Heather P. Hoadley The Loan Whisperer

Would an extra $25,000 come in handy for your next home purchase?

If so, you should check out the metroDPA Social Equity program!!

In conjunction with the City of Denver, the metroDPA Social Equity Program focuses on Social Equity for borrowers who have lived in or are descendants of individuals who have lived in areas that were subject to red lining from 1939 – 2000.

Want to see if you qualify?
https://geospatialdenver.maps.arcgis.com/apps/webappviewer/index.html?id=32064924a0894d4f9cb99f96d768740d

People who make up to $176,700 a year and have a credit score above 640 are eligible for a home loan and down payment assistance to purchase a home in Front Range cities and counties.

Borrowers at or below 80% of Denver AMI will receive $25,000 in Assistance (FHA and Conv loans). Borrower above 80% Denver AMI will receive $15,000 in Assistance (FHA loans only).

Assistance is secured in the form of a 0% interest, second mortgage, forgivable pro rata on a monthly basis (i.e., 1/36 of the principal balance will be forgiven monthly on the 1st day of each calendar month), over a period of 36 months, with no scheduled payments.

Want to know more?
https://programs.ehousingplus.com/available-programs/colorado/metroDPA/

metroDenver Social Equity Map Tool Historically redlined areas (grade

Ever wondered how to establish top tier credit? Now you know…

The three repositories typically require at least 6 months of payment history information to issue a credit score. Since most creditors report their findings in arrears, you should plan to begin the process of building top tier credit at least 7 to 8 months prior to applying for a mortgage loan.

There are several types of credit; revolving, installment, and mortgage. The more types of positive credit and different types of credit you have, the higher the score. You should work towards getting at least three different creditors to report to the credit bureaus.

One easy way to establish a reporting creditor is to be added as an authorized user on someone else’s healthy credit card. Check with family members to see if this is an option.

Another way to build credit is to establish a secured prepaid credit card. This type of credit card requires the borrower to deposit funds into a holding/savings account, in the same amount as the credit line limit. This allows the credit card company to feel secure in issuing a credit card, even if an applicant has zero credit history.

Please keep in mind, never borrow more than 20% of your approved credit line limit on any card. A rule of thumb is to charge only your gas on the credit card each month. Then when you make a payment, pay the balance down to $20. Do not pay the card off in total. Your FICO score is a mathematical equation and when a carry forward balance disappears, it reduces your final score.

Remember, make sure you are always making timely payments. Any late payment while you are working on building a higher credit score can derail the process.

Want to know more? https://www.fanniemae.com/crediteducation

Credit Education | Fannie Mae Home Credit Education Credit Education Twitter Facebook Linkedin Email | Know Your Options Loan Lookup Search Your credit journey starts here Using resources, tools, and other useful intel, you can level up your credit and take an important step towards reaching life’s big goals, like homeownershi...

Ever wondered how your Loan to Value affects your rate? Now you know…

One of the key factors that determines an interest rate is the Loan to Value (LTV) ratio. The LTV ratio is a measure comparing the loan amount of the mortgage with the appraised value of the property. The larger the down payment, the lower the LTV ratio. Generally, borrowers with more equity in their home are considered to be less risky. Hence, they receive a lower interest rate.

On a primary home purchase loan, the optimal pricing reflects a LTV at 60% or less. Above that LTV, the pricing is tiered. It worsens slightly at 75% and again at 80%.

For an investment property purchase loan, the breakpoints remain the same. However, the discount points charged can vary, and will be greater than that of a primary residence loan.

Want to know more? https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-to-value-ratio-and-how-does-it-relate-to-my-costs-en-121/

What is a loan-to-value ratio and how does it relate to my costs? | Consumer Financial Protection Bureau The loan-to-value (LTV) ratio is a measure comparing the amount of your mortgage with the appraised value of the property. The higher your down payment, the lower your LTV ratio.

Ever wondered what an appraisal gap is? Now you know…

When purchasing a home with mortgage loan financing, the lender must determine what the Loan -To -Value (LTV) is on the property. The LTV is the loan amount divided by the property value. The property value is the purchase price or the current appraised value, whichever is lower. Everything is fine when the appraisal is equal to or greater than the purchase price. However, when the appraisal is less, it can create a problem and is known as an appraisal gap.

