Fast Closes and Rentbacks to Compete Against Cash; CD Timing

Rentbacks: All lenders offer lower rates for “owner-occupants” than they do for investors. To qualify for “owner-occupied” rates, buyers must agree to move into the property within 60 days of close. Hence, most lenders allow sellers to rentback properties from buyers for up to 59 days. Competing Against Cash Offers: Writing an offer with a […]Read More

JVM Has A Down Payment Assistance Program; When Down Payment Assistance Programs Are Overrated

JVM offers the Chenoa Down Payment Assistance Program (DPAP). The “assistance” is a 3.5% (of purchase price) 2nd mortgage that can be coupled with either a 96.5% loan-to-value FHA loan or a 97% loan-to-value conforming loan. Hence, qualified borrowers can purchase a home with no down payment. The 3.5% 2nd mortgage is at a rate […]Read More

Special Deals for First-Time Homebuyers? Only at JVM!

Throughout my 25-year mortgage career, I have heard First-Time Homebuyers ask again and again if there are any “special deals” for First-Time Homebuyers. The answer has always been “no” for the most part. There are some low money down (3%) loans that only First-Time Homebuyers qualify for, but these loans are often hard to qualify […]Read More

Only 21% Think “Now” Is A Good Time to Buy; Demographics Say Otherwise

CONFIDENCE IN BUYING DROPS Only 21% of Americans think now is a good time to buy a home, according to October’s Fannie Mae Housing Survey. This is down from 28% in September, and it shows that low rates do not drive purchase volume as much as many of us might suspect. In response to this, […]Read More

People Staying In Homes Much Longer – Creates Inventory Shortage

“Fewer homes for sale is a big reason why even ultralow mortgage rates, record levels of home equity and a strong job market haven’t jump-started the sluggish housing market.” The above quote is from this recent WSJ article – People Are Staying In Their Homes Longer – A Big Reason for Slower Sales (we can […]Read More

Airbnb/Vacation Rentals – Can Lenders Use Income? Are They Allowed?

When buyers purchase multiple unit properties or single family rentals, they can use future rents to help qualify for the purchase, as I mentioned in Friday’s blog. Multiple unit buyers can use the market rents from units to qualify even if the units are vacant. Similarly, investors, purchasing a single family residence, can also use […]Read More

Using Rental Income From Units to Qualify; Vacant Units; Illegal Units

I blogged recently about “House Hacking” (here and here) or buying multiple-unit properties in order to use the rental income to subsidize one’s mortgage payment. We received numerous questions in response that made for some great blog fodder, discussed below. How much rental income can we use? For all units that will not be occupied […]Read More

House Hacking Part II: Co-Buying; Sufficiency Test; Fourplexes

I received a lot of feedback in response to Friday’s blog about “House Hacking,” or the strategy of buying two to four unit properties in order to use the rental income to subsidize a mortgage payment. One successful Bay Area Agent sent me the following message: “… This is the gospel I’m always preaching to […]Read More

House Hacking: Using Rent from Units to Offset Mortgage Payments

We cohosted a “House Hacking” seminar earlier in the year where we illuminated the many advantages of buying multiple units with rental income, as opposed to buying a single family residence. I was one speaker along with a seasoned agent, a property manager, a tax planner, and a financial planner. The advantages of buying units […]Read More

Correlating to the Worst Credit on a Loan Application When There Is More Than One Borrower

When discussing credit with our borrowers, we often hear something like this: “My credit score is only 670, but don’t worry; my wife’s score is over 800!” Unfortunately though, lenders correlate to the worst credit on the loan application when there is more than one borrower. LOWER MIDDLE SCORE Most mortgage lenders check credit with […]Read More

Rent vs. Buy Calculators – Surprising Results

WHEN RENTING MIGHT MAKE SENSE My young nephew pays $4,250 per month to rent a property in San Francisco’s Marina District. This is a bargain rate given the lifestyle that renting in one of America’s most desirable zip codes affords – short commute, stunning views, awesome nearby parks, perfect weather, best restaurants, etc. His financial […]Read More

“Biggest Housing Boom In History Has Just Begun” SFR Rentals = Future

The above subject line is the title of this Forbes.com article. The author focuses on the supply of houses, shifting demographics and massive pent up demand. From the 1950s through the early 2000s, an average of 1.5 million new homes were constructed every year in the U.S. But, over the last ten years, we have […]Read More

Which Week Is the “Black Friday” For Homebuying?

