New Digs, Same Excellent Service!

New Digs, Same Excellent Service!

Excited to announce that I am the newest member of the US Bank Mortgage Loan team! Us Bank has a n incredible reputation in our industry, and I am thrilled to be offering the wide array of mortgage services that they provide.

One of US Bank’s many services are jumbo loans (In fact, it’s their specialty.)

What are jumbo mortgages? They are home loans that exceed conforming loan limits. A jumbo loan is one way to buy a high-valued or luxury home. Borrowers are required to have a low debt-to-income ratio and a high credit score.

Interested in this type of loan or another loan? Contact me today at tera@loansbytera.com

Should You Apply for Forbearance on Your Home Loan?

Should You Apply for Forbearance on Your Home Loan?

Forbearance is a process whereby homeowners are allowed to have their monthly mortgage payments suspended.

This new term has come to the forefront for many due to the number of those who have been unemployed or otherwise facing a furlough from their employer.

More than 3.5 million mortgage borrowers had asked for forbearance as of late April, according to the Mortgage Bankers Association.

And yet, there’s still some uncertainty as to how the forbearance process actually works.

Forbearance does not mean mortgage debt is reduced. All money owed to the lender is still owed. What’s changed is the repayment schedule.

There are several ways to repay the lender once forbearance ends.

  • Payment Plans. You repay the lender by making larger monthly payments once forbearance ends
  • Loan modifications. The lender changes the loan terms. Maybe the interest rate can be reduced, the loan term extended, or both. You could reduce your monthly payments altogether while still paying back the forbearance sum
  • Lump-sum repayments. You can, if you elect, repay the entire missed amount as a lump sum once the COVID forbearance period is over

Many homeowners feared they would owe up to 12 months’ worth of payments at the end of their loan term. That means, at year 30 of a 30-year fixed $300,000 loan, you would need to come up with nearly $17,000, or lose your home.

A lump sum repayment might be required under normal circumstances. But it’s hardly a feasible solution for borrowers who have been laid off or put on reduced pay due to COVID-19.

Thankfully, borrowers who have conventional loans backed by Fannie Mae and Freddie Mac won’t be asked to make a lump sum repayment for their coronavirus forbearance.

Simply put, if you are a homeowner seeking forbearance and Freddie Mac owns your loan, you are never required to make up missed payments in a lump sum.

This is good news for borrowers. It means they’ll have access to alternative repayment plans — whether they accept larger monthly payments after COVID-19 is over, or restructure their loan to incorporate the missed amount and keep payments low.

On the downside, FHFA’s announcement didn’t clarity how those alternative repayment plans will work. If there is a standard process, FHFA hasn’t made a clear announcement about it yet.

So for now, borrowers still need to work with their loan servicers one-on-one to come up with a repayment plan that will make sense for their unique situation.

However, there is one more caveat….

Forbearance will affect your chance at getting new loans

You should only look at this option if absolutely necessary. Forbearance should not be used to fatten your purse for a few months; it should only be used if you are in financial dire straits and need some relief. This is especially important to remember if you are planning on buying a new home or refinancing in the upcoming months. Mortgage companies are not approving new loans for them until they have been out 6-12 months.

To learn more, contact me at tera@teragilbert.com.
Credit Inquiries: Whey They Matter, When They Don’t

Credit Inquiries: Whey They Matter, When They Don’t

A credit inquiry is logged when someone, either an individual or a business, requests the credit history from one of the three main credit repositories of Equifax, Experian and TransUnion. Credit inquiries are also play a part when calculating a credit score.

But there can be concerns when there are several inquiries within a short period of time but at other times these additional inquiries don’t have an impact, even when applying for a mortgage.

Soft Inquiries

There are two basic types of inquiries, a soft inquiry and a hard inquiry.

A soft inquiry is certainly a request to review credit but it’s one that is made by a third party prior to offering someone the opportunity to apply for credit. When someone receives a solicitation in the mail from a credit card company, the company previously took a quick look at a credit report to see if that person is eligible to apply.

A soft inquiry can also come from a potential employer. A soft inquiry isn’t associated with a direct request for a credit account. Consumers who get a free copy of their credit report each year, that’s considered a soft inquiry. A soft inquiry will have no affect on a credit score.

Hard Inquiries

A hard inquiry on the other hand will impact a score. A single request for credit won’t hit credit scores hardly at all, especially if the request is an isolated one. But what does affect scores as it relates to inquiries is when multiple requests for credit within a shortened period of time and for different types of credit.

For instance, someone applies for three revolving credit cards at the same time in addition to a department store card. Credit score algorithms see this as a red flag as it could indicate the individual is soon heading into some financial worries and is looking to establish some new credit lines to help ward off any potential money problems. That’s when multiple inquiries matter.

Consumers however can be confused regarding multiple inquiries. After a little online research, they can read up on what improves and harms credit scores, and multiple credit inquiries are one of the bad ones. But that’s not necessarily the case as it relates to home loans.

