Eliminate FHA Mortgage Insurance

removing fha mip

The mortgage insurance premium can add almost $225 monthly to the payment on a $265,000 FHA mortgage.  The decision to get an FHA loan may have been the lower down payment requirement or the lower credit score levels, but now that you have the loan, it is possible to eliminate it?

The mortgage insurance premium protects lenders in case of a borrower’s default and is required on FHA loans.  The Up-Front MIP is currently 1.75% of the base loan amount and paid at the time of closing, or financed into the loan amount.  The annual MIP (paid monthly) for loans with greater than 95% loan-to-value is .85% per year. 

For loans with FHA case numbers assigned before June 3, 2013, once the loan is paid down to 78% of the original loan amount, the MIP can be cancelled.  The borrower will need to contact the current servicer for the specific requirements.

However, for loans greater than 90% with FHA case numbers assigned on or after that date, the MIP is required for the term of the loan.

Most homeowners with FHA mortgages are not eligible to cancel the MIP because they either originated their loan after June 3, 2013, put less than 10% down payment and/or got a 30-year loan.  If they have at least 20% equity in the home, they can refinance the home with an 80% conventional loan which in most cases, does not require mortgage insurance.

With normal amortization on a 30-year loan, it takes approximately 11-years to reduce the original loan to the 78-80% requirement based on normal amortization.  There is another dynamic involved which is the appreciation on the home.  As the home goes up in value and the unpaid balance goes down, the equity increases. Further, one extra principal and interest payment annually will reduce a 30 year mortgage to 22 years.

If you believe that you have enough equity that would eliminate the need for mortgage insurance, I can investigate refinancing with a conventional loan.  Borrowers refinancing will incur expenses in starting a new mortgage and the interest rate may be higher than the existing rate. But, a lower MI payment or the elimination of the MI/MIP could significantly lower your monthly mortgage payments.




When Veterans Should (and Shouldn’t) Use a VA Home Loan

Happy New Year 2019

If you’re a veteran who’s thinking of purchasing a home or refinancing the home you have, you may want to consider a VA loan instead of conventional financing. This government loan program was created to help members of the armed forces, veterans, and eligible surviving spouses become homeowners.

VA loans come with plenty of perks. According to the U.S. Department of Veterans Affairs, VA loans used to purchase a property come with competitive interest rates and don’t require a down payment or private mortgage insurance (PMI). Cash-out refinance loans come with equally generous terms, except they let you take out cash to pay down debt or fund other financial goals.

Another popular VA loan program, the Interest Rate Reduction Refinance Loan (or IRRRL, also called the Streamline Refinance Loan), lets you refinance your current VA loan to a new loan with a lower interest rate with no appraisal or credit underwriting. There are also special VA loans for Native American veterans and disabled vets.

At the end of the day, all VA loans offer special terms to veterans, and may be more affordable than other options.

When You Should (and Shouldn’t) Use a VA Loan

To qualify for a VA loan, your length of service or service commitment, duty status, and character of service are considered. Once you determine that you’re eligible, it’s up to you to decide whether to work with the VA or pursue traditional financing for your home or refinance.

Unfortunately, this is where things get tricky, since not all realtors or even mortgage brokers work with VA loans enough to understand them. David Skogland, a realtor from Minnesota, says that he has seen real estate agents talk eligible buyers out of using a VA loan when doing so would have been in their best interest.

“They tell veterans that sellers will not accept their offer because the seller is expected to pay everything,” she said. “There are a couple of things that veterans can’t pay for, and there are so many ways to write an offer to take care of a seller and make the transaction fair and more than equitable.”

While real estate agents may be unnecessarily wary of working with buyers using this option, some loan originators may have their own reasons for steering consumers away from VA loans as well. We reached out to experts to find out when a veteran should — and shouldn’t — consider a VA loan. Here’s what they said:

When a Veteran ShouldUse a VA Loan

Before we dive in, let’s go back over the benefits of VA loans. One of the biggest is the fact that borrowers don’t have to have a down payment, nor do they have to pay private mortgage insurance (PMI). Since PMI can cost around 1% of the mortgage amount every year, not paying for this coverage can easily save you hundreds of dollars per month.

“VA loans are also more forgiving for people who have had some credit missteps in the past,”  says Owen Riess, a VA Home Loan specialist at cambria Mortgage. “The waiting period for a previous bankruptcy or foreclosure is much shorter for a VA loan.”

