What is a Cash And Dash? Many people are not aware of a rule that has altered, made more expensive, or stopped people’s refinance attempts. This rule related to Conforming Loans which are loans up to $417,000. It also related to Conforming-Jumbo loans which are loans from $417,001 to $729,750. If you are refinancing and paying off any 2nd trust Home Equity Line of Credit or Home Equity Loan that the transaction must be deemed a ‘cash out refinance’. It cannot be called a ‘no cash out refinance’. This is important for several reasons.
Blog Category: underwriting rules
The Treasury Department last week altered its financial support of Fannie Mae and Freddie Mac. The revised terms are that the guarantees of how much the Feds will back them are going down. But officials say the amounts they are still guaranteeing will be plenty. More importantly, there will now be no dividend that Fannie Mae and Freddie Mac has to pay. The new terms are that whenever there are profits they will simply be swept over to the Feds. And losses will still be covered by we the people.
If I Want To Keep My Current Property And Rent It, And Buy A New Property, I Have To Do What? If you are looking to buy a new house and want to keep your current home as a rental property, there are rules. On a Conventional loan you need to show the lender on your new home some things that you would not if you were selling your current home instead of renting it. You need to show 6 months “cash reserves”, in addition to the down payment and closing costs on the new house. And you need a 70% loan-to-value (LTV) on your current home, as evidenced by an appraisal.
There is a new Fannie Mae underwriting rule related to large deposits. There has always been a Fannie Mae rule that made underwriters ask about a large deposit that was clearly not a paycheck deposit. And that is understandable. If someone has a $30,000 deposit on their bank statement, and their paycheck is $4,250 each pay period, then I can see asking where the $30,000 came from. And usually, the answer is that it is a gift, or a transfer from another account. All we have to do is have the client document that with the proper documents. Documenting a large deposit is known in the industry as getting a “source of funds.” But recently, it has gotten more interesting.
When things drop there is usually trouble, like bombs, glassware, or variable income. However, sometimes it is good when things drop, like interest rates, gas prices or your golf score. Speaking of dropping income, it is important to know that if you have any sort of variable income and it drops, it will hurt you in qualifying for a mortgage.
I lost a client recently, mostly because she was a price shopper, and would not answer my questions. And then I heard from her again mostly because she was a price shopper, and would not answer my questions! Confused? I was too. It has to do with currencies, underwriting rules, foreign countries and more. Sounds mysterious. I’ll explain.