Blog Category: mortgage

small condominium

2-4 Unit Condos Are Easier To Get A Mortgage Loan For

Condo financing can be tricky, but with small 2 to 4 unit condos it has gotten easier. In some urban markets a multifamily home is converted to condominiums. For example, a duplex is turned into two condominium units. Or a triplex is turned into three condominium units. Or a fourplex is turned into four condominium units.

There is required condominium project review that needs to be done on most condominiums. But that is waived on condos that don’t consist of more than four units. Read More

stack of cash

2021 Mortgage Loan Limits

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

up arrow

2023 Much Higher Conforming Loan Limits Announced

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

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2024 Conforming Loan Limits Announced

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.

In most areas, the maximum conforming loan limits for 2024 are as follows: Read More

bad versus good

6 Tips on Choosing a Mortgage Lender or Broker

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

Truth Lie Street Sign

9 Mortgage Myths To Stop Believing

Buying and financing a new home can be a daunting task and many of us turn to friends and family for advice. Watch out for mortgage myths. The only experts in the mortgage field….are the experts in the mortgage field! Friends and family might not be the experts they think they are. The mortgage guidelines and interest rates are changing so frequently that unless someone is in the mortgage field as a full-time job, you should only take advice from a mortgage professional. Read More

ten percent off sale

Are Housing Values Dropping Now?

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

septic truck

Are Well And Septic Inspections Needed To Get A Mortgage?

Well and septic inspections may indeed be required to get mortgage approval. But it depends on the type of mortgage you are seeking.

Conventional mortgages

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.

FHA mortgages

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:

  • The septic tank must be 50 feet from the water supply on existing construction.
  • The septic tank must be preferably 100 feet from the water supply on new construction.
  • Existing wells must deliver water flow of three to five gallons per minute for existing construction.
  • Wells must deliver water flow of five gallons per minute over at least a four-hour period for new construction.

VA mortgages

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:

  • All testing must be performed by a disinterested third party.
  • Water quality for an individual water supply must meet the requirements of the health authority having jurisdiction. If the local authority does not have specific requirements, the guidelines established by the Environmental Protection Agency (EPA) will apply.
  • The appraiser must be familiar with the minimum distance requirements between private wells and sources of pollution.
  • Water quality test results are valid for 90 days from the date certified by the local health authority unless the local authority indicates otherwise.

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.

approve or reject

Automated Underwriting Versus Human Underwriting

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

interest rates

Bond Market Report – January 2019

I am going to post numbers on the 10 Year Treasury Bond on a regular basis. The 10 Year Treasury Bond is not a direct correlation to mortgage rates, but it is a good number to know.

As of 01-03-2019 the 10 Year Treasury Bond was 2.55%.

Below are some interesting numbers*:

In 2018 the average yield of the 10 Year Treasury Bond was 2.91%.

In 2017 the average yield of the 10 Year Treasury Bond was 2.33%. Read More

pain

Buybacks Are Scary, And Cause All Mortgage Applicants Pain.

TRANSCRIPT (this was taken from a cartoon video I did, featuring monsters):

This is an explanation of how scary Fannie Mae and Freddie Mac (now government owned it is important to note) have become. And how it affects the consumer. Anyone who has gotten a loan in the last 3 years knows how difficult it is. Guess why. Think its the banks? Nope. The underwriters? Nope. It’s the Halloween style nightmare Read More

open house sign

Buying A Home Non-Contingent On The Sale of My Current Home

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.

GETTING THE CASH FOR THE DOWN PAYMENT ON YOUR NEXT HOUSE

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

debt paydown

Can paying off a debt help qualify you for a mortgage?

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

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Cash Reserves Requirements For Jumbo Loans – UPDATE

Cash Reserves Requirements for Jumbo loans can be complicated. 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.

What is cash reserves?

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.

