Author: Madolyn Greve, Real Estate Sales, Broker Associate, Callaway Henderson Sotheby's International Realty

The Fannie Mae and Freddie Mac loan limits are adjusted annually to keep up with cost of living but with the appreciation experienced in many markets, it may not be enough. When the conforming loan limit is not enough, qualified buyers can turn to a jumbo loan.

The maximum loan limit on conforming, conventional loans for 2022 is $625,000 for a single-family home but is increased up to $937,500 for designated high price areas. The underwriting guidelines for conforming loans are consistent with regards to things like minimum down payment, private mortgage insurance, debt-to-income ratio, minimum credit score and cash reserves required.

Jumbo loans are loans more than the FNMA maximum limits and are considered non-conforming loans. This allows lenders to set their own requirements on maximum loan amount, minimum required credit score, maximum debt-to-income ratio, and minimum down payment.

The rates paid on the jumbo loans may be the same as conforming loan rates. It might sound logical that a larger loan would have more risk and therefore, be priced higher. Lenders do not sell jumbo loans to FNMA which saves them the guarantee fee normally required. This makes the jumbo loan more profitable. Borrowers are encouraged to shop the rates.

A minimum credit score of 700 will probably be required together with a debt-to-income ratio below 45%. While many borrowers seeking a jumbo may be putting 20% down, it is possible to find a lender who may only require 10% down payment. Lenders may be more lenient with regards to mortgage insurance.

Lenders may also require six to twelve months of cash reserves due to the increased risk of the larger loan amount.

It is a common practice for banks to make jumbo loans to attract other business that the borrower might be able to influence like company, corporate, or investment accounts.

Credit utilization reflects how much of your available credit is being used at a given time. Lower credit utilization indicates that a borrower is not heavily relying on their credit and that they are using their credit responsibly.

Is calculated by dividing your total credit card balances by your total limits. The higher the percentage, the higher the risk which adversely affects the credit score according to most of the companies. It is recommended that your credit utilization be under 30% to positively impact your credit score.

If the available limit on a credit card is $12,000 and their normal monthly balance is around $3,000, they have a credit utilization of 25%. If for whatever reason, the borrower’s available limit was reduced to $6,000, and their long history of having a monthly balance of $3,000, the ratio, then, increases to 50% which will likely lower their credit score.

For borrowers who use more than 30% of their available credit and regularly pay off the bill each month, they should consider making payments toward the balance more frequently, like every two weeks. This keeps the balance lower, and, in many cases, the card issuer will only report the credit activity once a month to the credit bureau, usually on the monthly closing date of the account.

Another option may be to use multiple cards, if they are available, for the purchases during the month. Based on the limits of each card, this could result in lower utilization on a single card.

You could also ask for your available credit to be increased. Assuming you have a good history of paying on time, this may be an easy fix. Before doing this, ask if it could negatively impact your credit score because it will be reported as a hard inquiry on your credit.

If you are trying to improve your score to qualify for a mortgage, consult with a trusted mortgage professional who can advise you specifically for your situation. If you would like a recommendation, please contact meMadolynGreve.

Some people consider a house payment as basic as monthly utilities but with a plan and some discipline, you can be mortgage free.

Consider a person borrowed $300,000 at 3% for 30 years, the principal and interest payment would be $1,264.81 and at the end of 12 years, the unpaid balance on the mortgage would be $210,900.

If that same person had financed the home on a 15-year term at 2.5%, the payments would have been $2,000 but the unpaid balance at the end of 12 years would be $69,310. The homeowner will have a larger equity but they have also had to make higher payments.

15-year mortgages usually have a lower interest rate than the 30-year loans and at the time this article was written, the difference in a 30-year loan was about 0.5%. A 15-year loan gives the lender their money back in half the time. If rates go up during the interim, they will be able to loan it at the higher rate sooner. For that reason, they are usually willing to offer a slightly lower rate on the shorter term.

Having a lower rate means paying less interest but another remarkable thing happens, lower interest rate loans amortize faster than higher rate loans.

This recognized wealth building technique with higher payments, saves interest and retires the mortgage sooner. The shorter-term mortgage requires a commitment to make the higher payments each month rather than giving the borrower flexibility to spend or invest the difference each month for as long as the loan is in place.

To make you own calculations, go to the 30yr vs. 15yr Comparison.

Homeowners know the need to periodically check certain things around the home to ensure that things operate properly and efficiently. If maintenance is required, it may be less expensive to take care of it early rather than waiting until it is not working at all.

Checklists are helpful because it requires little effort to know what must be done. They are usually concise and provide enough information to complete the task. These items apply to most homeowners but in no way offer a comprehensive list.

1. Vacuum dryer exhaust … not only does it affect the efficiency of your dryer itself, the accumulation of lint along with the hot air can ignite and create a fire hazard.
2. Replace HVAC filters 4 to 6 times a year … This is one DIY project that almost everyone should feel confident in handling. Locate the filter, make a note of the size, and keep replacements available. Turn off the unit, open the door or housing, remove the dirty filter, and replace it with the new one. Pay attention to the direction of the air flow; filters are marked to indicate the correct direction.
3. Test all GFCI breakers. – GFCI breakers, as well as outlets, have a test button on them. Pressing the test button should cause the breaker to trip which shuts off all power to the entire circuit. To reset the breaker, push it completely to off and then, back to on.
4. Vacuum refrigerator coils … Coils on refrigerators can be in different places depending on the model and manufacturer. Locate the coils and clean the dirt and dust from them using a soft bristle brush or a vacuum cleaner with a brush.
5. Replace batteries in smoke detectors … smoke detectors should be tested monthly by pushing the test button. Annually, the batteries should be replaced, even if they appear to still have life in them. After replacing the batteries, test the smoke detector to see if it is functioning properly.
6. Check windows and doors for leaks … There are several ways to check for leaks. One method used on a cold day would be to hold your hand a few inches from the window or door frame to feel for drafts. Another method would be to light a candle and trace the outline of the window or door to see if the flame or smoke pull in one direction, indicating an air leak.
7. Inspect all sprinkler system stations to see if heads are leaking or need adjusting. … Manually, turn on each of the stations and look at each sprinkler that is running to see if it is leaking or if it is properly covering the area intended.
8. Check garage door opener to see that safety features engage properly … Place a cardboard box in line of one of the sensors before trying to close the door. The door should reverse itself after sensing the obstruction.
9. Check and clean fireplace(s) annually, if used … this may be a job that you want to have someone else do but you may be able to recognize indicators that the chimney needs cleaning. These things include evidence of birds or animals; fireplace smells like a campfire; smoke fills the room; difficulty starting or keeping a fire going; the fireplace walls have oily marks; the damper is black with soot and creosote. The frequency of use on wood burning fireplaces will impact the need for cleaning.

If you need a recommendation of a service provider for repairs, contact me MadolynGreve with what you are looking for. I’ll get back to you quickly.

You don’t have to have an Uncle IRRRL but you must be a veteran with a current VA-backed home loan. IRRRL is an acronym for Interest Rate Reduction Refinance Loan. To refinance with this program, also called the VA Streamline, the loan must provide a net tangible benefit (NTB) which would be in the financial interest of the Veteran.

Obtaining a lower interest rate is usually the reason behind refinancing but there needs to be enough difference in the current and the new mortgage to justify the expenses incurred. Significantly lower payments or a shorter term are examples of acceptable benefit.

The Veteran must currently have a VA-backed home loan to refinance using this program. The Veteran does not have to currently live in the home as long as it can be certified that he or she did at one time.

In most cases, an appraisal is not necessary and less verifications are required. A minimum 640 credit score is needed, and borrower must be current on their payments with no 30-day late payments in the previous 12-months. A two-year employment history is required.

There are expenses associated with the IRRRL but they can be rolled into the loan balance. The VA funding fee, required on new VA loans for purchases or refinances is lower on the IRRRL at 0.5%. Disabled Veterans and qualifying surviving spouses refinancing under this program are exempt from the VA funding fee.

This program is not available for a cash-out refinance. There is a $6,000 exception for additional funds to pay energy improvements completed 90-days prior to closing. Your lender can provide more information for you.

If you are a Veteran and considering a refinance, ask your mortgage professional about this program. If you need a recommendation of a trusted mortgage professional who is experienced in VA loans, give me a call at (609) 921-1050 or MadolynGreve.