News


Affordable Housing For Everyone

Alabama

http://www.ahfa.com/homebuyers

Programs

Affordable Income Subsidy Grant

http://www.ahfa.com/homebuyers/programs-available/affordable-income-subsidy-grant

Mortgage Credit Certificate

http://www.ahfa.com/homebuyers/programs-available/mccs


Alaska

https://www.ahfc.us/buy

Programs

Tax-Exempt First-Time Homebuyer Program

https://www.ahfc.us/buy/loan-programs/first-time-loans

Taxable First -Time Homebuyer Program

https://www.ahfc.us/buy/loan-programs/first-time-loans


Arizona

https://housing.az.gov/general-public/home-plus

Home Plus Program

https://housing.az.gov/general-public/home-plus


Arkansas

Programs:

ADAF Move Up

https://homeloans.arkansas.gov/move-up/

ADFA MCC - Mortgage Credit Certificate

https://homeloans.arkansas.gov/mcc/

ADFA Down Payment Assistance (DPA)

https://homeloans.arkansas.gov/dpa/

Arkansas Dream Down Payment Initiative (ADDI)

https://homeloans.arkansas.gov/addi/


California

https://www.calhfa.ca.gov/homebuyer/programs/index.htm

Programs

First Mortgage Programs

CalHFA Conventional Loan Program

https://www.calhfa.ca.gov/homebuyer/programs/conventional.htm

CalPLUS Conventional Loan Program

https://www.calhfa.ca.gov/homebuyer/programs/calplus-conventional.htm

Government Insured Loans

CalHFA FHA Loan Program

https://www.calhfa.ca.gov/homebuyer/programs/fha.htm

CalPLUS FHA Loan Program

https://www.calhfa.ca.gov/homebuyer/programs/calplus.htm

Cal-EEM + Grant Program

https://www.calhfa.ca.gov/homebuyer/programs/eem.htm

CalHFA VA Loan Program

https://www.calhfa.ca.gov/homebuyer/programs/va.htm

Down Payment Assistance Programs

MyHome Assistance Program

https://www.calhfa.ca.gov/homebuyer/programs/myhome.htm

School Teacher and Employee Assistance Program (School Program)

https://www.calhfa.ca.gov/homebuyer/programs/school.htm

Mortgage Credit Certificate Tax Credit Program

Mortgage Credit Certificate Tax Credit Program (MCC)

https://www.calhfa.ca.gov/homebuyer/programs/mcc.htm


Colorado

https://www.chfainfo.com/homeownership

Down Payment Assistance

https://www.chfainfo.com/homeownership/down-payment-assistance


Connecticut

https://www.chfa.org/homebuyers/

HFA Advantage and HFA Preferred

https://www.chfa.org/homebuyers-homeowners/homebuyers/hfa-preferred-mortgage/

Homebuyer Mortgage Program

https://www.chfa.org/homebuyers-homeowners/homebuyers/homebuyer-mortgage-program/

Down Payment Assistance Program (DAP) Loans

https://www.chfa.org/homebuyers-homeowners/homebuyers/downpayment-assistance-program-dap-loan/


Delaware

http://www.destatehousing.com/HomeOwnership/HomeOwnership.php

Home Ownership Programs

Home Ownership Loan Program

http://www.destatehousing.com/HomeOwnership/hb_sfmrb.php

Delaware First-Time Homebuyer Tax Credit

http://www.destatehousing.com/HomeOwnership/hb_fthb.php

Neighborhood Stabilization Program (NSP)

http://www.destatehousing.com/HomeOwnership/dv_nsp.php

Downpayment and Closing Cost Assistance

Preferred Plus

http://www.destatehousing.com/HomeOwnership/hb_sfmrb.php#pp

Home Repair Programs

The Statewide Emergency Repair Program (SERP)

http://www.destatehousing.com/HomeOwnership/homeownermedia/serp_card.pdf

Community Development Block Grants (CDBG)

http://www.destatehousing.com/Landlords/dv_cdbg.php

Foreclosure Prevention Programs

Delaware Emergency Mortgage Assistance Program (DEMAP)

http://www.destatehousing.com/HomeOwnership/hb_demap.php

Manufactured Housing Assistance Program (MHAP)

http://www.destatehousing.com/HomeOwnership/hb_mhap.php

Wilmington Senior Tax Assistance Program

http://www.destatehousing.com/HomeOwnership/hb_wstap.php


Florida

http://www.floridahousing.org/

Mortgage Credit Certificate Program

https://www.floridahousing.org/programs/homebuyer-loan-program-wizards/mortgage-credit-certificate-program-wizard

