The Importance of Verification of Funds in Mortgage Process

Where the money comes from is important to underwriters

One topic ... one direction provided during the Mortgage Process that seems to baffle and frustrate my prospective home buyers during their Mortgage Process, surrounds the sourcing and documenting of Down Payment and Closing Cost Funds. When I touch upon this portion of the Process I often hear the comment, "it shouldn't matter where the money comes from" from my Borrowers.  There also seems to be a mindset that their Earnest Money is something other than an initial portion of the Down … [Read more...]

How to Make Your First Mortgage Payment

How to make your first mortgage payment on your Los Angeles home

Inside Mortgage Finance News reported on October 28, 2014 ... "Total mortgage-related complaints filed by borrowers with the Consumer Financial Protection Bureau fell again in the third quarter of 2014 – the fifth drop in the last six quarters, according to figures compiled by Inside the CFPB.      Data contained in the CFPB’s consumer complaint database show that such consumer gripes fell 17.6 percent in the third quarter of the year, and are now down 23.6 percent from the same period in … [Read more...]

I Received a New Property Assessment. What Do I Do?

What happens if I receive a property assessment

As a Chicago-area Mortgage Lender, I've always been asked a lot of questions regarding Taxes and Property Assessments.  Property Taxes, and subsequently monthly tax escrow contributions, play a very important role in loan approvals/denials. But throughout the recent housing downturn, the topic of property taxes and assessments has cropped-up more often and has become far more important to homeowners ... As of this writing (Sept. 2014), property Assessments have been completed in much of … [Read more...]

Using Gift Funds or a Co-Signer to Help With Your Mortgage

gift 1

Should I Pray or Should I Co?   I tend to see a fair amount of high loan-to-value mortgage scenarios, mostly because real estate values here in Marin County, the San Francisco Bay Area and coastal California, in general, tend to be high.  And I think it also has a lot to do with the formidable task of saving the funds necessary to purchase some homes, which we know can take a prohibitively long time.  So 10% down payments, or even less, are not at all uncommon, and I’ll see these … [Read more...]

The Many Ways Poor Credit Scores Cost You

Bad credit scores can affect you in many ways

A large percentage of the potential home-buyers I speak to have a basic knowledge of how credit scores influence the interest rate received when they finance their home purchase.  Most understand the basic principal:  The higher their credit scores, the lower their interest rate. I read a CNBC article today entitled, "How poor credit costs you on homeowners insurance".  It delivered a strong message.  Poor credit scores cost you.      In that article it was reported that:  "Homeowners … [Read more...]

Waiting Periods After Short Sale, Foreclosure, Bankruptcy

Extenuating circumstances after a short sale or bankruptcy

I wrote recently about Fannie Mae's announcement regarding the extension of the waiting period for those Buyers hoping to become Homeowners once again after having experienced a Short Sales (Pre-Foreclosures). The waiting period is now extended out to 4 years ... regardless of Loan-to-Value considerations (or Down Payment percentages). Naturally, there's been a wide range of reaction to Fannie Mae's announcement.  There's also been many questions asked in regards to this change and my post.  … [Read more...]

The ABCs of DTIs – Debt-to-Income Ratios

Debt to income 101

Definition of Debt-to-Income Ratio:   The figure that represents how much of your income is spent repaying your recurring monthly debts.  The HIGHER your Debt-to-Income Ratio is, the more of your monthly income is being devoted to paying back your debts.  Formula Used to Find Your Debt-to-Income Ratio:  Monthly debts owed divided by monthly income.  This includes utilizing ALL Recurring Monthly Debt VS Gross Monthly Income, as determined ultimately by an Underwriter at Final Approval.      … [Read more...]

Will Refinancing Cause my Property Taxes to Go Up?

Will refinancing cause my property taxes to rise

Because the current interest rate environment remains conducive to refinancing, a concern that some have about taking action stems from confusion related to how their property taxes are determined, and specifically the question, "Will refinancing cause my property taxes to go up?"  It goes without saying that nobody wants to save money via refinance, only to see it evaporate in the form of higher real estate taxes.  But is this a real threat?  Or is it safe to assume that simply by refinancing … [Read more...]

How do Divorces Affect Marital Property?

How do divorces affect marital property

Recently, I've been asked by many Realtors and Attorneys to help finance a client looking to buy another property after or during their divorce ... Because of the frequency of this scenario, I've been reminded that there's a large amount of misunderstanding and erroneous information surrounding this delicate topic. Below are some examples of the "divorce scenarios" I've seen most often: One, or both parties, are looking to "move on".  Depending on the Divorce Settlement Agreement, … [Read more...]

How to Dispute Credit Report Errors During Mortgage Process

How to Dispute Credit Report Errors While in the Mortgage Process

Veterans of the Mortgage Industry can remember a time when clients suffering errors or inaccuracies within their Credit Report, were typically advised to "dispute"  those errors ... But because of recent changes that have taken place in the Mortgage Industry's Automated Underwriting Systems (commonly referred to as AUS), the advice given to current mortgage clients may be quite different from that of the past. Today's advice ... and the suggestion as to the timing and direction of … [Read more...]

