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, […]

This morning, I read that former Fed Chairman, Ben Bernanke, was unsuccessful in his attempt to refinance his mortgage, even though he commands fess of up to $250K for individual speaking engagements. He is quoted as saying: “I think it’s entirely possible [that lenders] may have gone a little bit to far on mortgage credit conditions . . .The housing area is one area where the regulation has not yet got it right.” I agree and disagree, and here is why.

Reportedly, Bernanke, who had earned nearly $200K per year as the Fed Chairman is now self-employed. For many years, lenders have required proof of income for self-employed borrowers in the form of two years of federal tax returns to document income stability, and that makes sense. Bernanke left the Fed less than two years ago, so it follows that he cannot document his income. These requirements are set by Fannie Mae and Freddie Mac for loans that can be sold on the secondary market, and, in my mind, do not qualify as “regulation” in the context of Bernanke’s statement.

Looking back a few years, the housing market crisis was fueled by lenders offering loans that required no income documentation, then packaging and selling those loans in the secondary market. From the outset, a reasonable person would have concluded that the borrowers, in many of these instances, would have difficulty repaying these loans, especially in an environment where housing prices were declining.

There was little regulation at that time regarding the types of products that lenders were offering, and by playing “hot potato” with these loans on the secondary market, lenders caused significant injuries to the economy as a whole. For a former Fed Chairman to insinuate that income documentation is a form of over-regulation misses the point.

The current state of regulation in the mortgage industry favors big lenders over smaller ones, and places a huge burden of compliance and disclosure on mortgage brokers, disproportionately. Unlike lenders, mortgage brokers are required to disclose all of their income to borrowers at the outset of the loan application process, and income is set as a percentage of the loan amount, no matter what interest rate is offered to a borrower. Big national lenders have a different set of rule, and are not subject to the same disclosure requirements.

Mortgage brokers can offer lower rates than lenders, because they generally are leaner, have lower overhead, and they set their pre-determined compensation rates low. Borrowers often times lose sight of the fact that, in most cases, the people that handle the loan conditions on any loan file have more experience than workers holed up in cubicles at national banks, and they have a vested interest in getting a loan submitted, approved and closed in a timely manner.

First Indiana Mortgage is a mortgage broker, and we encourage you to visit our website at www.firstindianamortgage.com

This morning, I read that former Fed Chairman, Ben Bernanke, was unsuccessful in his attempt to refinance his mortgage, even though he commands fess of up to $250K for individual speaking engagements. He is quoted as saying: “I think it’s entirely possible [that lenders] may have gone a little bit to far on mortgage credit […]

The FHA 203k Streamline loan allows homeowners and purchasers to combine repairs and home financing into one loan. The FHA 203k Streamline allows borrowers to finance the purchase or refinance of an existing home and make improvements or upgrades up to $35,000. $5,000 minimum repair costs required.

Examples of repairs:

• Repair, replace, and upgrade roofs, gutters and downspouts
• HVAC systems (heating, vacuum, and AC)
• Plumbing and electrical systems
• Flooring, exterior decks, patios, and porches
• Minor remodeling that does not involve structural repairs
• Interior and exterior painting
• Weatherization, including doors, windows, insulation, stripping, etc.
• Appliance purchase and installation (kitchen appliances, washer, dryer)
• Lead-based paint removal and stabilization
• Exterior wall re-siding
• Certain other improvements that are a PERMANENT part of the real estate*

Contact us at www.firstindianamortgage.com for additional details.

The FHA 203k Streamline loan allows homeowners and purchasers to combine repairs and home financing into one loan. The FHA 203k Streamline allows borrowers to finance the purchase or refinance of an existing home and make improvements or upgrades up to $35,000. $5,000 minimum repair costs required. Examples of repairs: Repair, replace, and upgrade roofs, […]

In Indiana, USDA Rural Housing Loans are a good way for a potential home buyer to obtain a 100% mortgage, with no down payment required. The program, which is insured by the US Department of Agriculture, sets reasonable maximum income limits for households wanting to obtain loans under the program, and, like FHA loans, requires both upfront and monthly mortgage insurance premiums.

Currently, the income limit for the Indianapolis Metro area is $79,000 for all income earners in the household, combined. You can assess the income requirements, per Indiana county by clicking here. In addition to the income requirements, the house that you want to purchase must be in an eligible area and meet certain minimum household standards. To see whether the home that you want to purchase is eligible for a USDA loan, check here.

