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How to Qualify for President Obama’s 125% Negative Equity Refinance Program? Sunday, December 13th, 2009

 

How to qualify for President Obama’s negative equity refinance program? This is a question I get asked on a daily basis now that this program is a few months old. This is in my view, one of the better efforts by the new administration to help families stay in their homes, it is also known as the “Making Home Affordable” program. I don’t think enough people know about or fully understand this loan program, because did you know it offers todays interest rates of around 4.875% even if you owe up to 105% of your property value, there are also a few lenders that are also offering this program up to 125% of your property value.  As we all know rates are going to go up soon, so I wanted to send out this article so everyone fully understands how to qualify for this program, I hope this helps you or someone you know.

If you can answer “yes” to the following four questions then you will be allowed to apply for this program.

1. Does Fannie Mae own your current mortgage? not many people know if they do or not. Here is a great link you can use to check if your home is currently owned by Fannie Mae. http://loanlookup.fanniemae.com/loanlookup/ Just fill in the address information and if your result comes up as a “match found” then your loan is currently owned by Fannie Mae.

2. Have you paid your mortgage on time each month in the past 12 months? This program does not allow any mortgage lates in the past 12 months of your loan, this means you cannot be more than 30 days delinquent on your monthly payment.
 
3. Is the current loan amount on your mortgage less than $729k?  This is the maximum loan amount that will be allowed to qualify for this program.

4. Do you owe less than or eqal to 125% of your property value? This is another question that many homeowners will probably not have the right answer to. You are free to use sites such as Zillow.com etc to get a free assesment of your property value, but these numbers are sometimes often inaccurate, so feel free to contact me so I can run your property value by one of my appraisers or use one of my automated appraisal options, this way you can get more accurate data so you can make an informed decision.
 
What will interest rates be for this program? Good credit scores are essential!
So, if you answered yes to all the aforementioned questions, you are now eligible to apply for this program. So the next question on everyones minds is, so what will the interest rates look like for this program? Well for loan amounts up to 105% loan to value of your property, you will qualify at todays low interest rates of 4.875% to 5% if you have a credit score over 740, but if you have a credit score between 700-739 you will pay Fannie Mae between .5-1% in points to obtain the same interest rate.
 
Essentially the lower your credit scores the higher the cost will be to obtain todays rates, and the higher your loan to value the more in points you will pay to Fannie Mae. This program works best if your loan is at 105% of the property value. Fannie Mae is having a lot of losses these days due to loan delinquencies, so the easiest way for them recoup some of those losses is through added fees like these on all future business (our lovely government at work). 

 

No Mortgage Insurance and appraisal waivers!
There are some tremendous benefits to this program that must be mentioned. For example, if your existing loan does not have mortgage insurance and your new loan is now at say 105% of your property value, you will not have to get mortgage insurance on your new loan as the MI has been waived. But if you did have mortgage insurance on your exisiting loan, you will keep the same mortgage insurance premium % as before.
 
Also, There is a possibility that you will not have to do an appraisal on your property if your property has been given a “property waiver” when we run your application through Fannie Maes automated engine “DU”. I would say I have been able to get at least 25% of my clients funded without having to do an appraisal, as Fannie Mae already owns the note they are being more leniant with values on existing loans they are essentially rewriting at a lower rate. 
 
Results so far
Myself and some of my colleagues have been reporting a lot of success with this program, especially for many homeowners that bought in the past few years and lost a lot of equity recently, so even if they are now at 95-105% loan to value, they still qualify for this new program. But also unfortunately, a lot of applicants had appraised values that come in too low due to many appraisers under the new HVCC ( home evaluation code of conduct ruling) not appraising these homes correctly (this is a whole new topic in itself for another day), so they were unable to qualify. This program is certainly not for everyone, but for those that can qualify it presents a great opportunity to save some extra money.
 

 In Conclusion
I do believe that this program is probably one of the better ones initiated by this administration, and will help many homeowners lower their rate or fix their rate from an ARM to a fixed. There are still lots of homeowners out there who will be able to drop their interest rate from 6% down to 4.875% and save on average over $200 a month, if they know that this program exists. If you have any questions in regards to this program, or if you know someone this message may help, please feel free to contact me directly at 858-200-9602. You can also check out my blog at www.michaeladeery.com/blog for more information.

