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To Rent or To Buy?

We are currently assisting a borrower who is purchasing a duplex in northern Indiana that will see significant advantages once the transaction closes. The borrower, who is a single woman, had some credit issues, and had been on the fence about whether to purchase a property, or continue to rent.

The borrower had good income and had money in the bank, but had been a bit sloppy in the handling of her debt over the years. We worked with her to get some collections and account disputes resolved, and her credit score improved considerably. With a pre-approval in hand, she searched for available properties, and ended up reaching out to her landlord about his willingness to sell the duplex that she resided in.

The landlord agreed to sell the property, and she went from paying $750 month in rent, to getting approved for a loan that will enable her to own the building and have a total obligation on the property of less than $775 for principle, interest, taxes and insurance. The other unit in the duplex has a renter that she knows and likes, who pays $750 per month in rent.

As a homeowner, she will have tax advantages of writing off her mortgage interest, property taxes, and certain expenses associated with renting the other unit.

Visit www.firstindianamortgage.com to research available mortgage products, obtain a rate quote, or apply for a loan.

We are currently assisting a borrower who is purchasing a duplex in northern Indiana that will see significant advantages once the transaction closes. The borrower, who is a single woman, had some credit issues, and had been on the fence about whether to purchase a property, or continue to rent. The borrower had good income […]

The old reasons to buy a home in Indiana still apply today

Despite the turmoil that has affected the housing market over the last few years, there are a few enduring reasons that buying a new home now will continue to be a good investment. Here are a few:

Mortgages are still cheap. Current interest rates for well qualified borrowers in Indiana for a 30-year fixed rate conventional mortgages are about 4.00%. These rates had been declining since December 2014, but are currently facing pressure, especially if inflation starts to increase.

Owning a home provides annual tax incentives. Mortgage interest and property taxes are tax deductible, and most gains on the sale of your primary residence are tax deductible.

Rental housing is hard to come by, especially in good school districts, and is, by comparison, more expensive over time, especially when the tax benefits of home ownership and the accumulation of equity is considered. Rents tend to increase year-to-year, while a fixed rate mortgage payment will remain constant for the life of the loan.

Owning a home gives you the freedom to make it your own. You don’t need approval to paint it, you can make your yard the way that you want, and you have the added comfort of knowing that this is your home.

The real estate market is stabilizing, and home values have been increasing. Historically, homeowners have viewed their homes as long-term investments, and that will always be the case.

First Indiana Mortgage, LLC is a mortgage broker in the state of Indiana. We are dedicated to providing low rates, competent advice, and superior customer service. Visit us at www.firstindianamortgage.com to obtain a rate quote.

 

Despite the turmoil that has affected the housing market over the last few years, there are a few enduring reasons that buying a new home now will continue to be a good investment. Here are a few: Mortgages are still cheap. Current interest rates for well qualified borrowers in Indiana for a 30-year fixed rate […]

Adjustable Rate Mortgages are Making a Comeback.

With interest rates rising on fixed rate conventional mortgages, 2017 may be a year to consider whether an Adjustable Rate Mortgage (ARM) is a suitable loan alternative. Fixed rate mortgages are currently at their highest averages in over two years, and the sharp run up in rates since the election has priced many potential home buyers out of the market.

Adjustable Rate Mortgages, when compared to a fixed rate mortgage, offer lower rates and terms that certain homeowners may benefit from. Today’s ARM loans are often referred to as “hybrid loans” because they have an initial fixed-rate term, followed by an adjustable rate period for the remainder of the loan term. The fixed rate term of these loan products generally runs between 5- and 10-years.

Generally, the fixed rate portion of these hybrid loans is running about 0.75% lower than a comparable fixed rate loan. Unlike the ARMs of the past, current ARMs do not have prepayment penalties, and adjust only once per year after the initial fixed-rate period. Rate adjustments are limited by caps that are established at the outset of the loan, which minimize the worst case scenario.

A homeowner’s risk tolerances and personal preferences will help to determine which adjustable rate product is most suitable. If you are just starting your career, don’t have children, and don’t plan on staying in your current residence for more than five years, the 5/1 ARM may be your best choice; while if you intend to stay in your house longer and have less risk tolerance, the 7/1 or 10/1 loans may be best for you. Keep in mind that the longer the fixed rate term runs, the higher the corresponding rate will be.

Visit www.firstindianamortgage.com for additional information, or to obtain a free, no-hassle rate quote.

