The Home Appraisal Process When You Get FHA Loan is a post from: FHA,VA and Conventional Home Loans in all 50 States
Starting February 2010 there was a major change in how FHA appraisals are ordered during the FHA loan process. Prior to February 2010, the mortgage company handling your FHA home loan would order your appraisal though a local experienced appraisal they have known and worked with before. Now, FHA appraisals are randomly assigned through Appraisal Management Companies (AMC) used by FHA lenders. What this means is the mortgage company has very little contact with the appraiser and likely does not know who they are. Additionally, the appraisers are now getting lower fees and sometimes are not specialists in a particular area. So this can result usually in lower quality appraisals coming in lower amounts. This can actually be a good thing sometimes for those buyers who qualify FHA loan because they can possibly buy a property at a lower cost than its true value because of a substandard appraisal. But this may not be a great thing for those selling a home to a FHA home buyer or those wanting to refinance with an FHA loan, as these two types want the highest appraisal value they can get.
FHA appraisals are an upfront cost (as are all appraisals for any type of mortgage) for home buyers. One you receive FHA loan approval, find a property to purchase and get your purchase contract accepted, the FHA appraisal must be ordered and this is a $400-$450 fee paid up front by credit card.
FHA appraisals are also unique in that the appraisal “stays with the property” for 120 days. So once a FHA appraisal is done on a property, even if the current buyer who had the FHA appraisal done backs out and doesn’t buy the property, any buyer within the next 120 days will be influenced by that FHA appraisal. The next FHA buyer’s lender will see in the FHA system that an appraisal was done and it will have to be used. This is not the case for conventional loans.
So I hope these gives you a little more knowledge of the FHA appraisal process as you navigate your home purchase using FHA mortgage financing.
Some great aspects of FHA loans to remember:
- FHA loans in California can be had up to $729,750 with 3.5% down. This allows you to qualify FHA loan even in expensive coastal areas such as San Diego, Los Angeles, Orange County, San Francisco, San Jose and more.
- FHA loan credit scores do not have to be perfect. A 620 score is all you need to be considered.
- 3% of FHA loan closing costs can be paid by the seller
- FHA loan interest rates are still extremely loan compared to historical norms
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA, VA or conventional Loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and FHA specialist)
858-922-7899
When the tax credit for first time home buyers and repeat buyers was extended, there was a special rule for members of armed forces, uniformed services, Foreign Service and the intelligence community. What this special rule says is if you have official orders outside the United States for at least 90 days from 12/31/2008 to 5/1/2010, the tax credit is extended one year. So if you were outside the U.S. for 90 days, you can still get the tax credit as long as you sign your purchase contract by April 31st 2011 and close by June 31st 2011. This is excellent for those members of active military who want to get a VA loan with 100% financing to buy a home.
If you have not read about the $8,000 federal tax credit, it is a temporary credit for first time home buyers and move up home buyers the Government has created to stimulate the economy. In short, it is an incredible deal that has never happened before. As soon as you close on your house, you file a form with the IRS and you home closing statement and as long as you paid at least $8,000 in federal taxes the prior year, the IRS will cut you a check for $8,000. You can amend your previous year’s returns and get the tax credit immediately, or you can take the credit at tax time for the current year. So you will get a check for $8,000 after you close to do with as you please. This can be great for decorating your new house very nicely, paying off debt or doing with it as you please!
Keep in mind some of the wonderful advantages of VA loans for active military or veterans:
- If you qualify VA loan it is a 100% financing zero down loan. It is the only 100% financing mortgage loan available today. The next best is FHA with 3.5% down.
- VA loan 30 year fixed interest rates are still very, very low compared to historical norms
- California VA loans available with 100% financing all the way up to $600,000, $700,000 and beyond depending which county you buy in California. This allows you to buy with VA 100% financing even in coastal areas such as San Diego, Los Angeles, San Jose, San Francisco and Orange County. A VA loan over $417,000 is a jumbo VA loan.