Let’s say someone has applied for a mortgage. But after two weeks the applicant hasn’t heard from the loan officer. No correspondence, no return phone calls, just a lot of unanswered voice mails. Thinking that applying for a mortgage with another company would trigger another hard inquiry, the applicant just sits tight and prays the loan will go through and close on time. However, that doesn’t have to be the case.

The Consumer Financial Protection Bureau, or CFPB, has established guidelines as it relates to credit inquiries. With a mortgage, a consumer can in fact apply with a new lender and have a new credit report pulled with no effect on scores whatsoever. How? The rules state as long as the inquiry is made for the same purpose (buying a home or refinancing a mortgage) and made with a 45 day period, the additional inquiry is benign. There is only an issue if an application was made, the loan not closed and applying again four or five months later. But if a new request for a mortgage is made within that 45 day window, no harm and no foul.

Apply for a home loan at teragilbert.com

This is the Most Misunderstood Number in the Mortgage Business 

This is the Most Misunderstood Number in the Mortgage Business 

The Annual Percentage Rate, or APR, is often the most misunderstood number consumers see when applying for a mortgage.

Even though consumers are provided mounds of documentation explaining various processes, closing costs and cash-to-close requirements, it seems the APR is the number that causes more head-scratching than others. Too often, even the individual loan officer can’t explain the APR without getting confused or worse, telling the applicant that it’s not really that important and to ignore it. The note rate is used to calculate monthly payments, not the APR.

The explanation is this: The APR represents the cost of money borrowed expressed as an annual rate. That’s it. It’s that simple.

How is it calculated?

It’s a combination of the note rate, the rate used to calculate a monthly principal and interest payment with a nod toward certain closing costs needed to get a particular rate. Lender fees and other third party services may also be needed, and they all need to be paid for at the settlement table, referred to as finance charges. But upon an initial application where disclosures are required by statute to be prepared and delivered to a borrower, the APR must be disclosed at the same time.

APRs are supposed to provide consumers with the ability to shop around for rates and compare one lender to another. The thinking is if one lender has a lower APR than another, then the lender with the lower APR is offering the best deal. But that’s not really the case. APRs can vary based upon the term of the loan, closing costs and which day the APR was initially prepared. An APR for a 15 year loan will be different than the APR for a 30 year loan even with the exact same loan amount. APRs are good consumer tools, but only if properly used.

The key is the difference between the note rate and the APR. If there is somewhat of a large disparity between the two, that tells you there are more fees involved. An APR where the difference between the note rate and APR is relatively minor, tells the borrower there are fewer prepaid finance charges needed to get the desired rate.

Here’s an Example

A borrower gets a note rate of 3.25 percent and the APR is disclosed at 3.27 percent. Now, the borrower gets a note rate quoted at 3.25 percent and the APR is 3.50 percent. This is all for the exact same loan term and loan amount, remember. The loan with the 3.27 percent has fewer finance charges needed compared to the 3.50 percent number. Lower finance charges provide a lower APR number.

When you receive your loan disclosures, review your documents carefully and look for the APR number in the file. It will be there. If you have any questions about the APR, simply call me and we’ll review together. But put simply, the APR represents the cost of money borrowed expressed as an annual rate.

Ready to own your dream home? Click here to apply.


Fed Cuts Rates for First Time in Nearly 10 Years And That’s Good News For You

Fed Cuts Rates for First Time in Nearly 10 Years And That’s Good News For You

In a surprising move, the Federal Open Market Committee, or FOMC, lowered the Federal Funds rate by 0.25%, from 2.25 to 2.00, reversing last December’s rate increase of 0.25%.

The Federal Funds rate is the rate that banks charge one another for overnight lending, and while it isn’t directly tied to your standard 30-year fixed mortgage, it does hint that the FOMC believes the economy is booming and will continue to do so several months down the road.

And what does a healthy economy mean? You guessed it—lower interest rates on home loans.

Now is the best time ever to apply for a mortgage loan. Are you ready to be a homeowner? Apply today.

Hamilton for Heroes: Now Available to Help Even MORE Heroes!

Hamilton for Heroes: Now Available to Help Even MORE Heroes!

DID YOU KNOW?: The Hamilton for Heroes mortgage program is not only for active and retired Military and Veterans. These benefits are now available to active Police Officers, Firefighters and Emergency Medical Technicians (EMTs).

We want to thank our Heroes for helping to make our communities safer places to live! When our Heroes purchase or refinance a home, we will waive our lender fees (a value of $1,590).

  • First responders (firefighters, police officers and EMTs), active and retired military, veterans and surviving spouses are eligible
  • No limit to the number of times an eligible borrower can take advantage of this offer
  • A variety of Hamilton purchase and refinance loan programs are eligible for the offer in addition to VA loans
  • VA loans offer additional benefits such as no down payment and no mortgage insurance to military personnel
  • Dedicated service from a team of mortgage experts who understand the unique needs of our heroes
Please call or email me today to learn more about how we can work together to help our Heroes become homeowners! You can also apply online.

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