Florida Homebuyer Loan Program

https://apps.floridahousing.org/StandAlone/FTHBWizard


Georgia

https://www.dca.ga.gov/safe-affordable-housing/homeownership

State Home Mortgage

https://www.dca.ga.gov/safe-affordable-housing/homeownership/state-home-mortgage

Georgia Dream

https://www.dca.ga.gov/safe-affordable-housing/homeownership/georgia-dream

HomeSafe Georgia

https://www.dca.ga.gov/safe-affordable-housing/homeownership/homesafe-georgia

Housing Counselor Resources and Training

https://www.dca.ga.gov/safe-affordable-housing/homeownership/housing-counselor-resources-training


Hawaii

http://dbedt.hawaii.gov/hhfdc/

HHFDC Affordable Resale Program Project

https://www.locationshawaii.com/hhfdc/

Mortgage Credit Certificate

http://dbedt.hawaii.gov/hhfdc/mortgage-credit-certificate/

Buyback and SAE Programs

http://dbedt.hawaii.gov/hhfdc/request-for-information-on-hhfdc-sae-property/

Hula Mae Single Family Loans (Not currently active)

http://dbedt.hawaii.gov/hhfdc/copy_of_homebuyers/


Idaho

https://www.idahohousing.com/homebuyers/

Homebuyer Tax Credit

https://www.idahohousing.com/lenders-realtors/homebuyer-tax-credit/

Down Payment / Closing Cost Assistance

https://www.idahohousing.com/lenders-realtors/down-payment-closing-cost-assistance/


Illinois

Illinois Housing Development Authority

https://www.ihda.org/my-home/

IHDAccess Forgivable

https://www.ihda.org/my-home/getting-an-ihda-loan/#collapseOne

IHDAccess Deferred

https://www.ihda.org/my-home/getting-an-ihda-loan/#collapseTwo

IHDAccess Repayable

https://www.ihda.org/my-home/getting-an-ihda-loan/#collapseThree

1stHomeIllinois

https://www.ihda.org/my-home/getting-an-ihda-loan/#collapseFour


Indiana

Indiana Housings and Community Development Authority

https://www.in.gov/ihcda/homeownership/

Honor Our Vets (HOV)

https://www.in.gov/ihcda/homeownership/files/2018%20Honor%20Our%20Vets%20Program%20Guide.pdf

Helping To Own (H2O)

https://www.in.gov/ihcda/homeownership/files/2017%20HELPING%20TO%20OWN%20PROGRAM%20GUIDE_SH.pdf

Mortgage Credit Certificate (MCC)

https://www.in.gov/ihcda/homeownership/files/2017%20MCC%20PROGRAM%20GUIDE_SH.pdf

Next Home (NH)

https://www.in.gov/ihcda/homeownership/files/2017%20NEXT%20HOME%20PROGRAM%20GUIDE_SH.pdf

Next Home With Mortgage Credit Certificate (NH/MCC)

Affordable Home (AH)

https://www.in.gov/ihcda/homeownership/files/2017%20AFFORDABLE%20HOME%20PROGRAM%20GUIDE_SH.pdf

My Home (MH)

https://www.in.gov/ihcda/homeownership/files/2017%20MY%20HOME%20PROGRAM%20GUIDE_SH.pdf

My home with Mortgage Credit Certificate (MH/MCC)


Iowa

http://iowahousehunt.com/begin/

Mortgage Programs

http://iowafinanceauthority.gov/Public/Pages/PC77LN25

Down Payment Assistance Programs

http://iowafinanceauthority.gov/Public/Pages/PC78LN25

Mortgage Credit Certificate Program

http://iowafinanceauthority.gov/Public/Pages/PC93LN25

Military Home owership Assistance Program

http://iowafinanceauthority.gov/Public/Pages/PC79LN25

Iowa Title Guaranty

http://www.iowafinanceauthority.gov/TitleGuaranty/Residential


Kansas

Kansas Housing Resources Corporation

http://www.kshousingcorp.org/homebuyer-assistance.aspx


Kentucky

http://www.kyhousing.org/Home-Buyers/Pages/default.aspx

Down Payment Closing Cost Assistance

http://www.kyhousing.org/Home-Buyers/Pages/Down-Payment-Closing-Cost-Assistance.aspx

