Archive for San Diego Mortgage Programs
NOV 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.
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.
In a huge contrast to how things were a few years ago, these days it can be harder than ever to qualify for and close a San Diego mortgage loan.
Besides Freddie Mac, Fannie Mae and FHA having tighter rules, many lenders have more strict guidelines in place for financing that are called, “overlays”. Knowing which lenders have what overlays does help us place your San Diego home mortgage with a lender that will give us (and you) the fewest problems. I have come up with a list of the 5 most common hurdles that we have seen in the past 2 years that can and will keep your San Diego mortgage loan from closing. These apply if you are looking to buy real estate in San Diego or refinance your existing home.
1) You Owe Too Much Money.
This is one of the basic 4 C’s of lending. When you are applying for your new San Diego mortgage loan you have to show a CAPACITY to pay it back. The fact is, guidelines are changing rapidly and on Fannie Mae loans the debt to income ratio is being dropped from 55% to 45% (this was up to 60% last year). These ratios do not include food, utilities, auto and life insurance, auto expense, medical expense or any discretional spending. If you have balances on a lot of credit cards and car loans, you might owe too much money to qualify.
2) There are Issues with Your Tax Returns.
All loans today (with a few VERY rare exceptions) are done with full documentation. This means to qualify for your San Diego mortgage loan we will need to show underwriting your Tax Returns for the last 2 years. In the past this has mainly been a problem for people that are self employed because of “creative accounting practices” and excessive deductions. More recently I have seen issues with W2 employees ranging from non reimbursed tools for construction workers and mileage deductions for sales people to rental income not being fully disclosed or even shown on the wrong schedule of the returns.
3) The Property Does Not Appraise
This is another one of the 4 C’s of lending, COLLATERAL. It seems basic, but a lender will not loan you more than a home is worth or in this market 96.5% (FHA only) of what it’s worth. With the new HVCC guidelines and the big drop in San Diego home prices, many homes and condos are not getting an acceptable appraised value. It has always been said that Real Estate is a local business and here in San Diego our local market is changing at a rapid pace. We have been seeing a lack of inventory and multiple offers on listed properties which should show that supply and demand is pushing values higher but with the new appraisal guidelines many appraisals are coming up short.
4) The Condo Association is Broke or There Are Too Many Rentals in the Complex.
Getting condo financing for anything over 80% Loan to Value is impossible right now for any financing other than FHA. Both FHA and conventional sources of funding are getting stricter on condo financing and it’s actually easier to get manufactured home (think mobile home) loans then loans for condos because of a few big hurdles. Many San Diego condo complexes don’t have the reserves required to qualify them as lendable because they have too many people that are late on their dues or that have been foreclosed on. The other reason is that complexes are being turned down is that there are too many rental units. Lenders are now requiring that over 50% of the units need to be owner occupied and many in our area are not. This is why we check the financials, default levels and owner occupancy levels early in the process of getting your San Diego mortgage loan approved.
5) You or the Property Don’t Qualify for Private Mortgage Insurance.
In recent years (before 3 years ago) if you didn’t have 20% for a down payment you could just get a second mortgage. There was no problem doing a refinance or purchase loan in San Diego because there were companies lined up willing to loan up to 100% of a property’s value with a FICO score as low as 580. These loans went away almost overnight when property values started dropping and the only option besides FHA (which is government mortgage insurance) is to get PMI or Private Mortgage Insurance. As with everything in lending, these policies are harder to qualify because they require a lower debt to income ratio and a higher FICO score. Also, private mortgage insurance companies will not issue a policy on a condo.
These are just a few of the reasons why it is more important than ever to work with a local San Diego mortgage expert. If you have any questions or would like to pre-qualify, give me a call at (619)285-2921.
San Diego Home Mortgage : Hope for San Diego Short Sale Buyers and Sellers.
For the past 2 years I have had many pre-approved clients that more than qualify for a San Diego home mortgage that have either settled for their “second choice” home or have pulled out of the market to wait for more inventory. The main reason that they are passing on homes that they really want, can qualify for and are listed for sale is that they are short sales. While I do work with a few agents that have a 100% track record on getting their short sale listings approved and sold, the Sandicor (San Diego MLS) numbers show that on a county average only between 45 and 50 percent of short sale listings end in a closed escrow. In many of these, the ones that do close take between 4 and 9 months to close. This can be a big problem on the financing side of the transaction because credit approvals for a San Diego home mortgage are only good for a period of 90 days and a new approval with new documentation and a credit pull is required after that point. The short sale market and San Diego housing market might be in for a change for the better because the Obama administration has just announced new universal short sale guidelines. These new guidelines for investors (banks and mortgage company’s) should help San Diego home mortgage applicants that are looking to buy real estate in San Diego in a few different ways and a higher percentage of short sales should be closing and closing faster.
While speaking at the annual Mortgage Bankers Association that was held in San Diego a few weeks ago, Lori Maggino from The Treasury Departments Office of Home Ownership and Preservation said that they haven’t reinvented the wheel, but their goal is to cut down on paperwork and to standardize forms. By creating an industry standard they hope to eliminate the time consuming back and forth negotiations between the Realtor and the investor. That negotiation is the part of the short sale transaction that can take the better part of a year. Hopefully when these changes and guidelines come out, we will see more movement in the “pending” inventory of homes on the market and more San Diego home buyers will actually be able to buy the homes that they have offers in on. I will update the blog as more information and implementation is available.
