Long Beach California Real Estate Loans

Long Beach, CA. We wanted to share information about how buyers finance in today's marketplace. Below is a lot of information for your review.  Our job is answer questions and help guide you for the best decision.

As we know, the $8,000 federal tax credit for first time buyer's drove the marketplace the past several months to where it is primarily a seller's market for entry level home prices Six months ago, it was a buyer's market. To qualify for this rebate you wlll have to fill out IRS form 5405 that when you file with your 2009 federal taxes determining the amount and eligibility of this important tax credit. Please review with your tax preparer.

 The State of CA through CalHFA has down payment/closing cost assistance available based on household income. A first time buyer (someone who has not owned property in three years) is eligible for 3% of the sales price for down payment and/or closing costs assistance. Please visit www.calhfa.ca.gov where you may become more familiar with their programs. Currently, 1st mortgages from CalHFA are difficult to acquire due to lack of product. As a result, buyers will get a standard FHA or a FHA Energy Efficiency Mortgage and combine it with a CalHFA CHDAP 2nd mortgage (3% of the sales price) for closing cost assistance. The CHDAP is a silent second mortgage with no payments and a 3.25% interest rate as long as you live; do not refinance; or sell the property. The buyer makes the traditional 3.5% FHA down payment.

Cities have down payment assistance programs based on income and property sales prices. The income limits are often mirrored by the income limits we see with CalHFA. Also, cites have these programs based on specific properties too. This allows the buyer an opportunity to purchase a home that otherwise would not exist.

 FHA has three standard popular programs available for buyers.

1. The standard FHA 1st mortgage has only a 3.5% down payment requirement. Two years ago less than 10% of all owner occupied purchases utiilized FHA. Now, more than 75% of the same purchases use FHA financing and the percentage grows as conventional financing is more restrictive and difficult to get.

2.The FHA Energy Efficiency Mortgage allows up a buyer to finance energy efficient improvements (i.e. windows, doors, hot water heater, dishwasher, insulation, heating/air conditioning). The amount of money is based on the sales price (generally 5% of the sales price may be available for improvements). This was increased from a previous limit of $8,000 just a few weeks ago!

3. The FHA 203(k) Streamline allows a buyer to finance improvements and non structural repairs (flooring, paint, kitchen and bathroom fixtures/cabinets, appliances, pool equipment). The maximum amount is $35,000. Please see the attached HUD document outlining this valuable program.

Given the condition of many properties, the FHA 203(k) Streamline is more and more popular. I have personally provided this mortgage and have a couple in escrows right now with more buyers out shopping using this financing. The FHA Energy Efficiency Mortgage may be combined with the FHA 203(k) Streamline for maximum financing. The repairs/upgrades require use of a licensed general contractor and allow the normal close of escrow. A buyer of mine in San Diego bought a duplex with a pool that was bank owned for $340,000. We financed $43,000 (using 203(k) and Energy Efficiency combined) for the repairs/upgrades. The bottom line is the improved property value exceeded $400,000! The client made money day one! The beauty is ONE 30 year fixed payment!

One important aspect of FHA is the FHA Sreamline Refinance programs the home owner may utilize if interest rates decline after the home is purchased. This important refinance allows the buyer to refinance with a benefit to the buyer (lower home payment) without the cost of an appraisal; without declaration of income and assets! This simplified refinance right now is being/has been utilized by home owners who utilized FHA last year. Many are financing 6% plus interest rates into interest rates in the middle 5% range with the issue of an appraisal!

There are teacher and veteran programs available. The VA financing allows 100% financing. The CALSTRS financing for those who work for a public school system allows an 80% 1st mortgage and a 17% second mortgage with no payments for five years! Plus, there are other specialty finance programs.

About me and Golden Empire Mortgage (GEM). This has been my full time job for more than seventeen years. I work/am available six and one half days a week. Focus, listening, and execution of a game plan is how I operate. My client (you) is the only person I care about in a transaction by law and ethically. It is my job to protect your interests period.

GEM is a direct lender processing, underwriting, loan documenting, and funding the loan in our name. Our underwriters have delegated underwriting authority from numerous banks. What this means is we can approve a mortgage for Bank of America without having to ask B of A for permission to fund the mortgage. Our FHA underwriters are approved by HUD and banks for approving FHA loans. This allows us to look at many of the national lenders on a daily basis for the best rates and programs. For example, Bank of America has been very aggressive with their FHA interest rates. The past few weeks, GMAC (now that they have some issues resolved) has become aggressive too. The bottom line is the client (you) benefit as we seek out the best rates and terms. All of our lending functions are done here in California by Californians. We do not outsource our operations.

