Showing posts from May, 2017
How to Buy Your First Home

Ready to finally stop renting and buy your very first home? Current homeowners will tell you it was an exciting process to finally own their own place and quit sending their landlord rent money each month. And a pleasant surprise is that mortgage interest is actually tax deductible, reducing your annual income tax liability for those who itemize while rental payments have no such deduction. That said, how do you buy your first home?
Your first stop is to speak with an experienced loan officer. There are various loan programs available and your loan officer will suggest a few based upon your current situation. When you speak with a loan officer over the phone, be prepared to answer questions such as “How much do you make each month?” and “How much money do you have available for a down payment and closing costs?” There are loan programs that ask for nothing down such as a VA loan or USDA mortgage and there are those that you can put down more should that be a…
How Refinancing Your Mortgage Can Lead to Home Upgrades

Thinking of refinancing your mortgage? Maybe you just submitted your refinance application because you got a better rate or you’re switching in to a fixed rate loan from a variable one? During the process, have you also thought about making some home improvements along the way? While your loan is in process, talk to your loan officer about financing options to not only refinance an existing mortgage but also provide necessary funds for a remodel or home upgrades.
The simplest way to pay for home upgrades is to pull out cash in conjunction with refinancing your mortgage. Let’s say your appraised value came in at $350,000 and your current loan balance is $200,000. You’ve had a 5/1 hybrid loan for a four years and you’ve decided to switch to the stability of a fixed rate loan. But you’ve also been thinking about redoing both your kitchen and master bath with new hardware, appliances, tile…the works. You speak with a contractor and g…
How Can CalHFA Benefit Teachers?

The California Housing Finance Agency provides guidelines for approved mortgage lenders to help first time home buyers and low to middle income buyers finance their home using a special program called the CalHFA home loan. The Agency doesn’t approve the loan but does purchase the approved CalHFA home loan from lenders. There are several different programs within the California Housing Finance Agency developed to assist these buyers but there is also a special program specifically designed for teachers called the Extra Credit Teacher Home Purchase Program, or ECTP.
The ECTP is a secondary lien in the form of a grant ranging from $7,500 to $15,000 and can be used to fund a down payment or pay for closing costs or a combination of either but can only be used in conjunction with an eligible CalHFA loan.
In order to be approved for the ECTP loan, the borrowers must be first time home buyers which is designed for those who have not owned a home within the p…
Are Online Mortgage Approvals Safe?

It was back in the late 1990s that online mortgage applications were first made available. Back then, borrowers had a choice between applying online, faxing or mailing an application or meeting with a loan officer face-to-face. It took some time however for consumers to get comfortable submitting an online mortgage application as the internet experience was still relatively new. Over time however, as consumers began to view the internet as a tool and less of an experience, online loan applications began to take hold and today mortgage lenders everywhere provide an online access to complete a loan application. In fact, most consumers prefer the convenience of an online application and less so of scheduling a meeting with a loan officer.
Our proprietary FasTrac system is an example of the latest, most secure technology available today and not only allows borrowers to submit a loan application at their convenience 24/7, they can also retried their cred…
VA Cash Out Refinance Guidelines for 2017

There’s no doubt the VA home loan is one of the veteran’s most valuable benefits. Being eligible for a VA home loan means getting a mortgage that doesn’t require a down payment while still offering competitive interest rates. That means coming to the closing table with as little money as possible when buying a home and financing the purchase with a VA loan. Yet the VA home loan also has benefits when the veteran decides to refinance. How so?
When the veteran decides to refinance an existing VA loan, there are two distinct choices- a VA streamline refinance or a cash-out refinance. A streamline refinance doesn’t require a credit score. Nor does the streamline verify employment or income or even a property appraisal. As long as the veteran is refinancing to a lower rate or refinancing out of a variable rate loan into a fixed, the streamline is an option. However, what cannot occur during a streamline is pulling out additional cash in the process…
Finding a Manufactured Home Lender & What to Look For

Manufactured housing has come a long way over the past few decades. Originally tagged as “mobile homes” back in the 1930s, today’s manufactured home is built to rigid standards issued by the Department of Housing and Urban Development, or HUD. They are an excellent option for those wanting a lower cost home while still living in a quality manufactured home. But not every mortgage company offers manufactured home loans but we do. Even mortgage companies who have financing available for manufactured home may not have very much experience in placing them and the home buying experience can end up as a disaster.
It’s relatively easy to find a mortgage company who offers manufacturing housing mortgages but the trick is to find a mortgage company who knows how to properly process, approve and appraise a manufactured housing home loan. Here are a few things you need to ask your prospective lenders.
Do you offer FHA loans for manufacture…
No Money Down Loans?

