The Massachusetts Mortgage Blog by David Gaffin of Greenpark Mortgage, The Leading Massachusetts Mortgage Lender serving Greater Boston and Metrowest Massachusetts, MA mortgage lender, MA mortgage rates, FHA, VA, USDA, conventional, ARM, Jumbo, Super Jumbo, Construction Lending, Investment Property Lending, Interest Only, Low Down Payment, No Down Payment

First Time Home Buyer’s Mortgage Primer

September 27, 2011 David Gaffin No comments

Given that rates are at all time lows, many buyer’s have asked me whether first time home buyer’s can qualify for these rates. So today I want to help buyer’s understand the various programs that are available, what rates might be offered, what down payments they may need and whether mortgage insurance would be required.

I will lay out comparisons for the following widely available programs: Conventional, FHA, and USDA 30 year fixed rate mortgages. These are 3 major programs that are offered, however, additional programs such as Mass Housing 0r combining a first and second mortgage to avoid private mortgage insurance may be offered.

	Conventional	FHA	USDA
Minimum FICO (typical)	640	640	640
Best Rate FICO	740	700	720
Minimum Down Payment	3%	3.50%	0%
Typical Min Down Payment	5%	3.50%	0%
Down Payment from Gift?	Borrower must have 5% of own funds to get a gift	Yes	N/A
Guarantee Fee Required	NO	1%	2%
Fee Added to Loan	NA	YES	YES
Mortgage Insurance	YES, unless a 2nd mortgage	YES	YES
Mortgage Insurance Rate	Varies by Debt, FICO and Property Type	1.15% Annually	.3% Annually
MI Removal	Home Equity reaches 80%	5 years and Equity reaches 78%	Life of Loan
Seller Contributions	3% of Purchase Price	3% of Purchase Price	Unlimted, subject to Appraised Value
Property Location Eligibility	NA	NA	YES
Income Limit Eligibility	NA	NA	YES
Housing Ratio % (typical)	40%	45%	29%
Debt Ratio % (typical)	45%	55%	41%

The chart below shows examples of Conventional, FHA and USDA loans and payments that might be available for a purchase of a $250,000 single family home, assuming a 740 credit score. A score of 740 will typically get the borrower the best rates.

Convetional v. FHA v. USDA	Conventional	FHA	USDA
Rate Example	4.125%	3.750%	3.875%
Appraised Value	$260,000	$260,000	$260,000
Purchase Price	$250,000	$250,000	$250,000
Down Payment %	5%	3.5%	0%
Upfront Fee %	0%	1.0%	2.0%
Upfront Fee $ Added to Base Loan amount	$0	$2,500	$5,000
Down Payment $	$12,500	$8,750	$0
Loan Size	$237,500	$241,250	$250,000
Principal and Interest Payment 30 year amortization	$1,151	$1,117	$1,176
Annual Mortgage Insurance %	0.59%	1.15%	0.30%
Monthly Mortgage Insurance $	$116.77	$231.20	$62.50
Total P, I, MI Payment	$1,267.81	$1,348.46	$1,238.09
Allowable Seller Contributions	$7,500	$7,500	$10,000
APR Estimate	5.011%	5.494%	4.524%
*Assumes 740 FICO Score, Single Familly Residence. Used as example, Closing Costs additional and APR will vary by program. No points in these examples.

So why the big difference in programs you might ask?

Traditionally, these programs were designed to help different types of borrowers. Fannie/Freddie loans were designed for most borrowers, who traditionally had at least 10% down payment, many with 20% down and with good credit. As home prices increased, this left a larger portion of homebuyers, who did not have enough of a down payment. That is where FHA came in. FHA and USDA are government backed programs. USDA was designed to help more rural borrowers that were underserved by Fannie and Freddie. Now that Fannie and Freddie are backed by the government against losses, more than 50% of all mortgages originated in the US market are government backed.

With the credit crisis and the mortgage meltdown, the lines between these programs have become blurred, as Fannie and Freddie are requiring very high FICO scores to get the best rate and the difference in rate between best FICO and lowest acceptable FICO is startling. By contrast, FHA and USDA offer only a slight difference in rates between 740 FICOs and 640 scores.

