Category: Loan Origination

What is Mortgage Insurance and Can I Cancel it?

Posted on by Emily Andrews

What is mortgage insurance?

Mortgage insurance protects the lender in the event the borrower defaults on the loan. Defaults include failure to make payments because of death, medical bills and job loss. Mortgage insurance can be provided by a private mortgage insurance company (PMI) or by a government agency such as FHA or VA.

How can I benefit from mortgage insurance on government-backed loans?

The FHA provides borrowers with the opportunity to purchase their home with a smaller down payment and/or lower credit score (compared to conventional loans) in return for the borrower paying mortgage insurance.

How do I pay for private mortgage insurance? Can this be added into my mortgage payment?

Yes! There are different types of mortgage insurance that allow you to pay in different ways.

  • Monthly
    • No upfront premium
    • Versatile and maximum flexibility
    • May be canceled
    • Paid with monthly mortgage payment
  • Single
    • Premium paid upfront
    • Refundable and nonrefundable options
    • Paid by borrower, seller, builder or 3rd party
    • May be financed into loan amount
    • Portion may be refundable when cancelled
  • Split
    • Upfront premium combined with lower monthly renewal
    • Upfront premium may be paid by borrower, 3rd party or financed
    • May be cancelled
  • Lender-Paid
    • Paid by lender or 3rd party
    • Cost paid via higher interest rate and/or fees

I see that a few of these private mortgage insurance options offer the opportunity to cancel.  How and when can I cancel? 

You may ask your servicer to cancel the private mortgage insurance (PMI) once you have paid down the mortgage balance to 80% of the home’s original appraised value.  When the balance drops to 78%, the mortgage servicer is required to eliminate the PMI.

Also, insurance on the loan may be cancelled if a new appraisal is ordered through the servicer and demonstrates one of the following Loan-To-Value requirements:

  • A Loan-To-Original-Value ratio of 80% or less
  • A Loan-To-Current-Value ratio of 75% or less for loans ages between 2 and 5 years
  • A Loan-To-Current-Value ratio of 80% or less for loans aged greater than 5 years

If the age of the loan is less than 2 years, principal reduction payment must be made to bring unpaid principal balance down to 80% of the original property value.  In addition, a new appraisal must be ordered to verify the property has maintained its original value.

Additional requirements to cancel mortgage insurance:

  • The borrower submits a written cancellation request
  • The borrower has a good payment history
  • The borrower is current with payments
  • The borrower satisfies any requirement of the mortgage holder, such as:
    • Evidence that the value of the property has not declined below the original value
    • Certification that the borrower’s equity in the property is not subject to a subordinate lien

Want more information on mortgage insurance and how to cancel? Contact a First Home Mortgage loan officer today! Click Here

$1,500 Closing Cost Assistance in Rhode Island and Florida

Posted on by Emily Andrews

Looking to buy a home in Rhode Island or Florida?  This assistance may be perfect for you!  Rhode Island Housing and Florida Housing are both offering $1,500 in closing costs to qualified borrowers.  Rhode Island Housing is the state’s housing finance agency that ensures those who live or work in Rhode Island can secure a healthy, attractive home that meets their budget and needs.  Florida Housing provides a range of affordable housing opportunities for residents that help make Florida communities great places in which to live, work and do business.

Rhode Island Housing

In collaboration with Fannie Mae, Rhode Island Housing is offering a Summer Closing Cost Credit Program on all Fannie Mae purchase transactions.  This $1,500 credit is applied to the borrower’s closing costs (including prepaid charges and upfront) but may not be used for down payment.

Key Features:

  • Borrower’s income may not exceed 80% of applicable area median income ($57,680 is the current AMI for Rhode Island)
  • Applied only to Fannie Mae purchase transactions
  • For new loans starting July 20, 2017
  • Repayment not required

Florida Housing

Florida Housing will be giving borrowers $1,500 as a closing cost assistance grant.  These funds may only be used for additional closing cost assistance to first served, qualified borrowers on Conventional HFA Preferred and HFA preferred PLUS loans.

Key Features:

  • Credit qualifying income at 80% AMI or lower
  • Loan Application qualifying income (not based on household income)
  • Can be combined with HFA Preferred Loan with FL Assist DPA ($7,500, $9,000 total including closing cost grant)
  • Can be combined with 3% PLUS DPA product (3% of sales price plus additional $1,500 for closing cost assistance)

Contact a First Home Loan Officer today to learn more about RI’s and FL’s closing cost assistance before they run out!  Click Here.

