JUMBO Financing with NO PMI

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.

Set Your Offer Apart From The Rest

5 Simple ways to set your offers apart to get the deal

Are you tired of submitting offers and being overlooked?  Areas like Stockton, Lodi , Tracy and Lathrop have been inundated with new buyers from the Bay Area and the local real estate is getting more competitive.  Many of these suggestions have been used in high priced areas for years which is why many of Bay Area buyers are already doing them.   Educate yourself and the one or more of the suggestions below to turn that no into a yes.

  1. Get Pre-Approved

There’s a difference between a pre-qualification and a pre-approval although most people don’t understand the difference.  A pre-qualification is something lenders can provide to potential borrowers after running credit, analyzing your financials, and an automated underwrite.  A pre-approval goes beyond a pre-qualification by nearly completing the loan process minus the property.  This process takes longer but it will expedite your potential close time and it will give you an edge over the competition.

 

  1. Let the seller get to know you

Enclosing a thoughtful letter has been known to persuade sellers to accept one offer over another.  Although someone may be selling the home they may still have some sentimental attachment to the home or neighborhood. Before making the offer consult with your agent to see if makes sense to write a letter to provide the owner comfort that the home and neighborhood will be good fit for you and your family.

 

  1. Make a non-contingent offer

This something I will never tell a borrower to do, but many times it will send a loud and clear message to the owner that you are determined and ready to buy their home.  Inspection and Loan Contingencies exist to protect the buyers’ earnest money deposit in a transaction.  When removing contingencies you essentially say that if I pull out of the transaction my deposit is surrendered.

 

  1. Offer to guarantee the value

After an offer is accepted there isn’t a guarantee that the appraiser can reach the value you’re seeking.  Real estate prices have been on the rise and sometimes there aren’t suitable comps for an appraiser when they’re attempting to determine value.  A way to reduce the fear over the appraised value would be to offer a maximum amount of money over the appraised value if it came in low.

 

For example:  Offer 300k – If the appraised value comes in lower than offered price buyer will pay up to 5k over the appraised value for a total not to exceed 300k.

 

  1. Increase your earnest money deposit

Show the seller you’re serious by doubling or tripling the EMD. Having more invested in the transaction will give the seller a positive feeling about your offer.

 

 

Co-signing a loan can prevent home ownership

If you have stable income and credit you’ve probably been approached by friends, family, and/or Girlfriends and Boyfriends to co-sign for a loan.  Lenders look for good credit and income to evaluate the potential risk of applicants and those that pose and elevated risk need others to help reduce that risk.  It’s important to know what can happen if you decide to co-sign before you sign on the dotted line.

Co-signing

A co-signer accepts joint responsibility for another individual’s debt.  Both parties are responsible for the making sure the debts are paid. Credit of both parties involved may be positively or adversely affected depending on the payment history.

Understanding the risk

Credit scores are based on risk and those who can’t qualify for a loan may have limited/no credit, bad credit, too much credit, or not enough income.  All of the reasons listed should raise red flags for any lender and potential co-signer.

Mortgages consider co-signed loans in the DTI (Debt to income Ratio)

Mortgages treat co-signed loans like any other loan, even when it’s someone else’s.  The only way to remove the liability from consideration is if you can prove someone else has been making the payments for 12 months.  This can prove difficult if the account is paid in cash or unverifiable.

Questions to ask yourself before co-signing:

  • Are you willing to assume the debt if the co-borrower wasn’t able/willing to pay?
  • Have you looked at the co-signer’s credit to evaluate their risk?
  • Are you willing to trust this person to make the payments?
  • Are you willing to jeopardize home ownership?
  • Are they making a rash decision they aren’t financially prepared for?

Things you can do to safely co-sign (If you must)

  • Explain expectations to co-signer
  • Require all payments be auto paid through bank – so that all payments are made on time and can be verified.
  • Make sure your number and email are attached to the account so you may be notified in case of account issues.
  • Require the co-signer to allow you to evaluate and inspect their credit history.
  • Avoid co-signing for anyone that’s not part of your immediate family. Avoid boyfriends, girlfriends, friends, etc.

Fannie Mae’s Foreclosure and Short Sale Waiting Periods Updated

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 EventWaiting Period RequirementsWaiting Period with Extenuating Circumstances
Bankruptcy Chapter 74 Years2 Years
Bankruptcy Chapter 132 Years from discharge date
4 Years from dismissal date
2 Years from discharge date
2 Years from dismissal date
Foreclosure Included in Bankruptcy4 Years2 Years
Short Sale or Deed in Lieu4 Years2 Years
Foreclosure7 Years3 Years

Requirements

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.

Questions

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

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.

Home Energy Ratings and Energy Efficient Mortgages

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 insulationgreener Solutions Energy Efficient Mortgage
  • 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)
  • Insulation
  • HVAC and Duct repair
  • Windows and Doors
  • Solar

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.