With these benefits in mind, here are some of the instances where an eligible consumer should absolutely consider a VA loan:

  • You don’t have a down payment:“If a veteran is purchasing a home and doesn’t have the traditional down payment available to them, the VA loan will allow you to purchase with no down payment,” says Riess. This could help a buyer get into a home they couldn’t buy otherwise, which can help them start building equity faster.
  • You don’t want to pay PMI: The single most important benefit to a VA loan is that a veteran can purchase the home at 100% financing with no private mortgage insurance, said Partak. “Not only is private mortgage insurance incredibly expensive to set up, it also adds hundreds of dollars to the monthly payment.” Keep in mind, however, that VA loans usually come with an upfront funding fee between 1.25% and 3.3% of the loan amount based on your loan details and level of service.
  • You have credit issues. VA Home Loans are more forgiving if you’ve made some credit mistakes in the past. Generally speaking, you need a credit score of around 620 to qualify.
  • You want low closing costs. The closing costs on VA loans tend to be lower than those on conventional financing, partly because some of them are regulated. Also, the seller can credit back up to 4% of your loan back to you to cover closing costs.
  • You want to refinance to secure a lower interest rate. If you have a VA loan already but could qualify for a lower interest rate, it almost always makes sense to use an Interest Rate Reduction Refinance Loan (IRRRL).These loans don’t require an appraisal or credit underwriting, and the closing costs can be wrapped into the loan.
  • You’re a disabled veteran. Disabled veterans receiving compensation for a service-connected disability are often much better off with a VA loan compared to traditional financing, because they’re exempt from having to pay the upfront funding fee.

In short, a VA loan is good for most eligible borrowers since costs are low, PMI is not required, and credit score requirements may be more manageable for borrowers who’ve had credit mishaps in the past. For that reason, almost any veteran who can qualify would be better off with a VA loan provided the property they want to buy is eligible.

When It Doesn’t Make Sense to Use a VA Loan

Still, the experts we spoke to said there are some scenarios where a VA loan would be less advantageous than traditional financing. You may want to pursue a conventional mortgage if:

  • You’re using a VA loan for the second time: Because the VA funding fee is based on several factors, including whether you’ve had a VA home loan in the past, it can make sense to go with traditional financing for a second property purchase. Riess says that, if the veteran does not have a VA disability and has used a VA loan in the past, there will be a 3.3 percent funding fee from the VA. “This may offset any of the benefits of using a VA loan and may make a conventional loan more attractive.”
  • You’re buying an investment property. Riess notes that VA loans cannot be used for investment properties or second homes.
  • You’re buying a property that isn’t eligible for a VA loan. Not all properties are eligible for VA loans, although all single-family homes are or should be eligible, notes Riess. “Some condos will not allow them because they are similar to FHA loans in that they need a special VA approval,” he said. “If they aren’t on VA approval list, a lender can request or get them to be, but this is a challenging process and one that takes a lot of time.”
  • You have a 20% down payment. If your down payment is big enough to avoid paying PMI already, you should definitely compare rates and terms on both VA loans and conventional home loans. That’s because the upfront funding fee for VA loans could make the loan more expensive overall.
  • The home you want to buy is too expensive. VA loans come with limits that can make it difficult for veterans to buy in expensive real estate markets. These limits are determined by the county you live in and vary widely. The loan limit for a single-family home in all counties of Alabama, for example, is $453,100, while the limit for single families in every county of Alaska is $679,650.

The Bottom Line

At the end of the day, most borrowers eligible for a VA loan would be smart to consider it. With more lenient credit requirements, low interest rates, and no down payment requirement or PMI, what’s not to like?

But as you move through the mortgage process and start comparing your options, experts say you should make sure you’re speaking to someone who has a wide breadth of experience with VA loans. This is important because not all loan officers have experience with all types of funding.

Riess, who is a military veteran himself, says that both his loan originator and realtor advised him to use a VA Home Loan when he purchased a home as a young Marine Sergeant.

“In retrospect, I know that was good advice,” he said. “VA Home Loans have gotten a bad rap over the years, mainly because people don’t understand the process.  In reality, it’s no more difficult than a conventional or FHA loan, and often times it can be easier.”

Consider all the costs, interest rates, and the monthly payment for all your loan options, says Riess. “You should also take into consideration your short- and long-term plans,” he says.

By crunching the numbers and working with professionals who are knowledgeable about VA Home Loans, you can figure out which path to choose.