 
Sincerely

Your mortgage planner

Michael Deery

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Posted in Refinance Programs | No Comments »

Why Interest Rates Are Set To Go To 6%! Sunday, December 6th, 2009

 

This past week sure has been a great week for interest rates and home loans in San Diego as they dropped to their all time record lows on the 30, 15 Fixed, 5/1 & 10/1 ARM’s – all loan types hit their lowest levels of the year! For the weekly Freddie Mac survey of all lenders, this is the first time that all have been at their lowest level. Some clients were lucky enough to get their home loan locked in at 4.5% this past week.

 

 Rates are artifically low

But it is imperative that all buyers understand though, that interest rates are artificially low right now! Last November, Ben Bernanke and the Fed put into place their mortgage backed securities (MBS) buying program to lower rates, essentially they are buying these securities in the billions every week so they can manipulate the markets and artificially suppress rates. That program though is due to end on March 30th 2010, as the Federal Reserve has already purchased over $1 Trillion of these mortgage backed securities this year, and with less than 20% of allocated funds left in the program, rates are sure to increase. The only questions remaining are by how much and when.

 

home-loans-san-diego1 

 

 

The chart above shows the 30 Year Fixed Rate over the last 11 months. The first red arrow shows what took place when interest rates shot up in May, rising nearly 0.75% in a matter of days. Interest rates that were in effect prior to the implementation of the announcement of the Fed’s program last year were well above 6.00% and a return to those levels cannot be ruled out.

 

People on the fence
For example, a payment on a loan at 4.875% on a $350k loan is $1852 a month, versus $2098 a month at 6%. This $246 a month in savings amounts to $88,560 in overall loan savings for the 4.875% rate loan versus the 6% loan. So even though some people might be waiting for another 5% reduction in prices that might amount to only $10k, they would not be factoring in the $88k in lost savings if and when rates go back to 6% as indicated on the above example.

 
What will happen when the Feds stop buying MBS?

So the question on everyone’s mind is…what will happen when the Feds stop buying MBS come the 2nd quarter 2010? Well it will be difficult to see rates ever fight back to the levels we have seen this year, as there are both fundamental and technical reasons why a retracement back to these low rates will not happen. Fundamentally, the massive supply issue still exists, with no end in sight to the amount of debt still to be issued - the printing presses are just getting started, and the Fed now has to almost endlessly push sales of Bills, Notes and Bonds to raise the capital needed to continue to spend.

The Treasury has literally been printing money by way of Treasury auctions to pay for the massive spending and as we all know this is not going to stop next year.  These hundreds of Billions of dollars of new Bond supply will have to be absorbed by the markets, so the additional supply literally weighs on the entire Bond market and drags prices lower, thus raising rates. This supply must be absorbed, and while the Fed has been the largest  buyer recently, it will be difficult to see who will step in and take their place next year to balance all the selling. I am hopeful the Feds will make the decision to extend this MBS buying program at sometime next year, so they do not destroy the rate markets, just like the $8k tax credit program was extended to help the real estate market.

 
Get locked in soon

If you are interested in looking to refinance or are currently shopping for a home loan in San Diego, I would advise you to get your rate locked soon, so they can take advantage of the lowest rates we are likely to ever see in the future. If ever you have any questions regarding rates and mortgage bonds please feel free to contact me directly at 858-200-9602, I study market information daily and religiously and have software that tracks mortgage bonds live everyday, I think this is important so clients are always getting the right advice about what dictates interest rates and when and why they should lock their rates in. Also feel free to go to my websites at  www.michaeladeery.com or www.homeloansnsandiego.com for additonal information. I look forward to chatting soon.

 

Sincerely

Your mortgage planner

Michael Deery

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Posted in Interest Rates | No Comments »

Home loans San Diego. First Time Homebuyer Tax Credit Extended Into 2010! Plus…A New Tax Credit for Existing Home Owners! Friday, November 6th, 2009

 

The much-anticipated extension to the home buyer tax credit has finally been approved, this is fantastic news for buyers looking for a home loan in San Diego. President Obama has just signed the new bill into law to extend the tax credit for first-time homebuyers (FTHBs) through June 30, 2010. The bill also opens up opportunities for others who are not buying a home for the first time.

 
Who Gets What?

