Cannot Use “In House” Rents for Income

If a property is zoned as a “Single Family Residence” and the buyer/borrower lives in the property, lenders will not allow any “rental income” from that property to be used for qualification purposes. Many borrowers labor under the misconception that they can rent out a few rooms to help qualify for a mortgage. Though, unless […]Read More

Trying to “Time the Bottom” and Getting Burned

All of our borrowers wish or expect us to “time the bottom” of the market with respect to interest rates. And as a result, they are often reluctant to lock in a rate or are reluctant to get us the necessary paperwork after we do lock. This is because they read accounts in the press […]Read More

Fannie, Freddie, HUD – What’s the Difference?

Well over 90% of all mortgage financing involves Fannie, Freddie and HUD (FHA); meaning that over 90% of mortgages are effectively “government backed”. All of these mortgages must be under-written via guidelines established by those agencies, and many of those guidelines are not always rational. Examples include “explaining” a $1,200 deposit from 3 months ago, […]Read More

Cash Buyers Refinancing After Purchase?

We often have cash buyers who pay all cash for properties for a variety of reasons, including: (1) poor condition precluded mortgage financing; (2) need for a very fast close precluded mortgage financing; (3) offering “all cash” garnered a lower price from a nervous seller; or (4) the property was purchased via a deed of […]Read More

Condo Not FHA Approved? 5% Down Condo Loans

We had a highly qualified FHA buyer yesterday ask if a particular Condo Complex was FHA Approved. It was not FHA approved, but it makes little difference because the buyer can easily put down 5% (only 1.5% more than FHA requires) and garner conventional financing. As long as the resulting loan amount is under $417,000, […]Read More

Obscure Loan Conditions because of “BUYBACK” Threats

We have an FHA purchase right now involving a contract that initially indicated that the buyer was an investor. The buyer now intends to “occupy” the property, and the lender is concerned that the change of intent, as “owner occupancy” is a serious issue. So, the lender is asking for an addendum with very specific […]Read More

Risk of Using TWO Lenders; One as “Back Up”

We often have very, very tough loans that seem to “panic” both borrowers and Realtors alike. And, in their panic, they often go to other lenders as a “back-up precaution”. This more often than not screws up our transactions altogether. Example #1: We had a loan last summer in which the selling agent insisted that […]Read More

“It’s Just Not Meant to Be” = Nonsense

In a rare occurrence, both stocks and bonds are off today. Usually when stock prices are up, bond prices are down and rates go up. Conversely, when stock prices go down, bond prices often go up and rates improve (money leaves stocks for bonds). Today, both bonds and stocks suffered because of our government’s inability […]Read More

Financing After Foreclosure, Short Sale, BK – Time Required

Here are the “Seasoning Periods” or “Time Required Periods” after major derogatory credit events. We publish this time and again because they often change and because people ask us about them so frequently. ALL Periods below require FHA financing. The Seasoning Periods for Conventional financing are far longer. Short Sale with No Late Mortgage Payments […]Read More

Fannie Mae’s 3% Down Loan – Alternative to FHA

Fannie Mae has a 3% Down (“conventional”) purchase that is a good alternative to FHA, if FHA is unavailable. Fannie’s program caps out at $417,000, while FHA goes to $729,750, and Fannie’s rates are higher than FHA’s for this program. In addition, the PMI rate for the alternative Fannie Program is 1.15% (the same as […]Read More

Non-Citizens Need 2 to 3 Years Left on Visa

Borrowers do NOT have to be US Citizens to obtain Conventional or FHA financing. We have NON-US-Citizen borrowers come to us every week, and the first things we ask them are: (1) Do you have a Green Card?**, and if not, what kind of Visa do you have?; (2) If they have a Visa, we […]Read More

Not Hard to Raise Credit Score; From 580 to 650 In 60 Days

We had a first-time buyer come to us in April with sufficient income and assets, but a “middle” credit score of 580 (each of the 3 major credit bureaus assigns a credit score for every borrower and most lenders correlate to the “middle” of the 3 credit scores). Because of this low score, this borrower […]Read More

Rush Purchases

We got another “rush purchase” yesterday, involving a non-owner fourplex. The purchase was “as is”, but the deal died at B of A at the 11th hour because a document with a termite report reference made its way by accident to the underwriter. The underwriter promptly called for the report; there was too much repair […]Read More

Housing Depreciation Fears Addressed Again

We recently addressed what we think are unjustified fears of a continued decline in housing prices, focusing on how we are in the “trough” now and how “timing the market” never works for people looking for the exact “bottom.” There are many other reasons to be bullish on buying a house now, and below are […]Read More

Fast Closings? We Can Close in 10 Days; Thanks Bay Equity!

