Justin McHood

Loan Modifications in Arizona: Are They Possible?

June 29, 2011 By Justin McHood 1 Comment

Is it possible to get a loan modification in Arizona?

Kind of.

It is actually possible, but I haven’t really seen it happen all that much. In fact, according to Kevin Hardin from Thomson Law, one of the most common problems with getting a loan modification done is that it might not be the best solution in the first place for a homeowner.

There are many different situations when it comes to people and their homes – and there is no one-size-fits-all solution. Some people may have a situation where foreclosure makes the most sense, some may be in a situation where a loan modification can make sense and many will be in a situation where a short sale makes the most sense.

Regardless of which of the “bad three” options makes the most sense for your situation, one thing makes perfect sense regardless – hire the best real estate attorney you can.

Here in Arizona, we refer people all the time to Thomson Law and here is a little bit of information from the managing director there about what you need to know about loan modifications.

#1: Who really “owns” your loan?

Here is just a little more information about some of the things Hardin covers when talking about loan modifications and what to expect as you attempt to get your lender to modify your loan.

Arizona Loan Modifications: 7 Things To Know

Who really owns your loan? It may not be who you think
Your permanent loan modification isnt permanent?
A forbearance isnot the same as a principal reduction
Once you are underwater in your mortgage, it is virtually impossible to no longer be underwater
Are loan modification payments current payments?
Does a loan modification save your home?
How long before you can become a homeowner again?

Have more questions about what is possible when it comes to loan modification here in Arizona? Be sure to contact Kevin and learn what your options are.

Thomson Law PLC
Kevin Hardin, Managing Director
2701 East Camelback Road, Suite 150
Phoenix, Arizona 85016
602.774.3757

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Vets: Be Careful Who You Take Mortgage Advice From

May 10, 2010 By Justin McHood Leave a Comment

I’ve seen a lot of tips by so-called mortgage industry experts giving Vets advice on how to buy a house. So I’m here to set the record straight.

Tip #1:

The number one tip for a vet buying a house is to use a VA loan. Plain and simple.

Benefits of the VA loan, to name a few:

100% financing
All loan costs can be paid by the seller
VA loans have lower than industry average mortgage interest rates
No mortgage insurance
Lenient qualification requirements

Tip #2:

Be proactive. If you have not heard from your VA loan officer in a few days, don’t be afraid to call or send an e-mail to find out what is going on.

Tip #3:
Be organized. Keep a folder for all documents that you will be required to provide your loan officer. Also keep copies of all communication between you and your loan officer.

Tip #4:
Be available. Your loan officer needs to be able to get ahold of you at all times during the day, so be prepared to take calls at work or on your cell phone.

Tip #5:
Ask questions. If you are confused or have concerns during the loan process do not hesitate to ask questions. If you wait until the end, it may slow the process down.

By the way, if you’re not a vet, omit tip number one. Everything else is good advice for anyone in the home buying process. And forget about those mortgage industry experts.

Filed Under: blog, Mortgage, Top Posts Tagged With: VA Loans

You Can’t Refinance: Can You Still Save Money On Your Mortgage?

September 2, 2009 By Justin McHood Leave a Comment

Many people are stuck in their current mortgage. They can’t refinance for any number of reasons. Some of the most common reasons that people are “stuck” in their current mortgage include:

Some are upside down – meaning they owe more than their home is worth.
Some people have taken pay cuts at work and simply don’t make as much money as they used to.
Some people had too much debt – which leaves their debt to income ratio out of whack, or maybe they have even started a debt settlement or bankruptcy program.
Some people are working on trying to get their lender to modify their loan.

No matter what the reason is if you can’t refinance your current mortgage, is there anything that you can do to save money on your monthly mortgage payment each month?

Yes.

There are two things that you can do.

As you know, your mortgage payment is made up of Principal, Interest, Taxes and Insurance. If you refinance, then that will address the Principal and Interest – but if you don’t want to refinance (or can’t) then you can still save money each month on your taxes and insurance.

The first thing that you can do is to find out if your property tax assessment has been lowered. If you live here in Arizona, and your property value hasn’t went down, it is probably time to dispute it. If your property taxes haven’t went down, get on the phone with your county tax assessor and find out what it takes to dispute the assessment. You might be surprised to learn that by being a squeaky wheel you can actually save some money on your taxes.

Next, shop around for the best deal on homeowners insurance by getting multiple homeowners insurance quotes from companies you know and trust. There are also things that you can do to get a lower rating with your insurance company such as find one of the best home alarms and have it installed. Many times, home alarm companies will give you the hardware needed – and it will also save you money on your homeowners insurance.

So even if you can’t refinance, these are two simple things that you can do to lower your monthly mortgage payment — without refinancing.

And in today’s economy, every penny counts.