Need 4 months PITI if you are retaining your current primary residence

4 months PITI for each rental property you own

And 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:

  • Principal and Interest (as used in the qualifying payment amount)
  • Insurances (hazard, flood, and/or mortgage)
  • Real Estate Taxes
  • Ground rent/leasehold
  • Special Assessments
  • Homeowners’ association fees
  • Monthly co-op fees
  • Any home equity loan or HELOC payment, if applicable

Types of cash reserves:

  • Cash accounts (checking account, savings account, money market accounts, CD’s)
  • Mutual Funds
  • Stocks
  • Gift money is usually not allowed to count towards cash reserves
  • Retirement accounts may or may not be allowed to count towards cash reserves

Retirement accounts as 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.

Conclusion

Mortgage guidelines can change frequently, please schedule a call or email me with questions on your specific situation.

law books judge gavel

Condominium Litigation When Getting A Mortgage

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:

  • It is non-monetary litigation including, but not limited to neighbor disputes or rights of quiet enjoyment;
  •  the HOA is the plaintiff in the litigation and not the defendant;
  •  the reasonably anticipated or known damages and legal expenses are not expected to exceed 10% of the project’s funded reserves.

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.

interest rates are up

Did The Coronavirus Make Mortgage Rates Go Down? Did the Federal Reserve Just Cut Mortgage Rates To 0%?

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

What Who Where When How Why

Does It Really Matter Where Your Loan Officer Is Located?

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

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e-closings The Reality

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.

There are also different types of e-closings such as: Read More

unfinished house

Escrows For Weather Related Home Completion Items

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 More

Five FHA Loan Facts to Know Before You Buy A Home

 

FHA loan facts. FHA, known as the Federal Housing Administration, offers a mortgage loan requiring borrowers to have mortgage insurance on the loan. The FHA loan originated during the great depression and has contributed to the growth of the housing market ever since.  Read More

divorce

Getting A Mortgage Loan With Child Support And/Or Alimony

Getting mortgages with child support and alimony is difficult. I have people ask me what the requirements are to count alimony or child support income towards qualifying for a mortgage.

First we need a copy of a divorce decree. Or the separation agreement if the divorce is not final. That explains all the terms of any alimony and child support. And any other financial arrangements that may have a positive or negative impact on your mortgage application. Read More

solar panels

Getting A Mortgage Loan With Solar Panels On Your House

Think about solar panels and mortgages when applying for your loan. The popularity of electric cars and solar panels is increasing. It’s important to point out that having solar panels on your house may impact your ability to get a mortgage. Many times, buying solar panels will be financed. And that is when they have an impact on your ability to purchase or refinance a mortgage. Read More

interest rates going up

Home Price Reduction and Rates

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.

Are housing values dropping?

Should they adjust the price of their home due to interest rates rising?

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

calculator with house on it

How A Mortgage Calculator Can Keep You Out of Trouble

 

If you type “Mortgage Calculators” into Google you will get over 2 million results and Google’s simple mortgage calculator at the top. The Google mortgage calculator will give you a rough idea of mortgage monthly payments based on a simple calculation of the interest rate and mortgage term. It doesn’t answer any details, like: how many payments do I have to pay in order to pay off my mortgage? In 15 years how much mortgage will I have left to pay if I increase my monthly mortgage payment? What happens if you want to increase or decrease the interest rate, or change the amount of years of your home loan? With all the mortgage loan calculators out there isn’t it best when you can see the big picture of your home loan payment and how it can work for you. Read More

calculate property taxes

How are property taxes calculated?

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.

What amount will I owe?

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

money

How Can a Buyer Pay for Their Own Realtor Representation?

How can a buyer pay for their own realtor representation? I wrote an article discussing the lawsuits against the National Association of Realtors (NAR) and some of the largest real estate firms. By now everyone has likely heard about all these lawsuits. The litigation accused brokerages of inflating sales commissions and of monopolistic practices.

Homeowners could see a reduction in the cost of selling their homes now that the NAR agreed to resolve the case.

But could this mean an increase in cost for buyers instead?

Read More

paperwork stack

How Much Documentation Needs To Go Into a Pre-Approval Letter?

