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Mortgage Essentials | Eric Leigh, Mortgage Consultant

Archive for the ‘Mortgage Essentials’ Category

What to Know About New Credit Report Changes

What to Know About New Credit Report Changes

As part of their plan to improve credit report accuracy, the three consumer credit reporting agencies (Equifax, Experian and TransUnion) announced changes to what delinquent credit will be identified on credit reports.

Credit ReportEffective July 1, 2017, most civil judgments and tax liens will no longer be shown on credit reports. This is because many of these public records do not meet the credit reporting agencies’ new stricter standards for containing all of the personal information the agencies now require (like social security numbers, for example). The new standards are meant to protect consumers by preventing false identity matches and incorrect reporting information.

What does this change mean to potential homebuyers with tax liens and judgments on their reports?

According to research by FICO, about 12 million people will have a tax lien or judgment removed from their credit report. The majority will see a modest lift (20 points or less) in their credit scores as a result.

How does this change impact getting approved for a home loan?

Fannie Mae, a leading source for mortgage financing, responded to the credit report change, noting existing policy will still require those with genuine delinquent credit, including tax liens and civil judgments, to pay these debts at or prior to closing.

However, the new standards will be especially beneficial to thousands of consumers with inaccurate information on their credit reports due to mismatched records. They will no longer experience the frustration of trying to remove erroneous judgments and tax liens from their credit reports before being approved for a home loan.

If you or someone you know has been refused a home loan because of tax liens or judgments on a credit report, please don’t hesitate to call and see if these changes can be of benefit.

On your team,


P.S. You can help me get this important information in front of people by “Liking” and “Sharing” this post. Who do you know that needs a mortgage and has credit scoring concerns or questions? Please don’t hesitate to contact me directly if there is anything I can do for you or anyone you know.

© 2017 Eric Leigh and Vantage Production, LLC. All rights reserved.

FHA Insurance Premiums Drop

FHA Insurance Premiums Drop

FHA Insurance Rate Cut Helps Offset Some Recent Interest Rate Hikes

FHA’s annual mortgage insurance premiums are being reduced by .25% for most new borrowers who are closing on their FHA insured loan on or after January 27, 2017. This reduction will offset some of the recent interest rate increases that we have seen happening since November of 2016.

The savings from the lower FHA mortgage insurance premiums are very good. Here is a chart illustrating approximately how much FHA borrowers will save if they choose an FHA loan of >= 20 years in length:

Loan Amt Down Payment Previous MIP New MIP Estimated Savings per $100K
< $625,000 < 5% .85% .60% $250
< $625,000 > 5% .80% .55% $250
< $625,000 < 5% 1.05% .60% $450
< $625,000 > 5% 1.00% .55% $450

FHA homeowners with an FHA loan already would have to refinance to take advantage of these cuts in the cost of the mortgage insurance.

The reason we are seeing this reduction is because of the strong, U.S. housing market. Home prices have been moving higher for about five years now, which is part of why cuts like this are possible.

Also worth noting is that additional cuts to the FHA upfront insurance premium (currently at 1.75%) could be on the horizon. The upfront premium was as low as 1.00% in 2010 and 2011, so future cuts are possible. Our country’s continued economic recovery and strength in the housing market will play a big part in determining if this happens.

Should you have any questions regarding a new FHA loan, or if you’re just looking for trusted mortgage advice regarding your next home loan, CONTACT US directly for a complimentary consultation. We’re here to help!

On your team,


P.S. You can help me get this important information in front of people by “Liking” and “Sharing” this post. Who do you know that needs a mortgage and has home buying questions? Please don’t hesitate to contact me directly if there is anything I can do for you or anyone you know.

© 2017 Eric Leigh. All rights reserved.

The Fed Hikes Rates — So…What Does This Really Mean?

The Fed Is Hiking Rates — What Does This Mean For Consumers?

The Federal ReserveFed Answers Rate Hike Debate

In December, the Federal Open Market Committee raised its benchmark Federal Funds Rate for the first time in almost a decade. This is the rate at which banks lend money to each other overnight. It had been near zero to support economic recovery from the worst financial crisis and recession since the Great Depression.

What does this mean for consumers?

The Fed Funds Rate increase is not directly tied to long-term rates on consumer products, like purchase or refinance home loans. So, consumers should not expect home loan rates to rise as a direct result of the Fed’s decision. That being said, consumers will be impacted in two ways.

First, short-term interest rate loans will increase on credit cards, home equity lines of credit, auto and business loans.

