Not a US citizen? Here’s what you need to know about buying a home…

Buying a Home When You’re Not a U.S. Citizen

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Immigrants are having a significant impact on the U.S. housing market. According to the Research Institute for Housing America, immigrants accounted for nearly 40% of the net increase in U.S. homeowners from 2000 to 2010. Meanwhile, the same group estimates that U.S. homeownership rates among Latino immigrants will hit 50% by the year 2020.

Overall, the number of immigrant homeowners is still relatively small, representing only 11.2% of owner-occupied homes in 2014, according to the Joint Center for Housing Studies. Even so, that’s up from 6.8% 20 years earlier.

So immigrants are clearly buying homes. But what sort of obstacles and challenges do they face that native-born homebuyers do not?

There are no legal barriers to foreign nationals buying property, owning homes or obtaining loans in the U.S.

Foreign investors buy U.S. property and do business with U.S. banks all the time — getting a mortgage and buying a home is simply more of the same, on a smaller scale.

“Residency of any kind is not a requirement for home ownership in the U.S.,” said Jason Madiedo, president of Alterra Home Loans, in Las Vegas. “The challenge for the consumer is to gain financing.”

Documenting Foreign Financial Info Can Be a Challenge

For a legal immigrant with an established employment and credit history in this country, the process of buying a home is much the same as it is for a citizen. However, there are still certain challenges that non-citizens may face when seeking to buy a home in the U.S. that native-born borrowers are unlikely to encounter.

“It becomes a little more difficult for a foreign national to buy an owner-occupied property unless they’re here with a job in the U.S.,” said Bill Ashmore, president of IMPAC Mortgage in Irvine, California. “The longer somebody’s here and the more they can document their income through tax returns, the better off they are.”

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Revolving debt just got a lot less important for borrowers…

Banks Agree to Remove Credit Notations on “Zombie” Debt

Jann Swanson | Mortgage News Daily | May 8 2015 | link

A million or more consumers nationwide may see their credit histories improve as a result of an agreement in a Federal Bankruptcy Court in White Plains, New York.  As a result of two separate lawsuits brought in the court Bank of America and JPMorgan chase have agreed to update borrowers’ credit reports to eliminate data on so-called zombie debts, delinquent accounts that had actually been extinguished in bankruptcy.

The banks, along with Citigroup and Synchrony Financial (formerly GE Capital) had been charged in the suit with retaining the information on the credit reports as live debts to enable the banks to generate higher prices for the loans when sold in pools to investors as bad debts.

According to a report in the New York Times, the banks are accused of “engineering what amounts to a subtle but ruthless debt collection tactic, effectively holding borrowers’ credit reports hostage, refusing to fix the mistakes unless people pay money for debts that they do not actually owe.”  The banks offered as a defense to the lawsuits the argument that they do comply with the law and accurately report discharged debts to the credit agencies.

According to the Times, Judge Robert D. Drain, has repeatedly refused the banks’ requests to throw out the lawsuits, criticizing Citigroup last month for its actions and saying, “I continue to believe there’s one reason, and one reason only, that Citibank refuses to change its policy… because it makes money off of it.”

The banks are also rumored to be under investigation by the Department of Justice over whether they are deliberately flouting federal bankruptcy laws which require that banks update credit reports for a borrower discharged in bankruptcy to indicate the debt is no longer owned and to remove any reference to a debt being past due or charged off.

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Shopping online – not just for shoes anymore!

How to Shop for a Mortgage Online

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Ron Milman refinanced his mortgage in early 2015. A resident of an Atlanta suburb, Milman says he saved money, closed quickly, and except for one quick trip to a local bank to meet a local attorney to finalize paperwork, he never left his home office. Working strictly online and by phone, he says getting his mortgage online was a painless process for him. “I really don’t like going into an office,” he says. “It’s so much wasted time and effort.”

If you’re in the market for a home loan, whether for a purchase or refinance, you may have toyed with the idea of using an online lender. But you may be wondering what getting a mortgage online is like. How is the process different?

“The Internet provides the most convenient way for consumers to compare mortgage service offerings; as a result, a growing portion of mortgage originations are anticipated to be completed online in the years to come,” says Stephen Hoopes, an analyst with research firm IBISWorld.

It’s important to first understand that shopping for a mortgage online can be different than getting a mortgage online. In the first scenario, you may be using a service that doesn’t actually make loans but helps connect you to lenders. In the latter case, you actually apply for and complete the process largely online.

With that in mind, here are some of the differences when you get an online mortgage:

The Internet Holds Answers

Aren’t sure about a mortgage term? Need help deciding which type of loan to get, or whether to go for a longer-term loan or a shorter one? You can take a break to research it before you decide without giving a loan officer a blank stare or feeling like you are being put on the spot. Not that you can’t do that before you shop for a mortgage anyway, but apparently quite a few consumers don’t fully educate themselves on all their options when getting the largest loan of their lives.

A recent report by the Consumer Financial Protection Bureau found that almost half of borrowers seriously consider only a single lender or broker before deciding where to apply. The CFPB also says that most borrowers rely heavily on those who have a financial stake in the transaction, and less than half get a lot of their information from outside sources such as websites, financial and housing counselors, or friends, relatives or co-workers.