Today’s real estate market can be competitive for everyone. That’s why it’s important to understand the ins and outs of the home buying process before you hit the market. Let’s talk about what getting a mortgage pre-approval letter. It’s a good idea for anyone heading into the market for a new home. Read More

approved or declined

How Much Mortgage Can I Afford?

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

car loan

How Much Mortgage Does My Car Loan Cost Me?

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

Foreclosure Abandoned Home

How to Apply for a Mortgage On a Foreclosure Property

There are some great deals on foreclosed homes on the market today. You can find some of these foreclosure listings on Auction.com, Zillow.com, and Redfin.com. Since the housing bubble burst the U.S. has had a flux of foreclosures, where one person’s misfortune can become an investment for someone else.

Perhaps you are interested in buying foreclosure properties for a good deal on a home for you to live in. Or a home you want to flip or turn it into a rental property or Airbnb listing. Read More

special sale only this week

How to Get the Lowest Mortgage Rate

Clients always ask me how to get the lowest mortgage rate. Especially given the fact that interest rates have increased since 2022 after having been at record lows for so many years prior to that. Many people think mortgage rates are high currently. However, interest rates today are historically quite average. We were just spoiled with cheap money for a very long time from just after the economic debacle of 2008 through most of 2021. What I see now is an almost carnival like atmosphere of people hawking quick fixes to get “special” mortgage deals. Read More

Contract Agreement Signature

How to Make an Offer on a House: 5 Important Topics

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

veteran administration mortgage

Important VA Mortgage Guidelines

A VA loan is a mortgage loan guaranteed by the Veterans Administration. There are numerous mortgage guidelines for a VA mortgage. I wanted to list some of the more important ones below, but you always need to speak to an experienced mortgage loan officer and have them discuss your specific circumstances as there are many other things to consider in addition to the below. Read More

Percent Character rates

Interest Rates And Your Monthly Mortgage Payment

Many people are very focused on interest rates these days and are wondering where they are headed next and how it may affect their mortgage payment. Interest rates have been historically low for a very long time. And people are starting to fear that they may increase and have an outsized impact on the cost of purchasing a home.

You can see a chart of the long-term history of interest-rates by clicking here.  This chart shows that we are definitely near the bottom of where interest-rates have been over a long period of time. On the other hand, if interest-rates start to go up does it have as much of an impact as people think? Read More

interest rates

Interest Rates Are Still Low. Or Did They Go Up? Are They Down?

Interest rates rose after the presidential election. The news from the bond market according to MBS Online was “Trump has advocated for greater spending on defense and infrastructure. And at the same time he proposes to cut taxes. These policies raise the prospects for increased deficits and inflation. Neither of which are good for mortgage rates.”1 Read More

interest rates

Latest Bond Market Report – January 2020

The 10 Year Treasury Bond was at 1.822% on January 10th 2020.

It was 1.847% as of October 28th 2019.

So you can see that rates have been fairly flat for the last 2+ months.

The 10 Year Treasury Bond is not a direct correlation to mortgage rates. It is simply good to know historical information on Treasury bond rates.

Read More

interest rates

Latest Bond Market Report – June 2019

The 10 Year Treasury Bond was at 2.08% as of last Friday*. This is the lowest it has been in a long time.

QUESTION: But what does this mean for mortgage rates?

ANSWER: In general, mortgage rates are flat recently, but down over the last few months.

QUESTION: Do mortgage rates rise and fall in lockstep with the 10 Year Treasury Bond?

ANSWER: No.

QUESTION: What variables affect mortgage rate quotes.

ANSWER: Loan size, loan type, property type, credit score, down payment, debt ratios, and more.

Where are the 10 Year Treasury Bond, and more importantly mortgage rates, headed next? Check back here to see!

*The source for the 10 Year Treasury Bond quote comes from here: https://www.marketwatch.com/investing/bond/tmubmusd10y?countrycode=bx

interest rates

Latest Bond Market Report – October 2019

The 10 Year Treasury Bond was around 1.8% as of October 28th 2019.