Second, improving economic factors may influence home loan rates. The Fed’s rate increase was based on signs of a strengthening economy. If the economy continues to improve, home loan rates could move higher. Why? Because home loan rates are based on Mortgage Backed Securities, which are a type of Bond. Weak economic news normally causes money to flow out of higher risk investments like Stocks and into less risky investments like Bonds, causing Bond prices and home loan rates to improve. Strong economic news normally has the opposite result.

The Bottom Line
Mortgage rates are still near historic lows, making this a good time to purchase a refinance. If you’d like to find out more about how to get preapproved for a mortgage loan, or if you have any questions about the home buying process, please don’t hesitate to contact me directly. I’m happy to help!

On your team,


P.S. You can help people understand this by “Liking” and “Sharing” this post. Who do you know that has mortgage and home buying questions? Please don’t hesitate to contact me directly if there is anything I can do for you or anyone you know.

FHA Lowers Mortgage Insurance Premiums

The best way to describe this change for homebuyers and the housing industry?


http://www.dreamstime.com/-image10634598For the first time since 2001, the FHA is reducing its mortgage insurance premiums for homebuyers utilizing the FHA mortgage program to purchase or refinance a home. This change took effect on January 26, 2015.

The Federal Housing Administration was created over 80 years ago to help make homeownership more affordable. When the FHA was created, most homebuyers were required to make very large downpayments. 50% or more down and a five year repayment were not uncommon during that time. As you can see, those types of repayment terms made homeownership impossible for most Americans. The National Housing Act of 1934, which created the FHA, changed all that.

The rules of the FHA insurance programs were clear and simple. If a mortgage lender made sure that a loan met the FHA’s requirements and guidelines for “good loans”, the agency would agree to insure the lender against losses if the borrower defaulted on their FHA loan.

For 70+ years, the FHA’s system worked very well. The agency was self-funded using mortgage insurance premiums (MIP) paid by FHA-backed homeowners and carried a strong reserve surplus. The housing crash of the 2000’s changed that, and the FHA’s insurance reserve fund dwindled down to less than what Congress requires. At that time, the FHA was forced to raise their mortgage insurance premiums to replenish their reserves.

Here’s the history of FHA MIP, from 2008 to early-2015:

Prior to January 2008 : 0.50% annual MIP plus 1.50% upfront MIP
October 2008 : 0.55% annual MIP plus 1.75% upfront MIP
April 2010 : 0.55% annual MIP plus 2.25% upfront MIP
October 2010 : 0.90% annual MIP plus 1.00% upfront MIP
April 2011 : 1.15% annual MIP plus 1.00% upfront MIP
April 2012 : 1.25% annual MIP plus 1.75% upfront MIP
April 2013 : 1.35% annual MIP plus 1.75% upfront MIP
January 2015 : 0.85% annual MIP plus 1.75% upfront MIP

Note that the FHA consistently increased its annual MIP charges while also tweaking its upfront MIP in order to remain solvent and with sufficient reserves.

Things are better in FHA land today. Fewer loans are going bad as the domestic economy has improved. As a result, the FHA now shows a positive capital reserve balance. With its reserves growing quickly, the FHA is now ready to reduce what it collects from homeowners for the first time since 2001.

Click here to get current FHA mortgage rates.


The first thing you must understand is that FHA is not a mortgage lender. It’s a mortgage insurer. Just like other insurers, the FHA collects regular payments known as premiums which fund the claims it pays to lenders when borrowers default on their mortgage loans.

FHA mortgage insurance premiums are split into two parts. The first part is the Upfront Mortgage Insurance Premium (UFMIP). Under the FHA’s new plan, UFMIP is paid at the time of closing and is equal to 1.75% of your loan. This means that for every $100,000 in your loan size, your upfront mortgage insurance premium paid is $1,750.

That vast majority of my clients add their upfront MIP to their mortgaged amount because UFMIP does not count against loan-to-value (LTV). If you make the minimum FHA downpayment of 3.5 percent, then you will often carry an initial loan-to-value closer to ninety-eight percent.

Also, homeowners can earn an UFMIP refund via a refinance. When FHA-backed homeowners use the FHA Streamline Refinance program within 36 months of closing, a portion of the upfront MIP paid is refunded in full. Refunds range from 68 percent of the initial amount paid to ten percent — depending on how soon you refinance. The longer you wait, the lower your FHA MIP refund.

The second type of FHA mortgage insurance is annual. Annual MIP rates vary based on the length of your loan, the amount you’re borrowing, and your initial loan’s LTV.

