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  • Help More First Time Buyers Purchase a Home With These 4 Low Down Payment Programs!

    May 14th, 2019

    According to a recent survey completed by Freddie Mac, almost a third of potential homeowners think they need to put down 20% or more as a down payment. Around 70% of survey respondents who are planning to buy a home said that a 20% down payment would delay their homebuying decision. Not enough first time buyers know for example they can put down as little as 3% to remove the monthly mortgage insurance “PMI” on a loan, or that they can buy a home with zero down. Here are 4 low down payment purchase programs you can use to help finance your first home.

    Helping More First Time Buyers Obtain Home ownership

    For many prospective homebuyers, saving for a down payment is the largest barrier to achieving the goal of home ownership.

    Part of the challenge for those planning to purchase a home is their perception of how much they will need to save for the down payment.

    While the overwhelming majority of those surveyed in the Freddie Mac report would like to purchase a home at some point in the future, their perception is that a larger down payment is required to buy a home, as almost a third of potential homeowners think they need to put down 20% or more as a down payment.

    I believe that not enough consumers or First Time buyers know about the different low down payment programs available to help them buy a home, or programs that will even cover ALL of their down payment and ALL of their closing costs if needed.

    Here are 4 low down payment purchase programs you can use to help finance your first home.

    1.Buy a Home up to $500,000 with Only 3% Down Conventional Financing and No Monthly PMI.

    With the new higher conventional loan limit of $484,000 available for buyers in California, a first time buyer can now purchase a home up to $500,000 with only 3% down conventional financing.

    Buyers also have the option to eliminate the monthly mortgage insurance “PMI” from their monthly mortgage payment.

    All of the down payment can be gifted too, so this is a great option for buyers to purchase right away if they do not have the down payment saved up yet.

    Co-signers are allowed to help buyers qualify for a home purchase.

    Only a 620 credit score is required to qualify for conventional financing.

    Click HERE for more information on how to qualify for Freddie Mac’s New conventional 3% down HomeOne program with No PMI, there is a Q&A section included too.

    2.Buy a Home up to $765,000 with Only 5% Down Conventional Jumbo Financing with No Monthly PMI.

    If a first time buyer needs to finance a mortgage over the conventional loan limti of $484,350, they are eligible to use conventional jumbo financing up to a maximum loan amount of $726,525. This means a buyer can now purchase a home up to $765k with only 5% down.

    Buyers also have the option to eliminate the monthly mortgage insurance “PMI” from their monthly mortgage payment.

    Buyers in San Diego County can purchase a home up to $725,000 with only 5% down and No PMI.

    Buyers in LA County, Orange County and SF County for example, can purchase a home up to $765,000 with only 5% down and No PMI.

    All of the down payment can be gifted too, so this is a great option for buyers to purchase right away if they do not have the down payment saved up yet.

    Only a 620 credit score is required to qualify for conventional jumbo financing.

    Co-signers are allowed to help buyers qualify for a home purchase.

    Click HERE for more information on how to qualify for the conventional Jumbo 5% down program with No PMI, there is a Q&A section included too.

    3.Buy a Home up to $750,000 with only 3.5% Down FHA financing

    FHA financing is a very popular program with first time homebuyers. With it’s easier qualification rules for buyers with less than perfect credit, the FHA helps many first time buyers finance a home that would not be able to otherwise.

    The minimum down payment with FHA financing is only 3.5%. The FHA increased their CA conforming loan limit recently from $453,100 to $484,350, so this means a buyer can purchase a home up to $500,000 with only 3.5%.

    In higher cost markets like LA, Orange Co and SF etc, a FHA buyer can purchase a home up to $750,000 with only 3.5% with a FHA jumbo loan.

    In San Diego county, a buyer in San Diego can purchase a home up to $715,000 with only 3.5% down.

    In Riverside and San Bernardino counties, a buyer can purchase a home up to $500,000 with only 3.5% down.

    Only a 580 credit score is required to qualify for 3.5% down FHA financing.

    Co-signers are also allowed to help buyers qualify for a home purchase.

    Click HERE for more information on FHA loans.

    4.Zero Down Payment Loan Program and Closing Cost Assistance For Buyers 

    If a buyer would like ALL of their down payment and closing costs covered to purchase a home, we have a terrific program available for buyers that combines a Conventional and CalHFA loan or a FHA and CalHFA loan.

    Buyers can purchase a home up to $700k in certain counties with No down payment and No closing costs.

    CalHFA (California Housing Finance Agency) offers down payment and closing cost assistance loan programs to help first time buyers purchase a home. A first time buyer is defined as someone who has not owned a home in 3 years.

    This program is available with both conventional and FHA financing. CalHFA gives buyers a small 2nd mortgage up to 3.5% to help cover the minimum down payment due with conventional and FHA financing.

    If buyers don’t have enough funds for their closing costs, CalHFA will give buyers an additional small 3rd mortgage of up to 4% to help cover ALL their closing costs.  Many buyers using this program only have to pay the upfront appraisal fee out of pocket.

    Payments on the CalHFA 2nd or 3rd mortgage loans are deferred for the life of the first mortgage. The terms are the same as the first mortgage. There are no payments due unless you sell or refinance.

    Click HERE for more information on this program and examples of how you can purchase a $450k or $550k home with zero down and no closing costs.

    If you have questions about any of these loan programs or you would like to get approved for one of these options above, just let me know.

    P.S. If you would like to be updated faster on important industry news or any new loan programs that come out, please join my Facebook page .

    As Rates Move Lower, Home Buyers Gain 7.5% in Purchasing Power

    February 19th, 2019

    Home buyers have received a nice boost in purchasing power and affordability recently. With mortgage rates moving down from as high as 5% in November to 4.25% as of this week, this is a gain of 7.5% in purchasing power in just the past few months. This means a buyer who could afford $600,000 in November, can now afford $645,000 with the same mortgage payment. It’s a good time for buyers to get approved for financing again to purchase a home.

    Mortgage Rates Drop from 5% to 4.25%

    As you can see below, it has been a steady decline in rates since November.

    There was a lot of concern that rates when rates hit 5% in November, they were going to continue moving higher. It moved a lot of buyers to the sidelines.

    With rates back down to 4.25% on a 30 year fixed, it’s welcome news for buyers who are looking to buy a home in 2019.

    Why Mortgage Rates are Moving Lower

    Why are rates moving lower? You are going to hear a lot of chatter about “Global Growth Concerns” over the next few months.

    Global Growth Concerns include any of the following…trade war re-escalations between the US and China, Brexit negotiations, Italy falling back into recession, Germany soon to be in recession, the US soon to be in recession, corporate earnings deceleration, fear that front-loaded economic activity due to tariff fears would make for a bigger slowdown after the inventory-building.

    All of these concerns are causing a “flight to safety” of investor funds from riskier assets like stocks into safer bonds and Treasuries, which in turn is driving down interest rates. 

    The 10-Year Treasury, which is the best indicator for the direction of longer term interest rates, was as high as 3.25% in November. It has moved down to 2.63% as of this week, see chart below. The 30-year mortgage rate follows the direction of the 10-Year Treasury.

    The German Bund 10-Year equivalent is currently trading at “.10”, the Japanese 10-year is trading negative at “-.03”. These are 2 of the top 5 economies in the world, so global concerns are already moving rates in other countries back down to record lows.

    Some people may ask, what indicators are pointing to the the US going into recession soon? The Yield Curve Predictive History is one of them.