The 10 Year Treasury Bond is not a direct correlation to mortgage rates. It is simply good to know historical information on treasury bond rates.

On August 2nd 2019 the 10 Year Treasury Bond was 1.846%.

On September 3rd 2019 the 10 Year Treasury Bond was 1.461%.

Below are some interesting historical numbers:

In 2018 the average yield of the 10 Year Treasury Bond was 2.91%.

In 2017 the average yield of the 10 Year Treasury Bond was 2.33%.

In 2007 the average yield of the 10 Year Treasury Bond was 4.63%.

In 1997 the average yield of the 10 Year Treasury Bond was 6.35%.

In 1987 the average yield of the 10 Year Treasury Bond was 7.18%.

In 1977 the average yield of the 10 Year Treasury Bond was 7.42%.

Where is the 10 Year Treasury Bond headed next? Stay tuned!

*The source for these numbers comes from:

https://www.macrotrends.net/2016/10-year-treasury-bond-rate-yield-chart

and

https://www.marketwatch.com/investing/bond/tmubmusd10y?countrycode=bx

interest rates

Latest Rate News. And Are Loan Limits Changing?

Latest Rate News TRANSCRIPT:

Justin: We are on. Hey, Brian. This is Justin and we’re here with the Mortgage Market Minute. What do you have for me today?

Brian Martucci: Well, I think the topic of the day is probably going to be interest rates and the odd thing to me is that a lot of people do not realize that interest rates are up a little bit, not a lot, but people, when the media starts to hammer the public with the fact that rates are down, rates are down and they repeat it all the time. Read More

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Limited Review Condo Approval

A limited review condo approval means that when you get a mortgage to purchase a condominium you don’t have to go through the normal extensive document review to approve the condominium. You must have an approved condo to get a mortgage approved to buy a unit in the building. The approval review is more limited/abbreviated with a limited review condo approval. Read More

monopoly houses

Maximum number of financed properties

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

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Mortgage forbearance

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

no money

Mortgage Forbearance in 2020

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

lock and key

Mortgage Interest Rate Lock-In Information

You would think locking-in an interest rate for your mortgage is a very simple process. What is there to think about? You are given your choices, and you pick one and lock-in. Right? Not much to it?! It’s amazing what the average consumer doesn’t know, and what they should be thinking about. Read below to learn about what will be important for your next mortgage application and interest rate lock-in. Read More

onerous paperwork image

Mortgage Paperwork Is Getting Easier

Here at Capital Bank Home Loans we have a new dynamic loan application that we use, to help ease the mortgage paperwork. Being dynamic means that it can potentially verify your assets and income during the application process, allowing you to avoid having to upload any documents. And of course we all love to avoid mortgage paperwork!

Read More

Interest rate

Mortgage Rates Today

What are mortgage rates today?  Interest rates are different according to numerous variables. Interest rates can be different based on loan size, credit score, property type, loan type, how many days you need to lock-in the interest rate for, and more.

I am not going to talk about exact rates which are impossible to quote online, due to the variability of each of our own individual circumstances. But I am going to talk about some other important things related to mortgage interest rates.

Date the Rate and Marry the House

Read More

Mortgage Resources for Realtors

Where does one find mortgage resources for realtors? There are many Realtor tools and resources mentioned in the above video. You can view them by going to Tools > For Realtors on GetLoans.com. This video briefly shows all the mortgage resources I have available for real estate professionals. It shows what services I offer my Realtor partners. Read More

multifamily home

Multifamily Property Mortgages Got Cheaper

Multifamily mortgage financing just got cheaper.

What Is A Multifamily Home?

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.

How Did Things Get Cheaper?

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

2017 calendar

New Loan Limits For 2017

New Loan Limits For 2017! The mortgage loan limits have been changed for 2017. For Conventional loans the new limits are:

Conforming loans are:

Units
1 $424,100
2 $543,000
3 $656,350
4 $815,650

For Conforming “High Balance” loans in designated high cost areas the new limits are:

Units
1 $636,150
2 $814,500
3 $984,525
4 $1,223,475

Find more details on Conventional loan amounts click here.

