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 the rest of this entry »
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 the rest of this entry »
Property taxes are a part of the cost of owning a home. When you buy a home you not only have to consider the cost of the monthly mortgage payment, but 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, and that 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 the rest of this entry »
There are times that I have used a mortgage borrower’s retirement account balance/s as income, 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 many rules to consider.
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 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.
Jumbo loans, also called Non-Conforming loans, are loans that do not conform to the Conforming loan limits. Conforming loan limits can be found by clicking here. If you have a loan amount that is higher than the Conforming loan limits, then you have a Jumbo loan. Jumbo loans require that a mortgage borrower has cash reserves. The Jumbo loan cash reserves requirement is different from Conforming loans, in that Conforming loans many times do not require cash reserves at all.
Cash reserves is a certain amount that a lender may require that the borrower has left over after they pay their down payment and closing costs at closing, in reserve.
Different lenders have different requirements for cash reserves for their Jumbo loans. There are requirements for the amount of cash reserves, and there are requirements for the types of cash reserves.
Amount of cash reserves (the below is illustrative as it may vary from lender to lender):
6 months of the PITI (principal, interest, taxes, and insurance) are required in general.
4 months PITI if you are retaining your current primary residence
4 months PITI for each rental property you own
4 months PITI for a second home/vacation home that you own
Cash reserves are based on all recurring housing expenses for the subject property and in some cases for other property owned by the borrower. Cash reserves are also cumulative, so if you are buying a new home and have a rental property, per the above, you may need 10 months of cash reserves. Housing expenses, also known as principal, interest, taxes, insurance, and assessments (PITIA), include but are not limited to:
Types of cash reserves:
I have seen lenders go back and forth over the years on allowing retirement accounts, such as 401(k), 403(b), IRA, and TSP; to be used as cash reserves.
When a mortgage lender is considering retirement accounts as cash reserves, they are not suggesting that you must liquidate or borrow against the retirement account to generate cash. Lenders are only considering the balance of the retirement account without having to liquidate any of it or borrow against any of it.
Retirement accounts are not very liquid, and hence they shouldn’t be considered cash, which is why at some points in time I’ve seen lenders not allow retirement accounts to count towards cash reserves requirements.
But currently, as of the date of this blog, we have many lenders we work with that allow retirement accounts to be used as cash reserves. This is an important development because it now allows borrowers to only need to have their down payment and closing costs liquid, but not the cash reserves.
Mortgage guidelines can change frequently, please schedule a call or email me with questions on your specific situation.
A VA cash-out refinance can be used for many reasons. There are a few important things to know about cash-out refinancing to 100% loan-to-value (LTV) when using your VA eligibility.
On a VA cash-out refinance to a 100% LTV the 100% must include the VA funding fee. Read the rest of this entry »
There has been a lot of talk about e-closings recently, which allows 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.
There are also different types of e-closings such as: Read the rest of this entry »
Lenders are sometimes asked by a mortgage borrower to allow an escrow account to be created for some items to be completed. Repairs cannot be addressed by putting money in escrow. Repairs are usually required to be completed prior to closing. However, lenders may allow an escrow account to be created for items unable to be completed due to weather. Weather related delays are most common in new construction homes.
In my 3.5 decades in the mortgage business, I don’t recall a lender I have worked for ever allowing repair escrows. That is because they are typically messy, and many times end up not being resolved in a timely fashion. There are contractor problems and other situations where the cost exceeds the escrow account reserve. Weather related escrows are a different story, but repair related escrows may be impossible to get approved by a lender. Read the rest of this entry »
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. Read the rest of this entry »
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.
A mortgage lender will approve your loan allowing you to spend a certain percentage of your gross monthly income on your new mortgage payment and your debts.
Let’s see how much more mortgage you could qualify for if you did not have a car loan. Then you can see if paying off a car loan off leaves you with the cash needed to make a down payment and pay the closing costs to purchase a new property. Read the rest of this entry »