- VA loan credit scores do not have to be perfect, you just need a 600 score to qualify.
- You can get a second VA loan (and 3rd, 4th, etc…) even if you have had a VA loan before, but you can only have one at a time.
- VA loan benefits include a waived VA funding fee for veterans if you receive any VA disability pay. This is a savings of thousands and thousands of dollars
- VA lending has NO monthly mortgage insurance. You have to put 20% down to get any other type of mortgage with no monthly mortgage insurance.
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions or want to apply for a VA loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and VA specialist)
858-922-7899
Federal Tax Credit Extended to April 2011 For Certain Members of Military and Other – Great to Get a VA Loan is a post from: VA,FHA and Conventional Loans 858-922-7899
Two Key Boxes to Check When Get FHA Loan to Buy A Short Sale in California is a post from: FHA,VA and Conventional Home Loans in all 50 States
As anyone looking to buy a home in California knows right now, many (if not most) of the properties on the market are short sales. For those who do not know what a short sale is, it is a sale where the seller has a mortgage balance of higher than they are selling the property for, and they are negotiating with their mortgage holder to take less than they owe. Short sales present some of the best deals at the lowest prices in the market. This post will discuss purchasing these short sales in California with a FHA home loan.
Below is a brief overview of the stages of a short sale purchase:
1. Short sale seller contacts a Realtor and indicates their desire to sell with a short sale and Realtor pre-qualifies if seller is likely to be approved for a short sale
2. Realtor puts the property on the market and finds a buyer
3. Realtor submits the buyers purchase contract + the sellers short sale package to the lender (this is where you need patience, it can take lenders 3+ months in most cases to get the written short sale approval)
4. If everything goes to plan, seller’s mortgage holder delivers written approval of the short sale and accepts your purchase contract (this is really where you know you have a deal and the timelines begin to close)
5. After step #4, you should have 30 days or more to do all of your inspections on the property, get you loan fully approved and close on the property and get the keys
What I wanted to touch upon in this post is the timeline of a short sale and two important boxes to check on part of your short sale purchase agreement called the “Short Sale Addendum”, to protect yourself when you get FHA loan as your financing to buy a short sale in California.
The key with short sales is from the date you get your purchase contract accepted, it can take usually 60 days at the soonest, to 3-9 months until you close on a short sale. So go back to the numbered steps above, and you need to realize you really do not know you have a deal until step #4. So in the “Short Sale Addendum” to the purchase contract, you need to check 2 boxes under section B 1 & 2. Those boxes to two things:
1. They make sure your contingency release time periods for your inspections, loan approval, appraisal and more, do not begin until the seller delivers written approval of the short sale by the sellers mortgage holder(s). There are likely two different lenders in a short sale because so many loans in the past had 1st and 2nd mortgages, so you will need written approval from both.
2. The second box checked makes sure your earnest money deposit is held uncashed until the day after you are delivered written approval of the short sale by the seller’s mortgage holder(s).
These are both very key boxes to make sure you check. Because once again, you don’t really know you even have a deal until you get that written short sale approval. So none of the timelines in your contract should start until you get that written approval. And you should make sure you have at least 30 days, if not 35-40 days, to close from the date you get the written approval.
I hope this helps you to understand a little more about buying a short sale property in California and protecting yourself when you use FHA loans in California to purchase short sales.
And here are some reminders of highlights of FHA loans in California:
- FHA loan credit score minimum is generally about 620, it gets much more difficult to qualify FHA loan below this score. Conventional loans require a 720 score for 10% down, so 620 is very forgiving.
