House to Home

Mortgage Acronyms 101

Posted by Morgan Saylor on 4/8/16 7:30 PM

When you go to apply for a mortgage in the first step to becoming a home owner, you may feel like you’ve been dropped off into some remote land where the language is alien to you. You are not alone!


At SMC, we try to keep the jargonish language to a minimum, but somewhere in your home buying journey you may come across some terms and scratch your head in wonder. Luckily, Trulia has compiled a list of commonly used and misunderstood acronyms used in the industry.

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Topics: Mortgage, Banking, ARM, PMI, IO, industry, DTI, acroynms

Why non-banks are thriving

Posted by Amy Patterson on 5/8/15 3:54 PM

For borrowers, making a decision about which lender to choose when financing their home can be difficult. Not only is the choice of selecting a specific lender a hard decision, but one of the biggest choices before narrowing in on a specific lender, is deciding whether to finance through a bank or through a non-bank.

“In the wake of the financial crisis, non-bank lenders and servicers have witnessed a significant emergence in the mortgage business. In fact, independent mortgage banks (IMBs) are heavily dominating the single-family market. The IMB share of overall mortgage originations has increased from 25% in 2008 to 40% in 2013, according to MBA’s own research,” according to Bill Cosgrove, chairman of the Mortgage Bankers Association, in his article posted on Housing Wire.

So why are non-banks or independent mortgage banks thriving in our post collapse housing market:

  • Exclusivity – Unlike depository banks, non-banks only use their funding for mortgages. Not personal loans, not deposit products, not business loans – nothing other than home loans.


  • Regulations – Unlike banks, which operate under one license throughout a variety of states, independent mortgage banks, or non-banks, are required to have licensing for each and every state in which they operate. The state regulators review all financial statements, balance sheets and data on origination and servicing, quarterly.


  • Monitoring – Non-banks’ activity is overseen by warehouse banks, as well as government agencies such as: Fannie Mae, Freddie Mac, Ginnie Mae and FHA.



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Topics: Mortgage, Home Loans, Banking

How much is a down payment?

Posted by Amy Patterson on 4/25/15 6:00 PM

For many first time home buyers, some of the biggest questions about buying their first home, revolve around how much their mortgage will cost. Not necessarily the mortgage itself, but the fees and costs associated with procuring the loan. Closing costs, escrow costs and down payment percentages are usually the biggest costs that borrowers worry about when getting a mortgage. Fortunately, closing costs and escrow costs are detailed in the GFE – a document that estimates the closing costs well before closing. 

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Topics: Mortgage, Finances, First Time Home Buyers, Millennials, Credit, Homeowners, Home Loans, Banking, FHA loans, Home Sales, 100% financing

How VantageScore may change the game

Posted by Amy Patterson on 4/24/15 2:31 PM

For individuals without any credit, securing a mortgage loan can be nearly impossible. Most of us know that a mortgage approval is based on several different factors, however, the largest factor is your credit – or more specifically, your FICO credit score.

Currently, FICO scores pulled from Equifax, Experian, and TransUnion are the only reports to measure a potential borrower’s credit worthiness.

But there’s a problem with that – some would be borrowers have so little credit that they don’t even have a FICO score at all, and because of that, some borrowers are turned down for mortgages.

However, all of this may be changing soon, according to an announcement by HUD Secretary Julian Castro and NAR President Chris Polychron earlier this month. According to the two industry specialists, the agencies are exploring alternative credit systems in an effort to expand American’s access to mortgages.

This announcement falls in line with last year’s statement by VantageScore – an alternative scoring system – that Fannie Mae and Freddie Mac, the two government loan agencies, were looking into updating their credit scoring methods.

Though it has not yet been confirmed that VantageScore will be used along with or in place of FICO scoring, this new development – if utilized – could work to change the game for many borrowers – 7.6 million borrowers to be specific.


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Topics: Finances, Credit Report, Credit, Home Loans, Banking, FHA loans, FHA, Home Sales, Economy

Why saving for retirement is a big deal

Posted by Amy Patterson on 4/7/15 1:06 PM

In a recent report by HSBC, one third of retirees said that they wish they had saved more for retirement during their working years. In the 15-country-wide study of more than 16,000 people, 36% of survey participants also admitted they would have begun saving at an early age to improve their current standard of living.

But what’s the magic age to start saving? According to many – it’s 30. The U.S. may be leading the way over Australia and the UK in terms of workers contributing to retirement, but one quarter of U.S. workers are not saving. Compare this number to Australia where 53% lack a retirement savings account, and the U.S. appears to be in good shape, but that doesn’t mean that we shouldn’t strive to do better. An astonishing 41% of retirees have had to cut their everyday spending because of their limited retirement income.

Saving for retirement is difficult, especially with the amount of debt that most Americans are working to pay off. Luckily, recently, down payment requirements and interest on mortgages have dropped significantly – cutting what used to be the biggest debt payment for Americans. Saving for retirement is possible – and even the smallest amount can really add up. Andy Ireland, head of wealth management for HSBC in the U.S., says that even an investment of $50 per month for 35 years, (in a mutual fund assuming an annual return of 7%), will yield $86,000; but double the $50, and yield $172,000. 


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Topics: Mortgage, Finances, Home Loans, Money, Banking, Market, Savings, Retirement

5 Things You Should Expect Your Mortgage Banker to Ask About

Posted by Amy Patterson on 3/18/15 11:36 AM

1. Proof of incomemortgagebankerquestions

  • You will need pay stubs (showing at least 30 days)
  • If you have recently started a new job, your mortgage banker may ask you to provide letter from your employer confirming your salary

2. Debt

  • All of your debt – student loans, credit cards, cars and even store credit cards

3. Assets

  • Cash, cars, property and basically anything that is owned that can be sold or converted into cash

4. Down payment

  • While this will vary depending on what loan program you qualify for, (some loans require no down payment at all) it’s a good place for you and your mortgage banker to begin deciding what type of loan you want

5. Documentation 

  • Items like pay stubs, bank statements and identification documents are an important and necessary part of the mortgage process – for a complete list of needed documentation, ask your mortgage banker 


Interested in taking the first steps to becoming a home owner? Check out our First Time Home Buyer's Study Guide



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Topics: Mortgage, Finances, Rates, Home, Credit Report, Credit, Home Loans, Banking

5 Sneaky Things That Tank Your Credit

Posted by Amy Patterson on 3/17/15 12:55 PM

It’s no secret that your credit is the single most important factor that is considered when you apply for any type of credit card or loan. There are tons of tips out there to improve your credit, but in addition to putting those practices into place, you should also know about what sneaky things have the ability to tank your credit score.

1. Maxing Out a Credit Card: This makes your credit utilization 100% and has one of the worst impacts on your credit score.

2. Not Knowing That Paying off a Collection Account Will Not Remove It: You can’t hide from FICO – the paid account will remain on your report for seven years.

3. Opening New Credit Cards to Increase Your Credit: You may think it expands your credit portfolio, but creditors could see it as you trying to max out your credit potential.

4. Not Using Your Credit Cards: You can’t build credit without using credit. Some creditors even have a time period after which your account will be marked inactive, and some will simply close neglected accounts.

5. Making Purchases by Using a Retailer’s 0% Financing Program: This offer is usually viewed as a last resort type of loan and could cause creditors to view you as high risk. 


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Topics: Finances, Credit Report, Credit, Home Loans, Money, Banking

Are You One of 248,000 Home Owners Missing Out on a Cut of $175 Million?

Posted by Amy Patterson on 3/16/15 12:40 PM


The U.S. Department of Housing and Urban Development (HUD) is working to locate approximately 248,000 home owners who are owed a total of $175 million in FHA mortgage insurance refunds. While the HUD has recently increased its efforts to find these home owners, some have not been found – mostly due to relocation and a lack of current address records.



But why does HUD owe home buyers money?

Before January 1, 2001, it was mandatory for all home buyers to purchase mortgage insurance on FHA loans.

When a home owner with an FHA-insured loan pays off the loan within five years, they get a portion of the mortgage insurance premium back. It is similar to any home owner’s fire insurance policy, for example, if you purchase a policy for one year, and then decide to move from your home after six months, a portion of the premium is refunded.


Who does this impact?

There are two different kinds of refunds, the first, called the “premium refund,” is available to home owners who: originated their loan after September 1, 1983, paid an up-front premium for insurance at their closing, and did not default on their mortgage.

The second refund, called the “distributive share,” is available for home owners who: acquired their loan before September 1, 1983, paid on their loan for over seven years, and terminated their FHA insurance before November 5, 1990.


How do you find out if you’re owed money?

Find your FHA loan number and visit HUD’s website or call toll-free 1-800-697-6967.



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Topics: Insider, Mortgage, Finances, Home, Credit, Home Loans, Money, Banking, FHA loans, Mortgage Insurance, Private MI, FHA

Bill Withdrawn After Critics Boast its Favor of Banks over Home Owners

Posted by Amy Patterson on 3/12/15 10:14 AM

Last week, a state lawmaker withdrew one of his own bills after a harsh response from critics.

The foreclosure bill, House Bill 407, which was backed by Jeff Greer, the House Banking and Insurance Chairman, would have permitted a quicker and more direct mortgage foreclosure process.

However, the opponents of the bill say that it threatened to favor banks over home owners. They expounded by saying that the bill would force home owners to deal with obstacles such as no longer being able to regain their home by paying the amount owed within six months. Home owners would also be forced to file lawsuits – at their expense – in order to halt a wrongful foreclosure.

“My intention was to give some relief to the banking industry, but I had no intention to hurt anybody,” said Greer, who went on to explain that the overall issue with the bill was the lack of time he had to present it adequately. “That’s what you get for trying to rush a bill through.”

Last year, Greer received a minimum of $9,400 from Kentucky’s banking industry, from both individuals and political action committees, in political donations.

General counsel for the Kentucky Bankers Association, Debra Stamper, said the bill was designed to expedite the foreclosure in such cases where everyone – borrower included – wanted things to be resolved quickly.

Stamper continued to say that there was a lot of misinformation about the bill and that there was a lack of time to, “talk it out with everyone.”

Stamper also said that the association has plans to pursue a similar bill in 2016.

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Topics: Insider, Loans, Mortgage, Finances, Homeowners, Politics, Bill, Frankfort, Foreclosure, Kentucky News, Banking

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