Filed Under: Mortgage Tagged With: home owners insurance, Mortgage, property taxes, refinance, upside down

FHA 203k Streamline vs FHA 203k “Regular” Program, what is the difference?

August 19, 2009 By Justin McHood 2 Comments

When thinking about buying a home that is in need of a few repairs, there are a small handful of options available. The most popular ones include the Fannie Mae HomePath Renovation loan (for homes that are owned by Fannie Mae), the FHA203k Streamline loan and the FHA 203k loan.

Many times when thinking about the FHA 203k loan program I am asked “what is the difference between the FHA 203k Streamline and the FHA 203k program?” and although the answer can be somewhat complicated, there is one magic number that separates the two.

FHA 203k Streamline vs FHA 203k: The Magic Number

The magic number that separates the Arizona FHA 203k streamline program from the FHA 203k “regular” program is $35,000. $35,000 is the amount of money that you can set aside for repairs under the FHA 203k streamline program and anything over that will mean that you need to try to qualify for the FHA 203k regular program.

FHA 203k Streamline Common Repairs

Many lenders will only underwrite the FHA 203k streamline program and the FHA 203k streamline program has some distinct advantages when considering rehabilitation financing. Some of the most popular repairs under the FHA 203k streamline program include:

Repair gutters and downspouts
Repair/upgrade of existing HVAC systems
Minor repairs of plumbing and electrical systems
Minor repairs of existing flooring
Minor remodeling that does not involve structural repairs
Exterior and interior painting
New appliances – which may include free-standing ranges, refrigerators, washers/dryers, dishwashers and microwaves but may not exceed $2,000
Improvements for accessibility for people with disabilities

FHA 203k Streamline: Popular Reasons to Choose

There are several popular reasons to choose the FHA 203k Streamline over the FHA 203k loan, and here are just a few:

There is no minimum threshold for amount of money for repairs (note: some lenders require a minimum, but not all)
Maximum allowance of $35,000 includes a 10% contingency for cost over-runs
General contractors / consultants are not required
Lender is responsible for ensuring cost to repair is reasonable for the area
Architectural exhibits are not required

More Information:

HUD 203k Streamline Mortgagee Letter

HUD 203k “Regular” Mortgagee Letter

For more information or to see if you qualify contact Justin McHood at 480.374.0303

Filed Under: Financing Tagged With: 203k, 203K Streamline, FHA, Streamline

Neighborhood Stabilization Program: Free money available and 1% down FHA loan

July 20, 2009 By Justin McHood Leave a Comment

There is a new program that many people have started calling the 1% down payment program. While it is true that if you qualify for the program, you can get an FHA loan with putting only 1% down, there is much more to the program than that.

The new program is called the Neighborhood Stabilization Program and here are just a few details about the program:

Neighborhood Stabilization Program Highlights:

If you own a residence, you must be leasing your primary residence at least 12 months before applying for the program.
You must use us a lender from the ADOH participating lender list.
You must attend and complete an eight‐hour Homebuyer Education Class provided by one of the ADOH participating homebuyer counseling agencies. (A list will be provided by your lender once you begin the process.)
The property you purchase must be your primary residence.
You must have a maximum debt‐to‐income ratio of 31/43.
You must be AUS approved eligible.
You must have two months PITI reserves.
You can use any type of financing with the NSP program – including paying cash. That means you can still get up to 22% of the purchase price even if you pay cash for the house.
You must be approved and have your paperwork completed for the program prior to submitting an offer on a house.

Neighborhood Stabilization Eligible Property Types:

Foreclosed properties only. A property is considered “foreclosed upon” at the point that the mortgage or tax foreclosure is complete.
One‐unit detached single family homes, condos and townhomes.
The property must be vacant at time of listing.

Neighborhood Stabilization Program Purchase Price Limits:

Neighborhood Stabilization Program Income Limits:

In order to qualify for the program, you must have a gross income (the total income before taxes, health care costs, social security, etc.) of no more than 120 percent of the average median income for the county they want to purchase a foreclosed house in.

Income Limits For Maricopa County:

Maricopa County Income Limits

Neighborhood Stabilization Program: 1% Down Payment?

A minimum of 3 percent of the property purchase price is required as down payment. One percent must come from the borrower’s own funds. Two percent can come from any other approved source.

Neighborhood Stabilization Program: FREE Money?

Up to 22 percent of purchase price
All loans are forgivable after a period of time based on the amount of the loan.
* 5 years for assistance of $15,000 or less
* 10 years for assistance of $15,001‐$40,000
* 15 years for assistance of more than $40,000
All loans are zero percent interest with no monthly payment.
The balance of the loan is forgiven at the completion of the term.

An Overview On The Neighborhood Stabilization Program

This program is very “real” and is generating a lot of excitement. The real bottom line is basically that if you are buying a foreclosed property and meet the guidelines – AND – plan on living in the home, then this program is easy to take advantage of.

