Every year, the Federal Housing Finance Agency (FHFA) sets a dollar cap on conventional mortgages that Freddie Mac or Fannie Mae are allowed to back, commonly referred to as a conforming loan limit. In 2020, the conforming loan limit for a single-family home was $510,400. This year, the conforming loan limit for a single-family home increased to $548,250, nearly 7.6% higher! Read More
2023 conforming loan limits have been announced! The Federal Housing Finance Agency (FHFA) sets the loan size limits each year on conventional mortgages that Freddie Mac or Fannie Mae will buy from mortgage lenders. In 2022 the conforming loan limit for a single-family home was $647,800. This year, the conforming loan limit for a single-family home has increased to $726,200. A little over a 12% increase! Read More
2024 conforming loan limits have been announced! New loan size limits are set each year on conventional mortgages that Freddie Mac or Fannie Mae will buy from mortgage lenders. You can see the 2023 loan limits in the chart below. For 2024, the conforming loan limit for a single-family home has increased from $726,200 to $766,550. That is about a 5.5% increase! Loan limits go even higher for 2-4 unit homes.
Is choosing a mortgage lender important? People spend a lot of time looking for the perfect home. There are the countless hours spent poring over real estate listings, the weekend trips to open houses, and the days of driving with your realtor from showing to showing. However, choosing a mortgage lender or broker is often treated as an afterthought. Many buyers simply go with their own bank or a broker/lender recommended by their realtor. They do so without researching competitive rates and looking for lenders who will also educate them.
This is a critical mistake. Read More
Buying a home is the most important and expensive decision that most of us will undertake. It is surprising to me how many people are not prepared to buy a home. A potential homebuyer should do extensive amounts of research and give a lot of thought to what they want to buy. When they feel they are ready then they can get pre-approved for a mortgage. Below are some of the warning signs that you might not yet be ready to buy a home and you may need to do some more research. Read More
Are housing values dropping now? Potential homebuyers who contact me for a mortgage are now frequently asking if they should wait to buy a home. The implication is that people are now worried that housing values are going to fall. So why buy now? Isn’t it smarter to wait? Maybe, maybe not. It is understandable why everybody is asking the question, “are housing values dropping now?” Read More
Well and septic inspections may indeed be required to get mortgage approval. But it depends on the type of mortgage you are seeking.
A conventional mortgage through Fannie Mae or Freddie Mac typically do not require well and septic inspections. I say “typically” not required because there may be an instance where they are required.
Fannie Mae requires the lender to disclose any information regarding environmental hazards. A lender is required to get the necessary inspections if the appraiser, real estate broker, property seller, property purchaser, or any other party to the mortgage transaction informs the lender that an environmental hazard exists in or on the property, or in the vicinity of the property. Fannie Mae also requires the lender to disclose such information to the borrower and comply with any state or local environmental laws regarding disclosure.
So if you’re buying a home that is on a well and/or septic systems and it comes to the attention of the lender through the appraiser or any other party, inspections will be needed on those systems to get the loan approved. If there is no visible issue and nobody reports a problem, which is typical, then no well and/or septic inspection would be required.
For more details on this issue as it relates to Conventional loans, click here B4-1.4-08, Environmental Hazards Appraisal Requirements.
However, with FHA and VA loans, a well and septic inspection is always required, regardless of the visible condition of these systems. If an inspection doesn’t pass the local guidelines and requirements, remediation will be needed until the systems pass. And an FHA or VA mortgage loan will not be able to close until the inspections pass.
With an FHA loan, the FHA Appraiser must check for issues or malfunction if the property has a septic system. If there are visible deficiencies, the FHA appraiser must require repair or further inspection. And the FHA guidelines also require the lender to get a septic system inspection. Hence, it is important to note regardless of what the FHA appraiser finds, the lender is going to require an inspection of the septic system. The same holds if the home has a well water system.