There are mortgage loan programs that require zero money down. If you’re a veteran or active duty and have at least 181 days of service, you’re eligible for a VA loan which requires no down payment. USDA loans are another government-backed mortgage program that doesn’t need a down payment yet the property must be located in an approved rural area and there are income limits on how much a household can make and still be approved. If neither of these options work for you, there is another program that isn’t used very often but should be if a no-down-payment loan is a requirement.
The California Housing Finance Agency, or CalHFA, was created in 1975 and oversees their home financing and down payment assistance programs for those who qualify. The programs are offered through approved lenders. The “MyHome” program is an interest free loan filed as a subordinate lien in the amount up to3.5% of the sales price and used in conjunction with a CalHFA loan. The funds can be …
New Mortgage Rules and How to Make the Most of Them

You may or may not have noticed, especially if  you’re not in the mortgage business, but 2017 did bring a few changes to the mortgage industry. The majority of all loans made today are those underwritten to guidelines set forth by Fannie Mae and Freddie Mac. When a lender approves a loan using these standards the loan is then eligible for resale in the secondary markets. Selling loans frees up additional cash in which to make still more loans. Yet lenders must adhere to these guidelines and keep on top of changes to make sure the loans that are approved qualify. Fannie and Freddie both make periodic changes to both underwriting guidelines and processes. FHA loans also made a few tweaks.
For starters, 2017 saw the first confirming loan limit in 10 years. Loan limits are adjusted annually by comparing the average home value in the third quarter of each year with the previous third quarter value. Because home values fell so far so fast …
How to Get Approved for a Home Loan Today

For those about to embark on a home purchase and it’s their first time, they really don’t appreciate how easy the approval process is compared to several years ago before automated underwriting took over. In the past, a loan was completely documented before an underwriter ever looked at the loan file. A fully documented loan package could be two to three inches thick! Today, that process is streamline and applicants only submit the items listed on the automated approval. Today, loans are “approved” first, and then documented afterward. Here’s how to get approved for a home loan in today’s environment.
Credit. When you first submit a loan application, the lender submits your electronic application through an automated system which also pulls a credit report and credit scores. Most loan programs require a minimum credit score of 620 although there are other instances where lower scores are accepted. Lenders also ask there be at least three trade …
Home Loans for Bad Credit

For those who have low credit scores, say someone with a score below 600, they may not have as many choices when researching mortgage loans. Most loans today ask for a credit score of at least 620 but there are programs that allow for an approval with a score as low as 580. FHA loans are a popular choice for those with less-than-perfect credit due to the flexibility FHA approvals offer. There still income and employment requirements and the lender must verify there are enough funds in the bank to cover the down payment and associated closing costs but those with bad credit don’t have to wait if they don’t want to. There are possible alternatives.
For someone with bad credit and it was the result of an isolated event or during a specific period of time, they do have options. Lenders can evaluate a credit report and determine if the borrowers did have something happen during a particular period of time if a series of late payments are showing up around the same…
Tips Handling Your Finances As the Fed Raises Rates

The Fed has been a bit more active as of late as it relates to monetary policy and adjusting interest rates. The Federal Open Market Committee, or FOMC, meets every six weeks or so to discuss the current economic policy and the cost of funds. So far this year we’ve seen one interest rate increase of 0.25% in addition to the move made at the end of last year. The Fed has also commented we can expect to see at least two more rate increases in 2017. Here are a few tips handling your finances in light of rate moves.
1. Don’t Panic. When the Fed raises rates it essentially raises the rate banks can charge one another for short term, overnight loans. Those rate increases cause the banks cost of funds to rise which will ultimately be passed on to credit cards, auto loans and other accounts. Yet the amounts are incremental and you’ll barely see a difference.
2. Pay Them Down. To avoid slightly higher payments in the future, start paying down y…
Refinance Your Mortgage and Pay Off Your Student Loans

For those that weren’t fortunate enough to earn a “full ride” academic scholarship to college or had college paid for as an athlete, chances are student loans were taken out. Especially so for those who go on for an advanced degree. And while taking out the student loan took care of much of the bill and there were no immediately monthly payments made, at some point they become due. And the longer term student loans can stay there for a very long time until the loan is paid off.
However, for those who are considering refinancing their current mortgage to get a better rate, change loan terms or switch from a variable to a fixed rate while also having student loans outstanding, take a look at pulling out some equity and getting rid of those student loans. For instance, say you have an adjustable rate mortgage and are finally convinced rates won’t go lower any time soon. You call your lender and talk about refinancing. Your credit rep…
Need a Mortgage? How to Keep Your Debt Levels in Check

If you’ve probably heard of the term “debt ratios” but if you haven’t it’s a term lenders use when comparing your gross monthly income with your current minimum monthly credit payments. Such payments include an automobile loan, credit cards and student loans. It also refers to your total monthly mortgage payment as well. Lenders like to see your mortgage payment which includes an amount for property taxes, insurance and any mortgage insurance, be around one-third of your gross monthly income. For total monthly debt, the ideal debt to income ratio is around 40 percent. Lenders refer to these numbers as “33, 40” or whatever your ratios might be. The 33 is the “front” ratio and 40 is the “back” ratio.
Okay, so when you’re getting ready to apply for a mortgage, either to purchase a house or to refinance an existing home loan, you can calculate your own front ratio on your own. How? Take a look at the statements you receive each month.…
How Can Mortgage Insurance Be Good?

