Posts

Why FHA’s BETTER Than Conventional In Hot Markets

My wife Heejin was “on call” for weekend referrals yesterday, and she had two buyers who wanted to switch from FHA financing to 5% down conventional financing. The buyers were making offers over list price in very competitive markets, and they were convinced their offers would be stronger with conventional financing. And Heejin screamed,“NOOOOOO, DON’T […]Read More

2019 Conforming Loan Limit Increases – Good and Bad

PEOPLE WALKED AWAY FROM MORTGAGE OBLIGATIONS B/C THEY WERE UPSIDE DOWN In 2006, a relative of mine asked me to help her qualify for a condo purchase. Wanting to help, I loaned her enough money to clean up her credit, to pay off her consumer debt and to make a down payment. I then cosigned […]Read More

First-Time Homebuyers Should Consider FHA

Federal Housing Administration (FHA) loans are an excellent option for first-time homebuyers looking to buy in the competitive California market. FHA loans have low down-payment financing options with flexible underwriting guidelines that are great for homebuyers with liquidity or credit issues. FHA loans are growing increasingly popular among the first-time homebuyer demographic. The Urban Institute […]Read More

Mortgage Acronyms Every California Borrower Should Know

The mortgage industry is infamous for throwing a lot of acronyms around. If borrowers aren’t familiar with the industry or the lingo it can be confusing to understand what’s going on at times. Here are seven of the most common mortgage acronyms that every borrower should know when planning to take out a loan: APR […]Read More

The Pros and Cons of Low Down Payments in California

When it comes to down payments, buyers always want to know how low they can go. The industry standard is that down payments will be 20% of the property’s purchase price. This percentage is important because it determines if a buyer will need to have private mortgage insurance (PMI) with their loan. PMI is required […]Read More

Reminders: Amendatory Clause; RPA Signatures; Seller = LLC; Deceased Seller

FHA and VA Amendatory Clause. This form is required for all VA and FHA loans. It lets buyers know they are entitled to the appraisal and not bound to buy the property if it does not appraise. This form needs to be signed by all parties and dated prior to the appraisal. Residential Purchase Contracts […]Read More

Evidence of Success! FHA MI; Extra CO/Smoke Detectors; Local Escrow

One of our former business coaches used to make us mail out “Evidence of Success” postcards every few months illuminating one of our success stories. We stopped the postcards, so here’s one for the blog: On a recent Saturday, a Realtor introduced her client to JVM. Our “Mortgage Analyst On Call” contacted the client and […]Read More

17 Day Close – Conventional and FHA Only; Nobody Closing Jumbos “Fast”

We tout our “Super 17” or 17 Day Closings often, but we need to emphasize that this is only for Conventional and FHA Loans, and not for Jumbo Loans. Nobody is closing jumbo loans fast. This is really important b/c our borrowers and Realtors are often confused about this. All jumbo lenders and investors are […]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

Cash to Close And Reserves

Borrowers often come to us with just enough funds for their down payment, without accounting for closing costs and reserves. “Reserves” have become a bigger issue lately as more borrowers shift into the jumbo arena. Reserves are the liquid funds left over after a transaction closes. Reserve requirements are usually expressed as a given number […]Read More

When Can Seller Sign? No Impounds If LTV 89.9% Or Less

Two Reminders: Sellers can sign documents at almost anytime after escrow opens for conventional and jumbo transactions (as long as escrow has all necessary terms and time to prepare documents). Sellers do not need to wait for the buyer’s loan documents to get to title before they can sign. With an FHA transaction, however, sellers […]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

BK’s & FHA Financing; 2 Years Seasoning Unless In Chapter 13

FHA requires only two years of seasoning from the date a bankruptcy is discharged. This is relatively well-known. What is not well known is that borrowers in a Chapter 13 bankruptcy do not need any seasoning to qualify for FHA financing, as long they have a one year history of timely payments to the bankruptcy […]Read More

Big Changes In FHA! Or Not…

FHA made a large number of changes in underwriting guidelines recently and Realtors are asking how this will affect buyers. For about 99% of our FHA buyers, the changes will have no effect. Some of the changes include: • Deferred loan student loan payments must now be counted in ratios. • For newly rented properties […]Read More

What If Spouse Has Horrible Credit? Too Much Debt?