    The graph below shows that when 2-year Treasury yields exceed 10-year Treasury yields, otherwise known as “a yield curve inversion,” a recession has always followed. Following the inflection point of the inversion, as circled, the curve steepens through a recession and for some time afterward. It looks like the yield curve is on the cusp of inverting soon, which indicates a recession is probably coming to the US in the next 12-18 months.

    A combination of some or all of the global growth concerns listed above is going to drive rates lower over the next 6-12 months.

    Therefore I believe it is only a matter of time before our 10-Year Treasury continues moving towards 2% and possibly lower, which will drive down the 30-year fixed rate mortgage below 4% sometime in 2019.  Watch the direction of the 10-Year Treasury over the next few months.

    The Impact of Lower Rates on Purchasing Power

    Changing mortgage rates do more to influence home affordability than changing home prices. This chart below shows the “impact of lower rates on buyer purchasing power and affordability.

    When rates decrease by 7.5%, a buyer gains 7.5% in purchasing power. Mortgage rates were as high as 5% in November, so with rates back down to 4.25% again,  this means a homebuyer has gained 7.5% in purchasing power in just the past few months.

    For example, see how the payment at the 5% rate on a $370k loan, is roughly the same payment as the 4.25% loan at $400k, a gain of 7.5% in purchasing power for a buyer.

    This means a buyer who could afford $500k in November, can now afford $537,500 with the same mortgage payment.

    Or a buyer who could afford $600k in November, can now afford $645k with the same mortgage payment.

    Current mortgage rates compared to the past 40 years

    This chart below puts current mortgage rates in perspective. Did you know the average 30 year fixed mortgage rate over the past 40 years is roughly 8.7%, and 6.29% over the past decade.

    Compare this to current rates at 4.25%.

    If you need to borrow money to to buy a home, these current interest rates are a gift.

    It’s a Great Opportunity to Buy a Home

    With the recent drop in rates, it’s a great opportunity for buyers to get approved for financing to buy a home.  There were plenty of buyers who stopped moving forward with the home buying process towards the end of last year because of rising rates.

    With these new lower rates, it’s a a good idea for buyers to get approved again to see how much extra home they can afford, or how much lower the payment is compared to 3 months ago. This will improve their purchasing power and they will probably have more inventory to look at.

    If you have questions or you would like to get a free rate quote, just let me know and I can run the numbers for you. I look forward to chatting soon.

    P.S. If you would like to be updated faster on important industry news or any new loan programs that come out, please join my Facebook page .

    Buy a $500k Home With Zero Down and No Closing Costs With a Conventional CalHFA Loan!

    January 4th, 2019

    We have a new mortgage program for buyers that combines a 3% down Conventional loan and a CalHFA loan, which will cover ALL of their down payment and ALL of their closing costs. This program will be a great option to help first-time buyers and Millennial buyers purchase a home in 2019. It is available for buyers up to a purchase price of $705,000 in some counties. Check out how to qualify.

    Down Payment and Closing Cost Assistance For Buyers 

    First time buyers and Millennial buyers represent over 40% of all buyers in the market, and this number is expected to increase in 2019.

    Not enough buyers know there are home purchase programs available to help them with the down payment and closing costs.

    CalHFA (California Housing Finance Agency) offers a down payment and closing cost assistance loan program to help first time buyers purchase a home. A first time buyer is defined as someone who has not owned a home in 3 years.

    This program is available with both conventional and FHA financing. CalHFA gives buyers a 2nd mortgage up to 3.5% to help cover the minimum down payment due with conventional and FHA financing.

    If buyers don’t have enough funds for their closing costs, CalHFA will give buyers an additional 3rd mortgage of either 3% or 4% to help cover all their closing costs. Many buyers using this program only have to pay the upfront appraisal fee out of pocket.

    Payments on the CalHFA 2nd or 3rd mortgage loans are deferred for the life of the first mortgage. The terms are the same as the first mortgage. There are no payments due unless you sell or refinance.

     

    How to Purchase a $500k Home With Zero Down and NO Closing Costs 

    Check out this example of a $500,000 purchase we recently funded for a buyer client in San Diego.

    The buyers had limited funds for the down payment and closing costs, but preferred to save their funds to renovate the home and buy new furniture after purchasing the home.

    We got them qualified for a 3% down conventional loan. They received a 3% CalHFA 2nd mortgage to cover the 3% down payment.

    We also got them approved for an additional CalHFA 3rd mortgage of 3%, which helped cover all their closing costs.

    The buyers were able to purchase a home they loved, and the only fee due out of pocket was the upfront appraisal fee.

    Here is a summary of the $500k purchase terms

    • Purchase price $500k.
    • 3% minimum down payment required for  conventional financing ($15,000).
    • Buyer qualifies for a 3% My Home grant loan to cover ALL of the 3% down payment.
    • Buyer gets a 3% grant to cover all the closing costs.
    • They got a rate of 5.625% on a conventional 30 year fixed, the monthly principal and interest payment is $2,943.
    • Property taxes and homeowner’s insurance were $575.
    • The monthly mortgage insurance is $124.
    • Their total monthly mortgage payment was $3,642.
    • The appraisal fee was the only fee due out of pocket.

    Frequently Asked Questions on This Program

    Here are the most frequently asked questions that buyers and Realtors have in regards to this program.

    1. What is the maximum loan amount I can borrow?

    You can borrow up to your county loan limit with this program. The maximum sales price for this program is $705k. In San Diego for example, a buyer can finance a conventional or FHA jumbo loan up to $690k.  You can check your county loan limit HERE

    1. What can I borrow up to with conventional financing?

    If you need to finance up to $484,350 with conventional financing, the minimum down payment is 3%. You can get a maximum CalHFA 2nd mortgage loan for 3% to cover all of the 3% down payment.

    If you need to finance >$484,350 with conventional financing, the minimum down payment is 5% for a conventional jumbo loan. You can get a maximum CalHFA 2nd mortgage loan for a maximum of 3.5% which will be applied towards the 5% down payment, so now you just need to cover the remaining 1.5% down payment.

    1. What can I borrow up to with FHA financing?

    The maximum sales price for this program is $705k. With FHA financing, the minimum down payment is only 3.5%. As you can get a 2nd mortgage loan from CalHFA for 3.5%, this will cover ALL of the down 3.5% down payment requirement with FHA up a purchase price of $705k.

    1. What credit score is required to qualify for this program?

    We only require a 640 credit score to qualify. Please note, the higher the credit score the lower the monthly mortgage insurance will be on the first mortgage loan loan.

    1. Is this program for first time buyers only?

    This program is for first time buyers and for any buyer who has not owned a home in 3 years.

    1. Are there any payments due on the CalHFA 2nd or 3rd mortgage loans?

    No, the payments are deferred for the life of the first mortgage. There are no payments due unless you sell or refinance.  The terms mirrors that of the 1st mortgage.

    1. If I can cover my own closing costs, do I get a lower rate on my mortgage?

    Yes, if you only need a CalHFA 2nd mortgage loan to cover the down payment, but you can cover all your own closing costs, you can get a lower rate of 5.125% on the conventional 30 year fixed rate mortgage. Compare this to a rate of 5.75% if you need an additional 3% CalHFA 3rd mortgage loan to cover your closing costs.

    1. Are co-signers allowed on this program?

    Yes co-signers are allowed on this program.