  This was the title of a Housing Wire article I read last week. I am lifting this directly from the article: “Apparently, the best time to purchase a house is the first week of Fall. This time of year, buyers have less competition, more price reductions and greater inventory, according to realtor.com. Out of […]Read More

“PMI” or “Private Mortgage Insurance” Explained (Briefly)

PMI remains a great option for high-LTV financing in 2019, and all too many borrowers and agents do not fully understand how it works. First of all, PMI protects lenders (not borrowers) in the event of default. So borrowers with PMI will still be on the hook or liable for their mortgage debt even after […]Read More

Credit Inquiries – Way Too Much Concern

Over 500 borrowers come to JVM every month seeking mortgages. And way too many of them are far too concerned about credit inquiries. It is our strongest borrowers who are often the most concerned, which is ironic b/c they are the least affected by credit inquiries. This is b/c credit inquires only affect a strong […]Read More

Adding Eggs & Why Agents Should Let Sellers Help Sell Their Home

  When General Mills introduced Betty Crocker boxed cake mixes in the 1950s, they included dried eggs. Aspiring cooks just had to add water to the mix in order to get a perfect cake. But, the cakes were so easy and so good that women felt guilty about deceiving people and sales lagged. So, General […]Read More

Home Sales Fall Despite Falling Rates; Is the End Finally Here? We Can Only Hope :)

TULIP MANIA In the 1630s, the Dutch experienced one of the world’s first major financial bubbles – Tulip Mania. They were all convinced that the price of the exotic (at the time) tulip bulbs would increase forever, not taking into account how easy it was to reproduce them and how the ridiculously high prices were […]Read More

Life Events That Influence Decisions to Move; Big Data

Zillow, with all of its faults, often publishes interesting articles. A recent example is Behind Every Move Is a Story (Life Events That Influence Decisions to Move). It is of course no surprise that major life events influence decisions to move – almost 70% of all movers surveyed experienced one or more major “life events” […]Read More

Why Cash-Heavy Buyers Should Put LESS Down – Liquidity and Investment Returns!

We have had so many “cash-rich” borrowers ask us if they should put more money down lately, that we thought we should repeat this popular blog. Long-story-short:  borrowers usually should not put more money down as long as they have optimal financing and are not paying mortgage insurance. Borrowers also should not be so gung-ho […]Read More

Why Lenders Have to “Beat Up” Borrowers

Our well-heeled borrowers often get extremely frustrated when we ask them to chase down seemingly inane conditions. They will say: “I can just pay cash for the entire house… WHY do I need to provide this?” This happens so often that it prompted me to repeat this blog from a few years ago. BEATING UP […]Read More

Buying Out Spouse/Partner = Refi; Not Cash Out or Purchase

We recently received the below email from a borrower who left us for what he thought was a lower rate.  “Hi Casey, The other lending company fell through and couldn’t get us a loan in time. Their customer support was horrible and wouldn’t provide me with a direct answer. We would like to see if […]Read More

Seller & Lender Credit Guidelines

Here are a few quick reminders/guidelines for Seller and Lender Credits. If a credit is specified to be for a repair anywhere in a purchase contract, the repairs will have to be completed PRIOR to close of escrow. We will need to show proof they are complete with either an appraiser’s or a licensed contractor’s […]Read More

Income Continuance – Three Years Is All We Ask

When my dog Kevin was issuing pre-approvals based on Desktop Underwriting (DU) findings only, one of his biggest mistakes was not verifying “Income Continuance.” Lenders cannot use Child Support, Alimony, Disability, or Retirement income unless they have proof that it will continue for a minimum of three years after close of escrow. For example, if […]Read More

How Long Is a Pre-Approval Letter Valid? Forever, as long as…

We have over 800 pre-approved borrowers in our database – all closely tied to their respective referral sources I might add. As an aside, each pre-approval requires about two to four hours of labor, depending on complexity, with additional hours often required for scenarios, questions, advice, calling agents, etc. Our historic conversion rate for pre-approved […]Read More

