Mortgage Loans

2/21/2014

GRANTS to Buy a Home in California

Down Payment Grant Gift

Orange County INCOME LIMITS GENERAL NUMBERS

FHA Max

$85,680 Riverside & San Bernardino
$102,360 Orange County
$85,680 Los Angeles County
$91,080 San Diego County

Compare CHDAP, CHFDAP ACCESS Down Payment Assistance Programs – Which is Better?

Compare CHDAP, CHFDAP, ACCESS Down Payment Assistance Programs – Which is Best?

Home buyer down payment assistance loan programs such as CalHFA’s CHDAP, CHF DAP, and the CHF ACCESS program are three of the most popular first time home buyer assistance programs in California.

The CHDAP and ACCESS program all provide 3% assistance that can be applied towards meeting FHA’s 3.5% minimum down payment requirement.

CHF DAP gives grants gifts five percent

I offer all these mortgage loan programs but each is a little different

CalHFA’s CHDAP assistance, CHF’s DAP Grant, and the CHF ACCESS assistance program will help you make better home financing decision that impact you long after you move into the home.

	CHDAP	CHFDAP	ACCESS
Assistance Amount	3% – sales price	5% – loan amount	3% – sale price
3% Assistance	Silent 2nd Loan	Grant	Loan Repaid
Qualifying Area	All California	All California	All California
Mandatory Origination fee?	0	1.5%	0
Credit to pay closing costs?	Up to 2%	Yes	Very Limited
DTI Ratio Max Limit	55%	50%	43% – 45%
Minimum Credit Score	640	620	580
First Time Buyer Only?	Yes	No	No
Income Caps? (county)	Yes	Yes	Yes
Income that Qualifies	Household	Borrower	Borrower
Max Loan Amount	$417+	$500	$417k+
90 Day Flips Allowed	Yes	Yes	Yes
Prepayment Penalty?	No	No	No
Max Seller Contribution?	3%	6%	6%
Gift Funds Allowed?	Yes	Yes	Yes
Cancellation Fee?	No	$400	No

$250,000 Purchase	Comparison	===========	========
Assistance Amount	$7,500	$12,500	$7,500
Down Payment Needed	.5% = $1,250	0	.5% = $1,250
Est. % Rate /apr (call for actual current rate)	3.875 / 4.962	4.5 / 5.413	4.5 / 5.183
Rate on 2nd lien	3.25% (deferred)	NA	8.25%
Mtg P&I Payments + MI	$1,405	$1,208	$1,567

Interest Rate: The interest rate comparison is for a 30 year fixed, 660 FICO score, from a time when CHF published their Platinum rate of 4.5%. Rates can vary, but for the most part, the Platinum and ACCESS mortgage rate is .5% to .625% higher than a regular FHA loan. Rates change a couple times a day. This is not a rate quote. This is not a commitment to lend. These programs may be cancelled at any day at will. APR is listed above as second number

All assistance programs are subject to funding availability

CalHFA CHDAP Down Payment Assistance Program

As you can see, the CalHFA CHDAP home buyer assistance program typically offers you a much lower interest rate, payment, and is the least expensive option between the three assistance programs. Some people say the CalHFA’s CHDAP is the BEST down payment assistance program in all of California.

CHFDAP Down Payment Assistance Program

The CHF DAP program seems like it should be the better program because the 5% grant never has to be repaid, right? CHF Platinum charges an additional 1.5% up. Plus, the interest rate, on average, is .5% higher than CHDAP assistance program.

In the $250,000 purchase scenario above, the CHFDAP assistance program gives you $12,500. for the down payment (less than CHDAP or ACCESS), then charges you a 1.5% fee ($3,618), AND you Just because you can use the Platinum assistance program doesn’t mean you should, right? What do you think?

CHF ACCESS Down Payment Assistance Program

The CHF ACCESS program offers the highest interest rate, reduces how much you can qualify for but does cater to borrowers with lower credit scores. However, since the assistance in the form of a 2nd loan (15 yr fxd) that is actually a fully amortizing payment, you’re paying that 3% loan off and building equity faster.