In the past when an appraisal gap occurred, the buyer and seller would have to renegotiate the purchase contract by reducing the selling price, increasing the buyers financing to reflect a higher loan amount, or terminating the contract. For many borrowers, they could not go to a higher LTV and still qualify for the loan, forcing the sellers to accept less or relist their property.

An appraisal gap is the shortage that occurs when a buyer's offer is higher than the appraised value of the property. This is currently happening in the hot and highly competitive Colorado real estate market. There are many more prospective purchasers, than inventory available for sale. This creates bidding wars and the need for aggressive purchase offer tactics, such as an appraisal gap guarantee.

Often for a buyer to get their offer accepted, buyers will state that they are responsible for any appraisal gap, if it occurs. This is known as an appraisal gap guarantee and normally comes with some sort of cap on the amount of the guarantee. The guarantee states that the borrowers have the ability to cover the appraisal gap from their proven assets. This ensures the seller that the closing will take place, regardless of what the appraised value is determined to be.

It is very important that the buyer works closely with their lender to ensure that they can include such a guarantee in their offer. If so, that the lender communicates to the seller of the home that the buyer can indeed comply with that guarantee, without negatively affecting their ability to purchase the home.

Want to know more? Please see https://selling-guide.fanniemae.com/Selling-Guide/Origination-thru-Closing/ and https://dre.colorado.gov/division-notifications/what-appraisal-gap-home-purchase

Fannie Mae Selling If you have additional questions, Fannie Mae customers can visit Ask Poli to get information from other Fannie Mae published sources.

Ever wondered what a credit freeze is? Now you know…

A credit freeze restricts access to your credit report without your specific consent. When you, or others, apply for credit using your personal information, a lender or card issuer, typically checks your credit before making a decision. If your credit is frozen, the potential creditor cannot see the data required to approve the application. This protects you from unauthorized credit being granted in your name.

A credit freeze makes your credit reports inaccessible to most people, with a few exceptions:

• You can access your own records, including getting your free annual credit reports
• Your current creditors still have access
• Marketers can see your credit reports for the purpose of sending you offers
• In certain circumstances, government or child support agencies can see them
• You can still give permission to an employer or potential employer to check your credit

A credit freeze lasts until you remove it. Before applying for credit, you will need to lift your security freeze so that potential creditors can access your credit report.
Although there are several ways to initiate a credit freeze, the best long term way is to create an online account at each of the three repositories. This give you the control to add, remove, or check the status of your credit in real time. The three repositories are Experian, Transunion and Equifax.
Want to know more? Go to: https://www.experian.com/freeze/center.html, https://www.transunion.com/credit-freeze, https://www.equifax.com/personal/credit-report-services/credit-freeze

Security Freeze Center at Experian Add or remove a security freeze to freeze access to your credit report.

Ever wondered what an appraisal waiver is? Now you know…

An appraisal waiver is an option to close on a mortgage loan without completing an appraisal on the collateral property. The benefits are; not paying the cost of the appraisal fee, the value of the property/purchase price is immediately confirmed, and on a refinance transaction, the borrower does not have to allow the appraiser access to the property.

Fannie Mae and Freddie Mac, offer appraisal waivers issued through each of their underwriting systems for eligible transactions. To be eligible, they review information in their system, an appraisal report from a previous loan, values of comparable homes on the web or individual proprietary analytics that determine if the estimated value submitted by the lender is reasonable.