Hardest Hit Fund (HHF) DAP

http://www.kyhousing.org/make-the-move/Pages/default.aspx

Home Buyer Tax Credit

http://www.kyhousing.org/Home-Buyers/Pages/Home-Buyer-Tax-Credit.aspx


Louisiana

Louisiana Housing Corporation

https://www.lhc.la.gov/homebuyers

MRB Home and Assisted

https://www.lhc.la.gov/mrb-homebuyers#

Market Rate GNMA Program

https://www.lhc.la.gov/gnma-homebuyers

LHC Preferred Conventional Program

https://www.lhc.la.gov/preferred-homebuyers

LHC Choice Conventional Program

https://www.lhc.la.gov/choice-homebuyers#

LCH Advantage Program

https://www.lhc.la.gov/advantage-homebuyers

Delta 100 Program

https://www.lhc.la.gov/delta-homebuyers

Mortgage Credit Certificate Program

https://www.lhc.la.gov/mcc-homebuyers

Soft Second Program

https://www.lhc.la.gov/soft-second-homebuyers

Down Payment Assistance Programs

https://www.lhc.la.gov/down-payment-assistance-homebuyers#


Maine

Maine State Housing Authority

http://www.mainehousing.org/programs-services/homebuyer/home-loan

First Home loan:

http://www.mainehousing.org/programs-services/homebuyer/home-loan#Loan


Maryland

Maryland Mortgage Program

https://mmp.maryland.gov/Pages/default.aspx

Programs:

MMP 1st Time Advantage with 3% Assistance

https://mmp.maryland.gov/Pages/1stTimeAdvantage3.aspx

MMP 1st Time Advantage

https://mmp.maryland.gov/Pages/1stTimeAdvantage.aspx

Maryland Mortgage Loan Assist

https://mmp.maryland.gov/LoanAssist/Pages/default.aspx

Maryland Mortgage Grant Assist

https://mmp.maryland.gov/GrantAssist/Pages/default.aspx

Maryland Mortgage Rate Assist

https://mmp.maryland.gov/RateAssist/Pages/default.aspx

Partner Match

https://mmp.maryland.gov/Pages/Downpayment.aspx

Maryland HomeCredit

https://mmp.maryland.gov/Pages/MDHomeCredit.aspx

Maryland SmartBuy Program

https://mmp.maryland.gov/Pages/SmartBuy/default.aspx


Massachusetts

Massachusetts Housing

https://www.masshousing.com/portal/server.pt/community/home_ownership/223/home_ownership_home

MassHousing Mortgage

https://www.masshousing.com/portal/server.pt/community/home_buyer_loans/226/masshousing_loan

Operation Welcome Home

https://www.masshousing.com/portal/server.pt/community/home_buyer_loans/226/operation_welcome_home

Down Payment Assistance

https://www.masshousing.com/portal/server.pt/community/home_buyer_loans/226/down_payment_assistance


Michigan

Michigan State Housing Development Authority

https://www.michigan.gov/mshda/0,4641,7-141-45866---,00.html#!#homebuyers

Programs:

MI Home Loan Mortgage

https://www.michigan.gov/mshda/0,4641,7-141-45866_45868-370762--,00.html

MI Home Loan Flex

https://www.michigan.gov/mshda/0,4641,7-141-45866_45868-284858--,00.html

Step Forward Down Payment Assistance Loan

https://www.michigan.gov/downpayment/0,8844,7-353-88583---,00.html

Mortgage Credit Certificate (MCC)

https://www.michigan.gov/mshda/0,4595,7-141-45866_45868-216692--,00.html

Individual Development Account

https://www.michigan.gov/mshda/0,4641,7-141-45866_45868-172118--,00.html

Housing Education Program

https://www.michigan.gov/mshda/0,4641,7-141-45866_45868-177801--,00.html


Minnesota

Minnesota Housing

http://www.mnhousing.gov/sites/Satellite?c=Page&cid=1519058662552&pagename=External%2FPage%2FEXTStandardLayout


Mississippi

Mississippi Home Corporation

https://www.mshomecorp.com/how-we-help/helping-homebuyers/


Missouri

Missouri Housing Development Commission

http://www.mhdc.com/homes/index.htm

Programs:

First Place Loan Program

http://www.mhdc.com/homes/firstplaceloans/index.htm

Mortgage Credit Certificate (MCC)

http://www.mhdc.com/homes/mcc/index.htm


Montana

Montana Housing

http://housing.mt.gov/Homebuyers

Programs:

Regular Bond Loan Program

http://housing.mt.gov/HBRegBond

Set Aside Program

http://housing.mt.gov/HBSetaside

Montana Veterans’ Home Loan

http://housing.mt.gov/HBVHLP

Down Payment Assistance

http://housing.mt.gov/HBDPA

80% Combined Program

http://housing.mt.gov/HB80Combined

Habitat for Humanity

http://housing.mt.gov/HBHabitat

Mortgage Credit Certificate

http://housing.mt.gov/HBMCC

Board of Investments

http://housing.mt.gov/HBBOI

Disabled Accessible Affordable Homeownership

http://housing.mt.gov/HBDAAHP


Nebraska

Nebraska Investment Finance Authority

https://www.nifa.org/homebuyer

Programs

https://www.nifa.org/homebuyer/loan-programs

Eligibility

https://www.nifa.org/homebuyer/eligibility

Interest Rates

https://www.nifa.org/homebuyer/interest-rates


Nevada

Nevada Housing Division

https://www.homeispossiblenv.org/

Programs:

Home is Possible

https://www.homeispossiblenv.org/home-possible-nevada-down-payment-assistance-program

Home is Possible for Heroes

https://www.homeispossiblenv.org/program/home-possible-heroes

Mortgage Credit Certificate

https://www.homeispossiblenv.org/home-possible-mortgage-credit-certificate

Home is Possible for Teachers

https://www.homeispossiblenv.org/program/home-possible-teachers


New Hampshire

New Hampshire Housing Finance Authority

https://www.gonewhampshirehousing.com/

Programs

Homebuyer Tax Credit

https://www.gonewhampshirehousing.com/our-programs/homebuyer-tax-credit

Mortgage Programs:

https://www.gonewhampshirehousing.com/our-programs/mortgage-programs


New Jersey

New Jersey Housing and Mortgage Finance Agency

https://www.njhousing.gov/homeownership/

Programs

NJHMFA Down Payment Assistance Program

https://www.njhousing.gov/dca/hmfa/homeownership/buyers/dpa/

First-Time Homebuyer Mortgage Program

https://www.njhousing.gov/dca/hmfa/homeownership/buyers/first/

Police and Firemen's Retirement System Mortgage Program

https://www.njhousing.gov/dca/hmfa/homeownership/buyers/retire/


New Mexico

New Mexico Housing Finance Agency

http://www.housingnm.org/homebuyers/home-buyers

Programs

First Home Program

http://www.housingnm.org/homebuyers/first-home

First Down Program

http://www.housingnm.org/homebuyers/first-down

NextHome Program

http://www.housingnm.org/homebuyers/next-home-program


New York

State of New York Mortgage Agency

http://www.nyshcr.org/SONYMA/

Programs

SONYMA Neighborhood Revitalization Program

http://www.nyshcr.org/Topics/Home/Buyers/SONYMA/SONYMA-NRP.htm

SONYMA Graduate to Homeownership Program

http://www.nyshcr.org/Topics/Home/Buyers/SONYMA/SONYMA-grad2home.htm

Conventional Plus Progran

http://www.nyshcr.org/Topics/Home/Buyers/ConventionalPlusProgram.htm

FHA Plus Program

http://www.nyshcr.org/Topics/Home/Buyers/FHAPlusProgram.htm

Manufactured Home Advantage Program

http://www.nyshcr.org/Topics/Home/Buyers/MHAP.htm

Down Payment Assistance Loan (DPAL)

http://www.nyshcr.org/Topics/Home/Buyers/SONYMA/DownPaymentAssistanceLoan(DPAL).htm


North Carolina

North Carolina Housing Finance Agency

https://www.nchfa.com/home-buyers

Programs

NC Home Advantage Mortgage

https://www.nchfa.com/homeownership-partners/home-builders/mortgage-product-options/nc-home-advantage-mortgage

NC 1st Home Advantage Down Payment

https://www.nchfa.com/home-ownership-partners/home-builders/mortgage-product-options/nc-1st-home-advantage-down-payment

NC Home Advantage Tax Credit

https://www.nchfa.com/homeownership-partners/home-builders/mortgage-product-options/mortgage-credit-certificate


 