- FHA home loan requirements for qualification are much more relaxed than 10% down conventional loans with 55% debt ratio and 620 credit scores vs. 41-45% debt ratios and 720 scores for conventional
- FHA max loan amount is $729,750 in the coastal areas of California such as San Francisco, San Jose, San Diego, Orange County, Los Angeles and Santa Barbara
- FHA loan down payment is 3.5% which is the lowest of any mainstream mortgage loan out there today
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA, VA or conventional Loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and FHA specialist)
858-922-7899
Credit issues are one of the major reasons I see eligible active military members and veterans from using their VA loan benefits to get a VA loan to buy a new home or refinance. There are a few very simple things you can do to improve you score dramatically before or even after you apply VA Loan. I’m going to just hit some of the top secrets of raising your credit score. And even if you think you have “bad credit”, you can even sometimes get a VA loan without doing anything as we allow you to have as low as a 600 credit score for 100% VA loans.
So now on to the tips:
1. Do not ever be late on anything that reports to the credit bureaus
What few realize is if you MUST be late on something, be late on your cell phone, your rent, or your utilities for example….but NEVER be late on items that report to your credit such as credit cards, student loans and auto loans. These items report to the credit bureaus where cell phones, utilities and rent payments do not report to your credit
2. Keep your credit cards at 30% or LESS than your credit limits
The credit bureau penalizes you for going over 30% of your credit limits. So keep you cards paid down low or spread the balances around to other cards so you are at 30% or below on everything. Be careful of store cards with low credit limits of say $400 where you owe $350. This will hurt your score.
3. Do not close out older active accounts
If you want to close out credit cards, close the newer ones. Do not close out older cards. The credit scoring system gives you credit for the longer you have had accounts open and paid on time.
4. Try to limit credit inquiries to few or none when applying for your VA loan
Every time a creditor pulls you credit it can lower your score 2-5 points. When you are applying for a loan, try to limit applying for new credit cards, auto loans, store cards, etc….
So those are a few tips to help you keep your credit score high so you can get your 100% VA loan that is only available to you because of your military service. And also, make sure when you start out the VA loan approval process you get a “tri merge mortgage style credit pull”. The consumer credit reports available from the bureaus or from other web sites have different scoring systems than mortgage oriented credit reports. The very best way to start the VA home buying or refinancing process is to have a mortgage company do a mortgage style credit pull, we can do this for you.
And here are some of the incredible and unique advantages of VA Lending for California VA Home Loan applicants:
- The VA loan limit in many counties of California can go up to $700,000 and above. So you can still get a jumbo VA loan to buy in the more expensive coastal areas of CA such as San Diego, San Francisco, Los Angeles, San Jose, Orange County and more.
- VA loan interest rates are still hanging around their historic lows
- VA lending requires NO down payment. They are 100% financing loans. All other loan types such as FHA and conventional require down payments!
- VA homeloans have NO monthly mortgage insurance (unlike FHA loans and conventional that do)
- The guidelines are very flexible to qualify VA loan. For a VA loan credit does not need to be perfect and debt ratios are much more flexible than FHA or conventional
- VA loan streamline refinances allow you to easily drop into a lower rate if you currently have a VA loan
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions or want to apply for a VA loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and VA specialist)
858-922-7899
VA Loan Credit Tips For California VA Home Loan Applicants is a post from: VA,FHA and Conventional Loans 858-922-7899
Fannie Mae Homepath Loans An Excellent Alternative to Getting FHA Loan California is a post from: FHA,VA and Conventional Home Loans in all 50 States
Fannie Mae is a major buyer of conventional mortgages sold in the secondary market. When Fannie Mae forecloses on a property and take it back, they list it on the market with local Realtors like other mortgage companies do. But what is special about Fannie Mae foreclosures is that they allow you to obtain a special loan called a Fannie Mae Homepath loan to buy their foreclosures. We are a mortgage company that can handle these very special Fannie Mae Homepath loans.
Here are some special features of the Fannie Mae Homepath loans that we offer on Fannie Mae foreclosures:
- Minimum 3% down payment (but best to go 5% down)
- NO mortgage insurance!
- NO appraisal
- NO condo qualifying
- 10% down for 2nd homes (there is no other 2nd home loan available with less than 20% down!)
