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I need some advice from someone who knows more about this mortgage stuff than me. I'm a first time homebuyer and have been checking around on different mortgage options and found one that seems to be the best deal. It's a 30 yr fixed at 6% with 100% financing and a 1% origination fee. It's a NC Bond program, which you can check out at this website if you want: www.nchfa.com. Just click on the bottom right corner where it says "For Your First Home."
Anyway, to my question: I've been reading some about mortages and everything says to ask if there is a Yield Spread Premium associated with the loan. So...I asked the mortgage lady with whom I"ve been dealing about this and she reponded by telling me she didn't know why anyone would say to ask about the YSP b/c it doesn't affect my loan....but she never really answered my question. Does anyone know anything about this NC Bond program loan or could you tell me if it appears to be a good deal? Any advice at all would be greatly appreciated!! Thanks so much!!
Well first a YSP (Yield spread premium) really only applies to brokers, or any lender who doesn't have their own money line to lend. It's really generated off of expected profit of a higher rate. So a bank/direct lender can have a YSP, but they are not legally bound to disclose it. In addition, many of the loan officers working for these banks don't even know it exists. If they are truly lending their own money, it doesn't exist in such that they could disclose it.
The only way to deal with a mortgage when it comes to someone who doesn't disclose it, or doesn't even know it exists, is really just looking at the overall rate and costs.
A 100% loan often has mortgage insurance on it, so you will want to ask for details about that. Otherwise, one loan at 6% 30 year fixed for one point is a very good rate. I'm assuming that bond program is something done by the state or county, and if that's the case they often offer very good deals, assuming you can qualify.
So, in my opinion it's a very good rate at 1 point cost. I don't know anything about the NC bond program. YSP really doesn't apply to you for this program like she said. It can't hurt to shop around if you want to... there are other 100% financing programs out there, but it's not likely you will get that low of a rate.
It's a pretty good program BUT you need to meet qualification guidelines for income AND the subject property needs to be in their SPECIFIC area.
These loans are for low-to-moderate income areas.
I highly doubt if there is any YSP on this mortgage.
Most lenders dont like doing this loan because they make NO MONEY on it.
They may RAISE the interest rate...and receive more money for a higher rate.
Quote:
Originally Posted by baileyblue444
I need some advice from someone who knows more about this mortgage stuff than me. I'm a first time homebuyer and have been checking around on different mortgage options and found one that seems to be the best deal. It's a 30 yr fixed at 6% with 100% financing and a 1% origination fee. It's a NC Bond program, which you can check out at this website if you want: www.nchfa.com. Just click on the bottom right corner where it says "For Your First Home."
Anyway, to my question: I've been reading some about mortages and everything says to ask if there is a Yield Spread Premium associated with the loan. So...I asked the mortgage lady with whom I"ve been dealing about this and she reponded by telling me she didn't know why anyone would say to ask about the YSP b/c it doesn't affect my loan....but she never really answered my question. Does anyone know anything about this NC Bond program loan or could you tell me if it appears to be a good deal? Any advice at all would be greatly appreciated!! Thanks so much!!
It's a pretty good program BUT you need to meet qualification guidelines for income AND the subject property needs to be in their SPECIFIC area.
These loans are for low-to-moderate income areas.
I highly doubt if there is any YSP on this mortgage.
Most lenders dont like doing this loan because they make NO MONEY on it.
They may RAISE the interest rate...and receive more money for a higher rate.
The 1st time homebuyer bond program usually do have a YSP or SRP (service release premium) that ranges from 0.5% to 1.0%. So, lenders typically make 1.5% to 2.0% on these deals when you add the 1% origination fee.
The reason many lenders, especially small brokers, don't do these loans is two-fold. First, they are government oriented, so there are extra requirements and paper work with respect to qualifying and compliance. Secondly, there are usually substantial upfront fees and some training required before you can originate them.
As a borrower, these are the best deals going!! Don't let any brokers talk you out of taking part in one of these deals. 6.0% on a 30 yr. fixed 100% loan with 1 point is an excellent deal.
As far as raising the rate....they can't. The rate is set. They also cannot charge more than 1% origination (no points). These programs look out for the borrowers and pay the originators fairly.
You should only worry about the YSP or SRP if you don't qualify for the bond program and have to use a different program.
They dont make that much on them! It's a loan to me so I will do it regardless, but these loans are low-to-moderate income areas.
That is usually the first disqualifier.
BROKERS dont talk you out of these programs because they still make money. Brokers dont make SRP's but only on YSP or upfront costs.