So if you think that you are excited about the 8000 tax credit, you are going to love the Neighborhood Stabilization Program – it can mean even more money to your bottom line!

Filed Under: Lending Programs Tagged With: 1% down, FHA Loans, Neighborhood Stabilization Program, nsp

Can the $8000 tax credit be used for down payment assistance and closing costs? It can now

June 1, 2009 By Justin McHood Leave a Comment

One of the most common questions that I have had in the last few weeks is “I heard that you can now use the 8000 tax credit for your down payment, is this true?”

And my official answer to that question has been “Wait and see. Nothing is official yet.”

The wait is now over.

On Friday, HUD issued a Mortgagee Letter that outlined the rules regarding “using the 8000 tax credit for your down payment” — which has also been referred to as “monetizing the tax credit”.

Across the US, experts are predicting that the 8000 tax credit will spur up to 160,000 new home sales — and more than just a few of those 160,000 people will be right here in Arizona. Now, with the new rules that have been established, you no longer have to wait to use the 8000 tax credit for new home buyers for closing costs or part of a down payment, there is a process to use it immediately.

According to Reuters:

The National Association of Home Builders estimates that the $8,000 first-time homebuyer credit will stimulate 160,000 home sales across the United States — 101,000 purchases from first-time buyers and another 59,000 purchases by existing homeowners who sold dwellings to first-time buyers.

According to CNN Money:

On Friday, the U.S. Department of Housing and Urban Development (HUD) announced that first-time homebuyers using FHA-approved lenders can now get an advance on the $8,000 tax credit created by the stimulus package and apply it toward their down payments or closing costs.

“We believe this is a real win for everyone,” said HUD secretary Shaun Donovan in a speech before the National Association of Homebuilders (NAHB). “Families will now be able to apply their anticipated tax credit toward their home purchase right away. What we’re doing today will not only help these families to purchase their first home but will present an enormous benefit for communities struggling to deal with an oversupply of housing.”

Some of the more popular questions from people here in Georgia about the monetization of the tax credit include “How much does it cost” and “can I use the tax credit for my down payment?” Here are the answers to those two popular questions as well as some resources that you can use to get any other questions that you may have:

Can You Use The Tax Credit For Your Down Payment?

Yes, — but you cannot use the tax credit to cover the first 3.5% of your down payment, you must come up with that on your own or have it gifted to you from a blood relative.

Once you come up with the initial 3.5% down payment that is required by FHA, if you would like to use the 8000 tax credit to add to that down payment, that is allowed.

How Much Does It Cost To Get “Monetize” The Tax Credit?

In my opinion, HUD did a nice job of outlining a reasonable fee structure for people who wanted to monetize the tax credit. According to the Mortgagee Letter:

Any costs attendant to the purchase of the tax credit are to be nominal and discounting the anticipated credit to cover the costs and expenses of the transaction must be reasonable and disclosed to the homebuyer. In FHA’s view, fees and costs that total more than 2.5% of the anticipated credit are considered excessive. (Example: $6000 to be refunded, with all fees and costs discounted, borrower should receive not less than $5850.00 for sale of tax credit.)

I am sure that there will still be plenty of questions about the tax credit – and the best way to get those questions answered is to speak with a loan officer at a FHA approved lender – they should be able to answer your questions.

HUD Official Announcement

Official Mortgagee Letter 2009-15

New Home Buyer 8000 Tax Credit Down Payment: Answers To Questions

8000 Tax Credit Questions and Answers

Filed Under: First Time Home Buyers Tagged With: $8000 tax credit, First Time Home Buyers, first-time tax credit

Can you use the $8,000 first-time home buyer tax credit for your down payment?

May 13, 2009 By Justin McHood 2 Comments

Note: This is something that has not yet happened, but may soon happen. I originally posted this information about the 8000 tax credit being used as a down payment on my main site, and thought it was relevant enough to share with everyone as to what may soon be around the corner. Remember, to my knowledge, this is not yet official, and we will be sure to bring you updates if/when it becomes official.

But it appears as if it might be just around the corner… stay tuned for any forthcoming announcement.

Dean’s notes: I have my own thoughts on this which you can read towards the end of this post. I would love to hear your thoughts. My thoughts were developed after conversations with other agents today. All I will say is the other agents did not agree with me so I thought I would share them here.

Can you use the 8000 tax credit as a down payment for your home?

Not today, but soon you may be able to.

Yesterday, Secretary of Housing and Urban Development Shaun Donovan gave a prepared speech at the National Association of Realtors Real Estate Summit. He said something that was a possible hint as to things to come when he mentioned that FHA was currently working on a proposal that may involve people being able to use the 8000 tax credit as a down payment.