Looking to Buy a Condominium? What You Need to Know

Buying a condo in L.A.? What you need to know

If you're presently in a house hunt, or even just dabbling with the idea of buying a home, you've probably done some research and run across multiple articles regarding the current Mortgage Process ... and its challenges ... You've probably also heard that you'll be asked to submit plenty of documentation regarding your finances (savings, credit/debt), employment, down payment ability, and more to meet lending requirements.  And that the home your hoping to buy will need to pass muster (via … [Read more...]

Is Now the Time for You to Sell Your Home and Buy the Next?

Is now the right time to well your Los Angeles home

The final decision to Refinance your existing Mortgage (or  not), should be based on one simple thing.  It must make good financial sense ...That decision is often times determined by the length of time you, as a Homeowner, "guesstimates" you'll own your loan (i.e., stay in your present home).  A good rule-of-thumb is that the monthly payment savings received through the Refinancing (at minimum), should "pay back" your Closing Costs for your Refinance. Similar (and additional) considerations … [Read more...]

Heading to College? Protect Your Finances For The Future

How to protect your finances when going to college

It happens fairly frequently ...      While reading through a potential Mortgage Applicant's Credit Report, I'll discover that many of their reported debts and Credit Cards were first established while they were in college.  And now years later, they're still trying to pay off those debts. Yes, it's true.  The Credit Card Act (signed into law May 22nd of '09) is supposed to be addressing some of these issues by removing Credit Card companies ... and the temptations they offer to college … [Read more...]

Are You Self-Employed and Hoping to Get a Mortgage?

How to get a mortgage when self-employed

From a Mortgage Lender's perspective, the most complicated Mortgage Applicant is often the Applicant that is Self-Employed.      Why?      Full Documentation Loan Files are demanded in today's Mortgage lending.  IRS transcripts are requested (and received) on the vast majority of Mortgage Loan Applications.  With Self-Employed Borrowers, the only way to verify income (and expenses) is through an Individual U.S. Tax Return and the Tax Returns filed by the business they own.  And that is true … [Read more...]

Looking for Trends in Mortgage Lending During 2014

Mortgage Lending trends in 2014

Turn on the TV.  Read a newspaper. Check-out Social Media ... and you'll run into an article(s) regarding the latest "trends".  Heck, on Twitter they have a trend list that's constantly evolving and updating.  Trends ... and being able to report them ... are big news. That's certainly true in the Real Estate/Mortgage world too.  Whether a hopeful new Home Buyer, someone looking to Refinance, or a Real Estate or Lending professional ... being educated and capable of responding to the latest … [Read more...]

Balancing Risk with Affordable Financing

Lower loan limits can mean a higher cost of borrowing

Lower Loan Limits & Higher Costs of Borrowing An interesting phenomenon is taking place within the financing world these days ...      What "used" to be ... doesn't "remain that way" long! This has always been the case in quickly-changing JUMBO financing.  JUMBO loans are defined as those loans above $417,000 on Single-Family Residences (except in those areas considered as more high cost*  (*See me for more info).  JUMBO loans are typically financed through: Private … [Read more...]

A Pragmatists Guide to Qualified Mortgages (QM)

Los Angeles mortgage, new rules

A Pragmatists Guide to Qualified Mortgages (QM) On January 10, 2014, new mortgage rules will go into effect that will change the way home loans are originated by just about every institution.  These changes stem from the Dodd-Frank Wall Street Reform and Consumer Protection Act passed in 2010.  Here is what a buyer, seller and borrower need to know: Conforming Loans You are a buyer with more than a 5% down payment.  Your loan amount falls somewhere below the conforming loan limit of … [Read more...]

What Happens if the Appraisal Comes in Low?

Understanding Los Angeles Property Appraisals

I thought I would address a question that comes up either occasionally (or frequently, as the real estate market might dictate...):  "What happens if my appraisal comes in low?"  And so I'd like to cover the relationship between purchase price and appraised value while providing a few looks into your mortgage options should this dilemma befall your homebuying experience. In all of our examples to follow, we’re going to assume a purchase price of $500,000. We’ll change the appraised value of … [Read more...]

When Inaccuracies Show on your Credit Report

Buying a home in L.A. Inaccuracies on your credit score

When Inaccuracies Show on your Credit Report ... What Then? Credit Scores and Credit Reports are very important ... That's true whether someone is hoping to buy a home (or refinance) or not.  But should you be someone in the hunt for Mortgage financing to purchase or refinance a home, the stakes get higher.  Your Credit Scores and Credit Reports become paramount to the success you'll discover when financing and the end-costs you face. Most of my Mortgage clients understand this when we … [Read more...]

When Buying a Home in Los Angeles Check Your Credit First

Repair your credit before buying a home in Los Angeles

If you are considering buying a home in Los Angeles it is important to know what your credit history is going to show before you start the process.  Why?  Because, depending on your score, and if there are any negative hits on your report, your interest rate is going to rise and you may also not get approved for a loan. There are three credit reporting agencies (CRA)  that track your credit:  Trans Union, Equifax and Experian, and you will need to run your credit through all three. You are … [Read more...]