Mortgage Blog

Leigh’s Heartwarming Journey to Home-ownership

Leigh’s Heartwarming Journey to Home-ownership

Leigh's Tearful Journey to Homeownership

2018 Bike to School and Work Day

2018 Bike to School and Work Day – City of Sugar Land

An Amazing group of people came together for one day to show support for cycling in the City of Sugar Land as May Joe Zimmerman declared May as Bike Month in our beautiful city.  We had an extraordinary turn out for our 2018 Bike to School and Work Day here in the City of Sugar Land, TX.

2018-bike-to-school-and-work-day

FHA and Deferred Student Loans

FHA and Deferred Student Loans

MortgageMack Here and today we’re going to discuss FHA and Your Student Loans.

FHA and Your Student Loans

FHA is a mortgage loan insured by the Federal Housing Administration that requires the borrower to pay mortgage insurance to insure the lender against default.  I just completed a Blog Post specific to the FHA purchase and refinance loan called FHA 203b.

Now, for many years, FHA has allowed for the lender to exclude student loan payments in their qualification analysis or what we call debt to income ratio…

if we could prove the student loan payments were deferred for at least 12 months from the day of closing.  But,

Today’s FHA requirement differentiate between deferred loans and student loans and we’re going to talk specifically about Student Loans debt.

FHA and Your Student LoansStudent Debt has Reached the Highest it has Ever been in our History.

The average Student Loan debt for the Class of 2017 was $39,400 per student.  The total amount owed by American students and their parents is $1.48 trillion spread among 44 million borrowers with a 90 plus days delinquency rate of 11.2%.*

Many economic professionals, I’ve listened to and spoken to over the past years have stated Student Debt is likely to be the next major US economic bubble.**

Now, I’ve had a couple of borrowers with an exceptional amount of total Student Loan obligations and FHA gives me 3 options for declaring that debt on the mortgage application which we’ll analyze now.

So, let’s define Student Debt.  FHA refers to Student Loans as a liability incurred for educational purposes.  Pretty simple?

FHA also, states all Student Loans owed by the borrower must be included as an active liability with the following requirements.

  1. If the payment used for the monthly obligation is: a) less than 1% of the outstanding balance reported on the credit report and b) less than the monthly payment reported on the Borrower’s credit report, the lender just obtains written documentation of the actual monthly payment, the status and evidence of balance and term: THEN
  2. Regardless of the payment status, the Lender must use either the GREATER of: a) 1 percent of the outstanding balance of the loan or b) the monthly payment reported on the credit report unless c) the actual documented payment provided is fully amortized to full term from beginning to end!

Now, as I stated before, I had client with an $80,000 Student Loan and according to the guidelines, I must use the the 1% which $800 and there was no payment reported on the credit report and even if there was and the payment was less than 1%, I still had to use the $800/mo. calculation.

Therefore, I asked my borrower to call the Creditor and request a full amortization schedule for her Student oan, which the servicer obliged and the payment was reduced to $319/mo.

Big difference from $800/mo., wouldn’t you agree?

So, if you have Student Loan debts and are afraid can’t qualify, call me or apply at www.mortgagemack.com and help you with a FREE analysis of your Student Loans.

Thank you for watching.  I welcome your questions and comments and please subscribe to www.teammortgagmack.com?

MortgageMack….OUT!

*Student Loan Statistics

**Student Loans Economic Bubble

FHA Mortgages Texas

FHA Mortgage Texas

MortgageMack Here.

Today we’re going to discuss FHA loans, specifically the FHA 203b program, FHA also offer disaster relief mortgages which you can find information about on my vBlog.

FHA Mortgages in Texas

FHA Mortgages in Texas – What is a FHA Home Loan?

An FHA loan is a mortgage that’s insured by the Federal Housing Administration (FHA). … However, borrowers must pay mortgage insurance premiums, which protects the lender if a borrower defaults. Borrowers can qualify for an FHA loan with a down payment as little as 3.5% for a credit score of 550 or higher with OneTrust Home Loans.

