Posts

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

Buyers in California don’t need a perfect credit score to qualify for a loan. 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 Do Credit Scores […]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

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

100% “Gift Funds” OK for Conventional Now

FHA allows 100% of a down payment to be from “gift funds” from a relative (parent, sibling, aunt, uncle, etc.). Fannie Mae (conventional lending) used to only allow 100% gift funds if the down payment was equal to 20% or more of the purchase price. If a down payment was less than 20%, at least […]Read More

“Government Shutdown” Will Marginally Affect Mortgages, If At All

We are getting asked how a “Government Shutdown” might affect mortgage lending. It will most likely be minimal and it will only affect the processing of the loans. It is important to remember that the government does not fund mortgages (either conventional or FHA). The Government only “insures” FHA mortgages via HUD. What the government […]Read More

Appraisals Good for 90 to 120 Days; Caveats

We sometimes have closings severely delayed b/c of repair issues, title issues, or unexpectedly large liens surfacing. In these situations, we are invariably asked how long the appraisal will remain valid. The general answer for conventional loans is 90 days. Loan documents must be drawn before the appraisal is 90 days. FHA lenders will draw […]Read More

Short Sale Seasoning? 0 to 3 yrs for FHA; 2 to 4 yrs for Conventional

We are frequently asked if the required seasoning for short sales has changed. It hasn’t. If a borrower had no late mortgage payments prior to his short sale, he can obtain FHA financing immediately after the short sale as long he buys “down” (smaller/cheaper home). No seasoning is required. If a borrower was late with […]Read More

Min. Credit Scores in 2013; FHA: 580; Conventional: 620 to 660

We are frequently asked about “minimum credit scores” for obtaining financing. Here are general guidelines for minimum scores for our office in 2013: FHA: 580 Conventional < $417,000: 620 Conventional > $417,000: 660 Jumbo: 680 Pricing hits/rate increases for lower credit scores are now larger than ever. For example, lenders that accept FHA borrowers with […]Read More

Short Sale Seasoning Periods (again); Improved for Conventional

Most people know now that Short Sale seasoning periods for FHA financing are as follows: (1) 3 years IF there were late mortgage payments prior to the short sale; and (2) NO seasoning required if there were no late payments leading up to the short sale. Conventional borrowers only need to wait 2 years from […]Read More

97% LTV or 3% Down Conventional Loans – SFRs and CONDO

3% Down, or 97% loan-to-value loans are available now at many lenders. The option is only for loans below $417,000, but it is a great alternative to FHA financing now that FHA MI is becoming permanent in June. For loans above $417,000, borrowers still need to put down 10%. A major advantage of 3% down […]Read More

PMI is NOT Permanent; Getting Out of PMI

FHA currently requires Mortgage Insurance for five years no matter what, and in June FHA MI will become permanent (for the life of the loan). This is why conventional financing with Private Mortgage Insurance (PMI) is often a better route. Several borrowers, however, recently told us they thought PMI was permanent too. It is not, […]Read More

FHA Loans Often Stronger than Conventional; Speed and Flexibility

We beat this dead horse often, but it bears repeating. FHA offers are not weaker than conventional offers with down payments of 20% or less. FHA financed purchases are often more likely to close. Flexibility: FHA financing has far more flexibility with respect to debt ratios, down payments, gift funds, credit issues, etc. Many issues […]Read More

Short Sale Seasoning for Conventional Loans – 2 Years Maybe w/ 20%

Borrowers with short sales on their records can get conventional financing with two years of seasoning, sometimes. Borrowers can even have late mortgage payments prior to their short sales. But, to garner a conventional loan approval, borrowers must put at least 20% down, they must be “strong” from a credit, income and asset perspective, and […]Read More

Getting out of Private Mortgage Insurance – Options

Buyers who put less than 20% down for conventional financing have to get Private Mortgage Insurance (PMI). They invariably ask how they can get out of their PMI obligation. Below is the email we send to such borrowers. Here are three options for eliminating the private mortgage insurance (PMI) obligation associated with a conventional loan. […]Read More

Vernacular: Conventional, Conforming, High Balance, Low Balance, Etc.

Here is a brief vernacular review, as some of our clients have been confused lately. Fannie, Freddie, Conforming and Conventional loans are all the same thing. A loan is considered “conforming” if it “conforms” to Fannie and Freddie guidelines. Lenders split “conforming” limits into “Low Balance” and “High Balance” categories. Low Balance loans cap out […]Read More

Irrational and Frustrating Conditions – Today’s Fannie Mae

We had a buyer tell one of our top Realtors yesterday that we are the most ignorant and incompetent buffoons to ever walk the face of the planet. She was utterly convinced that we were looking for a reason to NOT approve her loan. She was livid because we were trying to paper-trail all of […]Read More

Rates Up; Avoiding a 2nd Appraisal Inspection for FHA Purchases

We often point out how FHA appraisals are not that much more exacting than Conventional appraisals. FHA appraisers do, however, have a checklist of items they need to inspect with every appraisal they perform. Unfortunately, many Realtors do not properly prepare their listings/properties for an FHA appraisal inspection. This results in the appraiser having to […]Read More

Seasoning After Short Sale; 0 FHA; 2 Yrs Fannie Mae; 3 Yrs FHA?

Here is some clarification about the necessary “seasoning period” after a short sale: FOR FHA: 1. No Seasoning: If there are NO late payments up to the date of the short sale, there is NO seasoning required. Borrowers can get financing the day after the short sale. 2. 3 Years Seasoning: If there are late […]Read More

FHA Offers Need to be Held in Higher Esteem

We frequently have lunch with competitors to find out what is going on in the industry; we like to make sure there is not some technology, market segment or manner of business that we are ignoring. It usually turns out that we are ahead of the game. Our most recent lunch was with a very […]Read More

3% Down Conventional vs. 3.5% Down FHA

Many buyers with limited down payment funds think FHA financing is their only option. But, for loan amounts under $417,000, Conventional Buyers can put down as little as 3% (0.5% less than FHA requires). Below are some of the benefits and drawbacks of Conventional Financing. Benefits of 3% Down Conventional Financing (vs. 3.5% Down FHA […]Read More

FHA Stories; Short Sales

One of our top producing Realtors told us this week that none of her Bank clients are accepting FHA offers if there are alternative Conventional or Cash offers, even if the latter are at a lower price. This amazed us b/c FHA is now so much easier and so much more flexible. We have a […]Read More

What To Do If CONDO Project Is NOT FHA Approved?

If a Condo Project is NOT FHA approved, chances are that it is still Fannie Mae approved. If so, borrowers can still get conventional financing with 10% down. 5% must be the borrower’s own funds, and 5% can be a gift. There are advantages to the conventional financing despite the higher down payment requirements; these […]Read More

FHA Condos and Spot Approvals

Yesterday, we screwed up and put the wrong Subject Heading with our commentary. Because this might have prevented some of you from reading it, we are repeating the info we sent regarding FHA Financed Condos, as we consider this extremely important. The main fact to note is that Spot Approvals remain available until Feb. 1st. […]Read More

Bernanke Speaks; Appraisal Issues; FHA; Record Home Price Decline

The stock market again approached lows not seen since the 1990s, and the Case-Shiller U.S. Home Price Index showed that home prices plunged 18.2% nationally from the same period a year ago – the largest drop in its 21-year history. An 18.2% drop, however, seems mild compared to the 45%+ drop we experienced here in […]Read More