How Does Co-signing Affect Your Ability To Buy A Home?

There are many situations where getting an FHA home loan can be complicated by circumstances. One good example– a borrower who has co-signed with a family member or friend on another financial obligation such as a home, vehicle, or student loan. One common question on topics like these: “How will cosigning affect us if we want to buy a home soon using a FHA or Conventional loan?”

FHA loan applicants in this case would have what’s described as a “contingent liability”. That means basically that the borrower isn’t paying the other person’s debt, but could be obligated to pay under certain circumstances. And that could be counted in the borrower’s debt to income ratio, depending:

HUD 4000.1 has the rules for contingent liability, stating that the lender must, “include monthly payments on contingent liabilities in the calculation of the Borrowers monthly obligations” unless the lender is able to verify and obtain proof, “that there is no possibility that the debt holder will pursue debt collection against the Borrower should the other party default or the other legally obligated party has made 12 months of timely payments.”

Contingent liability is an important issue when it comes to FHA loan approval. If you are considering an FHA home loan in the future, it’s good to think seriously about co-signing and whether or not being a co-signer on another person’s loan could interfere with your chances at loan approval. As we can see from the above, co-signing is not necessarily an automatic barrier to getting an FHA mortgage.

But your lender will definitely need proof as described above.

Timing could be the key– If you have only recently co-signed on another person’s loan, the 12 months worth of on-time payments won’t be available as a matter of record to help the lender justify approving your loan. That is very important to consider when reviewing your options.

If you have been a co-signer for longer than 12 months and the payment record is solid, you’re a lot closer to the goal of FHA loan approval. In cases where there might have been a missed payment by the other party, it’s best to wait until that 12 month period as elapsed (with on-time payments) before applying for a new home loan.

Tips For Your First Meeting With A Mortgage Lender

Congratulations on deciding to become a homeowner. Here at Mortgage Solutions LP, we understand that buying a house is a huge commitment and can be a daunting experience. As your Kingwood mortgage lender, we have made a list of tips to help you prepare for your first meeting with your mortgage lender.

  1. Be prepared with documentation

    At your first meeting, it is important that you bring all the necessary documentation. This includes but is not limited to, your personal ID, social security number, proof of income, proof of employment, bank account statements, and your last two years of IRS tax returns.

  2. Have savings

    It is important that you show proof of your savings. When you buy a house you will generally have to pay a down payment. This is typically between 3% to 20% of the overall purchase price. What borrowers generally do not know is that you cannot borrow the money for your down payment from friends or family. Having proof of savings will show that you can afford a down payment and are financially ready to take on the responsibility of homeownership.

  3. Be honest

    As your Woodlands mortgage lender, we understand that it is not uncommon for people to have blemishes on their financial record. Do not try to cover it up. Be honest if you have ever filed for bankruptcy, have a low credit score, or have a lot of debt. We will work as best we can to overcome these hurdles and still try to find you the best products available. We have helped many clients with problem credit, increase their credit scores.

  4. Property Details

    Make sure you have as much information as possible about your new potential property. This includes all the real estate taxes, flood zone status, and any potential repairs that may be required.

Whether you are looking for a Cypress mortgage lender or are wanting a home loan in Pearland, contact Michael Durr today at 281-348-9899 to get started.

What is Mortgage Insurance?

If you are trying to obtain a mortgage with a small down payment (less than 20% of the total value of the loan), you may be required to pay for mortgage insurance.

Mortgage insurance is a type of insurance that is designed to protect home loan lenders should the borrower of the funds be unable to make the required payments on their mortgage. This could be because the borrower is no longer in the same financial situation and does not have the financial resources to pay or because the borrower has passed away. In either of these events, a mortgage insurance policy will ensure that the lender receives at least a portion of the difference between the funds they lent to the borrower and the amount the borrower has already paid back.

Mortgage insurance is typically required for borrowers that are borrowing 80% or more of the total loan value because mortgages with such high loan-to-value ratios are more likely to go into default.

Types of Mortgage Insurance
Depending on what type of mortgage you are obtaining – Conventional, FHA, VA, USDA, etc. – there are different types of mortgage insurance that may be required by your lender.