    1. Are there income limits for this program?

    Yes there are income limits, but they are pretty high.  For example, the San Diego income limit is $157,000, Riverside and LA is $128,700, Orange county is $174,200. Each county has it’s own county income limit. Contact me for more details if you need to know your county income limit.

    1. Are there purchase price limits for this program?

    The maximum purchase price for this program is $705k.

    1. Can I use this program on 2nd homes or Investment Properties?

    No, this program is for Primary Residences only.

    1. Do condos also qualify for this program?

    Yes this program is available for condos and single familyresidence homes.

     

    A Great Opportunity For Buyers in 2019.

    First time buyers and Millennial buyers represent over 40% of all buyers in the current marketplace. This number is expected to grow in 2019 as more and more first time buyers and Millennial buyers enter the market to buy homes.

    This program presents a great opportunity for first time buyers and Millennial buyers who want to purchase a home, but assume they don’t have all the funds saved up yet.

    There are also buyers who assume because they don’t have funds for closing costs, they can’t buy a home. This program will help take care of both of these concerns and allow buyers to fulfill their dream of owning a home.

    Let your family and friends know this program is available to help them buy a home in 2019.

    If you have any questions about this program or getting approved for financing, please feel free to contact me at 858-442-2686. I look forward to chatting soon.

    P.S. If you would like to be updated faster on any important industry news or new loan programs that come out, please join my Facebook Page.

    Top 4 Low Down Payment Programs to Help More First Time Buyers Purchase a Home!

    December 14th, 2018

    During 2018 40% of all home buyers were first time buyers, this number is expected to increase in 2019. Over 80% of these first time buyers use low down payment programs to purchase a home. A newly released report by Apartment List advised that saving for a down payment is the primary financial obstacle keeping millennial renters from purchasing homes, with 61.7% of respondents who plan to buy saying that they can’t afford a down payment. ​Not enough first time or millennial buyers know about the different low down payment options available to help them buy a home. I summarized below the Top 4 purchase programs available for first time buyers.

    Understanding First Time Buyers and Millennial Buyers

    A newly-released report from Apartment List analyzed data from 6,400 surveyed millennials on their plans for home ownership.

    With Millennial’s on the verge of surpassing Baby Boomers as the nation’s largest generation, the question of when and if they will purchase homes looms large over the housing market. 

    While the overwhelming majority of those surveyed would like to purchase a home at some point in the future, far fewer are financially prepared to do so in the near term.

    Key findings include:

    89.4% of millennial renters say that they plan to purchase a home at some point in the future, but just 4.4% expect to do so within the next year, while 30.4% percent say that they won’t buy for at least five years.

    Of those millennial renters who plan to purchase a home, 48% have zero down payment savings, while just 11% have saved $10,000 or more.

    Specifically, we find that saving a down payment is the primary financial obstacle keeping millennial renters from purchasing homes, with 61.7% of respondents who plan to buy saying that they can’t afford a down payment. 

    Too many Millennial and First Time buyers don’t know about the different low down payment programs available to help them buy a home, or programs that will cover ALL of their down payment and ALL of their closing costs.

    Here is a summary of the best 4 purchase programs available for first time buyers.

    1. Buy a Home up to $500,000 with Only 3% Down Conventional Financing and No Monthly PMI.

    With the new higher conventional loan limit of $484,000 available for buyers in California, a first time buyer can now purchase a home up to $500,000 with only 3% down conventional financing.

    Buyers also have the option to eliminate the monthly mortgage insurance “PMI” from their monthly mortgage payment.

    All of the down payment can be gifted too, so this is a great option for buyers to purchase right away if they do not have the down payment saved up yet.

    Co-signers are allowed to help buyers qualify for a home purchase.

    Only a 620 credit score is required to qualify for conventional financing.

    Click HERE for more information on how to qualify for Freddie Mac’s New conventional 3% down HomeOne program with No PMI, there is a Q&A section included too.

    2. Buy a Home up to $765,000 with Only 5% Down Conventional Jumbo Financing with No Monthly PMI.

    If a first time buyer needs to finance a mortgage over the conventional loan limti of $484,350, they are eligible to use conventional jumbo financing up to a maximum loan amount of $726,525. This means a buyer can now purchase a home up to $765k with only 5% down.

    Buyers also have the option to eliminate the monthly mortgage insurance “PMI” from their monthly mortgage payment.

    Buyers in San Diego County can purchase a home up to $725,000 with only 5% down and No PMI.

    Buyers in LA County, Orange County and SF County for example, can purchase a home up to $765,000 with only 5% down and No PMI.

    All of the down payment can be gifted too, so this is a great option for buyers to purchase right away if they do not have the down payment saved up yet.

    Only a 620 credit score is required to qualify for conventional jumbo financing.

    Co-signers are allowed to help buyers qualify for a home purchase.

    Click HERE for more information on how to qualify for the conventional Jumbo 5% down program with No PMI, there is a Q&A section included too.

    3. Buy a Home up to $750,000 with only 3.5% Down FHA financing

    FHA financing is a very popular program with first time homebuyers. With it’s easier qualification rules for buyers with less than perfect credit, the FHA helps many first time buyers finance a home that would not be able to otherwise.

    The minimum down payment with FHA financing is only 3.5%. The FHA increased their CA conforming loan limit recently from $453,100 to $484,350, so this means a buyer can purchase a home up to $500,000 with only 3.5%.

    In higher cost markets like LA, Orange Co and SF etc, a FHA buyer can purchase a home up to $750,000 with only 3.5% with a FHA jumbo loan.

    In San Diego county, a buyer in San Diego can purchase a home up to $715,000 with only 3.5% down.

    In Riverside and San Bernardino counties, a buyer can purchase a home up to $500,000 with only 3.5% down.

    Only a 580 credit score is required to qualify for 3.5% down FHA financing.

    Co-signers are allowed to help buyers qualify for a home purchase.

    4. Zero Down Payment and Closing Cost Assistance For Buyers 

    If a buyer would like ALL of their down payment and closing costs covered to purchase a home, we have a terrific program available for buyers that combines a Conventional and CalHFA loan or a FHA and CalHFA loan.

    Buyers can purchase a home up to $700k in certain counties with No down payment and No closing costs.

    CalHFA (California Housing Finance Agency) offers down payment and closing cost assistance loan programs to help first time buyers purchase a home. A first time buyer is defined as someone who has not owned a home in 3 years.

    This program is available with both conventional and FHA financing. CalHFA gives buyers a small 2nd mortgage up to 3.5% to help cover the minimum down payment due with conventional and FHA financing.

    If buyers don’t have enough funds for their closing costs, CalHFA will give buyers an additional small 3rd mortgage of up to 4% to help cover ALL their closing costs.  Many buyers using this program only have to pay the upfront appraisal fee out of pocket.

    Payments on the CalHFA 2nd or 3rd mortgage loans are deferred for the life of the first mortgage. The terms are the same as the first mortgage. There are no payments due unless you sell or refinance.

    Click HERE for more information on this program and examples of how you can purchase a $450k or $550k home with zero down payment and No closing costs.

    If you have questions about any loan program or you would like to get approved for one of these options above, please call me at 858-442-2686.

    I look forward to chatting soon.

    Pay Off Your Mortgage Early: Easy Tricks Anyone Can Use

    December 7th, 2018

    There are two ways to own your home. Either you can pay cash upfront or you can pay little by little, year after year. For most us, monthly mortgage payments are really the only feasible option. Nonetheless, there are a few simple strategies you can put into place now and pay off your mortgage early.