There is no specific limit to the loan amount or purchase price, but you are generally capped at a debt-to-income ratio of 41%. The available rates are generally consistent with, or lower than, prevailing FHA rates, and the mortgage insurance premiums are affordable, and can be financed into the loan. Currently, USDA loans require a 2% upfront premium, and an additional 0.40% monthly premium; while FHA loans require a 1.75% upfront premium, in addition to a monthly mortgage insurance premium that can be as high as 1.55% (annually).

Using the scenario above, a home with a $100,000 purchase price can be financed with a 100% loan, plus the upfront mortgage insurance premium can be financed, bringing the total loan amount to $102,000. The monthly mortgage insurance premium would be $33.33.

The USDA loan must be used for the purchase or refinance of a primary residence, so investment properties and working farms would not meet the eligibility requirements of the program.

If you already have a USDA mortgage in place, it can be refinanced without any income or asset requirements, and there is no appraisal required.

If you are interested in obtaining details regarding a USDA loan for a purchase in the state of Indiana, contact First Indiana Mortgage at 888-627-2002.

In Indiana, USDA Rural Housing Loans are a good way for a potential home buyer to obtain a 100% mortgage, with no down payment required. The program, which is insured by the US Department of Agriculture, sets reasonable maximum income limits for households wanting to obtain loans under the program, and, like FHA loans, requires […]

The proposed Fair Credit Reporting Improvement Act of 2014 proposes to shorten the time that adverse credit information appears on individual credit profiles, which will lead to higher mortgage interest rates. Here is why:

Currently, adverse credit information will remain on credit reports for a period of up to seven years; under the proposed law, that period would be shortened to four years, and if a non-performing credit account is paid or settled, that account would be removed from the credit profile in approximately 45-days.

What this will do is encourage borrowers to default on loans, because there will be no consequences for not paying creditors back in full. Once the derogatory information is removed, presto, the potential borrower will look like a good credit risk. While the current credit scoring model is not perfect, it rightfully factors in the non-payment of debts, and is a model in which lenders can reasonably assess a potential borrower’s willingness and ability to repay debts.

Creditors will have no choice but to raise rates for high credit score borrowers (who currently receive better rates) to accommodate for the increased risk posed by the deadbeats who would now appear to be good credit risks. While legislators may mean well, surprisingly, this law does not appear to have been well though out.

If you are an Indiana resident searching for a mortgage, visit www.firstindianamortgage.com for a free, no obligation rate quote.

The proposed Fair Credit Reporting Improvement Act of 2014 proposes to shorten the time that adverse credit information appears on individual credit profiles, which will lead to higher mortgage interest rates. Here is why: Currently, adverse credit information will remain on credit reports for a period of up to seven years; under the proposed law, […]

It has been reported that national mortgage lenders slashed 19,000 jobs during the 2nd quarter of 2014, while non-bank mortgage employment number increased slightly during that same period.

First Indiana Mortgage competes against these national lenders for loans, and we often hear comments that potential borrowers are more comfortable using a big lender, such as Chase (which eliminated 11,500 mortgage jobs in 2014 Q2) and Bank of America (which eliminated 3,900 jobs) because of their perceived stability, even if these lenders are offering a higher rate.

What these employment numbers illustrate is quite the opposite of the stability that borrowers desire.  Borrowers need to realize that, with any lender or broker, it is the actual employees that handle your file that will make your experience favorable or unfavorable. When you obtain a loan with First Indiana Mortgage, you will always be working directly with a licensed loan originator, and your file will be handled by licensed employees from start to finish. National lenders do not have the same continuity, and with declining employee numbers, the experience and training level of the employees that would be handling a loan file is questionable.

So when you are comparing rates and programs, it is always important to determine your comfort level based upon the rate, and the level of service that you will receive. At First Indiana Mortgage we are committed to providing low rates and outstanding customer service. Visit our website at www.firstindianamortgage.com or call us at 888-627-2002 to obtain a rate quote or discuss available loan programs and options.

It has been reported that national mortgage lenders slashed 19,000 jobs during the 2nd quarter of 2014, while non-bank mortgage employment number increased slightly during that same period. First Indiana Mortgage competes against these national lenders for loans, and we often hear comments that potential borrowers are more comfortable using a big lender, such as […]

In August, 2014, purchase loans accounted for more than half of all loans originated nationwide for the fourteenth consecutive month. Mortgage rates for qualified borrowers with good credit and more than a 20% down payment (or equity) have been hovering between 4.00% and 4.25% for the last year or so.

With mortgage rates at these levels, and with home prices increasing, there has been a sense of urgency among buyers to make their offers and get their loans locked.

