February 24th, 2010
Title insurance is insurance against defects in title to real property. It is meant to protect an owner’s or lender’s financial interest in property against loss due to title defects, liens or other matter of public record. It will defend against a lawsuit attacking the title, or reimburse the insured for the actual monetary loss incurred, up to the dollar amount of insurance provided by the policy.
Just as lenders require fire insurance and other types of insurance coverage to protect their investment, nearly all Read the rest of this entry »
Tags: title insurance
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February 12th, 2010
I almost feel like there is no more PMI (Private Mortgage Insurance) on condos! But that is not true, there is PMI availability for condos, but it is getting harder to get. Most people know by now that PMI is needed on a Conventional loan if you have less than 20% down payment. I recently had a client who Read the rest of this entry »
Tags: PMI
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February 8th, 2010
It seems any banks that are still doing home equity lines of credit (also known as a HELOC) have limited them to an 80% combined loan-to-value (LTV). This means that the existing 1st trust mortgage and any equity line cannot exceed 80% of the current appraised value. For example: Read the rest of this entry »
Tags: home equity line
Posted in Uncategorized, Underwriting Rules | 5 Comments »
February 2nd, 2010
It used to be simple to get an FHA condo loan. Lenders could do an FHA “Spot Condo Approval”, which meant that the condo did not need to be on the FHA Approved Condo List, and all we lenders needed to do was verify that the condo met certain FHA requirements (51% owner occupancy, no litigation against the condo, no more than 10% of the unit owners behind in their condo fees, etc). Now the condo approval process is more centralized, and more complicated. Read the rest of this entry »
Tags: FHA condo rules
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January 29th, 2010
Getting a condo loan approved seems to get harder and harder each day. Below are the loan approval conditions I got on a recent loan submission for a condo purchase:
1. Buyer to get 20% HO6 dwelling coverage.
2. Statement from the property management company about the cleaning services in the condo’s budget. What type of cleaning services are they?
3. Statement from the appraiser on whether having no parking in the project has an effect on the value. Read the rest of this entry »
Tags: condo financing problems
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January 21st, 2010
An HO-6 policy is the form used for a condominium insurance policy. This condo policy will provide for coverage on the interior walls, interior upgrades, and for personal property held within the dwelling.
How does this apply to mortgage finance? In 24 years of mortgage banking, I have never even heard of HO6 insurance. And that is because when underwriting a condo loan, the banks only cared to see that the dwelling was insured in case of damage. And in a condo, part of condo fees go towards the master umbrella policy, so the unit owner usually does not concern himself with getting dwelling coverage, because the master policy covers the reconstruction of their unit. But now, banks have new HO6 rules. This changed in the middle of 2009, and I have done 30-40 condo loans since then, and am just finding out now! Read the rest of this entry »
Tags: condo insurance
Posted in Underwriting Rules | 2 Comments »
December 11th, 2009
Debt ratios are what banks use to qualify a mortgage borrower. Your debt ratio is what percentage of your gross income a bank will allow you to spend on a new mortgage and your existing debts.
The debts that a bank will count against you are car loans, student loans, credit card debt, the new mortgage you are qualifying for, and any other mortgage debt you may have. They do not count debts like auto insurance, utilities, cell phone bills, etc.
Fannie Mae is currently dropping there maximum debt ratio Read the rest of this entry »
Tags: debt ratios
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November 23rd, 2009
Appraisals seem to be the issue of the day in the mortgage and real estate world. Everybody seems to value property differently even in the best of real estate markets. In a more difficult real estate environment, appraising becomes even more contentious.
For example, banks have really tightened their underwriting policy on appraisals. On an FHA loan they may require two appraisals if if the loan is an FHA jumbo loan (which is one that is over $417,000), if the property is in a declining market, and if the buyer is borrowing the maximum loan to value (which is 96.5%, i.e. a 3.5% down payment).
Also on an FHA loan, even if it is a loan that is a conforming FHA loan (which is one that is below $417,000) the bank may require a desk review Read the rest of this entry »
Tags: appraisals
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October 28th, 2009
It seems many home buyers feel they already have a “good enough” idea of what amount of mortgage they qualify for, so they don’t feel the need to consult a mortgage professional in advance of their home search. Or they use some quickie online tool that helps tell them what they are qualified for, which are really not thorough enough and don’t take into account all the complicated new rules.
And some people have champagne taste and are on a beer budget, and need to be careful in determining how much they can afford to spend on a home.
I can’t say this loudly enough, DON’T WASTE YOUR TIME OR YOUR REALTOR’S TIME looking at a single home until you have had your finances thoroughly analyzed by a seasoned mortgage professional. And here is why: Read the rest of this entry »
Tags: Mortgage Pre-Approval
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October 27th, 2009
I am sure it has happened to many readers or to someone you know…a mortgage settlement gets delayed or occurs several hours late! And it is customary to blame the mortgage lender, because after all, settlement had been scheduled for weeks and weeks. How could the settlement be delayed when we all knew for so long what the target settlement date was??
Here is the truth about delayed settlements, it is everyone’s fault, the lender, the seller, the buyer, the Realtors, the appraiser, etc.
Here is what happens on a typical loan file. Read the rest of this entry »
Tags: settlement
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