Original content by renowned author: Holly Johnson

Resolving Major Mortgage Myths


The amount of content available today on any topic is staggering. Sometimes all this information can lead to confusion and we don’t get the full story on any one topic. The housing market and home affordability often fall victim to scary headlines. Read on to dispel some major mortgage myths you may be coming across.

Myth #1: Homes Are Not Affordable

While it is true that average home prices are increasing and mortgage interest rates have ticked up slightly, housing inventory is also increasing and interest rates are still near historical lows. Those factors combined with potential tax benefits of owning a home still put homeownership squarely within reach for those who desire it.

Myth #2: You Have to Have Outstanding Credit to Qualify

There are very few people with perfect credit. While your credit score is a player in the qualification process, it is not the only factor that lenders will be looking at. Your income, payment history and credit score all combine to give lenders a picture of your financial health. There are also multiple loan programs available and each one has a set of requirements so working with your Mortgage Consultant and Cambria Mortgage can help you find the right program based on your current situation.

Myth #3: You Must Have 20% For a Down Payment

While having 20% for a down payment is great, it is not the only way to purchase a home. There are multiple programs available for qualified buyers that require as little as 3% down.  There are also programs for veterans and those in rural areas that require no money down. On top of these programs, there are also options for borrowers that include down payment assistance. These programs are often part of a county or city initiative and a call to your Mortgage Consultant can help you identify if there is a program available in your area and if you would qualify.

Myth #4: Renting is Cheaper Than Owning

The debate over owning or renting continues to rage. While there are benefits to both, the long-term financial impact of owning a home often puts ownership in the win column. Even with slightly higher interest rates, the tax benefits and appreciating home values provide homeowners with incomparable long-term value. Aside from the financial impact, there are also intangible factors to being homeowners that include pride in ownership and a sense of security.

Call Cambria Mortgage

To get started, call me at Cambria Mortgage at 952-486-6131 or email me at Owen.Riess@CambriaMortgage.com. I will provide personal, hometown service with sound advice and impeccable attention to detail at every step of the process.

Thank you, Owen Riess

#Mortgage #Minnesota #RealEstate #OwenRiess

VA Home Loans for Purchase

VA Home Loans by Owen Riess

Features and Benefits of VA Home Loans

Millions of veterans and service personnel are eligible for a VA home loan. Even though many veterans have already used their loan benefits, it may be possible for them to buy homes again with VA financing using remaining or restored loan entitlement.

Before arranging for a new mortgage to finance a home purchase, veterans should consider some of the advantages of VA home loans:

  • There is no down payment required in most cases. Conventional loans typically require a 5 percent down payment, and FHA loans require 3.5 percent.
  • No monthly mortgage insurance premium to pay. FHA loans come with both an upfront and an annual mortgage insurance charge. Conventional buyers typically need to pay for private mortgage insurance unless they’re making a down payment of 20 percent or more.
  • Limitation on buyer’s closing costs. Sellers can pay all of a buyer’s loan-related closing costs and up to 4 percent in concessions.
  • Lower average interest rates than other loan types. VA loans continue to have the lowest average interest rates of all loan types.
  • No prepayment penalties. VA buyers can pay off a loan early without any financial penalties.
  • An assumable mortgage, typically subject to VA and/or lender approval. You may be able to have someone take over your mortgage payment, which can be a big benefit in an environment of rising interest rates.
  • Foreclosure avoidance advocacy from the VA loan program. The VA has staff members who advocate on behalf of homeowners to find alternatives to foreclosure.

Common Misconceptions about a VA Home Loan

Guarantee that the house you buy, whether it is new or previously occupied, will be free of defects. The VA appraisal is not intended to be an “inspection” of the property. If you have any doubts about the condition of the house, it is in your best interest to seek expert advice before you legally commit yourself in a purchase agreement.

Most sellers will permit you, at your expense, to arrange for an inspection by a qualified residential inspection service and negotiate with you concerning repairs to be included in the purchase agreement. Such action can prevent later problems, disagreements and disappointments. Remember, VA guarantees only the loan, not the condition of the property. It is your responsibility to be an informed buyer and assure yourself that what you are buying is satisfactory to you in all respects.

VA cannot guarantee that you are making a good investment, or that you can resell the house at the price you paid. Neither does the VA have authority to provide you with legal services.

How to Move Forward with a VA Home Loan

Contact me with your DD-214 and I will help you determine your eligibility and obtain your Certificate of Eligibility (COE) from the Veterans Administration.

