EVENTS AND INFO REGARDING REAL ESTATE FINANCE
JVM LENDING MARCH OF 2012 – MONTH-END SUMMARY
Below is a summary of some of the topics covered in
JVM Lending’s March “Daily Comments”
1. Rates increased 1/4 of a percent in March. Rates increased at least 1/4 of one percent on average in March. Positive economic news and a workout with respect to Europe’s debt crisis are the main reasons.
2. FHA MI to increase. FHA Monthly MI will go up from 1.15% to 1.25% for all Case Numbers ordered after April 9th. For loans over $625,500, MI will go up to 1.5%. Upfront MI will go up to 1.75% (from 1.0%). The key is to find an address and order the case number BEFORE April 9th; you can close escrow anytime thereafter and still preserve the lower MI rates.
3. CHDAP is a down payment assistance program that requires only 1/2 percent down. Income limits apply, but this is a great program that ties a 3% second to an FHA first mortgage; there are no payments due on the 2nd; interest merely accrues.
4. HOA dues eat into ability to qualify. Condo and Townhouse buyers could qualify for a much higher purchase price if they bought a single family residence with no HOA dues. $100 of HOA dues”eats up” about $20,000 of purchase price in a 4 percent rate environment.
5. 401k Loans are considered “seasoned funds”. Many lenders often do not count 401k loan payments against debt ratios. Borrowers with 401k funds should consider borrowing against them for down payments and closing costs.
6. “Unwarrantable” condos with litigation or other major issues can be financed. We have a lender that lends against condos that Fannie Mae and FHA will not touch; they go to 85% LTV.
7. Foreign national borrowers (who are not citizens, with no credit and no visas) can get financing. We have a lender that lends to 65% LTV.
8. FHA Loans are assumable; great feature when rates go up. Qualified buyers can “assume” existing FHA financing. Sellers with FHA financing in place at 3.75% will be able to sell their properties for far more after rates go back up. If rates exceed 7.75% (and they will eventually), a borrower with a $400,000 loan will save $16,000 per year in interest by assuming a 3.75% loan.
9. Job changes are OK if staying in the same industry. Borrowers can change jobs without impairing their ability to qualify, if the new job is in the same industry. They merely need to verify 30 days of income. A job change to a new industry or field will require six months of income history.
10. Things not to do after getting pre-approved: (1) Don’t take on new debts; (2) Don’t make deposits that cannot be explained or “paper-trailed”; (3) Don’t liquidate assets; (4) Don’t co-sign for others’ loans; (5) Don’t take time off work if paid “hourly” and debt ratios are tight; (6) Don’t miss any payments; (7) Don’t get a new job in a new field or industry; (8) Don’t file taxes with a large tax liability still owing.
11. Borrowers can take mortgage tax deduction even when NOT on loan. Person making the payments gets to take the mortgage interest tax deduction even if the loan is not in his name; person should be on title, however.
12. Lenders correlate to borrower with lowest credit score. Credit scores affect interest rates. Cannot add borrower with high scores to improve rates; lenders still correlate to lowest score.
13. Interest Rates not “controlled” by the Fed alone. Market forces can move mortgage rates up (way up) no matter what the Fed says or does.
14. “Flips” can be financed. Flips are properties that are bought and resold within 90 days. We have lenders that finance them even if appreciation is over 20% in the 90 day period. FHA and conventional financing is available.
15. Housing is a great inflation hedge or a great way to “short” the dollar. Housing is a fixed asset that appreciates with inflation, and that can be financed with currently very low fixed interest rates.
16. Deeding “off” title does not remove responsibility for a related mortgage loan. Borrowers often get burned when they deed off title and think they are “off the hook”. If the person remaining on title misses payments or lets the property go to foreclosure, the borrower who is off title is still responsible.
17. 3% down conventional loans are a great alternative to FHA loans. 3% down conventional loans have higher rates and they don’t allow “gifts” for down payments, but they have lower MI rates and it is easier to get out of Conventional MI.
18. What are Fannie Mae, Freddie Mac, Ginnie Mae, FHA, Conforming Loans, Jumbo Loans, and how does it all work? See our blog post from March 9, 2012
Founder/Broker | JVM Lending
(925) 855-4491 | DRE# 01524255, NMLS# 335646