For further FHA guidelines click on this link, and start reading at the bottom of page 170 from “Requirements for Well Water Testing” for all the details. You will see other interesting details such as:
For further VA guidelines click on this link and look for page 12–20 and start reading from “15. Water Supply and Sanitary Facilities”.
You will see information on things such as:
Feel free to contact me for any further questions on well and septic systems as it pertains to getting a mortgage, or any other questions in general related to conventional loans, FHA loans, and VA loans.
When you’re ready to buy a new home, one of the first things you have to do is take steps to get your financing in place. Mortgage approval is based in part on an automated underwriting process. It is beneficial to get a pre-approval letter from a mortgage lender before you even make an offer. Having your loan pre-approved can show a seller you are a serious buyer with adequate funds. You can also reduce the risk of the contract falling through.
Lenders typically use one of two underwriting processes for mortgage loans: automated and manual. Understanding the basics of how these types of loan approval work can give you confidence when applying for your mortgage. Read More
This blog assumes you’re at the final steps of the mortgage process. You’ve completed your loan documentation, received your appraisal and title insurance, your loan is approved, and you have scheduled your movers. Now you’re ready for it to be over. But there is more to consider. Settlement day, a.k.a. closing day, can bring surprises and unexpected stress. Spend some time on these final closing details with a couple of tips that I give my clients on how to be prepared for the big day. Read More
Buying a home Non-Contingent on the sale of your current home is hard. I often get asked to get a potential buyer pre-approved to buy a new home, without the mortgage being contingent on the sale of the current home that they own. While this is possible, it is difficult.
First, you have to have the cash for the down payment and closing costs for the new home without the benefit of the sale of the current home. Then you would have to be able to qualify to carry the debt of both mortgages at the same time. Read More
Can paying off a debt help qualify you for a mortgage? When you qualify for a mortgage loan it may not be for the amount you want. Outstanding debts can affect how much you are able to borrow. In some instances you may be able to pay off the debt in order to qualify for a larger loan.
If you reduce the number of installment payments to 10 or fewer, the loan may not be included in your debt-to-income ratios. What if the debt has a large monthly payment? Then an underwriter may consider it a risk in your debt-to-income ratio. Read More
Both Fannie Mae and Freddie Mac changed their seasoning requirements for cash-out refinances. They are now requiring 12 months seasoning for cash-out refinances when paying off an existing mortgage. What does this mean? Read More
Condominium litigation can be a problem when getting a mortgage. What if a condominium has litigation against it and you want to buy it? To get a loan approved there are certain things a mortgage lender has to document or the loan may be denied.
A mortgage lender has to prove that the litigation has no impact on the safety and structural soundness of the condo.
And the insurance carrier that insures the condominium building is involved. They have to have agreed to provide the defense, and the amount of the litigation must be covered by the HOA’s insurance.
There are other reasons why litigation against a condominium may not be an issue. These may be:
Financing a condominium can be tricky for other reasons. Mortgage guidelines have the ability to change at any time. Always talk to a well-reviewed mortgage loan officer. Make sure you understand the current guidelines and how they might apply to you.
Mortgage rates did indeed go down after the Coronavirus spread and financial markets started to panic. But the Coronavirus and mortgage rates aren’t directly connected.
People considering a refinance continue to contact me for low rates, but now that rates have spiked it may no longer makes sense.
The recent mortgage rate reductions we saw may be gone for a period of time, but the rate changes are not as drastic as the media made it sound. Read More
Condo HOA fee impact a mortgage pre-qualification. When pre-qualifying someone for a condo mortgage a loan officer will have to make some assumptions if there is no ratified contract on a particular condominium. In those assumptions would be an estimate of what the monthly condominium fees would be. I personally use $1.00 per thousand of the sales price when I am working up my numbers when prequalifying someone. Read More
It is very common for realtors to ask a homebuyer who their mortgage loan officer is and where they are located. There is a belief that a lender, and for that matter all the service providers to a real estate transaction, needs to be very local.