We frequently get husband/wife borrowers where one spouse has stellar credit and the other has awful credit. Most people know that the solution is simply to do the loan in the name of the “good-credit-spouse” only, as long as the good-credit-spouse has sufficient income to qualify on his or her own. The bad-credit-spouse can do […]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

Using Rental Income From Departing Residence: Lease, Check, Deposit

We are seeing a lot of borrowers lately who want to buy a new home before they sell their current home. These borrowers, however, often cannot qualify for a new home b/c of the debt against their current home, and they need to use the potential rental income from their current home to qualify. Borrowers […]Read More

Short Sale Seasoning Revisited; Extenuating Circumstances Exceptions

We get so many questions about short sale seasoning that we thought we’d revisit the issue. FHA financing requires 3 years of seasoning. Conventional financing always requires 4 years now (used to be 2 in some cases). Jumbo lenders require 4 or 5 years, depending on the lender. Our 2nd Mortgage/HELOC lender requires 5 years. […]Read More

Put Less Down and Pay Off Car or Consumer Debts

We had a borrower last week who was getting a gift of $40,000 to buy a home with FHA financing. FHA of course required a much smaller down payment but the borrower wanted to qualify for a higher purchase price by putting down more than what was required. The borrower, however, also had a $15,000 […]Read More

Seasoning From Bankruptcy Discharge: 2 Yrs for FHA

We have been seeing a lot of bankruptcies (BKs) lately, so we thought it was time to again mention required seasoning periods from date of discharge. For Chapter 7 (liquidation) BKs, the seasoning period from discharge is: 2 Years for FHA Financing. 4 Years for Conventional Financing. Borrowers in a Chapter 13 (reorganization/debt pay off) […]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

Jan. 26: Big Day – FHA MI Drops; CU Appraisal Rule In Effect

January 26th, 2015 is a big day in the mortgage industry. 1. FHA “monthly” MI is lower (down to 0.85% for most loans) for all case numbers ordered from today on. Per HUD, expect delays in getting case numbers. 2. Fannie’s much feared new Collateral Underwriting (CU) Rule is now in effect. This is a […]Read More

Homes Do Not Need Appliances Unless “Built In”

Properties do not need to have appliances installed at close if they are not “built in” in most cases. Hence, many properties do not need stoves or refrigerators to be eligible for FHA or conventional financing. There are exceptions if the missing appliance creates a gaping hole in the counter area with wires exposed, as […]Read More

FHA to Reduce Annual MI by 0.50% – 0.85% in Most Cases

President Obama is announcing a proposed reduction in FHA Mortgage Insurance today. Currently, most FHA Loans (with 3.5% down) have Annual Mortgage Insurance Premiums of 1.35%. The Obama Administration wants to reduce annual MI premiums by 50 basis points down to 0.85%. FHA (Federal Housing Administration) and Congress still have to buy off on the […]Read More

FHA No Longer Finances FLIPS

FHA will no longer finance “Flips.” A “Flip” is any property that was purchased and re-sold within 90 days of the purchase date. This means the contract for 2nd purchase cannot have any dates on it that are within 90 days of the previous purchase. If a buyer goes into contract within the 90 day […]Read More

Commercial Use In Condo Complex Is OK

JVM Lending is open today. This is a reminder that Commercial Use within a condo complex is OK (for Fannie, Freddie, and FHA) as long as the commercial use does not constitute more than 25% of the total complex. Jay Voorhees Founder/Broker | JVM Lending (855) 855-4491 | DRE# 01524255, NMLS# 335646Read More

When VA /FHA Clearly Stronger Than Conventional? Large Down

We often have buyers willing to take VA or FHA financing even though they have substantial funds for down payments. The reason is that they are often bidding on properties that will be difficult to appraise because of the lack of closed comparable sales (necessary to “bracket” the purchase price). In many markets it is […]Read More

Minimum Credit Score for FHA: 580; Minimum Score Conventional: 620

Our FHA investors and lenders allow credit scores as low as 580 for low balance loans (under $417,000). Scores under 620 require a “manual underwrite.” Manual underwrites require perfect credit over the last 12 months and much lower than typical debt ratios. High Balance FHA ($417,000 to $625,500) requires a minimum credit score of 620. […]Read More

All Questions to Ask When Evaluating Condo Financing/Purchases

We frequently discuss Owner Occupancy ratio requirements for condos, but there are many other important considerations that need to be addressed up front. The below are questions we ask all buyers and Realtors who are considering a condo purchase. These are all questions that significantly affect condo financing and they need to be known up […]Read More

Financing “Fixers;” What to Look For? Avoid? Options?

