Posts

Conventional vs. Conforming vs. Government vs. Jumbo Loans; Bias For Action

CINNABON STORY – BIAS FOR ACTION I heard this story on a podcast a few months back and just had to share it. When Cinnabon first started, they could only afford to lease very small spaces that required them to place their ovens in front; as a result, passersby could easily smell the aroma when […]Read More

What Is A Conventional Loan?

What Is A Conventional Loan Conventional loans are a favorite for homebuyers with decent credit scores and who have a fair amount of funds for a down payment. Conventional mortgages should not be confused with “Conforming Mortgages.” Conventional mortgages are institutional mortgages that are not insured by the FHA (Federal Housing Administration) or guaranteed by […]Read More

Buyers Don’t Need a ‘Perfect’ Credit Score to Get a Loan in California

Buyers in don’t need a perfect credit score to get a loan in California. Having a high credit score can help buyers secure a loan with a lower interest rate. However, today’s loans have more forgiving guidelines when it comes to a buyer’s credit, which is especially true with government-funded loans. Where Is The Credit […]Read More

If Property Won’t Appraise, Change Financing!

AGENT KNOWS PROPERTY WON’T APPRAISE We have a buyer who is willing to offer $750,000 for a property with 10% down. The problem is that, according to her agent, “the property will never appraise for more than $680,000, b/c there are no comparable sales anywhere above $680,000.” There are also cash offers so the seller […]Read More

Why Lender-Paid Mortgage Insurance Isn’t Such a Good Deal

We are seeing borrowers come to us with quotes from online lenders for conventional loans with LTV > 80% but NO mortgage insurance. What the borrowers don’t realize is they are being quoted for a Lender-Paid Mortgage Insurance product (LPMI). With LPMI, a lender simply waives PMI requirements in exchange for a higher interest rate. […]Read More

How To Lower Debt Ratios 101

Experienced Mortgage Analysts (or Loan Officers) have many tools to lower debt ratios to help borrowers qualify for a larger loan. Here are a few that all loan officers should know: 1. Put less money down, and use down payment funds to pay off consumer debt. Mortgage debt has lower payments than consumer debt b/c […]Read More

How To Buy A Flip – Property Bought & Re-Sold Within 90 Days

We have been seeing “Flips” surface again lately. Flips are properties that are purchased and re-sold within 90 days. Lenders go by “contract date” and not close of escrow. Hence, if you buy a property on October 1st, your contract to re-sell it must be dated after January 1st, to avoid “flip” status. Anytime a […]Read More

FHA Is Faster Than Conventional; Myth That FHA Is Slower

We beat this dead horse often, but it keeps rearing its head. So we are re-beating it: FHA loans do not take longer to close than conventional loans (at least at JVM). They are often faster b/c of FHA’s flexibility. We got the below email from a listing agent yesterday after we closed his listing. […]Read More

Rules For Gift Funds

We have a few borrowers right now navigating the best way to receive gift funds, so we wanted to provide a few reminders. Gift Funds – a Few Rules of Thumb For FHA Loans – An entire down payment can be a gift. FHA Gifts must be “sourced;” this means that the donor or “gifter” […]Read More

Gift Funds Should Go Straight to Escrow, Not Into Bank Account

We are seeing buyers use gift funds more often than ever lately. This is a reminder that it is much easier if borrowers wait until they are in escrow before receiving gift funds. The funds can then be deposited by the donor or “gifter” directly into escrow. For conventional loans, when gift funds are deposited […]Read More

FHA Better than 80/10/10 Conventional in Tight Market

We can close almost any purchase transaction in 14 days, using our uber-systematic, assembly-line process. One major exception is 80/10/10 loans with 10% down and a 1st and 2nd mortgage. 80/10/10 loans take us 21 days to close b/c we have to get two loans approved. Hence, if a borrower is making offers in very […]Read More

Sellers Don’t Sign Conventional Doc’s, Do Sign FHA Docs

Realtors often ask if there are any documents among our “loan documents” that sellers need to sign. FHA loan documents require seller-signatures. Conventional loan documents do not. Once a property is in escrow with conventional financing and contingencies are removed, the seller can sign all “seller documents” before loan documents are in title. There is […]Read More

3% Down Conventional Is Back

Conventional Lenders are again financing purchases with only 3% down (the option was not available for about a year). The maximum loan amount is $417,000. For loan amounts from $417,000 to $625,500, borrowers still need to put down 10%. The 3% down option is better this time around b/c the down payment and reserves can […]Read More

We Push 5% Down Conventional Over FHA, If Loan Is Under $417,000

We had a buyer come to us this weekend who had been approved for FHA financing by an online lender. The buyer, however, was very well qualified and should have been encouraged to take 5% down Conventional financing over 3.5% down FHA financing. Conventional financing is better than FHA financing, when buyers qualify, for the following reasons: 1.) […]Read More

Can Use 75% of Rents for Income; 85% for FHA

We discussed rental income in previous blogs and had questions in regard to how much of the rental income we can use. For a refinance, we use the income from the Schedule E on a borrower’s tax returns, irrespective of market rents. We can add back “non-cash” expenses like depreciation. For conventional purchases, we use […]Read More

FHA Loans Do Not Take Longer Than Conventional

We are frequently asked by Realtors if we can close FHA loans as fast as conventional loans, and our answer is always the same: “of course.” FHA loans do not take longer to close than conventional loans if a lender has well-trained staff. It is a myth that FHA loans take longer. There are few […]Read More