The complete MIP schedule for FHA loans sized $625,000 or less, as of, is as follows:

15-year loan terms with loan-to-value over 90% : 0.70 percent annual MIP
15-year loan terms with loan-to-value under 90% : 0.45 percent annual MIP
30-year loan terms with loan-to-value over 95% : 0.85 percent annual MIP
30-year loan terms with loan-to-value under 95% : 0.80 percent annual MIP

The above FHA MIP schedule is effective January 26, 2015 and applied to all loans with FHA Case Numbers assigned on, or after, this date. Loans above $625,000 are subject to an additional 25 basis point (0.25%) annual FHA MIP increase.

One important note to make on this for you: The number of years that a homeowner must pay FHA MIP varies by loan type. Loans for which the initial downpayment was 10% or more carry FHA MIP for 11 years from the date of the mortgage. All other FHA loans pay FHA MIP for as long as the loan is active.


The whole reason behind Congress’ thinking when creating the FHA was to provide affordable U.S. housing and the agency is getting it done. You can now finance new homes cheaper than ever before and homeowners with existing FHA mortgages can refinance via the FHA Streamline Refinance cheaply and easily.

Should you have any questions on this, or any mortgage related topic, call me today. Or feel free to contact me via email to start dialogue about your question. I’m here to help!

Should I Refinance?

What should you do with the low mortgage rates today?

Homes and MoneyAccording to Freddie Mac, today’s mortgage rates have reached a 15-month low. However, few homeowners are taking advantage. There are currently more than $800 billion in outstanding U.S. mortgages that have rates of 5% or more. At today’s rates, the typical household can save big money on a refinance…but people are holding their mortgages for longer than ever.

Should you refinance with rates around 4%?

It’s a common question that I get asked. When I talk to my clients and mortgage prospects about their scenario, the most common argument made against refinancing is, “I shouldn’t refinance unless I can lower my rate by at least 1%.”

This thought can be misguided. Here’s why…

Mythconception: Saving One Percent On Your Mortgage

This thought process dates back to the middle of the last century. Literally the 1950’s and 1960’s when my parents were still in school. During this time, loan sizes were small, closing costs were high (as a percentage of the loan amount), and most homeowners lived in their homes until they died.

Loan sizes, typically less than $50,000 or $60,000, required a rate reduction of at least 1% to save $1,000 annually. With today’s loan sizes, my typical refinancing homeowner saves 3-4 times those amounts.

The “one percent mythconception” makes a lot of my clients insist on getting a 1% rate reduction. However, the truth of the matter is that even a modest rate reduction can save big money these days. The more important measure is the cost of the loan.

Better Idea: Zero-Closing Cost Loans

Here’s the best way to know if it makes sense to refinance: Take a look at refinancing with a zero-closing cost loan.

These are exactly what their name sounds like…they are mortgages for which you literally pay no closing costs. There isn’t a 1% savings analysis that needs to be done. You simply refinance to a lower mortgage rate and pay nothing for me to do it.

By increasing the interest rate I can otherwise offer you, I can offer you a zero-closing cost loan. Generally, for loans greater than $250,000, I can do this by increasing your interest rate by .25%. You generate immediate monthly payment savings, and at the same time, pay no closing costs to do so. That’s a win-win situation.

If you have any questions regarding a zero-closing cost loan, or would like for me to create a complimentary refinance analysis for you, feel free to Contact Me at any time. I’m here to help and look forward to earning your future mortgage business.

Tapering = Strong Economy?

Indicators Point to Greater Recovery for 2014

Federal ReserveMost of you were probably not on the edge of your seats each time the Federal Reserve ended their meetings…literally dying to know whether the “taper” they have been hinting at would finally begin. In our industry, it was a different story…we literally were watching this like a hawk because we knew what tapering could do to mortgage rates.

The big “will-they or won’t they” finally ended last month with the Fed’s mid-December announcement that it would begin tapering its economic stimulus efforts, better known as Quantitative Easing (QE3). Federal Reserve Chairman Ben Bernanke’s decision to scale back on Bond and Treasury purchases by $10 billion signaled that the economy has showed sufficient ability to play on its own, albeit, on a kid leash.

The Fed’s ambivalence towards tapering dominated central banking discussions and created market volatility for most of 2013. Janet Yellen, the Fed’s current vice chairman and President Barack Obama’s nominee to succeed Bernanke, voted in favor of the policy action, which was bolstered by promising figures in the labor and housing markets.

The Year in Housing

Housing gained traction in 2013 amid job gains and rising stock values. Residential construction starts soared in November to a five-year high, explaining why builder optimism last month matched its highest level since 2005.