In some cases, private mortgage insurance, also known as PMI, may be required. PMI is a mortgage insurance policy through a private company. Initial fees and monthly premiums are typically lower with PMI but can vary based on down payment amount and the borrower’s credit.

In cases where the borrower is obtaining an FHA loan to purchase their home, the borrower will be required to pay for mortgage insurance through the FHA. FHA mortgage insurance does not vary much from borrower to borrower, as credit does not affect the cost of the policy.

Paying for Mortgage Insurance
Mortgage insurance can be paid as a monthly premium that can be added to your regular mortgage principal payments or it can be paid upfront as a lump sum.

The good news is that once you have paid off a certain portion of the principal balance of your mortgage, you will most likely be able to cancel your mortgage insurance policy.

If you would like to know more about mortgage insurance and whether you may be required to obtain a mortgage insurance policy for your loan, give the Kingwood Mortgage Guys a call today! We are always happy to help!

My Interview – Getting to Know Your Local Businesses – Kingwood

I had the honor of being interviewed for kingwood.com as a part of their series dedicated to getting to know more about the professionals who are involved in local businesses. As the original Kingwood Mortgage Guy, I am proud to have built the Kingwood Mortgage Guys from the ground up and to be able to share more about myself and my business with the local community.

I have lived with my wonderful wife and children since 1990. I made the decision to enter the mortgage industry as a loan officer and branch manager in 1997. During my time in this position, I began contemplating how I could best serve the people of Texas by finding them affordable options for their home financing needs. With this goal in mind, I started my own consulting business in order to better focus my time and energy on my clients and the mortgage lending process.

As you will see from the article that was posted on the Kingwood website, I concentrate the majority of my business on residential financing for purchase and refinancing loans. Within this focus, I am proud to offer my clients a variety of financing options that include, but are not limited to, Conventional, Jumbo, Cash Out, FHA and VA loans.

I am proud to have worked so hard to be in the position I am in now – a position that allows me to work one-on-one with each and every client. When my clients have difficulty qualifying for a loan, I provide my knowledge and experience as we work together to create a plan of action to help them get approved for their mortgage in the future.

My favorite part of the business I am in is being there to witness the joy on my clients’ faces when they are approved for their mortgages. This is especially true when their journey has been a long one that we have pushed through together.

To find out more about special promotions I am working on, the bi-weekly webinars I host, and my vision for the future of my company, check out the complete article here.

Loan Officers – What Should Realtors Expect?

6 Things Realtors Deserver in Their
Loan Officers

During a recent conversation I had with one of my trusted real estate partners, I discovered how frustrated she was with the service she has been receiving from a particular title company closing agent. We have both worked with this person in the past and are both now disappointed in the lowered level of service we have been receiving as of late.

Our conversation quickly turned into more of a discussion as to what we think could explain such decreases in service levels from the loan officers we work with. Could it be that they have gotten too busy, or that their support staff has changed?

We realized that, regardless of what had changed on their end, there are still certain things that Realtors deserve from their loan officers.

If you have no complaints about your current loan officer, this post is most likely not for you. However, if you have had some issues with your chosen mortgage professional lately, it might be time for some change.

The following list shows 6 things that every Realtor deserves from their loan officer:

1. On time closings
2. Weekly updates on the progress of the loan
3. Competitive interest rates
4. Closings on tough loans (Think low FICO)
5. Availability
6. Co-Marketing

Examples of marketing that Realtors and loan officers can do together are joint mortgage rate flyers and email video campaigns. They can also help each other with Search Engine Optimization by linking between each other’s websites.

If you are no longer happy with the loan officer you are currently working with, give me a call! I look forward to exceeding your expectations of what a loan officer should provide to their partners.

Kingwood Mortgage Guys | 1521 Green Oak Pl. # 197 Kingwood, TX. 77339 | Call 281-348-9899 Ext. 101 | Ask for Mike

The Woodlands Mortgage – October Market Update

The Houston real estate market has taken a large hit following the devastation caused by Hurricane Harvey. Many people have lost their homes and valuable possessions, and the market has lost its great traction as we were previously maintaining record-breaking trends.

Of course, it is too soon to judge the full impact of this natural disaster’s impact on our local real estate markets, but we have already seen some significant changes in statistics across the board.