Three Important Tax Filing Tips for Homebuyers

With Tax Season upon us, I want to share a few reminders: If income is lower this year, self-employed borrowers might want to file an extension instead of filing tax returns. This is b/c lenders will often correlate to the most recent year only if income is declining, and that will of course adversely impact […]Read More

Asset Loans; Qualifying With Assets Instead of Income

I touched on Asset Loans in December but I wanted to elaborate on them b/c they are such a great alternative for borrowers with substantial assets but limited documentable income. There are three basic types of Non-QM Asset Loans that we offer. Asset Depletion Loan: We simply divide total liquid assets by 120 months and […]Read More

What Homebuyers Really Want In A Lender

The lender you refer your clients to is a reflection on you. I repeat that often because it is true and because we meet so many agents who are having issues with their lenders. In light of this, JD Power’s recent survey of borrowers should be of particular interest, as it illuminates what borrowers look […]Read More

8 Ways To Lower Debt Ratios & Qualify for More

I repeat this topic from time to time b/c “Debt Ratios” weigh so heavily in our pre-approval process and b/c tight debt ratios so often prevent borrowers from buying the property they want. I explain what debt ratios are and how we calculate them in this past blog. 8 Ways to Lower Debt Ratios: Put less money […]Read More

Five Misleading Closing Cost Tricks the Big Banks Play

We sent out this blog right after the New Year and feel it is worth repeating now, as we’ve seen the below scenarios play out more and more recently. We have been stealing a lot of loans lately from the big banks b/c our service is better and our rates are lower. As a result, […]Read More

When Renovation (203k) Loans Are Not Practicable

Renovation loans, also known as “203k” or “Homestyle” loans, are an awesome resource for properties that are badly in need of major repairs or updating. These loans allow buyers to finance major home improvements with their initial purchase money mortgage by increasing the mortgage to cover the cost of improvements. For major repairs required by flood, […]Read More

Five Misleading Closing Cost Tricks the Big Banks Play

We have been stealing a lot of loans lately from the big banks b/c our service is better and our rates are lower. As a result, the big banks are using some very aggressive and often misleading tactics to win borrowers back. These tactics include massively understating closing costs and then implying that their closing […]Read More

Cracking the Perfect Credit Score? Don’t Bother…

200 MILLION AMERICANS NOW HAVE FICO SCORES About 200 million Americans now have FICO Scores, and about 3 million have perfect scores of 850, according to this Bloomberg article – “How More Americans Are Getting a Perfect Credit Score.” America may be approaching “peak credit score” with average scores now above where they were at […]Read More

Seller 2nds/Carrybacks Are Kosher; See Our Winter Seller’s Guide

SELLER CARRYBACKS In yesterday’s blog about how sellers can help buyers, I failed to mention an important avenue – Seller Carrybacks or Seller 2nds. Almost all conforming loans allow for seller carrybacks as long as: (1) buyers still meet the minimum down payment requirements – usually 5% of purchase price or more; (2) the note’s […]Read More

How Sellers Can Help Cash-Strapped Buyers (They Can’t Gift Funds)

SELLER CAN’T GIFT FUNDS An agent recently asked us if a seller could gift funds to a cash-strapped buyer to help the buyer get into the home. The answer unfortunately is no. This is what sellers can do to help cash-strapped buyers. 1. Closing Cost Credits. Sellers can give credits up to 6% of the […]Read More

5 Reasons Why This Winter Is The Best Time To Buy

Most of our agent-readers well know why winter can be a great time to buy from a real estate perspective. I am nonetheless repeating a few of the obvious reasons while also illuminating a few less-obvious mortgage-related reasons. 1. Rates Hit Six Week Low! While rates have been climbing for most of the year, they […]Read More

Calling Listing Agents With Every Offer

This is another reminder that we love to call listing agents when offers are made simply b/c it is so effective. Listing agents have in fact told us on numerous occasions that it was our phone calls that pushed our buyers to the top. When we call, we follow the same script every time and […]Read More

Why Even Cash-Rich Borrowers Need 30-Year Mortgages; LIQUIDITY!