    Why Pay Off Your Home Mortgage Early?

    When you pay off your home loan faster, you end up paying less for your home than if you were to pay the minimum required payment for the term of the loan. Paying off your house early will literally save you thousands, tens of thousands of dollars and possibly more, over time. Consider the following hypothetical example.

    Let’s say you get a $300,000 home loan based on a 30-year term and at a fixed rate of 4.46% (current average APR as of 10/1/2019). If you were to pay the minimum, your monthly mortgage payment would be $1,512.93 every month for 30 years. However, by the time you pay your house off, you would not have paid $300,000 for your home but significantly more, in fact, almost double.

    Home Loan                   APR                      Term                   Interest Paid             Total Paid

    $300,000 4.46% (fixed) 30 years $244,656 $544,656*

    * For simplicity of calculations, we did not include insurance, PMI, property taxes, or any closing costs associated with buying a house.

    In this example, we can see that the amount paid in interest is nearly equal to the original home loan. But what can you do? Many of us do not have the $300,000 to buy a house outright. Luckily, here are some simple tricks you could use to knock years off your mortgage while saving you a ton of money in the process.

    Set up Bi-weekly Mortgage Payments

    This strategy could reduce a 30-year mortgage to 25 years and save you tens of thousands of dollars in the process. Essentially, you will take your monthly mortgage payment (including taxes and insurance), divide that in two, and then pay it every two weeks rather than once a month. In effect, this strategy will have you make the equivalent of 13 monthly payments per calendar year instead of 12. The result is significant as you can see below.

    If we were to use our $300,000 mortgage example from above and apply a biweekly payment of $765.47 (which is half the mortgage payment) instead of the full monthly payment of $1,512.93, this would be the result:

    Home Loan                      APR                      Term                   Interest Paid             Total Paid

    $300,000 4.46% (fixed) 25 years $201,820.63 $501,820.63

    Not only do you reduce your mortgage by 5 years but also you end up saving $42,835.37 in the process. However, you should check with your lender to see if they accept bi-weekly payments without charging a fee before implementing this strategy. If they do charge a fee, this may not be the best tactic to use to reduce your mortgage and you should possibly look to one of the other strategies below.

    Refinance Your Mortgage

    This strategy is highly relative to your situation. If you have a high-interest rate but you have been in your home for a few years and have built up some equity, you might want to consider refinancing your mortgage before interest rates go up. Even a 1% decrease in your APR can save you a considerable sum of money. Alternatively, if you feel financially capable to handle a larger mortgage payment, a 15-year mortgage over a 30-year would save you tens of thousands of dollars. Again, using our hypothetical example from above, we get these results:

    Home Loan                   APR                      Term                   Interest Paid             Total Paid

    $300,000 4.46% (fixed) 15 years $111,993 $411,993

    Typically, with a 15-year home loan the APR is lower than a 30-year term; however, even with keeping the APR the same we can still see that the difference in interest is substantial. Not only would you be paying $132,663 less in interest but also you would have effectively eliminated 15 years of paying on a mortgage. However, your monthly mortgage would have also increased to $2,289.

    A Little Extra Goes a Long Way

    You may think that little amounts don’t count for much in the larger picture of a 30-year home loan; such as the money you spend on your morning cup of coffee. However, what if I tell you that you could shave off years from your home loan by skipping your coffee and putting that money toward your mortgage. Even a hundred extra bucks each month could save you thousands of dollars in interest payments.

    Let’s say you didn’t buy your morning cup of coffee, and instead saved that $5 to put toward your mortgage (in this hypothetical situation, we are estimating that a morning cup of coffee is more than just drip coffee and with a tip should equal to about five dollars). At $5 a day, we are looking at an additional $100 month that could be going toward your mortgage. Again, referring back to our hypothetical situation of a $300,000 home loan but adding an additional $100 a month against your mortgage we would get this as our results:

    Home Loan                  APR                      Term                   Interest Paid             Total Paid

    $300,000 4.46% (fixed) 26yrs 5 months $211,016 $511,016

    In this scenario, we have not only effectively knocked off a few years of your mortgage payments, but also reduced what you would be paying in interest by $33,640. Don’t worry, you can keep drinking your coffee, however, the main takeaway is that a little extra towards your home loan can go a long way.

    Monetary Windfalls

    The main strategy for those wanting to pay off their mortgage early is to focus on reducing the overall principal of their home loan as fast as possible. Monetary windfalls are any form of extra money that comes your way and is unplanned for. This could include things like gifts, bonuses at work, overtime, inheritance, tax refunds, and lottery winnings, among others.

    As we saw in the prior example that even paying an extra $100 a month, or $1,200 a year, you can reduce your mortgage payment by years. Just imagine how many years you could reduce your mortgage by if you were to start putting all your extra money against your home loan.

    Speak to Your Lender

    Make sure you speak with your mortgage lender about your intentions. You don’t want to begin a strategy to pay off your mortgage early only to find out that your lender has penalties for early payments. Also, some lenders may only allow extra payments to be made within a specific timeframe. You should also make it clear that when you are applying an additional payment that it needs to go against the principal of your home loan, and not towards any future mortgage payment.

    Take Time to Build Your Strategy

    Paying off your mortgage early is all about having the right strategy. Take your time to explore your options and pursue the strategy that best fits your situation.

    This article was written by Jeff Anttila at San Diego Redfin, click HERE for more information.

    Good News for Buyers as CA Conventional, FHA and VA Loan Limits Increased Effective Immediately!

    December 1st, 2018

    There is good news for home buyers as Fannie Mae, the VA and FHA just increased their California borrowing loan limits effective as of November 30th 2018. These increases will help more buyers purchase a home with better financing options. For example, a conventional buyer can now purchase a home up to $500,000 with only 3% down and No PMI. A buyer in San Diego can now purchase a home up to $725k with only 5% down and No PMI with a conventional jumbo loan.​ Check out the rest of the new financing options available for buyers below.

    Increased Loan Limits for Conventional Home Purchase Programs

    Fannie Mae increased their CA conventional loan limit from $453,100 up to $484,350.

    This means a buyer can now purchase a home up to $500,000 with only 3% down, which is the minimum conventional down payment requirement.

    In higher cost markets like LA, Orange Co and SF etc, the conventional jumbo loan limit was increased from $679,650 up to to a maximum of $726,525. This means a buyer can now purchase a home up to $765,000 with only 5% down, which is the the minimum conventional jumbo down payment requirement.

    In San Diego county, the conventional jumbo loan limit was increased from $649,750 up to $690,000. This means a buyer in San Diego can now purchase a home up to $725,000 with only 5% down.

    In Riverside and San Bernardino counties, where loan limits always seem to be too low for some buyers, their conventional loan limit was increased from $453,100 up to $484,350. This means a buyer can now purchase a home up to $500,000 with the minimum conventional down payment requirement of only 3%.

    Each county in California has their own specific loan limit. You can check your new county loan limit HERE for Conventional and Conventional Jumbo financing.

    Overall, this is good news for buyers who require higher loan amounts to finance their home purchase.

    Buy a Home up to $500,000 with Only 3% Down Conventional Financing and No Monthly PMI.

    With the new higher conventional loan limits, a buyer can now purchase a home up to $500,000 with only 3% down.

    Buyers also have the option to eliminate the monthly mortgage insurance “PMI” from their monthly mortgage payment.