First-Time Homebuyers (FTHBs): First-time homebuyers looking for home loans in San Diego (that is, people who have not owned a home within the last three years) are eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000.

Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years. This is a great incentive for any buyers who will be looking for another home loan in San Diego.

 

What are the New Deadlines?

In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

 

What are the Income Caps?

The amount of income someone can earn and qualify for the full amount of the credit has been increased. Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

 

What is the Maximum Purchase Price?

Qualifying buyers may purchase a property with a maximum sale price of $800,000.
 
How Much are First-Time Homebuyers (FTHB) Eligible to Receive?

An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000. 

 

home loans San Diego

 

Who is Eligible for FTHB Tax Credit?

Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible. This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.

As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.

 

How Much are Current Home Owners Eligible to Receive?

The tax credit program includes a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

 

Can Homebuyers Claim the Tax Credit in Advance of Purchasing a Property?

No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.

 

  Can Homebuyers Purchase a Home from a Step-Relative and Still be Eligible for the Credit?

Yes. As long as the person they buy the home from is not a direct blood relative, the purchase would be allowed.

 

If a Parent (Who Will Not Live In The Property) Cosigns for a Mortgage, Will Their Child Still be Eligible for the Credit?

Yes, provided that the child meets the other requirements for the tax credit.

 

There is no doubt that this will be a gift for everyone that is looking to buy, sell or finance a new home loan in San Diego. If you have any questions regarding this new home buyer credit, or you need help getting pre approved, please do not hesitate to contact me. You can contact me directly at 858-200-9602.  I look forward to hearing from you soon.

Sincerely

Your mortgage planner

Michael Deery

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Posted in $8k Homebuyer Credit | No Comments »

Treats, Not Tricks Await Those Who Act Now For Home Loans in San Diego! Thursday, October 29th, 2009

Last chance, last dance, last call. All sayings conjure up images but one thing remains constant. Miss the opportunity and it’s gone. San Diego Home loan rates recently hit all-time lows, and if you don’t act now, you could miss your chance to save thousands of dollars over the life of your loan!

According to Freddie Mac, interest rates recently dropped to all-time lows in some categories with most people qualifying at 4.875% on the 30 year fixed and 4.375% on the 15 year fixed, and within a hair of all-time lows in others. We will likely never see rates at these levels again for home loans in San Diego. If you missed the chance to refinance earlier this year, you just got a do-over. Don’t miss out a second time!

homes-loans-in-san-diego

Why Act Now?

While the reasons to act now are numerous, here are just a few.

No one, not even George Washington, had a chance to borrow money at these rates…but you do!

The Federal Reserve implemented a mortgage-backed securities buying program to artificially lower rates, and that program is nearing its end. The originally scheduled end date was December 31, 2009. While this deadline has been extended the amount of purchases remains the same, which means the level of participation will wane, decreasing by half as much. Rates will be forced to levels seen before the program started, likely near 6.50% and in short order.

Inflation, while currently contained, is likely to show its ugly head as all the stimulus from Washington continues to pour into the system. The end result will be increasing inflation pressure across the board, which will cause all interest rates to rise.

Don’t Miss the Boat Here
Sydney Smith, an English clergyman from the 1800’s once said, “Regret for the things we did can be tempered with time; it is regret for the things we did not do that is inconsolable.”

It is likely that interest rates at these levels will never be seen again in our lifetime for home loans In San Diego. Take advantage of them today while you still can so you’ll never have to look back and say, “I wish I had….” If you took advantage of this opportunity earlier this year, congratulations! If not, call me so we can discuss your situation.

Likewise, if you know someone else who can benefit, be it a family member, friend, or co-worker, please have them call me or let me know who they are and I will reach out to them. This could be the greatest gift you could offer someone this year.

Please call me at 858-200-9602 to discuss all your available options. I look forward to speaking with you soon, but if not, I hope you have a Happy Halloween!

