Here is an example using a $120,000 loan with interest rate of 5% on the 30 year option and 4.5% on the 15 year.

• A 30-year term would give a monthly principle and interest payment of $644.  The borrower would pay $111,905 in interest, and $231,905 over the life of the loan.
• A 15-year term would give a monthly payment of $918; pay $45,239 in interest, and $165,239 over the life of the loan.

The 30-year term has a lower monthly payment by $274 but will cost $66,667 more in interest over the life of the loan. The benefits of the 15-year term are the considerable savings in interest.  The drawback is your monthly payment is higher.

But what if you opt for a 30 year and pay if off in 15?

An extra $305.00 per month or $949.00 total P&I would payoff the house in 15 years and cost $50,790 in interest charges. I personally like this option and often recommend it to my clients when asked because it allows for wiggle room should something financially negative happen. Of course the main draw back being self-discipline; if you can’t be consistent and you really want to payoff your home in 15 years then a 15 year note maybe for you.

Feel free to contact me with any questions.

Typically when someone currently owns a home and they decide to buy a new principle residence they have 3 options:

1. Sell the current home and payoff the mortgage

2. Convert the property into a second home assuming they qualify with both the existing and new house payments.

3. Convert the property to an investment property and provide documentation that they will rent the property and use the income to offset the mortgage payment.

Number one is obvious and needs no real explanation but 2 and 3 have ifs’ that must be considered. With option 2 the second / vacation home must be far enough away from the new principle residence so that it can be considered as  a second / vacation home. From my experience lenders typically want to see at least a 100 mile distance between properties. No you can’t buy the house down the street and call your current home a vacation home.

Under conventional guidelines if you do want to buy the house down the street you may be able to take advantage of option 3 and use the rental income to offset the mortgage payment if:

1. You have a fully executed lease agreement with a security deposit received, documented and deposited.

2. You must have at least 30% equity in the house. This can be determined with a current appraisal, an AVM (Automated Valuation Model) or a BPO (Broker Price Opinion) less any outstanding liens. Most lenders require an appraisal.

If 30% equity cannot be shown then you can still rent the house but you cannot use the rent to offset the mortgage payment and you must qualify with both the current and the new house payment. Also, you must document at least 6 months reserves for both properties. For example if the current and new PITI including any mortgage insurance total $2000.00 then you need $10,000 in reserves. This can be liquid or accessible retirement funds.

A second financing option would be an FHA insured loan. Keep in mind though that typically you are only allowed one FHA loan at a time. There are extenuating circumstances that may allow you have more than one FHA loan but usually no more than one.

Under FHA guideline you may use rental income to offset mortgage payments if either one of these apply:

1. If you are relocating with a new employer  or being transferred by your current employer to an area not within reasonable commuting distance. A fully executed lease agreement must be provided with proof of security deposit or first months rent.

2. Sufficient equity in the home of at least 25% is documented by either an appraisal no more than 6 months old or by comparing the current principle balance with the original purchase price. So if you bought the house for $100,000 and you owe $75,000 you should be OK.

Also, keep in mind whether utilizing conventional or FHA financing lenders only let you use 75% of rent to offset the mortgage payment including taxes, insurance and mortgage insurance; the other 25% is considered maintenance expense. For example if your current house payment is $1000 including property taxes, homeowners insurance and any mortgage insurance then only $750.00 can be used to offset that; meaning that you would still have a negative $250.00 per month that must be included when calculating your monthly debt to income ratios.

It is very important when getting pre-qualified that your loan officer understands these guidelines and knows how to apply them to your situation. If they don’t ask you questions like:

1. What kind of loan do you have now on your current home
2. How much do you owe
3. Why do you want to move to another home

Then they may be providing you with a false approval and you will be in for a very aggravating loan process.

I help people all over Arizona with there mortgage needs feel free to contact me with any questions or concerns. My primary goal when working with someone is to make sure I provide a true and valid pre-approval while at the same time making the loan process as head-ache free as possible.

My Path2Buy coaching system will coach you through the process of identifying and resolving the issues that are holding you back.  This is not a quick fix to get you into a home – it’s a process that can take months and sometimes years.  Our free face to face consultation will help you identify strengths and weaknesses, as well as any threats to your financial stability.

Are you insecure with your job? If your answer is yes – you’re probably not alone. We’ll identify the factors that are causing your concern.
In some cases, the problem can be resolved quickly – in other cases, you just may need to weather the current economic forces before you feel secure.

