Category Archives: Lending

Recent Changes in USDA Rates

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If you’ve been in the market for a mortgage lately, you’ve undoubtedly heard a lot of commotion about the recent changes in USDA rates, and are probably wondering what this means for you, a person who is looking to purchase or refinance a home. On May 16, 2016, the USDA recently announced a series of changes that will make it cheaper and faster to refinance a USDA loan. We’re here to break it all down for you.

To begin, it’s important to understand what a USDA loan is. USDA loans are mortgages backed by the US Department of Agriculture as a part of its USDA Rural Development Guaranteed Housing Loan program. USDA loans have increased in popularity over the past few years due to their 100-percent financing program that helps approved lenders provide low to moderate-income households with an opportunity to own a home in a rural or semi-rural area (to buy it, refinance it, build it, rehabilitate it, improve it, or relocate another dwelling) with no down payment, reduced mortgage insurance premiums, and an attractively low monthly interest rate. No, you don’t have to be a farmer to obtain the loan, you just have to meet the following criteria:

  • Meet income eligibility
  • Agree to personally occupy the dwelling as your primary residence
  • Be a US Citizen, US non-citizen national, or qualified alien
  • Demonstrate the willingness to meet credit obligations in a timely manner
  • Purchase a property that meets all program criteria including location as defined by the USDA

The loans were created in 1991 to encourage homebuyers to live in rural and suburban areas in hopes of boosting the local economies and growth through more affordable housing options. So what do the new changes mean? Nothing but good news for those who qualify!

Starting June 2nd, 2016, homeowners current on their mortgages for the past 12 months will no longer be required to secure an appraisal, provide a credit report, or undergo a debt-to-income calculation when they refinance for a 30-year term, saving applicants both time and money.

Average savings are expected to be around $150 per month, with some borrowers saving up to $600 per month. When it comes to the changes, Rural Housing Service Administrator Tony Hernandez says “These changes reaffirm the Obama Administration’s commitment to middle-class Americans, and I am pleased that we continue to provide affordable housing to support thriving economies in rural communities. Helping homeowners refinance their homes to reduce their monthly payments and take advantage of low-interest rates will bring increased capital to rural residents and the communities where they live and work.”

Interested in seeing if you qualify for a USDA loan or refinance? Contact us today!

Alpha Mortgage – April Recap

It’s officially May, and the housing market is heating up just like the weather in Wilmington,NC! This month’s blog will cover the updates on the CFPB’s decision to revisit TRID, the hottest smart-home technology to keep an eye out for, as well as the 20 hottest markets in the US for April. Enjoy!

http://www.constructiondive.com/news/20-hottest-housing-markets-in-april/418340/

http://www.constructiondive.com/news/20-hottest-housing-markets-in-april/418340/

Revisiting TRID– You all recall the four letters that started to cause chaos in the real-estate industry late last year- TRID. TRID, also know as the ‘know before you owe’ rule was put into place to help the borrower be better informed and protected during the lending process. The process was expected to transition seamlessly into the lending community, but unfortunately, the rule has run into a few hiccups and many complaints. The biggest? Lack of understanding.

TRID is extremely complex, and many mortgage officers and investors have had a difficult time understanding if they are complying with such a large and intricate rule. Industry groups also have asked for guidance on many other issues like curing errors, accounting for lender credits, and calculating cash-to-close transactions.

7 months after its implementation, the Consumer Financial Protection Bureau (CFPB) has announced that it would reopen rulemaking, with a notice of proposed rulemaking expected to be released by late July to provide greater certainty and clarity to the mortgage industry.

According to Dodd Frank, the new rulemaking, governing what also is known as the Know Before You Owe mortgage disclosures, would incorporate some of the bureau’s existing informal guidance as well as provide adjustments in the regulatory text and commentary, CFPB Director Richard Cordray said in a  letter to the industry.

The industry is pleased that the CFPB is being so receptive of their concerns and complaints. Cordray gives more peace of mind writing “We will continue to work with industry, consumers, and other stakeholders to support a smooth transition for the mortgage market. As we do so, we and other regulators are all agreed that our oversight of the implementation of the Know Before You Owe mortgage disclosure rule in the months ahead will continue to be sensitive to the progress made by those entities that have squarely focused on making good-faith efforts to come into compliance with the rule.”

-Top 5 smart home features– While some people may have thought that by 2016 we would be living in a world of flying cars and homes that would virtually do everything we needed them to and more on their own, we aren’t quite there yet. Take your home to the next level this year by investing in these 5 smart-home features that are guaranteed to make your life easier and your home’s value increase as written by US News.