Sincerely

Michael

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Fannie Mae Tightens debt to income Rules for Home Loans in San Diego! Will You Still Qualify? Saturday, October 24th, 2009

Fannie Mae lowers debt to income ratios down to 45%

Fannie Mae has just announced it will be lowering its debt to income (DTI) ratio requirements for all home loans in San Diego from 50% down to 45%. As part of normal business operations, Fannie Mae regularly reviews DU ( Desktop Underwriter) to fine-tune its credit risk assessment based on new data and loan performance information to ensure that credit risk assessment will stay strong moving forward on all future business. These new rules will go into effect as of December 12th on all loan applicants. This is not really a surprise considering recent home loan performances in San Diego, from 2002 until fairly recently debt to income ratios were allowed on most loans up to 60%, this never factored in utility bills, food and insurance etc, so it is easy to see why people did not have too much cash left over at the end of each month to cover all their bills..and the rest they say is history.

Make sure you still qualify!

I feel this is a very important subject that needs to be addressed immediately with all potential homebuyers, as these new stricter qualifying guidelines will prevent a large percentage of outstanding offers in this market from getting approved for financing. If buyers have an offer out there with a 55% debt to income ratio and they are not accepted by December 12th , they will not get financing under these new qualifying guidelines.

A lot of buyers will not qualify!

I would venture to say that at least 30% of most approvals for buyers are in the 45-55% debt to income ratio range. I myself performed an analysis on 28 different clients of mine that have current offers out there, and found that over 30% of these have debt ratios over 45%. I immediately categorized these buyers as “safe” or ”unsafe” so all parties know what expectations need to be met over the next 4-5 weeks.

Why it will be very important to work with a Professional Mortgage Planner!

Fannie Mae did announce that they will allow flexibilities up to 50% debt to income ratios as long as a loan file has strong compensating factors, under current guidelines clients were able to get approvals up to 55% with strong compensating factors. Strong compensating factors to name but a few are, a steady job history, consistent income for the past few years, plenty of liquid assets, solid credit scores etc. Therefore it will be imperative that the proper documentation is  requested and underwritten upfront and accurate information is being verified for all applicants, so they have the best chance to get approved for the maximum loan approval possible.

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Helping buyers create a mortgage plan

Until recently many times you could just throw an applicant against the wall and the loan approval would stick, in fact if they had a pulse from 2002-2006 most people could get a loan. In current times, I think It will also be important to take a very proactive approach with loan applicants and help them restructure some debt and also advise them on ways to pay down their debt, so they can get in the best possible position to qualify for the maximum loan approval. If you need help getting  approved, or if you have any questions regarding these new guidelines, Please do not hesitate to contact me. I look forward to hearing from you soon.

Cheers

Michael

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Posted in How to Purchase a Home | No Comments »

Qualifying for Condo Financing and What You Need to Know! Sunday, October 11th, 2009

 
What is going on with Condominiums? Almost not a day goes by when I do not get a call from a client asking me why they cannot get approved for  condo home loan. There sure are some great deals out there in the condo market for our clients with these low prices not seen in San Diego for some time, but many can’t seem to qualify for a condo home loan in San Diego for many different reasons.

Either the owner occupancy rates are not high enough, the HOA are more than 15% delinquent, the complex is not FHA approved etc etc. So with all these rules and changing guidelines, what is the best way to get our clients approved for a home loan for a condo? Here are some great tips for you to know when your client is interested in buying a condo.

Is the condo complex FHA or Fannie Mae approved?

 First of all it is imperative to check and see if a complex is FHA approved or Fannie Mae approved if you plan on getting financing through one of these sources for your clients. Here are the links you need to check right away to make sure the particular complex is approved.

1. For FHA financing use the link https://entp.hud.gov/idapp/html/condlook.cfm

2. For Fannie Mae financing use the link below and then click on “California” to make sure the complex you are looking for is on the list for Fannie Mae approved complexes. https://www.efanniemae.com/sf/refmaterials/approvedprojects/index.jsp?from=hp
 

Spot Approvals are gone as of February 1st!>

 It’s official and as of February 2nd FHA are no longer allowing “Spot Loan Approvals” (SLAs). The decision to eliminate spot approvals in my opinion, will deny ownership to many potential condo purchasers, as this allowed people to purchase a condo in a project without having to go through the project approval process. Now the whole project will have to get approved. Previously, only the FHA could grant approval to condo projects for FHA financing, but now the FHA will allow Lenders to determine project eligibility and review project documentation.

It will be interesting to see what lenders will step up to participate in this new process, given the extra liability processing and certifying their own condo approvals will entail, it is my hope that the FHA will reverse this decision soon because this will definitely hurt condo sales in our markets.
 
