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.
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.
- 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.
- 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.
- 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.
- 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.
- 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.
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.