    All of the down payment can be gifted too, so this is a great option for buyers to purchase right away if they do not have the down payment saved up yet.

    Click HERE for more information on how to qualify for the conventional 3% down program with No PMI, there is a Q&A section included too.

    Buy a Home up to $765,000 with Only 5% Down Conventional Jumbo Financing with No Monthly PMI.

    With conventional jumbo financing, a buyer can now purchase a home up to $765k with only 5% down.

    Buyers also have the option to eliminate the monthly mortgage insurance “PMI” from their monthly mortgage payment.

    Buyers in San Diego County can purchase a home up to $725,000 with only 5% down and No PMI.

    Buyers in LA County, Orange County and SF County can purchase a home up to $765,000 with only 5% down and No PMI.

    All of the down payment can be gifted too, so this is a great option for buyers to purchase right away if they do not have the down payment saved up yet.

    Click HERE for more information on how to qualify for the conventional Jumbo 5% down program with No PMI, there is a Q&A section included too.

    VA Loan Limits Increased Effective Immediately

    The VA also increased their loan limits effective immediately too.

    VA buyers qualify for zero down financing up to their county loan limit.

    For example, a VA buyer can get zero down financing in San Diego up to $684,350.

    VA buyers in LA county and Orange County can get zero down financing up to $726,525.

    VA buyers in Riverside and San Bernardino counties can get zero down financing up to $484,350.

    You can check your county loan limit HERE.

    If a buyer needs to purchase a home price higher than the VA zero down county loan limit, the VA uses a formula for calculating the maximum loan amount financed. For example, on a $750k purchase in San Diego, the down payment due is only $15,000.

    We can also give a VA buyer a 3% lender credit to cover ALL their closing costs. This means a VA buyer can purchase a home with No down payment due or closing costs either, and this also includes a credit for the appraisal fee.

    FHA Loan Limits Increased Effective Immediately

    The FHA also increased their loan limits effective immediately.

    The FHA offers financing based on county loan limits. The FHA increased their CA conforming loan limit from $453,100 to $484,350.

    This means a buyer can purchase a home up to $500,000 with the minimum FHA down payment requirement of only 3.5%.

    In higher cost markets like LA, Orange Co and SF etc, the FHA jumbo loan limit was increased up to a maximum of $726,525, up from $679,650.  This means a FHA buyer can now purchase a home up to $750,000 with the minimum FHA jumbo down payment requirement of only 3.5%.

    In San Diego county, the FHA jumbo loan limit was increased from $649,750 up to $690,000. This means a buyer in San Diego can now purchase a home up to $715,000 with only 3.5% down.

    In Riverside and San Bernardino counties, the FHA loan limit was increased from $453,100 up to $484,350. This means a buyer can now purchase a home up to $500,000 with the minimum FHA down payment requirement of only 3.5%.

    You can check your county loan limit HERE.

    Down Payment and Closing Cost Assistance For Buyers 

    If you know of a buyer that does not have the minimum down payment to qualify for any of these loan programs above, we have a terrific program available for buyers that combines either a Conventional and CalHFA loan or a FHA and CalHFA loan.

    Buyers can purchase a home up to $700k in certain counties with No down payment and No closing costs.

    CalHFA (California Housing Finance Agency) offers down payment and closing cost assistance loan programs to help first time buyers purchase a home. A first time buyer is defined as someone who has not owned a home in 3 years.

    This program is available with both conventional and FHA financing. CalHFA gives buyers a small 2nd mortgage up to 3.5% to help cover the minimum down payment due with conventional and FHA financing.

    If buyers don’t have enough funds for their closing costs, CalHFA will give buyers an additional small 3rd mortgage of up to 4% to help cover ALL their closing costs.  Many buyers using this program only have to pay the upfront appraisal fee out of pocket.

    Payments on the CalHFA 2nd or 3rd mortgage loans are deferred for the life of the first mortgage. The terms are the same as the first mortgage. There are no payments due unless you sell or refinance.

    Click HERE for more information on this program and examples of how you can purchase a $450k or $550k home with zero down and no closing costs.

    If you have questions about any loan program or you would like to get approved for one of these options above, please call me at 858-442-2686. I look forward to chatting soon.

    P.S. If you would like to be updated faster on important industry news or any new loan programs that come out, please join my Facebook page .

    Buy a Home With Zero Down and No Closing Costs With a Conventional CalHFA Loan!

    October 18th, 2018

    The #1 reason buyers state for not being able to buy a home is lack of funds for the down payment. We have a terrific program available to help buyers purchase a home with a 3% down Conventional loan combined with a CalHFA loan, which covers the down payment and ALL the closing costs. This program is available up to a purchase price of $705,000 in some counties. Check out how to qualify.

    Down Payment and Closing Cost Assistance For First Time Buyers 

    Not enough buyers know there are programs available to help them with the down payment and closing costs.

    CalHFA (California Housing Finance Agency) offers a down payment and closing cost assistance loan program to help first time buyers purchase a home. A first time buyer is defined as someone who has not owned a home in 3 years.

    This program is available with both conventional and FHA financing. CalHFA gives buyers a small 2nd mortgage up to 3.5% to help cover the minimum down payment due with conventional and FHA financing.

    If buyers don’t have enough funds for their closing costs, CalHFA will give buyers an additional small 3rd mortgage of either 3% or 4% to help cover all their closing costs.  Many buyers using this program only have to pay the upfront appraisal fee out of pocket.

    Payments on the CalHFA 2nd or 3rd mortgage loans are deferred for the life of the first mortgage. The terms are the same as the first mortgage. There are no payments due unless you sell or refinance.

    How to Purchase a $450k Home With Zero Down and No Closing Costs 

    Check out this example of a $450,000 purchase we helped fund recently for a client. The buyer qualified for a 3% down conventional loan. They received a 3% CalHFA 2nd mortgage to cover the 3% down payment.

    They received an additional CalHFA 3rd mortgage of 3% to help cover all their closing costs.

    The buyers were able to purchase a home they loved, and the only fee due out of pocket was the upfront appraisal fee.

    Here is a summary of the loan terms.

    • Purchase price $450k.
    • 3% minimum down payment required ($13,500).
    • Buyer qualified for a 3% 2nd mortgage CalHFA loan to cover the 3% down payment.
    • Buyer qualified for a 3% CalHFA 3rd mortgage to cover all the closing costs.
    • hey got a rate of 5.75% on a conventional 30 year fixed, the monthly principal and interest payment is $2,534.
    • Property taxes and homeowner’s insurance were $533.
    • The monthly mortgage insurance is $94.
    • Their total monthly mortgage payment is $3,161.
    • The appraisal fee was the only cost out of pocket to buy the home.

    How to Purchase a $550k Home With Zero Down and No Closing Costs

    Here is another example of a purchase we recently funded for a client. With a purchase of $550k, this meant the loan amount borrowed was >$453,100, so this required a jumbo loan. The minimum down payment for a FHA jumbo loan is 3.5%.

    The buyers received a 3.5% CalHFA 2nd mortgage to help cover the 3.5% down payment.

    They received an additional 3% CalHFA 3rd mortgage to help cover all their closing costs.

    Here is a summary of the loan terms.