Despite robust new construction, sales of previously-owned homes declined for the third consecutive month in November to the lowest level this year, as rising home loan rates and a limited supply of existing properties discouraged homebuyers. Rates could rise even further with Fed tapering.

Purchases overall dropped 4.3 percent to a 4.9 million annual rate, in a mid-December report from the National Association of Realtors. The report also showed that the median price of an existing home rose 9.4 percent to $196,300 from $179,400 one year ago. The group still projects 2013 will be the best year for the industry in seven years, with an estimated 5.1 million properties sold. Rising prices and borrowing costs may have put homes out of reach for many first-time buyers and the partial federal government shutdown in October may have delayed some purchase decisions.

The Year in Jobs

A five-year low in unemployment and a boost in job hirings helped prompt Fed tapering. In what was largely typical year-end activity, applications for U.S. unemployment benefits rose in early December to an almost nine-month high, according to the Labor Department. Gains in payrolls on the other hand lifted consumer confidence and prospects for retailers during the holidays. The U.S. Automotive industry is also hiring, with sales at their best pace since 2007, according to data from Ward Automotive Group.

All in all, home loan rates still remain attractive compared to historical levels. If you have any questions about your personal situation or would like to inquire about housing and home loans, please don’t hesitate to call me or Contact Me by Email directly.

Common FHA Myths

About MortgagesFHA mortgages are one of the most misunderstood loan programs available. Realtors® and homeowners alike that I work with often contact me with the same, similar questions regarding common “myths” about the FHA program. Let”s talk about the most common myths that I hear about regarding FHA mortgage loans.

MYTH: FHA Loans Are For First-Time Homebuyers Only

FHA loans can be used by all homebuyers. I think that this myth stems from the marketing of FHA loans as a good product for first-time homebuyers because of it”s low downpayment requirements. FHA loans are available for any primary residence and are not limited to first-time homebuyers.

MYTH: FHA Loans Require 20% Downpayment

FHA mortgages require a minimum of 3.5% downpayment for the loan. This low downpayment requirement makes FHA one of the most lenient loan programs available. FHA also allows the 3.5% downpayment to come from a family member”s gift and other approved, downpayment assistance programs.

[FHA interest rate as of 9/3/13: 4.25% (5.788% APR) APR based on a 30-year loan of $250,000 with a 1% origination fee and a fixed rate of 4.25% with FHA/HUD mortgage insurance required for the life of the loan. Repayment term would be 360 monthly payments of $1,530.42 each (includes FHA mortgage insurance monthly premium). Click here for a more detailed mortgage rate update.]

To be clear, there are other low downpayment mortgage options as well. The USDA Rural Development mortgage allows for no downpayment financing for the purchase of homes in predefined, semi-rural to rural areas. The VA loan for military borrowers also allows for no downpayment financing. Fannie Mae and Freddie Mac also offer Conventional mortgage loans with a low downpayment requirement.

[These downpayment requirements are accurate as of the date of this norgesbesteonlinecasinoer.com Blog post and are subject to change in the future]

MYTH: FHA Loans Require High Credit Scores

FHA actually has some of the most forgiving credit score and credit history requirements. Borrowers with short sales or foreclosures in the past can often purchase with an FHA loan much sooner (in just 3 years after the short sale or foreclosure) than with Conventional loans.

Although not everyone will qualify for an FHA loan, you most certainly have a better chance to be approved if you have “less than perfect credit” in your recent past.

MYTH: FHA Loans Are Very Expensive

This myth is semi-truth. FHA loans can be more expensive OR less expensive than other loan programs. The true cost of the loan is determined by downpayment and loan size.

Most don”t realize this, but the most expensive part of FHA mortgages is the mortgage insurance (MI). FHA MI premiums are paid by the homeowner to FHA to insure the loan against default. FHA MI is paid in two different ways: 1) Upfront MI premiums paid at closing, and 2) Annual (paid as part of your monthly payment) MI premiums.

Whether or not FHA MI is more expensive than Conventional PMI (Private Mortgage Insurance) depends on many different factors, including your credit score and amount of downpayment you plan to make.

As always, I”m here and available to answer any questions you have about any mortgage program. Feel free to contact me directly at any time!

What Is APR Anyway?

Homes and MoneyHere’s a quick note to let you know how I can help you—or anyone you feel comfortable introducing me to.

