HARP 2.0…Who Will This Latest Version Help?
For homeowners whose current mortgage balance exceeds the value of their home…basically, you’re underwater on your mortgage; HARP 2.0 may be the golden key to a lower mortgage -payment. If you are current on your mortgage and have been unable to obtain a traditional refinance because the value of your home has declined, you may be eligible to refinance through HARP.
On November 15, 2011, FHFA announced a new and improved version of the Home Affordable Refinance Program to help underwater homeowners who where not able to take advantage of the previous version. Starting December 1, 2011, all applications for HARP will fall under the new set of guidelines. The previous program was a disappointment due the LTV restriction of 125%, with HARP 2.0; this restriction has been lifted.
For more information…Click Here.
December 21, 2011 by Mark Estermyer · Leave a Comment
What You Should Know About Buying A Flipped Property
Purchasing a flipped property in San Bernardino and Riverside counties just got easier. RPM Mortgage has eliminated the maximum 20% increase in sales price within 90 days. This change in guidelines will be huge for those looking to purchase a flipped property while interest rates are at 50 year lows.
Because the Inland Empire has been hit so hard with foreclosures, it should not be a surprise real estate investors are trying to make a few bucks. I am all for free enterprise and every entity should have the ability to make as much money as the free market allows.
But there are some rules to protect the public from unscrupulous investors. Prior to January 15, 2010, FHA had an anti-flipping policy that prevented an owner to sell their property within 90 days. For the past 15 1/2 months, in an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, this rule has been waived.
“This change in policy is temporary and will have very strict conditions and guidelines to assure that predatory practices are not allowed,” HUD Secretary Shaun Donovan said.
Even though RPM doesn’t need to, most California lenders are still following the guidelines mandated by HUD, Fannie Mae and Freddie Mac. Here are just the bullet points for both FHA and conventional loans.
- Property flips within 90 days will only be allowed where the re-sale of a property and the new sales price is no more than 20% higher.
- All transactions must be arms-length; no identity of interest between buyer, property seller or third parties. Specific ways to ensure an arms-length transaction include:
- Property seller currently holds title to the property.
- LLCs, corporations or trusts serving as property sellers must meet all applicable state and federal law.
- No pattern or previous flipping activity exists on the property (as evidenced by multiple title transfers within the past 12 months)
- The property was marketed openly and fairly (any sales contracts with “assignment of contract of sale” may be a red flag).
- Flips between 91 and 180 days will require 2 full appraisals if there is a 100% increase from the acquisition price to the re-sale price. The cost of the second appraisal cannot be charged to the borrower.
- The 91 days is calculated from the date the seller took title to the date of the new purchase contract.
- The contract must be dated on the 91st day or greater to not be required to meet the max 20% rule.
- The application, case number and appraisal must all be dated on or after the contract date.
- Property flips within 90 days will only be allowed where the re-sale of a property and the new sales price is no more than 20% higher.
- Maximum LTV/CLTV is 80% for O/O and 2nd Home properties.
- Maximum LTV/CLTV is 60% for N/O/O properties.
- Minimum fico of 680 for O/O and 2nd Homes.
- Minimum fico of 720 for N/O/O.
- Minimum of 2 months reserves for owner occupied transactions.
- Two Full Appraisals are required.
Not every lender will follow these set of guidelines and there are still investors trying to take advantage of a housing weary public. If you have any questions or concerns about the property you are looking to buy, contact me or your trusted real estate advisor.
August 18, 2011 by Mark Estermyer · Leave a Comment
Home Buyer Assistance Program For The Inland Empire
RPM Mortgage recently announced the roll out of a program designed to help San Bernardino/Riverside homebuyers achieve home ownership through this down payment assistance program…CHF Platinum Program. This program is designed to assist low to moderate income home buyers with the purchase of a home, by providing closing cost and/or down payment assistance in the form of a grant.
The CHF Platinum Program is for the purchase of an owner occupied property in the state of California. This unique program is not limited to first time home buyers, but is open to all eligible applicants using FHA or VA loan programs (USDA with some lenders).
Just like most down payment assistance programs, there are strings attached to the money coming from NHF (National Homebuyers Fund). Unlike most community grant funds that have no payment schedule and the money is considered a silent second; the grant money from this program is a true gift. The downside to this program is the interest rate may be higher than what I would normally quote on an FHA or VA loan. But if you are having difficulties in saving enough money for the down payment…the CHF Platinum Program may be for you.
Here are just some of the program highlights:
Loan Terms
- The first mortgage loan features a 30 year fixed rate that is fully amortized.
Assistance Grant
- May not exceed 3% of the first mortgage loan amount, including up-front mortgage insurance premium (MIP).