First Home Mortgage Corporation is back at it again!

Posted on by Emily Andrews

The Scotsman Guide has released its 5th annual Top Mortgage Lenders of 2016.  First Home Mortgage has been ranked 43rd in Top Overall Volume and 25th in Top Retail Volume in the nation.

Scotsman Guide, the leading resource for Mortgage Originators, will release their list of the country’s Top Mortgage Lending Companies in their June 2017 residential edition.

To be eligible for such an achievement, First Home Mortgage needed to have the top loan volume from mortgages on one- to four-unit residential properties within the United States.  First Home has exceeded these qualifications to be one of the top-producing, best Lenders of the country.

Congratulations First Home Mortgage Corporation and its phenomenal employees who made this achievement happen!

 

Update: Scotsman Guide officially released their online rankings.  To see all of the rankings and results, click here!

The Scotsman Guide Top Originators of 2016

Posted on by Emily Andrews

The Scotsman Guide is one of the leading resources for Mortgage Originators.  Every year for the past eight years, the Scotsman Guide calculates the highest producing Loan Originators for each calendar year.  To be included in the Scotsman Guide Top Originators of 2016, Loan Originators must have had at least $40 Million in loan volume or 100 closed home loans.

According to Rania Efthemes, Editor in Chief of the Scotsman Guide Media, the top 500 Originators ranked on the 2016 Top Dollar Volume list closed 169,983 loans at a total volume of $59.8 Billion.  That is approximately $9 Billion more than 2015, and over 20,000 more loans that had closed. Amazing!

With this in mind, I am proud to announce that First Home Mortgage Corporation’s Alex Jaffe and Ryan Paquin were among the 500 Loan Originators named for Top Dollar Volume of 2016.  This is quite an achievement in this ever-changing industry.  Congratulations Alex and Ryan!

In addition, James Moran was listed as one of the top 25 Loan Originators in USDA volume (niche category).  Niches are rankings of Originators based on dollar volumes of loans financed by the Federal Housing Administration (FHA), the U.S. Department of Veteran Affairs (VA), and the U.S. Department of Agriculture (USDA).  These top 25 Loan Originators of the 2016 USDA volume list closed a  total of $219.5 Million in mortgages.  Congratulations James!

Way to go Loan Originators of First Home Mortgage Corporation.  Let’s continue to dominate and have a phenomenal 2017!

For the entire list of the Scotsman Guide Top Originators of 2016, click here.

Mortgage Executive Magazine- Top Originators from First Home Mortgage Corporation

Posted on by Emily Andrews

A BIG CONGRATULATIONS goes to First Home Mortgage Corporation’s top-producing Loan Officers of 2016.  These 50 individuals are among the top 1% Mortgage Originators of America, according to Mortgage Executive Magazine.  To qualify for this achievement, each Loan Officer was required to produce a minimum of $30 Million in 2016.  First Home Mortgage Corporation is proud to announce that 49% of the First Home Mortgage sales team were named among these top 1% Mortgage Originators.   FHMC was named 7th out of 123 companies that were surveyed as having the highest number of top 1% Loan Originators.

These remarkable, hard-working Loan Officers are:

Alexander Jaffe, Ryan Paquin, Scott Story, Marc Aymard, Peter O’Donnell, Heather Devoto, Michael Farrell, Darran Anthony, Derek Evans, Kari Story, James Moran, Gabe Tuvek, Bruce Rosenberger, Anne Borghesani, Carolyn Flitcroft, Tony Olmert, Neil Bourdelaise, Karen Dulmage, Todd Pede, Michael Nadeau, Salvatore Savastano, Ayaz, Rahemanji, Christopher Jordan, Gary Pierpont, David Toaff, David Strassner, Paul Nagel, Robert Mercer, Michael Taylor, Timothy Reinhart, John Savastano, Jake Ryon, Robert Schurr, Bill Payne, Jeffrey Halbert, David Licciardi, Meghan McDonald, Derek Schwarz, Darren Rickwood, Michael Archer, Sean Pierpont, Ann Flaherty, Jeffrey Douglas, Robert O’Connell, Evelyn Perez, Tony Pandolfo, David Black, Bruce Meyers, Travis Vollmerhausen

A second CONGRATULATIONS goes to Alex Jaffe who has been named one of the “Top 200 Mortgage Originators” by Mortgage Executive Magazine.

