What’s Ahead for Home Loans in 2010:

House for Sale - CA Mortgage Guy - LA Home Mortgage

This year could bring significant changes from 2009 for those seeking a LA Home Mortgage Loan or CA Mortgage Home Loan. Over the last year, home prices fell to 2003 and earlier levels in many parts of the country. In addition, home loan rates declined to the lowest levels on record and this combination led to the highest home affordability levels ever recorded. Here’s a recap of what happened in 2009 and what you need to know for the year ahead.

Would You Like a Sweetener with that Rate?

Interest rates throughout 2009 were artificially low. That’s because in late 2008, the Federal Reserve put into place a program for purchasing Mortgage Backed Securities with the intention of lowering mortgage rates. They were successful with reported rates by Freddie Mac falling below 5.00% several times in 2009.

Without this program mortgage rates would have been at least 1.00% higher, and potentially even higher than that. Did you know that a change of 1% in a home loan rate impacts the amount someone can borrow by roughly 10%? For example, if rates are in the low 5.00% range today and they shoot up to the low 6.00% range, $250,000 home buyers may become $225,000 home buyers.

Look for rates to return to 2008 and previous levels as the Fed ends the program on March 31, 2010; unless the program is extended. While rates will not immediately increase to 6.00% or higher, know that without additional intervention or an extension of the program, rising rates are inevitable. Expect that under worst case scenarios, rates could dance around the 7.00% range.

Show Me Your Docs

Contrary to what you may see or hear in the media, money is widely available for people who want to finance their homes. There is one caveat, though. People need to be able to demonstrate that they qualify for the loan amount they are pursuing and that they have been willing to repay debt they have accepted in the past.

To obtain financing today, a borrower needs to supply the lender with all documentation pertaining to their income, liquid assets and potentially items related to their credit reporting. The best preparation path to follow is to gather most recent paystubs for 30 days of earnings, two years W-2s with complete tax returns and three months statements, all pages, for any liquid assets used for qualifying.

The free wheeling days of borrowing whatever people thought they could repay are gone. While some exceptions may be granted for strong compensating factors, total debt to income level will be capped at 45%.

If you haven’t checked out your credit reports recently, now is a good time to do so if you plan on seeking financing in the next 12 months. You can pull up your reports for free at AnnualCreditReport.com. Examine your reports for any inaccuracies and work to get them corrected prior to seeking financing. You can also seek assistance from your mortgage professional.

Have We Hit a Bottom in Housing?

If you simply look at the data that is reported, one could surmise that the bottom in U.S. home prices was hit in 2009. One nationally respected index for home price reporting, the S&P/Case-Shiller Home Price Indices, indicates that home prices turned for the better around mid-year in 2009.

While all markets are different and some may continue to show signs of weakness, most communities have demonstrated strength and should continue to do so. However, some potential headwinds do exist for the second and third quarter of 2010, following the expressed expiration dates of several stimulus programs: The Mortgage Backed Securities purchase program and home buyer tax credits, both of which are directed at the housing and the mortgage markets.

Foreclosures and short sales will also continue to influence many of the hardest hit markets as unemployment and resetting adjustable rate mortgages weigh on distressed homeowners.

Dates to Remember

Two dates lie on the horizon that will impact interest rates and potentially home prices. The first program scheduled to end is the Federal Reserve’s program for purchasing Mortgage Backed Securities. Announced in November of 2008, the Fed began purchasing $1.25 trillion in mortgage bonds in 2009 which will culminate at the end of March. As the intention and result of this program was to lower rates, mortgage rates will likely begin to rise after the program concludes.  However, there is talk that the program may be extended as there are no other real investors in these products still.  The CA Mortgage Guy will keep you posted on any changes in the policy when they become available.

In addition, April 30, 2010 is the last day to enter into a home purchase contract and still potentially qualify for a federal income tax credit of up to $8,000 for first-time home buyers and up to $6,500 for repeat home buyers. The credit can be claimed only on contracts that close by June 30, 2010.

Act Now…Not Later

While no one knows for certain what the future holds, one thing does appear clear. Home loan rates and home prices both will be higher in the future. If you or anyone you know is looking to purchase or refinance a home, waiting could be costly!

