HARP Refinance Loans for Underwater Homeowners
It’s finally here!
The highly anticipated new refinance program for underwater homeowners, commonly called “HARP 2.0″ will be available beginning March 19, 2012.
For homeowners whose loans are held by FannieMae (check your mortgage here) or FreddieMac (check your loan here), this is a great opportunity to get a new mortgage on a property with a loan balance that exceeds the appraised value. Many homeowners have been hurt by dramatic decreases in property values, making it nearly impossible for them to refinance their mortgages. Borrowers with adjustable or interest only mortgages have been particularly hard hit because their mortgage payments have risen and options for changing to a fixed rate loan are few.
If the amount of your mortgage(s) is higher than the value of your property, please call me at (916) 849-9200 to discuss your options under the HARP 2.0 program.
I’m here to help!
March 17, 2012 by Ed Gillespie · Leave a Comment
1/2% Down Payment Option Now Available for First-Time Homebuyers!
If you are considering buying your first home, you may be able to do so with only a ½% down payment!
FHA requires a 3.5% investment of your own funds when using FHA financing for a home purchase. But, beginning March 1, 2012, the California Homebuyer’s Downpayment Assistance Program (CHDAP) is offering downpayment assistance of up to 3% of the purchase price or appraised value, whichever is lower. That means you would only need ½% of your own funds to purchase a home!
Are you eligible for 100% financing through VA? Searching for properties in an area eligible for 100% USDA financing? You can use the CHDAP program for closing costs, too!
As with all loan products, the CHDAP program has guidelines. Give me a call at (916) 849-9200 to see if you qualify!
With home prices and interest rates at record lows, this dowpayment assistance program adds one more reason why now is a great time to buy a home!
For more information on CHDAP, FHA, VA, Conventional, Jumbo and USDA loans on properties anywhere in California, give me a call at (916) 849-9200!
March 8, 2012 by Ed Gillespie · Leave a Comment
“No Closing Costs” Loan? Think Again.
I recently had two clients opt to use an online lender rather than me for their financing. The reason? They believed they were going to get a VERY low interest rate AND pay “no closing costs”. That’s right. Gonna buy a home with nothing more out of pocket than the down payment!
I explain to clients that, with extremely rare exceptions, the only way to avoid or minimize closing costs is through the lender credit associated with the interest rate. The higher the rate, the higher the borrower’s credit for closing costs.
Face it—the title company doesn’t work for free. Impounds must be prepaid. The hazard insurer doesn’t give away free policies. These costs must be paid, either directly by the consumer at closing or via a lender credit associated with the rate.
So where are home buyers getting the idea that they can buy a home bringing in only the amount of the down payment while getting an extremely low interest rate?
Let’s look at CashCall as an example. As of today, their Web site reads:
Today’s Advertised Special – “No Closing Costs”
3.99% / 3.99% APR
Today’s low 30 year fixed rate as of 01-06-12
Apply Online or Call Now!
1-866-708-LOAN (5626)
Click for loan assumptions Click for No Closing Costs disclosures
Great rate! And no closing costs!
But notice there’s a link to closing costs disclosures. The disclosures say:
‘No Closing Costs’ loans
The following Fees are covered on a ‘No Closing Costs’ loan.
On purchase transactions the ‘No Closing Costs’ option covers the cost of the appraisal fee, credit report fee, flood certification fee and tax service fee. The borrower is responsible for paying all title fees, escrow/closing fees, notary/signing fees, prepaid interest, property taxes, state mortgage taxes, insurance, mortgage insurance and recording fees.
Uh-oh. Looks like you are paying closing costs after all!
But there is more in those disclosures:
Please note that for the 30 Year No Closing Costs 3.99% and 10 Year No Closing Costs 2.99% advertised rate specials, the following pricing adjustments apply: Loan amounts from $300k to $417k priced as shown. Loan Amounts $250k-$299,900 add .135 to rate. Loan Amounts $200k – $249,900 add .26 to rate. Loan Amounts $150k to $199,900 add .385 to rate.
So, unless you are financing $300,000 or more, you aren’t getting the advertised 3.99% rate.
The lesson here is not to trust your largest financial transaction to a person working in a Web site’s call center. Find a reputable person in your state who can be reached during and after business hours by cell phone. They will provide you a no fine print rate quote customized to your specific financial situation.
January 26, 2012 by Ed Gillespie · Leave a Comment
What It REALLY Costs to Get a Roseville Mortgage
Recently, I have had a few clients be shocked at closing cost quotes I have given them. On each, I went back and checked my numbers very carefully and, yes, the quotes were right! The clients just didn’t realize that there were many costs associated with a home purchase!
No one wants any unpleasant surprises that involve money! So, here is some information on closing costs to help you better prepare for a home purchase.
In addition to a down payment, home buyers should anticipate these possible costs:
Home Inspection
An inspector will review the mechanical, electrical, and structural aspects of your home then provide a written report.
Condominium/Home Owners Association-related Fees
These may be required if you purchase a home in a condominium complex.
Well and/or Septic Certifications
If the property has either of these systems, a buyer will want professional testing to ensure they function properly.