As you can see, each program has benefits and restricitions/costs that make them more advantageous depending on your particular situation. I would be happy to help you determine which program may be best for your needs.

To determine if you and your property will qualify for USDA loan, please click this link to the USDA: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

You can reach me at dgaffin@greenparkmortgage.com or my cell at 508-254-2645.

Hurricane Irene Safety Tips and Insurance Claim Information

August 26, 2011 David Gaffin 1 comment

There never seems to be enough time in the day to write lately given that rates are so low and I have been extremely busy trying to help my clients.

In this vein, I would like to thank Gary Nagle (781)-235-0502 of Corcoran and Havelin Insurance in Wellesley, MA for sending me the following Hurricane Safety and Preparedness list along with the telephone numbers of the major Homeowner Insurance carriers for Massachusetts.

If you do not currently have homeowner’s insurance please do not call today to get any, as the carriers will not write coverage until after the storm passes.

Please use this well and be safe this weekend.

When a Hurricane is Headed Your Way

Careful preparation and planning before a storm arrives will help minimize damage, loss and grief. The following is a short listing of what could be done to prepare yourself and your family during this season.

Pre-Planning:

Obtain information on flood zones and evacuation shelters. in some area, these can be found in your telephone book or online.

Plan an evacuation route to the nearest shelter or “safe” area and keep a map handy. During emergencies, shelter locations be also be announced on the radio.
Replenish emergency kits and supplies.
Secure important documents from possible damage or move to a safe location.
Develop a list of important phone numbers.
Develop a plan to secure loose objects around the house; trim branches and trees.
Ensure that your pets have collars and identification tags.

Prior to the Hurricane:

Secure all loose objects outdoors.

Secure all windows using plywood.
Fill your vehicle with fuel.
Charge all batteries (i.e. phone, lamps, flashlights, radios, etc.)
Listen to the emergency broadcasts of the storm.
Be prepared to evacuate with emergency supplies to a predetermined location.

During the Hurricane:

Stay in doors and away from windows. Keep to the center of the building on the ground level.

Listen to the emergency broadcast on the radio or television.
Turn off all electrical devices and appliances that are not needed.
Stay away from coastal waters, rivers, streams or other flooding areas.
Do not try to cross flooded areas with your vehicle.
Listen for instructions from emergency officials when the storm is over.

Emergency Supplies and Kits:

First aid kit and personal medications

Drinking water
Ice Chest
Lighter, matches and candles
Clothing, personal toiletries
Sleeping bags and blankets
Portable radio and flashlight
Extra batteries
Non-perishable foods
Manual can opener
Important documents
Quiet games, books, or toys for children

Here are the carrier’s phone numbers:

Acadia Insurance	(800) 691-4966
AIG (Global Energy)	(877) 743-7669
AIG (Private Client Group )	(866) 642-5246
Andover Companies: Cambridge Mutual & Merrimack Mutual	(800) 225-0770
Chubb Group	(800) 252-4670
Commerce	(800) 221-1605
Fireman’s Fund	(888) 347-3428
Great American	(888) 882-3835
Guard Insurance Group	(888) 639-2567
Hanover Insurance	(800) 628-0250
Hartford Insurance	(800) 327-3636
Hingham Mutual (After hours claims)	(800) 972-5399
Mass. Property Insurance Underwriting	(800) 851-8978
Trident (After hours claims)	(800) 288-2502
Tower	(877) 365-8693
Quincy Mutual	(800) 490-0047
Safety Insurance	(800) 951-2100
Selective Insurance	(866) 455-9969
Splash Program (Emergency Pollution related claims)	(866) 577-5274
Splash Program (Emergency Non-Pollution related claims)	(800) 746-3835
Travelers	Personal lines: (877) 425-2466 Commercial: (800) 832-7839
Utica National	(800) 216-1420
Vermont Mutual (After hours claims)	(800) 445-2330
Zurich/Maryland	(800) 565-6295

Thank you Gary for this helpful information. I hope that none of my reader’s will have to use the claim process.

If you need Homeowner’s Insurance, please give Gary Nagle a call at 781-235-0502. He is extremely knowledgeable and as he carries many lines of insurance he can analyze and find the best policies and rates for you.