- Proceeds may be used for down payment and/or closing costs.
- There cannot be cash back to the borrower from the Grant Fund proceeds.
Property Eligibility
- Owner occupied primary residence in the state of California.
- Single family residence, 1-Unit.
- FHA/VA approved condos.
- PUDS
Borrower Eligibility
- Be a U.S. citizen, permanent resident alien or qualified alien.
- Occupy the property as their primary residence; non-occupant co-borrowers are not allowed.
- Borrower(s) income cannot exceed CRHMFA’s income limits established for the eligible county in which the borrower(s) is purchasing (120% AMI-area medium income).
- San Bernardino County $84,480
- Riverside County $84,480
- Orange County $101,04
- Los Angeles County $84,480
- San Diego County $89,880
Homebuyer Education
- Not required at this time.
The CHF Platinum Program has many restrictions and guidelines that may prevent you from qualifying for this program. It is always best to consult with a seasoned mortgage professional to help determine your eligibility of this program.
Please contact me anytime if you have any questions about this program or any other home financing options.
June 14, 2011 by Mark Estermyer · Leave a Comment
Should I Trust Zillow/Trulia In Determining A Homes Value
Do you want to get frustrated, look up the value of your home on Zillow…then Trulia or any other home value provider. San Bernardino and Riverside residents who would like to know the value of their house or the one they are looking to purchase, have generally relied upon websites like these to get a basic idea on the value of a house.
Does anyone really understand how these internet sites calculate the values…maybe they just pull public records and lump every transaction into the equation. Or they just reach up into the clouds and come up with a number that fits into some obscure formula. Does it really matter if the information is incorrect? Of course it matters!!! It is still bad information and how is anyone suppose to make a decision on that.
All I know is every time I needed the value of a property for a refinance and used these sites, the actual appraisal never came close. The appraisal was generally far less than what these websites had to report.
So what good are these websites if the home values are not correct.
INFORMATION!!! The information in the blogs or answers given by the professional is generally right on. Some of the staff write articles that are relevant to the industry. Heck, I even have a blog on Trulia…so not all information is bad.
So how did I get over my frustrations of relying on these sites for a homes value, I stopped using them for this purpose and found another source. There are a lot of appraisers out there who are suffering from a down turn in the housing industry, some have gotten fairly creative and that is what this whole article is about.
Spend about the cost of a dinner for two and have a professional provide the value. There are plenty of websites that provide (at a cost of less than $50) a professionally rendered report based on actual comparables in your neighborhood. I have used several over the past several months and have found they are extremely reliable and I have not had an issue with the value of a house since then.
Here is a list of some of these websites that I have used that are accurate, reliable and quick.
If you are looking into purchasing a house, your real estate agent is your best resource. Besides, they will do this for free. But if you would like to get a second opinion, this option is not a bad way to go. If you are looking into refinancing, ordering one of these reports will save you time, money and potential heartache.
If you are serious about refinancing your home or you are about to start looking for a new home, click here to complete my secure online application and send me an email telling me you read this article and I will order the report for you.
May 9, 2011 by Mark Estermyer · Leave a Comment
Should Inland Empire Residents Rent or Buy A Home
RPM’s Chief Strategy Officer, Barry Habib Discusses Renting Versus Buying On Fox News
Buying a home versus renting is a big decision that takes careful consideration for Inland Empire residents.
While there are several biased sources that can make arguments for or against owning a home, we’ve found that most home buyers base their ultimate decision on emotion.
Yes, there are some tax advantages of owning real estate in San Bernardino and Riverside counties, as well as the potential to earn equity or pay a mortgage note off after several years.
However, let’s address some of the more obvious topics of discussion first.
Benefits Of Renting:
Lower Acquisition Cost –
Unless you’re able to qualify for a mortgage loan with zero down and have your closing costs paid for by the seller, a typical investment to purchase a home is around 3.5% – 7% of the purchase price for down payment and closing costs on an FHA mortgage, and an average of 13% – 23% for a home secured by conventional financing.
Compared to the cost of about 1-3 month’s rent payment, it’s obvious that renting a home makes financial sense in the short-term.
Lower Qualifying Standards –
While the FHA and other government insured mortgage programs have more flexible credit / qualifying guidelines than most traditional home loan programs, there is certainly a lot less paperwork and personally invasive probing required by most landlords and property management companies.
Generally proof of employment / income and a decent credit history (or a good explanation) is needed to rent a home.
Freedom To Move –
It’s easy to find a home through a reputable property management company, move in that weekend and then leave a year later when the rental contract expires. Not being tied down by a long-term mortgage liability is ideal for people new to the Inland Empire, in a career that keeps them on the go or for parents with children that prefer a certain school district.
