FHA Purchase: After 90 Days But Before 180 Days
Posted by Kevin Kueneke | Leave A Comment »
We have discussed FHA’s 90-day “anti-flip” policy a lot these days. Basically, a buyer will be unable to obtain FHA insured financing if the subject property has been owned by the seller for less than 90 days, with some exceptions.
But did you know that FHA is still concerned from day 91 to day 180? If the new purchase price is 100% or more than the price paid by the seller and the seller purchased the property within the past 91 to 180 days, the lender will be required to obtain a second appraisal by another appraiser.
Even though this rule has been in effect since June of 2006, it has only recently been an issue due to all of the properties purchased on the court house steps.
Even if the seller can provide documentation showing the costs and extent of rehabilitation that went into the property resulting in the increased value, a second appraisal will still be required. Also, the cost of the second appraisal may not be charged to the home buyer.
Bottom line: check the transaction/price history. A second appraisal could add additional time to your escrow, unless you plan accordingly.
Should you have questions regarding this article or any other mortgage related topic, please call me at (760) 500-1919 or email me: Kevin@MyCWMtg.com
Related Posts: Buyers, CW Mortgage, Home Loans, Homeowners, Mortgage News
When Does It Makes Sense to Refinance?
Posted by Paul Gonzales | Currently 1 Comment »
Trying to decide whether or not to refinance your mortgage can be like trying to find treasure on a deserted island. You can shovel a lot of sand and still come up empty-handed at the end of the day. However, you can sift it all down and find that nugget of wisdom rather quickly if you know how.
There are three primary reasons to refinance your mortgage:
(1) To take advantage of a lower interest rate and/or smaller monthly payments
(2) Pull cash out of your equity to consolidate other more costly debt, like credit cards, car loans, student loans and such, thus saving a lot of money each month
(3) Pull cash out to invest or pay for other expenses such as college tuition, home improvements, medical expenses or taxes.There are other reasons to refinance that you might consider such as swapping an adjustable-rate loan for a fixed-rate mortgage, but they all boil down to the three primary reasons noted above.
Refinancing to consolidate debt, invest or meet other obligations is usually straightforward and the numbers are easy to grasp. But how do you know when refinancing just to lower your interest rate or monthly payment really makes financial sense?
Back when the Beach Boys were Surfing USA, the “rule of thumb” was that it made sense to refinance your loan if you could lower your interest rate by 2 percent (say from 12% to 10%). But that was in the days when the typical middle-class home loan was $65,000.
Today, with most home loans considerably larger than that, a good standard rule is that if you can recover the cost of refinancing within 24 to 36 months, you should consider doing so.
For example, if you can refinance your $300,000 loan and reduce the interest rate by just one-half percent from 6.5% to 6.0% you will save $98 per month. If the cost to refinance is $2,900, dividing that cost by your monthly savings of $98 results in a payback of your initial $2,900 cost in about 30 months.
This simple calculation is called a “break-even analysis”. After 30 months, you are making money on your lower interest costs – and that makes sense for most people. As I have said before, consult your trustworthy loan officer and ask him or her to work up a break-even analysis for you. Then you will quickly be able to sift a beach-full of sand and discern that golden nugget!
Call me at (800)775-7334 or email me at paulforloans@aol.com to see if refinancing makes sense for you!
Related Posts: CW Mortgage, Financial news, Home Loans, Interest Rates, Mortgage News
High Balance Conforming Loans…Minimum Down Payment Requirements
Posted by Kevin Kueneke | Leave A Comment »
Conventional loan amounts up to and including $417,000 are considered Conforming loans, or Agency loans, and are typically backed by Fannie Mae and Freddie Mac.
In San Diego County, conventional loan amounts greater than $417,000 and less than or equal to $697,500 are considered High Balance Conforming loans (also known as Conforming Plus, Conforming Jumbo, and Agency Jumbo).
Some areas, like Los Angeles and Orange County, have high balance conforming limits as high as $729,750.
These loans are still backed by Fannie Mae/Freddie Mac. However, the High Balance guidelines differ slightly from the true conforming guidelines. One of the most important differences is the minimum down payment requirement.
The following is a quick breakdown of the minimum down payment requirements for High Balance Conforming loans:
Owner Occupied Purchase
- SFR and Detached PUD’s, the minimum down payment is 10%
- Condo and Attached PUD’s, the minimum down payment is 20%
- 2-4 units, minimum down payment is 25%
Second Home Purchase
- The minimum down payment for all property types is 35% for a 2nd home purchase
- 2-4 units are not allowed
Investment Property Purchase
- The minimum down payment for all property types is 35% for an investment property purchase
- SFR, Attached and Detached PUD’s, Condo’s, and 2-4 units allowed
There are also additional credit score requirements: 740 minimum for 2nd home and investment properties, 660 for owner occupied up to 75% loan to value, and 740 minimum score up to 90% loan to value.