By the way readers, should you be closing on a purchase or refinance after the storm passes and the Feds declare a Federal Disaster Area, be prepared to have a re-inspection of the property before closing. This is considered to be an Act of God and as a result the borrower will be required to pay for any re-inspection fee. These re-inspections range from $125 to $200. You will receive notice from your lender and re-disclosures prior to closing.

FANNIE MAE, FLOODING, HOMEOWNER'S INSURANCE, Uncategorized, WIND DAMAGE COMMENTARY, DAVID M. GAFFIN, FANNIE MAE, FREDDIE MAC, Greenpark Mortgage, Home Repairs, METROWEST HOME LENDER, METROWEST HOME LOAN, Metrowest MA insurance agent, NEWS

Fannie, Freddie and FHA Loan Limits Dropping. Close by 9/30/2011 or sooner!

August 15, 2011 David Gaffin 2 comments

As Congress lets the temporary increase in conforming loan limits expire October 1st, we have received word that some investors will require that all loans affected by these limits close on or before September 30, 2011. Other investors will have their own timelines and will require closings earlier, perhaps weeks earlier.

I have attached a chart below indicating the new loan limits for 1-4 family residences through 12/31/2011 for some investors. 2012 Loan limits for Fannie and Freddie have yet to be announced. For Massachusetts this reduction will impact the these areas as follows: Martha’s Vineyard and Nantucket: Reduced from $729,750 to $625,500; , Essex, Middlesex, Norfolk, Plymouth and Suffolk Counties reduced from $523,750 to $465,750; Bristol county will be reduced to $426,650; Franklin, Hampden, Hampshire and Worcester Counties will remain at $417,000.

Please follow the attached chart for the max loan amounts. It is indicated by county.

1 Family 2 Family 3 Family 4 Family

BRISTOL	MA	$426,650	$546,200	$660,200	$820,500
DUKES	MA	$625,500	$800,775	$967,950	$1,202,925
ESSEX	MA	$465,750	$596,250	$720,700	$895,700
FRANKLIN	MA	$417,000	$533,850	$645,300	$801,950
HAMPDEN	MA	$417,000	$533,850	$645,300	$801,950
HAMPSHIRE	MA	$417,000	$533,850	$645,300	$801,950
MIDDLESEX	MA	$465,750	$596,250	$720,700	$895,700
NANTUCKET	MA	$625,500	$800,775	$967,950	$1,202,925
NORFOLK	MA	$465,750	$596,250	$720,700	$895,700
PLYMOUTH	MA	$465,750	$596,250	$720,700	$895,700
SUFFOLK	MA	$465,750	$596,250	$720,700	$895,700
WORCESTER	MA	$417,000	$533,850	$645,300	$801,950

You can also access other states via the website: http://www.fhfa.gov/Default.aspx?Page=185 and click on the HERA Loan Limits at the bottom of the page.

With respect to FHA, more pain is ahead as FHA seeks to lower its market share and reduce exposure. Loan limits decreases will affect Massachusetts dramaticaly, as the chart below indicates:

		Continuing	HERA		Median
		Appropriations	Limit		House	Year
		Act	of		Price	of Median
		Limit 2011	2011		for	House
		(1-unit)	(1-unit)	Difference	Area	Price
MA	BarnstableCounty	$462,500	$405,950	($56,550)	$353,000	2008
MA	BristolCounty	$475,000	$426,650	($48,350)	$371,000	2008
MA	DukesCounty	$729,750	$625,500	($104,250)	$626,000	2010
MA	EssexCounty	$523,750	$465,750	($58,000)	$405,000	2008
MA	FranklinCounty	$318,750	$274,850	($43,900)	$239,000	2010
MA	HampdemCounty	$318,750	$274,850	($43,900)	$239,000	2010
MA	HampshireCounty	$318,750	$274,850	($43,900)	$239,000	2010
MA	MiddlesexCounty	$523,750	$465,750	($58,000)	$405,000	2008
MA	NantucketCounty	$729,750	$625,500	($104,250)	$1,325,000	2009
MA	NorfolkCounty	$523,750	$465,750	($58,000)	$405,000	2008
MA	PlymouthCounty	$523,750	$465,750	($58,000)	$405,000	2008
MA	SuffolkCounty	$523,750	$465,750	($58,000)	$405,000	2008
MA	WorcesterCounty	$385,000	$285,200	($99,800)	$248,000	2008