With interest rates rising on fixed rate conventional mortgages, 2017 may be a year to consider whether an Adjustable Rate Mortgage (ARM) is a suitable loan alternative. Fixed rate mortgages are currently at their highest averages in over two years, and the sharp run up in rates since the election has priced many potential home […]

How To Finance A Fixer-Upper

In many home purchase transactions where the subject property is in need moderate repairs, borrowers, and their Realtors, find themselves in a Catch-22 situation – banks won’t lend money to buy the house without the repairs being made, and the repairs can’t be made until the home has been purchased.

Enter HUD’s 203 (k) Streamline Program. This loan will enable the borrower, with a down payment as low as 3.5%, to obtain financing that will cover the acquisition cost, plus the costs of making necessary repairs and improvements. The repair work will need to be performed by a licensed contractor, and the plans need to be prepared and approved by the lender during the initial underwriting process. The borrower can obtain up to $35,000 for these repairs, and draw funds from an escrow account established by the lender at the close of the transaction to pay the contractor at the completion of the repairs. This loan affords the borrower up to 6-months to complete the work, and the final disbursement will only be made after a HUD-approved inspector verifies that the repairs stipulated in the contract have been completed. These repairs must meet HUD’s Minimum Property Standards, and all necessary permits must be obtained to meet all applicable building codes.

An FHA 203k Streamline loan is a great way for borrowers to obtain financing to complete non-structural repairs to a property they own or are purchasing. The Streamline program has the same underwriting criteria as a standard FHA loan. If used appropriately, especially with the high number of REOs on the market that need repairs and are priced accordingly, this loan will enable borrowers to get into a house with as little as a 3.5% down-payment, develop equity, and improve their neighborhoods, one house at a time.

Eligible repairs under the 203 (k) program include, but are not limited to the following:

  • Repair/Replacement of roofs, gutters and downspouts
  • Repair/Replacement/upgrade of existing HVAC systems
  • Repair/Replacement/upgrade of plumbing and electrical systems
  • Repair/Replacement of flooring
  • Minor remodeling, such as kitchens, which does not involve structural repairs
  • Painting, both exterior and interior
  • Weatherization, including storm windows and doors, insulation, weather stripping, etc.
  • Purchase and installation of appliances, including free-standing ranges, refrigerators, washers/dryers, dishwashers and microwave ovens
  • Accessibility improvements for persons with disabilities
  • Lead-based paint stabilization or abatement of lead-based paint hazards
  • Repair/replace/add exterior decks, patios, porches
  • Basement finishing and remodeling, which does not involve structural repairs
  • Basement waterproofing
  • Window and door replacements and exterior wall re-siding
  • Septic system and/or well repair or replacement

Under the right circumstances, these loans can be a real benefit to borrowers who are unable to cash flow needed repairs. The final loan amount is based upon the After-Improved Value of the property.

A recent 203 (K) transaction that we had been involved in demonstrated the overall value of the program, and enabled the borrower to gain instant equity in the house. The house was bank-owned, had been vacant for at least a year, but was in a good neighborhood. The borrower liked the property and saw opportunities to repair the house; but, he would not have been able to cash-flow the repairs or devote the time necessary to complete the repairs himself.

As the transaction unfolded, the borrower’s instincts were right on target. The repairs that were done included the installation of new appliances, a new HVAC system, a new tankless water heater, new carpeting, new windows, and a new garage door.

The home inspection did not identify any issues not addressed by the planned repairs, and the appraisal determined that the after-improved value of the house will provide the borrower with more than 10% equity in the property. This loan really can provide home buyers with the ability to find a deal on a house and finance necessary repairs and improvements to gain equity, without too much of their own sweat.

Sure, the loan does require some additional work for the loan originator and real estate agent, and may require 30-35 days to close, but under the right circumstances it is a very good product.

Please feel free to contact us with any questions regarding the FHA 203(K) Streamline program.

In many home purchase transactions where the subject property is in need moderate repairs, borrowers, and their Realtors, find themselves in a Catch-22 situation – banks won’t lend money to buy the house without the repairs being made, and the repairs can’t be made until the home has been purchased. Enter HUD’s 203 (k) Streamline […]

National Fair Housing Alliance accuses Fannie Mae of Housing Discrimination

The National Fair Housing Alliance has filed a lawsuit, representing 20 fair housing organizations nationwide, accusing Fannie Mae of housing discrimination.  Included in this petition is the Fair Housing Center of Central Indiana, alleging Fannie Mae has failed to maintain foreclosed homes in predominately black and Latino neighborhoods to the same standard as white neighborhoods in Indianapolis. Problem homes include issues of graffiti, missing gutters, water damage and trash.

