Archive for the 'Buyers' Category
This is the fourth and final post in a series that deals with important aspects of FHA financing.
Minimum Down Payment
In today’s challenging market, this is probably the most attractive feature of the FHA home loan – the minimal down payment requirement. The minimum allowable down payment is 3.5% of the purchase price. This benefit is enhanced further by the flexibility allowed for the source of those down payment funds, as discussed below:
Reserve Requirements
Reserves are funds that a buyer has “left over” after purchasing the home. Most conventional home loans require enough reserve funds to cover at least two months of mortgage payments including property taxes, insurance, mortgage insurance and home owner’s association (HOA) dues if required.
FHA financing does not have a reserve requirement if purchasing a 1 or 2 family property (a 3 or 4 family property requires at least three months of reserve funds).
Acceptable Sources of Funds
- Borrower’s depository funds – Funds owned by the Borrower in bank accounts, stocks and bonds, Certificates of deposit, retirement accounts such as 401k plans
- Gift funds – Can come from a wide variety of sources, including family members, a close friend with established close ties to the borrower, an employer or labor union, charitable or non-profit organization, government agency or a public entity such as a city through a homebuyer’s assistance program. A couple important caveats: the gift funds must be thoroughly documented and provide a clear paper-trail. Depending upon the source of the gift funds, such documentation will include a detailed “gift letter”, copies of cancelled checks and bank withdrawal slips or evidence of bank wire transfer. There must be reasonable evidence that the qualified donor has the financial ability to give the gift. As of October 1st, 2008, funds from certain non-profit organizations which are matched by donations from the home seller can no longer be gifted to the buyer
- Sale of existing home – proceeds from the sale of an existing home may be used to purchase a new home with FHA financing
- Sale of personal property – the sale of a car or other personal property is acceptable as long as the funds can be paper-trailed to the sale
- Cash or “mattress money” – this requires a written explanation describing the source of the cash, how it was accumulated and how long it took to accumulate. Such cash accumulation must make sense for the borrower, such as not having a checking or savings account or credit accounts.
- Commission from sale of property – acceptable if the borrower/buyer is a licensed real estate agent and entitled to a commission from the sale
Mortgage Insurance
A lesser appreciated, but very vital benefit of FHA financing, has to do with mortgage insurance, or MI. Until recently, it was generally easy to avoid having to pay for mortgage insurance when purchasing a home with less than 20% down payment. This was accomplished by getting a second mortgage to “piggy back” with an 80% first mortgage. Thus a qualified buyer could buy a home with little or no money down by obtaining two mortgages. In the reality of today’s markets such second mortgages are all but non-existant or exorbitantly priced.
The only remaining option for a homebuyer with less than 20% for a down payment is to pay for mortgage insurance. In certain areas such as California and Florida, most companies that provide such insurance have limited the maximum coverage to 90% (or less) of the purchase price. In addition, they have tightened their underwriting guidelines and it is indeed more difficult to actually qualify for the insurance.
Enter the FHA home loan. It is generally considered easier to qualify for MI under the FHA and it will go to 96.5% of the purchase price. In short there is a significant portion of the home-buying population who have no other option than FHA financing just for these two reasons alone.
In a Nutshell…
FHA financing may not necessarily be the best fit for everyone in the home-buying market. However, these hallmark features of the FHA home loan – minimal down payment and reserve requirements, flexible sources of funds and availability of mortgage insurance – are far and away the primary reasons that many home buyers, particularly younger first-time home buyers, seek FHA financing. It’s clear to see why.
For more information contact Paul Gonzales, Manager, Countywide Mortgage Inc (760) 746-7388 or paulforloans@aol.com
Home Prices Rise
Home sale prices in Southern California showed new energy in January, bouncing 8.6% from the same month one year earlier — a period when the market was inundated with steeply discounted bank-owned properties.
Compared with a very strong December, the median fell 6.1% to $271,500 in January, ending eight consecutive months of price appreciation or stability in the Southland, MDA DataQuick, a San Diego real estate research firm, quoted Tuesday.
The month-to-month decline was likely in part to the higher percentage of cheaper Inland Empire homes that sold in January compared with December as buyers in pricier areas stopped searching during the holidays and investors and first-time buyers made up a larger share of shoppers. Read the rest of this entry »
Home Equity
Trading Home Equity for Cash
Would-be borrowers still find most home mortgages tough to get in this semifrozen credit environment. A major exception is reverse mortgages for homeowners over age 62. These mortgages represented a growing market for the past decade. Even in the recession of 2009, the number of reverse mortgages grew 4 percent over the previous fiscal year.