How’s your credit? The world of credit is very complex today. We will guide you through the steps necessary to maximize your credit profile and credit score.  Many times you just need to know the rules of the credit game in order to make improvements.

Can you really afford the payment?  If your current debt is too high, we’ll help develop a plan to bring your debt under control. We consider your personal comfort level.  We want you to feel secure long after your closing.

Do you just not have the funds required to buy a property? In this direct deposit – debit card world, we know how hard it is to
save. We have created a program similar to the old Christmas Club and Lay Away programs from years past.

We also know that other obstacles keep people from moving forward with a home purchase.  Today’s newspapers, television and internet are full of misinformation.   There is certainly no shortage of “experts” spewing wrong information. We’ll teach you how to recognize fact vs. fiction.

If you want to be a homeowner at some time in the future – whether in 5 months or 5 years – you owe it to yourself and your family to get
the plan that will put you on the Path2Buy.  You will leave with a customized plan that gives you adequate time to save more, clean up credit issues, reduce your monthly debt, and my commitment to ongoing assistance to help you stay on your Path2Buy.

I firmly believe that no matter how low home prices or interest rates are, if you have issues causing you concern, IT’S OK NOT TO BUY  – but it’s not OK to be without a plan.  Call me today to schedule a time for your free Path2Buy consultation.

Call me today to schedule a consultation at 602-684-0866 or email me at Avaldez@WaterstoneMortgage.com

Waiting Periods PDF File

Please feel free to email or call me with any questions.

MEDIC! …. WE HAVE A  MAN DOWN AND WOUNDED! ….WE NEED A MEDIC!….MEDIC!

May 5^th, 1976 is burned into my mind forever. It  is the day I volunteered and joined the U.S. Army. Enlisting as a Combat Medic and  enduring basic training at Fort Sill, Ok. , educated at Fort Sam Houston and honorably  discharged December 1982 @ Fort Devin, Mass. Those were the years that truly  define who I am. I am a medic at heart. Those of you who know will understand.

“Few people are aware of the personal sacrifices the aid men  went through. We were not strangers with the platoon we served with, everyone  was a comrade. And unlike the other members of the platoon who can’t stop to aid a wounded buddy, have no idea how it tears the aid man apart to witness one  of his buddies wounded and helpless. We eat, sleep, laugh, and yes even cry with these comrades, we become a family, and like any family, death affects us  all. But more so because it is the aid man who remains with the wounded, until  he can stabilize the wounds and have him delivered to batt. aid station. I can never describe the feeling you get when you see your closest friend dead from  his wounds, and knowing that you were unable to save his life. But it has one  advantage, you learn not to become too close to anyone, because the pain is too  deep when it was a friend who had died. You have to remove every emotion in  your body, or end up a raving madman. No one can ever understand that unless  they themselves lived it. In every war history book you read, there is never a description of what the aid man truly feels, and you never will. That is why I  have chosen to give a detail account of the pain and sorrow that the aid man  lives with every single moment of the day. It isn’t the acts of the aid man  that becomes important but rather the inner pain that he carries within  himself. A pain he dare not show publicly, for to do so you risk the probability that others may see that pain, or (fear) which would demoralize the riflemen who put their trust in your hands. I’m human and like all humans I’m born with fear, but we can control that fear when faced with the realization that there are others who depend on you’re ability to save their lives. I never considered myself a brave man. There wasn’t a moment that I wasn’t scared, but that’s a disadvantage an aid man has to live with, we either control it, or demand to be relieved of their duties. There is one thing I discovered in combat, the vast amount of soldiers can control that fear.  While there are others who are too stupid, to understand the meaning of fear, and they are the most dangerous, because in their  drive to win medals and return a hero, they take risks that eventually ends up  getting someone else killed.”—Albert Gentile,  Aid-Man for Company B, 333rd Infantry, 84th Infantry Division, WWII.

Let us all pray and remember the Medic this day. Not only for those that have passed but especially for those who are experiencing the pain of war today.

But today it’s a different deal. Today a family can buy a nice house for under $150,000. Heck depending on how far you’re willing to commute you can get a relatively new house ( less than 5 years old ) for under $100,000. This combine with interest rates that I haven’t seen since 2003 makes for a very good time to buy. I think.