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Great news for buyers!

Just When You Thought Mortgage Rates Couldn’t Get Any Flatter

Matthew Graham | Mortgage News Daily | Apr 21 2015 | link

Mortgage rates are on the warpath, blazing a ferocious trail in a more sharply sideways direction than we’ve seen in recent memory.  This won’t last.  It never does.  But it’s, as yet, unclear what the catalyst will be for the breakaway.  From there, it’s even less clear if the break will be higher or lower.  A case can always be made for either, but certainly, cases for rates bouncing higher have been much less tenable over the past 30 years (though they have their moments, like the Spring of 2013).  Whether or not you see one here will depend on your time horizon.

Even in long term downtrends (like the one stretching back to the beginning of 2014 fairly reliably), there are periodic corrections that mark good opportunities to lock in rates.  With that in mind, it’s worth considering that rates are experiencing this flatness right in line with the best levels in more than 2 months.  Historically, these have been great opportunities to lock for anyone with an approved loan in process.  For those with longer-term time horizons, floating isn’t an insane idea here, but be sure to set a line in the sand where you’ll lock at a loss if markets move against you.

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Are we closer to a foreclosure finale?

REO Surge Signals Foreclosure “Clean-up”

Jann Swanson | Mortgage News Daily | Apr 16 2015 | link

Foreclosure activity increased by 20 percent in March compared to February and was up 4 percent from a year earlier.  RealtyTrac, in its combined March and 1st Quarter 2015 report said it was the first annual increase in foreclosure filings, which include default notices, scheduled auctions, and completed foreclosures or bank repossessions, since September 2010 but that the increases indicated a cleanup of lingering problems rather than a new round of distress.

Despite the substantial month over month and small annual increase for the month the quarterly total was down.  Filings were 7 percent lower than in the 3rd quarter of 2014 and down 8 percent year over year to the lowest level in eight years.

RealtyTrac said a total of 122,060 properties received foreclosure filings in March and 313,487 for the quarter.  The 20 percent month-over-month increase came off of a 104-month low in filings in February.  The surge was driven by 36,152 bank repossessions or REO, a 49 increase from February and 25 percent from March 2014.   REOs for the quarter numbered 82,081, down 14 percent from the 1st quarter of 2014.  Repossessions increased 54 percent in Ohio, 39 percent in Maryland, and 34 percent in New Jersey.

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Who WOULDN’T want a shorter mortgage? Here’s how…

No one wants to spend longer making mortgage payments than they have to. The obvious way to pay off a mortgage faster is to get a shorter-term loan, like a 15-year instead of a 30-year. But on a $300,000 home purchase with 10 percent down, you’ll pay about $620 more per month on a 15-year loan than on a 30-year loan (including mortgage insurance), which might be too expensive for you.

So how do you fix your budget with a loan you can afford, yet still pay it off early if you have extra money? Here’s a look at four common approaches.

Refinance, then reinvest savings

It’s always prudent to evaluate refinancing when rates drop, but unless you refinance from a 30-year loan to a 15-year loan, refinancing doesn’t automatically shave years off your mortgage.

If you bought a home for $300,000 with 10 percent down five years ago, the rate on your 30-year fixed loan of $270,000 was about 4.875 percent, giving you a payment of $1,429 (plus mortgage insurance). With today’s refinance rates of about 3.625 percent on your remaining $247,494 balance, your new payment would be $1,129, saving you $300 per month.

It’s a huge savings, but you’re resetting your payoff clock from 25 years back to 30 years. However, if you take the extra step of applying the $300 savings toward your new loan each month, you’ll shave 9.5 years off your new mortgage, giving you a shorter term for the same budget.

Make biweekly payments

A biweekly payment plan is the simplest way to shorten your mortgage without a material budget increase. This plan shaves about four years off your mortgage by paying half your payment every other week.

Doing so means you’re making 26 biweekly payments per year, which is the equivalent of 13 monthly mortgage payments per year instead of 12. Your budget can usually absorb this because you’re simply chopping your mortgage payment in half and paying each half every other week.

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Low down payments AND loan security – a great combo…

Low down-payment mortgage options return

Except these home loans are safer

money zipper

New programs are starting to allow first-time homeowners back into the housing market, except this time, new regulation will help prevent the same type of lending that spurred the financial crisis. Per CNNMoney:

“It’s one of the things that’s inhibiting first-time homebuyers,” said Rob Chrane, president of Down Payment Resource. “There are a lot more people who can qualify for a home that don’t realize that they can.”

Two big factors that are playing in to the recent ease is the Federal Housing Finance Agency’s new down payment programs and the Federal Housing Administration’s reduction in mortgage insurance premiums.

In October, Fannie Mae and Freddie Mac announced 97% loan-to-value offerings.

At the beginning of the year, the Obama Administration directed, via executive action, the FHA to reduce annual mortgage insurance premiums by 50 basis points, from 1.35% to 0.85%.

FHA monthly insurance premiums dropped dramatically at the beginning of 2015. The change, from 1.35% to only 0.85%, will make FHA loans a better choice for some borrowers after years of prohibitively high premiums, said Anthony Hsieh, chief executive officer of loanDepot, one of the largest FHA lenders in the country.

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