Any Conventional loan amount which is higher than the above limits is considered a Jumbo loan (aka non-conforming) and is subject to different underwriting guidelines.

To look up FHA loan limits for your area click here.

To look up VA loan limits for your area click here.

To contact me to discuss your mortgage scenario, mortgage rates, or other mortgage questions, click here to schedule a call or you can email me directly.

Savings Budget Investment

No cost refinancing a.k.a. no cost refi

I frequently have people ask me for “one of those no-cost refi’s”. Some people think that mortgage lenders are so hard up for business that they are willing to lose money and simply pay the closing costs for the mortgage borrower. I don’t know of any businesses where losing money is part of the process of making money. A no-cost refi actually comes with a cost…a higher interest rate.

The reality is that a no-cost refi is one where the closing costs are built into a higher interest rate. Read More

Mortgage prepayment versus recast

Prepayment Versus Recast

When you divvy up your monthly budget pie, housing is very likely the biggest slice, especially after you add in utilities, maintenance and of course, your mortgage.  

So wouldn’t it be great if you could lower your mortgage payments without refinancing your loan? Or better yet, pay off your mortgage ahead of schedule? Read More

house sitting on pennies

Reduced Government Transfer Taxes for First Time Homebuyers

Government transfer taxes can consist of some or all the following: transfer tax, recordation tax, and tax stamps. These are one time taxes charged by a state or jurisdiction upon the transfer of real estate. They are based on the sales price of the real estate being transferred to the new owner. These taxes are simply a tax on the transfer of property.

If there is a mortgage on the new property, then there is also tax stamps or a recordation tax to record the mortgage. It may be customary in most areas for the buyer and seller to split these taxes. But it’s always good to check and see what is customary in your area, or if a seller expects those to be negotiated. Read More

COVID

SELF EMPLOYED LOANS DURING COVID

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

Self employed Freelance

Self-Employed Mortgage Borrowers Need 1 Or 2 Years Of Tax Returns?

I constantly get questions about whether or not someone who is self-employed needs a minimum of two years of tax returns, or if they can get away with one year of them, when qualifying for a mortgage. I thought I would answer this question and put it to rest. Please realize guidelines can change in the future. As of the date of this blog, the hyperlinks below are guidelines related to the history that self-employed people need, and the number of years of tax returns they need to document their income. Read More

stickman looking up

Stick People Say Rates Are Going Up

Hello John.

Hello Doug.

Let’s talk about interest rates.

Why would we do that? I just bumped into you on the street and I am on my way to work.

You are not on your way to work. We are stick people, in a skit, on some guy’s website. We only exist because of his imagination. So let’s talk about mortgage rates.

Okey dokey.

So here is why interest rates will go up. First, our deficit is on par with Greece, even worse when you consider our unfunded entitlement mandates, which are ludicrous. When the world figures out what an economic mess we are in, they’ll demand higher rates to lend us money. Second, interest rates have only been lower than they are now a few other times in 220 years of recorded interest rate history. Do I need to go on?

Please do, smart stick man. Read More

fifty percent off

The Best Mortgage Rate

Often a client will start a mortgage loan conversation with, “I need to get the best rate.” And that often confuses me. What does the “best rate” mean? Does that mean you won’t work with a lender who doesn’t have the very lowest interest rate on the day you are ready to lock-in an interest rate? Does it mean you won’t give any consideration to experience, execution, responsiveness and delivery?

Would most people work with a mortgage lender willing to lose money? Read More

question mark pile

Top 15 Questions to Ask a Lender or Broker Before You Apply for a Mortgage Loan

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

older couple in retirement

Using Retirement Account As Income For A Mortgage

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.

There are many rules to consider.