- 10% down for investors (there is no other investor loan available with less than 20% down!)
- Fannie Mae properties are usually fully rehabbed with brand new flooring, kitchens, baths, paint and light fixtures when they are sold
Let me speak to some of these benefits as they are all really incredible right now in this lending environment:
NO mortgage insurance
On a FHA loan you now have 2.25% upfront mortgage insurance (MI) + .55% MI monthly. Since there is NO mortgage insurance at all on a Fannie Mae Homepath loan that is a $15,000 savings on a $300,000 loan over 5 years vs. a FHA loan and a $9,300 savings over a standard 10% down conventional loan over 5 years.
NO appraisal
This speeds up the loan process considerably and creates no worries about the appraisal causing problems with you getting your property.
NO condo qualifying
There are many obstacles to obtaining a FHA or conventional loan today on condos and townhomes today because of the difficult requirements these loans have for the condo complex such owner occupancy % and many other requirements of the condo complex Homeowners Associations (HOA). The amazing thing about the Fannie Mae Homepath program is that there are NO condo requirements at all! This allows you to buy a condo that may be very difficult to get financing on without a Fannie Mae Homepath loan.
10% down for 2nd homes
There is no other loan out there period right now to get a 2nd home with less than 20% down. If the property is owned by Fannie Mae you can buy it with 10% down as a 2nd home. This saves you half of the down payment.
10% down for investors
There is no other loan out there period right now to buy an investment property with less than 20% down. If the property is owned by Fannie Mae you can buy it with 10% down as an investment. This saves you half of the down payment.
Fannie Mae properties are usually fully rehabbed with brand new flooring, kitchens, baths, paint and light fixtures when they are sold
Many bank owned properties sold today are in worn out condition and need tens of thousands of your dollars in upgrades after you buy them. Most Fannie Mae Homepath homes have been fully fixed up for sale with fresh new carpeting, paint, new kitchens, bathrooms and light fixtures. And everything is in working order in the house. This can save you a ton of money out of pocket after you buy.
So as you can see, the Fannie Mae Homepath Mortgage is a very special home loan out there right now. If you see a Fannie Mae owned property in California, give me a call and I can get pre-approved. It will usually say in the property listing if the property is a Fannie Mae owned property.
Fannie Mae does have a bit tougher lending guideline than FHA, so FHA loans are still the best way to go if the property is not Fannie Mae eligible or if you can’t meet the Fannie Mae guidelines. Fannie Mae Homepath requires a 45% debt-to-income ratio where FHA is 55% and Fannie Mae requires a 660 middle credit score where FHA is 620.
So here are some reminders of some of the nice things about FHA Loans in California:
- You can go up to a maximum FHA loan amount of $729,750 in many areas of California. This allows you to buy properties with a 3.5% down FHA loan even in the more expensive coastal parts of California such as San Diego, San Francisco, San Jose, Los Angeles, Orange County and more!
- You can get FHA loan approval with up to a 56.9% debt-to-income ratio. Conventional loans with 10% down only allow 45%.
- FHA loan interest rates are still incredibly low!
- FHA loan down payment of 3.5% is still the lowest of any widely available loan out there right now and that 3.5% down can come from a gift from a relative
- You can get FHA loan on a 2-4 unit property that you plan to occupy as your primary residence with only 3.5% down
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a Fannie Mae Homepath or FHA Loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and Homepath and FHA specialist)
858-922-7899
As of today, up front FHA loan mortgage insurance is increasing from 1.75% to 2.25%. So this post will compare getting a 5% down conventional loan vs. getting a 3.5% down FHA loan.