Benefits of a FHA Mortgage…

  • Low down payment of 3.5% and you do not have to be a first time home buyer or meet income limits as FannieMae requires for their 3% down program
  • The minimum credit score with OneTrust Home Loans is 550 subject to approval wherein the minimum score for a conventional loan is 620
  • FHA will allow for a person to currently be in a Chapter 13 BK as long as they can prove on time payments to the courts for 12 months in accordance with their original BK plan and a letter from courts granting permission to enter to a mortgage transaction
  • Allows the seller to pay up to 6% of the sales price towards the buyer closings and pre-pays not to exceed the actual total of the closing costs and pre-pays wherein conventional will only allow 3% from the seller with 3 to 5% down payment
  • There are no income limits but the maximum mortgage for Harris County and the surrounding area is: $331,200 for a single family dwelling and higher for 2 to 4 unit residences
  • The debt to income ratio is much higher for FHA affording people the opportunity to buy more house. Subject to AUS approval, I’ve seen DTI up 57% approved and recently closed a transaction with a 57% DTI ratio wherein conventional is limited to 50%.

FHA Mortgages in Texas

So, those are some the benefits of FHA and the #1 reason folks might avoid FHA is the extra mortgage insurance costs relative to a conventional loan.  FHA’s has an upfront mortgage insurance premium of 1.75 and monthly, depending on down payment and length of the loan of as much as .85% and the monthly amount is permanent for the life of the loan.

Most owner don’t live in their home past 9 years, so I’m not sure the permanency of the monthly mortgage insurance is that big a deal.

In summary, FHA is great loan program that offers more opportunity to more folks who want to own a home.

If you or someone you know would be interested in knowing more about a FHA home loan, call me or email me at mack@onetrusthomeloans.com or go to www.mortgagemack.com to apply and please subscribe to my vBlog at www.teammortgagemack.com

I look forward to your questions and comments.

Thanks for watching and have a great day!  MortgageMack out

2018 Economic Outlook

2018 Economic Outlook – Ted C. Jones, PhD, Chief Economist, Stewart Title

VA Loan Eligibility

VA Loan Eligibility

Hi, Mortgage Mack here.

So, it’s been awhile since I’ve posted on my video blog and I had a couple of inquiries recently specific to VA loan.

VA Loan Eligibility – The Seller can Pay ALL the Closing Costs on Behalf of the Veteran

As many of you know, I’ve been a mortgage banker for a long time and I’ve done quite a few VA loans in my career. And the inquiry, the question was whether or not the seller could pay for the funding fee on a purchase transaction to benefit the VA buyer. And the answer to that question is yes. And actually, the seller could pay all the closing costs and including the funding fee. And so, a veteran could move in for literally zero dollars in that type of scenario.

VA Loan Eligibility

So, you know, veterans administration has a fantastic loan program for veterans that qualify. And to know whether or not you qualify, the veteran can request a certificate of eligibility and I’ll leave a link here to where they would go to request that in the VA portal using their DD 214 or we can do it for you.

VA Loan Eligibility – Veterans Receiving Service Connected Disability maybe exempt from the VA Funding Fee

So, a veteran’s home loan is zero down and it does have what we call a funding fee. And it doesn’t have monthly mortgage insurance like many conventional loans do or FHA loans. And it has a funding fee. For the first time usage, it’s 2.15%. And for subsequent use, it’s 3.3. So, a veteran doesn’t usually pay the funding fee at closing, it is normally added to the loan unless of course the veteran has a certain amount of disability. When I request the certificate of eligibility and it tells me that the veteran is not required to pay the funding fee, then there’s no funding fee.

VA Loan Eligibility

The VA Home Loan is a GREAT Benefit to those Who’ve Served their Country

So, it really is just a great program. If you’re a veteran and you have served your country and you think you might wanna buy a house call, you know, give us a call. Go to mortgagemack.com and apply and let us look at your scenario and see if we can help you.