Realtors assign some magical powers to a mortgage loan officer who is Read More
There has been a lot of talk about e-closings recently. E-closings allow someone to close on a mortgage remotely from the comfort of their own home or office, without physically going to a title company office. However, knowing the details is important. You need to determine if this is an option that is available to you, and if it is a good idea for you.
As of the writing of this blog, e-closings are not available in all 50 states. You need to determine if your state has passed legislation to allow them. Then you need to find a mortgage lender and a title company that have the knowledge and technology needed to participate in e-closings.
You may also hear an e-closing referred to as a digital closing, electronic closing, remote closing, and other variations.
Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin are community property states. Community property laws require divorcing couples to split assets acquired during a marriage equally. Marital property includes earnings, all property bought with those earnings, and all debts accrued during the marriage. Read More
Do you know Historical Real Estate Values? I often have conversations with potential homebuyers in speaking with them about their mortgage financing. And they ask me about whether I think Real Estate is due for a correction. Let’s face it, Real Estate has been going up in value at a striking pace in the last few years. It’s a realistic question to ask if some of that increase is due for a correction to some degree.
Of course, I don’t have the answers. But we can have a discussion to give homebuyers a frame of reference. Read More
How do home price reduction and rates affect one another? I have clients who have reported seeing price reductions in the asking prices of homes for sale. This is the first time I have heard of this in years and years. So, are real estate values about to correct? It probably depends on where you live. And of course, as with many of life’s answers, the answer is a matter of degree. Some markets may be in for a large correction, some a small correction, and some markets may still experience price gains.
I have heard of some home shoppers say they feel home sellers owe it to homebuyers to drop prices just because of the interest rates increase. Read More
Owning a home is one of the most valuable assets and investments you can have in a lifetime. Protecting your investment should be commonplace. There are still those who feel that paying for insurance is a waste of money. Homeowners who have purchased their home with cash can decide against homeowners insurance but that is unwise. Otherwise, if you have a mortgage loan the lender will require you to have homeowners insurance. Read More
How are debts paid by others handled on a mortgage application? Sometimes when someone applies for a mortgage with me, they mention they have a debt paid by a parent. They may have a school loan that a parent pays. Or people may tell me they co-signed for someone else’s mortgage, but they do not make the payments. Read More
Property taxes are a part of the cost of owning a home. When you buy a home you not only have the cost of the monthly mortgage payment. You also need to consider property taxes, homeowners insurance, any HOA dues, maintenance, and utilities.
Many people wrongly assume property taxes are a fixed cost. They believe whatever amount is billed when you first buy the house, is what the amount will be for the life of owning the home. However, property taxes can change quickly after buying a home. Most counties assess property value annually, and adjust the amount due annually. Read More
What affects your ability to get approved for a mortgage and the terms you’re offered? That depends largely on your credit report and your history of managing debt responsibly. Under some circumstances, your credit score can be affected by loans you’re not even responsible for paying. Read More
How do tax losses affect mortgage qualifying? The answer depends on what type of loan you are getting. Read More
When you buy a new home, you need a mortgage to purchase it. And before you get a mortgage, you need to determine how much mortgage you qualify for. Different sources may qualify you for different mortgage amounts. And how much you qualify for does not necessarily equate to how much you can afford.
How much you can afford is based on your personal budget. When a mortgage lender tells you how much you can qualify for, that is the highest mortgage amount they’ll approve you for. But this may not be the mortgage size you end up closing on. Read More
How much mortgage can I afford? People are always searching for information on how much mortgage they can afford. Some people want to buy a new home. Others a second home/vacation home or a rental property.