What if complex has more than 15% HOA delinquencies! A Limited Condo Review is the solution!

Another rule that FHA and Fannie Mae have come up with, is that there cannot be more than 15% of the units in the complex be delinquent on their HOA fees. I have run into this problem myself a few times recently when the HOA cert comes back and it shows that 20-25% of the properties are delinquent..this will kill the deal immediately as the property will not get financing.

Now most people assume that the lender always requires a HOA cert on every condo loan file, this is not true. Here is the solution if you have more than 15% delinquencies in your particular complex! First of all, you should always do a little homework upfront on the specific complex, or if you can request a HOA cert upfront on the complex and determine the data of the complex. If your borrower has the following requirements..is owner occupied or 2nd home, has a loan amount <$417k, complex is more than 50% owner occupied, complex is not involved in litigation etc, some lenders will allow you to complete a “limited condo review” on the complex, which eliminates the need to request a HOA cert which lists the delinquencies.

You are eligible for a limited review when you run DU (Fannie Mae desktop underwriter) on your client’s application,  DU will advise you if you are eligible to qualify for a limited review for the complex. If you qualify for a “limited review” you will not have to send in a HOA cert which of course would list the HOA delinquencies of the complex…so bingo.. your borrower now qualifies for financing. I should also point out it is important that the appraiser inputs the correct data regarding the condo on the appraisal, as not listing this correct data may trigger a HOA cert and then kill the deal.

Please note there are only a few lenders that I know off that allow a limited review on a complex, so if you have a file that has HOA delinquencies over 15% let me know and I can help you get your client approved. 

 What if I cannot get a Limited Condo Review?

If you cannot get a limited review (as described above) then you are going to be subject to a “Full Review” of the complex and a full HOA cert is required for the loan file. Make sure you are aware of the requirements to be eligible for FHA and Fannie Mae financing. Here are some of them but make sure you know what all of them are for a specific lender you are trying to get financing with. For example, you will need 51% owner occupied, no litigation, 70% of the units must be presold or under contract, no more than 15% of the units can be delinquent on their HOA fees, one investor cannot own more than 10% of the total number of units, etc.

 
Mortgage insurance and Condos!

Obtaining mortgage insurance on condos for high loan to value financing has also become quite difficult. Thankfully the FHA will allow mortgage insurance (MI) up to 96.5% on condos. Fannie Mae now only allows conforming financing up to 80% on condos and this is because none of the MI companies will insure higher than 80% here in CA, as CA is still determined as a declining market.

While values continue to decline, (although it seems at last they are stabilizing in CA) MI companies will limit their exposure on condos. When the market picks back up again and values have stabilized, you will see MI companies come back to the fore again to offer MI on higher LTV financing on condos.

 Help your clients qualify for single family homes instead of condos!

There is no doubt it is getting tougher to get financing on condos, even some of the sellers will not even allow FHA financing on some of their condos. But I do think there will be many more opportunities opening up soon for our buyers, as the lenders have to allow their condo inventories to unclog at some time. So when they do it is imperative that we know what our clients can qualify for and what requirements need to be met for financing.

From working with lots of first time buyers, many of them assume they can only afford a condominium as this is where their price range is and affordable monthly payment is. But there are ways to help them qualify from “condo buyer to single family home buyer”.

Here are a few tips that I have used recently to help some of my clients move into a position to qualify for a single family home, just by helping them restructure their debt a little and also by giving them the right advice. Lets say your buyer is looking for a condo, by eliminating for example $300-$400 HOA fees from a buyers debt ratios, this enables them to afford $55k-$75k more on a single family home. Perhaps they also have a $500-600 car payment they can turn in for a cheaper payment to help them afford more financing.

Perhaps they can get a loan from the family to payoff some high interest payment credit card debt and lower their debt ratios, and in turn they can pay them back with the $8k tax credit (it is my opinion that this tax credit will get extended for 6 more months). Perhaps they can ask one of their family members to help them co sign for a single family home because they cannot get condo financing, many times they did not know co signing was an option, and only asked their parents after I advised them too.

I hope this information and some of these ideas help you and your clients, if ever you have any questions please do not hesitate to contact me.