Banks, brokers and savings and loans are happy to approve reverse mortgages because the Federal Housing Administration insures them; thus, lenders will be repaid even if the value of the house falls below the balance of the loan. And many consumers find reverse mortgages simpler to qualify for, because eligibility primarily involves borrowers’ age, home value and equity — not their income or credit history. Read the rest of this entry »
Find Your Dream Home in North Escondido
A View From Every Room
Truly a work of art! Amazingly unique and exquisite at every turn. The finest quality materials and attention to detail have been used in the constuction of this seller built South Western Style home.
Gourmet Dream Kitchen
From the El Dorado Stone Arched hallwyas to the Gourmet kitchen with Red Dragon Granite countertops and stained glass Knotty Alder wood cabinets
South Western Style Masterpiece
The features of this property rival some of the finest Rancho Santa Fe estates. Fabulous outdoor entertaining areas, including outdoor game room, Salt water, Solar heated pool and spa, fire pit, pavillion, built in BBQ center on upper patio, media room on lower level of home, and oh…did I mention those drop dead gorgeous views?
Views from the front
This is a home to be experienced, words and even pictures do not do it justice. It is truly a remarkable masterpiece ready and waiting for a lucky new owner.
Click Here to enjoy the full VIRTUAL TOUR
For more information or to schedule a private viewing of this special property,
CALL
Pam and Joanna
760-580-1615 or 760-580-1630
New Rules For Home Loan Modifications
Those seeking to ease their mortgage terms must now document their finances before a trial modification will be approved. Loan servicers must adopt the policy by June 1st 2010.
Taking borrowers at their word for how much they earn was a major cause of the mortgage meltdown. That practice may also be why an Obama administration program has struggled to convert temporary home loan modifications into permanent ones.
The government said last week that it would overhaul the program by requiring homeowners to document their incomes before trial modifications are granted. Read the rest of this entry »
How is your credit?
Most people at one time or another try to improve their credit to be able to secure the best rate for a mortgage, car loan or to just repair their damaged credit.
Here are some helpful tips to improve your credit score;
DO pay your bills before the payment is due preferably as soon as you get the bill. For millionaire credit building, this does have an impact on your credit score. Additionally, it keeps your average daily balance low and saves you money on interest when determining interest and insurance rates.
DO keep your account balances less than 40-60% of the limit. Potential creditors like to see that you use your credit appropriately, but not excessively. The old adage “The best way to get approved for credit is to not need the money” is true.
DO pay your biggest bills first. The larger the missed payment, the more it hurts your credit score. Simiarly, if you are forced to juggle bills, choose to skip the payments for the creditors who don’t report to the credit bureaus like utility companies and pay the ones who will report to the bureaus.
DO pay your mortgage or home loan every month. Lenders frown on late payments on your old home loan when you are applying for new loans.
DO maintain a variety of types of loans. A previous mortgage or auto loan will increase your chances of getting the next mortgage or auto loan.
DON’T cancel your credit cards. Even unused cards help your credit score. It is not until you have a long credit history with a large number of accounts that lenders start to be concerned that you are possibly overextending yourself. If you have trouble not using your cards wisely, freeze them in a block of ice, even cut up the cards. But don’t cancel the account!
DON’T sign up for more cards or get too many rate requests over an extended period of time . Strategically plan and concentrate your efforts when applying for additional credit or loans.
DON’T pay old unpaid bills. This will draw attention to the old accounts. Showing recent activity can keep the information on your report for an extended period of time. Sometimes it is better to leave sleeping dogs lie.
For more information on home buying or selling, give us a call!
Pam Parton & Joanna Woolley
760-580-1615 or 760-580-1630
Brian Olenik of
Corinthian Title
contributed to this
article
Your Home's Investment
If you are in the process of buying a home ask your Real Estate Agent when submitting your offer to ask for:
1) THE CLTA/ALTA HOMEOWNER’S POLICY: There are 3 forms of title policies offered in California. The CLTA Policy (Standard Policy), ALTA-R (ALTA Residential) and the ALTA Homeowner’s Policy.The distinction is that the CLTA Policy only offers very limited protection against defects such as liens and encumbrances (these items are not part of the public record). The ALTA-R Policy provides greater coverage against several (but not all) off-record matters. Numerous title companies will only issue the CLTA Policy (Standard Policy) on REO and Short Sale transactions. This coverage is not enough to protect the most comprehensive policy available to you. Remember to request the ALTA Homeowner’s Policy for your purchases on all 1-4 unit residential properties.