Even with the more strict down payment requirements, the High Balance Conforming loan program is still beneficial to San Diego real estate. Please feel free to email me with any questions: Kevin@MyCWMtg.com
Related Posts: Buyers, CW Mortgage, Home Loans, Mortgage News, San Diego
Mortgage Rates Still In A Fantastic Place
Posted by Kevin Kueneke | Currently 1 Comment »
When rates shot up a month or so ago, we saw many potential San Diego real estate buyers get cold feet since 30 year fixed rates in the 4’s were gone. These buyers felt that the home of their dreams was no longer available if their rate was not under 5%. Face it, we were all spoiled. 
I remember in 1994 when conforming “A” paper first mortgage rates were as high as 10% and people were still buying homes. This was immediately following the first real refinance boom of our time (1992-1993) when rates were down to 6% or so.
Those that were in the industry in the ’80’s tell tales of rates in the 13’s and 14’s. So a rate just over 5% is not a good deal…?
How much of a difference does it make if the rate is just under 5% vs. just over 5%? The payment on a $400,000 loan at 5.125% is only $62 more than at 4.875%. The payment on a $200,000 loan at 5.125% is only $31 more than at 4.875%.
If you are a buyer that thinks a rate above 5% is high, call or email me and I can show you the payment difference for your particular price range. You might be pleasantly surprised.
**FHA, VA, High Balance Conforming buyers should also call. Your rates are great as well!
Email: Kevin@MyCWMtg.com Phone: (760)500-1919
Related Posts: CW Mortgage, Financial news, Home Loans, Interest Rates, Mortgage News, San Diego
$8,000 Tax Credit As Down Payment? Almost…
Posted by Kevin Kueneke | Currently 1 Comment »
Last week, HUD announced that the new $8,000 first-time home buyer tax credit could be used towards the down payment of the purchase of a primary residence. The way that it would have worked is that a third party would front the tax credit money to the buyer. The buyer would sign some sort of promissory note with the third party promising to pay back the fronted credit amount when they file their taxes next year (or this year if they have not filed 2008 yet). The seller would pay a fee on the buyer’s behalf, as a seller concession, to the third party.
I had heard about this potential arrangement months ago, but did not want to advertise the idea until all of the details were known. Unfortunately, the cat was let of the bag so I began to discuss this idea with my business referral partners. And then…
HUD has rescinded this decision and has in fact pulled the Mortgagee Letter (how they announce things) from the HUD website. The following is an excerpt from a blog post on ActiveRain by Jeff Belonger explaining “why” in more detail:
“In regards to FHA loans, a borrower can only obtain monies for their down payment of 3.5% by the following :
- Their own funds
- up to 100% of a gift from a relative/family member
- From the Federal, state, and local governmental agencies and nonprofit instrumentalities of government
- FHA approved non-profits
- monies from their employer in a form of employee contribution
- monies from secured borrowed funds… IE. borrowing equity from your home to buy another home or borrowing against your car that is free and clear or borrowing from your 401-k, etc, etc
Here is the major confusion that was put out yesterday, in the body of the mortgagee letter, ML 09-15, at the bottom, it stated :
The Tax Credit: Short-Term Loan:
Entities that can offer the tax credit advance with short-term loans:
- Federal, state, and local governmental agencies and nonprofit instrumentalities of government, FHA-approved nonprofits, and FHA-approved mortgagees may provide short-term or “bridge loans” secured only by the anticipated tax credit due the homebuyer as collateral.
The confusion: It states “as collateral” and not as a secured lien against the home, but as a secured loan against the collateral. Which in this case would be the $8,000 tax credit.
Because of this, HUD does not allow for monies to be borrowed or given to in any form that I did not mention above, to be used for the down payment. The reality of it all, basically everything that was stated in the mortgagee letter, that has been revoked for now, is old school FHA. When it comes to FHA loans/FHA mortgages, you could get monies for your down payment from the items that mentioned above, which is mentioned in the mortgagee letter. Well, was mentioned… One caveat to all of this is that HUD was going to allow for lenders to secure a short term loan or bridge loan against the $8,000 to be used to purchase a home. But again, that can’t be used for the actual down payment, because it goes against the basic FHA guidelines of down payment monies of 3.5%. Now, unless HUD changed this, it does not clearly state this in the mortgagee letter, even though that letter is no longer valid.”
So for now, buyers must find their down payment the same way they have always had to. Regardless of whether the tax credit can be used as the down payment, it is still a fantastic benefit for first time home buyers especially when combined with the added tax deductions of mortgage interest and property taxes (thereby lowering taxable income).
Rates are low. Prices are reasonable. $8,000 tax credit. Now is a great time to buy real estate.
Questions? Please feel free to email me: Kevin@MyCWMtg.com
Related Posts: Buyers, CW Mortgage, Financial news, Home Loans, Mortgage News, San Diego