Long Beach, Ca.  FHA loans may net you more when refinancing your home.  Wherein,  conventional  Fannie and Freddie  are limiting cash out refinances to 75% of a property's value.  FHA loans may go as high at 95% of the homes value; however, if you cash out more then 85% of the homes value, you will definitely have to do a second appraisal.  This can add a lot of costs to the regular refinance.  For example, a typical FHA appraisal costs between $350-$400 and this must be paid up front.  If you double that, you are expending between $700-$800 upfront before the loan closes.  This is a considerable sum which is really only going to protect the bank by doing an extra certification of value on a home. 

As an illustration, let's say you own a property that today appraises for $300000.00, pretty much the maximum you can get out of the property utilizing conventional financing is $225000.00; however, if you were to opt for an FHA loan should be able to cash out up to $285,000.00.  This is a difference of netting $60,000.00 after the loan records.

Stock markets fell yesterday and Treasuries rallied after Treasury Secretary Geithner did not address the specific concerns on the minds of traders: what banks will do with toxic assets, how illiquid assets will be removed from balance sheets, and how to stem the decline in home prices. Currently, the Ten Year yield is at 2.82% (2.94% yesterday).  30 year fixed rate mortgages are about the same on where the market closed yesterday.

Yesterday was a "traditional" day where stocks went down and bonds went up. There's only so much money in the world, right? Locks volumes were heavy, but apparently the Fed buying mortgage-backed securities helped prices, and mortgage rates did well.A lot may happen in the next 3 business days, especially with an early bond market close Friday ahead of the President's Day Monday holiday.

Only economic news is the trade deficit. The U.S. trade deficit narrowed in December to the smallest in almost six years, with both exports and imports declining for the fifth straight month as consumers worldwide pulled back their spending.  The gap between imports and exports shrank 4 percent to $39.9 billion, from a revised $41.6 billion deficit in November that was wider than previously estimated, the Commerce Department said today in Washington. "Trade is collapsing globally; whether it's imports or exports, there's a net benefit from trade that lifts all economies, and we're losing that now," said Christopher Low, chief economist at FTN Financial in New York. "We'll see a rise in protectionist sentiments."

As you know, the Senate passed the Stimulus bill yesterday. And now it goes to the conference committee to work out the differences between the House and Senate version. Assuming they are successful, the final bill is hammered out, and voted on by both the House and Senate and is then presented to the President to sign.  And the President has asked for a final bill to be on his desk by this Monday.  Here is a link for the summary of the bill.

Kirk Mulhearn, a Long Beach real estate broker and Professional Mortgage Planner may be contacted at:  562-989-4608 ext. 110

You may subscribe to this blog at:  www.longbeachrealestateandloans.com

Long Beach, CA. James B. Lockhart, director of the Federal Housing Finance Agency (FHFA), announced thatwith mortgage applications taken on or after Jan. 1, 2010, Freddie Mac and Fannie Mae are required to obtain loan-level identifiers for the loan originator, loan origination company, field appraiser and supervisory appraiser. This is the result of Title V of the Housing and Economic Recovery Act of 2008, the S.A.F.E. Mortgage Licensing Act through which Congress required the creation of a nationwide mortgage Licensing system and registry. With enactment of the S.A.F.E. Mortgage Licensing Act, identifiers will now be available for each individual loan originator.

Redundancy is wasteful.  Although in the past, only real estate appraisers and underwriters were listed on a loan file, the new move will be to also license loan officers and put them on the file as well.  Firstly, I do believe, from my own experience, that licenses seem to be more of a revenue collecting device for the government, rather then an actually helpful tool for the consumer.

If you don't believe me, just look at the American Construction Industry which is ripe with unlicensed contractors who undercut legitimate contractors everyday.  Is it fair?  No, life is not fair.  These  back alley construction workers and day laborers work openly and cannot be punished simply because they are not licensed.  The facts are, that so much insurance is required from real licensed Contractors that to be legitimate you have to upfront invest a small fortune, not to mention the workers compensation that must be paid; therefore, a blackmarket has been created.