Pest Inspection
A qualified professional inspects the property, looking for termites and other pests and pest damage then submits a report.
These costs are common in a purchase transaction:
Credit Report
This fee covers the cost of a three bureau credit report which shows each borrowers’ credit history. The borrowers will be provided a copy of their credit report.
Appraisal
An appraisal is a professional opinion about the value of your home, prepared for the lender. The appraisal is usually paid for up-front by the borrower. And, in a few cases, more than one appraisal may be required. Buyers receive a copy of the appraisal.
Title and Escrow services, such as title search and insurance, so buyer and lender are sure that no one else has any lien, claim, or encumbrance on the property; recording the Deed and mortgage with the County Recorder; Notary for signing services; and, preparing documents necessary to close a real estate transaction.
Lender’s Origination Services
For services involved in the creation of a mortgage loan, such as loan processing and the underwriting of the loan.
Property Taxes
Payable to the County. The amount collected depends upon the month of the year the property sale closes.
Insurance
Lenders typically require the first year of fire and hazard insurance be paid up front. Flood insurance will be required if the house is in a flood hazard area.
Impounds (also call Reserves)
Prepayments of funds, held in an account, to cover annual charges for homeowner’s insurance and property taxes which will be paid by the lender on the borrower’s behalf. Sums will be added to the impound account each month from the monthly mortgage payment.
Prorated Mortgage Interest
Depending upon the time of month a loan closes, this per diem charge may vary from a full month’s interest to a few days interest. Future interest payments will be made through the monthly loan payment.
Supplemental Property Taxes
The buyer will be billed by the County for these, by mail, after the sale closes. Supplemental taxes that are assessed due to a change in ownership.
The amount of closing costs varies, depending upon the amount of the mortgage and type of loan (i. e., VA, FHA, USDA or Conventional). A mortgage professional can provide an estimate of costs when a potential buyer completes the prequalification process.
What if you don’t have enough money for closing costs? Consider a gift from a family member or participating in a down payment assistance program.
November 28, 2011 by Ed Gillespie · Leave a Comment
Help for California Homeowners with Financial Hardships
If you are a homeowner experiencing financial hardship, the California Housing Finance Authority (CalHFA) might be able to help!
CalHFA has a mortgage assistance program called “Keep Your Home California”, a federally funded initiative for low- and moderate-income homeowners who are delinquent or facing default on their primary residence. The program has four components:
- Unemployment Mortgage Assistance*
For homeowners receiving California EDD Unemployment, mortgage payment assistance up to $3,000 per month for up to nine months.
- Mortgage Reinstatement Assistance*
One time payment of up to $20,000 for principal, interest, taxes, insurance and HOA dues for those who have fallen behind on their first mortgage.
- Principal Reduction*
Funds to be matched, dollar for dollar, by the loan servicer (the company to which the monthly payment is made each month) for loan principal reduction. (For mortgages originated before 1/1/09)
- Transition Assistance*
One time funds up to $5,000 for homeowners involved in a short sale or deed in lieu of foreclosure.
* These programs have income limits and eligibility criteria. Homeowners may qualify for more than one program.
The funds are disbursed directly to the participating loan servicer, to be applied to the first mortgage. The assistance is a conditional lien that does not require payments. The lien becomes a loan subject to repayment, however, if the home is sold or the first mortgage is not kept in good standing for three years following the disbursement.
For assistance and more information, call 888-954-KEEP.
If you are not experiencing a financial hardship and would like to refinance an underwater mortgage, please call me at (916) 849-9200.
November 10, 2011 by Ed Gillespie · Leave a Comment
The Myth of Separate Credit on Sacramento FHA Loans
Some married couples here in Sacramento elect to maintain completely separate bank accounts, assets and debts. Unfortunately, some think this means that when one spouse wants to buy a home that the other spouse’s credit is not considered.
On a Sacramento FHA loan, this is often not the case. A credit report is run on the non-borrowing spouse and the spouse’s debts are included with the borrower’s debts.
This is no big deal if your spouse has clean credit and not much debt. But what if they don’t? Some couples maintain separate finances specifically because one of them has bad credit.
On a Sacramento FHA loan, a low credit score for the spouse is usually, by itself, not an issue. The loan will often be granted, but the non-borrowing spouse may be left off of title to the house.
History of default on a mortgage by a non-borrowing spouse is quite another issue for FHA underwriters. Did that spouse have this loan prior to the marriage? Did the couple file joint taxes and take advantage of the mortgage interest deduction? Was the other spouse on title even though they were not on the mortgage? A select few lenders might do the loan but most won’t.
The bottom line is that maintaining separate credit does not guarantee that you can get an FHA loan solely on your own credit.
October 12, 2011 by Ed Gillespie · Leave a Comment
The Lowest Interest Rate Isn’t Always the Best Deal on an El Dorado Hills Mortgage
As a El Dorado Hills mortgage broker, I am sometimes asked by clients, “What is your rate?” Little do they know that I have scores of different rates offered by more than 50 lenders! Interest rates are a very interesting subject to most people when financing a home.