Can I Refinance Out of My Higher Rate Platinum or ACCESS Loan in the future?

To qualify for an FHA streamline refinance, FHA has a 5% net tangible benefit requirement test.

In five years (after having built enough equity to 80% assuming 3% gain in value per year - or if you have additional funds to pay the loan down sooner) you may be able to refinance out of this this FHA assistance loan and into a conventional loan. Of course your value could go down rather than up. There is no guarantee you will have income or credit to refinance at a later date.

The Platinum and ACCESS down payment assistance programs are great for people who don't have a family member who can give them a gift or haven't saved enough money on their own, have lower credit scores (but not always), and may feel the only way to purchase is to accept a higher rate and fee home buyer assistance program.

If you can’t get your credit score to 640, or make more than the CHDAP program income cap, you don’t have many options. That’s when Platinum and ACCESS fill a void. I can help you raise your FICO score for free. Don't be urgent to buy with a low score. Call me to get some action paln to raise the score as it will affect your rate and long term payment.

THE CONVENTIONAL LOAN PROGRAM IS MUCH BETTER BUT YOU NEED HIGHER FICO

5% Grant combined with Conventional loan

Income limit Orange County = $ 93,750 or $7793 monthly

FICO score needed 660

Using 43% debt to income ratio as a target

Individuals will have a variety of parameters, FICO, debts, = many factors to

count into qualifying but these are some general numbers

$7793 X 43% = $3351 PITI target

$480000 sales price

$456000 loan

p and I $ 2310

Mi 380

Tax 490

Insur. 80

Total $3260 They could not have any bills with a $ 480000 loan

Seller pays some of closing costs? OR buyer needs about $4000 to close

***

$7000 month income X 43% = $3010 target

$400000 sales price

$380000 loan

P and I $1925

Tax 416

MI 310

Insur 79

TOTAL $ 2730 - 3010 they could have $280 in monthly other bills

Seller pays some closing costs or Buyer needs about $ 3800 to close

***

$6500 month income X 43% = $2795

$375000 sales price

$ 356250 loan

P and I $ 1805

Tax 390

MI 290

Insur 77

TOTAL $ 2562 - $2795 the could have $ 233 in monthly other bills

O.K you made it through all those numbers. I know it sounds confusing. Just call me and we can talk about your scenario. Everyone is unique.

Below are some fun pictures I took with my iphone at MIT with my son as your reward for reading.

2/17/2014

Stop The Ten Mistakes Buyers Make on Home Loan Application

Boston window

1)Lack of disclosure: Buyers need to be honest. Disclose everything that remotely affects the financing of the home.

I can fix “broken deals”. I’m here to close your loan on time. But I can’t fix issues that aren’t disclosed.

For example: Just because an issue doesn’t pop up on a buyer’s first credit report, it does not mean it won’t raise its ugly head at the very end of underwriting. Layers of checks occur after the initial mortgage credit report.

Issues that involve past government contact, (i.e. tax liens, unpaid student loans, pending litigation, or criminal fines) often go undisclosed (particularly where there is a “remarriage”) and one (or both) of partners wish to hide their past from the new spouse.

Often these items are so far in the past they (conveniently) “forget” to disclose. A CAVIRS is run at closing and sometimes other checks to government data bases. You can be sure the ghosts come out of the closet

Cavirs is the LAST STEP of the “Quality Control” or QC process (after loan docs are drawn, signed and returned to the doc dept.).

Lying will can “sour” Underwriter on a file and may cause them to decline a marginal loan application even after you signed.

2) Lack of preparation/ cooperation.

I am the greatest loan officer when your borrower cooperates with me.

If buyers aren’t providing information in a timely manner there are usually reasons why…

Don’t spin your wheels with buyers who have not gotten preapproved.

Agents who remaining in close contact me aids to closing on time. As me to teach you to read a DU and an LP approval. Banks will only have access to one but as a mortgage brokers I can go a variety of ways.

