LendEDU published a financial report back in October of this year showing the national average credit score is 682. This is a solid score in the mortgage lending world but generally considered a “fair” credit score by the credit bureaus. It also means the average American might have a tough time qualifying for a decent mortgage rate. With 50% of people below a 680 credit score it means there are many who don’t qualify for conventional financing and the government loan options, which are typically only for owner occupied homes, can’t help them. These people typically fall into three categories. They are someone who has experienced a derogatory credit event like a bankruptcy or foreclosure, a self employed borrower that has too many write offs thereby killing their qualifying income, or they are a real estate investor and/or foreign national unable to purchase their next property due to conventional ownership limits. If you happen to fall into the middle ground between conventional and hard money lending it can feel like you have very few options. The good news is that there are many new lenders who recognize this need and specialize in helping just this type of borrower through offering Non-Qualified mortgage loans. To find out more about how this may help you find just the right type of financing for your next purchase click here and send me a message
By Kathryn Vasel of CNN Money Saving for a down payment is often a major hurdle for wanna-be homeowners. And for good reason: Putting 20% down costs two-thirds of the average household income, according to a new report from Zillow. “It’s a big number,” said Aaron Terrazas, senior economist at Zillow. “Very few are saving for a down payment in one year, it’s something they do over multiple years. And for renters who have been faced with rising rent and health care costs, it’s very difficult to put away any money at all.” A median-priced home in the U.S. is $192,500, according to the report, which means buyers need to come up with $38,500 to put 20% down. And that figure doesn’t include added expenses associated with home buying — like an inspection and closing and moving costs. Home prices have been rising throughout the country, largely because of strong demand for homes combined with a shortage of available homes for sale. In many markets, home prices rose much faster than incomes, putting homeownership out of reach for some buyers. Calculate: How much house can you afford? Home buyers in California, where home prices have exploded in the past few years, are feeling the pinch the most. For house hunters in San Jose, San Francisco and Los Angeles, saving a year’s worth of income wouldn’t cover a 20% down payment
The Skinny on Pre Qualification Getting pre-qualified is the initial step in the mortgage process, and it’s generally fairly simple. You supply a bank or lender with your overall financial picture, including your debt, income and assets. After evaluating this information, a lender can give you an idea of the mortgage amount for which you qualify. Pre-qualification can be done over the phone or on the internet, and there is usually no cost involved. Loan pre-qualification does not include an analysis of your credit report or an in-depth look at your ability to purchase a home. The Skinny on Pre Approval Getting pre-approved is the next step, and it tends to be much more involved. You’ll complete an official mortgage application, then supply the lender with the necessary documentation to perform an extensive check on your financial background and current credit rating. (Typically at this stage, you will not have found a house yet, so any reference to “property” on the application will be left blank). From this, the lender can tell you the specific mortgage amount for which you are approved. You’ll also have a better idea of the interest rate you will be charged on the loan. With pre-approval, you will receive a conditional commitment in writing for an exact loan amount, allowing you to look for a home at or below that price level. Obviously, this puts you at an advantage when dealing with a
Much time has passed, and many people don’t really know how the whole Subprime Mortgage Meltdown happened. People who have seen the recent movie, “The Big Short” have a much better idea, but for those who have not, take a look at this quick video and you will have a better understanding of just what happened. It is pretty funny, but has a few “bad” words in the text near the end, so for the easily offended…harden yourselves! Trust me, you will come out enlightened…..or something else. Cheers, Craig Sutliff Mortgage & Real Estate Consultant The GreenHouse Group. Cell: 619-857-4954 Email: Craig@GreenMeansGrow.com
For most first time home buyers the biggest challenge they face is coming up with the funds needed for down payment. This leaves few financing options that can mean many wait on the sidelines until the money needed is saved. Here in San Diego county that can mean the difference between home ownership and being a life long renter. With increasing enhancements to home loan guidelines being rolled out there usually won’t make a big difference but when several of these improvements are combined it can be a big boost to a person’s purchase power and dream of home ownership. Recently, Freddie Mac made some reductions to their Home Possible MI factors at 97% loan-to-value. The table to the left outlines the advantages of the Home Possible program over the Home Ready program. Combined with their updated income limits higher cost areas like San Diego County are now more accessible to those in need of a low down payment and lower monthly payment option. This could be a great alternative to FHA financing because it could offer a better long term loan option. Is this your best chance yet to buy a home? To find out click that link in the previous sentence and let’s find out. With the right mortgage plan you’ll know when your dream of home ownership will be a reality. By David Hughson Mortgage Planner