Everybody seems to want the “best rate”. When I hear that, I sometimes ask, “What is more important to you a lower cost loan or a lower interest rate loan?” Many buyers are solely focused on interest rates without considering the closing costs and actually having enough cash to close.
An interest rate comes with a corresponding cost or credit. A lower interest rate will cost more than a higher interest rate. Let’s take a $200,000 loan amount, for example, and compare the interest rates:
5.0% gets (2.0%) credit ($4,000) and a principal and interest payment = $1,073.64
4.5% gets (0.0%) credit ($0) and a principal and interest payment = $1,013.37
So the question is, “Would you rather pay an extra $60 per month in payment OR come up with an additional $4,000 to get your El Dorado Hills mortgage?”
October 11, 2011 by Ed Gillespie · Leave a Comment
A Lesson about Hazard Insurance for Your Folsom Mortgage
If you’re a Folsom home buyer getting some quotes for hazard insurance, you look for the lowest possible insurance premium, right?
As a Folsom mortgage broker, I used to think so until I got a thorough insurance lesson from a very smart Sacramento insurance agent. A miscalculation on hazard insurance could end up being a BIG and unpleasant surprise in a much higher than expected annual premium to the homebuyer to get the actual coverage they need.
Forego the increase and a homeowner is in a precarious place of not having enough coverage. Here are some special items to consider when shopping for insurance: Be sure to ask your insurance agent what their policy is for “loss of use” coverage. This is to help replace the loss of use of the home that has sustained damage and is unlivable for a period of up to one year. What would it cost to get a suitable home until the repairs are made?
Check policy coverage for “building code and ordinance upgrades”. If an older home sustains damage, local codes or ordinances may require “upgrades” (for compliance with code or ordinances changes after the home was originally built) during the repair. The insurance policy may not cover these “upgrades” or they’ll only cover a small percentage of them. Make sure you ask your insurance agent about this when deciding on what kind of coverage is adequate. You might be surprised at which companies cover 100% building code and ordinance upgrades and the ones that don’t. I know I was!
If the home is located in a rural area you might want to check with the local Fire Chief and find out what “protection class” the home is in. If the home is located five miles from the nearest Fire Station and there is no fire hydrant near the home, this is a protection class 8, 9, or 10 and will increase your premium dramatically. While you’re at it, find out if the nearest Fire Station has a paid or volunteer staff. This is also a major factor in the annual premium you’ll pay.
Be knowledgeable when shopping for homeowners insurance for your Folsom mortgage!
October 9, 2011 by Ed Gillespie · Leave a Comment
You Really Don’t Want that 3% Rate for Your El Dorado Hills Mortgage
You’ve probably heard the ads. It’s often for one of the major banks and the commercials go something like this: “30 year mortgage just 3%!” A few of my customers have heard these ads and asked me to match the rate for their El Dorado Hills mortgage I could but I don’t. Here’s why…
What the banks don’t advertise is that you can only get that screamin’ low rate if you are willing to pay “discount points”. One discount point equals one per cent of the loan amount. If you wanted to borrow $200,000 at that advertised mortgage rate of 4.5%, the 2 ½ discount points (2 ½ percent of the loan amount) would cost you $5,000 in fees at loan closing.
An interest rate comes with a corresponding cost or credit. A lower interest rate will cost more than a higher interest rate. Let’s take a $200,000 loan amount, for example, and compare the interest rates:
5.0% gets (2.0%) credit ($4,000) and a principal and interest payment = $1,073.64
4.5% gets (0.0%) credit ($0) and a principal and interest payment = $1,013.37
Would you really want to spend thousands of dollars to get a low rate on your El Dorado Hills mortgage? I’ll bet not!
October 8, 2011 by Ed Gillespie · Leave a Comment
Cash Out Sacramento Mortgage after a Cash Purchase
Many Sacramento home buyers are taking advantage of the great buys available in the current market, paying cash for Owner and Non-Owner Occupied homes. Until June, 2011, however, these buyers had to wait six months before they could get a mortgage on their purchased homes to recover some of their initial cash investment.
Now, no more waiting!
You can now get cash-out financing with no waiting period after a no-financing purchase transaction under the following parameters (no exceptions will be granted):
- The new loan amount is not more than the actual documented amount of your initial investment in purchasing the property, plus the financing of closing costs, prepaid fees, and points (subject to the maximum loan to value guidelines for the transaction).
- The purchase transaction was an arms-length transaction.
- The purchase transaction HUD-1 confirms that no mortgage financing was used to obtain the subject property.
- The preliminary title search or report confirms no liens on the subject property.
- The source of funds for the purchase transaction can be documented (bank statements, personal loan documents, HELOC on another property). Any loans used as the source for the purchase transaction will be required to be repaid on the new HUD-1.
Even better: this change also applies to owners of 5-10 properties, too!
Paid cash for a home and ready to recover some of your investment? Considering a no-financing purchase but don’t want your cash tied up too long? I can help you! Give me a call at (916) 849-9200!
September 2, 2011 by Ed Gillespie · Leave a Comment