The most recent report released by the Houston Association of Realtors showed that single family homes sales fell by over 25%, marking the first time single-family home sales have dropped in nearly a year.

The inventory of home that are currently listed on the market has gone up slightly as everyone is taking the time to assess the damage to their own homes and make decisions about what to do and where to go next. The current 4.4 month’s supply of homes on the market is expected to decrease quickly as more families who have lost their homes enter the market to start purchasing new homes.

The price of Houston homes has remained seemingly unaffected by recent events, with the average sales price of single-family homes rising to $296,418, an increase of 2.6%.

As mortgage professionals who live and work in Houston and the surrounding area, we are dedicated to helping our fellow Houstonians as we work together to navigate this incredibly difficult situation.

If you have any questions about your financing options following Hurricane Harvey and would like to discuss your situation with a qualified professional that has your best interests in mind, give The Kingwood Mortgage Guy a call today!

If you are in need of temporary housing while you figure out your next move, visit www.har.com/temporaryhousing or contact the Houston Association of Realtors.

Source: http://www.har.com/content/mls

The Three Phases of Credit Score Recovery?

What Phase Are You In?

1. You are currently late on existing credit bills and you are struggling to match your income to the amount you are obligated to pay each month.

2. You have recently let bills go to collections and you are operating on cash.

3. You have gone through the tough income problems, and you are coming back out on top. You have begun to stabilize your income and your outgo. You may have even started to save some money and you are tired of paying rent.

If you are in phase one and two, now is not really the time to begin your credit restoration.

When You Walk Away From Credit

A lot of times, when you walk away from credit, the only thing that is left on your credit report is the bad stuff that happened previously – the collections and the things you didn’t pay. Unless you do something about that, your credit score will stay low because there is no new, positive input.

Not Much To Do Until You Stabilize

If your income is not stable and consistent you should not worry about clearing up your credit yet. If you start working on your credit, only to have another series of late payments, it will only take longer to fix.

Give me a call today for more information about repairing your credit score!

For Home Buying Couples Who Have Good and Bad Credit Profiles

For Home Buying Couples Who Have Good and Bad Credit Profiles

This video discusses home loan scenarios involving spouses with different credit profiles. In other words, when one spouse has good credit and the other does not.

Scenario #1

In this scenario, the husband has a steady source of income and good credit, but the wife has poor credit.

Conventional Financing Rules
The best option for this situation is to take out the loan in the husband’s name. In this case, the wife would be listed as a non-borrowing spouse, so there is no need to pull her credit, and the loan will be based on the husband’s income and credit score. The wife will still be 50% owner of the property.

FHA Financing Rules
The rules for FHA financing are a little different than those of conventional financing. In this case, it is still the best option to do the loan in the husband’s name with the wife listed as a non-borrowing spouse. The loan will be based on his credit score, but the debts of both the husband and wife will be considered in the debt to income ratio. Judgments and collections for both parties will be considered and even though the loan will be based only on the husband’s credit, the wife’s credit will still need to be pulled. The wife will still own 50% of the property.

Scenario #2

In this scenario, the wife has a steady source of income and good credit, but the husband has poor credit.

Conventional Financing Rules
The best option for this situation is to take out the loan in the wife’s name. In this case, the husband would be listed as a non-borrowing spouse, so there is no need to pull his credit, and the loan will be based on the wife’s income and credit score. The husband will still be 50% owner of the property.

FHA Financing Rules
The rules for FHA financing are a little different than those of conventional financing. In this case, it is still the best option to do the loan in the wife’s name with the husband listed as a non-borrowing spouse. The loan will be based on her credit score, but the debts of both the husband and wife will be considered in the debt to income ratio. Judgments and collections for both parties will be considered and even though the loan will be based only on the wife’s credit, the husband’s credit will still need to be pulled. The husband will still own 50% of the property.

For more information about your loan options if you and your spouse have different credit profiles, contact Mike Durr, The Kingwood Mortgage Guy, at (281) 348-9899!

Help For Hurricane Harvey Victims – FHA 203(h)

Mortgage Insurance For Disaster Victims

Section 203(h) of the FHA program allows the Federal Housing Administration to insure mortgages that have been obtained through qualified lenders by victims of a catastrophe, such as the recent hurricanes Harvey and Irma. This program has been designed to help victims that need to rebuild their homes or purchase a new home in the aftermath of a natural disaster.