    • Purchase price $550k.
    • 3.5% minimum down payment required ($19,250).
    • Buyer qualified for a 3.5% 2nd mortgage CalHFA loan to help cover the 3.5% down payment.
    • Buyer qualified for a 3% CalHFA 3rd mortgage to cover all the closing costs.
    • They got a rate of 5.5% on a FHA 30 year fixed, the monthly principal and interest payment is $3,066.
    • Property taxes and homeowner’s insurance are $645.
    • The monthly mortgage insurance was $375.
    • Their total monthly mortgage payment was $4,086.
    • The appraisal fee was the only cost out of pocket to buy the home.

    Frequently Asked Questions on This Program

    Here are the most frequently asked questions that buyers and real estate agents have in regards to this program.

    1.What is the maximum loan amount I can borrow?

    You can borrow up to your county loan limit with this program. In San Diego, a buyer can finance a conventional or FHA jumbo loan up to $649,650, and $679,650 in Orange County and LA.

    2.What can I borrow up to with conventional financing?

    If you need to finance up to $453,100 with conventional financing, the minumum down payment is 3%. You can get a maximum CalHFA 2nd mortgage loan for 3% to cover all of the 3% down payment.

    If you need to finance >$453,100 with conventional, the minimum down payment is 5% for a conventional jumbo loan. You can get a maximum CalHFA 2nd mortgage loan for a maximum of 3.5% which will be applied towards the 5% down payment, so now you just need to cover the remaining 1.5% down payment.

    3.What can I borrow up to with FHA financing?

    The minimum down payment with FHA is only 3.5% and this includes FHA jumbo financing. As you can borrow a 2nd mortgage loan from CalHFA for 3.5%, this will cover ALL of the down 3.5% down payment requirement with FHA.

    4.What credit score is required to qualify for this program?

    We only require a 640 credit score to qualify. Please note, the higher the credit score the lower the monthly mortgage insurance will be on the first mortgage loan loan.

    5.Is this program for first time buyers only?

    This program is for first time buyers only. A first time buyer is defined as someone who has not owned a home in 3 years.

    6.Are there any payments due on the CalHFA 2nd or 3rd mortgage loans?

    No, the payments are deferred for the life of the first mortgage. There are no payments due unless you sell or refinance.  The terms mirrors that of the 1st mortgage.

    7.If I can cover my own closing costs, do I get a lower rate on my mortgage?

    Yes, if you only need a CalHFA 2nd mortgage loan to cover the down payment, but you can cover all your own closing costs, you can get a lower rate of 5.125% on the conventional 30 year fixed rate mortgage. Compare this to a rate of 5.75% if you need an additional 3% CalHFA 3rd mortgage loan to cover your closing costs.

    8.Are co-signers allowed on this program?

    Yes co-signers are allowed on this program.

    9. Are there income limits for this program?

    Yes there are income limits, but they are pretty high.  For example, the San Diego income limit is $157,000, Riverside and LA is $128,700, Orange county is $174,200. Each county has it’s own county income limit. Contact me for more details if you need to know your county income limit.

    10.Are there purchase price limits for this program?

    The maximum purchase price for this program is $705k.

    11.Can I use this program on 2nd homes or Investment Properties?

    No, this program is for Primary Residences only.

    12.Do condos also qualify for this program?

    Yes, this program is for single-unit homes only. This includes single-family detached homes and single-family attached homes such as condominiums and town homes.

    A Great Opportunity For Buyers

    This program presents a great opportunity for buyers who want to purchase a home but don’t have the full down payment saved up yet.  There are also buyers who assume because they don’t have funds for closing costs, they cannot buy a home.

    This program will help take care of both of these issues and allow buyers to fulfill their dream of owning a home.  Spread the word to your family and friends that this program is available to them too.

    Feel free to contact me directly at 858-442-2686 if you have any questions about this program or getting approved for financing.

    I look forward to chatting soon.

    Mortgage Rates Spike to 5%: Why Rates Will Continue To Increase Higher

    October 7th, 2018

    Mortgage Rates have spiked up “.3%” in the past 3 weeks and now sit at 5% on a conventional 30-year fixed with most lenders. It is important that buyers and homeowners looking to refinance understand that rates are going to continue moving higher due to rising inflation concerns in the economy. If rates continue to increase another .5% higher from where they are today, a buyer who can afford to purchase $600,000 today, will only be able to afford $567,500 using the same monthly payment, which is a loss of 5% in purchasing power. If rates continue to increase 1% from today, a buyer who can afford to purchase $600,000 today, will only be able to afford $535,000 using the same monthly payment. Here is why rates will continue to increase.

    Why Interest Rates Will Continue to Increase

    It has been a rough month for rates. As you can see below, the 10-Year Treasury has spiked from 2.85% around the 10th of September to 3.22% as of this week, an increase of “.37%”.

    The 30-year mortgage rate follows the direction of the 10-Year Treasury. Mortgage rates have increased roughly “.3%” during this period.

    Here is why rates are going to continue to increase.

    Due to the recent slew of very strong economic data, the bond market is going through a correction phase right now, that can be summed up as “phew, The Federal Reserve has inflation covered” to “The Federal Reserve better wake up and get it under control before it’s too late”.

    Simply put: these past 2 months of very strong economic data finally put us in a situation where market participants are within their rights to wonder if the Federal Reserve is behind the curve and did not raise rates fast enough and if the economy actually could grow/inflate faster than expected, so the bond market is repricing rates accordingly and fast.

    Check out the chart below. The 30-Year Treasury is now breaking out of it’s multi decade lows at 3.34%. This is a significant trading level that dates back to 1987.

    Once these trading levels are broken, rates will usually continue increasing higher until they find a new level of support. We just don’t know where that next level of support is, it could be “.25% – .5%” or even higher from current levels. .

    If you know of any buyers who have been putting off a home purchase, or any homeowners who have been putting off their refinance, let them know their interest rate is probably going to increase as each month goes by.

    If you have the opportunity to lock in a rate for a home purchase or a refinance, you should LOCK in the rate immediately.

    The Impact of Higher Rates on Buyer Purchasing Power

    A question that many buyers ask is, “If rates rise how will this affect my affordability?”

    Here is a chart that all homebuyers should review, that shows the “impact of rising rates on a buyers purchasing power or affordability”.

    As you can see, when rates increase by 1%, a buyer will lose 10.75% in purchasing power.

    This means, if a buyer can afford to purchase $600k today, but rates increase by 1%, they will only be able to afford $535,500 using the same monthly payment.

    If a buyer can afford to purchase $800k today, but rates increase by 1%, they will only be able to afford $714,000 using the same monthly payment.

    If a buyer can afford to purchase $1,000,000 today, but rates increase by 1%, they will only be able to afford $892,500 using the same monthly payment.

    The Cost of Borrowing Money is Still Good Historically

    When compared to rates historically, current rates are still good. This chart below puts current mortgage rates in perspective.

    Did you know the average 30 year fixed mortgage rate over the past 40 years is roughly 8.7%, and 6.29% over the past decade!

    Compare this to current rates around 5%. As rates are going to continue to increase, current rates are still attractive to anyone looking to borrow money to finance a home.

    Close your Transaction Faster

    As we approach the winter months, there are going to be lots of sellers who will be very motivated to sell their homes. Closing a transaction faster is a way to entice the seller to accept your offer and negotiate a lower price.

    We had a buyer get an offer accepted last week who was also able to negotiate a price reduction, as we told the seller we can close escrow in 10 days. They accepted a lower purchase price because they were going to get their seller proceeds faster. If the sellers are not receiving any other offers, give this strategy a shot.