Home equity has rebounded. While the U.S. housing market hasn’t completed its rebound, most home values have been rising steadily. That’s certainly good news for homeowners! CoreLogic, a leading provider of consumer, financial and property information, analytics and services to business and government reports that 91.5% of all mortgaged properties in the U.S. are equity-positive. There are 3 ways to access your home’s equity that don’t involve selling your home. The first is to do a cash-out refinance and the second and third come in the form of a home equity line of credit or a second mortgage. All three options mean you are tapping into your home’s precious equity and doing so should only be after careful consideration. We all remember the boom years of the last decade when we saw people harvesting large amounts of equity, some up to 100% of the value, only to find themselves and their home’s value under water a few short years later. Nowadays lending guidelines are much more strict when it comes to accessing your home’s equity so there is protection in place that wasn’t there before. To find out the advantages of a cash-out refinance or home equity line of credit while maintaining your, or even lowering your monthly payments, and preserving your home’s equity click here. By David Hughson (with thanks to John Robinson’s Inspection Group blog post dated 5/14/16) Mortgage
Our Southern California housing market demands a lot from buyers. Whether purchasing a primary residence, a second home, or investment property the biggest challenge for all potential home buyers is down payment. Recent lending guideline enhancements mean there are 2 loan programs you must know about. For those looking at purchasing a second home or investment property you can now exceed the conforming limit of $417,000 and put down as little as 15% for a one-unit property. The previous minimum required down payment amount was 20% and that was below the conforming limit. Under the old rules you would be capped at a loan amount of $417,000 and be required to put down 20%. Now you can exceed the conforming limit and put down 5% less. Comparison of old and new lending guidelines: Old guidelines New guidelines Purchase price $521,250.00 Purchase price $521,250.00 Loan amount $417,000.00 Loan amount $443,062.50 Down payment (20%) $104,250.00 Down payment (15%) $78,187.50 To find out more about this loan program including monthly payments click here. By David Hughson Mortgage Planner 858-863-0264
Did you know only 9% of home owners stay in their home or keep their loan for ten or more years? Did you also know 94% of home-loan applications are for 30-year fixed mortgages? With 30-year fixed mortgage rates are in the mid-to-high 3% range it’s hard to argue with anyone wanting to lock up a 3.5% mortgage for as long as possible but that also means the overwhelming majority of people are applying for 30-year fixed mortgages and won’t ever come close to keeping that loan for even the first 10 years. Now that we are seeing 30-year rates creep up above 4% there are two home loans you must consider that will keep your interest rate as low as possible. These two loans are the 7 & 10 year Adjustable Rate Mortgages, also known as ARMs. These loans are still 30 year terms and the rate is either fixed for the first 7 or 10 years. Many people think Adjustable Rate Mortgages are the reason for the banking crisis and subsequent mortgage meltdown that happened from 2007-2010. While there were truly some victims of bad loans what most people don’t realize is that most of those ARM loans adjusted down. I know people who are still in their ARM loans from 2006 who now have interest rates in the 2% range. Here is a current comparison of a
Almost all loans fall into two categories: Government and conventional. Government loans are further subdivided into either VA (Veteran Administration) loans for our active and inactive military looking to buy an owner-occupied property and FHA (Federal Housing Administration) loans which are open to all people looking to purchase an owner-occupied residence. Conventional (Fannie Mae & Freddie Mac) loans, like FHA loans, are open to all people as well but offer many more types of loan structures including those looking to buy second homes and investment properties. What most people don’t know is that lenders choose to offer all three types of loans and often times impose their own guidelines on top of the base guidelines. For example, for forever it’s been a lender loan guideline to provide two years of tax returns for anyone applying for a home loan. But did you know that Freddie Mac only requires 1 year of tax returns? That means the one thing all self employed people need to know is that if you’ve only been in business for one year you can apply for a home loan. This is great news for anyone who has made the leap from their salaried job to being self employed and thinks they can’t buy a home until they’ve been in business for two years. Or for anyone who wants to start that side business now to boost
Not sure whether to buy a home now or not? Should you pay down your revolving debt before looking for a home to buy? How much do you need for a down payment and closing costs? Do you have too many questions that have you sitting on the fence, unable to decide? Let me help you make the right decision and answer all your questions and concerns. I will provide you with a Free, 1 on 1 consultation, with absolutely no conditions. The median sales price for a single family, detached home in San Diego was $500,000 in January 2015. That is up 5.26% from the year prior. And the market is really heating up right now. Home values have been moving up and we should see good, positive gains this year. I have been finding many people who are wanting to pay down, or pay off, their revolving debt before looking for a home. They feel this will improve their credit score and get them a better interest rate. But, the greater risk is that interest rates can rise. For example if you were to buy a $500,000 home with a 20% down payment at an interest rate of 3.75% the loan amount would be $400,000 and the principal & interest payment would be $1,852/month. If interest rates were to increase by 1.00% to 4.75% this would reduce your
The GreenHouse Group INC is a full service Real Estate & Mortgage Planning Firm located @ 3111 Camino Del Rio North, Suite 400, San Diego, CA 92108. We'd love for you to drop by and say "hello" to us here at our beautiful offices in Mission Valley. Or, if you'd prefer to drop us a line you can call us anytime @ (858) 863-0261. We look forward to meeting you!
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