Purpose of the 203(h) Loan

Through Section 203(h), the Federal Government is able to help victims that are located within areas that have been declared disaster areas by the President. Section 203(h) makes it easier for residents of such areas to get mortgages and re-establish themselves as homeowners.

Type of Assistance

Section 203(h) provides assistance to those who are located in such an area and have either lost their homes entirely or whose homes have sustained enough damage that reconstruction or replacement of the home is necessary.

Financing

There is no down payment required for Section 203(h), meaning the loan can be 100% financed. The closing costs, however, as well as other prepaid expenses, are still the borrower’s responsibility. There are still a few options for these fees as they can be paid through premium pricing or in cash by the borrower or by the seller. The seller will be limited to 6% if they agree to take responsibility for these costs. FHA Upfront and monthly mortgage insurance will both be collected. The HUD sets the limit for each county in regards to maximum loan size for Section 203(h) loans.

Eligibility

Any homeowner whose home has been either destroyed or significantly damaged in an area that has been declared a disaster area by the President is eligible to apply for mortgage insurance under this program. The application for Section 203(h) must be submitted within one year of the disaster declaration by the President.

If you have been affected by Hurricane Harvey and would like more information about your mortgage options, give Mike Durr – The Kingwood Mortgage Guy – a call today at (281) 348-9899 or visit him at 1521 Green Oak Place, #197, Kingwood, TX, 77339.

NMLS# 318989

Kingwood Mortgage – How to Raise Your Credit Score


What We Will Cover


– How did you get where you are
– The different paths you have moving forward
– How to know if you are ready
– How to deal with collections
– How to deal with charge-offs
– How to deal with judgments
– How to deal with disputes

How Did you Get Where You Are?

We have found that most people with low credit scores have had some form of financial trauma in their financial past. No matter how recently this financial trauma happened, it can still be a difficult thing to overcome.

Examples of these financial traumas are health challenges, divorces, or lost jobs.

If you currently have a low credit score, you are most likely in one of these three categories:
1. You are currently late on your existing debts, which can include credit card bills, and you are struggling to cover the amount you are obligated to pay back.
2. You have let your bills go into collection and you are now operating on cash.
3. You have begun to stabilize your income to debt ratio and may have even started adding to your savings. At this point, most people become tired of paying rent.

How to Know if You Are Ready

You won’t be able to do much until you can stabilize your income. As long as your income remains inconsistent, clearing up your credit shouldn’t be a priority. Starting to work on your credit now will only put you further behind when your next set of payments are made late.

You are ready to start working on your credit once your income is stabilized. Once you have accomplished this, you can start by getting a secured credit card, possibly two. It is important to only use this card sparingly, keeping the balance well below your limit. We recommend spending less than $50 a month. It is also important to pay off most of your balance each month. You won’t get points for a zero balance, but you also don’t want to start racking up a large bill. We suggest paying off all but $5 – $10 a month.

How to Deal with Collections

The answer to this will vary based on the amount of the collection and how long it has been open. If the debt is two years or older, don’t do anything. If the debt is less than two year old, you should attempt to settle the debt or work out a payment plan.

How to Deal with Charge-Offs

If you don’t have the money to settle or work on paying off your debts, charge-offs may be an option. A charge-off refers to a debt that the lender is no longer attempting to collect. A charge-off does have a negative effect on your credit socre, so this option is not for those who believe they will most likely be able to settle or pay off the debt using a payment plan.

How to Handle Judgments

Judgments are a nasty collection practice that can absolutely have a negative impact on your credit score and can even be a deal breaker for a home loan. To qualify for your loan, you will need to ensure the judgment is completely resolved and obtain documentation from the county stating as such.

How to Handle Disputes

Disputes are a way for borrowers to challenge what has been reported by the creit bureau on their creidt report. This is a useful way to remove incorrect information that is listed on your credit report and is negatively effecting your credit score. The credit reporting agency will have 30 days to investigate your dispute claim.

To find out more about how to raise your credit score from 500 to 700, contact Mike Durr, The Kingwood Mortgage Guy, at 281-348-9899!