2) MAKE SURE THAT THE POLICY IS ISSUED “WITHOUT WESTERN REGIONAL EXCEPTIONS”. Beware of these exceptions to coverage. They include some of the most common issues that later become title claims. “Western Regional Exceptions” exclude coverage in the policy from matters such as easements not shown in the public record, certain tax liens which should be cleared before closing, boundary line discrepancies and other matters. Some title companies will issue the CLTA/ALTA Homeowner’s Policy, but then include these as exceptions later in the report. A good idea is to write in the contract “Without Western Regional Exceptions”(when the property is located in San Diego, Orange, Riverside and San Bernadino Counties).
For More Information on San Diego Real Estate Call Pam and Joanna, we are here to help and we answer our phones.
PAM PARTON 760-580-1615 JOANNA WOOLLEY 760-580-1630
Content courtesy of Brian Olenik, Corintian title.
Palomar Mountain is a mountain range in Northern San Diego County, California only a few miles from Valley Center. Its claim to fame is being the home of the famous Palomar Observatory and the Giant Hale Telescope. It is also the location of Palomar Mountain State Park.
Palomar Mountain
There are several great campgrounds for campers, as well as a campground for the local school children. On average 70,000 visitors take in the sites of this beautiful mountain. The highest point in the Palomar Mountain range is one of the highest peaks in San Diego County, at 6,140 feet, although it is dwarfed by the higher 11,500 feet San Bernardino Mountains, which are north in San Bernardino County and Riverside County. Also Mount Whitney 14,500 feet which lies further north.
Valley Center Living offers the benefits to many homeowners some of the most amazing vistas from their homes of this everchanging mountain range -
Home Buyers do You Know About the New FHA Rules
The Federal Housing Administration
(FHA) have recently announced some new rules for FHA borrowers. If you are considering buying a home you do need to be aware of these new rules as they will effect you, this might make qualifying for a home loan a litttle more challenging.
- The minimum credit score requirement for new borrowers has been raised to a minimum FICO score of 580 to qualify for the FHA’s 3.5 percent down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10 percent of the purchase price of the home. FHA expects this to take effect in the early summer months.
- Allowable seller concessions will be reduced. The agency is lowering the maximum permissible level to 3 percent from its current 6 percent limit. FHA expects this also to take effect in the early summer months.
- The up-front mortgage insurance premium will rise to 2.25 percent from its current 1.75 percent. HUD is expected to release a Mortgage letter towards the end of January making the premium increase effective this spring.
If you are thinking of buying a home it might be wise to move forward and purchase as soon as possible.
We are available to help you through every step of your home purchase. Please give us a call to schedule an appointment.
Pam Parton 760-580-1615 Joanna Woolley 760-580-1630
- An FHA 203 (k) Can Help You Purchase and Repair a Home with One Loan.
FHA 203 (k) Home Buyers Repair Loan
If you are a home buyer looking to buy a home that needs some repairs or updating, an FHA 203(k) rehabilitation loan can help. It is a mortgage that provides the purchase price plus funds for renovation by financing the “as improved” value of the home. This can make it possible to make repairs or improvements with just one loan and one closing. Renovations are completed after closing of the loan using a portion of the proceeds to cover improvement costs.Funds are held in a loan reserve to pay for the improvements in a managed account. With so many neglected or damaged homes on the market at this time this can be an excellent route to take, allowing you to buy the home you have always wanted.
- Applies to owner occupied primary residences, from 1-4 units
- Requires as little down as 3.5% to qualify
- Includes most repairs that add value to the property
- Covers materials, labor and expenses such as permits and fees
- Repairs need to be less than $35,000
- Foundation and Structural Repairs cannot be included
- No monthly mortagage payments can be included in the total amount
So if you or someone you know is thinking of purchasing a home call us today so we can give you more information on this great loan.
Pam Parton 760-580-1615 Joanna Woolley 760-580-1630