First let’s talk about mortgage insurance, as this is the primary advantage of 5% conventional loans vs. FHA loan. The way FHA up front mortgage insurance works when you get FHA loan is you take the mortgage amount X 2.25% and that number gets rolled into your new loan balance. So let’s say you are buying a house for $300,000 and putting down the min 3.5% FHA loan down payment. That would be a base loan of $289,500. You take ($289,500 X 2.25%) =$6,513. So $6,513 is the upfront mortgage insurance with an FHA loan. So your base loan amount for your new FHA loan would be ($289,500 + $6,513) =$296,013. Additionally, FHA has monthly mortgage insurance of .55% per month. So you would take your new FHA loan amount (including the rolled in FHA mortgage insurance) of ($296,013 X .55%) =$1,628 per year or $135.67 per month. So over a 5 year period with 3.5% down using a FHA loan to buy a $300,000 house, you would pay a total of $14,653 in mortgage insurance over that 5 year period.
Now let’s look at a 5% down conventional loan. With 5% down on a $300,000 home purchase you would have a new loan of $285,000. There is no upfront mortgage insurance with conventional loans, so you loan balance would stay at $285,000. The monthly mortgage insurance on a conventional loan is .51% per month. So your monthly mortgage insurance would be ($285,000 X .51%) =$1,530 per year and $127/mo. So over a 5 year period you mortgage insurance on a conventional 5% down loan would be $7,650. So as you can see, there is a $7,003 savings over a 5 year period with a 5% down conventional loan vs FHA loan.
However the qualifying guidelines are much tougher for 5% down conventional loans vs FHA loans. You must have a 720 credit score, the max debt-to-income ratio is 45% and you need two months payments in reserves after closing. Additionally, you would have to come up with $15,000 down payment for a 5% down conventional loan vs. $10,500 for a 3.5% FHA loan down payment. FHA on the other hand you only have to have a 620 credit score, the max debt-to-income ratio goes up to 55% and you are not required to have any reserves after close. Additionally, FHA allows a gift from a relative for 100% of the down payment and closing costs.
Keep in mind that mortgage interest is tax deductible in most cases. Mortgage insurance in both cases with FHA and conventional loans can be removed once your loan balance is 78% of the value of the property. The 30 year interest rates are comparable for 5% down conventional vs FHA.
So in summary, if you have excellent credit and can qualify with your income, a 5% down conventional loan is a low down payment option to look at in comparison with FHA.
And here are some other highlights about FHA financing:
- FHA loan down payment is only 3.5% and can be a gift from a relative
- Maximum FHA loan amounts in California can go up to $729,750 in many California cities such as Los Angeles, San Diego, Orange County, San Francisco, San Jose and more
- FHA loan credit score can be 620 and still get your the best interest rates
- FHA loan interest rates are still extremely low
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA Loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and FHA specialist)
858-922-7899
Here are some updates to an earlier post I made on the newly extended California home buyer tax credit. That post did not have all the details but this should have more.
Starting May 1st, the state of CA will award $200 million in state income tax credits to home buyers. Here are some details of the credit:
- Worth up to $10,000 spread over 3 years
- Credit is available to anyone who buys a newly built home and first time buyers who buy and existing home or newly built home
- To get the full $10,000 credit over three years, a home buyer must owe at least $3,333 in state taxes each year
- A first-time buyer is defined as an individual, or an individual’s spouse, who had no ownership interest in a principal residence for three years before the date of purchase
- The home must be used at your principle residence for at least 2 years
- The credit is worth 5% of the purchase price or $10,000, whatever is less. So if you bought a home for $100,000, you would only get at $5,000 tax credit. But if you bought a house for $200,000 and over you would get the full $10,000 tax credit.
- Buyers of existing homes must close on the house between May 1st 2010 and Dec 31st 2010
- Buyers of new homes must enter into contract between May 1st 2010 and Dec 31st 2010, but have until Aug 2011 to close
- Last year the tax credits were on a first come first served basis. This year the Franchise Tax Board existing home credits will run out by June 30th (so you need to move fast!!!). Once all the credits are allocated, the program will end.