Mortgage insurance sometimes gets a bad rap. “Avoid PMI” or “eliminate your private mortgage insurance payment” is what you might hear. But while mortgage insurance does sometimes get underappreciated, private mortgage insurance, or PMI, is actually a good thing and doesn’t have to be something you should avoid at all costs.
Private mortgage insurance was introduced in the late 1950’s by a company that thought of an insurance policy that would cover the difference between a down payment and the amount borrowed. Back then, and still today, any conventional loan whose balance exceeds 80% of the appraised value, the lender requires PMI. Say that a buyer has 5.0% down on a home listed at $200,000. The down payment is $10,000 leaving a loan amount of $190,000.
Because the loan amount is more than 80% of the value, a PMI policy is required. In this example, the policy would protect the lender in case of default for the difference between $10,000 and 80% o…
Financing a Multifamily Home
Ask any real estate investor who has been around for a while how they got started investing in real estate and it’s very likely tell you it was quite by accident but it all started when they bought a multifamily property. Whether it’s a duplex or a 2-4 unit property, buying such a property can provide a monthly cash flow as well as contributing to your financial bottom line over time through appreciation. To get the best deal when financing a multifamily home, you’re likely looking at a conventional home loan underwritten using guidelines set by Fannie Mae or Freddie Mac.
Let’s consider first a duplex. You’re wondering whether or not it would be wise to occupy one of the units and rent out another and then your loan officer tells you the down payment requirements and interest rates will be higher if you don’t. So you run a few numbers with your loan officer and get an idea on interest rates and fees.
If you do intend to occupy one side of the duplex you ca…
What’s the Difference Between a Cash Out and a Rate and Term Refinance?

Sorry but we mortgage companies do have our fair share of loan terms and when someone is refinancing a mortgage yes there are different types. The most common are the cash-out refinance and rate and term. What are the differences between the two terms and why should it matter? Let’s take a closer look at refinancing and what makes one and what makes the other.
A rate and term refinance is a transaction where a new mortgage replaces an old one. A refinance can replace a new interest rate on a loan. This is the “rate” part of the rate and term refinance. It’s easy enough to understand as it becomes apparent that refinancing to a lower rate will benefit the borrower with lower overall monthly payments.
You can also adjust the term during a refinance. Terms for conventional mortgages can be as short as 10 years and as long as 30. Most lenders offer loan terms of 10, 15, 20, 25 and 30 years. Why the different terms? A …
Tax Advantages Owning Rental Property

Owning investment real estate is a tried and true method to accumulate wealth over time while also putting extra money in your pocket each month with a positive cash flow. When the rental income exceeds the monthly payment, taxes, insurance and maintenance that’s one of the requirements when deciding which rental property to buy. But beyond that, there are tax advantages owning rental property you may not be aware of. Note that you need to consult your own tax professional to discuss your personal situation.
Interest. Interest on a mortgage loan used to finance a rental property is tax deductible and is usually the single largest tax deduction.
Depreciation. A physical structure will depreciate over time and tax rules allow landlords to depreciate the cost of the property over time by deducting a portion each year over several years.
Repairs. If your sink disposal goes bad in your primary residence you have to buy another. It’s an out of pocket expen…
Should You Pay Points When Refinancing?

Points are relatively common in mortgage lending. Sometimes referred to as “discount points” because paying points discounts the interest rate, points are nothing more than a form of prepaid interest given to the lender at the settlement table instead of paying additional interest each month as part of your mortgage payment. Whether or not to pay points is completely up to you because the lender really has no preference one way or the other. You either pay interest over time or pay a portion of it upfront. But when you’re refinancing, should paying points even be in the discussion?
Probably not and here’s why. When you’re considering a refinance, the math typically suggests it’s a good thing or maybe not so good. A refinance just like a purchase money loan has associated closing costs involved and these costs need to be considered before making the move. For example, let’s say you’re thinking of refinancing because rates have fallen. Closing cos…
3 Ways Millennials Can Invest in Rental Properties

Investing in real estate is back. In fact, a lot of real estate investors have made quite a bit of money scooping up properties at pennies on the dollar at real estate auctions and foreclosure sales. But those bargains are long gone but investing in real estate has not. In fact, investing in real estate is back in a big way and there are some very good reasons why. But for those who are 18-34 years of age, so-called “millennials,” should they be thinking of real estate as an investment or should they stick with their 401(k) plan? Many investors who save for retirement don’t look to real estate because their employer doesn’t offer it with their 401(k) or their financial planner doesn’t mention it but savvy investors know that real estate should always be considered as a part of their portfolio. Should millennials be looking harder at real estate?
Investing in real estate takes a bit more planning when buying a first rental unit. Why? B…