Those loans are considered FLAT CLOSTS because you can only charge in the front. They dont have YSP. Either way a broker will need to close all the above.
Quote:
Originally Posted by TimtheGuy
The 1st time homebuyer bond program usually do have a YSP or SRP (service release premium) that ranges from 0.5% to 1.0%. So, lenders typically make 1.5% to 2.0% on these deals when you add the 1% origination fee.
The reason many lenders, especially small brokers, don't do these loans is two-fold. First, they are government oriented, so there are extra requirements and paper work with respect to qualifying and compliance. Secondly, there are usually substantial upfront fees and some training required before you can originate them.
As a borrower, these are the best deals going!! Don't let any brokers talk you out of taking part in one of these deals. 6.0% on a 30 yr. fixed 100% loan with 1 point is an excellent deal.
As far as raising the rate....they can't. The rate is set. They also cannot charge more than 1% origination (no points). These programs look out for the borrowers and pay the originators fairly.
You should only worry about the YSP or SRP if you don't qualify for the bond program and have to use a different program.
They dont make that much on them! It's a loan to me so I will do it regardless, but these loans are low-to-moderate income areas.
That is usually the first disqualifier.
BROKERS dont talk you out of these programs because they still make money. Brokers dont make SRP's but only on YSP or upfront costs.
Those loans are considered FLAT CLOSTS because you can only charge in the front. They dont have YSP. Either way a broker will need to close all the above.
Please!! I have closed somewhere between 70 & 100 of these "FIRST TIME HOMEBUYER LOANS" including our state wide program (MHFA), my county's bond program (Dakota Co. CDA) and the Minneapolis/St. Paul proper (City Living). The MHFA and City Living bond programs BOTH PAY 1% in the front AND 1% in the back. The Dakota County bond program pays 1% in the front and 0.5% in the back!
The income requirements on these programs are not that restrictive either. $63k on the state-wide and $77k on the other 2. These income limits go up for larger families.
As I mentioned earlier most of your smaller broker shops are not able to originate these type of loans and will try to point out why a borrower would not want to do them. ie. "recapture tax"
Please go to the North Carolina website for bond programs before you continue to make a fool of yourself.
This is NC specific.
I work for one of the largest broker in the United States.
My company is either #1 or #2 every single year.
Brokers originate over 60% of the loans in the United States.
If we are in the top position, then that makes us one of the largest in the United States.
I have worked with Bank of America, and LendingTree.
I do these loans, and dont have a bias of where I should place my customers.
REPEAT and REFERRAL business is the best business to have.
These loans AREN'T FOR EVERYBODY, and you can verify this yoursel
Quote:
Originally Posted by TimtheGuy
Please!! I have closed somewhere between 70 & 100 of these "FIRST TIME HOMEBUYER LOANS" including our state wide program (MHFA), my county's bond program (Dakota Co. CDA) and the Minneapolis/St. Paul proper (City Living). The MHFA and City Living bond programs BOTH PAY 1% in the front AND 1% in the back. The Dakota County bond program pays 1% in the front and 0.5% in the back!
The income requirements on these programs are not that restrictive either. $63k on the state-wide and $77k on the other 2. These income limits go up for larger families.
As I mentioned earlier most of your smaller broker shops are not able to originate these type of loans and will try to point out why a borrower would not want to do them. ie. "recapture tax"
Please go to the North Carolina website for bond programs before you continue to make a fool of yourself.
This is NC specific.
I work for one of the largest broker in the United States.
My company is either #1 or #2 every single year.
Brokers originate over 60% of the loans in the United States.
If we are in the top position, then that makes us one of the largest in the United States.
I have worked with Bank of America, and LendingTree.
I do these loans, and dont have a bias of where I should place my customers.
REPEAT and REFERRAL business is the best business to have.
These loans AREN'T FOR EVERYBODY, and you can verify this yoursel
I was just at the NC website and it is basically the same exact thing we do here. This is because these MRB (mortgage revenue bond) programs fall under the FEDERAL tax code. While I can't say for sure whether the NC program pays anything on the back I can say most do!
Just so other readers know...it looks like the standard for the state of NC is $53k on the income limit and $190k on the acquisition cost. If you fall under that you should try to qualify for the program.
You say "I highly doubt if there is any YSP on this mortgage." That tells me you have not done ANY. Otherwise you would know exactly what they pay. You also say
Quote:
They may RAISE the interest rate...and receive more money for a higher rate.
This is simply dead wrong including NC! The orignal poster has the NC rate correct at 6.0% per the website. No originator can charge a higher rate for the program. The rate is the rate.
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