When it comes to buying “fixers” in relatively poor condition, either FHA or Conventional financing can be used. As long as there are no glaring condition issues (major leaks, sloping floors, water damage, etc.), and as long as no reports or issues are referenced in the MLS or the contracts, “fixers” can be financed. And […]Read More

Condos Must Be HUD/FHA Approved; NOT Fannie Approved; Warrantable

There is sometimes confusion in regard to the difference between an FHA/Hud approved condo complex and a Fannie Mae/Freddie Mac approved complex. If a borrower wishes to obtain FHA financing to purchase a condo, the entire condo complex must be FHA/HUD approved. If a borrower wishes to obtain conventional financing to purchase a condo, the […]Read More

Blended Ratios = Co-Signer = Non-Occupant Co-Borrower: Explained

This is a quick review of Blended Ratios, or using a “co-signer” or a “non-occupant co-borrower” to qualify. Both FHA and Conforming loans allow the use of a non-occupant co-borrower; FHA only requires 3.5% down, as always, but conforming lenders often require 20% down when a non-occupant co-borrower is required. A non-occupant co-borrower’s income can […]Read More

“Millennials” Drive Housing Recovery/Future; Internet Driven

Reminder: FHA MI becomes permanent in June. This is an incentive for FHA buyers to find properties sooner rather than later. The below link is a graphic published by the PulteGroup. It illuminates why “Millennials” (18 to 34 year-olds) will be a major part of the housing recovery and housing’s future. http://goo.gl/94cyI Many of our […]Read More

Sellers with FHA Loans Beware: Must Close Before Month Ends

Sellers with FHA financing tied to their properties need to ensure their transactions close before the end of the month. If they close at the beginning of the month, an entire month of interest will be due (even if the loan pays off at the beginning of the month). FHA charges for a full month […]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

“Streamline” Refinances for FHA Loans – No Appraisal Required

An FHA Streamline Refinance is a refinance of an FHA loan that requires NO appraisal. Many borrowers with FHA financing and limited or no equity believe they are unable to refinance. This is not the case because Streamline Refi’s do not require equity. We are locking in no cost, FHA Streamline refi’s in the low […]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 Loans “Assumable”; What it Means? Why More Important Now?

We tout FHA loans often because of their flexibility and low fixed rates and because they are “assumable”. Many people do not know what it means to be assumable, and why it is important. If a loan is assumable it means that someone other than the original borrower can literally assume all of the terms […]Read More

Foreclosure Inside a BK – Same Seasoning Periods

As mentioned yesterday, we often get borrowers with recent bankruptcies (BKs), and we quote the normal seasoning periods that lenders require after a BK is discharged. The seasoning period is usually 2 years b/c most of our borrowers have had Chapter 7 BKs. But often, after further digging, we discover that borrowers had one or […]Read More

Financing After a Bankruptcy – Seasoning

We have been getting borrowers with recent bankruptcies asking about financing after a bankruptcy. Fortunately, FHA is very forgiving when it comes to bankruptcies. A Chapter 13 BK requires NO seasoning after 12 months of timely payments into the BK. Chapter 7 & 11 BKs require 2 years of seasoning in most cases, or 1 […]Read More

Chase Turn-Down Comes to JVM After 30 Days; Stuff Missed!

An FHA purchase came to us last week after having lingered at Chase for 30 days, and after Chase told the borrowers they could release contingencies. The Chase loan office told us that Chase denied the loan b/c the borrowers had a “declining income trend”. This is an overlay that we have never heard of. […]Read More

Can’t Ignore Spouse’s Bad Credit If “Benefited” From Debt/Home

It is well-known that FHA underwriters look at both spouses’ credit even if only one spouse is buying a property. Hence, a spouse’s recent foreclosure or short sale can prevent another spouse (who might have perfect credit) from getting FHA financing. This happens often in fact. In these situations, we often turn to conventional financing […]Read More

FHA MI Going Up; Keep LOWER Rates to Apr. 9; 15 Year FHA w/ NO MI

We mentioned several times that FHA Mortgage Insurance (MI) Rates are going up significantly in April. Many lenders made April 1st the cut-off date, but we now have several lenders allowing us to order FHA Case #’s as late as April 8th or 9th in order to preserve the lower MI Rates. For most FHA […]Read More

FHA MI Increase Again – Order Case Numbers in MARCH

We mentioned yesterday in our month-end summary that FHA “Monthly” and “Up Front” MI are both going up on April 1st. Monthly MI will increase to 1.25% from 1.15%, in most cases. And “Up Front MI” will increase from 1% of the loan amount to 1.75% of the loan amount in most cases. This is […]Read More

FHA MI To Go Up; Equity Lines or HELOCs

FHA Insurance will increase again sometime this year because the default rate on FHA loans is so high. It appears that FHA buyers are not averse to walking away from their properties if their equity position dries up. This is the case even if they can afford their payments. Our borrowers frequently request Equity Lines […]Read More

FHA MI vs. Conventional or Private Mortgage Insurance

FHA Monthly Mortgage Insurance is now 1.15% for most borrowers. It was only 0.55% prior to October of 2010; and it was 0.90% prior to today. Borrowers refinancing their FHA loans do NOT get to keep their old FHA MI rate. Up Front MI remains at 1% of the loan amount. This is the fee […]Read More

Gift Funds – A Few “Rules” to Note

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” must prove the ability to gift with bank statements that verify sufficient available funds for the gift. For Conventional Loans – The entire […]Read More