An excerpt from that speech regarding FHA’s position on the 8000 tax credit being used as a down payment:

And we are taking action to further help the housing market recover. I’m excited to announce here at NAR that FHA’s policy on the “monetization” of the first-time homebuyer tax credit will soon be published. I know that you’ve been waiting anxiously to hear FHA’s position on the matter. We, like you, believe that this new tax credit is not only a tremendous opportunity for first-time homebuyers, but also an enormous benefit for communities struggling to deal with an oversupply of housing. According to estimates by the National Association of Home Builders, this new tax credit will stimulate 160,000 home sales across the nation – 101,000 of which will be first time buyers who will receive the credit. Another 59,000 existing homeowners will be able to buy another home because a first time buyer purchased their home.

We all want to enable FHA consumers to access the tax credit funds when they close on their home loans so that the cash can be used as a downpayment. So FHA will permit trusted FHA-approved lenders and HUD-approved nonprofits, as well as state and local governmental entities to “monetize” the tax credit through short-term bridge loans. We think the policy is a real win for everyone, ensuring that borrowers can tap into the numerous organizations that are already part of the FHA network to receive this additional benefit. FHA will be publishing the details shortly.

Enabling first time homebuyers to use the 8000 tax credit as a down payment would be a big win for the market – it would allow many more people to move into a home who currently may not have enough for a down payment.

Certainly, if FHA decides to allow homeowners use the 8000 tax credit as their downpayment in some form, this will help our market. We will be sure to keep you updated with any more developments on this story.

(h/t Mark Madsen at MyFHAMortgageBlog for sharing the video about the 8000 tax credit being used as a down payment and the guys at ThinkBigWorkSmall)

Dean’s thoughts: I’m not saying that using the tax credit for a down payment is a bad thing, I think putting down as much money as you can on a home is a good idea. If you need the $8,000 for your down payment because you cannot afford the 3.5% down and the closing costs, then maybe the best thing for you to do right now is hold off on buying that home. It is a great time to buy, but prices will more than likely not be much different in a year than they are now. Start saving, and if you cannot save then home ownership may not be the best thing for you at this time.

Justin McHood is a nationally published mortgage expert who lives and works right here in Arizona. You will normally find him wearing a blue starched shirt (he says that it goes well with is orange hair) and you can learn more about him at ArizonaMortgageTeam.com

Filed Under: First Time Home Buyers Tagged With: $8000 tax credit, down payment assistance, First Time Home Buyers

PITI – Knowing What It Means Can Save You Money On Your Mortgage

April 10, 2009 By Justin McHood Leave a Comment

There is more to saving money on your mortgage payment each month than first meets the eye. Many times when I talk with people about some of the best ways to save money on their mortgage, 99% of the time we end up talking about getting the lowest possible interest rate.

Which of course is a great way to save money each month.

But there are also a few other ways to save money each month on your mortgage than just finding the lowest interest rate possible.

Your monthly mortgage payment is made up of different things: Principal, Interest, Taxes and Insurance. PITI is a common way for people in the real estate world to describe it. [Read more...]

Filed Under: PITI Tagged With: mortgage payment, PITI, property taxes, Save money

Mortgage insurance: Do I need it? What is PMI? Do FHA loans have PMI?

April 3, 2009 By Justin McHood 1 Comment

The idea behind mortgage insurance is relatively simple: an insurance entity agrees to insure against default on a loan in exchange for premium payments.

The insuring entity may be a “private” mortgage insurance company or a government entity, but the company that issues mortgage insurance is not a lender.

Conventional loans use Private Mortgage Insurance – also known as PMI

When you buy a property using conventional financing, you will be required to put down a 20% down payment or purchase private mortgage insurance. When you have mortgage insurance on conventional loans, you can usually get your lender to drop your private mortgage insurance once you reach a 20% equity point in your property – and conventional loans allow for property appreciation when making the calculation. [Read more...]

Filed Under: Insurance Tagged With: FHA Loans, LPMI, Mortgage Insurance, PMI

What You See Isn’t Always What You Get in interest rates

March 24, 2009 By Justin McHood Leave a Comment

Guest Column from Justin McHood.

Is that interest rate you just saw on that advertisement too good to be true?

Have you recently seen an advertisement recently that caught your eye by saying something like “4.5% INTEREST RATES AVAILABLE” only to find out when you call the number that there isn’t a 4.5% interest rate available?

It happens all the time.

And there are two possible reasons for this:

The 4.5% interest rate was never really available in the first place
The 4.5% interest rate was available – on the day that the advertisement was printed and mailed

Since I happen to be a mortgage guy myself, I will give whoever-printed-the-advertisement-that-you-saw-with-4.5%-on-it the benefit of the doubt… and here is a simple explanation of how this could happen. [Read more...]

Filed Under: Financing Tagged With: interest rates, Teaser rates