Once I determine your eligibility I will work with you to get you pre-approved so you know exactly what price range you should be shopping in, so that you can shop for a home with confidence.

I will recommend an experienced Realtor that has worked with and helped veterans purchase homes. Some sellers may have misconceptions regarding the VA Home Loan process and having an experienced Realtor will educate and inspire confidence in the program.

From here you will work with your Realtor and within your pre-approval range to find your dream home.

I am a certified military housing specialist and a veteran and I will work for you. Don’t hesitate to contact me today at (952) 486-6131.

Semper Fi


Owen Riess

NMLS #543286

The Home Buying Process Explained

Home Financing Help form Owen Riess

Step No. 1: Contact me today

You will want to be financially prepared and fully understand all of the down payment options (3.5%, 5%, 10% or 20%) as well as the asset, income, debt, credit and costs that go into obtaining a mortgage loan. As a seasoned mortgage loan originator I may take your loan application, and collect your supporting documentation online, but will meet with you to review exactly where you are at and what you need to do to get where you want to be. We will review programs such as FHA, Conventional and specialty programs like Asset Depletion and Veterans Administration Home Loans.

I have years of experience working with Realtors and title companies and will be able to make a great Realtor referral to meet your specific needs. Choosing someone to handle the financial part of the home-buying process can feel like a scary step, but choosing a lender that’s personable, competitive on rates, accessible communicative, and available are key.

Step No. 2: Clean up your credit

Now that we have started the mortgage process I will give you guidance on any credit score issues you may be facing. Whether it’s a small or large problem, I will provide the guidance to help repair your situation and make sure you’ll be approved for a loan.

Step No. 3: Obtain mortgage pre-approval

The next step is pre-approval and I will make sure that all of your i’s are dotted and t’s are crossed so that when you make an offer you will be able to do so with complete confidence that your mortgage financing is in place. We will help you determine exactly what you can afford, therefore, which houses you should be considering. To arrive at a purchase price, we’ll factor in expenses like homeowners insurance, association dues, property taxes and utilities to make sure you can comfortably make your mortgage payments. I will give you a great Realtor referral.

“Having a pre-approval letter in hand from a solid reputable lender when you’re ready to purchase a home adds strength to your offer, which can be an important advantage in this competitive home-buying market,” says David Skogland, a Realtor with RE/MAX Advantage Plus.

Step No. 4: Meet with your agent

Once you have your mortgage pre-approval in hand and your Realtor referral it’s time to meet with the agent. This next step in the home-buying process will give you and the agent an opportunity to get to know each other, review exactly what you are looking for in a home, and allow you the opportunity to feel comfortable working with each other on what will likely be the largest financial decision of your life.

If you have a home to sell your agent will review with you all of the in’s and out’s such as the cost of selling your home. “You might be surprised at how many folks are in the first home they purchased and have never been through the home selling process. This is where a great agent will take the time to explain the home selling process,” says Cheryl Eastbourne, a Realtor with Edina Realty.

Step No. 5: Create a home wish list

You know what your purchasing power is, and have had the opportunity to talk with your real estate agent about your ideal home. You have come up with a few “musts,” as well as “wants” you’d ultimately be willing to compromise on. Your agent will put you on email notification so when a property that fits your parameters comes onto the market you get notified immediately.

For instance, do you want to be within walking distance of restaurants? Do you want space between you and your neighbors? Is proximity to a good school the most important factor? What is your timing?

Don’t overlook new construction opportunities. But, bear in mind purchasing new construction is a very different process and you will want to take extra time to make sure you understand the purchase agreement, change orders, standard finishes vs upgrades, and the quality and reputation of the builder.

Step No. 6: Search the listings

Now comes the fun and exciting part: searching for homes that meet your parameters. When you begin touring homes that are on your short list, take along a notepad and jot down your thoughts as you approach each home. Can you imagine yourself living there? What is the curb appeal of the home?

A small notebook will allow you to create a page for each home then “Peruse them and make note of what you like about each home,” says Eastbourne.

Step No. 7: Make an offer

Your real estate agent will walk you through the steps required to make an offer on a home. Once you have an accepted and fully executed offer on a home your agent will get a copy to me, so that I can get the appraisal and title ordered.

“Your offer will include earnest monies that will apply toward your down payment on the home and may include contingencies such as a home inspection,” says Skogland. Expect some negotiation, and discuss a realistic and competitive offer with your agent.