What are the implications of this in our Real Estate Industry concerning Mortgages? In addition to the real estate board fees, already too expensive, that many loan officers pay right now, they will be burdened with even more fees and licensing requirements.  This is absurd.  Given the demographics and history of Southern California real estate.  You probably will see a similar Black Market of mortgage loans develop by non-licensed, nothing to lose, unprofessionals who will end up funding loans for a small fee through a legit licensee.  I

The facts are that Consumers themselves have to be burdened with the responsibility of knowing what they are getting themselves into when they purchase or refinance a home.

The last item I will mention today is about the future licensing of mortgage originators and the company they work for.   Remember we mentioned this at our last Manager meeting about importance of loan quality.  It used to be that appraisers and underwriters were the only ones with their names on the loan file.  Now you as an originator will join this group. 

Kirk Mulhearn, a mortgage planner and real estate broker, may be reached at:

 562-989-4608 ext. 110

 Subscribe to this blog at:  www.longbeachrealestateandloans.com

Long Beach, Ca.   Many home buyers are concerned about how long they have to be on their job before they purchase a home.  Generally speaking, it is required that you work for at least two years in the save line of work.  That does not mean, two years at the same job, just two years in the same line of work.

Of course, every rule has exceptions.  For example, if you just finished technical school or graduated with a professional degree, the time that you invested in your career counts as job time.  

For example, if you were to graduate from the Police Academy, all the months that you spent becoming a cop would apply toward your two year work history.  Likewise, if you graduated from College with a professional degree like law, architecture, dentistry or accounting you would also normally qualify to purchase a property assuming that you have immediately been hired after graduation.

If you are on a salary, the actual gross salary per year that you are making will be utilized to caluculate your qualifications.  However; if you are on an hourly wage, the average of the last two years will be used to calculate your earnings.  For example, if you made $40,000.00 in hourly and bonus income in 2007 and $45,000 in 2008, the banks would only give you credit fro $42,500.00(a running two year average). 

One big mistake that some loan officers are making in that they are also applying the same two year average even when hourly employees are making less in the last year then the year before.  In these difficult economic times, when employers cut hours the bank's underwriters will only use the latest years earnings.  So, if in 2007 you made $45,000.00 working in an hourly job and $40,000.00 in 2008, the banks will only give you credit for $40,000.00 of annualized income. 

 Kirk Mulhearn, a mortgage planner and real estate broker can be reached at: 

• 866-961-8042 ext. 110

 Subscribe to this blog at:  www.longbeachrealestateandloans.com

Long Beach, Ca.  What is a "Full Doc" Loan?  In the last two years we have seen an evaporation of almost all "stated income" loans.  These loans enabled home buyers to purchase properties without disclosing their actual incomes.  Partly, because of these types of loans, the sub-prime loan melt down was conceived,  born, and died, throwing the financial markets into a tailspin.   As a reaction to the housing collapse, the pendulum has completely swung to the other the opposite side of the banking world.

This means that in the current market, you now have to prove income in order to purchase a home and qualify for a mortgage.  In the lending business, we call these, "Full Doc" loans, short for, "full documentation," loans.  Historically, banks like to see the following items to document your income:

•1.      Federal Tax returns for the last two calendar years.

•2.      The latest pay check stub from all of the signers on the loan.

•3.      The last two months of Bank Statements from all buyers.

 This will be required from all signers that go on a loan application.  Note, that if a person in not employed or is a homemaker, they may still go on a loan application but typically will not add to the viability of a loan.  In truth, a non-employed spouse may actually hinder the loan origination in that the bank will take into account all of their debts which makes the ratios of income to future housing payment higher; thus, making a higher risk loan. 

 There are four items that any lender needs to accurately pre-qualify a buyer:

A).  Gross income from the entire household.

B).  Total monthly debt obligation of all parties on the loan.

C).  Available liquid cash that can be used for the purchase.

D).  An accurate and recent credit report.

If a lender is set up properly, he can run the above information through an Automatic Underwriting System(AUS) like Fannie Mae's "Desktop Underwriter," which will give a computerized approval within minutes.  However, remember the old adage here, "Junk in junk out."  If the information was not properly inputted into the computer software, you may have a faulty approval or worse, a loan rejection when you could have actually have qualified.  You may take a free loan application by contacting:

Kirk Mulhearn, Mortgage Planner

866-961-8042 ext. 110

www.longbeachrealestateandloans.com

www.kirkmulhearn.com