1. Keyless entry systems. With these replacements for standard locks, homeowners don’t have to worry about carrying keys. They can also give instructions to others on how to get into the home when they’re not there.

2. Smart thermostats. Thermostats have grown beyond a mechanism that you can program to raise and lower the temperature. Today’s smart thermostats can be controlled via your computer or smart phone and will even learn habits such as when you’re usually at home and if you raise or lower the temp when you get up or at certain times of day, like when you go to bed.

3. Alarm systems. Today’s home security systems include controls for thermostats and lighting and have features that allow you to arm and disarm them remotely, using a computer or a phone. Security cameras also have fallen in price and grown in popularity among homeowners.

4. Hidden or unobtrusive built-in speakers. Wired speaker systems are still popular, but the speakers are smaller and there may be more than two to a room, Galante says. That makes it easier for homeowners to customize sound for, say, a party.You can expect to see more of these four smart home innovations in the future:

5. Smart building materials. Shingles will be able to notify you of leaks, drywall will detect moisture and wood framing will report termite infestations. “That’s the stuff that’s coming seven to 10 years down the line,” Galante says.

Realtor.com’s 20 hottest markets for April featured many of the same cities from March (we’re talking about you, California), however, there was a spike in popularity around the mid-west that it is important to take note of. So why is this important? Jonathan Smoke, realtor.com’s chief economist explains. “The Midwest region is representative of the status of the broader U.S. recovery. When Columbus, Ohio, is the 10th hottest market in the country, you know that the Midwest – and the U.S. overall – is back and doing well.”

Also on the list? Raleigh, NC at number #15, showing the US that North Carolina is definitely an area to watch in terms of quality of life and property. Check it out:

1. San Francisco

2. Vallejo, CA

3. Denver

4. Santa Rosa, CA

5. San Jose, CA

6. Dallas

7. Santa Cruz, CA

8. Sacramento, CA

9. Ann Arbor, MI

10. Columbus, OH

11. Boston

12. Colorado Springs, CO

13. San Diego

14. Stockton, CA

15. Raleigh, NC

16. Lafayette, IN

17. Fort Wayne, IN

18. Oxnard, CA

19. Modesto, CA

20. Sioux City, IA

As we move into the Summer months, we invite you to stay tuned to the latest in mortgage and real estate news. We are proud to serve the Wilmington, Charlotte, Jacksonville, Winston-Salem, Greensboro, Fayetteville and Asheville areas with the most competitive mortgage and lending services at the lowest rates. Let us help make getting your dream home a reality!

NC Housing Loans – The Basics

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Owning a home is an integral part of the achieving American Dream. But where do you begin the process? This blog will teach you the basics of NC Housing Loans and what you need to do to prepare for your first home purchase.

Step 1: Start Early

The first thing that you need to do when you have decided to purchase a home is determine the negotaibles and non-negotiables involving where you will reside and start your research. What do you want in the house? Where do you want to live? Most importantly, what is your budget and can you afford a house? After you figure out the necessities your new home needs to make you happy, start your research.

Subscribe to newsletters, read magazines and newspapers with real estate listings, and research websites that have listings as well. Note how long homes that interest you stay on the market in the area you’re moving to, price, and size that you can afford in the area. Also be sure to watch changes in price over time.

 

Step  2: Get Preapproved

It’s always a good idea to get pre-approved for a mortgage if you can. You may have a basic idea on how much you believe you’ll be able to spend on a home, but until you get prequalified or approved for a mortgage, you won’t know for sure. To get preapproved, meet with your mortgage banker. They’ll tell you the price range of homes you should be looking at.

Step 3: Find your Dream Home

Once you get preapproved for a mortgage, you need to find your home. Find a real estate agent that you can trust, and who is easy to communicate with, and goes above and beyond to provide you with insight about properties you are interested, as well as the areas that these properties are located in. Tour the homes, take notes, take pictures and videos, and be as transparent with your likes and dislikes as possible with your agent!

When you find your home, have your real estate agent negotiate an offer that is fair based on location, size, and value of comparable houses. When you reach an agreement with the seller, the home goes into escrow.

Be sure to get a home inspection within a few days of your agreement to make sure that everything is A-OK with your home, and to make sure that any issues found are can be dealt with through renegotiation, withdrawal without penalty, or understanding what else needs to be done. If there are issues with the home that you want to discuss with the seller, know your options! Ask the seller to fix issues before closing the sale.

Step 4: Find an amazing Loan Officer + CLOSE!