3) Buyer’s go out and apply for credit (in anticipation of redecorating their new home) or make large purchases

I have seen borrowers who went to Car Max and they purposely run your FICO fifteen times through every lender that they can to block you from buying a vehicle elsewhere. Fifteen inquiries in one day can knock your score down one hundred points.

In addition to drastically lowering scores, new debt raises debt ratios.

4) Transferring money around without a “clear paper trail”.

After 9/ 11 the United States government has strict currency laws about funds in and out of accounts greater than five hundred dollars that are not payroll deposits.

If the borrower is receiving gift funds, put the funds into the receiver’s account ninety days before loan submission. This eliminates the need for a gift letter (and the giver’s subsequent documentation).

The problem with gifts is: givers must provide a proof/source of funds (bank statements) and often the giver resents / refuses to provide banking info. The gift person has to provide bank statements all pages.

The solution: Convince the giver to fax banking info directly to the loan officer so their privacy is preserved.

5) Liquidation of 401k or IRA accounts.

Borrowers need to begin the liquidation process inquiry three weeks before the close of escrow.

6) Illegible or Unsigned Documents

From an illegible purchase contract to “blacked out account numbers” on bank statements borrowers and sometimes agents submit unreadable documents. Borrowers take smart phone photographs of small items such as driver’s licenses and argue about if they are legible.

7) Many loan officers simply prefer processing “refi” transactions.

Purchase transactions are more tedious and require much more attention to detail than refinances. Escrow must provide accurate fee structure before we disclose, and they are often under-staffed to gather this information the first day of the transaction. Home owner associations have become a mousetrap of fees and misinformation. Banks mostly refuse to get Condominium complexes back on the FHA approved list because the fines for errors are $250,000 and five years in jail. A small mortgage outfit will not take it upon themselves to make this risk. At Eagle Home Mortgage I have in house staff to gather the documentation and submit to HUD. I share the same break room with Underwriters in our same office, processing and funders.

8) Appraisal value comes in low.

With multiple offers on each property it’s tempting for sellers to choose the highest offer. If the offer is all (or mostly) cash; it’s a good choice.

If the buyer has minimum down and a lack of capacity to make up the difference between sales price and appraised value there is nothing but to renegotiate with the seller.

Dodd-Frank legislation requires all appraisals to be conducted by an independent appraisal (arm’s length) service. Loan Officers CAN NOT speak to appraisers.

Appraisals are to REFLECT current home prices (based only on previously closed escrows) vs. LEADING home prices (based on future/anticipated close of escrows).

If the loan is FHA or VA, the appraised value is “set in stone” for at least the near future (no second appraisal is allowed).

The best way to avoid a low appraisal is for the listing agent to show up for the appraisal appointment armed with comparables in hand, and to provide those to the Loan Officer.

Often appraisers have their own lock box key (it does speed the appraisal process) allowing appraisers to bypass the contact with agent. Listing agents do not give them access to wander in.

9) Verification of (previous) employment.

Many buyers working for large corporations must be verified thru automated systems.

If the borrower has a job change, this process will be repeated if we’re to count overtime, bonus or commission to qualify.

Some companies only verify “gross wages” in which case we need to have all the past 2 years of paystubs to count the additional income. Tax returns must not show employee expenses to match up and use the overtime, bonus and or commission.

10) Borrower leaves town, takes a vacation or thinks they are all done. The loan process is no longer simple. More paperwork is always going to be required if your deal goes past thirty days as the paperwork becomes aged/ old.

2/14/2014

Yahoo email hacked

Green House at Santiago Canyon College, Orange California

A gardening post from sunny Orange County California. While the East Coast is suffering from storms, California is concerned with lack of water. Orange County has recieved little or no rainfall. All of our water is imported from the Colorado River. Our President is in Fresno California today to talks about water rationing. What will happen to industry? Food fiber and fuel costs can only increase...

On presonal issues my yahoo email was hacked. I have nothing in my inbox two days running when I usually recieve 200 a day. Please call me and for heaven's sakes don't send them money I am not in the Ukraine.