When some lenders advertise loans, they use annual percentage rates, or APRs. The APR combines loan fees and points with a year of interest to show the true annual cost of a loan. Consumers, theoretically, should be able to go from one lender to another comparing the APR to see which loans are better. However, lenders’ APR policies differ. For instance, some include application fees, some don’t. Therefore, two loans from different banks may have different APRs even with identical rates and points. You can see that looking only at APR to choose your loan maybe a mistake. The traditional loan officer may not accurately explain this difference to you. The only true way to compare one loan against another is to work with a reliable mortgage consultant who will break down costs item by item for you.

If you know someone trying to find the best mortgage, please call me at (208) 880-0316 or email me instead. I’ll send you my free report, How to Stop Spending Money on Rent and Own a Home Instead.

The Truth About Appraisals

Knowing the Guidelines Helps Solve the Mystery

The Truth About Appraisals

The appraisal process is always baffling to my mortgage clients. More often than not, they feel that their home is worth a higher dollar amount, and so the appraised value doesn’t always make sense to them. This is where I take the opportunity to educate them about the guidelines for appraisals in mortgage lending…because then it all starts to make sense.

First of all, it is important to know that the appraiser is completely independent from lenders, buyers, sellers, and real estate agents, and that the guidelines to which they adhere are dictated by the Uniform Standards of Professional Appraisal Practice (USPAP) and Fannie Mae. In most states, the mortgage lenders must also disclose the purpose of the appraisal, as each transaction carries its own set of rules.

In essence, these important guidelines help appraisers put a fair market value on homes based on comparable sales in the same area, and the home must be bracketed in size and value.

Here is a good example: There is no set dollar figure associated with a great view, pool, spa, bathroom upgrades, etc. If my client were to install a custom in-ground swimming pool that cost them $50,000, but the local marketplace supports the value of a pool at $15,000, then that item will be bracketed as [$15,000] on the appraisal.

Upgrades can usually be expressed at a higher percentage of their value in newer homes because the only way to obtain those upgrades was to put more money into the cost of building the home. On the other hand, the upgrading or remodeling of an older home is rarely reflected in full in the final appraisal. This is because typically 25-40% of the project involves demolition and the fixing of issues that aren’t uncovered until the project has already begun, such as plumbing or wiring that may need updating.

Ultimately, the value of the upgrades must be supported by comparable examples within the same marketplace. These comparisons must be drawn from current market activity within the last six months. This is a safeguard to prevent appraisers from attaching too high a value to the home in question, and opening up the appraisal for review. This guideline further states that appraisers can only base their opinion on the value of home sales that have actually closed.

As a mortgage professional, I make a point to follow the appropriate guidelines at all times, including the guidelines in the Home Valuation Code of Conduct, which among other things prohibits a lender from having any contact with or influence on how the appraiser values a home. Staying up-to-date on the rules of my industry promotes good relationships between all parties in the mortgage transaction, and helps to create easier and much smoother closings for my clients.

Please let me know if you have questions regarding this post’s topic or another mortgage scenario. Feel free to call me (208-880-0316) or email me anytime…I’m here to help.

Choosing a Fixed Rate Mortgage

The vast majority of my clients who come to me for mortgage service and advice are only interested in a fixed rate mortgage. I can”t blame them…as of this post, mortgage rates are at or near HISTORIC lows. It”s an incredible time to purchase or refinance because the mortgage money is so cheap right now.

Fixed rate loans now come in many different types. Generally, my clients are picking from one of two options; the 30-year fixed and the 15-year fixed (we also do 20- and 25-Year fixed mortgages). If a borrower is planning on being in the same home for a long period of time, a 30-year fixed may be more attractive because it offers stability. The monthly payment will remain consistent over the life of the loan. If interest rates are at historic lows at the time the borrower is seeking to obtain financing, this is a casino online good program to consider.

A 15-year fixed loan program offers the same stability, but the accelerated amortization schedule makes the monthly payment substantially higher. While the interest rate may be lower on this type of loan, the borrower must be willing to commit to a higher monthly payment. If the borrower wishes to retire in 15 years and be debt-free at that time, this loan program may be more suitable to the borrower”s long-term needs.

It is also possible to make pre-payments on a 30-year loan and reduce the life of the loan, as well as the overall interest payment, without committing to the higher monthly payment of a 15-year program. As long as there is no pre-payment penalty associated with the 30-year mortgage, pre-payment offers the borrower the latitude to make additional payments when it is affordable. If cash flow becomes difficult, this arrangement will not put the borrower in a compromising position.

As always, my door and phone are always open to you if you have questions about your current mortgage or would like a complimentary mortgage consultation about a new loan you are considering. Call me (208-880-0316) or email me at any time…I”m here to help!