Last Friday The Department of Housing and Urban Development (HUD) had a news release that will impact the San Diego mortgage process quite a bit. HUD controls the Federal Housing Administration (FHA) insured mortgage programs that have seen a huge increase in popularity since the “mortgage meltdown”. Fridays press release gave reference to plans to implement a set of new credit policy changes that will strengthen the agency’s risk management. Rumors have been going around that FHA has dropped below the capital reserve ratio of 2% mandated by congress. They have also announced that a new position of Chief Risk Officer will be created for the first time in FHA’s 75 year history.
Most first time home buyers are using FHA programs for their San Diego mortgage since they allow up to 96.5% financing so the stability and survival of the program is extremely important. These changes take effect January 1st 2010 and have an effect on who can originate FHA loans, the appraisal process and reserve requirements for lenders that originate FHA mortgage loans. This news seems to be very positive for consumers and hopefully for the San Diego housing market as a whole.
To see the press release CLICK HERE.
Apply now for your new mortgage!
I am pleased to announce another high loan to value program that is helping more people buy San Diego homes. The Fannie Mae HomePath™ program can be used to buy foreclosed homes and condos owned by Fannie Mae. There are a few unique things about this San Diego mortgage program that no other program offers. First the new loan will not have any mortgage insurance. Even at the 97% financing level. There is no appraisal needed on the property since the sale price is considered an accepted value of the property. The best part is that there is a minimum of only 3% down on owner occupied properties and investment properties can be purchased with only 10% down. HomePath™ is a program that was made by Fannie Mae for them to be able to sell properties quickly that are already serviced and guaranteed by them. It was designed to minimize the impact of foreclosed properties on a community. The buyer of these San Diego properties is even allowed to have the 3% gifted or loaned to them for the down payment needed to buy the home. The borrower for this San Diego mortgage program must have at least a 620 credit score and the loan must be full documentation. The mortgage can be used on a condo, single family home, a planned unit development (PUD) or on multi unit properties. Second homes and investment properties can be bought with as little as 10% down; so these properties have a tendency to sell quickly.
There are only a few San Diego mortgage lenders approved as HomePath™ lenders. For more information call me at (619)285-2921 or fill out the contact form for us to give you a call.
If you are a Realtor® that would like to find out more information about being approved as a HomePath listing agent or would like some marketing material about the program you can click here for more information from Fannie Mae.
In the past few years the lending industry has lost many programs that were important tools for helping people buy and refinance homes. One of the most used and abused San Diego mortgage programs and a major cause of the “mortgage meltdown” and housing crisis was the stated income loan. While the major banks main concerns these days these days seem to be trying to pass government stress tests and spending TARP dollars, a few small wholesale lenders have introduced stated income San Diego mortgage programs again. The last time this type of mortgage program was available, 100% financing with stated income could be used for purchase or refinance with unlimited cash out and there was a lot of abuse. This time around there are a few more guidelines to hopefully slow the abuse of the program while letting responsible people use this tool effectively. The applicant must now have at least a 660 FICO score and no mortgage late payments in the last 24 months. The loan can be used to purchase or refinance (with no cash out) an owner occupied residence. The property can be a single family or up to 4 units as long as the buyer plans to live in one of the units (sorry no condos) . This San Diego mortgage can only be used for a loan amount of up to $417,000 and the maximum loan to value is 80%. The borrower must be a w2 employee which makes NO sense at all since it is self employed people that usually have a hard time proving their income but hopefully this will change in the near future. This is a true stated income program with no 4506T required so there will not be any request for IRS transcripts. This program can and will help many people be able to get loans that otherwise would not be able to buy or refinance their homes.
For more information on this or any other San Diego mortgage program give me a call at (619)285-2921 today .
In a recent survey over half of potential home buyers said that they are still not ready to jump into the Real Estate market due to the fear of losing their jobs.
Fortunately for San Diego first time home buyers there is a program that will help pay for a San Diego mortgage loan in case of job loss, disability or accidental death. In April the California Association of Realtors® launched a mortgage protection plan. The C.A.R. Housing Affordability Fund Mortgage Protection Program for First Time Home Buyers ( a shorter name would have been nice) will give up to $1500 per month, for 6 months to help make your San Diego mortgage loan payments. A qualified co-borrower on the San Diego mortgage loan can also receive a monthly benefit of up to $750 dollars per month for 6 months.
This program is FREE to first time San Diego home buyers and comes in the form of a mortgage insurance policy that is prepaid for one year. by C.A.R. to help make payments on your San Diego mortgage loan.
To qualify for this mortgage protection plan an applicant must:
- Be a first time home buyer that has not owned a property in the past 3 years.
- The escrow must be both opened and closed between April 2, 2009 and December 31, 2009.
- Purchase a primary residence in California.
- Be represented by a California Realtor®.
- Be a W2 employee (not self employed) but can be a sole proprietor, partner or controlling stockholder in the business in which you are employed.
This San Diego mortgage loan protection plan has NO income or home price caps.
For more information give us a call at (619)285-2921 or contact your Realtor®