- The California credit goes into effect the day after the federal tax credit is set to expire
In 2009, the state of California approved $100 million in state tax credits for people who bought a newly built home starting March 1, 2009. Last year’s credit was also worth up to $10,000 spread over three years but was good ONLY for brand new homes, not existing homes. The credits, which were allocated on a first come, first served basis, ran out in less than four months, and the Franchise Tax Board stopped awarding them July 2. So the moral of the story is you need to really buy between May and July and file for your credit really fast to make sure you get it.
The summary is you will pay $10,000 less in state taxes over the next three years if you fit into this program.
A reminder on some excellent advantages of VA lending:
- Maximum VA loans and jumbo VA loan up to $962,500 in the San Francisco Bay Area Counties, $593,750 Los Angeles, $437,500 San Diego, $593,750 Orange County (feel free to call for your county limit)
- VA loan credit score can be as low as 600 for 100% financing, you don’t need perfect credit
- VA loan interest rates for 30 year fixed loans STILL at historic lows
- VA lending has the most generous debt-to-income ratios – VA loans can allow upwards of 55% ratios where conventional with <20% down is 41% with min 720 credit
- Second VA loan (and third, fourth, etc…) available if you have paid off your first VA loan
- 100% financing on VA loans and the seller can pay all your closing costs, so you can buy with almost zero out of pocket
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions or want to apply for a VA loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and VA specialist)
858-922-7899
New Info On Expanded $10,000 California Home Buyer Tax Credit – Perfect To Use When You Get a VA Loan is a post from: VA,FHA and Conventional Loans 858-922-7899
Here are some updates to an earlier post I made on the newly extended California home buyer tax credit. That post did not have all the details but this should have more.
Starting May 1st, the state of CA will award $200 million in state income tax credits to home buyers. Here are some details of the credit:
- Worth up to $10,000 spread over 3 years
- Credit is available to anyone who buys a newly built home and first time buyers who buy and existing home or newly built home
- To get the full $10,000 credit over three years, a home buyer must owe at least $3,333 in state taxes each year
- A first-time buyer is defined as an individual, or an individual’s spouse, who had no ownership interest in a principal residence for three years before the date of purchase
- The home must be used at your principle residence for at least 2 years
- The credit is worth 5% of the purchase price or $10,000, whatever is less. So if you bought a home for $100,000, you would only get at $5,000 tax credit. But if you bought a house for $200,000 and over you would get the full $10,000 tax credit.
- Buyers of existing homes must close on the house between May 1st 2010 and Dec 31st 2010
- Buyers of new homes must enter into contract between May 1st 2010 and Dec 31st 2010, but have until Aug 2011 to close
- Last year the tax credits were on a first come first served basis. This year the Franchise Tax Board existing home credits will run out by June 30th (so you need to move fast!!!). Once all the credits are allocated, the program will end.
- The California credit goes into effect the day after the federal tax credit is set to expire
In 2009, the state of California approved $100 million in state tax credits for people who bought a newly built home starting March 1, 2009. Last year’s credit was also worth up to $10,000 spread over three years but was good ONLY for brand new homes, not existing homes. The credits, which were allocated on a first come, first served basis, ran out in less than four months, and the Franchise Tax Board stopped awarding them July 2. So the moral of the story is you need to really buy between May and July and file for your credit really fast to make sure you get it.
The summary is you will pay $10,000 less in state taxes over the next three years if you fit into this program.
Here are some of the benefits of using FHA financing:
- FHA loan interest rates on the 30 year fixed loans are still ridiculously low!
- Maximum FHA loans in many parts of California go up to $729,750. So you can get FHA loan on a condo in places like San Francisco, Los Angeles, San Diego and Orange County with 3.5% down up to a $729,750 FHA max loan amount
- FHA loan credit score does not have to perfect, but it does help if your score is 620 or above
- FHA loan down payment is only 3.5% and that can be a gift from a relative
- FHA loan approval is a lot easier than conventional loan approval. You can have a lower credit score, higher back end debt-to-income ratio, and still get 30 years fixed rates as good as conventional loans!
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA Loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and FHA specialist)
858-922-7899