In fact I recently helped my son finance his first home. Nothing special… he got the same loan that anyone with a decent credit score of at least 640 would get. In fact his interest rate is a little higher than what I have been able to offer others with the same qualifications recently. He makes $9.00 an hour and didn’t have much debt so he qualified for a house that sold for $79,500, with FHA financing and 3.5% (about $2800.00) down payment his house payment out the door was under $575.00 per month. He can’t rent for that.

Here is an interview I found at Business Insider who interviewed Barbara Corcoran.

“Because we have a regular real estate miracle happening right now,” says  Corcoran. “We not only have record low prices, but we also have cheap money.”

Read more: http://www.businessinsider.com/barbara-corcoran-housing-market-08-2011-3#ixzz1NbNhUzLa

Barbara  Corcoran’s credentials include straight D’s in high school and college and  twenty jobs by the time she turned twenty-three. But it was her next job that  would make her one of the most successful entrepreneurs in the country when she  took a $1000 loan to start The Corcoran Group. She parlayed that loan into a  five-billion-dollar real estate business which she sold in 2001 for $66 million.  She knows real estate.

On February 14^th, 2011 FHA issued HUD MORTGAGEE LETTER 11-10 announcing an increase to the current monthly MIP for both 15 year and 30 year mortgages. This increase designed to bolster FHA capital reserves so that they can meet there Congressionally-mandated obligation to maintain a two percent capital reserve ratio in its Mutual Mortgage Insurance (MMI) fund.

FHA does not provide mortgage loans but in fact insures them to the lender. This insurance essentially offsets some of the risk lenders take in issuing mortgages under FHA guidelines.

The MMIF is the largest of FHA/HUD operated mortgage insurance funds. The others are: the General Insurance Fund (GIF), the Special Risk Insurance Fund (SRIF) and the Cooperative Management Housing Insurance Fund (CMHIF).

Through those Insurance Funds HUD provides insurance for mortgages on single and multifamily units, manufactured homes, and certain health care facilities.

All borrowers taking FHA-insured loans have to pay mortgage insurance premium (MIP) – it is charged both as an upfront cost upon closing the loan and on a monthly basis. The MIP is partially refundable if the loan was repaid in the early years.

So what does this mean to homebuyers with FHA case numbers assigned on or after April 18^th, 2011? In basic terms the payment goes up because the MIP went up. This increase represents an approximate 28% increase in the monthly MIP.

In other words if your MIP payment was $118 it is now $151.

Here is the HUD MTG LTR 11-10

http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/11-10ml.pdf

If you are a buyer on the fence … get off with this news or it will cost you money.

If anyone needs a pre-approval give me a call.

Tony Valdez

Loan Officer Extraordinaire

602-684-0866

Let’s make something perfectly clear I am not a credit expert but over the last 9 years I have learned a thing or two about credit and buying a house. First, paying off your collection accounts, while necessary in some cases, will not have a huge impact on credit scores.

What will have a huge impact is coming current on your past due accounts and keeping them current, decreasing your outstanding balance on credit cards to less than 50% of limit and establishing new credit. These are the areas I have found over the years to have the greatest impact. The first two possible credit repair solutions are simple but what about establishing new credit when it seems no one will give you credit based on your past history.

3 words …. Secured Credit Cards are a great source of re-establishing or establishing a credit rating. But as with anything “BUYER BEWARE”.

THE GOOD

These cards have reasonable interest rates with low annual fees but require a “security deposit” of $300 to $500. This money is deposited into an interest bearing account and is the basis for your credit limit. So if you deposit $500 then you get credit up to $500. After a period of time usually 1 year of good payment history they refund you your deposit plus interests earned and issue an unsecured card with a higher limit.

THB BAD

Beware of the fine print. Many “bad credit” credit cards have really high interest rates but more importantly really high start fees. STAY AWAY from cards that cause you to be indebt simple because they issued you a card. Here is what these companies do…they will issue you a card; say with a $500 limit but charge said card for the annual fee, application fee etc up front to the point you owe $200 to $300 before you even got or used the card. These programs are the easiest to get involved with and don’t require a “security deposit” but are designed for you to fail or at the very least cause you to be in debt right away.THE UGLY

THE UGLY

Stay away from these altogether. These companies will not only do what the BAD do but will also require that you purchase some sort of insurance charged to the card monthly. Absolutely designed to bury you.