    My company Citywide Financial Corp is closing Purchase Transactions in 15 days or less. We can close in 10-12 days if you need a special rushed closing.

    We are also giving clients a lender credit to cover their appraisal fee at closing. Contact me for more details.

    Tips for Homebuyers

    It is still a good time to buy a home. I tell my clients not to focus on the volatility in rates or home prices, but to find a home that you love and that you can afford for your family.

    We are entering the winter months soon, and many of the sellers will be motivated to sell their homes. There are already price reductions happening all over local markets, as sellers are starting to reprice their homes to match the reality of the current market we are in.

    It is a good time to get out there an put offers in on homes. If you find a very motivated seller, you may be able to pick up a good deal on a home.

    If you have any questions about getting approved for financing, feel free to contact me directly at 858-442-2686. I look forward to chatting soon!

    P.S. If you would like to be updated faster on any important industry news or new loan programs that come out, please join my Facebook Page.

     

    Freddie Mac Introduces New Conventional 3% Down HomeOne Program With No Monthly PMI

    August 24th, 2018

    Freddie Mac just introduced a NEW Conventional 3% Down Program for First-Time Buyers called HomeOne. This new program is especially aimed at helping more Millennial buyers qualify for home-ownership. With it’s low down payment requirement, No income level restrictions, and the ability to remove the monthly mortgage insurance “PMI” from the mortgage payment, this program will help more buyers qualify to purchase a home. Check out how to qualify.

    The Benefits of a 3% Down Mortgage With No PMI

    The conventional 3% down mortgage is helping many buyers obtain home ownership, who may have not been able to otherwise.

    I hear all the time from buyers who tell me they assumed they needed to save up 20% to buy a home without monthly mortgage insurance. They are excited when I tell them they only need 3% down to remove the monthly PMI.

    Being able to remove the monthly PMI is helping buyers obtain a lower monthly payment, and is helping alleviate the fears of having to take a loan with monthly mortgage insurance.

    This program also allows ALL of the down payment and closing costs to be gifted, so buyers can reach out for a gift instead of having to wait and save up the full 3% down payment.

    This conventional program is a great option for buyers in complexes that are NON FHA approved, so now you have more inventory to choose from and agents have more homes to show them.

    This conventional program will help some buyers afford to purchase a single family home instead of a FHA condo, as it frees up having to pay FHA monthly mortgage insurance and HOA dues, which can both amount to roughly $600-$700 a month on a typical condo. This will open up more inventory to review.

    If you know someone who is postponing a purchase to save more money, let them know about this program.

    Compare The Savings on a $465k Home Purchase with No Monthly PMI, vs a Mortgage With Monthly PMI.

    Let’s compare the conventional 3% down mortgage with No PMI to other low down payment options, which require monthly mortgage insurance to purchase a home.

    *Please note, as interest rates can change 2-3 times a day, make sure to ask me what are the current rates for this program.

    To calculate property taxes, we will also use 1.2% of the purchase price, so $465 a month, and $60 a month for a homeowner’s insurance policy, so we can calculate what the total monthly PITI (principal and interest, taxes and insurance) payment is for each scenario.

    Option #1. The figures on the first column is a conventional 3% down loan with No PMI. The approximate rate on a conventional 30 year fixed with No PMI is 4.875%. The total monthly PITI payment is $2,911.

    Option #2. The figures on the second column, is a conventional 3% down loan with PMI. The rate on a conventional 30 year fixed with monthly mortgage insurance is lower at 4.625%, but there is also monthly mortgage insurance of $263 that is included in the monthly mortgage payment. The total monthly PITI payment is $3,107.

    Option #3. The figures on the third column, is a FHA 3.5% down loan with monthly mortgage insurance. The rate on a FHA 30 year fixed is 4.375%, but there is also monthly FHA mortgage insurance of $315. There is also a FHA funding fee of 1.75% due on all FHA loans, this fee of $7,852 was added to the loan amount in this example. The total FHA monthly PITI payment is $3,120.

    As you can below, option #1 with the conventional loan and No PMI will help you obtain the lowest monthly payment and save you the most money.

    It will save you $195 a month over the conventional loan with PMI, and saves $208 over the FHA loan.

    Over the next 15 years the conventional loan with no PMI will save $15,604 over the conventional loan with PMI, and $27,693 over the FHA loan.

    In Summary. Instead of taking the conventional or FHA loan option and paying the mortgage insurance each month, the conventional loan with No PMI will give the buyer the lowest monthly payment.

    Important to remember with FHA, if you put down less than 10% with FHA, you have to pay the monthly mortgage insurance for the life of the loan. Click HERE for a summary of the current FHA mortgage insurance rules.

    Frequently Asked Questions for the 3% Mortgage

    Here are the most frequently asked questions that buyers and real estate agents have in regards to the conventional 3% down No PMI loan option.

    1. What is the maximum loan amount I can borrow with 3% down?

    The maximum loan with 3% down is $484,350, which is the conventional loan limit.

    If you need to finance over $484,350, the minimum down payment is only 5%. For example, in San Diego a buyer can finance a 5% down conventional jumbo loan up to $690,000 with No PMI. In Orange County and Los Angeles County a buyer can finance a 5% down conventional jumbo loan up to $726,525 with No PMI. Click HERE for more information on the 5% down conventional jumbo loan program.

    2. Can I receive the 3% down payment as a gift?

    Yes, all of the 3% down payment can be gifted. Closing costs and reserves can also be gifted if needed.

    3. What credit score is required to qualify for this program?

    We only require a 620 credit score to qualify for conventional financing. You need a 700 score to remove the PMI. The lower the credit scores, the higher the interest rate will be.

    4. How do you eliminate the monthly mortgage insurance “PMI’ option on this program?

    All you have to do is take a slightly higher interest rate than normal, say from 4.25% to 4.5%, and we use a lender credit with the higher interest rate to eliminate the PMI from the mortgage payment. This is also known as lender paid mortgage insurance.

    5.  Can I get 3% down with No PMI on 2nd homes or Investment Properties?

    No, the 3% down is for Primary Residences only. On 2nd homes, you only have to put down 10% to obtain the No PMI payment option.

    6. Are co signers allowed on this program?

    Yes co-signers are allowed on this program, the co-signer does NOT have to reside in the home.

    7. Is this program for first time buyers only?

    If there is one buyer they have to be a first time buyer. If there are 2 buyers, only one of them has to be a first time buyer.

    8. Are there income limits for this program?

    No, there are NO income restrictions with this program, so any buyer can qualify for this program regardless of income.

    9. Do condos qualify for this program?

    Yes, you can also purchase a condo using this program with only 3% down and get the No PMI option.

    10. Can I use an adjustable-rate mortgage with the 3% down mortgage?

    No, the 3% down mortgage requires a 30-year fixed rate mortgage only.

    11. What is the maximum number of units for a home with the 3% down payment mortgage?

    The 3 percent down mortgage is for single-unit homes only. This includes single-family detached homes and single-family attached homes such as condominiums and town homes. 2-unit homes, 3-unit homes, and 4-unit homes cannot be financed with the conventional 3% down mortgage.

    12. What if i put down 5% or 10%, will I get a lower rate?

    Yes, if you put down 5% or 10% for the down payment, you will get a lower interest rate. The larger the down payment, the lower the interest rate you will get with conventional financing.