Car loans and mortgages, do they affect one another? When a mortgage lender analyzes your finances to qualify you for a mortgage, they’re looking at all of your debt along with the new proposed mortgage payment. The other debts that they consider outside of your new mortgage payment are debts like minimum credit card payments, car loans, student loans, and any losses from other rental property. They do not look at debts like utility bill payments, car insurance or cell phone bills. Read More
When comparing mortgage lenders there are many things to consider. If you want to save time follow the below steps on how to compare mortgage lenders. Time is valuable and these six steps should help you find a good mortgage lender: Read More
Do you know how to make an offer on a house? It’s simple, right? There are many things to consider when you are making an offer on a house. When it comes to making an offer there are some key things that can make a difference! Below are some important topics related specifically to the mortgage when you’re getting ready to write up an offer on a home. Read More
Is It Cheaper to Rent or Own a House? If you are planning on moving and are financially stable enough to potentially qualify for a mortgage, there is a lot for you to consider. Buying a home usually requires a down payment plus closing costs. Renting also comes with its own fees, but those are generally less than you will need to buy a home. Here, we will explore whether it is cheaper to rent or own a house. And the pros and cons of both.
Fees paid during a home buying process are at risk? Every now and again a loan does not make it to closing. Common reasons for this are home inspection issues that cannot be resolved or a condo that cannot be approved. Unfortunately, some of these issues arise and cause a deal to cancel after some services have already been performed and therefore have to be paid for. And this is where debate will sometimes arise. The debate is related to fees paid during the home buying process. Read More
There are rules related to the maximum number of financed properties you can have. These are for investment property buyers. There are some mortgage agencies, like Fannie Mae, that will not do a loan for an investment property buyer that already has what they consider to be excessive financed properties.
What if you are buying a new primary residence? Then there is no limit to the number of financed properties that you already have.
However, if you are buying a second home/vacation home or rental property there are rules. You cannot have more than 10 financed properties already. Read More
Forbearance – you should only do it if you absolutely have to. Some people are taking a forbearance on their mortgage as a way to take a break on their mortgage payment when they really do not need to.
Forbearance does not mean you can skip mortgage payments and never pay them back. You have to repay any missed or reduced payments in the future. So, if you’re able to keep up with your payments, keep making them.
It will also impede your ability to refinance. Having a forbearance on your credit report means you cannot get a new mortgage. You have to bring the loan current to do so. Read More
Forbearance, only do it if you absolutely have to. Some people are taking a Forbearance on their mortgage as a way to take a break on their mortgage payment when they really do not need to.
But forbearance does not mean you can skip mortgage payments and never pay them back. You have to repay any missed or reduced payments in the future. So, if you’re able to keep up with your payments, keep making them.
Taking a forbearance will also impede your ability to refinance. Having a forbearance on your credit report means you cannot get a new mortgage. You would have to bring the loan current. Read More
If I had one dollar for every person that said, “Please tell me what I can qualify for but do not pull my credit because I know it hurts my credit score,” I would have enough money to make a large down payment on almost any house I wanted. Read More
When you move into a new home there are numerous tasks to track. It is almost impossible to keep everything organized, unless you keep track through a task list or use some sort of technology tool.
Although the closing will seem like a long time off once you get under contract for a new home, it will all happen quickly. And a lot of tasks related to moving into your new home require a lot of advance notice! It is time to start planning things ASAP, do not procrastinate. The below will help. Read More
Multifamily mortgage financing just got cheaper.
Multifamily residential homes are two, three, and four unit homes. These are also called duplex, triplex, and four-plex homes. I have also heard them called two-family, three-family, and four-family homes.
Fannie Mae defines multifamily property as, “A property that consists of a structure that provides living space (dwelling units) for two to four families. Although ownership of the structure is evidenced by a single deed.”
Any home with more than 4 units is considered a commercial property. These don’t qualify for a residential loan. I don’t do commercial loans. I do have some knowledge of commercial loans. They typically require large down payments, like 25% down or more. I doubt that will ever change.
Multifamily residential property has historically also required significant down payments. These down payments ranged from a minimum of 15% down to as much as 25% down.