“We are hopeful out of this lawsuit we will get Fannie Mae to change their way of doing business to make sure these neighborhoods are protected,” Nelson said.

Fannie Mae responded Monday afternoon with the following statement:

“We have heard NFHA’s concerns, and strongly disagree with these allegations. Our REO maintenance standards are designed to ensure that all properties are tended to and treated equally. In addition, over the years we have continuously enhanced our REO maintenance practices in the ordinary course of business, including the use of clear boarding nationally, adoption of technology to enhance the property inspection process, enhanced guidance to field service vendors of our expectations, and enhanced staffing in the field. Through these actions we have demonstrated our continued dedication to providing quality care to all communities. And we remain firmly committed to continuing to provide such attention to our REO properties moving forward.”4

First Indiana Mortgage operates under strict Equal Credit Opportunities and Fair Housing Guidelines.  Please visit our website to generate a competitive and unbiased rate quote.

The National Fair Housing Alliance has filed a lawsuit, representing 20 fair housing organizations nationwide, accusing Fannie Mae of housing discrimination.  Included in this petition is the Fair Housing Center of Central Indiana, alleging Fannie Mae has failed to maintain foreclosed homes in predominately black and Latino neighborhoods to the same standard as white neighborhoods […]

Mortgage Industry Regulations Are Exerting Pressure On Home Prices

During the last several years, regulations imposed on the mortgage industry have restricted the availability of credit to many borrowers. I am not saying that the industry should not be regulated, but rather, that the types of regulation that are put into place need to be sensible, and they need to be fair to the various players in the mortgage business.

The Federal Housing Finance Agency recently announced its plans to make more loans available for as little as a 3% down payment. This pledge sounds good, put upon closer review, it does not appear to be a game changer. There are plenty of low-down payment loan programs available, but it has become increasingly difficult for even well-qualified borrowers to access these programs.

While the housing market has seen improvement since 2008, and there are less underwater homeowners than there had been as recently as 2012, values are still not where they should be, in part due to the tough underwriting standards lenders are placing on files to ensure that they are compliant with federal regulations (that have nothing to do with a borrower’s ability to repay the loan).

Here are some additional reasons why loan originations will face downward pressure in the years to come:

1. Many homeowners refinance in 2012 and 2013 and have no need to refinance into today’s higher rates.

2. Many borrowers lack the equity needed to refinance.

3. Incomes have fallen 8.7% between 1999 and 2013, so it is harder for borrowers to afford mortgage costs.

4. Student debt levels are rising, which is making the qualification process more difficult because of the more strict debt-to-income regulations.

5. Existing home sales are down from 2013 levels, meaning that there are less properties to finance.

First Indiana Mortgage, LLC is a mortgage broker operating in the state of Indiana. Please visit our website at www.firstindianamortgage.com for a free rate quote, or to learn about the mortgage process.

During the last several years, regulations imposed on the mortgage industry have restricted the availability of credit to many borrowers. I am not saying that the industry should not be regulated, but rather, that the types of regulation that are put into place need to be sensible, and they need to be fair to the […]

Advantages of Using a Mortgage Broker Over a Direct Lender

Many times, potential borrowers wonder whether a broker or direct lender is the best choice while shopping for a mortgage. Here are some advantages of using First Indiana Mortgage:

  • Because we have low overhead, we can offer lower rates that direct lenders.
  • We receive a fixed compensation amount for each transaction, based upon a percentage of the loan amount, regardless of the rates that borrowers choose.
  • We are required to undergo strict licensing and testing procedures.
  • We have long-held partnerships with the lenders that we work with, and have good relationships with underwriters.
  • We are responsive to your calls.
  • We review the information borrowers supply, and oftentimes, we can resolve potential documentation issues before information is submitted to an underwriter.
  • We realize that we are in a customer service oriented profession, and are committed to providing prompt, professional service.

Visit us at www.firstindianamortgage.com for a free rate quote, or to obtain additional information about our company and the services that we provide.

Many times, potential borrowers wonder whether a broker or direct lender is the best choice while shopping for a mortgage. Here are some advantages of using First Indiana Mortgage: Because we have low overhead, we can offer lower rates that direct lenders. We receive a fixed compensation amount for each transaction, based upon a percentage […]

My Community Mortgage Program

The My Community Mortgage Program is a great low down payment alternative to FHA loans. The my Community Program, which is offered by Fannie Mae, is a conventional loan program that offers flexible underwriting standards, and lower monthly mortgage insurance rates to qualified borrowers, when compared to FHA financing.