North Dakota

North Dakota Housing Finance Agency

https://www.ndhfa.org/Homeownership/Intro.html

 

Programs:

First Home

https://www.ndhfa.org/Homeownership/Firsthome.aspx

 

Home Access Program

https://www.ndhfa.org/Homeownership/Homeaccess.aspx

North Dakota Roots

https://www.ndhfa.org/Homeownership/Roots.aspx

Major Home Improvement Program

https://www.ndhfa.org/Homeownership/Majorhomeimprovement.aspx

 

Targeted Area Loan Program

https://www.ndhfa.org/Homeownership/TargetedAreas.html


 

Ohio

Ohio Housing Finance Agency

https://myohiohome.org/

Programs

First-Time Homebuyer

https://myohiohome.org/firsttimehomebuyer.aspx

 

Your Choice! Down Payment Assistance

https://myohiohome.org/downpaymentassistance.aspx

 

OHFA Advantage

https://myohiohome.org/homebuyeradvantage.aspx

 

Grants for Grads

https://myohiohome.org/grantsforgrads.aspx

 

Ohio Heros

https://myohiohome.org/ohioheroes.aspx

 

Mortgage Tax Credit

https://myohiohome.org/mortgagetaxcredit.aspx

 

Target Area Loan

https://myohiohome.org/Geodata/Default.aspx

 

Next Home

https://myohiohome.org/nexthome.aspx

Renovate Ohio

https://myohiohome.org/renovateohio.aspx

 

 

Oklahoma

Oklahoma Housing Finance Agency

https://www.ok.gov/ohfa/

 

Programs

https://www.ok.gov/ohfa/Homebuyers/index.html


Oregon

https://www.oregon.gov/ohcs/Pages/oregon-bond-loan-program.aspx

 

Pennsylvania

Pennsylvana Housing Finance Agency

https://www.phfa.org/homebuyers/

 

Programs

 

Home Purchase

https://www.phfa.org/programs/homepurchase.aspx

 

Purchase Assistance

https://www.phfa.org/programs/assistance.aspx

 

Refinance Options

https://www.phfa.org/programs/refinance.aspx

 

Home Improvements/Repairs

https://www.phfa.org/programs/repairs.aspx



 

Rhode Island

Rhode Island Housing

https://loans.rihousing.com/

 

Programs

First Down - Down Payment Assistance

https://loans.rihousing.com/First_Down/

 

First Homes

https://loans.rihousing.com/FirstHomes/

 

Beyond First Homes

https://loans.rihousing.com/Beyond_FirstHomes/

 

Lasting Homes

https://loans.rihousing.com/LastingHomes/

 

Septic and Sewer

https://loans.rihousing.com/SepticSewer/

 

 

South Carolina

South Carolina Housing

http://www.schousing.com/Home/HomeBuyers

 

Programs

SC Housing Homebuyer Program

http://www.schousing.com/Home/HomebuyerProgram

 

Mortgage Credit Certificates

http://www.schousing.com/Home/MortgageCreditCertificates

 

Palmetto Home Advantage

http://www.schousing.com/Home/Palmetto-Home-Advantage

 

Hardest Hit Fund Down Payment Assistance

http://www.schousing.com/Home/HHF-Down-Payment-Assistance

 

Income/Home Price Limits

http://www.schousing.com/Home/HomeLimits



 

South Dakota

South Dakota Housing Development Authority

http://www.sdhda.org/home-ownership/first-time-homebuyers.html

 

Tennessee

Tennesse Housing Development Agency 2019

https://thda.org/homebuyers/

 

Programs

Down Payment Assistance

https://thda.org/homebuyers/down-payment-assistance-1

 

Great Choice Home Loans

https://thda.org/homebuyers/great-choice-home-loans

 

Texas

http://www.tdhca.state.tx.us/homeownership/

 

Programs

My First Texas Home

http://www.tdhca.state.tx.us/homeownership/fthb/my-first-texas-home.htm

 

My Choice Texas Home

http://www.tdhca.state.tx.us/homeownership/fthb/my-choice-texas-home.htm

 

Texas Mortgage Credit Certificate Program

http://www.tdhca.state.tx.us/homeownership/fthb/mort_cred_certificate.htm

 

 

 

Utah

Utah Housing Corporation 2019

https://utahhousingcorp.org/homebuyer

 

Programs

Down Payment Assistance

https://utahhousingcorp.org/homebuyer/programs/downPaymentAssistance

 