We got a new loan on Monday that Wells Fargo couldn’t do. We locked the loan at a lower rate than Wells had offered. We then compiled the file, prepared disclosures, ordered the appraisal, and submitted the file. Yesterday (Wednesday) we had a formal (very clean) approval in our hands, and the appraisal was complete […]Read More

The Signing/Funding/Closing Process – What to Expect?

With lenders backed up and stymied by regulations, we often end up in “rush situations” around closing time. Our borrowers are often caught off guard when they are asked by escrow to rush to sign a pile of loan documents on a moment’s notice to foster an on-time closing. To avoid “surprises,” we now send […]Read More

Co-Signing; Risks and Benefits

“Co-Signing” pops up all the time for us now. We frequently need co-signers for our FHA Buyers, and for our Conventional Buyers with 20% down. We also have numerous borrowers who have co-signed for someone else. If you co-sign for a mortgage, you are on the hook for that mortgage for as long as it […]Read More

Sell Tax Benefits of Buying a House – Scenario

We had borrowers call yesterday with $173,000 in total income. They were looking to buy a house in the $350,000 range so their payment would not be too much higher than their current rent payment of $2,000 per month. These borrowers, however, are paying the top Federal and State income tax rates of 34% and […]Read More

Rapid Re-Scores – What Are They & When to Do Them?

Each of the 3 major credit bureaus provides a single credit score. The “Middle Credit Score” refers to the middle of the three scores provided by the 3 bureaus. If a borrower’s score is lower than desired, we run “what if” analyses to find the best course of action to raise his score. Score-raising actions […]Read More

FHA – Pay Interest Through End of Month No Matter When Pay Off Is

Many people don’t realize that when borrowers pay off an FHA loan, they must pay interest through the end of the month no matter when the loan pays off. This often catches sellers by surprise when they have an FHA Loan in place. For example, if an FHA loan pays off on May 5th, the […]Read More

Paying Interest on Mortgage; “Arrears”;”Skipping Payment”

Paying Interest on Mortgages: Mortgage Interest is always paid “in arrears” with one exception. “In arrears” means that the current payment always covers interest accrued during the previous month. Hence, a payment due May 1st will pay interest accrued in April; a June 1st payment will cover interest accrued in May, and so on. The […]Read More

“New” Pricing Rules; Transfer Disclosure Statements (TDS)

There is a huge disparity among lenders today with respect to rates. Only Citi is at 4.75% for a “one point loan” (for the above $400,000 loan scenario). All of our other lenders are at 4.875%. More interesting is that Citi is paying a 0.30% “Commission” at 4.75%, but if we (the broker) charge 1 […]Read More

Don’t Reference ANY Reports Anywhere in “As Is” Contract

We have a condo transaction in which a seven-year-old pest report was referenced in an obscure clause in an obscure addendum, and, of course, the lender is asking for both the report and a “clearance.” The highly skilled and seasoned selling agent is flabbergasted (to put it mildly) that the lender would ask for something […]Read More

FHA Monthly MI Goes Up April 18th from 0.90% to 1.15%

FHA Monthly MI rates go up on Monday, April 18th to 1.15% from 0.90% for loans at 95% LTV or higher. For loans with LTVs less than 95%, the monthly MI is and will be 5 basis points lower. This is 0.25% increase in rates that fence sitters should well consider (and we have many). […]Read More

Must Pay 2010 Taxes Owed Before You Buy

We have a borrower buying a $300,000 home with 5% down ($15,000). He has $20,000 in the bank, and ample 401k funds for reserves. And the seller is paying closing costs. The problem?? He owes $12,000 in taxes for 2010. He was hoping to just not pay his taxes until after close of escrow, but, […]Read More

31% of Purchases are Cash; $5,000 = Payment of $26

31% of all purchases in California in January were ALL CASH. This is the highest percentage ever. All we can say after all we have been through with lenders is “no wonder”. But, we are making strides to make the process easier. A $5,000 increase in price results in an only $26 higher monthly mortgage […]Read More