The loan limit who for 0 down is up to the maximum conforming limit for our area, which is 453,100. And that is the absolute max. So, if you have a funding fee beyond that, the funding fee would have to be paid in cash and/or by the seller. But a lot of people don’t know that you can go up to a million dollars on VA loans as far as the loan amount is concerned. However, to do that, the veteran would put in essence what is 25% down for every dollar of above the 453,100 plus pay the funding fee in cash. So, I’ve actually had a scenario in my career where the amount borrowed was beyond the scope of the loan limit and then veteran did have to pay the funding fee at closing, but that was all. And that was all he had to pay plus whatever closing costs that weren’t paid by the seller.

And you know, there’s a lot of advertising out there that would lead you to believe that that is indeed the case. I mean, the Veterans’ Administration has recently come down pretty hard on some of those lenders that advertise on TV. And one of the things that they say is that they say no appraisal required for a VA we finance. And you know, veterans’ administration doesn’t require an appraisal for an interest rate reduction loan for a veteran. So, that’s kind of misleading and/or what I would term intellectually dishonest.

So, I encourage you that if you’re a vet and interested in inquiring about the opportunities for you as a veteran for a zero down loan or even to refinance your current VA loan, I will encourage you that if your current VA loan and the interest rate is above say— I would say today’s 5%-5.5% and it might be worth it, but just give us a call and we’ll be glad to help.

Thanks a lot. I hope you have a great day. I hope you find this helpful. I’d love to see your comments and/or questions below and I’d be happy to answer them for you.

Have a great day. Take care.

Divorce Mortgage – Owelty Deed

Divorce Mortgage – Owelty Deed

Hey. MortgageMack here!

I think I’ll do a different installment on divorce, which is just for a lot of people are— I guess for some it could be rather liberating. For others, it’s a real challenge and a real challenge financially.

Divorce Mortgage

So, I had a scenario recently where a person was divorced and the divorce decree wasn’t neatly executed properly or what I would consider properly by their attorney.

Divorce Mortgage – Owelty Deed can pay you your equity and relieve you of liability

If you’re married and you have common debt, specifically a mortgage, then the divorce decree alone does not relieve you of the liability associated with that mortgage.

However, there is an instrument called an Owelty deed. It’s a deed that allows the owner of a home to utilize the equity they have in a home to assist in the dividing of their property. So, the Owelty deed is in essence a refinance.

So, I’ve done several of these in my career where I have a couple, who are in the process of getting divorced. The one that’s gonna keep the home applies for the mortgage. We refinance and we in essence cash out and without doing an actual cash out home loan. And remember that. This is not a cash out. It’s an Owelty deed. So, it’s a refinance. It’s a regular refinance. And with the decree, with the amount of equity defined in the decree by all parties as they’ve agreed, we pay the other party who will not occupy the home, who will move on be paid their equity share and no longer be obligated on the loan.

Divorce Decrees should spell out the division of debt as accurately as it does assets

And so, that’s the situation I found myself in with a client who just didn’t get the appropriate counseling. He thought the divorce decree alone would be sufficient to take the loan out of his name. And unfortunately, his ex-spouse made late payments on the mortgage.

So, I would encourage anybody that if you are listening to this podcast or this video blog that if you know anybody that’s getting a divorce or might get a divorce or anything along those lines, they really should give me a shout and let me coach them to how they will create a scenario that would relieve them of the liability associated with a mortgage and/or allow them to refinance the loan, pay the other spouse off, and take their name off the note because, again, the divorce decree does not supersede the original note signed by the original parties.

Revolving Debt and Installment Loans need to be refinanced or closed where both parties share the debt

In essence or in addition to that, you know, when it comes to common debt associated with credit cards, car loans, all of those things, if you’re in the process of getting a divorce, you should include those debts in the decree not only to be assigned to say the other responsible party, but I suggest that you have them closed and/or your name removed and/or have them refinance without your name on them.