So where can you find GOOD secured credit offers? Usually your local bank or credit union offer some sort of “secured credit card” program. But shop around as all of them have fine print. Bankrate.com has a selection of lenders that offer these programs. Wells Fargo, Citi, Bank of America, US Bank all have programs and you can apply online.

SO I GOT A CARD…NOW WHAT?

So now you have a brand spankin new card…let’s charge it up right? Wrong. First off  credit cards are designed to give someone a short term loan. A loan that is to be paid off in 60 to 90 days but most people use them almost like income.

Remember the whole reason you got a card was to establish a better credit rating. Does that mean that you have to carry a balance on  the card month to month? No.

All you have to do is show that you pay on time every time. Get the card put $50 in gas on it and when the bill comes pay it off. Doing it this way you never pay interest, you don’t create debt and you do create good credit history.

Many years ago, because of the sins of my youth, I used this method to take my score form a 540 FICO to over 680 in less than 6 months. Then I bought my first house. If I can do it so can anyone.

Good luck and may all your dreams come true.

This rule enables individuals to purchase homes utilizing FHA insured financing even when the seller has owned the property less than 90 days. Of course there are some guidelines that need to be followed but in general if the sale price is 20% or more over the sellers original purchase price then a few things need to happen:

1. only owners of record can sell the properties
2. all transactions must be arms length with no identity of interest between buyer, seller or other parties participating in the sales transaction.
3. the lender must be able to justify the increase in value with supporting documentation ( receipts, contractor work orders etc AND/OR a second appraisal.
4. in cases where no work is performed the appraiser must provide an appropriate explanation of the increase in value since the prior title transfer.
5. A property inspection is ordered and a copy of the inspection is provided to the borrower. Any repairs noted on the inspection must be corrected.

I have found that it behooves the listing agent and the seller to be available at the time of the 2^nd appraisal to provide the appraiser with sufficient documentation in order for them to be able to correctly justify the increase in value. For the appraiser to simply state that the prior sale was a “distress sale” opens the door to extreme examination by the underwriter.  The 2^nd inspection is ordered by the lender in order to ensure that the collateral (the property) is in a condition that is acceptable for FHA insurability. It therefore again behooves the seller and the agents to be available at the inspection. Ask the buyers loan officer to notify you when these two reports are ordered so that the real estate agents can coordinate the inspections.

Remember loan officers are prohibited by law to contact the appraiser BUT everyone else in the transaction can talk to them and provide supporting documentation. For example a real estate agent can provide comps to help support value; the seller can provide history and receipts for improvements completed.

My best and most efficient loan on one of these was because a seller met the appraiser with a written explanation of all improvements to the house since purchase along with an itemized list with costs supported by receipts. This was one smooth transaction.

If you have any questions or would like to apply for a loan please give me a call. Remember PNC Mortgage has only a flat lender fee and never charges an additional origination fee.

Tony Valdez

Loan Officer

PNC Mortgage

Cell: 602-684-0866

anthony.valdez@pncmortgage.com

Not knowing when you will get approved.

Not knowing IF you’ll get approved.

Not knowing if everything you’ve given to the bank is enough.

Not knowing if you should pack.

Just plain not knowing….

My son is buying his first home and because I didn’t want to create a potential problem I didn’t do the loan. Someone else, whom I trust, is doing it and I am always getting up to the minute updates, but there is still this nagging question what IF. How often have I reassured a client that everything is OK only to be blindsided by a seemingly insurmountable underwriting condition? Not very often but it happens.

I pride myself on my responsiveness to the client as well as everyone else involved with the transaction. But this “Old” but “New” experience has made me look at how responsive I really am. Is it sufficient to give updates every few days or would it be better to do it every day? Maybe for the agents I work with who know and understand the process every couple days it’s OK. But for the actual buyer and even maybe the private seller daily updates are more what is needed.  Instead of dashing out of the office at the end of the day a 5 minute call could be exactly what the “doctor ordered” for some folks.

Let’s see… 10 loans in the pipeline @ 5 minutes each that’s 50 MINUTES. Can I take an hour out of my day to help someone sleep better that night…Even if I have no new information? I think yes.

Yes because it stinks when your son comes home everyday and asks “Have you heard anything?” or when at the dinner table a wife asks a husband “Should I start packing?” or when your little daughter asks “Are we moving yet, dad? AND YOU DON”T HAVE AN ANSWER…ANY ANSWER.    At the very least you should be able to say “no not yet” but “Tony called and said, we’ll be there soon.”