Home Loans

https://utahhousingcorp.org/homebuyer/programs/homeLoans

 

Grants for Veterans

https://utahhousingcorp.org/homebuyer/programs/grantsForVeterans



 

Vermont

Vermont Housing Finance Agency

https://www.vhfa.org/homebuyers/buyahome

 

Programs

https://www.vhfa.org/homebuyers/loanprograms



 

Virginia

Virginia Housing Development Authority 2019

https://www.vhda.com/Pages/Home.aspx

 

Programs

Home Loans

Https://www.vhda.com/Homebuyers/VHDAHomeLoans/Pages/VHDAHomeLoans.aspx#.XEi1v1zYq70

 

VHDA Plus Second Mortgage

https://www.vhda.com/Homebuyers/VHDAHomeLoans/Pages/VHDAHomeLoans.aspx#.XEi17FzYq70



 

Washington

Washington State Housing Finance Commission

http://www.wshfc.org/buyers/index.htm

 

Programs:

Home Advantage

http://www.wshfc.org/buyers/HomeAdvantage.htm

 

House Key Opportunity Program

http://www.wshfc.org/buyers/key.htm

 

Energy Spark Home Loan

http://www.wshfc.org/EnergySpark/index.htm

 

Mortgage Credit Certificate

http://www.wshfc.org/buyers/MCCprogram.htm


 

West Virginia

West Virginia Housing Development Fund

https://www.wvhdf.com/

 

Programs

Homeownership Program

https://www.wvhdf.com/home-buyers/homeownership-program

 

Down Payment/Closing Cost Assistance Program

https://www.wvhdf.com/home-buyers/down-paymentclosing-cost-assistance

 

Moving Up Program

https://www.wvhdf.com/home-buyers/movin-up-loan-program

 

On-Site System Program

https://www.wvhdf.com/home-buyers/on-site-systems-loan-program

 

WVHDF Refinance Program

https://www.wvhdf.com/home-buyers/wvhdf-refinance-program-2

 

USDA 502 Direct Loan Program

https://www.wvhdf.com/home-buyers/usda-502-direct-loan-program


 

Wisconsin

Wisconsin Housing and Economic Development Authority 2019

https://www.wheda.com/Home-Buyers/

 

Programs

https://www.wheda.com/Home-Buyers/Available-Programs/


 

Wyoming

 


The Basics of the Secondary Market

Nov 29
11:51
AM
2018
Category | Community

Often times borrowers wonder about the basics of the “secondary” mortgage market.  But what are they, and why do lenders “sell” them loans?  Mortgages, and specifically liens, are substantial sums of money that are tied up for up to 30 years.

 

While depository institutions, which are chartered by both the Federal and State governments, have the capacity to lend large amounts of capital over long periods of time, mortgage banks don’t. Keep in mind that a bank, in theory, can take the money it has in deposits, pool the money together, and lend it out to make home loans.

 

In order to maintain a sufficient pool of money such that they can continue making loans, mortgage banks, which do not take deposits companies but offer greater program and rate flexibility, “sell off” borrower’s mortgages to another institution—often Fannie or Freddie, but also to pension funds, insurance companies, or securities dealers. Along with allowing mortgage banks to do more business, this practice earns mortgage bankers a commission on every loan they sell.

 

A mortgage has one of two paths it can follow once it enters the secondary market. It can be sold by a lender into one of Freddie, Fannie, or another financial institution’s investment portfolios for cash, or it can be pooled with other mortgages in exchange for Mortgage-Backed Securities (MBS). MBS are very liquid investments that are traded on Wall Street through securities dealers, which means that lenders can easily hold or sell them. In turn, these transactions provide capital that can be loaned out to other borrowers.


Many borrowers tell their loan officers that they prefer obtaining their mortgage through a smaller shop rather than a huge national bank. That is an interesting phenomenon – what is happening out there? After all, aren’t the rates and prices all the same?

 

It turns out, the answer is “no.” For smaller lenders, size is critical. They are more nimble. Midsized firms, for example, pride themselves on processing times, quick underwriting, and being able to close loans in a timely manner. Currently some of the large national banks take over a month, even two or three, to close a loan.

 

During the financial crisis in 2009, it stung larger home lenders, and the heightened regulation that followed hasn’t done them any favors. Still, the biggest banks, on average, originate roughly double the volume of all other banks each month.