Step No. 8: Get final mortgage approval

Once your offer to purchase is accepted, you’ll work with your lender to get final approval for your home purchase by the date specified for the closing. You will be required to pay property taxes and homeowners insurance for the first year at the time of closing, so I will make sure you know what funds will be expected and when.

During this time “Don’t make any major purchases like that big-screen TV or riding lawn mower or new furniture until after closing, especially if you’d be using credit, as that can affect your mortgage qualification,” says Eastbourne.

Step No. 9: Do your due diligence

The due diligence process includes getting a home inspection to make sure you haven’t missed any hidden problems on your walk-throughs. If issues are found, negotiate for the current owner to fix them or take the cost of repair off the closing costs. Your agent will walk you through this process. You will never be on your own.

Step No. 10: Attend the closing

Once all of the above steps are completed, you’ll be on your way to the closing table. This is when the deed to the home is transferred from the seller to you the buyer. An attorney or title settlement agent will guide you through the process. This is where you officially become a homeowner and receive the keys to your new home. Congrats!

Owen Riess

NMLS # 543286

Spring Forward / 2017 Housing Market

The-Difference-a-Hour-Makes-STMSome Highlights:

  • Don’t forget to set your clocks forward this Sunday, March 12th at 2:00 AM EST in observance of Daylight Savings Time.
  • Unless of course, you are a resident of Arizona or Hawaii!
  • Every hour in the United States: 649 homes are sold, 177 homes regain equity (meaning they are no longer underwater on their mortgage), and the median home price rises $1.86!

If you are thinking about selling or buying, just want to know the value of your home in the current market, call me anytime to discuss financing options or for a great Realtor referral.

Let’s “Spring Forward” together with confidence.

Owen Riess, Mortgage Consultant, NMLS #543286

No Matter What the Groundhog Says, Here are 5 Reasons to Sell Before Spring!


Is spring closer than we think? Depending on which groundhog you listen to today, you may have less time than you think to get your home on the market before the busy spring season.

Many sellers feel that the spring is the best time to place their homes on the market as buyer demand traditionally increases at that time of year. However, the next six weeks before spring hits also have their own advantages.

Here are five reasons to sell now.

1. Demand is Strong 

Foot traffic refers to the number of people who are out, physically looking at homes right now. The latest foot traffic numbers from the National Association of Realtors (NAR) show that the number of buyers out looking for their dream homes in December reached the highest mark since February 2016.

These buyers are ready, willing and able to buy…and are in the market right now! Take advantage of the strong buyer activity currently in the market.

2. There Is Less Competition Now 

Housing inventory just dropped to a 3.6-month supply, which is well under the 6-month supply needed for a normal housing market. This means, in many areas, there are not enough homes for sale to satisfy the number of buyers in that market. This is good news for home prices; however, additional inventory is about to come to market.

There is a pent-up desire for many homeowners to move, as they were unable to sell over the last few years because of a negative equity situation. Homeowners are now seeing a return to positive equity as real estate values have increased over the last four years. Many of these homes will be coming to market soon.

Also, new construction of single-family homes is again beginning to increase. A study by Harris Poll revealed that 41% of buyers would prefer to buy a new home, while only 21% prefer an existing home (38% had no preference).

The choices buyers have will increase in the spring. Don’t wait for this other inventory to come to market before you sell.

3. The Process Will Be Quicker

One of the biggest challenges of the housing market has been the length of time it takes from contract to closing. Banks are requiring more and more paperwork before approving a mortgage. There is less overall business done in the winter. Therefore, the process will be less onerous than it will be in the spring. Getting your house sold and closed before the spring delays begin will lend to a smoother transaction.

4. There Will Never Be a Better Time to Move-Up

If you are moving up to a larger, more expensive home, consider doing it now. Prices are projected to appreciate by 4.7% over the next 12 months according to CoreLogic. If you are moving to a higher priced home, it will wind-up costing you more in raw dollars (both in down payment and mortgage payment) if you wait. You can also lock-in your 30-year housing expense with an interest rate around 4% right now. Rates are projected to rise by half a percentage point by the end of 2017.

5. It’s Time to Move on with Your Life

Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?

Only you know the answers to the questions above. You have the power to take back control of the situation by putting your home on the market. Perhaps, the time has come for you and your family to move on and start living the life you desire.

Call me today to get pre-approved for your next purchase or just to talk real estate and what’s happening in our market now. And, if you need a great Realtor referral call me and I’ll get you into good hands.

That is what is truly important.

Owen Riess

NMLS # 543286 and owen.riess@cambriamortgage.com or (952) 240-3020