Borrowers often underestimate the importance of liquidity. Especially when times are good. When rates are relatively low (under 8%), we always recommend using financing (obtaining a mortgage) to buy real estate, even if borrowers have ample cash. Similarly, we usually advise borrowers (who want lower 15-year rates) to take 30-year mortgages over 15-year mortgages. Even […]Read More

The Dispute Over Disputing Disputes (On Credit Reports)

One of our most frequent credit issues involves reported “disputes.” Borrowers report an account in “dispute” whenever they believe some credit data (usually late payments) is reported in error. We usually need to remove the “disputes” from the credit report altogether with an expensive “rapid rescore” and borrowers often do not like this. We must […]Read More

Funding Process Explained; Why Wet/Table Funding Isn’t Favorable

We have had a string of buyers relocating to California from the East Coast lately, and they are confused about the closing process out here. For most purchases in California, the loan is not immediately ready to fund after a borrower signs their loan documents. The “funding package” (signed loan documents and escrow conditions) needs […]Read More

How To Buy Before Selling Current House

We often have buyers who want to buy a new house before selling their current house. They often want more time to move, more time to fix up their current house before selling, or more time to fix up the new house before moving in. They also sometimes want to make offers on a house […]Read More

What Will $75,000 and $100,000 In Income Buy?

Many renters don’t realize how much house their income will buy in this environment, when rates are so low. We often maximize buyer’s qualification by having them use their savings to pay off consumer debt and put less down. For example, paying off debts that total $700 in monthly payments can increase a borrower’s purchasing […]Read More

Rapid Re-Scores Revisited

We often do a “rapid re-score” to repair a borrower’s credit for a variety of reasons: (1) to raise a borrower’s score above a minimum requirement, such as 700 for a HELOC; (2) to improve a borrower’s interest rate, as rates are significantly affected by credit scores; (3) to update tradelines to reflect lower balances […]Read More

Seller & Lender Credits; Can’t Exceed Closing Costs; Repairs; Rules

We thought it was time to repeat a few basic, but very important, guidelines in regard to seller and lender credits. We’ve had numerous delays in recent weeks b/c of mistakes. 1. If a credit is specified to be for a repair either in the contract or addendum, the repairs will have to be completed […]Read More

You’re Invited To Our Homebuyer’s Seminar on April 12th. Save Your Seat!

I’m going to guess you know someone just like Kim. Kim was a nurse making good money and renting in Pleasant Hill. Kim was working with one of our Realtors for over a year but had been too apprehensive to pull the trigger and buy a home. And it seemed as though that was how […]Read More

Unison – 10% Down Payment Assistance For Small Share of Appreciation

Unison contributes 10% of the purchase price or more to help buyers increase purchasing power, to save cash for other uses, to avoid PMI, or to reduce payments in order to lower debt ratios or just save money. Unison does not charge interest or any payments, but only takes a small percentage of the appreciation […]Read More

Occupying Properties w/i 60 Days; Notice to Vacate; Proof; Calling Loan

“Owner occupied” financing is more favorable than investment property financing b/c the risk of default is much less. B/c of this lenders need to make sure properties are actually owner-occupied. “Owner occupant” buyers must take possession within 60 days of close of escrow (this is why “rent-backs” can’t exceed 60 days too). Problems arise if […]Read More

Rate Shopping Concerns; Avoiding Pain for All

We sometimes lose pre-approved “rate shopping” borrowers long before they are even in contract. This is frustrating for us b/c our full pre-approvals take two to three hours of time, and b/c we have not even formally quoted rates yet (we only estimate rates when we send out payment scenarios). In any case, we like […]Read More

Fascinating “Buy Now” Story; Ignoring Friends; Broker Opens

We told a few stories in Monday’s blog about clients who got into the market when they were young and built over $1 million in equity. A friend of ours responded to that blog with a much more extreme story that is worth repeating, both b/c it is fascinating and it imparts a great lesson. […]Read More

Benefits of Buying Now – Again; Fence-sitters

One of the most effective elements of our Homebuyers Seminars is explaining the benefits of buying now. We are repeating some of our reasons again, as we continue to see a lot of apprehension and b/c rates are rising. Benefits from buying: 1. Inflation Hedge; 2. Building Equity; 3. Feels Good to Own; and 4. […]Read More

Schools and Housing; Exodus After Graduation

There was a great article in the WSJ a few weeks ago about schools and housing. WSJ – Homeowners Quest For Best Schools It is well known that the quality of local schools often drives the value of nearby homes. This was especially noticeable after the 2008 meltdown when we watched the areas with poor […]Read More