If your getting a divorce, apply at www.mortgagemack.com and we’ll help you

I guess the only way to figure that out is to sit down, do a credit report with your attorney, and look at the common debts and itemize those debts in your request for divorce and make it part of the divorce that the other party has to either refinance the house and/or pay you your equity with an Owelty deed or refinance the house and just take your name off of it and along with any other common debt that you might share with the other party just to protect your credit into the future should the other party experienced any financial difficulties.

So, if you have any questions or comments, please leave them below and/or give me a call.

And I’ll be glad to share my experience with you.

I hope you have a great day. Mortgage Mack out. Take care. Bye.

Triathlon for Kids

Triathlon for Kids

Hi, Mortgage Mack here.

You know, I have a video for you that I hope you’ll find very inspiring. My friend, Brandon Adame, is the #1 all blind triathlete in the United States and he’s ranked 26th I believe worldwide. He is just an exciting young man who does not allow his challenges and disabilities to get in the way of being active.

Triathlon for Kids – April 21 & 22 at NRG Stadium – Houston Texans & NFL Play60

Now, I was asked to be a guide and I’ve been a guide for Brandon years ago when I was younger and faster, but I was asked to guide him at a recent NFL Play60 event at River Oaks Baptist School. The event was a rally to encourage kids to participate in this year’s Kids Triathlon at NRG StadiumGet Ready to be Inspired by and Extraordinary Young Man

So, here’s a video. Hope you enjoy. Hope it inspires you. And if you or someone you know would like to be a guide, please contact me or EyeCan Alliance. Or if you think that you might be inspired to become a donor, we, along with myself and EyeCan Alliance, would be just immensely grateful for your donations. Please contact me if you are interested in that aspect of being involved with this organization that not just helps Brandon, but helps many other athletes. And I will include photos of their most recent endeavor at the Houston Chevron Marathon. Have a great day. Thanks.

Get Ready to be Inspired by and Extraordinary Young Man

Announcer:  Brandon Adame worked hard and he amazingly became one of the greatest athletes in today’s Houston area. Welcome the one and only, Brandon!

[Cheering]

Announcer:  The highest ranked totally blind para-triathlete in the United States.

Triathlon for Kids
EyeCan Alliance athletes and their guides at the 2018 Houston Aramco Marathon

Mack:  Brandon, what would you like to tell the boys and the girls here today?

Brandon’s Advice to the Students

Brandon:  I will leave you with 3 points.

Point #1: Listen to your parents, your teachers, and your coaches.

Point #2 is trust your training.

And point #3 is always remember to have fun. Thank you.

Brandon’s Advice to Parents, Faculty and Adults

 Brandon:  I want to leave the adults with 3 points.

Point #1 is I can do all things through Christ who strengthens me (Philippians 4:13).

Point #2 is when you set a goal, you will attract people to you and will help you accomplish your goal.

Point #3 is once you have accomplished the goal that you have set, you will never know who you will inspire to do something greater than they thought they can ever be.

If you or someone you know would be interested in being a corporate donor, guide or just make a donation, EyeCan Alliance and MortgageMack would be very grateful for your support!

Thank you.

Houston Texans Kids Triathlon

EyeCan Alliance

EyeCan Alliance Donation and Sponsors

Texas Home Equity Loan Changes for 2018

Texas Home Equity Loan Changes for 2018

Hi. Mortgage Mack here. And today, I thought we would talk about home equity loans.

Texas Home Equity Loan — Once Unconstitutional in Texas

You know, I’ve been in the mortgage business for 25 years. For a small part of that time-frame, home equity loans were not even allowed in the State of Texas. I think legislation was passed in 1998 (legislation passed on Nov. 1997 ballot 60% to 40%) and took effect on January 1, 1999 and allowed homeowners in Texas to take equity out of their primary residence.  Prior to that, it was unconstitutional.

Homestead Rules within the Texas Constitution Protected Settlers from Creditors Abroad

And the constitution (homestead protections in the Texas Constitution) was written to protect the homestead for a multitude of different reasons and one of those reasons was to protect the homestead of early settlers of the Republic of Texas from creditors.

