Stockton and Lodi is a market filled with self-employed borrowers that have been left out of the housing market due to unfair regulations. Prospective home buyers who fall outside that box – even ones with good credit and a sterling history of repayment – might have found it difficult to qualify for a loan. We at the Mortgage House Inc. have been looking for ways to service those that didn’t quite fit into the conforming loan box. I’m happy to announce we now offer several niche programs to fill that gap including bank statements for income and interest only options for loan amounts up to $3,000,000.
These new programs are some of the most innovative ways to put a self-employed borrower in a home. However the new products aren’t for everyone. These programs will tailor to those with strong credit (700 min) with a history of financial responsibility while using the monthly deposits to help determine income for the loan. These programs are critical of past credit events and restricts lending to those with negative credit events in the past five years (No charge offs, collections, or tax liens) and the bank statements shouldn’t reflect NSF charges or occurrences.
These programs are geared toward the purchase or refinance of an owner-occupied home. It’s Maximum allowable LTV (loan-to-value) for the program is 70% for purchase loans and 65% for refinances.
On the surface these programs may raise eyebrows, but they’ve been carefully tailored to focus on credit behavior, healthy equity positions and realistic income calculations. You may ask “why offer these loans”? Because as the ability to repay is proven by the credit history, sizable equity positions and income is based on a non-biased asset statement that’s not watered down through a self–employed borrower’s accountant.
With 65-70% Loan to Value the borrower has a vested interest in keeping the loan current and provides enough skin in the game to make these loan programs viable for the lender.
Feel free to contact me directly if you’re interested.
JUMBO Financing with No PMI – You better believe it!
The market is definitely shifting and prices are increasing which is why new programs are coming around to fill in the gaps. Jumbo mortgage guidelines had been overly invasive and difficult in the past but recently new investors have come into town to offer a better option.
At the moment we can provide financing on JUMBO mortgages without PMI (Private mortgage Insurance) with as little as 10% down with a 680 credit score. A few weeks ago I would have told you that were impossible, but things are changing rapidly. These new programs are reducing the reserves, credit score, loan to value, cash-out loan to value etc. If you were told no before you may want to give us a call to see if your situation now fits.
Beginning October 1st, 2016 USDA loans will drastically reduce their upfront and annual guarantee fees. It will allow home buyers and homeowners in rural communities to reduce the costs associated with closing and holding a USDA 100% financed loan.
USDA guarantee fees are very similar to FHA’s MIP/ UFMIP(Mortgage Insurance Premium and Upfront MIP) or VA’s Funding fee. Both FHA and USDA charge and upfront (financed) fee and an annual fee (paid monthly), while VA only charges an upfront funding fee.
| ||Upfront Guarantee Fee||Annual Guaranty Fee (Paid Monthly/12)
Over the past several years delinquency rates and foreclosures have reduced to normal levels and USDA has reduced its risk which led to a reduction in the amount of insurance they need to collect. This is a win for borrowers who plan to move into an USDA eligible community.
What areas can I buy a home and use a USDA home loan?
USDA will allow financing on homes in areas they have deemed rural. Below is a list of some towns, cities and communities within 75 miles that will currently work:
Galt, Lathrop, Jackson, Sutter Creek, Wilton, Linden, Lockeford, Rancho Murieta, Plymouth, Thornton, Farmington, Escalon, Oakdale, San Andreas, Del Rio, Ripon, Patterson, Discovery bay, Newman, Waterloo, Valley Springs, Wallace, Walnut Grove, Rio Vista, Camino, Placerville, and many more in between
How much will the lower Guarantee fees save me?
On a $300,000 home, the new lower USDA upfront Guarantee fee of 1.0% will save you $5,250! This will help keep your loan balance lower because the USDA upfront Guarantee fee is normally added to the loan balance.The new .35% annual fee (paid monthly) will reduce your monthly payment by approximately $37.50/month or $450/yea.
Why hasn’t my lender offered this program to me?
The truth is, Most lenders either don’t offer the program or don’t understand it. It’s a Niche type of loan that isn’t available for use in big cities, so many large banks and lender don’t bother with it. We live in an area that rightfully suits USDA financing due to the surrounding rural landscape ithat is far reaching and affordable.
Banks that don’t offer USDA or the other ‘niche’ loan programs that we offer, will often purposely withhold educating and informing their customers in hopes they don’t go elsewhere for their mortgage.
And don’t think USDA is the only low down payment option you have.