You’ve settled on “The One.” Congrats! The next thing you need to do is find a loan officer that will help you navigate the waters of financing your home through an NC housing loan. A loan officer should be many things, especially transparent, passionate, and accountable on top of other traits. Be sure that you choose a great loan officer, and that you discuss any eligibility you may have for special types of loans like (VA Loans, Jumbo Loans, etc.). You will also need to discuss whether a 15-year or 30-year mortgage works best for you. Once you and your loan officer find a payment plan that best suits your needs, they will arrange for an appraiser to ensure that you will be paying a fair price for the home.

Following an appraisal, the paperwork begins. Your loan officer will coordinate everything and ensure that all rules, ordinances, and laws are met with your home purchase. Once this step is complete, you can close the sale and enjoy your new home!

Alpha Mortgage is a full service mortgage banker offering in-house processing, underwriting, closing and funding. In addition to new purchase loans, Alpha Mortgage specializes in home refinances with various programs and the lowest rates. Our mortgage professionals are well versed in all aspects of how the refinance process flows and can look at your previous loan package and find the best way to make your new mortgage work best for your financial goals.

2016 Housing Market Predictions

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New Year, New Housing Market? Not so much. According to many housing predictions, 2016 will bring a whole lot of the same to the table. But is this a bad thing? Absolutely not. While 2015 was known as the best year for housing since 2007 due to many factors such as increased employment rates, implementation of TRID, and more, 2016 will also continue the housing market’s upswing- just not as exponentially.  We’ll start to secure a ‘normal’ in 2016. Remember that word?!

Here are our 2016 Housing Predictions:

  1. Increased Interest Rates– The Federal Reserve is expected to continue to raise interest rates in the short term between now and 2016’s end, & homeowners who have adjustable-rate mortgages or home equity loans will most likely see their interest rate rise as a result.  Housing wire goes as far to say that Fixed-rate mortgages will also rise, perhaps up one-half of a percentage point between now and the end of 2016, reaching 4.5% for 30-year loans. Despite this increase in interest rates, mortgage rates will remain historically low. If the rates do start to rise in 2016, as gradually as they may, we could see slightly lower home-buying numbers next year. But these changes will be minimal due to the continued increase in economic expansion and employment numbers- meaning more people are becoming able to afford houses.
  2. Evolving Mortgage Process – Mortgages may be in reach for more Americans in 2016 due to legislation that would allow Fannie Mae and Freddie Mac to take into account new ways to measure creditworthiness like evaluating rental history and utility bill payments instead of just the FICO credit score. More loans may also allow buyers to include income from room rentals, etc. More lenders are continuing to ease credit standards, and don’t see that changing in the future.  This is good news for potential homebuyers!
  3. Increased Housing PricesReverse Mortgage Daily reports that appreciation in national home price indexes will likely continue at a faster pace than inflation, but grow more moderately than last year. The CoreLogic Home Price Index was up about 6% over the last 12 months, and CoreLogic anticipates a rise of 4-5% during 2016. This increase in home sales and prices can be attributed to the improved economy, which has brightened the financial outlook for many families and enhanced their overall financial security. Prices may be higher, but they will still be affordable to most.
  4. More first time buyers– We expect first-timers to make up a bigger portion of the market than they did this year. The reason is simple: The market will be more welcoming to them thanks to the aforementioned slowing price growth and easier access to loans. It is important to note that Millennials & Young Gen X’ers are expected make up the largest demographic of home buyers in 2016 because they have recovered from the financial crisis, are entering their prime professional years, as well as their prime family raising years.
  5. Rental Homes & Millennials– According to a recent analysis by the Federal Reserve, outstanding student loan debt now totals more than $1 trillion. Student loan debt can create additional hurdles for mortgage shoppers. It increases the borrower’s total debt-to-income ratio, which can cause problems during the underwriting and approval process, and excessive debt can lower a person’s credit score. All of this makes it harder for Millennials to qualify for home loans.  This is why we predict rental homes will continue to increase in popularity- Millennials simply can’t afford homes. Rental vacancy rates for both apartments and houses are at, or near, their lowest levels in 30 years, and rents are rising quicker than inflation.
  6. Smart Homes/ Housing Tech – Smart homes and houses with more technological features available at time of sale will continue to become more popular. Features like beacon technology, security tech, VR and more will make homes more appealing. Smart home features will start to be expected by consumers in 2016.

We can’t wait to help you own your dream home in 2016! On behalf of all of us from Alpha Mortgage, we wish you a very happy New Year!

