Archive for November, 2009

San Diego Home Mortgage Broker BlogNOV 30 2009

Besides the DTI changes to qualify for a conventional San Diego mortgage loan that I went over last week there are some other major changes being imposed by Fannie Mae on December 8th that will affect many people looking for a San Diego Home Mortgage.


If you have had a Bankruptcy, Foreclosure or Deed in Lieu of Foreclosure after the change it will be harder to qualify for a San Diego home mortgage.


The Fannie Mae Desktop Underwriter will be updated and will affect any applicant of a San Diego home mortgage that has had a Foreclosure with a completion date more than 5 years ago but less than 7 years. Starting with the December 8th update the minimum credit score will be a 680 FICO with a maximum of 10% down (but good luck finding MI coverage).  The purchase of a second home or investment property will not be permitted and there will be NO cash out refinance transactions for any property type.


For the San Diego home mortgage applicant with a bankruptcy the rules will also change.  If an applicant has a Chapter 13 that was discharged within the last 24 months , dismissed in the last 48 months, or filed but not discharged or dismissed in the last 48 months will get a “Refer with Caution IV” recommendation. This is an approval level that no lender is honoring.

If the applicant of the San Diego home mortgage has had a non-Chapter 13 bankruptcy that has been filed, dismissed or discharged in the last 48 months the application will get the same refer with caution recommendation.

Some other changes that will apply to people looking for a San Diego home mortgage are:

An IRS 4506-T form will have to be completed for every loan at the time of the application and the closing.  This is an IRS form that will let the mortgage company get a transcript of the applicants taxes directly from the IRS in addition to the copy of taxes that we have to get as part of the application process.

Verbal Verification of Employment will have to be done 10 days before the note date on every non self employed borrower for every mortgage being sold to Fannie Mae. 

Reserve requirements for investment properties and second homes will also be changed.  When getting a home mortgage for a second home the reserves have been lowered to only 2 months but on and investment property it has been increased to 6 months.  Retirement accounts can now be used as reserves but only at 60 percent of current face value of those accounts.

These are a few of the many underwriting changes in the mortgage industry so it is more important than ever to work with a seasoned mortgage professional.  If you have any mortgage questions or would like to pre qualify for a new San Diego home mortgage give me a call at 619-285-2921.  You can also click here to pre-qualify now.

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Fannie Mae Lowers the Debt to Income Ratio to Qualify for Home Loans.

Fannie Mae has said that the debt to income (DTI) requirements for all applicants will be going  down from 55% to 45% (more income to qualify) so anyone looking for a San Diego mortgage loan should re-qualify as soon as possible.  On a regular basis Fannie Mae reviews the DU system (desktop underwriter) to limit losses and to ensure that credit risk assessment will stay strong on as many future loans as possible.  The new rules will go into effect between now and  December 12th and one major lender has already changed guidelines to the new levels.  This new change in the San Diego mortgage and home buying process should not be a surprise considering the recent mortgage loan performance in San Diego and the rest of the country.  From 2003 until just last year the maximum debt to income ratio on most home loans was 60%, these ratios do not include food , utility bills, gas, insurance or anything else that is not listed on the credit report. If you factor these in it is easy to see why home buyers didn’t have much left over at the end of the month.  With just a few unexpected expenses a home owner qualifying at such a high ratio could easily contribute to the recent “correction” that we have seen in the San Diego real estate market.


Make Sure that You or Your Client Still Qualify for that New San Diego Mortgage Loan!


It is extremely important that all perspective home buyers get re-qualified for their San Diego Home Mortgage. Since most soon to be San Diego home buyers have been putting in multiple offers on many properties to try and have one accepted for MONTHS they might be pre approved at a higher DTI and will no longer qualify for the same price home. Working with an experienced mortgage planner is more important than ever because with a proper file there are some exceptions for this new rule.  Fannie Mae has announced that on an exception basis some loans will be approved at up to 50% DTI.  There must be strong compensating factors like a steady job history, a large amount of assets and high credit scores.  It is extremely important that all documentation is  packaged properly UP FRONT before the property search even starts and before anything is submitted to the lender to ensure that a strong case can be made for any exceptions. It may be necessary to pay off a few small debts or to restructure a file completely even if a borrower was pre-qualified just a month ago.

If you or someone that you know is looking to buy or refinance a home in San Diego now is the time to make sure you still qualify.  Give us a call at 619-285-2921 or click here to apply online.  You can also download out printable mortgage planning package by clicking here.