Low rates can increase buying power, and save thousands in interest payments over the life of the loan, so it is important to shop reputable lenders, and compare rates through online mortgage comparison sites. First Indiana Mortgage advertises on sites, such as Trulia, and we invite you to compare our rates against any other Indiana lender.

Please visit our website at www.firstindianamortgage.com for more information, or to get a no-obligation rate quote.

In August, 2014, purchase loans accounted for more than half of all loans originated nationwide for the fourteenth consecutive month. Mortgage rates for qualified borrowers with good credit and more than a 20% down payment (or equity) have been hovering between 4.00% and 4.25% for the last year or so. With mortgage rates at these levels, and […]

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 […]

The mortgage business is extremely competitive, and as you search for mortgage programs and rates, you will encounter a variety of lenders, each of which may present a compelling reason to place your mortgage with them. Because your home is likely your biggest financial investment, it is worthwhile to take a look at what lurks behind the radio ads, TV commercials, and fancy downtown buildings that many have come to equate with the mortgage industry, at large.

During the mortgage process, your initial and primary contact will be your loan officer and the processing staff. As with any occupation, these positions are filled with men and women who have varying levels of proficiency, education, work ethic, commitment to get you the best deal, and ability get your loan closed on time. These professionals also have different roles within their employing companies. At First Indiana Mortgage, what you see is what you get — the company is owned by its employees, and we have a direct interest in ensuring that your loan closes on time, at the rate you select, without too much hassle . We have been the business for many years, and obviously have a vested interest in the outcome of each loan, and the goodwill and reputation that comes along with doing what we say that we will.

We have lost business to mortgage people with less education, training and commitment, simply because they work for a national bank, even if their rates and other terms of the loan that they offered were worse. Borrowers sometimes transfer a perception of credibility, based upon the name recognition of a lender like Chase or Bank of America, to the loan originator. If my memory serves me correctly, these familiar big banks have recently suffered huge losses, had to be bailed out with taxpayer dollars, and have paid enormous fines for their shoddy lending practices; yet we, as a small company, constantly find ourselves pitted against them in typical David versus Goliath fashion.

First Indiana Mortgage has survived because we are committed to providing outstanding service, while offering the most competitive rates that we can. We don’t have huge overhead and advertising expenses, which enables us to offer lower rates. What we do have is experience, and the ability to offer practical solutions to your mortgage problems, with the care and compassion of a neighbor or friend.

Just because your banker has “a guy” and your Realtor has “a guy” doesn’t mean that that “guy” is the right person for the job. Ask around at work, talk to your friends, seek a recommendation from your tax preparer or financial advisor to find a lender that has done a good job in the past, and has shown a willingness to take the necessary steps to ensure that the loan process goes the way that it had been explained at the beginning of the mortgage process.

First Indiana Mortgage is a mortgage broker that offers residential mortgages in the states of Indiana. Please access our website at www.firstindianamortgage.com

The mortgage business is extremely competitive, and as you search for mortgage programs and rates, you will encounter a variety of lenders, each of which may present a compelling reason to place your mortgage with them. Because your home is likely your biggest financial investment, it is worthwhile to take a look at what lurks […]

Increasingly, people in the market for purchase or refinance mortgages are initiating their searches online. There are several advantages to shopping online for mortgage services; the primary ones are listed below:

Greater understanding of loan terms and costs. The internet is a great source to learn the nuts and bolts of the mortgage process, and to gain an understanding of the typical rates,costs and fees associated with obtaining a loan. It is important to understand the difference in mortgage loan types, terms and conditions, and there are several objective sources available on the net.

Websites like bankrate.com enable borrowers to enter their loan information and receive instantaneous rate quotes from multiple mortgage lenders, without the hassle of responding to a barrage of emails and phone calls from overzealous loan officers. A typical search will enable borrowers to do side-by-side comparisons of multiple loan scenarios and rate quotes.

Studies have shown that potential borrowers with incomes of more than $50,000 are more likely to obtain an online rate quote at the outset of the loan process than borrowers with lower incomes, and that, in general, online shopping leads to more competitive rates.

It is important to understand the mortgage process and employ available resources to get the loan that fits your needs best.

Visit us a www.kertinmortgage.com to obtain free real time rate quotes or obtain additional information about the loan process. Kertin Mortgage Group is licensed to originate residential mortgages in Indiana and California.

Increasingly, people in the market for purchase or refinance mortgages are initiating their searches online. There are several advantages to shopping online for mortgage services; the primary ones are listed below: Greater understanding of loan terms and costs. The internet is a great source to learn the nuts and bolts of the mortgage process, and […]