Posts Tagged ‘jumbo’

Thinking of Buying a Home? Tip 7 of 10 to Help.

Wednesday, May 11th, 2011

Today I’m posting tip #7 of a 10-part series on things you need to know before you start your house hunt.

TIP #7. Choose your loan, before you shop for your home.

There are two main types of loan categories; Conventional Loans and Government Loans. The loan options available to you will be determined by:

  • Down Payment
  • Loan Amount
  • Loan to Value or need for Mortgage Insurance
  • Credit Score
  • Property Type

Down payment: If your assets allow a down payment of 10% or more, then a conventional loan may be a worthwhile consideration. The mortgage insurance (MI) costs will be lower and it may be possible to remove the mortgage insurance earlier than on government loans.

Loan Amount: If your loan amount will be $417,000 or lower and you are buying in the continental US, an FHA, VA, USDA or Conventional loan are all options for you. If over $417,000, then your transaction would fall into whats called a JUMBO loan. September 2011 is the latest that FHA loans may be funded up to the $417,000 loan amount. We will have to wait and see what the new maximum loan for FHA will be after that date.

Loan to Value: If your down payment will be less than 10%, then you will want to look at securing a government loan like FHA, VA or USDA. FHA still requires a 3.5% down payment, all of which could be a gift, or a combination gift/grant, etc. VA requires no down payment from qualified Veterans with full eligibility. USDA also provides 100% financing, however, the property must be located in a less populated or rural area.

Credit Score: Credit scores play an important role in your options for home-loan financing. The better your credit score is, the better your loan pricing and options will be.

Property Type: Not all loans are available for all types of properties. Most notably, condominiums. Condos need to meet certain requirements for both FHA and conventional loans. The approval requirements are quite stringent. Some condo’s meet FHA standards, some Fannie Mae, some both or some VA. Most condos will not be in an area that conforms to USDA requirements.

For all of the above reasons it is wise for buyers to start early with an informed lender before beginning their home search. It is important to work with a lender that will help you understand all options available to you. Getting pre-approved first, is as much about finding the right loan options available to you, as it is about satisfying the home sellers that you have the necessary financing in place to successfully and quickly close your home loan.

As always, I am here to answer any of your home-loan questions!

Photo of Ingrid Pierson

Ingrid Pierson
(530) 885-1545
Licensed – NMLS # 233666

New Government Lending Regulations – What They Mean to You

Tuesday, August 4th, 2009

It’s no surprise lending and real estate regulations have changed as a result of the credit crisis. We have already seen tightened lending practices that resulted from rising mortgage delinquencies, and now our legislators in Washington have enacted new laws changing the way lenders do business today.

If you are a home buyer or real estate agent, there are two significant pieces of legislation impacting lending that should be considered, especially when determining closing dates for purchase transactions.

Home Valuation Code of Conduct – Now all conventional home buyer loan applications sold to Fannie Mae or Freddie Mac must be compliant to new important changes. In an effort to help safeguard and reinforce appraiser independence and ensure the soundness of appraisals, lenders must be in full compliance with the HVCC. One of the main changes is the manner in which the appraiser is selected and engaged. Under these new regulations, loan originators are not allowed to have any communications with an appraiser to have impact on valuation, and home buyers have the right to “promptly” receive a copy of the appraisal.

The code is intended to reinforce the independence of the appraiser. Lenders no longer have the ability to help facilitate the appraisal process on conventional loans. Because our company VITEK Mortgage Group is not satisfied with the poor performance and appraisal reports we’ve received using the recommended national and regional Appraisal Management Companies, we are about to unveil our solution to better serve our customers with quality and timely appraisals. Expect to receive more in future blogs about our solution. In the meantime, it is important to note that these new regulations DO NOT affect government loan programs such as FHA, VA, CalVET, reverse mortgage, and USDA loan programs. They do affect CalPERS loans and some jumbo home loans.

Housing and Economic Recovery Act – Real estate agents, buyers, and sellers beware. The recently enacted Housing and Economic Recovery Act (HERA) amends and impacts several aspects of obtaining a mortgage, including the disclosures required for borrowers and the timing of their delivery. When applying for a loan, a borrower is provided a Truth in Lending (TIL) statement that details the total expected costs that could be incurred over the life of the loan. Should anything change in the loan application causing the APR to increase more than 0.125%, a new TIL must be reissued to the borrower.

The new rules may adversely affect the minimum time required to close, especially if changes are made to a loan application. When changes are made to the loan application that cause the APR (Annual Percentage Rate) to increase more than 0.125%, re-disclosures are required to be sent to the applicant. There is now a minimum of three business days wait from the time of any re-disclosure to when the borrower can sign their final loan documents which may delay the subsequent closing date. Also, for rush situations now the earliest a loan can close is 7 business days after the initial disclosure is issued! Examples of things that can cause the APR to increase are loan product changes, loan amount changes, interest rate changes, good faith estimate of loan cost changes, and even changes of the planned closing date!

In addition, lenders may not accept any additional fees from a homebuyer until the fourth business day after the initial disclosures have been provided to or mailed to a borrower, other than paying for a credit report. This has the potential to delay several aspects of the application process, especially the appraisal ordering process.

Now more than ever, for peace of mind it is important to work with a lender like VITEK Mortgage Group that understands the new lending rules and acts appropriately to avoid unnecessary delays in your purchase transactions. For starters, we recommend you work with home purchase contracts that have sufficient time frames to account for possible delays if the terms of the loan application are not certain and the interest rate lock is still undone. Also make sure your loan terms are locked at least seven days prior to closing to avoid any unnecessary and time delaying re-disclosure requirements. The new HERA rules do not apply to home refinance loans.

Philip Duncan
Executive Vice President

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