    Refinance Tip For homeowners – Refinance up to 97% of Your Property Value with No Monthly PMI

    This 3% down conventional program with No PMI also works the same for refinances, as homeowners with limited equity can now refinance up to 97% of their home without having to pay any monthly mortgage insurance.

    For example, many homeowners who bought a home over the past 12-24 months using a FHA loan and a minimum down payment of 3.5%, have probably gained at least 8%-10% equity due to appreciation.

    This 3% down conventional loan program is a great option to help them refinance out of their current loan with mortgage insurance, and into this conventional loan option with No PMI, so they can save some extra money and get a lower monthly payment.

    We have helped many of our clients who bought over the past few years with a FHA loan refinance into conventional loan with No monthly PMI, and save them on average $200-$300 a month.

    If you would like to get approved for this program, or you have any questions about any of this information above, please feel free to contact me directly at 858-442-2686. I look forward to chatting soon.

    P.S. Please join my Facebook page if you would like to be updated faster on any new loan program changes or industry news.

    Fannie Mae Makes it Easier to Buy a Condo Investment Property – No More 50% Owner Occupied Ratios Required

    July 1st, 2018

    Fannie Mae has finally eased up their qualifying rules for buyers looking to purchase an investment property condo with conventional financing. Prior to June 23rd, if a complex had <50% owner occupied ratios, and a buyer was trying to purchase a condo as an investment property with conventional financing, the loan was automatically declined. Now as long as a buyer puts down 25% to purchase an investment property, 50% owner occupied ratios are no longer required to qualify for conventional financing. This is going to open up a lot more opportunities for investors to purchase condos in complexes that exist all around California that do not have 50% owner occupied ratios.

    Tips How to Qualify to Purchase a Condo in a Complex with Less than 50% Owner Occupied Ratios

    1. To qualify to purchase a condo in a complex that has <50% owner occupied ratios, the buyer needs to put down a minimum of 25%.

    2. If a buyer does NOT put down 25%, Fannie Mae’s underwriting system will require a Full Review of the complex and the owner occupied ratios will be required.

    3. Make sure the buyers loan application with the property address is ran through Fannie Mae’s conventional underwriting system (DU) and receives a “Limited Review Approval”. Then the owner occupied ratios are not required.

    4. Important. Make sure you work with a lender that follows this new rule. There will be some lenders that will still require the owner occupied ratios regardless of down payment and even if Fannie Mae’s underwriting system does not require it. This is called a Lender Overlay.

    5. Realtors, you probably already know lots of complexes in your market that don’t have 50% owner occupied ratios, which meant your buyers could not purchase investment properties there with conventional financing. A good idea is to reach out to these buyers now and let them know.

    Fannie Mae made 2 additional changes that will help more investors and buyers purchase condos

    1. Single-Entity Ownership has increased from 10% to 20% for projects with 21 units and more, which means a single investor can own up to 4 units in a 20 unit complex.

    2. Project review requirements for 2-4 unit projects are now waived, so no more owner occupied ratio or budge requirements etc for a 3-4 unit property.

    Buying an Investment Property is a Great Investment

    Buying an investment property is one of the best financial investments you can make.

    With annual rents continuing to increase on average 3% – 4% in many parts of California, and rental vacancy rates at 30-year lows in most parts of California, buying an investment property is a great source of additional income for the future.

    As you can see below, just a 4% increase in annual rent can increase monthly rent of $1,500 up to $1,974 in just 8 years, an increase of $474. 

    This is a 32% profit in rental income for an investment property owner in only 8 years.

    Interest rates are not far of multi decade lows, so you can still get a low long term fixed rate on an investment property.

    4 Loan Programs to Help you Purchase an Investment Property

    Here are the best 4 mortgage programs that buyers can use to finance and purchase an investment property.

    1. Tips for Buying an Investment Property with Conventional Financing

    The majority of buyers and investors will use conventional financing to purchase an investment property.

    Conventional financing allows you to obtain the lowest long term fixed rates, so their monthly return on rental income is highest.

    The larger the down payment, the lower the rate with conventional financing.

    The minimum down payment with conventional financing to purchase a single family residence or condo is 15%. You can finance up to a loan amount of $649,650 in San Diego.

    The minimum down payment to purchase a 2 unit property is 20%, and 25% for a 4 unit.

    A buyer is allowed to finance up to the following loan amounts for a 2-4 unit property.

    • You can finance up to a loan amount of $870,225 on a 2 unit property.
    • You can finance up to a loan amount of $1,051,875 on a 3 unit property.
    • You can finance up to a loan amount of $1,307,175 on a 4 unit property.

    Please note, as listed above, when purchasing an investment property condo and putting down less than 25%, conventional financing will require 50% of the units to be owner occupied.  *When purchasing a condo in a complex as a primary residence, there are NO owner occupied ratio requirements.

    Another rule to be careful with when using Conventional financing, gift funds are not allowed on investment properties.

    2. FHA Buyers Can Buy a 3-4 Unit With Only 3.5% Down FHA Financing

    Did you know the FHA allows you to purchase a 2-4 unit home with FHA financing and you only have to put down 3.5% to qualify?

    FHA financing is for owner occupied financing, so you would live in one unit and rent out the other 1-3 units.

    You can also use the rental income from the other 1-3 units to qualify for a loan.

    This is a great way for homebuyers to start out as a real estate investor.

    The FHA allows you to finance up to the following loan amounts for a 2-4 unit property.

    • You can finance up to a loan amount of $870,225 on a 2 unit property.
    • You can finance up to a loan amount of $1,051,875 on a 3 unit property.
    • You can finance up to a loan amount of $1,307,175 on a 4 unit property.

    3. VA Buyers Can Buy a 3-4 unit with Zero Down VA Financing

    Did you know the VA allows their military buyers to purchase a 2-4 unit home with zero down VA financing?

    VA financing is for owner occupied financing, so the VA borrower would live in one unit and rent out the other 1-3 units.

    You can also use the rental income from the other 1-3 units to qualify for a loan.

    This is also a great way for VA homebuyers to start out as a real estate investor.

    A VA homebuyer is allowed to finance up to the following loan amounts for a 2-4 unit property.

    • You can finance up to a loan amount of $870,225 on a 2 unit property.
    • You can finance up to a loan amount of $1,051,875  on a 3 unit property.
    • You can finance up to a loan amount of $1,307,175 on a 4 unit property.

    4. New Bank Statement and Stated Financing  Programs Available for buyers

    There are lots of new financing options available for buyers who cannot qualify for the 3 traditional financing options above.

    We have different bank statement and stated programs for self employed and W2 buyers who cannot verify their income on their tax returns.

    For example, if you need financing to purchase an investment property and rehab it, we can help you with the financing.

    I also have access to several private money sources that will allow you to finance up to 90% of the purchase price, and then also give you the additional cash to rehab the property. The r are also some of the lowest in the industry.

    Tips for Investment Property Buyers

    It is a great time to purchase an investment property. With rates still near mutli decade lows, the cost of borrowing money to finance a home is still historically very low.

    With rising rents and low rental vacancy rates, buying an investment property is a great long term investment.

    Buying an investment property is also a great source of additional income for the future.

    There are the tax benefits too of course, as the interest on the mortgage is tax deductible, and the property taxes and any repairs are also tax deductible.

    If you have any questions about any of this information above, please feel free to contact me directly at 858-442-2686. I look forward to chatting soon!

    P.S. If you would like to be updated faster on any important industry news or new loan programs that come out, please join my Facebook Page.