New Conforming Loan Limits Announced For 2009
Posted by Kevin Kueneke | Currently 1 Comment »
After months of speculation, we finally know what the new 2009 high balance conforming loan limits are for San Diego and other “high cost” areas. The Federal Housing Finance Agency (FHFA) said that the $697,500 number we enjoyed for part of 2008 is dropping to $546,250 in San Diego.
Some areas such as Los Angeles-Orange Counties, San Francisco, San Jose, and Santa Cruz are having their 2009 numbers set at the new maximum of $625,500.
According to FHFA’s press release, the 2009 loan limits were calculated using 115% of median house prices as determined by the Federal Housing Administration (FHA) whereas the 2008 loan limits were calculated using 125% of median house prices.
So what does this mean? It means that anyone currently in escrow in San Diego with plans to borrow more than $546,250 needs to do everything they can to get their loan closed before 12/31/2008 or face significantly higher interest rates. There is almost a 2% interest rate difference between loans less than $697,500 and loans greater than $697,500 (also known as true jumbo loans) because conforming loans are guaranteed by the government (FNMA and FHLMC). Guidelines are also more strict for true jumbo loans than for conforming and high balance conforming loans.
As expected, the Federal Housing Administration (FHA) announced that FHA Jumbo limits will match the high balance conforming limits. The Department of Veteran’s Affairs (VA) said that VA Jumbo loans with zero-down payments will be allowed up to the high balance conforming loan limits through the end of 2011. This is good news for FHA and VA buyers as they will still be allowed to take advantage of these programs for higher priced properties.
Any questions or comments? Please email me at Kevin@MyCWMtg.com
Popularity: 48% [?]
Related Posts: Buyers, CW Mortgage, Education, Financial news, Home Loans, Homeowners, Interest Rates, Mortgage News
FHA Kiddie Condo…What Is That?
Posted by Kevin Kueneke | Leave A Comment »
Many of my referral partners have asked about the FHA “Kiddie Condo” program. I spoke about this several months ago, but now that FHA loans are more prevalent, I felt that it is a good time to revisit the details. Here are a couple questions I have been asked recently:
Question: My child is now attending college and I do not want to throw money away on their rent. Is there a way to buy a property for them to live in without having to pay an enormously high interest rate? Can I avoid a large down payment typically associated with investment properties? 
Answer: Absolutely. FHA allows a non-occupant family member (for example, mom and dad) to go on the loan and basically carry the load. Income and debt from all parties are used to qualify, but the occupying borrower is not required to have any income or assets of their own. As long as your college student does not have credit that would otherwise disqualify them for a loan, their income and assets (if any) are irrelevant. Hence the term “Kiddie Condo”. Better yet, rent the other rooms to your child’s friends to help with cash flow.
Question: My parents are looking to retire and relocate to a new home closer to my family. Unfortunately, their verifiable income is not enough to qualify for a loan, but they do have a small down payment. Since I had planned to help them with their new mortgage payment, can I help them purchase a new home?
Answer: Absolutely. The term “Kiddie Condo” does not just apply to parents helping their children. Adult children can help their parents!
By the way…in addition to condos, all 1-unit properties are eligible: attached and detached single family residences (SFR’s), and homes in a planned unit development (PUD’s).
Far better option than standard Conventional financing due to significantly lower down payment required (3% versus 25-30%) and still get owner-occupied interest rates! **The minimum down payment for FHA loans is going to 3.5% as of January 1, 2009. Still a dramatic difference.
Remember though: these are full documentation loans for all qualifying parties and property condition is important to FHA. At this time, FHA Jumbo loans do not allow a non-occupant co-borrower…so keep your loan amounts under $417,000.
Questions? Call me at (760)500-1919 or email me at Kevin@MyCWMtg.com
Popularity: 62% [?]
Related Posts: Buyers, CW Mortgage, Home Loans, Homeowners, Mortgage News
A Change In A Buyer’s Expectations
Posted by Kevin Kueneke | Leave A Comment »
The home buying landscape is significantly different than this time last year. For those of us in the industry, this is obvious.
The media has mentioned this in countless articles and news broadcasts, but there are still many homeowners looking to buy a new home that expect to get the same loan they got when they purchased their last home. They expect, and in some cases demand, a No-Documentation loan or a No Income Verification loan with little money down. 