Congratulations Alex and the top Loan Officers of First Home Mortgage Corporation!

2016 Tax Deductions for Homeowners

Posted on by Emily Andrews

Purchased or refinanced a home in 2016? Find out the tax benefits available to you as a homeowner.

For most people, the annual task of completing income taxes is about as exciting as a visit to the dentist’s office. BUT…homeownership typically means increased tax deductions, which are generally considered to be a good thing.

Use the information below as a reference to help you determine which items from last year’s closing may be written off on your 2016 income taxes.

Write Off Items for 2016 Taxes

The list below pertains to primary or vacation residences (for investment properties, please see IRS Publication 527). All the items listed below can be found on the Closing Disclosure signed at settlement. This may help you save money in 2017!

Points Paid on a Home Purchase in 2016 – Closing Disclosure Page 2, Section A

If any origination charges include points paid in exchange for a lower interest rate, they may be fully deductible. **Other fees in this section – application, underwriting, processing, etc.- may not be deductible.

Points Paid on a Mortgage Refinance in 2016 – Closing Disclosure Page 2, Section A

Points paid to your mortgage company in exchange for a lower interest rate may be deductible, BUT there is a distinction between could be deductible this year, and what is deductible over the life of the loan:

  • Points paid on the portion of the mortgage proceeds that were used for home improvements may be deducted this year.
  • Points paid on a rate term refinance or any portion of the mortgage not used for home improvements must be spread out over the life of the loan. **As outlined above, other fees itemized in this section may not be tax deductible.

Property Taxes (actual and pro-rated) – Closing Disclosure Page 2, Section F

Property taxes itemized in this section may be tax deductible in the year they are paid. However, property tax escrows in section G may NOT be tax deductible until they are actually paid by your mortgage company to the appropriate municipality, (city or county).

Pre-paid Interest – Closing Disclosure Page 2, Section F

Pre-paid interest is typically collected at closing to square the borrower(s) away through the end of the month. Because this is a pro –rated part of the payment to begin the amortization cycle in arrears, the interest noted in this section may also be deductible.

Upfront Mortgage Insurance & VA Funding Fee – Closing Disclosure Page 2, Section B

If your adjusted gross income is $109,000 or less, you may be able to deduct upfront mortgage insurance on FHA and conventional loans as well as the VA Funding Fee.

This list does not include all of the property taxes paid throughout the year or all of the mortgage interest that will be included in the 1098 form(s) that will be sent by your mortgage servicer(s).

**PLEASE NOTE: THIS OVERVIEW IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL, TAX, OR FINANCIAL ADVICE. PLEASE CONSULT WITH A QUALIFIED TAX ADVISER FOR SPECIFIC ADVICE PERTAINING TO YOUR SITUATION. FOR MORE INFORMATION ON ANY OF THESE ITEMS, PLEASE REFERENCE IRS PUBLICATION 936.

9 Ways to Avoid Mortgage Sabotage

Posted on by Emily Andrews

Homebuyers are often not aware of how an innocent transaction such as making a credit card purchase or moving cash from one bank to another can jeopardize the mortgage pre-qualification process. Please be aware of the common areas that need special attention:

  1. Review your credit report:
    The best way to get a jump start on your mortgage process is to know what your creditors are saying about you and the accuracy of the information! Review the report with your Loan Officer and report any inaccurate or omitted information.
  2. Credit cards/new debt:
    Do not apply for any new credit of any kind! That creditor will show up on your credit report, and the lender will have to verify there is no new outstanding debt. If you are planning to add a debt or pay debts off for closing, wait until you have spoken with your Loan Officer. A paid debt may not show on your credit report, and the lender will have to re-verify each creditor’s current balance, which takes time. It may be possible to pay off those debts at closing, with no effect to your approval process.
  3. Don’t move cashing/savings around:
    Lenders have to verify all funds for closing, including the source of those funds. Moving assets around can create a paper trail nightmare. The best advice is to leave everything where it is, even if the purpose of the move is to pool your funds for buying the house. After your accounts have been verified and the lender give you an “ok”, you can consolidate your accounts if needed.
  4. Large deposits:
    All sources of funds for the transaction must be verified. The lender will be looking at any large deposits into your asset accounts (checking, savings, money market, etc.). You should be prepared to document the source-such as a copy of the paycheck, bonus check, money from the sale of an asset, etc.
  5. Do not pack financial papers:
    Keep all pages of your tax returns, along with any W-2’s, 1099’s, or K-1’s and any other financial papers from the past two years in a handy place. If you sold a home in the past two years, have your (HUD-1) Settlement Sheet handy. You may have to provide more items, which your Loan Officer will outline.
  6. Become a paper hound:
    Save all pages of all bank statements and pay stubs from now until closing. The lender will need these, so please make sure you keep them handy!
  7. Changing jobs: 
    While a different career opportunity can be an exciting venture, it’s best to wait until the mortgage process is complete if possible. A new position could derail the financial information you originally provided and jeopardize loan approval. If you need to change jobs, make sure you let your Loan Officer know so adjustments can be made.
  8. Gifts:
    Gifts from relatives are very common in the purchase of a home. However, there are specific ways a gift must be handled to avoid a paper trail nightmare. If you are receiving a gift, hold off on accepting the funds until you have spoken with your Loan Officer. There is a Gift Letter form you may use which provides instructions.
  9. Selling something?
    If you are selling an asset such as a car, an antique, or baseball card collection to come up with the cash for closing, make sure you document the asset. For example, if you purchase a car, obtain the check from the buyer, car title and a bill of sale. You may need to get a certified appraisal for the item.

When in doubt, always consult your Loan Officer. He or she will help guide you through the process and answer any questions you might have along the way.

Which mortgage is right for you?

Posted on by Emily Andrews

As a home buyer, you may have more options than you realize to finance your investment. Figuring out which loan suits your needs requires research. Your Loan Officer will assess your situation and walk you through all of your choices. However, it never hurts to have a head start by knowing the basic categories of home loans.

Fixed Rate or Adjustable Rate Mortgage

A main deciding point during the loan process is the type of interest rate you prefer. You can have a fixed or adjustable interest rate. Here are the highlights of each loan type to help you decide.

Fixed-Rate: this mortgage is considered the “standard” choice for most borrowers. It allows you to pay off your home loan in a set amount of years (usually a term of 10, 15, 20 or 30) with the same interest rate. Although overall housing market rates may go up or down, your specific rate will be unchanged. Usually, a shorter term comes with a lower interest rate. For example, a 10 year fixed will have a lower rate than a 30 year fixed. This is an attractive choice for those looking for stability. You will know, for the most part, what your monthly mortgage payment will be. If rates start to drop significantly, you could have the option to refinance.

Adjustable-Rate (ARMs): while a fixed-rate stays true to its name, so does an adjustable-rate mortgage. ARMs offer a lower initial interest rate, but it might fluctuate after a certain period of time. A hybrid ARM is represented by fractions, such as 5/1, indicating the rate will adjust after 5 years, then continue to reset each year. Since the initial lower rates are appealing, ARMs are best for borrowers who don’t plan on staying in their home for long.

Conventional or Government-Backed Loan

The next step in selecting your mortgage is whether you quality for a conventional or government-backed loan. The main difference between the two is the institution which insures your loan.

Conventional mortgages are insured by private companies, while government-backed loans are subsidized by the government. FHA, VA, and USDA loans are all government-backed loans and available to eligible borrowers. This means there are certain guidelines home buyers must meet in order to receive funds. These loans usually help those with limited savings for a down payment, served in the military, or are looking to buy in a rural area. Your Loan Officer is well versed on these guidelines and can determine whether you qualify for a government-backed loan.

Conforming or Jumbo Loan

One of the final choices you can face as a borrower is deciding between a conforming or jumbo loan. These loan types concern the location and price of the home you are shopping for.

Conforming loans follow Fannie Mae and Freddie Mac’s conforming guidelines, which include maximum loan amount – how much you can borrow to purchase your home. These loan limits differ depending on where you are located and can change from year to year. In some counties the loan limit for a single unit is $417,000, while in others it can be upwards of $625,500.

Jumbo loans allow higher loan amounts not allowed by standard confirming programs (Fannie and Freddie). These loans are also known as “non-conforming” mortgages. If you are in the market for a  home that is priced higher than your county loan limit, you might want to ask your Loan Officer about a Jumbo loan. The requirements to qualify for this type of loan are different than a conforming loan, so it’s important to discuss whether it is fitting for your situation and home buying goals.

Review the highlights of the different loan types here, and become familiar with mortgage terms as you start the loan process. Your Loan Officer is available for any questions you may have.

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