Texas Home Equity Loan – 20% Equity Must Remain at Closing

And one of the most important aspects of the original amendment to the constitution to allow home equity loans is that it doesn’t allow you to borrow more than 80% of the value. And so, basically, what that means is if your home is valued $100,000 and you owe $80,000 already, well, you can’t borrow the remaining $20,000.

But let’s say the home is valued at 100,000 and you owe $60,00, you can have access to $20,000 for a total of 80% loan to value with 20% equity remaining in that scenario, which would meet the ceiling of 80% of the value.

Texas Home Equity Loan Changes for 2018
Texas State Capitol

Texas Home Equity Loan Changes for 2018

So, one of the recent changes that took effect were specific to closing costs. And previously, we had a limitation of closing costs to 3% of the loan amount. Well, that’s been changed to reduce to 2% of the loan amount. However, what’s happened is the legislators excluded some of the type of charges specific to that calculation, which I’ll include a link below. And I also am including a link here of conversation that I had with a local attorney. It was a conversation specific to the law that you might find helpful as well.

So, what they’ve done is they’ve reduced the limitation of fees to 2% of the loan amount rather than 3% and excluded some type of charges such as the appraisal and survey along with title insurance and title examination.

Proposition 2 also allows home equity loans to be refinanced as a rate and term. Now, the reason that’s important is because previously once you did a first lien home equity loan, your loan always remained a home equity loan and we developed the cliché that “once a home equity always a home equity”.   Well, that’s no longer the case. So, if you’ve had a home equity loan in the past, you can refinance at 80% of the value less what you owe with no cash out and have the lien renewed and extended as a rate and term refinance.

Texas Home Equity Loan and Agricultural Exemptions

So, they also repealed the prohibition on origination of home equity loans that were secured by a homestead with an agricultural exemption. So, this really impacts folks in the rural areas because in the past we couldn’t do a home equity loan for say a couple that owned a home in a rural area where they may have owned 20, 30, 40 acres on which there was an agriculture exemption on the property. The to take equity out of a borrower residence in those days we had to survey out 1 acres of land around the residence.  Have it re-surveyed to exclude the portion of the property on which the agricultural exemption remained. and appraise the property just on that 1 acre and the residents which didn’t allow them to fully utilize the full equity on the property.

Now, there were a couple of other changes that don’t directly impact me and not necessarily the products that I offer. I don’t do the home equity lines of credit. However, I would gladly refer you to organizations that do locally that I’ve had previous experience with. And the legislature also expanded— I think it’s the list of lenders or lenders that are authorized to offer home equities. I don’t know much details about that, but I will include some links here and hope you find this helpful.

If you have any comments, please leave your comments at the bottom. Or if you have any questions, please let me know. And I’ll get with our in-house attorney and find an answer for you. Have a great day.

Links:

Proposition 2 – Home Equity Amendment 2017

Homestead Law – Texas State Historical Association

Constitution of the Republic of Texas (1836)

Proposition 8 – Types of Homestead Liens (1997)

Definition of Voluntary Liens

Tax Reform For Homeowners

Tax Reform For Homeowners

Mack:  Hi, Mortgage Mack here. And I’m here again with Jo Ann Stevens, the National President of Women’s Council of Realtors.  And we thought we’d get together and talk about specifically about the results of the recent tax reform bill and how some of the new regulations are going to impact homeowners both here and throughout the United States.

So, Jo Ann, tell me— Let’s maybe go into some specifics of what the new regulations look like.

Jo Ann:  I’ll be happy to and Happy New Year to everybody. And guess what? We’re gonna have a new tax reform bill.

I do think in some instances the lobbying that Realtors did for some of the issues proved to be successful. I don’t think we got everything that we asked for, but we certainly got a number of concessions.

Mack:  Let’s talk about mortgage interest deduction and what that looks like moving forward for the coming tax year.

Jo Ann:  Okay. First, you have to realize that the standard deductions have just about doubled over what they were in the past. So, for a number of people, they probably will not itemize on their return.