Look forward to the next posting from the CA Mortgage Guy!

FHA loans continue to have a front-end max housing payment debt ratio up to 47% and a max TOTAL debt to income ratio of 57% with compensating factors; as of the time of this posting.

If you would like further information on what this means to you and qualifying for a loan, please contact me today.

Look forward to the next posting from Jeff Cook – the CA Mortgage Guy!

• Short sale – a previously owned property was sold for less than what was owed.
• Short pay off – there was a principal write down of indebtedness that cannot be refinanced into a new mortgage.

Here is an overview of the Top 5 things you should know about these changes:

1. These changes are effective immediately.
2. Borrowers are NOT eligible for new FHA financing if they pursued a short sale on his or her principal residence simply to take advantage of the declining market in their area in order to acquire a similar or better property near their current residence within a reasonable commuting distance.
3. Borrowers ARE eligible for new FHA financing if they had 0×30 (no 30 day lates) on their mortgage and other installment debts in the past 12 months AND the proceeds from the short sale served as payment in full.
4. Borrowers whose mortgage was in default OR pre-foreclosure status at the time of the short sale are NOT eligible for FHA financing for 3 years from the date of the pre-foreclosure sale, unless they qualify for an exception.  Lenders MAY approve an exception based upon A) The default was due to circumstances beyond the borrower’s control, such as a death of primary wage earner, long-term un-insured illness etc. AND B) The review of the credit report indicates satisfactory credit history prior to the circumstances beyond the borrower’s control which caused the default.
5. On an FHA refinance, borrowers ARE eligible if the current lender chooses to write down the mortgage due to declining market values AND/OR a reduction in income.

Stay tuned for more FHA and conventional loan updates from the CA Mortgage Guy!

Here are 5 Things You Need to Know about the New Condo Approval Process:

1. The new temporary changes and updates are effective on December 7, 2009 through December 31, 2010; with the exception of the spot approvals.
2. Spot approvals will be eliminated effective February 1, 2010.
3. FHA loan concentration within a project or development may be increased to 100% as long as the following criteria are met: A) Project construction has been 100% complete for at least 1 full year. B) All units within the project have been sold and no single entity owns more than 10% of the units. C) Development or project HOA holds 10% of the budget in reserves for capital expenditures and deferred maintenance. D) Control of the HOA (Home Owner’s Association) has been transferred to the owners of the units; and E) Owner-occupancy is a minimum of 50%.
4. Although FHA requires a 50% owner-occupant ratio, bank owned units that are either vacant or tenant-occupied are no longer required to be included in the ratio calculation.
5. New construction project’s/development’s pre-sale requirements are temporarily reduced to just 30%.

Over 50% of all loans nationwide today are now processed through FHA.  Know that your lender knows and understands FHA! Skyline Financial Corp, which powers the CA Mortgage Guy, is proud to be directly endorsed by the US Department of Housing and Urban Development (HUD) to originate, underwrite, process, fund and deliver FHA insured home loans.  Year to date 2009 we have funded millions of dollars in FHA loans for hundreds of California home owners!!

Contact the CA Mortgage Guy today for your FHA financing needs or any questions on FHA you may have!

Look forward to my next posting!

LA Home Mortgage - CA Mortgage - 2010

President Obama has signed into law a bill that included the legislation for an extension of the current Temporary High-Cost loan limits through the end of the calendar year 2010.  This is great news for those searching for a CA mortgage as the extension of the loan limits will keep rates down on those loan limits as they will not be classified in the jumbo market.  Non-conforming or “jumbo loans” carry higher mortgage interest rates than conforming loans, making them less affordable.

The bill effectively extended the higher conforming loan limits for all Fannie, Freddie and FHA guaranteed CA mortgage loans through December 31, 2010.

The Temporary High-Cost loan limits in high-cost counties will remain:

• 1 Unit – $729,750
• 2 Units – $934,200
• 3 Units – $1,129,250
• 4 Units – $1,403,400

The extension has received praise from N.A.R. (National Association of Realtors) and C.A.R. (California Association of Realtors) as the higher conforming ca mortgage loan limits combined with the tax credit have helped stabilize the real estate markets.

I will keep you posted on information we receive on the extension of the homebuyer tax credit as it becomes available.