 

What is a Jumbo Loan & Would I Qualify

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It’s over halfway through 2015 and the luxury housing market is booming. According to the Washington Post, soaring prices and sales in the luxury market are factors due to the rapid growth of “jumbo loans” in the Washington area and around the nation. Nearly 1 in 4 mortgages originated in 2014 around the country were jumbo loans, spurred also by lenders’ efforts to make the mortgages more attractive to buyers. 

What is a Jumbo Loan?

A Jumbo Loan is a conventional mortgage with a loan amount that is higher than $417,000 in most areas of the United States, exceeding conforming loan limits imposed by Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac, the large financial agencies that purchase the bulk of US residential mortgages from banks and other lenders, allow for institutions to free up money to lend more mortgages to those looking to purchase homes. Jumbo loans happen when Fannie Mae and Freddie Mac do not cover the full amount of the loan, which normally occurs when homebuyers are looking to buy larger, more luxurious homes, which come with a higher price tag.

Difference between Jumbo Loan and Conventional Loan

 In the past, jumbo loans have required higher interest rates from buyers, but according to the WSJ, low interest rates triggered a refinance flurry in the first few months of 2015 and the volume of jumbo mortgages—those above $417,000 in most places and $625,500 in some high-price areas—reached an estimated $160 billion in the first six months of 2015, up about 36% from a year ago at the same time, says Guy Cecala, publisher of Inside Mortgage Finance, which covers the industry. Since these normally higher interest rates have stayed relatively low, the main difference between a Jumbo Loan and a Conventional Loan is just the higher monetary amount and monthly payments that the loan is for.

Qualifying

So how do you know if you as a borrower qualify for a jumbo loan? To secure a jumbo loan, you must start by having a high credit score (greater than 700), and low debt-to-income ratio (no more than 45%)  . As a lender, there are some risks associated with providing jumbo loans since they are worth more money (and come with the potential to lose more). In order to secure a jumbo mortgage, you will have to put down a higher down payment than with a conventional loan. Along with a higher down payment (typically around 20% of the price of the home), the monthly payments and interest rates will also be higher- although in recent years interest rates for jumbo loans have been reduced. The Washington Post reports that today, the interest rates and down payment requirements are more aligned with conforming loans, making them more appealing for borrowers. Jumbo loan borrowers still typically need to prove they have cash reserves in the bank, a high credit score, a solid employment history and a low debt-to-income ratio in order to be approved.

Remember- jumbo mortgages are great solutions for those looking to buy higher-priced homes, and it is critical to do your research when trying to secure the best value. In the very near future, interest rates for jumbo loans are expected to rise especially if the Federal Reserve raises its interest rate benchmark (expected in September), so for the best rate, don’t wait! Need more assistance? We can help. Contact Alpha Mortgage today and make the first step in securing your jumbo loan.

Should I choose a 15-Year Mortgage or a 30-Year Mortgage

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So you’ve found your dream house, and have decided to start the lending process so that you can own the keys and start making it a home. Congratulations! Once you’re sure that you can afford the home, and have found an informed and transparent loan officer, the next thing as a buyer that you need to consider is whether you should choose to secure 15 year fixed mortgage, or a 30 year fixed mortgage. When determining which loan option is best for you, it is important to weigh out the differences in affordability, your degree of job security, as well as your saving habits.

The main difference between a 15 and 30-year loan is that fifteen-year loans typically have higher monthly payments with less interest, and thirty-year loans usually have lower monthly payments in which you end up spending more interest over time. The first step in determining which term to choose is using a mortgage calculator and crunching the numbers to figure out your specific individual options and the difference in monthly payments and total amount spent. Then, ask yourself what you can honestly afford. If you can comfortably make the 15-year fixed mortgage rates, do so. If not, the 30-year option is probably best for you. Remember that making extra payments when possible is always an option (although according to the FDIC, 97.3% of people do not consistently pay extra on their mortgages).

It is also essential to evaluate your job security and emergency funds when determining which loan to choose. Are you in a position/job with a paycheck steady enough to make those payments every month? It is important to remember that once you sign the loan, you will be required to make the same payment each month, and if you choose to go with a higher monthly payment (15-year loan) it is a good idea to have an emergency fund in place just in case something happens. If you don’t have adequate savings in place, or lack an emergency fund, it is a safe bet to go with a 30-year option.

