The process of purchasing a home is often much more complex than the average individual expects it to be. Items involved in your purchase contract can have a significant impact not only on the success of your purchase transaction, but on your stress level as well. Below, I have listed out some of the important items you should be aware of, that require you to make decisions as a home buyer in entering into a purchase contract. Loan or Financing Contingency Loan contingency is the period of time the seller is giving you…
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First Time Home Buyer
FHA + CHDAP = 0.5% Downpayment Loan For CA First Time Home Buyers
By combining an FHA loan with California Homebuyers Downpayment Assistance Program (CHDAP), First Time Home Buyers in California can buy a home for as less as 0.5% downpayment. Here's how it works: We do FHA Loan as the first mortgage of 96.5% Loan-to-Value Ratio (LTV) and combine that with 3% second mortgage provided as part of CHDAP. CHDAP is a deferred payment second mortgage which becomes due in full when you refinance or sell the home. However, CHDAP may be resubordinated in some cases at the time of refinance and hence may not…
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FHA Wont Allow Cancellation Of Mortgage Insurance Anymore; Increases Premium
FHA recently announced changes to mortgage insurance premium for home loans insured by the agency. The new guidelines will make FHA loans more expensive. You will also need to pay mortgage insurance for the life of the loan in most cases. Changes to FHA Annual Mortgage Insurance Premium The below chart shows the changes coming to FHA mortgage insurance premium. This goes into effect for loan applications on or after March 1, 2023. Can I cancel FHA Mortgage Insurance Premium? For all mortgages regardless of their amortization terms, any mortgage involving an original…
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Qualifying For FHA Loans To Become Tougher, Costlier
Last month FHA announced increase in mortgage insurance premium and prolonging cancellation of mortgage insurance (read the full report here). But looks like those steps are not enough to restore FHA's reserve requirements as mandated by congress. FHA commissioner and government are proposing/considering several new proposals that would make qualifying for FHA loans tougher and costlier. Let's look at some of these proposals: Down payment on loan amounts over $625,500 to be increased by 1.5%. From 3.5% it would be raised to 5%. FHA is also considering eliminating loan amounts over $625,500 altogether,…
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2013 FHA Loan Limits For California(CA), Oregon(OR) And Washington(WA)
Federal Housing Administration (FHA) recently announced 2013 maximum loan limits for California, Oregon and Washington FHA mortgages. While the "floor" and maximum high-cost limit remained the same nationally, for some counties the loan limits changed. Every county will at least have the "floor" as their loan limit, also called FHA's minimum loan amount limit per below. One-unit applies to Single family residence (SFR), Condominiums and Townhomes. One-Unit: $271,050 Two-Unit: $347,000 Three-Unit: $419,425 Four-Unit: $521,250 For high-cost areas the maximum FHA loan limits for 2013 would be: One-Unit: $729,750 Two-Unit: $934,200 Three-Unit: $1,129,250 Four-Unit:…
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FHA to Hike Mortgage Insurance Premium, Prevent MI Cancellation
Federal Housing Administration (FHA) said it will hike mortgage insurance premium (MIP) again. Its also setting in place regulation that will prevent all new borrowers to cancel their mortgage insurance premium even if the loan-to-value requirement is met during the life of the loan. This was announced in the FHA press release issued on November 12, 2012. FHA mentioned that over the past year it has been critical to housing recovery by insuring 1.2 million single family mortgages, with 78% loans to first time home buyers. FHA accounted for 50 percent of home…
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Is Qualified Mortgage Rule Biggest Risk To Real Estate Recovery?
Banks are talking about it, Credit Unions are talking about it, Loan Officers are talking about it, heck even the President and wanna be President are talking about it. Not too many people know exactly what it is and how it will pan out - but one thing is for sure, it definitely has the potential of derailing the nascent real estate recovery. As part of implementing the Dodd-Frank act, Consumer Financial Protection Bureau (CFPB) plans to finalize the rule for "qualified mortgage (QM)" in January 2013. This proposal is the first ever…
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How to Build a Good Credit from Scratch
Establishing a good credit history has never been as important as it is today. It's not just that you'll need good credit to get decent rates when you're ready to buy a home or a car. Your credit history can determine whether you get a good job, a decent apartment or reasonable rates on insurance. It's a classic Catch-22: You've got to have credit to get credit. So where do you start? If you're just starting out, you have a once-in-a-lifetime opportunity to build a credit history the right way. Here's what to…
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Dos and Don’ts during your California Mortgage Loan Process
It is very tempting to start thinking about decorating your new home the moment you initiate the mortgage process. But as a Lender, there are certain things I caution my clients against to ensure their California mortgage gets approved smoothly. When you fill out a credit application, they run a credit report for the underwriter. Each lender and each loan program has different guidelines they must follow. You should not do anything that will have an adverse effect on your credit score while your loan is in process. We know it's tempting. If…
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Fannie Mae Guideline Changes Coming to a California Loan Near You
Fannie Mae is set to release a new version (9.0) of its automated underwriting system called DU (Desktop Underwriter) over the weekend of Oct 20th, 2012. Fannie Mae tightened some underwriting guidelines based on their performance data. Here are some highlights: Limited Review for Condominium to be capped at 80% (currently at 90%) - So if you are buying a condo in California with less than 20% down, you would need to provide more documentation related to the condo project. Usually these documents are provided by the HOA office. In some cases these…
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