Look forward to my next post!

Unless you have either been under a rock for the past 12 months or you never work with first time home buyers (FTHBs), you are no doubt aware the clock is ticking on the IRS tax credit for FTHBs. My purpose here is to give you some additional information on what you can do to buy your new house, sell your current house, move listings, motivate buyers, and more importantly close deals.  To check current LA Home Mortgage rates or CA Mortgage rates, contact me today – they are at or near historic lows still!

General Points to Consider – Buyer and Seller
The expiration date of the tax credit is November 30, 2009. Close December 1, as of now, and any qualifying buyer will not receive the tax credit. With the 30th falling on the Monday following Thanksgiving, where possible work towards a closing date of November 24th. This will provide some cushion if anything pops up in the closing process that could delay a closing.

Recent legislation mandates that if the Annual Percentage Rate or APR changes outside acceptable tolerances from the initial application of as little as .125%, some documentation needs to be re-disclosed and time needs to pass (waiting period) before the closing can occur. Items that can impact APR can include a change in interest rate or fees required to close. If a buyer delays locking the application and interest rates increase during the loan process, this could delay the closing. This is just one reason to plan accordingly and schedule an earlier closing date than the last possible day.

Protect yourself with extended closing dates of 45-60 days. Expectations are high that more FTHBs will be going under contract in the next month. Interest rates have fallen to levels not seen since May – contact me today to find out the most current mortgage rate california. The result is that many lenders’ pipelines will be swelling with people seeking to take advantage of lower rates and the tax credit. Get under contract soon and plan accordingly to allow for any processing delays that could result.

Seller Points to Consider
Many FTHBs are motivated to purchase but may lack the necessary funds to close or may fall short in qualifying income. One way to assist with either or both situations and make the property more attractive is to promote that the seller will pay to reduce the borrower’s interest rate and/or closing costs. In many cases, this will not only cost the seller less than a price reduction but also lowers the buyer’s required qualifying income by reducing their monthly payments and brings additional prospects to consider the house.

Most FTHBs today are choosing to obtain loans that are guaranteed by the FHA. What is FHA?  The Federal Housing Administration is a division of HUD.  In the case of FHA loans, the seller can pay up to 6% of the sales price or appraised value towards closing costs and rate reduction.

Consider approaching all sellers today with homes that would appeal to FTHBs and get them to commit to paying closing costs and/or reducing the buyer’s interest rate. This has often worked for builders in generating sales and it can work for sellers, too with more of an impact than having to reduce price!

Sellers who do not move homes before the end of November may find themselves waiting until the spring buying season kicks in to find their buyer. Make sure sellers know they need to promote their property now or risk waiting months while potentially seeing their property’s value decline in the process.

Buyer Points to Consider
In the same light as just mentioned, many buyers may feel they lack the funds required to close. When buyers are interested in a property, encourage them to submit an offer with the concessions needed to get the mortgage approved. You may just find that the seller is willing to negotiate.

Get all potential buyers pre-approved!  As the time to close will be at a premium during the months of October and November, any work that can be done to expedite the application process will be golden. Buyers should be prepared by not to waiting until they have a home under contract. Any documentation submitted today for pre-approval should be good through the end of November. Also, with a pre-approval in hand, both you and they will know exactly what they can qualify and shop for and an offer submitted with a pre-approval letter is the one that gets looked at 1st!

If you want to help with the application process and prevent the need to possibly re-disclose loan documents, encourage your buyers to lock their interest rate early in the loan process. This will be helpful for all parties and help the buyer focus on closing and providing any additional documentation that may be needed.

Some Questions on Who May Qualify
I have received many questions regarding who may and who may not qualify for the FTHB tax credit. I have a list of FAQs on examples I have either dealt with or read about so contact me today to receive this FREE list. As always, I encourage anyone with specific questions to consult with an accountant for final clarification.

Let’s Move Some Property or Buy That New Home!
If you have any questions from either a seller or buyer side as to what someone can or can not offer where financing is concerned, how LA home mortgage rates are looking or just a general question like “what is fha”, pick up the phone and call me or contact me via email or the contact tab above. I’m here to help YOU!

Look forward to my next posting!