If you would like to find out of you can qualify for a USDA loan and interested in comparing that option with several other home buyer assistance programs that offer down payment and closing cost assistance, call me at 209-474-7111 or email firstname.lastname@example.org
Fannie Mae recently changed their policies regarding the purchase of a home after a major credit event like a foreclosure, short sale and bankruptcy. The changes are both positive and negative, but seem to focus on reducing the wait times for those that encountered an “extenuating circumstance” or in layman’s terms a one-time or temporary event that led to the negative credit event. These changes show Fannie Mae’s focus on helping those that were hit hard by the recession.
|Derogatory Event||Waiting Period Requirements||Waiting Period with Extenuating Circumstances
|Bankruptcy Chapter 7||4 Years||2 Years
|Bankruptcy Chapter 13||2 Years from discharge date|
4 Years from dismissal date
|2 Years from discharge date
2 Years from dismissal date
|Foreclosure Included in Bankruptcy||4 Years||2 Years
|Short Sale or Deed in Lieu||4 Years||2 Years
|Foreclosure||7 Years||3 Years
After bankruptcy, foreclosure, or short sale a borrow must re-establish credit in order to meet minimum Fannie Mae guidelines. For specific down payment and documentation needed please contact me directly.
What’s considered an extenuating circumstance?
Extenuating Circumstances must be verifiable hardships that are considered out of the borrower’s control that significantly reduce income or expense. This can be anywhere from job loss to health issues.
I foreclosed when my property lost substantial value, is that an extenuating circumstance?
Unfortunately no, that falls under a strategic default and is exactly why Fannie Mae is drawing a line in the sand. If you fall into this category waiting 3 years and using FHA may be the best option for you.
Buying A Home After College
You’re graduated from college or trade school, and ready to ditch your rental in favor of a property you can call your own. You’ve weighed your options and decided it’s time to invest in real estate ASAP. It’s likely you won’t have the cash needed to purchase the home out right and you’ll need to obtain a loan. Cover your basis and review the steps below to graduate from rental status into home ownership. Do you have what it takes to qualify?
Step 1 – Employment
Loan guidelines will accept two years of school transcripts in place of a two year work history as long as the education is in line with the job you’ve landed. Loans can close after you’ve received 30 days’ worth of pay-stubs.
Step 2 – Credit
Many college students have limited credit, but programs like FHA allow lower scores and alternative credit sources like cell phone, insurance, rent, and health club memberships. Learn about building credit in my understanding credit score article.
Step 3 – Funds
You just spent thousands on school and probably have limited savings; although you may be able to buy a home without much money at all. Down payment assistance programs like CALHFA, CHF Platinum, WISH, and County/City programs can bridge the gap for first time homebuyers without notable assets.
Feeling powerless against high energy costs isn’t acceptable anymore.
If you’re in the market for a home it would be wise to order a HERS report and possibly obtain an EEM.
Acronyms and programs may be a bit boring, but I assure you knowing the energy flaws of a home before you buy could save you thousands in energy costs.
- HERS (Home Energy Rating System) is a powerful tool you can use to evaluate your homes energy consumption with an in depth diagnostic report.
- EEM (Energy Efficient Mortgage) is added into your current mortgage to pay for energy upgrades on a home purchase.
Home Energy Rating System (HERS)
HERS inspection results are based on diagnostic testing using specialized equipment, such as: a blower door test, duct leakage tester, and infrared cameras to determine:
- The amount and location of air loss/leakage throughout the home
- Percentage of air loss/leakage through HVAC
- The quality and effectiveness of current insulation
- Window and Door energy loss
- Appliance energy assessment (Water heater, HVAC, Kitchen Appliances)
- Solar benefit analysis
The report will produce a computerized simulation analysis with accredited rating software to calculate a rating score on the HERS index. The report will provide recommended improvements based on a cost benefit analysis and expected return on investment through energy savings. These energy upgrades can be financed through what’s called an EEM (Energy Efficient Mortgage).
Energy Efficient Mortgage
Energy Efficient Mortgage program (EEM) helps home buyers save money on utility bills by enabling them to finance the cost of adding energy efficiency features to a home as part of their home purchase or refinancing mortgage. Items that can be included in an EEM
- Appliances (Water Heater, Kitchen Appliances)
- HVAC and Duct repair
- Windows and Doors
Loan amounts vary by county and price of the home, as well as lender limits. So we like to stress that the best way to approach the topic of EEM is during the Pre-Approval/Approval stage of the lending process, not when they are looking at homes or after they found one. It’s better to go into the search with open eyes knowing your options opposed to finding out later.
The EEM shouldn’t be an added stress, the process is simple, and when you think about it, you want the savings your upgrades will bring to be greater than the cost of the upgrades, we often use the analogy you give us $50 we will give you $51 and new windows! The program is set up to provide buyers the opportunity to upgrade the home without incurring additional costs; the additional loan payment should equal the energy savings. An EEM on an older home will provide the funds necessary to upgrade while also adding which should be a no brainer.
Who should obtain a HERS report and EEM?
All homeowners can benefit from the homes energy data; however homes built before 2000 would likely benefit more. Energy focused building has improved drastically in the recent years and older homes stand to save the more.
Is the EEM used in Stockton?
The amount of Energy Efficient Mortgages in Stockton is increasing, because of companies like ours that draw attention to the cost and energy saving potential. Stockton was built in phases and the majority of homes were built prior to 1980, which leaves thousands of potential homes without energy improvements. Think about single pain windows, ineffective insulation, Missing weather stripping, Old HVAC, and aging appliances.