Sincerely

Michael

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Posted in Condominium Financing | No Comments »

Home Loans San Diego-Stated Purchase Loans are Back and HomePath’s new 97% Purchase Loan with no MI! Thursday, August 27th, 2009

 
With all the negativity surrounding the lending world recently about available financing options, good news is always welcome. I wanted to advise you of two new loan programs that just hit the market that will be available for home loans in San Diego. The first one is a new loan program offered by Fannie Mae called HomePath, that involves getting financing on Fannie Mae foreclosed properties up to 97%, and there is no mortgage insurance or an appraisal needed either. The second program is a true stated program that you can now use for your purchase transactions. I think we can look at these new product offerings as a positive sign for our market place, whereby investors are now willing to offer these loan programs to clients that were unable to get these types of home loans in San Diego for the past two years. The next step we can hope to see is for an ease in current underwriting standards, and with this new stated product hitting the market we can venture to say that investor appetite for a little more risk is coming back. I believe that the market recovery for the financing side has now started.
 

What is HomePath and who Qualifies?


As Little as 3% down for owner occupied properties
As Little as 10% down for investment properties
No MI
No appraisal needed-value determined by sales price 

 

HomePath was created to facilitate the purchase of the bulk of REO properties currently serviced/guaranteed by Fannie Mae. In summary it is a new loan program offered by Fannie Mae that offers special financing on foreclosed properties already owned by Fannie Mae. Their goal is to offload and sell these properties as quickly as possible in order to minimize the impact on the community. They are offering 97% financing up to $417k, the 3% down payment can be gifted or borrowed, you only need a 620 credit score, must be full documentation, there is no mortgage insurance and you don’t need to do an appraisal. This can offered on condos, SFR’s, Puds and multi family units. 2nd homes and investment properties can get financing up to 90% LTV. There are only a few lenders offering this special financing at this time as directed by Fannie Mae, so if you are interested please contact me directly.

 
How to get Approved to offer HomePath!


If you are interested in becoming an approved HomePath listing agent or need some HomePath marketing material, go to www.homepath.com or click on the following link for more information. http://www.fanniemae.com/homepath/realestateprof/index.jhtml

 

So Who Qualifies for the Stated loan product!

 

 I know many of us have had a client recently that has been unable to qualify for a loan because there have been no stated loan options available. This new stated product will definitely help give our clients another option for purchasing a home. I myself have had two loans that funded through this program this month, so I can now vouch that this program works. I did not want to market this until I knew this was a loan program that worked. So, who qualifies? If your client can meet the following guidelines and you get an acceptable DU Approval/Eligible, your client will qualify for this new stated loan program. Rates are also excellent and currently you can get a 30 year fixed at 5.5%.

 

Needs a 660 credit score.
Will need to be a W2 wage earner.
Will need to be purchasing a owner occupied residence.
Will need to be a SFR or detached PUD.
Loan amount limited to $417k.
LTV limited to 80%.
Purchase or rate and term refinance.
1-2 units 80%, 3-4 units 75% financing available.
30 year fixed loans only.
True stated program as No 4506T is ran.

In Conclusion


I hope that you find these two new programs beneficial for your clients to obtain home Loans in San Diego. I believe that for a full market recovery it is imperative that we make more of these financing options available to our clients. If you have any questions about how to qualify for either of these programs, please do not to hesitate to contact me directly at 858-200-9602. I look forward to speaking with you soon.

 

Your mortgage planner

 

Michael Deery

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Posted in Home Loan Programs | No Comments »

Conventional loans Sunday, August 16th, 2009

 

A conventional loan is any mortgage which is not guaranteed or insured by the federal government. Conventional loans were the first traditional mortgage loans made by local lenders. The loans were held in the lender’s investment portfolio until they were either paid in full or foreclosed upon.

 

Although it enabled the borrower to build a business relationship with the lender, this practice was generally not in the lender’s best financial interest. When rates rose, lenders found themselves in the position of receiving below-market interest on their loans, in addition to not being able to recycle the funds to lend to other borrowers.  

 

Conventional loans are “conforming” if they are generally $417,000 or less for a single-family home. Conforming loan limits can be higher in pricier regions of the country. For example, in such states as Alaska and Hawaii, it’s $625,500.

 

There are also established guidelines for borrower credit scores, income requirements and minimum down payments. For example, most conventional loans require somewhere between 5 percent and 20 percent down.