Financial saving habits are also important to consider when determining whether to go with a 15-year or 30-year loan. Before choosing which term you want to have your loan on, evaluate your spending habits. According to USA Today, many people may lack the discipline needed to save long-term, especially in amounts that would offset what they would save by switching (from a 30-year) to a 15-year mortgage. A lot of times people need that extra money for something else, so they choose to keep their money in a 30-year mortgage with lower individual monthly payments. It is important to realize that you can always pay more of your mortgage off monthly, however, many people lack the discipline to send in the extra money every month when it isn’t required by the bank. If you are confident in your financial personal discipline, and do not tap into your savings (or will need to in order to afford a shorter term), a 15-year loan might be a good option to consider.

Be sure to consider your age and professional plan for the next 15-30 years when deciding whether you want to choose a 15 or 30 year loan. Are you planning on retiring? Do you plan on having children? What about other expenses that you will have (car, student loans, etc.)? Once again, it is important to answer these questions as honestly as possible, and to go over your options with your loan officer, who will be able to give his/her honest opinion based on individual circumstances and plans and which term will be best in your scenario.

Remember – in the end, your individual financial situation, goals, and comfort levels will determine which mortgage term you should choose, and what may be right for someone else doesn’t necessarily mean it will be right for you. However, a good rule of thumb remains: if you’re comfortable making higher payments (and have an adequate emergency fund), can meet other important financial milestones such as retirement and large expenses like cars and student loans, and have strong personal discipline when it comes to finances, a 15-year mortgage is a great option to own your home in half the time you would otherwise. If any of these conditions make you uncomfortable, it is better to go with the 30-year fixed loan and add in extra payments if you can. Let Alpha Mortgage help you make the right decision when it comes to choosing your loan term.

How to Apply for a VA Loan in North Carolina

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A VA loan, formally known as a Veteran Affairs loan, is a mortgage loan in the United States guaranteed by the US Department of Veteran Affairs that is designed to offer long-term financing to eligible American Veterans in order to help secure housing. VA loans are available for the primary residences of Veterans, active duty members, certain surviving spouses, certain Reservists, and National Guard members, and provide excellent benefits for those who are approved. Benefits of getting a VA loan include equal opportunity, little to no down payment, no monthly PMI, home appraisal and reasonable value calculated, negotiable interest rate, reasonable closing costs, assistance to borrowers, and the ability to finance the VA funding fee.

The US Department of Veteran Affairs doesn’t directly fund the loans through the program, but instead backs them from private lenders such as banks and mortgage companies,  which is why Alpha Mortgage can provide VA Loans to those who qualify in North Carolina with more favorable loan terms than they may normally receive.

In order to apply for a VA loan in NC, there are a few preliminary steps one must take in order to reach the application process. The first thing you will need is a Certificate of Eligibility that one obtains from the VA. A Certificate of Eligibility (COE), provides lenders with the evidence that they need to determine if one is qualified to receive a VA loan. As stated on the official website, “The evidence you need depends on the nature of your eligibility.” They provide a table to reference during this process here.  It is important to make sure that all of the qualifications

After you figure out what specific evidence you need, and that evidence  has been collected, there are multiple ways to go about actually applying for the loan- including online, through your lender, or through mail. Once the loan is approved through the U.S. Department of Veterans Affairs, the rest of the process can be taken care of through your lender.

Whether you have been approved for a VA loan already, or need assistance in the process, remember that Alpha Mortgage is here to help with all of your VA loan needs! Contact us today!

Mortgage Market Update

Housing news dominates the headlines this week. The Commerce Department reported on Tuesday that sales of newly constructed homes rebounded in April, up from the dip in March, as the spring buying season got underway. New Home Sales rose by 6.8% to an annual rate of 517,000, which was above the 510,000 expected. Since April 2014, sales are up a whopping 26%. The median price for a newly constructed home in April was $297,300, up 8.3% from a year ago. The report comes after a contrast in Existing Homes, which makes up a bulk of the market, which fell 3.3% in April.
Data from the Case Shiller 20-city Index on a year over year basis revealed that home prices rose by 5% from March 2014 to March 2015. Home prices have now risen year-over-year for 35 consecutive months following the housing bubble bust in 2007 and 2008. The 5% gain was above the 4.6% expected, while matching the February annual gain. From February to March, prices were up 0.9%. “The pattern of consistent gains is national and seen across all 20 cities covered by the S&P/Case-Shiller Home Price Indices,” said David Blitzer, managing director and chairman of the index committee.
The last positive report today showed that May Consumer Confidence rose from April. The Index rose to 95.4 in May, above the 94 expected and up from April’s reading of 94.3. The report read that business conditions remained “good” last month, while the employment component said that those stating jobs are plentiful rose to 20.7% from 19%. The monthly Consumer Confidence Survey®, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch.