M&T Bank – Mortgage Division

At M&T Bank, we’ve built our business over the past 150 years on a tradition of reliability and responsiveness to the needs of our customers.

So whether you’re considering buying your first home, moving up to your dream home, obtaining a construction loan, or refinancing your mortgage, M&T Bank offers a full range of home financing solutions to meet your needs.

Buying a home is a big deal – financing it shouldn’t be.
Your home is one of the largest investments you’ll ever make. As an M&T loan officer, my mission is to understand what’s important to you, so I can assist and guide you through the home financing process. I’m committed to earning your trust, because that’s the best way to earn your business. I’ll offer home financing advice and guidance that provides peace of mind, so you can feel comfortable you’re making informed decisions every step of the way.

Now is a great time to make your move.
Interest rates remain at historically low levels, so now’s a great time to act if you’re considering buying, building or refinancing a home. At M&T Bank, we make homebuying easy and affordable with a wide range of home financing products designed for almost any need – all delivered with the service you expect.

Contact me to learn more!
Erick Yurkanin
Senior Loan Officer
M&T Bank
570-307-2600

Questions and Answers for Borrowers about President Obama’s Homeowner Affordability and Stability Plan

Questions and Answers for Borrowers about the
Homeowner Affordability and Stability Plan

This is the Q&A from FinancialStability.gov.

1) Borrowers Who Are Current on Their Mortgage Are Asking:

What help is available for borrowers who stay current on their mortgage payments but have seen their homes decrease in value?
Under the Homeowner Affordability and Stability Plan, eligible borrowers who stay current on their mortgages but have been unable to refinance to lower their interest rates because their homes have decreased in value, may now have the opportunity to refinance into a 30 or 15 year, fixed rate loan. Through the program, Fannie Mae and Freddie Mac will allow the refinancing of mortgage loans that they hold in their portfolios or that they placed in mortgage backed securities.

2) I owe more than my property is worth, do I still qualify to refinance under the Homeowner Affordability and Stability Plan?

Eligible loans will now include those where the new first mortgage (including any refinancing costs) will not exceed 105% of the current market value of the property. For example, if your property is worth $200,000 but you owe $210,000 or less you may qualify. The current value of your property will be determined after you apply to refinance.

3) How do I know if I am eligible?

Complete eligibility details will be announced on March 4th when the program starts. The criteria for eligibility will include having sufficient income to make the new payment and an acceptable mortgage payment history. The program is limited to loans held or securitized by Fannie Mae or Freddie Mac.

4) I have both a first and a second mortgage. Do I still qualify to refinance under the Homeowner Affordability and Stability Plan?

As long as the amount due on the first mortgage is less than 105% of the value of the property, borrowers with more than one mortgage may be eligible to refinance under the Homeowner Affordability and Stability Plan. Your eligibility will depend, in part, on agreement by the lender that has your second mortgage to remain in a second position, and on your ability to meet the new payment terms on the first mortgage.

5) Will refinancing lower my payments?

The objective of the Homeowner Affordability and Stability Plan is to provide creditworthy borrowers who have shown a commitment to paying their mortgage with affordable payments that are sustainable for the life of the loan. Borrowers whose mortgage interest rates are much higher than the current market rate should see an immediate reduction in their payments. Borrowers who are paying interest only, or who have a low introductory rate that will increase in the future, may not see their current payment go down if they refinance to a fixed rate. These borrowers, however, could save a great deal over the life of the loan. When you submit a loan application, your lender will give you a “Good Faith Estimate” that includes your new interest rate, mortgage payment and the amount that you will pay over the life of the loan. Compare this to your current loan terms. If it is not an improvement, a refinancing may not be right for you.

6) What are the interest rate and other terms of this refinance offer?

The objective of the Homeowner Affordability and Stability Plan is to provide borrowers with a safe loan program with a fixed, affordable payment. All loans refinanced under the plan will have a 30 or 15 year term with a fixed interest rate. The rate will be based on market rates in effect at the time of the refinance and any associated points and fees quoted by the lender. Interest rates may vary across lenders and over time as market rates adjust. The refinanced loans will have no prepayment penalties or balloon notes.

7) Will refinancing reduce the amount that I owe on my loan?

No. The objective of the Homeowner Affordability and Stability Plan is to help borrowers refinance into safer, more affordable fixed rate loans. Refinancing will not reduce the amount you owe to the first mortgage holder or any other debt you owe. However, by reducing the interest rate, refinancing should save you money by reducing the amount of interest that you repay over the life of the loan.

8) How do I know if my loan is owned or has been securitized by Fannie Mae or Freddie Mac?

To determine if your loan is owned or has been securitized by Fannie Mae or Freddie Mac and is eligible to be refinanced, you should contact your mortgage lender after March 4, 2009.

9) When can I apply?

Mortgage lenders will begin accepting applications after the details of the program are announced on March 4, 2009.

10) What should I do in the meantime?

You should gather the information that you will need to provide to your lender after March 4, when the refinance program becomes available. This includes:
information about the gross monthly income of all borrowers, including your most recent pay stubs if you receive them or documentation of income you receive from other sources
• your most recent income tax return
• information about any second mortgage on the house
• payments on each of your credit cards if you are carrying balances from month to month, and
• payments on other loans such as student loans and car loans.

11) Borrowers Who Are at Risk of Foreclosure Are Asking:

What help is available for borrowers who are at risk of foreclosure either because they are behind on their mortgage or are struggling to make the payments?
The Homeowner Affordability and Stability Plan offers help to borrowers who are already behind on their mortgage payments or who are struggling to keep their loans current. By providing mortgage lenders with financial incentives to modify existing first mortgages, the Treasury hopes to help as many as 3 to 4 million homeowners avoid foreclosure regardless of who owns or services the mortgage.

12) Do I need to be behind on my mortgage payments to be eligible for a modification?

No. Borrowers who are struggling to stay current on their mortgage payments may be eligible if their income is not sufficient to continue to make their mortgage payments and they are at risk of imminent default. This may be due to several factors, such as a loss of income, a significant increase in expenses, or an interest rate that will reset to an unaffordable level.

13) How do I know if I qualify for a payment reduction under the Homeowner Affordability and Stability Plan?

In general, you may qualify for a mortgage modification if (a) you occupy your house as your primary residence; (b) your monthly mortgage payment is greater than 31% of your monthly gross income; and (c) your loan is not large enough to exceed current Fannie Mae and Freddie Mac loan limits. Final eligibility will be determined by your mortgage lender based on your financial situation and detailed guidelines that will be available on March 4, 2009.

14) I do not live in the house that secures the mortgage I’d like to modify. Is this mortgage eligible for the Homeowner Affordability and Stability Plan?

No. For example, if you own a house that you use as a vacation home or that you rent out to tenants, the mortgage on that house is not eligible. If you used to live in the home but you moved out, the mortgage is not eligible. Only the mortgage on your primary residence is eligible. The mortgage lender will check to see if the dwelling is your primary residence.

15) I have a mortgage on a duplex. I live in one unit and rent the other. Will I still be eligible?

Yes. Mortgages on 2, 3 and 4 unit properties are eligible as long as you live in one unit as your primary residence.

16) I have two mortgages. Will the Homeowner Affordability and Stability Plan reduce the payments on both?

Only the first mortgage is eligible for a modification.

17) I owe more than my house is worth. Will the Homeowner Affordability and Stability Plan reduce what I owe?

The primary objective of the Homeowner Affordability and Stability Plan is to help borrowers avoid foreclosure by modifying troubled loans to achieve a payment the borrower can afford. Lenders are likely to lower payments mainly by reducing loan interest rates. However, the program offers incentives for principal reductions and at your lender’s discretion modifications may include upfront reductions of loan principal.

18) I heard the government was providing a financial incentive to borrowers. Is that true?

Yes. To encourage borrowers who work hard to retain homeownership, the Homeowner Affordability and Stability Plan provides incentive payments as a borrower makes timely payments on the modified loan. The incentive will accrue on a monthly basis and will be applied directly to reduce your mortgage debt. Borrowers who pay on time for five years can have up to $5,000 applied to reduce their debt by the end of that period.

19) How much will a modification cost me?

There is no cost to borrowers for a modification under the Homeowner Affordability and Stability Plan. If you wish to get assistance from a HUD-approved housing counseling agency or are referred to a counselor as a condition of the modification, you will not be charged a fee. Borrowers should beware of any organization that attempts to charge a fee for housing counseling or modification of a delinquent loan, especially if they require a fee in advance.

20) Is my lender required to modify my loan?

No. Mortgage lenders participate in the program on a voluntary basis and loans are evaluated for modification on a case-by-case basis. But the government is offering substantial incentives and it is expected that most major lenders will participate.

21) I’m already working with my lender / housing counselor on a loan workout. Can I still be considered for the Homeowner Affordability and Stability Plan?

Ask your lender or counselor to be considered under the Homeowner Affordability and Stability Plan.

22) How do I apply for a modification under the Homeowner Affordability and Stability Plan?

You may not need to do anything at this time. Most mortgage lenders will evaluate loans in their portfolio to identify borrowers who may meet the eligibility criteria. After March 4 they will send letters to potentially eligible homeowners, a process that may take several weeks. If you think you qualify for a modification and do not receive a letter within several weeks, contact your mortgage servicer or a HUD-approved housing counselor. Please be aware that servicers and counseling agencies are expected to receive an extraordinary number of calls about this program.

23) What should I do in the meantime?

You should gather the information that you will need to provide to your lender on or after March 4, when the modification program becomes available. This includes
•information about the monthly gross income of your household including recent pay stubs if you receive them or documentation of income you receive from other sources
•your most recent income tax return
•information about any second mortgage on the house
•payments on each of your credit cards if you are carrying balances from month to month, and
•payments on other loans such as student loans and car loans.

24) My loan is scheduled for foreclosure soon. What should I do?

Contact your mortgage servicer or credit counselor. Many mortgage lenders have expressed their intention to postpone foreclosure sales on all mortgages that may qualify for the modification in order to allow sufficient time to evaluate the borrower’s eligibility. We support this effort.

President Obama’s Homeowner Affordability and Stability Plan

Last week, President Obama signed the Homeowner Affordability and Stability Plan into law. There are 3 main facets to the initiative:

(1) Modifications – The creation of a $75 billion homeowner stability initiative aimed at providing a clear and consistent protocol for mortgage loan modifications and affordable monthly mortgage payments to a projected 3 to 4 million at-risk homeowners.

(2) Refinances – The introduction of refinance programs to a projected 4 to 5 million homeowners who otherwise have no opportunity to refinance their loan in today’s market. This will reportedly include allowing refinances of existing Fannie and Freddie loans with current loan-to-values as high as 105%.

(3) Investment – An increase in Treasury’s funding commitment to Fannie Mae and Freddie Mac to promote continued strength and security in the mortgage market. This will include the purchase of Fannie/Freddie mortgage-backed securities by Treasury and the increase of the size of the combined Fannie/Freddie portfolio by $50 billion.

At this point, there is very little detail on the respective programs outlined in the law. Fannie and Freddie are expected to announce the details of their refinance programs by March 4th, the effective date of the law.

Additional information may also be found at the Treasury’s new website FinancialStability.gov .

New 2009 $8000 First Time Homebuyer Tax Credit

We have an Obama administration revised version of the first time home buyers tax credit. The old program effective date is April 8th, 2008 and is set to expire on July 1st, 2009. The old program, I will refer to it as the 2008 tax credit, has a 15 year repayment schedule and most home buyers viewed it as a debt. The new 2009 tax credit does not have to be repaid, but it is still only for first time homebuyers. A first time homebuyer is defined by someone who has not had ownership in a property in the last 3 years. The 2009 tax credit has been expanded to $8000 or 10% of the purchase price whichever is lower. Also the 2009 version is still a tax credit which mean you will get the refund even if you owe no taxes that year.
Here are some situations where you cannot get the credit or that would force a repayment of the tax credit.

1. You modified adjusted gross income exceeds $170,000 for joint filer or $95,000 for single filers
2. You buy a home from a close relative.
3. You stop using your home as your primary residence
4. You sell your home within 3 years
5. You are a Non-resident alien
6. You purchased your home in 2008, so you need to use the 2008 program.

Here are some new situation that are allowed under the 2009 tax credit that where not allowed in the 2008 version.

1. You can qualify for the credit if you used PHFA or any other state bond program.
2. The credit can be used on a new construction
3. Even though the old program does not expire until July 2009, you can use the 2009 if you bought a home anytime in 2009.

The super highlight of the 2009 First time homebuyers tax credit is that it does not need to be repaid.

This information is accurate as of February 19th, 2009

Thanks,
Erick Yurkanin
M&T Bank
Senior Mortgage Consultant
570-307-2600

Mortgage Rates

Mortgage rate have been very turbulent much like the stock market. Over the last 6 week mortgages rates have varied from 6% to 4.625% on the 30 year fixed with 0 points. Due to the constant changes in the mortgage rates I suggest to everyone that I think about refinancing or purchasing a home that they check around to various lenders to check on the current rate. I know I have spoke with customers and quoted them interest rates but then the very next day the rates drop or jump up. Because of the uneasiness of mortgage rates I would lock in an interest rate as soon as it hit your target rate that you are happy with.
Before you actually lock in a rate make sure you call the few lenders that you are think about going with. The key here to get the mortgage rates from these lenders on the same day. By getting the rate from various lender on the same day it will provide an even playing field. Again, the reason for this is that you can get a high quote from your bank and then the next day call another bank and their rates maybe lower. But the reason for the low rate at the other bank may just be due to mortgage rate decreasing across the market and your bank my have even lower rates.
Bottom line is to check local rates on the same day and always check around with more than one place.

PA Reverse Mortgage for Purchase Information for Seniors

M&T’s Reverse Mortgage For Purchase

What is the Reverse Mortgage for Purchase?

* HECM for Purchase allows seniors, age 62 and over, to purchase a primary residence using the loan proceeds from the reverse mortgage.

* The amount the senior is eligible for is based on the appraised value of the home, the age of the borrower(s), and the current interest rate.

* The senior utilizes their own funds or investments to cover the difference between the reverse mortgage proceeds and the purchase price of the home.

* Repayment occurs when the estate is settled, the home is sold, or it no longer is the primary residence.

Benefits of the HECM for Purchase

* No need to qualify for the traditional mortgage. Verification of income and credit are not required to qualify.

* No monthly payment to repay the Reverse Mortgage.

* Senior(s) can purchase the new home and retain cash from the sale of their current home for their own use.

Property Requirements
(typical to standard FHA guidelines)

* Existing one-to-four unit properties qualify, as long as the senior(s) will occupy one of the units.

* Approved condominiums qualify.

* A newly constructed residence must have a certificate of occupancy already issued by the local authority.

*Senior(s) must occupy the new residence within 60 days of closing, with no post closing rent backs.

* The property must be held in fee simple or renewable leasehold:

-99 years or longer, OR

- a remaining period of 50 years or more beyond the youngest owner’s 100 birthday.

Down Payment Sources

* The homeowner(s) will have a required minimum investment with the purchase product. The amount is determined by program guidelines and differs with every transaction.

-No secondary financing is permitted from ANY

* Acceptable sources of required funds include:

- Withdrawal from cash or retirement accounts
- Proceeds from the sale of the current residence

* Unacceptable sources of required funds include:

- Secured or non-secured loans from other assets, such as home equity loans on investment property or on second homes

- Gifts •Bridge loans

- Seller concessions, loan discount points, interest rate buy downs, or closing cost assistance

Reverse Mortgage Purchase ScenariosBorrower Age: 75

Scenario 1:

Purchase Price of Home $300,000
FHA Appraised Value $300,000
Available HECM proceeds $203,892
Req. Investment from Senior $96,107

Scenario 2:

Purchase Price of Home $325,000
FHA Appraised Value $300,000
Available HECM proceeds $203,892
Req. Investment from Senior $121,107

Scenario 3:

Purchase Price of Home $280,000
FHA Appraised Value $300,000
Available HECM proceeds $203,892
Req. Investment from Senior $76,107

Illustrations are based on the interest rate for the week of November 17, 2008.The available HECM proceeds are net of origination fee, HUD MIP and other closing costs.

More Reverse Mortgage Purchase Scenarios

Borrower Age: 67

Scenario 1:

Purchase Price of Home $300,000
FHA Appraised Value $300,000
Available HECM proceeds $180,500
Req. Investment from Senior $119,500

Scenario 2:

Purchase Price of Home $325,000
FHA Appraised Value $300,000
Available HECM proceeds $180,500
Req. Investment from Senior $144,500

Scenario 3:

Purchase Price of Home $280,000
FHA Appraised Value $300,000
Available HECM proceeds $180,500
Req. Investment from Senior $99,500

Illustrations are based on the interest rate for the week of November 17, 2008. The available HECM proceeds are net of origination fee, HUD MIP and other closing costs.

Dispelling The Myths

* The bank will not assume ownership of the home.

* The senior(s) will not be forced out of their home.

* Income and credit history are not considered.

* The senior(s) heirs can inherit the home.

* Homeowner(s) will not have monthly payments.

The Reverse Mortgage Process

The buyers:
1) Meet with an M&T reverse mortgage specialist to review:

the requirements of the HECM for purchase, review funds needed by the senior to satisfy the difference between the reverse mortgage proceeds and the sale price of the home, and the documentation needed at application.

2) Obtain independent, FHA approved counseling to ensure their understanding of the product.

3) Work with their realtor to find a home and make an offer.

4) Apply for a Reverse Mortgage when they have the executed sales contract.

At the application, the:
Sales contract, counseling certificate, proof of funds, and proof of identity are required.

5) After the application, the:

- FHA appraisal is completed to determine the home value.
- Financing commitment is provided within the contract timeframe.
- Reverse Mortgage application is processed and underwritten.
- Loan closing and funding occur

Thank You,
Erick Yurkanin
M&T Bank Mortgage Consultant

Reverse Mortgages Can Now Be Used To Purchase A Home

Reverse mortgages can now be used to purchase a home. This is a new change to the reverse mortgage loans and will be a great additional financial tool for seniors.

What Mortgage Deal is Better? How to Compare Mortgage Offers.

There is a lot of mortgage rate displayed all over the Internet and some mortgage rates are much lower then everyone else. Is it a good deal or a better question is why is the rate so much lower at some places then they are everywhere else?

Mortgage interest rates are complex then car loans, personal loans, and other loans. Mortgages rates can be changed or manipulated based on the amount of closing costs that are being charged.

For example; An interest rate of 6.00% with 1 points is that same as 6.25% with 0 points, as is 5.75% with 2 points, Cēterīs paribus. So, a general statement can be made that 1 point (1% in fees) is equal to 0.25% on the interest rate.

How does this point thing work? First “points” or loan origination fees are calculated based on a percentage of the loan amount. So, if you say 1.25 points then the points are 1.25% of the loan amount. This fee is added to your standard closing costs and will increase the overall money you need to to buy a home. Sometimes, you can be charged both “points” and origination fees. If you are being charged under both of the line items you should use the total of the 2 to figure out the total points.

For example: If you are being charge 1 point and 0.50 origination fee the total points should be viewed as 1.50 points.

Since it is hard to determine, based upon an advertisement or verbal rate quote, what points and fees you are being charged, you should request in writing a Goodfaith Estimate. A goodfaith estimate is a standard required form that discloses all the fees you are being charged in a line item format. Once you have couple of goodfaith estimates from different lenders you will be able to compare the offers side by side. You should pay particular attention to fees such as points, origination fees, broker fees, application fees, processing fess, documentation fees, and anything else that sounds like a junk fee.

Now, there are other fees that will end up being the same across all offers even if the goodfaith estimates list different amounts for each lender. Yes, this is where is gets a little tricky and why just getting the total closing costs amount is not good enough to compare offers. I go back to the goodfaith estimate which will line item the closing costs and reveal any discrepancies.

Some of the fees will end up being the same amount in the end no matter what the goodfaith estimate says. Some of these fees are; the property taxes, homeowners insurance premiums, title insurance premiums, any transfer taxes, attorney fees, fees charged by the title company, deed recording fees, endorsement fees, and escrows. These items should be ignored when making a comparison because you will be charged whatever the true costs are, unless the lender or someone else is paying them for you. But I do not think that any lender will be paying your taxes for you.

Mortgages Rates Drop

Mortgages rates drop dramatically last week. If you checked mortgage rates over a week ago I would suggest you check your local mortgage rates again. If you are locked into an interest rate try to renegotiate that rate so you can take advantage of the reduced mortgage rates. If you lender will not reduce your rate I would look elsewhere.

What do you think about banks and lending?

Do you think bank are lending money?
( polls)

Can’t Buy A House? Says Who?

I have spoke with a lot of people recently that are under the impression that the banks are not lending.  This is completely inaccurate at least for mortgage loans.  I can speak not only for M&T Bank, but also for other lenders and banks because of the of universal guidelines that have been established.   This is especially true in regards to FHA and VA loans. Federal Housing Administration and Veterans Administration set the guidelines that all mortgages lender have to follow for these types of loans. As of today, you can still buy a home with a little as 3% (3% of the purchase price) total out of pocket using an FHA loan and if your a veteran you can still utilize the VA’s 100% financing program.

But has FHA tightened their lending standards, since they have not increased the down payment requirements? The simple answer is No, the lending standards have only changed in minor areas. Here at M&T Bank the Minimum credit score for an FHA loan is 580. A 580 credit score would be a major issue for both Fannie Mae and Freddie Mac loan programs, but not FHA.  Since there are many variables and unique situations I cannot cover all of them here. My suggestion for anyone that is interested in becoming a homeowner, but hesitant because of all the media hype, is that they contact a mortgage professional to review your situation.

Are you considering buying a home in need of renovations?

You really like the house, but…it needs to have the kitchen or the bathroom updated or maybe both. Perhaps the house is in a great location but it’s in disrepair. There are any number of home improvements you can do with an FHA 203K Mortgage or a Fannie Mae Homestyle Mortgage. These rehab mortgages enables you to finance both the purchase price of a house and the cost of its rehabilitation through a single mortgage loan. These renovation loans can also be used if you already own your home. At M&T, we can help you make the “almost” house a perfect house.

Program Highlights:

• The programs will not restrict the type of improvements you can make.
• You can finance up to six months of the mortgage payments during the construction.
• Get your project done with a little as 3% down.
• Gifts from family members can be used for your down payment.
• The seller can pay up to 6% of your closing costs.
• The Fannie Mae “HomeStyle” or rehab mortgage can be used to improve a primary residence, second homes, or 1 or 2 unit investment properties.
• The FHA 203K program can only be used for a primary residence

Contact me For more information and to determine which program would better suit your needs.

Debbie Saracino
FHA 203K / HomeStyle Specialist
M&T Bank
570-821-7154

Prequalification for a Mortgage – PART1: The Basics

When you first begin looking for home your first step should be to do a pre-qualification with a reputable mortgage bank. This first step can save you some troubles down the road and can help you make an informed decision.

You will typically need a prequal letter when you submit an offer to buy a house. The prequal letter lets the seller know that you are a serious buyer and that you are able to obtain a mortgage. A prequalification letter is not an approval but rather a review of your situation versus the general loan guidelines. The letter will state the amount of the loan that you are pre-qualified for, the anticipated payment amount, the type of loan (conventional, FHA, VA, PHFA), the down payment amount, and the current interest rate. If there are any significant changes to anything listed in the prequal you should re-review the information with your mortgage consultant. If there are no changes to the information you submitted for the prequal, the letter should be good to use for up to 90 days.
Besides the actual prequal letter, the process of obtaining the letter will help you know what the requirements are for the mortgage loan. When you are reviewing the information with your loan officer, you will find out how much your payments will be, how much money you need as a down payment, and how much the closing costs will be. This information may change your mind as to how much you want to pay for a home.

This is the information you will need when doing a prequal:

• Name, Address (2 year history), Date of birth, and social security number.
• Current employer (again 2 year history), employer’s address, your position, employer’s phone number, and income.
• For your income your should have any overtime, commissions, or bonuses listed separately from your base income.
• If you are self employed, commission, or 1099misc income you should have your last 2 years federal tax returns handy.
• How much money you are looking to use for a down payment, and where you are getting this money from (savings account, 401K, gift, proceeds from the sale of a home).
• Authorized your loan officer to pull your credit reports.
• Anticipated purchase price of the home.

Important Note: Your should not have to pay for a prequal letter. If you are being charged you may want to call us here are M&T Bank because there are no fees and no obligations to do a prequalification.

CLICK HERE to see what an M&T Bank Prequalification letter looks like.

Erick Yurkanin
Mortgage Consultant
M&T Bank
570-307-2600

Looking for Mortgage Rates in PA?

Unfortunately due to legal requirements I cannot post the current rates that will include every situation. But if you want to quickly check the local mortgage rates for M&T Bank you can call me for the current interest rates or for an immediate pre-qualification. Of course there is no obligation or fees of any kind.

Here is a partial list of the loan types we handle.

• Conventional mortgages
• FHA Mortgages – including the NEW super low rate FHA Community lending program
• VA mortgages
• PHFA Mortgages
• Construction loans – One close construction and two close construction
• Renovation loans – Including FHA 230K, Fannie Mae Homestyle, and Construction rehabs
• EXCLUSIVE Programs like the Get Started loan.

Thanks,
Erick Yurkanin
M&T Bank – Mortgage Division
570-307-2600

Looking to Build a Log Home or Timber Frame Home in PA?

November 1st and 2nd, 2008 there will be a log and timber frame home show in Lake Harmony PA. This a great opportunity to get the facts about building and financing a log home. The Show will feature leading log and timber frame home manufacturers and dealers, seminars and demonstrations about the homebuilding process, there will be financial experts to answer your mortgage questions ( Like M&T Bank), and there will be many home designers and skilled artisans who will make your home vision complete.

Location:

Split Rock Resort & Golf Club
One Lake Drive
Lake Harmony PA 18624
570.722.9111 – 800.255.7625

Hope to see you there,
Erick Yurkanin
M&T Bank – Construction Lending
570-307-2600

Major Fear Still Looms Over The Mortgage Industry

I attended a conference today on the state of the banking industry and we are not out of the red just yet. The problems were supposed to be over last quarter when most of the financial industry reported heavy losses. But these loses are still coming in and signs of other problems are creeping up. According to the research presented today, there are still large amounts of variable rate loans and interest only mortgages that have not reset (or changed to full principle and interest payments). I do not have the exact numbers as to how much in billions will be resetting, but these are the same types of mortgages that are causing a lot of the problems. Simply because peoples payments go up when the loan resets. Add this to the increasing costs of everything else.

For example:
If you have a $150,000 30 year interest only mortgage at 6.5% with interest only payment is $812.00. But at the end of that interest only payment schedule the new principle and interest payment will increase to $1013.00. That’s a $201 increase in your mortgage payment.

The good news is that most of these mortgage resets should be out in the open by the 2 quarter of 2009. By that time we will more than likely see more mortgage companies out of business. All this turmoil makes it especially important for home buyers to check out multiple banks before committing to take a loan. Not only to check the rates and fees, but also to make sure that company will still be around. According to the FDIC website there was 18 bank failures just in July 2008 alone. A lot of information is also available on different mortgage companies at various news outlets. M&T Bank remains strong as compared to our peer group.

Erick Yurkanin
Senior Loan Officer
M&T Bank – Scranton / Wilkes Barre, PA
570-307-2600
Email Me

First Time Homebuyers $7500 Tax Credit in PA

There has been a lot of talk recently about the $7500 tax credit for first time homebuyers. The $7500 credit is not as clear cut as its sounds. So, here is some of the qualifying criteria and the good and bad:

1) First the credit goes up to 10% of the purchase price or $7500 whichever one is lower.

2) You must have purchased your first home after April 9, 2008, and before July 1, 2009.

3) You must be a first time homebuyer. As first time home buyer is defined as a some who has not had ownership interest in a home in the last 3 years.

4) There are income limits for the full $7500 credit. The income limit for an individual is $75,000 and $150,000 for couples. But there is another higher limit that allows for a partial credit.

5) This is not free money but rather a 15 year interest free loan. Why? Because with in 2 years you must start paying the loan back at no more than 6.67% of the tax credit amount per year. The IRS will direct you properly on this.

6) This credit does not work the same way if you are not itemizing. The are some breaks for those who do not itemize but the credits are drastically different. They are $500 for individuals and $1000 for couples.

7) This one is bad. If you sell your home for a profit before paying back the entire tax credit you will be required to pay off the remaining balance. If you sell your home at a loss you do not need to pay back the tax credit.

8) This is a tax credit which means even if you only paid $1000 in taxes you would still get the full amount that you qualified for as a refund.

9) You cannot get the tax credit if your finance your loan through Pennsylvania Housing and Finance Administration or by any other tax exempt bond programs.

10) You must file for the tax credit in 2008 or 2009 or you will lose it.

11) The tax credit Cannot be used towards the down payment or the closing costs, because there is no way for the IRS to front the money. The tax credit can only be obtained after filing your 2008 or 2009 tax returns.

12) There is no application or process you need to follow. You do not need to do anything at the time you purchase your first home, because you would simply declare the credit when you file your tax returns.

13) Lastly, some questions that there is no answer for yet.

1. Will the IRS put a lien on the property? Currently, it is unknown how the IRS will lien their claim. But there is currently a method to obtaining a tax lien in case of non payment.
2. How do I pay back the tax credit? Currently the payment methods have not been established. But it will more than likely be an offset against ant tax refunds or you will own taxes.
3. There are other provisions for unique situations like death, divorce, and unmarried couples.

* For additional information please contact your CPA

Erick Yurkanin
Senior Loan Officer
M&T Bank – Mortgage Division
640 Scranton Carbondale Highway
Scranton, PA 18508
570-307-2600

VA (Veterans Administration) Loans in PA

VA loans are very similar to FHA loans, but VA loans are only available to qualified Veterans or their widowed spouse. There is a lot of information about VA loans out there but the main source of information comes from the Veterans Administration itself. The VA website will list the military documentation you will need when you apply for the mortgage. The main document is the certificate of eligibility and your DD214 (click here for the instructions on obtaining these documents). Here is a great promo presentation produced by the VA administration.

Instead of explaining all the particulars of a VA Mortgage I will go over some reason to do and not to do a VA loan. First off, the one misconception I hear a lot is that just being a qualified veteran means you can get a VA mortgage. This misconception is because not only do you be to qualify for eligibility but you also need to qualify for the mortgage. So, once you have the qualifying documentation your next step would be to consult with a loan officer at a VA approved bank to review the loan pre-qualifying criteria. The pre-qualifying criteria has a lot of variables on top of the standard guidelines of a FHA loan. Here is a partial list of these extra guidelines:

1) Debt ratio or the percentage of your monthly income that goes towards your bills is usually limited to 41% of your monthly gross income (gross income is your monthly income before any taxes or payments for medical insurance are taken out).

2) Residual (disposable income) income requirements are on top of the debt ratio requirements listed above. I would post these but they vary based upon your location and the number of family members.

3) Your loan officer will order a VA appraisal from an approved appraiser. The VA appraisal will also review the property for deficiencies which will need to be corrected prior to closing. This is not a home inspection but rather a health and safely review, so you should still have a full home inspection from a qualified inspector.

All these extra guildelines can make VA mortgages unfavorable for some veterans. There are other option like FHA which I have also written about in another post. Here are some other reasons when other mortgage options should be explored:

1) If you are looking to purchase a foreclosed home the property review criteria may cause major problems, because most foreclosed properties have needed repairs or have the utilities shut off. The appraiser will require the utilities to be on and operational and that the deficiency with the home be corrected. Most banks selling a foreclosed home will not allow repairs and may not turn on the utilities.

2) You are putting 20% or more down. VA mortgages real benefits are low down payments and cheaper mortgage insurance (PMI). So, because of the 20% down payment you may be able to get a lower rate on a conventional mortgage.

3) You are buying a fixer upper home. The property review criteria may cause problems because the problems with the home will need to be corrected prior to closing. There are other loan programs available through FHA that will allow you to buy the home and borrow the money for the repairs or remodeling. This program is called an FHA 203K. For information on the rehab loans from FHA you can contact Debbie Saracino or call 570-821-7154.

Ok now that we went over reasons to explore other loan options and the bad stuff about the VA mortgages we can go over the good stuff and why a VA loans are good.

1) VA loans allows up to 100% financing and allows you to roll your closing costs into the mortgage through the use of sellers assistance. Va allows up to 6% seller concessions (or sellers assistance), which means you increase the purchase price so the sellers can pay a portion of your closing costs. Sellers assistance does not costs the seller the price of your closing costs but rather you paid them extra so they could pay for them. Seller assistance is written into you purchase contract and must be acceptable to the seller.

For Example: You want to buy or offer $100,000 for 1 Any Street. In order to utilize the seller assistance you would offer $106,000. Within the purchase contract terms it would state that $6000 of the purchase price will go towards to buyers closing costs. So the end result is that you paid an extra $6000 for 1 Any Street so you could finance a portion of your closing costs.

2) There is NO PMI (Private mortgage insurance) on a VA loan. While where is no PMI in your monthly payment there is an up front funding fee (see table). This funding fee does not add to your down payment but rather it is automatically financed into your loan amount. This would not need to be included in to the sellers assistance either.

3) The interest rates do not change based upon your situation. There is only one interest rate for VA loan so, if qualified, your credit score and down payment will not affect your interest rate.

Erick Yurkanin <— Previously in the Marines
M&T Bank
640 Scranton Carbondale Highway
Scranton, PA 18508
570-307-2600

Buying a Home using an FHA Mortgage

I have been hearing a lot in the national news about how hard it is to get a mortgage, so I wanted to provide some current insight into the mortgage world. While the sub-prime mortgage market has collapsed, there are still plenty of willing mortgage lenders and mortgage products available so you can still buy a home.

One area of the mortgage market that has relaxed their underwriting guidelines is FHA (Federal Housing Administration). I cannot specifically state all of the FHA qualifying criteria but I will touch on the main topics.

1) First the down payment requirements: FHA has not increased their down payment requirements so you can still buy a home with as little as a 3.5% down payment. FHA also allows up to 6% seller concessions (or sellers assistance), which means you inflate the purchase price so the sellers can pay a portion of your closing costs.

For Example: You want to buy or offer $100,000 for 1 Any Street. In order to utilize the seller assistance you would offer $103,000. Within the purchase contract terms it would state that $3000 of the purchase price will go towards to buyers closing costs. So the end result is that you paid an extra $3000 for 1 Any Street so you could finance a portion of your closing costs.

2) Credit score criteria has changed a little to include a minimum credit score. Currently the minimum credit score for an FHA Mortgage is 580. The credit scores are determined by using the middle credit score from the 3 major credit reporting agencies. The 3 credit reports are Transunion, Experian, and Equifax.

3) “Will I qualify?” The pre-qualification for an FHA loan is done through the use of an automatic underwriting system. Once we have a completed application the information is electronically transmitted to the FHA Total Scorecard system, which will determine if your application will be pre-qualified. So the only way to know if you will be pre-qualified would be to contact a loan officer.

4) Interest Rates on FHA loans are sometimes lower than conventional mortgages. The new mortgage world of Fannie Mae and Freddie Mac has many interest rate add on depending on the down payment and the credit scores. See this fannie mae rate adjustment chart, which is used by any lender selling to fannie mae or freddie mac. This chart is not used by FHA so there is only one interest rate that everyone gets. The interest rates on FHA are not determined by credit score or by the amount of your down payment, which is a great thing if your credit is not perfect.

5) FHA tidbits:

• FHA does not regulate the interest rates or the discount points a lender may charge, which is why everyone should check out a few different mortgage banks.
• FHA does require their own inspection. If the inspection uncovers deficiencies they will need to be corrected. The inspection does not replace a full home inspection because it is nowhere near as thorough. FHA may also require a well and septic system tests.
• FHA charges PMI (Private mortgage insurance) differently than conventional loans do . Conventional loan typically only charge you monthly PMI in your payment, whereas FHA charges an upfront fees plus a monthly fee.
• FHA allows co-signers if you do not qualify on your own.
• FHA cannot be used to finance a 2nd home or an investment property
• FHA CAN be used to buy an owner occupied 2-4 unit property.

Thank You,

Erick Yurkanin
Senior Loan Officer
M&T Bank
570-307-2600
eyurkanin@mtb.com
www.Eyurkanin.com