 

Right now those guidelines are changing frequently but they should have at least a 620 credit score. Anything below a 740 credit score and they (lenders) are going to start adding fees which can be quite sizable, in the several-percent range, as borrowers’ credit scores drop compared to loan to value.

 

Conventional loans can be conforming or nonconforming. Loans above the lending limits set by Fannie Mae and Freddie Mac are called nonconforming or jumbo loans.

 

Most conventional mortgages have either fixed or adjustable interest rates. Typical fixed interest rate loans have a term of 15 or 30 years. A shorter-term loan usually results in a lower interest rate. Adjustable-rate mortgages, or ARMs, fluctuate in relation to the rate of a standard financial index, such as the LIBOR. Monthly payments can go up or down accordingly.

 

Cost: Origination fees, down payments, mortgage insurance, points and appraisal fees can mean the borrower has to show up at closing with a sizable sum of money out-of-pocket, or be prepared to roll over some of these costs into their mortgage amount, which may result in a higher loan rate.

 

Pros: Conventional mortgages generally pose fewer bureaucratic hurdles than FHA or VA mortgages, which may take longer to process because of the red tape. And because these mortgages generally require higher down payments than the others, home equity can build up faster.

 

Cons: You’ll need excellent credit to qualify for the best interest rates. Also, many lenders require higher down payments than for government-backed loans. In declining markets such as this one, borrowers may only qualify for 90 percent loan-to-value and have to come up with the rest out of pocket. Some lenders may require as much as 20 percent down, particularly for condominiums in markets where it’s difficult to get mortgage insurance.

 

Who they’re good for: Conventional loans are ideal for borrowers with excellent credit who can afford a down payment of 5 percent or more.

 

 

 

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First time buyers race to find a home loan in San Diego to beat $8k tax credit deadline! Saturday, August 15th, 2009

The first time home buyer frenzy is on to find a new home in San Diego. With the $8k tax credit deadline of November 30th fast approaching, many new first time home buyers are now scrambling to get a home loan in San Diego. Competition is certainly hot out there in this demographic, as over 43% of sales in the 2nd Quarter were attributed to first time buyers. Real estate agents are also advising that new buyers need to be in contract before September 30th, due to the fact that closing on a transaction for a new home loan in San Diego is taking almost two months in this current market.

But the biggest problem right now in the San Diego market is that there is not enough inventory out there to choose from, and it is especially more difficult for first time buyers who have limited funds for downpayments and closing costs. This is why this $8k tax credit is so important among first time buyers, as it is helping buyers get into homes that they could not afford otherwise. Many first time buyers are taking advantage of the $8k in a few different ways. The two most popular ways are as follows, firstly where they borrow the $8k funds from a family member and then they can pay back the family member immedietely after closing, as the IRS allow you to amend your taxes and claim this $8k as a refund right away. Secondly, borrowers are borrowing the funds from a 401k account, and then paying back those 401k funds immedietely after closing with your $8k refund. Both of these methods for down payment assisstance are allowed by the FHA, which is fast becoming the most popular choice among buyers for new home loans in San Diego. The FHA also only requires 3.5% for a down payment.

Many real state agents are advising that they are seeing a surge of first time buyers who want to close before November 30th, the deadline for the credit. But now that the overall loan process is taking longer, it is advisable for people to get into contract as soon as possible, because many buyers are now seeing several weeks being added onto a typical transaction due to inspections, appraisal delays and slower loan approvals.

Once this $8k tax credit approaches its deadline of November 30th, they are many who are optimistic that this tax credit will be extended going into 2010. There is no doubt it has helped a battered housing market, so keeping this tax carrot going into 2010 will only help to keep our San Diego market moving along. For more information on how to obtain a new home loan in San Diego, please visit www.michaeladeery.com, Here you will be able to find all the information you are looking for on the home buying process.

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How to Qualify for President Obama’s Home Loan Refinance Program Here in San Diego! Monday, May 4th, 2009

How to qualify for President Obama’s home loan refinance program here in San Diego? that has been a question everyone has been asking recently now that this program is 90 days old. This is the newest effort by the new administration to help families stay in their homes, the program is known as the “Making Home Affordable” program.  Did you know you can qualify for this San Diego Home Loan program even if you now owe up to 125% of your property value. The 105% program has been launched by a few lenders for 90 days now,  but as of September 1st , the lenders will now start offering this new refinance program for homeowners that owe up to 125% of their property value. I do believe this new home loan program in San Diego will offer some great opportunities to many San Diego homeowners, as they will be able to fix their adjustable rates, and take advantage of todays record low interest rates and save some extra money each month.