 

 

Returns have something to do with that. While interest rates are low, mortgage returns have risen because such loans have become more attractive to secondary buyers, partly because of stricter underwriting standards following the housing meltdown.

 

 

Teams of experienced LO’s, processors, and other support staff allow us to find the best rate and price among several companies, and do it efficiently and usually less expensively than a large bank. Non-huge lenders pride themselves on customer service, great pricing, and knowledge of the local markets. It is very hard for a new loan officer in a bank branch to beat that. And borrowers, in turn, are agreeing.

 

 

 

 

 

For more articles and updates, subscribe below. 

 

For a lender, down payments represent “skin in the game” since the more money a borrower can put toward a house the more the buyer will lose if they stop making payments. For many borrowers, attempting to put as little down toward the purchase of a house is standard, as they would rather have more money left over for furnishings, landscaping, and so on.

 

 

FHA (Federal Housing Administration) loans, which due to the government insurance, require very low down payments, and they rose to a very large share of the market during the worst years of the housing crash. Fannie Mae and Freddie Mac require at least 10% down, but borrowers must pay private mortgage insurance unless they put more than 20% down. In addition, private mortgage insurers these days aren't always willing to do business with low down payments.

 

But how much should borrowers put down? It depends on the program, but that certainly the days of “No money down!” are gone. Before the mortgage crisis unfolded, it was quite common for homeowners to come up with 20% of the sales price for down payment. So prospective homeowners took their time, saved up money in the bank, and when the time was right, made a bid on a property. We are back to those days, although some programs, such as FHA, VA, USDA Rural Housing, and Fannie Mae’s Homepath programs allow for lower down payments.

 

 

 

 

 

 

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When a borrower is trying to get a loan for a house, one of the things they'll need to do is fill out a lot of paperwork. In many cases that paperwork explains everything the lender and their underwriter needs to know. But in some cases that's not true, and a letter of explanation is needed. While that might seem daunting, or like there's a problem with the borrower's application, that's generally not true. Instead, these kinds of letters are becoming more common and are just used to clear up simple questions the underwriters may have about anything in the application they can't qualify or verify with the data they already have.

 

In other words, a letter of explanation is exactly what it sounds like. The lender and their underwriter are asking the borrower to explain something. That could be a change in jobs, a gap in employment, a large deposit into their bank account, a source of self-employed income, or just about anything else. These kinds of letters are also typically asked for if the borrower is purchasing a house a long distance from where they currently live. Are they moving? Did they change jobs? Will they telecommute? There are a number of questions the underwriter will seek to answer, but questions don't necessarily mean problems.

 

What the underwriter typically looks for is the borrower's ability to pay back the loan. As long as that can be verified to their satisfaction, the loan will likely be approved. They want the letter, or sometimes letters, of explanation in order to cover all of their bases and make sure that the information they are using to make an approval determination is as complete and thorough as possible. With that in mind, any borrower who's asked to provide a letter of explanation should do so quickly and efficiently, providing exactly the information the lender or the underwriter has requested from them.

 

If a borrower chooses not to provide a letter, refuses to do so, or otherwise doesn't give enough complete information to the lender when it is asked for, there is a possibility that the loan will be denied. In some cases the explanation itself will lead the lender or underwriter to deny the loan, but that's far less common. Most explanation letters are just used as a way to connect the dots, and when that's done the underwriter is satisfied with the information provided. Then they can move forward with underwriting and approving the loan, and the borrower can get the home they were hoping to buy.

 

If any borrower doesn't fully understand the questions being asked, they should get clarification before providing the letter. That way they can give the lender and the underwriter the information they need and want, so the loan can keep moving through the process. Failing to give them the information they want can actually result in the loan being delayed, and in some cases that could cost them the house they're trying to buy. It's always better to get that letter to the lender right away, so the loan can continue to be worked on by the underwriter and approval can be that much closer.

 

Overall, borrowers who are asked for letters of explanation shouldn't get worried about that type of request. They should simply make sure they understand the question, provide a direct and succinct answer, and then wait to see if the underwriter asks for anything else. There is no reason to assume that being asked for a letter of explanation means that the loan won't be approved. Many borrowers get nervous about these letters or see them as almost accusatory, but it's important to step back and treat these letters as what they really are. A lender's underwriter is asking a question, the borrower answers it, and the process of getting approved for the loan moves on. 

 

 

 

 

 

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