These loans were so easily attainable that many people forgot what “real” qualifying is like. Questions like, “What do you mean you want to see a paystub?” or, “My tax returns… you need every page?” are becoming quite common.
However, I had a very refreshing meeting the other day with a new client. Refreshing in the sense that the client understood that lending guidelines have actually changed over the last 12-18 months…but it took a little time for it to sink in.
We first spoke on the phone two weeks ago and at that time he was determined to buy a home that was outside of his full-documentation price range, but well within his “stated income” or “no doc” price range of years past. He is a 100% commission employee with significantly lower income than two years ago, and has about 15% down payment (he is selling his current home and is fortunate enough to have equity). However, his loan amount will still be over $417,000 (but under $697,500 - the current Agency Jumbo limit in San Diego County) and his once high credit scores are now considered average.
Two weeks ago, he sounded obviously frustrated by the fact that his No-Doc loan was no longer available. I explained that lending guidelines have changed since the last time he purchased a home and options are far more limited, especially with a down payment of less than 20%. He was still in the year 2006, the year where anyone with a pulse could qualify for a home loan.
He then left for a week-long family vacation. It took another few days for us to finally meet, during which time I encouraged him to call several other lenders, including his servicing lender. They all told him the same thing…lending has changed and banks are stricter than before and that his ocean view dream home is outside of his budget. But they forgot to tell him how much home he can afford. 
We ran the numbers and found that if he was willing to live a little further away from the ocean, that he could still afford a nice home. Nicer than what he has now but for less money. He even said that his current payments are a little steep and that he always thought it was strange that he was able to purchase his last home even though he did not have a job at the time.
If the mortage market had not crashed and his No-Doc loan was still available, this client admittedly would have purchased a more expensive, more unaffordable home like so many others have. Fortunately, he was forced to re-evaluate. He was forced to change his expectations. And he was willing to do so.
Any questions or comments? Please feel free to call me at (760)500-1919 or email me: Kevin@MyCWMtg.com
Popularity: 46% [?]
Related Posts: Buyers, CW Mortgage, Home Loans, Homeowners, Mortgage News
FHA Tries To Limit “Buy And Bail” Purchases
Posted by Kevin Kueneke | Currently 1 Comment »
I recently wrote a post about FNMA’s underwriting guideline change regarding retaining a principal residence as a rental when buying a new home. The gist of the new guideline is that the retained property needs to have a minimum of 30% equity in order for rental income to be used to help qualify for the new home. Otherwise, the buyers must have an increased amount of reserves in the bank and also sufficient income to carry both mortgages.
Lenders used to allow buyers to merely provide a rental agreement and then use a portion of that rent to offset the house payment. Unfortunately, some buyers would provide a fake rental agreement thinking that they would be able to easily rent out the home.
However, after a few months sitting vacant, and after a few more mortgage payments are made, the nov
elty of having a rental property wears off. The decision to walk away for many folks became very easy to make.
This decision is even easier to make if the retained property is upside down, like many in today’s market. Unfortunately, many people over the last twelve months have purchased more affordable homes with the intention of letting the previous home go, creating what lenders now call “Buy and Bails”.
FHA has temporarily decided to tighten their guidelines to help avoid this practice. Similar to FNMA, if the retained property has sufficient equity in the home (25%), then rental income can be used. Otherwise, borrowers income must be able to support both properties. **Relocation buyers are excluded from this rule as long as an executed lease agreement (with a minimum one year term) is provided as well as proof of receipt of rental deposit**
Even if the vacated property does not have an FHA-insured loan, FHA feels that if the property ended up in foreclosure it might have an impact on the value of nearby homes with FHA-guaranteed mortgages.
I understand FHA’s reasoning behind the guideline change and it was really only a matter of time before FHA followed FNMA. In the grand scheme of things, this change is another step towards reducing future foreclosures, but it does further emphasize that FHA is geared toward the first-time homebuyer.
Any questions? Please feel free to call me at (760)500-1919 or email me: Kevin@MyCWMtg.com
Popularity: 46% [?]
Related Posts: Buyers, CW Mortgage, Home Loans, Homeowners, Mortgage News
