).
Hear Me Clearly: First Time Homebuyer's Must Qualify and Offer NOW!
By NOW! I mean if you have not called a loan officer to get qualified, found a property and made an offer you’re dangerously close to missing the First Time Home Buyer’s Tax Credit. I know what you hear in your mind, “it’s good through the end of November.” You would, of course, be correct in so saying. Your correctness would be equivalent to leaving New York City for a trip to Tokyo to see your best friend’s wedding which happens at 5PM your time and you are getting on a jet at Noon your time the day of the event. In other words it’s “possible” you can make it on time but not very likely with the available equipment.
I Found Me! (At my new job)
While for the last several years I have been blogging as partner and “President” of a busy but small mortgage lender licensed in Georgia, Florida and for a time North Carolina things have changed mightily over the last few weeks. Many of you knew I was considering mothballing my Novation Mortgage and indeed had spoken to some about various opportunities around the industry.
Early on in the change process I decided if I were to continue with my experience in the mortgage industry it would be at Regional Director or above or good old Loan Officer. Several people contacted me through Active Rain or as a result of Active Rain I should say and others with whom I interviewed rapidly found my 3 plus years of blogging here as well as proliferated around the Internet. Some liked the idea and others did not – understandably – as keeper of the keys to my own company I was often more outspoken than I will be henceforth.
First Time Home Buyer's Tax Credit to be Extended?
Probably so, the House of Representatives voted on the 8th to give service members who served a minimum of 90 days overseas an extension on their ability to claim the $8000 federal tax credit for first time home buyers. TBWS reported the extension of 6 months based on Housing Wire reports while US News reported a 12 month extension.
Here’s the official story from Congressman Mark Schauer:
WASHINGTON, Oct 8 - Today, Congressman Mark Schauer voted to pass two key measures for our American veterans. The Service Members Home Ownership Tax Act (H.R. 3590), which passed with bipartisan support today, will extend the deadline for taking advantage of the first-time homebuyer tax credit under the American Recovery and Reinvestment Act for qualified service members by one year. Today’s House passage of an amendment to the Veterans Health Care Budget Reform and Transparency Act (H.R. 1016) will help advance the legislation towards a Presidential signature. The bill authorizes Congress to approve investments in Department of Veterans Affairs (VA) medical care one year in advance to provide more predictable health care funding for veterans.
If you have questions or comments about the First Time Home Buyer’s Tax Credit, FHA, VA or any other real estate finance questions I will be happy to answer. Telephone me at 678-439-8683
First Time Home Buyer's Tax Credit to be Extended?
Probably so, the House of Representatives voted on the 8th to give service members who served a minimum of 90 days overseas an extension on their ability to claim the $8000 federal tax credit for first time home buyers. TBWS reported the extension of 6 months based on Housing Wire reports while US News reported a 12 month extension.
Here’s the official story from Congressman Mark Schauer:
WASHINGTON, Oct 8 - Today, Congressman Mark Schauer voted to pass two key measures for our American veterans. The Service Members Home Ownership Tax Act (H.R. 3590), which passed with bipartisan support today, will extend the deadline for taking advantage of the first-time homebuyer tax credit under the American Recovery and Reinvestment Act for qualified service members by one year. Today’s House passage of an amendment to the Veterans Health Care Budget Reform and Transparency Act (H.R. 1016) will help advance the legislation towards a Presidential signature. The bill authorizes Congress to approve investments in Department of Veterans Affairs (VA) medical care one year in advance to provide more predictable health care funding for veterans.
If you have questions or comments about the First Time Home Buyer’s Tax Credit, FHA, VA or any other real estate finance questions I will be happy to answer. Telephone me at 678-439-8683
My Town: Marietta, Georgia – Cobb County
Fifty years ago this past August I was born in the same hospital where decades later my children would be born and I would say good-bye to both of my parents. I remember when there was no Interstate highway, only six government high schools and the fire department was all volunteer. That was before my fellow Cobb County residents Ty Pennington, Travis Tritt or Julie (Julia) Roberts were born.
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Daily Rates for Qualified Buyers
Today |
Last Week |
|
| 30 Year Fixed | 3.56% | 3.61% |
| 15 Year Fixed | 2.87% | 2.92% |
| 5/1 ARM | 2.34% | 2.51% |
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