Bid Aggressively; Quote from “Deal Chaser”

We have dozens of “Pre-Approved” buyers who have been on a house-hunt for months and months. Most of them are all too determined to get a bargain, thinking that there is little competition and that sellers are desperate. They are clearly wrong, as we write “Pre-Approval Letter” after “Pre-Approval Letter” for these buyers, and they […]Read More

Watch “LOAN LIMITS” in Cheaper Areas; Portfolio Alternatives

We had a buyer make a $600,000 offer in Sutter Creek, CA (in the Sierra Foothills). Her max down payment was 10% or $60,000. The problem: The MAX HIGH BALANCE LOAN is only $443,750 in Amador County (Sutter Creek). So our borrower’s ONLY option is/was Portfolio Financing, but ALL of our portfolio lenders wanted at […]Read More

Do NOT Finance Appliances Until After Close; Tell Broker ALL

Once again – do NOT finance appliances or anything else until AFTER close of escrow. Lenders now check for new debts obtained from the time a loan is submitted through the time a loan funds. We had clients contact us today on their way to finance appliances, and we could not be happier that they […]Read More

EEM Loan is a Very Easy Way to Make Home Energy Efficient – Does Not Slow Escrow; Windows, Furnace, AC, Even Solar OK

All FHA buyers need to consider an EEM loan to make their homes more energy efficient. They are fast, free and very easy to get. They do not slow down escrows b/c we have a consultant that does all of the paperwork. Buyers can tack on as much as 5% of the purchase price for […]Read More

Why We Love UNITS – FHA 4Plex Purchase in Vallejo

We have a borrower buying a Fourplex in Vallejo with FHA financing for $305,000 with a $10,000 credit for closing costs. His total “out of pocket” (including the down) will be just over $12,000 b/c of the large seller credit. The borrower’s total payment (PITI and MI) will be about $2,200 per month. This fourplex […]Read More

We ALWAYS Specialized in PURCHASES; We KNOW the Issues

JVM has always closed more purchases than refi’s, no matter how low rates were. We specialize in PURCHASES. We say this b/c we have myriad acquaintances in the industry who did nothing but refi’s but who are now clamoring for purchases. We have an “Issues to Spot” worksheet with 282 issues that everyone in our […]Read More

“Mattress Money”, Seasoned Funds and Selling Cars

We often have borrowers with large amounts of “Mattress Money”, or money that is not in a bank account or “seasoned”. Seasoned funds are funds that have been in an account for at least 2 to 3 months. Borrowers simply cannot use mattress money for the purchase of a home, as lenders track every dollar […]Read More

It Is Now Cheaper to Buy than Rent

Cheaper to BUY than it is to RENT? During the “boom” years, it was clearly cheaper to rent a dwelling than to buy one, but people bought anyway, counting on infinite appreciation. It is now, however, usually cheaper to buy than rent. Recently Trulia, the real estate data website, compared the median list price with […]Read More

Inflation Here; Buy Real Estate as Hedge, Investment, for Cash Flow

Inflation is clearly rearing its ugly head, as indicated by surging commodity prices. This is what pushed rates up yesterday, and this is a huge reason why we think Real Estate is a fantastic investment right now. Why to Invest in Real Estate: 1. Real Estate is a hard asset and an excellent inflation hedge; […]Read More

Do NOT Always Need 30% Equity Cushion in Departing Residence

We often have buyers who are cannot qualify for a purchase b/c they have a loan against their current or “departing residence,” and these buyers lack sufficient income to support two mortgages. One way around this issue is to rent out the “departing residence” and then use that rent for additional income. In most cases, […]Read More

HOMEPATH Rates (for Fannie Mae REOs) – Better But Not Great

“Homepath” financing is available solely for the purchase of Fannie Mae Owned REOs. Its biggest advantages are: (1) No Appraisal Requirement, so condition is not an issue; and (2) High LTVs. We have been critical of Homepath, however, b/c rates are often not competitive. But, Homepath pricing has been improving somewhat relative to other financing […]Read More

EEM Loans for Windows, Doors, Furnaces, etc.