Fannie Mae recently announced a 5% down payment option for multifamily homes. This is a significant policy change. Interestingly, Freddie Mac has not made the same change. Not as of yet, anyway. Read More
New TRID mortgage rules are causing delays in the mortgage process. In a December 15 2015 Wall Street Journal article titled New Federal Rules for Mortgage Forms Blamed for Delaying Loans stated, “Mortgages took an average of 49 days to close in November 2015”. It went on to say, Read More
Online reviews are playing an increasing role in the mortgage industry and here’s why:
TEXT: Hello. I’m doing a video blog today while on my treadmill, that’s why I’m bouncing up and down a bit, on online reviews. Online reviews were thought only to be for restaurants and bars. And you would go to a website like Yelp to see if you wanted to go to a certain restaurant in your neighborhood. Read More
Shopping for a home means coming to understand Owner’s Title Insurance vs. Lender’s Title Insurance. It also means learning about home inspections, appraisals, title searches, and other steps inform buyers and sellers of possible complications with the sale. Homeowners need to understand mechanisms built to protect them, such as owner’s title insurance. Read More
When you’re beginning the home-buying process, figuring out what you need to get your mortgage loan can seem complicated. You may even be tempted to find your dream home first before you apply for a mortgage. However, going through the pre-qualification and pre-approval processes at the start of your search can make the entire experience go more smoothly.
Before you meet with a lender or mortgage broker, you should have a good understanding of how the loan process works. This guide covers the basics of loan application, qualification, and approval. Read More
I have clients who are buying a rental property or who are buying a primary residence and already own rental property. And they think they need to provide a copy of a current lease for the rental property as part of the loan application. But, that is not always the case. Read More
Are you self-employed during Covid? Need a mortgage? There are newly revised mortgage guidelines for self-employed people due to the Covid-19 pandemic. There are temporary requirements for assessing income derived from self-employment. The additional due diligence is due to the disruption from the pandemic. Mortgage lenders now need to consider if and how a business has been impacted and the likelihood of income continuance.
There is additional income documentation required. You may need an audited Profit & Loss statement with supporting documentation for the Profit & Loss statement. The continuity and stability of income is what will be considered. Read More
Sometimes when you buy a new home you find termite damage, termite infestation, or both. When applying for a home loan termite damage is of course unwelcome news. And the lender will want to see the issue resolved before allowing the loan to go to settlement. However, there are solutions to avoid disrupting the mortgage process. Read More
It may seem odd that someone in the mortgage business wants to discuss how to help consumers find the best mortgage lenders. People search for mortgage providers every day without the benefit of professional help. So, I figured why not help people whether they find their way to me or someone else? Below I’ve listed the most important mortgage questions that you need to ask before you apply for a mortgage loan. Read More
There are times that I have used a mortgage borrower’s retirement account balance/s as income. I have done this even if the borrower is not currently taking required withdrawals from the account/s! But how can an asset be used as income? It can, and the guidelines allow it. However, there are rules.
All the Freddie Mac rules related to this can be seen by clicking here.
For retirement accounts that are already being used to take distributions as income, the Fannie Mae rules to document that as acceptable income are found here. Look under the area marked “Retirement, Government Annuity, and Pension Income.” The main points are:
If you are getting near retirement age or you are already retirement age, consider using your retirement accounts as income to help you qualify for a mortgage, even if you are not currently taking withdrawals from the account.
To contact me to discuss any income qualifying or other mortgage questions, click here to schedule a call or you can email me directly.
Prior to 2020, veterans could borrow more than the Veteran’s Administration (VA) Loan Limits capped amount, but had to have a down payment of 25% of the difference between the maximum loan limit and the sales price. As of January 1, 2020, the VA has started to allow $0 down loans that exceed the county loan limits.