Worcester County will get killed! With Loan Limits dropping by almost $100,000, FHA will be effectively increasing the down payment requirements for buyers, if they wish to purchase a home over $298,000. This will have an impact on home prices. FHA is also good for buyers who have less than 740 credit scores. Fannie has price adjustments for lower Ficos and these raise the interest rates to borrowers. The towns of Milford, Westborough, Northborough, Shrewbury, Northborough, among others could be hard hit.

Bottom line, Take advantage of the low interest rates and higher loan limits now. Greenpark is currently accepting purchase loans for the higher limits until 8/25/2011, to close by 9/30/2011.

Please send me an email me, dgaffin@greenparkmortgage.com with any questions and thank you for reading.

Say Yes to the Dress: First Time Homebuyer Tips – Guest Post

June 21, 2011 David Gaffin No comments

It is my pleasure to welcome Heidi Zizza of MDM Realty and author of the Metrowest Homes and Life Blog . Heidi has some great advice for First Time Home Buyers and has allowed me to repost her blog piece. The latest existing home sales reports indicates that home affordability is approaching lows not seen in 40 years. Lower home prices coupled with histrically low interest rates are a boon to homebuyers.

Heidi has some fun, as is typical for her, and likens the homebuying process to planning a wedding. Sage Advice.

Say Yes to the Dress: First Time Homebuyer Tips

by Heidi Zizza of MDM Realty on June 13, 2011

in Buying A Home,Homes for Sale,Just For Fun,Real Estate Advice

There are so many firsts in a person’s life. Getting married and buying a dress, having your first child, sending them on a kindergarten bus, the first time one of your kids leaves for college etc…

Well in housing your first time can be just as stressful and nerve wracking. I was asked by my first time buyer clients K.M and C.M to write a little something about this experience and how to handle yourself during this time. Here are some tips to keep you cool during this first time process.

1. If you equate this process (in hypothetical terms) to planning your wedding, PLEASE stop watching “Say Yes to the Dress!” Being overly obsessed with minutia can and will drive you crazy. (Yes K.M. I know you are organized!)

2. Don’t overload yourselves with too much information from the starting line, you will never remember it all anyway. Be informed but try to focus on each step as it presents itself. Ask your Realtor for an outline of the process and go over it in full during each step of the transaction.

3. Keep your P’s and Q’s to yourselves. I have said before in other articles that your situation is not the same as anyone else’s. Talk to your mortgage and Real Estate professionals, not friends and family. When you need a tooth pulled, you go to your dentist for a procedure not to your cousin Fred, so keep to those same rules here.

4. Before you start the fun part of house hunting you really need to sit with a qualified mortgage professional and find out what your financial picture looks like. It’s never a fun time to start looking at houses in the $400,000 range and then find out you are only qualified for $300,000. After that every house you see will be a disappointment.

5. Find out if your employer is affiliated with any financial institutions that offer employees special first-time home buyer incentives. Although the tax credit is history there are still some first time buyer promotions out there.

6. Last but not least be organized and diligent with all your banking paperwork (I will not worry about you K.M on this point). This will make for a smoother transaction without untimely and possibly costly delays that can affect both buyers and sellers.

Remember to try to enjoy yourself! Yes, this is a serious process, but have some fun at the same time. You want to look back on the experience as a positive one.

I truly believe there is a house for everyone and when you walk through its door it will let you know! Maybe it will even shout “Say Yes to the Dress!”

Thank you Heidi for the great advice. Heidi is a true professional who loves to work with First Time Buyers. If you or someone you know could benefit from her services, Heidi can be reached at mdmrealty@msn.com or 508-879-8999.

If you need your mortgage questions answered, please contact me at dgaffin@greenparkmortgage.com or visit my webpage to apply online: www.greenparkmortgage.com/dgaffin.

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