Posts

2nd Mortgage vs. HELOC (Home Equity Line); Which Is Better?

Yesterday’s blog, 5 Reasons to Get a HELOC, was inspired by a question from my nephew – as he is a perfect candidate for a HELOC. He is in his early thirties – and he has a family to support, about a half-million in equity, a very low rate first mortgage, an excellent job, and […]Read More

5 Reasons To Get a Home Equity Line Of Credit ASAP

When I was in law school, I clerked for a firm that specialized in commercial litigation. And – the first thing the attorneys did when considering litigation was to ensure the defendant had sufficient assets to go after – should they win a judgment. And a primary asset they looked at was the defendant’s home; […]Read More

Bridge Loans Explained (Buying Before Selling Current House)

We often have buyers come to us who want to buy a new residence before selling their current residence. If they do not have enough cash for a down payment, we often just recommend that they get a home equity line of credit (HELOC) against their current home. HELOCs are awesome because they are usually […]Read More

How To Finance In-Law Units; Flight To Safety Again

CA recently passed a bill (SB9) that eases zoning restrictions and makes it far easier for homeowners to add extra units to their properties. These units are known as Accessory Dwelling Units (ADUs), Granny Units, or In-Law Units. Per the WSJ, there are some 2.5 million single-family homes in California that are eligible to have […]Read More

DANGER! Home Equity Lines & Inflation

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Financing And Building ADUs Or In-Laws

CUTEST HOUSE I EVER SAW I have been in the mortgage industry since 1994 and have seen thousands of homes in every setting imaginable. And the cutest house I have ever seen was a 3,500 square foot brick, single-level ranch house on ten acres in the wine-growing region of Livermore Valley in California. It had […]Read More

Are Home Equity Loans Tax Deductible?

Homeowners cannot claim tax deductions on home equity loans in some cases. However, they can still benefit from cash-out refinancing programs to use the equity they’ve accrued in their homes. The Tax Cuts and Jobs Act, signed by President Trump in December 2017, introduced this change. Interest paid on home equity loans is no longer […]Read More

HELOCs For Bridge Loans; Online Lender Horror Stories

MORE ONLINE LENDING HORROR STORIES In response to my blog about Quicken’s pending IPO on Friday, I received several reminders of online lending/call-center horror stories. With every instance, the call-center loan-officer did a perfunctory “pre-qualification” without doing a full pre-approval, and transactions blew up as a result. The call-center loan officers are trained largely for […]Read More

Elephant In Room: Housing Prices; HELOCs Too

Chase stopped accepting applications for home equity lines of credit (HELOCs). I mentioned this previously, but in 2008, HELOC lenders not only stopped taking applications but they also froze existing HELOCs. Given the trends, HELOC borrowers in need of cash might consider drawing on their HELOCs now before they are frozen (as I mentioned in a […]Read More

1st/2nd Combos Instead of Jumbo; Backup Offers; Temporary Loans; Self-Employed Borrowers

1ST/2ND COMBOS INSTEAD OF JUMBO This is a reminder that 1st/2nd combo financing remains a great alternative to jumbo.  CA 2nd liens are Home Equity Lines of Credit (HELOCS) while Texas 2nd liens are fixed-rate 2nd mortgages; HELOC lenders tie their loans to Prime Rate (3.25% currently); and most accept revised appraisal guidelines (exterior only […]Read More

10% Down to $1.24 Million; 5% Down to $1.07 Million

“High Balance” Conforming Loan Limits are now $765,600 in “High Cost” areas, which include much of coastal California including the Bay Area. These much higher conforming limits now allow buyers to purchase homes in the $1 million+ range with much smaller down payments – if they couple their first mortgage with a “piggyback” Home-Equity-Line-of-Credit (HELOC) […]Read More

HELOC vs. Cash Out; Fed Cuts Fed Funds Rate

Borrowers in need of cash often wonder if they should get a Home Equity Line of Credit (HELOC) or if they should just refinance into a larger first mortgage with “cash out.” The answer is “it depends.” HELOCs are usually tied to Prime Rate, which has been at 5% for several months and will likely […]Read More

$5.4 Trillion of Home Equity; How To Tap It? HELOC or Cash Out Mortgage?

CONFORMING AND FHA LOAN LIMITS This is a reminder that Conforming and FHA Loan Limits are up for 2018.             $5.4 TRILLION OF HOME EQUITY A recent article in The National Mortgage News reported that there was $5.4 trillion in home equity in the U.S. in 2017. $3 Trillion of […]Read More

Prime Rate Up; HELOCs Up; PMI Down

Prime Rate was 3.5% last year at this time. Currently the Prime Rate is 4.25%. It has been climbing steadily with every increase in the Fed Funds Rate. Prime Rate is the interest rate that large companies pay to borrow funds for short periods. It matters to real estate b/c Home Equity Lines of Credit […]Read More

Post-Close HELOC to Reclaim Liquidity; 90% CLTV

We often encourage buyers to put down 20% or more not just to avoid mortgage insurance, but also to make their offers much stronger and to allow us to close in 17 days (80/10/10 financing with two loans requires 21 days). Buyers are often reluctant to deplete their liquidity, borrow from 401ks, or access gift […]Read More

What Is With 80/10/10?

We are getting many questions about “80/10/10” financing lately. “80/10/10” stands for an 80% loan-to-value (LTV) first mortgage, a 10% LTV 2nd mortgage, and a 10% down payment. The purpose of getting two mortgages with 80/10/10 financing as opposed to one mortgage to 90% LTV is twofold: (1) borrowers avoid PMI by keeping their primary […]Read More

“80/10/10” HELOC Lender Now Requires 720 FICO In CA Only

Our Home Equity Line Of Credit (HELOC) Lender, that offers the “10%” second mortgages in conjunction with “80/10/10” financing, increased its minimum FICO from 700 to 720. This applies to California only. This means that borrowers with limited down payment funds (less than 20%) will either have to take a single loan with Private Mortgage […]Read More

Post-Close HELOC to Reclaim Liquidity; 90% CLTV

We often encourage buyers to put down 20% or more not just to avoid mortgage insurance, but also to make their offers much stronger and to allow us to close in 14 days (80/10/10 financing with two loans requires 21 days). Buyers are often reluctant to deplete their liquidity, borrow from 401ks, or access gift […]Read More

89.99% CLTV to $1.275 Million (10% Down to $1.275 Million)

Our 2nd Mortgage Provider (TCF) announced last week that they will finance $1.42 Million purchases with as little as 10% down. In other words, they now offer 2nd mortgages (Home Equity Lines) up to a combined loan amount of $1.275 Million. They used to cap their combined loan amounts at only $750,000. This is extremely […]Read More

Home Equity Line of Credit (HELOC) Explained – Terms

Home Equity Lines of Credit (H.E.L.O.C.s) are popular once again b/c borrowers now have more equity in their homes and b/c HELOCs are the “10” in our “80/10/10” financing. 80/10/10 financing allows borrowers to only put 10% down and avoid PMI with an 80% first mortgage, and a 10% HELOC/2nd mortgage. Our HELOCs have the […]Read More