We want to remind everyone again about the availability for EEM loans or Energy Efficient Mortgages. These are FHA loans that allow borrowers to simply tack on an additional $8,000 for energy efficient home improvements (new windows, doors, furnaces, air conditioners, insulation, etc.). We did these types of loans often in 2009. They were quick […]Read More

What Could Bring Rates Way Down: Spain’s Collapse?

It is generally assumed that rates will continue to march up throughout 2011, as the economy continues to improve. And this is why, once again, we encourage people to lock in their fixed-rate loans now (and to buy now). The Fed is trying to push rates down, but its efforts are having the opposite effect […]Read More

Relieving Tight Cash Situation – Seller & LENDER credits

Borrowers with tight cash situations can garner extra cash for a purchase in two ways: (1) with Seller Credits; and (2) with Lender Credits. Seller Credits can be up to 6% of the purchase price, and they can cover both Nonrecurring and Recurring (interest, property taxes, insurance) Closing Costs, in most cases. Seller Credits can […]Read More

End of Year Thank You; Contractors Anyone??

Once again, we have a great “Handyman” and some great Contractors that we highly recommend. Please let us know if you need the info. The Handyman is particularly useful for minor repairs required by appraisers and underwriters, as he is skillful and inexpensive. We use him often with good results. Finally, JVM Lending had one […]Read More

Buying a House With a Major Roof Issue – What to Do?

We have a purchase involving a house with a very leaky roof. The buyers want to replace it in any case, but nobody wants to replace the roof prior to close of escrow (the seller does not want to pay for it; and it is risky for the buyer to sink money into a house […]Read More

Un-Permitted Additions OK; Min Number of Open Credit Accounts

Many Realtors are overly concerned about additions built without permits. Such additions are usually OK as long as: (1) No value is given to them in an appraisal; (2) they don’t contain stoves or ovens or look like a kitchen – un-permitted kitchens are never OK; (3) the addition is complete and the appraiser states […]Read More

We Need Clean “AS IS” Contracts; What Are “Necessary Repairs”?

We continue to have issues with Inspection Reports and getting required repairs done prior to close of escrow. Once again, if a Purchase Contract references ANY reports at all (even if the contract has “AS IS” plastered all over it), ALL lenders will request copies of those reports. Lenders will then request all necessary repairs […]Read More

What Will Bring Rates Back? FLIPs OK

What will bring rates back? Here are a few possibilities: (1) rates often come back a little after a major holiday, as we have stated; (2) a war in Korea will send investors to “quality”, reducing rates (note that “quality” refers to fixed income investments like bonds in lieu of stocks); (3) an economic meltdown […]Read More

Using Up Seller Credits for Closing Costs; Rent-Backs

Remember that seller-credits on a purchase can be used for both non-recurring and recurring closing costs. If a seller-credit is too large, we can charge extra points to use up the entire credit, and then rebate those points after close of escrow. This is a convenient tool that we employ often to eat up closing […]Read More

10 Financed Properties Rule

We still get questions all the time about the Ten Property Limit imposed by Fannie Mae. 1. This rule applies only to Residential Properties of 4 or fewer units; 2. This rule applies only to FINANCED properties; borrowers can own 50 “free and clear” properties; and 3. This rule allows up to TEN financed properties. […]Read More

2 – 4 Unit Properties Offer Better Returns Than SFRs

There is a four unit property listed in Antioch, CA right now for $229,000. Each of the four units supposedly rents for $900 per month. This property can be financed with a 25% down payment and loan at about 5%. PRICE: $229,000; DOWN: $ 57,250; LOAN: $171,750; P&I: $922/month; Taxes: $238/month; Insurance: $100/month. TOTAL PITI: […]Read More

Closing Cost Credits

Please remember that Closing Cost Credits (on a purchase contract) can be for BOTH Nonrecurring and Recurring Closing Costs. We frequently have large credits on contracts of $10,000 or more that are written as follows: “Seller to credit $10,000 for NRCCs”. This is bad b/c purchases getting financed with “no points” loans typically have nonrecurring […]Read More

More than 4 Properties Financed – Issues/Prohibitions

Many of our Realtors are overly concerned about borrowers having more than “4 financed properties.” This is b/c some lenders will not offer financing to any borrower who has 4 or more financed properties. We, however, have numerous lenders that allow up to 10 financed properties. And, keep in mind that this “prohibition” only applies […]Read More