Tax Reform for Homeowners – 2017 Tax Reform Bill increased Standard Deductions to $12,000 for Individuals and $24,000 for Joint Returns

Remove term: Tax Reform For Homeowners Tax Reform For Homeowners
Tax Brackets for Ordinary Income for Individual Taxpayers – See National Association in Show Notes Below for Married Filing Jointly Tax Bracket

Mack:  So, unless you have itemized deductions of 24,000 or more for married filing jointly, it’s not gonna make sense to itemize. Is that what you’re saying?

Jo Ann:  I’m saying that some people may not want to go to that trouble.

Mack:  So, we talked about mortgage interest. So, let’s discuss what’s next, real estate taxes and how is the new reform bill going to impact real estate taxes. What are my limitations now?Tax Reform for Homeowners

Jo Ann:  Well, $10,000 is all they’re going to allow for property taxes as we would call. That would be local and/or state.

Mack:  We also talked about the capital gains. Yes, capital gains and— Tell us how that changed.

Jo Ann:  Well, actually, it didn’t and I think this is one area where the realtors made an impact in that here the capital gains will still be in effect where it’s same as before. You have to live in a property 2 of the last 5 years. And they were considering 5 of the last 8 years, which would have really hurt our relocation people, our military people who move on a more frequent basis than that, but that is one area where I think our lobbying did help along with mortgage interest and property taxes. Those were all concessions that we received as a result of their realtor movement to get to our members of Congress. And if nothing else, this is the first step. Now, I don’t think this is the end result. I think it’s something that we will work toward refining. And I think that the members of Congress have been very good about listening to our reasoning and our rationale. I think they do honestly believe that homeownership is the backbone of our country. We don’t wanna become a country of renters.

Mack:  So, in closing, is there anything else that maybe we didn’t cover that might have changed in the current tax reform bill that maybe you could share with us?

National Association of Realtors Lobby Helps to Preserve Interest Deduction for Second Homes

Jo Ann:  Two things. We were able to preserve interest deduction on second homes because that was something that was about to be totally done away with. We also have seen a change that home equity interest will no longer be deductible. So, that is [0:04:10][Inaudible] unless— Now, I say that— I understand that if the funds are being used to significantly improve the property, then it’s a different situation.

Mack:  Anything else that you feel like moving forward from here? Maybe share with this the timing associated with this new bill and when people can, I guess, begin to see the changes on their tax returns.

Jo Ann:  Well, it will take effect— Well, it’s already taken effect January 1st. However, you really won’t see the difference in filing now for April. There you won’t see any changes. The changes will come this time next year when we’re preparing for the 2018 return.

Mack:  So, in summary, it looks like we’ve tried to or we’ve simplified the tax return. We’ve put some caps on some of the itemized deductions specific to real estate taxes, not necessarily to mortgage interest deductions. You can still take the mortgage interest deductions for whatever the amount you’ve paid if you decide to— Is there a cap on that? Do you recall what the cap is?

Jo Ann:  I have to look at that and refresh my memory, but I do believe there is a cap.

Mack:  I’ll look also too. I will just put a link.

Jo Ann:  I do believe that what it is, if you purchased the property after December 15 of 17, 750,000 loan amount was the max. Anybody prior to that, they would be grandfathered in and they could deduct up to the million dollars.

Mack:  In closing, anything else you might like to add?

Jo Ann:  Just that 2018 has already started off as a year of change and I think it’s very early. So, there’s more to come.

Mack:  I appreciate your time today.

Jo Ann:  My pleasure as always. Thank you.

Mack:  Good to see you. Have a good day.

Women’s Council of Realtors President and Tax Reform Lobby

National Association of Realtors – Complete Summary of the Impact on Homeowners and Prospective Homeowners

**The final bill repealed deductions for interest paid on equity debt through 12/31/2025.  Interest is still deductible on home equity loans or second mortgages if the proceeds are used to substantially improve the residence.

***As of this publication mortgage insurance is not deductible in 2017, but a Bill has been introduced in the House to make mortgage insurance permanently deductible:  H.R. 109