  • The mortgage must be for a 1-unit or 2-unit Primary Residence or a second home. No investment properties are allowed. And no 3-4 unit properties are allowed.
  • The mortgage must be a purchase loan or a no cash-out refinance, not a cash out refinance.
  • The maximum loan-to-value is 80%.
  • At least one borrower on the account must be 62 years old.
  • We take the account balance and divide by 240 to get the monthly income. For example: $800,000 401(k) account balance / 240 = $3,333.33/month in income to help qualify for a mortgage

All the Freddie Mac rules related to this can be seen by clicking here.

What if someone is already taking distributions from retirement accounts?

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 retirement income is paid in the form of a distribution from a 401(k), IRA, or Keogh retirement account, determine whether the income is expected to continue for at least three years after the date of the mortgage application.
  • Eligible retirement account balances (from a 401(k), IRA, or Keogh) may be combined for the purpose of determining whether the three-year continuance requirement is met.
  • The borrower must have unrestricted access to the accounts without penalty.

Conclusion

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.

house and calculator

VA $0 Down Payment Loans To Infinity?!

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

calculator

VA Refinance Recoupment Period

The United States Department of Veterans Affairs requires that the closing costs on a VA refinance be recouped in 36 months or less. If the recoupment period is over 36 months the loan will be rejected.

In other words, the refinance closing costs divided by the monthly savings has to be 36 or less.

For example, if the closing costs on a VA refinance are $3,000. And the monthly savings on the refinance are $400 a month. The recoupment period is 7.5 months because $3,000 divided by $400 a month in savings = 7.5. This is well within 36 months. Read More

condo building

Waiving Contract Contingencies On A Condo

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

Police and frog thief

Watch Out For Wire Fraud In Mortgage Transactions!

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

career

What is a COVID VOE?

Mortgage lenders are now required to confirm that you are still employed prior to closing on a mortgage, three business days prior in fact. Mortgage lenders are always required to verify that a borrower has not lost their job, been furloughed, laid off, or had their income altered prior to closing because it impacts their ability to repay the loan. Previously, lenders were able to document a borrower’s employment 10 calendar days prior to settlement. Read More

pie chart

What Portion of My Income Should I Spend on a Mortgage?

What portion of my income should I spend on a mortgage? Deciding on how much mortgage you can afford is very complicated with several things to consider. Before you plan to spend the maximum amount you’ve been approved for, consider what you feel comfortable with. And don’t treat your home purchase like a zero-sum game. Consider spending a sufficient amount to buy enough house to keep you happy for a longer period of time. This is due to the hefty transaction costs of real estate. Read More

getloans.com

What’s So Important About A Website?

TRANSCRIPT (fantasy discussion between Astronaut Neil Armstrong and Albert Esintein):

Hello Neil Armstrong. I have had a difficult time getting a mortgage. It is so complicated. I cannot understand it. Can you?

Albert Einstein, I cannot understand it either. Or your accent. But you were one of the fathers of the atomic age. One of the greatest scientists of all time. And came up with the theory of relativity! Are you being serious that you cannot understand the mortgage process?

I’d rather formulate the photon theory of light mechanics than go through the mortgage process. I don’t trust mortgage people. I would rather listen to politicians filibuster each other than go thru a mortgage process.

You clearly have not talked to Brian Martucci. He will help you get a loan and make it clear, easy, and transparent. Go to his website, www.getloans.com.

What will I do there silly astronaut man? Read More

hd wallpaper 7075492 1920

When Is A Mortgage Really Approved?

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:

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.

Read More

interest rates going up

Where Are Mortgage Rates Going?

Everyone is watching mortgage rates these days. And everyone knows they are much higher now than in 2020 and 2021! But are they high? Are they outrageous? And what exactly are they? How are they determined? Will they ever go back to when they were 3%?

Are mortgage rates high?

Looking at the historical numbers, today’s mortgage rates are above average. But today’s rates are  not outrageous, as some think. Read More

hd wallpaper 7075492 1920

Why Do Sellers and Realtors Want Me To Be Pre-Approved?

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

Work with individual or a team

Work With An Individual Loan Officer or A Loan Officer Team?

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

House For Sale

Your homeowner’s insurance coverage is too low!

Your homeowner’s insurance coverage is probably too low!

Check your home value annually

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