So now, if a veteran wants to buy a home for $1,000,000 with no money down, they can. $2,000,000? Sure thing. $3,000,000? No problem! However, there are rules and guidelines that come with this new change. Read More
When buying a condo, you may find yourself in a competitive bidding situation. And your realtor may ask you about waiving some or all the contingencies in your contract. These contingencies are usually things like a home inspection contingency, appraisal contingency, and financing contingency. But waiving contract contingencies on a condo can be risky. Read More
New home purchasers can get caught up in a wire fraud scam in a mortgage transaction by cyber criminals if they aren’t careful! This type of fraud is happening more often. Some borrowers are fortunate enough to have a bank that recognizes that money is being sent to a suspicious account and the wire gets stopped. Otherwise, the mortgage borrower can lose their entire down payment on the house. Read More
The new Loan Estimate (LE) was introduced in October 2015 as a federal standard form. It includes the interest rate, monthly payments, and total closing costs for a mortgage loan application. The lender is required to send you a Loan Estimate within 3 business days after applying for a mortgage. Even though this form attempts to help the consumer understand the loan payment breakdown and the costs, it can still be very confusing. The language on the form is murky and some of its terminology needs to be explained. Read More
So you’re applying for a mortgage and you get conditional loan approval? What is that? The loan approval conditions, what do those mean? Read More
When is an approval really an approval? When is an approval only a conditional approval? Below are the different levels of “loan approval” you can get for a mortgage:
Pre-qualification is done before you make an offer on a home. It is only a loan officer analysis, and supporting financial documents are not required. Only a review of the applicant’s income and debts are done. Standard methods of determining housing and debt ratios are used. This can help indicate the maximum loan amount for which an applicant would qualify. But it is subject to the satisfactory appraisal, further verifications of income, employment and credit history. This is the lowest form of analysis you can have done.
Most everyone knows low inventory is keeping real estate prices high. But why is inventory low? Because 90% of US homeowners have a 6% or lower mortgage rate. 62% have a rate below 4%! No one wants to give up their great rate for a much higher rate. They won’t move! But how does this end? When does it end? It can’t stay this way forever. Eventually people must move. People will move due to retirement. Or families will need larger homes. Or sometimes they are ready to downsize.
My theory is inventory will increase over a long period of time, and that may bring prices drops. But when? Interest rates going up has not stopped housing demand nor price increases. Rates going down won’t cause real estate prices to spike. And rates going up even more than they are now won’t cause prices to tumble. Historically low inventory will see to that. Read More
Always get your mortgage pre-approved! Homeownership is a major component of the American dream. It provides you with your own piece of property to put down roots and live your life. You might think the process starts when you first go out hunting for houses or condominiums. But it often begins long before the initial meeting with a realtor when you contact a lender for pre-approval. Here are a few reasons why the seller and listing agent might want you to get pre-approved. Read More
A home inspection protects the buyer. It’s meant to uncover potentially serious issues with the home so that you understand what you’re buying.
In a competitive market, some buyers walk through the home with an inspector before making an offer on the home. This gives them the confidence to formally waive the inspection contingency when they make their offer. And this possibly putting their offer in a stronger position to be accepted. However, a home inspection may identify the need for major repairs or builder oversights and minimize unpleasant surprises or unexpected difficulties. Read More
Should you work with an individual Loan Officer or a Loan Officer team? This discussion will stir up some controversy. I will likely get some angry comments as well as some supportive comments. Keep it classy, and let’s discuss! Read More
The real estate business is one of the most highly competitive job markets. And all real estate agents are in fact small business owners. They have an ever-growing client list, new leads, open houses, scheduling, marketing, budgeting, mailers, and websites. It is a never-ending list of responsibilities that seems to demand more and more time. It’s a fast-paced competitive housing world out there. Without the best tools and resources it’s possible to lose your clients to a more established realtor or realty team machine. Read More
Your homeowner’s insurance coverage is probably too low!
You should annually check your house value by having a local realtor pull comparable sales. Or use resources like this home valuation tool from Redfin. Or this one from Zillow. These tools will help you to adjust your home insurance as needed. Or you can ask a local realtor you trust to send you comparable sales. After a certain period you may find your existing insurance coverage is insufficient.
And let’s face it, who checks their house value annually? Who makes increase and adjustments as needed? Not many of us. Read More