 

But first of all how do you qualify?

If you can answer “yes” to the following four questions then you will be allowed to apply for this program.

  1. Does Fannie Mae own your current mortgage? not many people know if they do or not. Here is a great link you can use to check if your home is currently owned by Fannie. http://loanlookup.fanniemae.com/loanlookup/ Just fill in the information and if your result comes up as a ”match found” then your loan is currently owned by Fannie Mae.
  2. Have you paid your mortgage on time each month in the past 12 months, and not being more than 30 days delinquent?
  3. Is the current loan amount on your mortgage less than $729k?  This is the maximum loan amount that will be allowed to qualify for this program.
  4. Do you owe less than or equal to 125% of your property value? This is another question that many homeowners will probably not have the right answer to. You are free to use sites such as Zillow.com to get a free assesment of your property value, these numbers are sometimes inaccurate, so feel free to contact me and i can get your more accurate data so you can make an informed decision.

 

What will interest rates be for this program? Good credit scores are essential!

So, if you answered yes to all the aforementioned questions, you are now eligible to apply for this program. So the next question on everyones minds is, so what will the interest rates look like for this program? Well for loan amounts up to 95% loan to value of your property, you will qualify at todays  low interest rates of roughly 5% to 5.25% if you have a credit score over 740, but if you have a credit score between 700-739 it will cost you .5% to obtain the same interest rate. The lower your credit scores the higher the cost will be to obtain todays rates. Fannie Mae is having alot of losses these days due to loan delinquencies, so the easiest way for them recoup some of those losses is through added fees like these on all future business ( the lovely government at work). If your loan amount is going to be at 125% of your property value, the add on fee will be 1.5% to obtain an interest rate of 5.25% even with a 720 credit score. If you have a 680 credit score and you need to go to 125% of your property value, this may cost you 2.5% to get an interest rate of 5.25%. Good credit scores are absolutely paramount these days espcially if you want to obtain the best interest rates. I will be discussing how to obtain and keep excellent credit scores over 740 in another posting, but in the meantime feel free to check out my sections on “Credit Education and Improvement”  on my website  and download my “top ways to improve your credit scores” http://www.michaeladeery.com/index.php?option=com_user&task=links&id=41.

 

Results so far

I have submitted quite a few of my existing clients into this program to get qualified and at least half of them have funded with interest rates between 4.875% and 5.25%, unfortunately some of them had appraised values come in over 125% due to many new appraisers under the new HVCC ( home evaluation code of conduct ruling) not appraising these homes correctly, so they were unable to qualify, but the jury is still out because the program is only a little over 90 days old. Also, It is taking on average 30-45 days to fund a loan from inception to completion in this current market. But overall the results have been good for this new home loan program for San Diego

 

Tremendous Benefits

There are some tremendous benefits to this program that must be mentioned. For example, if your existing loan does not have mortgage insuranace and your new loan is now at say 105% of your property value, you will not have to get mortgage insurance on your new loan as this has been waived. But if you did have mortgage insurance on your exisiting loan you will keep the same mortgage insurance premium % as before.  Also, There is a possibility that you will not have to do an appraisal on your property if your property has been given a “property waiver” when we run your application through Fannie Maes automated engine. I would venture to say that this will rarely happen but could do so if your loan amount is truly at 82-87% of your property value.

 

In Conclusion

I do believe that this program will help many homeowners across San Diego, as there are still tons of homeowners out there who will be able to drop their interest rate from 6% down to 5.25% and perhaps even lower on a good market day, and save on average over $200 a month. I have had a few clients who were ready to short sell their homes or were ready to walk away, but now have choose not to, becuase they were able to obtain a great long term fixed rate. If you have any questions regarding this program please do not hesitate to contct me. You can also check out addtional info for this San Diego home loan program on my website at www.michaeladeery.com

 Your Mortgage Planner

 Michael A.Deery

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Posted in How to Qualify for President Obama's Refinance Program | 13 Comments »