First Indiana Mortgage offers the program, with as little as 5% down payment (or 95% LTV on refinances). Using the 5% down/5% equity scenario, based upon a $200,000 loan, FICO 650-699, the My Community Mortgage would save borrowers about $100 per month in mortgage insurance costs when compared to FHA financing.

To qualify for a My Community loan, you must meet certain income requirements, must not have other financed properties. To discuss the My Community Mortgage in more detail, reach out to Forst Indiana Mortgage ay 888/627-2002, or visit our website at www.firstindianamortgage.com.

 

 

 

 

The My Community Mortgage Program is a great low down payment alternative to FHA loans. The my Community Program, which is offered by Fannie Mae, is a conventional loan program that offers flexible underwriting standards, and lower monthly mortgage insurance rates to qualified borrowers, when compared to FHA financing. First Indiana Mortgage offers the program, with as […]

Ever wonder how mortgage loan originators get paid?

The Dodd-Frank Bill, implemented after the real estate crisis in 2008, sets the framework for how mortgage brokers are paid. Understanding the process may help borrowers to assess how there can be a variance in the rates offered for identical home loan products.

To provide a background, under these new regulations, borrowers receive a credit from lenders, expressed as a percentage of the loan amount, based upon the rate and program that they choose.  For illustration purposes, let’s suppose that a borrower is seeking a $250,000 refinance loan, has good credit, stable income and sufficient equity in the property. He approaches two mortgage brokers (Broker A and Broker B), and obtains different rate quotes from each, even though both brokers intend to send his loan to the same lender, XYZ Bank.

The Dodd-Frank Bill requires that lenders, in this case XYZ Bank, provide borrowers with a “credit” for each mortgage scenario, and that the credit must be reflective of a borrower’s specific circumstances, so that each borrower with the same credit, income, asset, and equity position be offered the same terms. For the purposes of this discussion, let’s use the hypothetical $250,000 loan above.

Under this scenario, Lender XYZ offers a rate of 4.25% for a 30 -year fixed mortgage, and provides a credit of $7,500 for the borrower to use to pay closing costs, prepaid interest, and to set up an escrow account for the future payment of insurance and property taxes. Under these circumstances, how can the rates offered by Broker A and Broker B be different?

Dodd-Frank requires that mortgage brokers set pre-determined compensation levels, based upon a certain percentage of the loan amount, for each loan that they originate. This lender compensation level is deducted from the lender credit, and the remaining funds go the borrower. Each brokerage sets its compensation level in light of the profit it intends to make on each loan, taking into consideration salaries, overhead, etc. So if Broker A has its compensation level set at 1% ($2,500 in this scenario) and Broker B has its compensation set at 1.5% ($3,750 in this scenario), a borrower would be better served to go with Broker A, and utilize the additional $1,250 to his benefit.

First Indiana Mortgage has set its compensation low to be in the position to offer its clients the lowest possible rates in the Indiana market. We encourage borrowers to shop their mortgage, and solicit written offers from mortgage providers. Visit us at www.firstindianamortgage.com to obtain a rate quote, or to learn more about the products and services that we offer.

The Dodd-Frank Bill, implemented after the real estate crisis in 2008, sets the framework for how mortgage brokers are paid. Understanding the process may help borrowers to assess how there can be a variance in the rates offered for identical home loan products. To provide a background, under these new regulations, borrowers receive a credit […]

The time is right to lock your mortgage rate

The Fed recently confirmed that it would conclude its Mortgage Backed Securities purchases in October, 2014. While the Fed has been tapering its purchases recently, its exit from the MBS market will reduce demand, and drive the price of Mortgage Backed Securities down. As we know, interest rates and bond prices have an inverse relationship, so when bond prices go down, interest rates go up.

With that in mind, if you are in the real estate purchase market, or have an adjustable rate mortgage that need to be refinanced, then it is the time to lock your interest rate.

First Indiana Mortgage offers a wide variety of loan products, low rates, and superior service. Visit us at www.firstindianamortgage.com or call 888-627-2002

The Fed recently confirmed that it would conclude its Mortgage Backed Securities purchases in October, 2014. While the Fed has been tapering its purchases recently, its exit from the MBS market will reduce demand, and drive the price of Mortgage Backed Securities down. As we know, interest rates and bond prices have an inverse relationship, […]