Eligible transactions:
• One-unit properties, including condominiums
• Limited cash-out refinance transactions:
o Principal residences and second homes up to 90% LTV/CLTV
o Investment properties up to 75% LTV/CLTV
• Cash-out refinance transactions:
o Principal residences up to 70% LTV/CLTV
o Second homes and investment properties up to 60% LTV/CLTV
• Purchase transactions:
o Principal residences and second homes up to 80% LTV/CLTV

Ineligible transactions:

• Loan casefiles in which the value of the subject property provided is $1,000,000 or greater
• Loans for which rental income from the subject property is used to qualify
• Loans with gifts of equity
• Loans for which the mortgage insurance provider requires an appraisal
• When the lender has any reason to believe an appraisal is warranted

Want to know more? https://singlefamily.fanniemae.com/originating-underwriting/appraisal-waivers and https://guide.freddiemac.com/app/guide/section/5602.3

Appraisal Waivers | Fannie Mae Appraisal waivers are available to all Fannie Mae lenders and occur for eligible transactions. The offers are issued through Desktop Underwriter® (DU®).

Ever wondered how to cancel private mortgage insurance? Now you know…

If you purchased your home with a conventional loan and made less than a 20% down payment, you may be paying Private Mortgage Insurance. (PMI). PMI is a financial guaranty, by a mortgage insurance company, that reduces the loss to the lender or investor in the event borrowers do not repay their mortgage. Most often, the borrower pays a monthly premium included in their monthly payment.
The good news is that borrowers do not have to pay the PMI premium forever. Borrowers have established rights to cancel their PMI, once certain conditions have been met.
Borrowers must have demonstrated a good payment history and there may not be any subordinate liens.
Rules for “Original Value” or value determined at time of purchase:
• Automatic termination @ 78% LTV
• Borrower requested termination @ 80% LTV
Rules for “Current Value” or the value today is determined with an appraisal (paid for by the owner) or other acceptable form:
• Loan must have minimum of two years of on time payments
• Borrower requested termination @ 75% LTV, if home owned less than 5 years
• Borrower requested termination @ 80% LTV, if home owned more than 5 years
• You will need to contact your mortgage company for exact steps to cancel your PMI.
Want to know more? Contact MGIC for borrower rights under the Home Owners Protection Act. https://www.mgic.com/en/servicing/cancelling-mortgage-insurance

Cancelling mortgage insurance | MGIC Cancelling mortgage insurance is typically permitted by lenders and investors after the homeowner has met certain criteria and built up enough equity.

Ever wondered how do I get my free credit report? Now you know…
Federal law requires each of the three nationwide consumer credit reporting companies - Equifax, Experian and TransUnion - to give you a free credit report every 12 months, if you ask for it.
You can request all three of your reports at once, or you can space them out over the course of the year.
We recommend everybody monitors their credit annually to ensure no fraudulent or inaccurate activity is being posted to your credit.
To order your free annual credit report:
Visit: www.freecreditreport.com or www.annualcreditreport.com
Or call toll free: 1-877-322-8228
Want to know more? The Federal Trade Commission and the Consumer Financial Protection Bureau sites contain extensive information about credit reports, your rights, and the laws that guarantee these rights.

Free Credit Report - FreeCreditReport.com Get the complete picture with a free credit report from Experian. Includes your FICO Score for free and Experian Boost. $0 and no credit card is required.

Ever wondered what a discount point is? Now you know…

Points, also known as discount points, lower your interest rate in exchange for paying for an upfront fee. Vice versa, Lender credits are cash paid to you to be used in paying your closing costs in exchange for accepting a higher interest rate. Lender credits are used for “No Cost” refinances.
Paying points lowers your interest rate relative to the interest rate you could get with a zero-point loan at the same lender.
Points are calculated in relation to the loan amount. Each point equals one percent of the loan amount. For example, one point on a $100,000 loan would be one percent of the loan amount, or $1,000. Two points would be two percent of the loan amount, or $2,000. Points don’t have to be round numbers – you can pay 1.375 points ($1,375), 0.5 points ($500) or even 0.125 points ($125). The industry normally quotes points in 1/8 increments.

Want to know more? https://www.consumerfinance.gov/ask-cfpb/what-are-discount-points-and-lender-credits-and-how-do-they-work-en-136/

What are (discount) points and lender credits and how do they work? | Consumer Financial Protection Bureau Generally, points and lender credits let you make tradeoffs in how you pay for your mortgage and closing costs. Points, also known as discount points, lower your interest rate in exchange paying for an upfront fee. Lender credits lower your closing costs in exchange for accepting a higher interest r...

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