Plus, if you’re planning on moving in the next 3-5 years, then it may become cost-prohibitive due to the amount of equity you’ll have to gain in the short-run just to cover the cost of paying an agent, buyer closing costs, transfer taxes…. so that you can at least break even at closing.
Less Maintenance and Cost –
If something breaks, a simple call to the property management company will generally solve the issue in 48 hours or less. Plus, renters don’t have to carry expensive homeowners insurance, pay property taxes or worry about interest rates adjusting.
Benefits of Owning:
Pets Are Allowed –
Well, according to the rules and regulations of your county or neighborhood HOA, you can pretty much have as many domestic and exotic pets without having to pay extra deposits.
It may seem like a funny benefit to mention first, but the millions of dog and cat lovers would definitely rank this towards the top of their list.
Pink and Purple Walls –
Yep, you can paint the inside of your house any color you choose. And depending on whether or not there is an HOA in place, you could probably do the same thing on the home’s exterior. Landscaping, flooring, built-in shelving… it’s your property to renovate and grow in.
Peace-of-Mind and Security –
The only way you would be forced to move is if the bank forecloses on your property due to a default in mortgage payments.
So basically, you don’t have to worry about a landlord’s financial ability to make mortgage payments on time. Plus, you can stay in your own property as long as you wish.
Tax Benefits -
The US government has created certain tax incentives making it possible for many homeowners to exceed the standard yearly deduction.
*Disclosure – Check with your CPA or Tax Attorney to verify your own unique filing scenario*
The following three components of your home mortgage may be tax deductible:
a) Interest on your home mortgage
b) Property Taxes
c) Origination / Discount Points
Stability -
Remaining in one neighborhood for several years lets you and your family establish lasting friendships, as well as offers your children the benefit of educational continuity.
Historically, even with other periods of declining value, home prices have exceeded consumer inflation. From 1972 through 2005, home prices increased on average 6.5%, according to the National Association of Realtors®.
Forced Saving -
The monthly payment helps in repayment of the principal amount. Also when you sell you can generally take up to $250,000 ($500,000 for married couple) as gain without owing any federal income tax.
*Disclosure – Check with your CPA or Tax Attorney to verify your own unique filing scenario*
Increased Net Worth
Few things have a greater impact on net worth than owning a home. In a comparison of renters versus homeowners, the Federal Reserve Board of Consumer Finance found that the average net worth of renters was just $4,000 compared to homeowners at $184,400.
While the available tax advantages and potential for earned equity are generally highlighted by most industry professionals as the top reasons to own real estate, it’s important to remember that markets go through cycles.
However, owning real estate that appreciates more than the rate of inflation may help contribute towards your overall investment portfolio, provided your maintenance and mortgage costs are kept low.
_________________________________
Related Articles – Home Buying Process:
- Home Buying Process
- First-Time Home Buyer Credit Checklist
- Assembling Your Home Buying Team – Knowing The Players
- Seven Things Your Agent Should Know About Your Mortgage Approval
- Important Factors To Consider When Getting Financing On A Foreclosure, Short Sale or New Construction
- Where Does My Earnest Money Go?
- HOA Hurdles to be Aware of When Looking at New Properties
- What You Need To Know About The Home Inspection Process
April 6, 2011 by Mark Estermyer · Leave a Comment
Home Purchases After A Bankruptcy-Foreclosure-Short Sale
Purchasing a home for Inland Empire residents after a bankruptcy, foreclosure or short sale can be a very frustrating. The experience a first time home buyer and previous home owners can depend on how prepared they are in providing all the necessary documentation.
The rule of thumb on this topic should be the same for documenting anything that is of any importance; keep all documents ready and available for your loan officer. Divorce papers, satisfied judgements and lien releases are other sets of documents needed to get a loan approved.
The most common question I get pertaining to bankruptcy, foreclosure or short sale is how long do I need to wait before I can qualify to buy a house. Each loan program has a different answer, but the following charts should answer most of your questions.
| CONVENTIONAL LOAN PROGRAMS | ||
| Bankruptcy | Forclosure | Pre-Foreclosure and Short Sale |
| Chapter 7 – 4 years from discharge or dismissal | 7 years from | 2 Years – 80% Max LTV/CLTV |
| Chapter 13 – 2 years from discharge | completion on | 4 Years – 90% Max LTV/CLTV |
| – 4 years from dismissal | credit report | 7 Years – Max LTV/CLTV per standard |
| Multiple BK’s – 5 years from most recent dismissal or | elegibility guidelines | |
| discharge date | ||
| FHA LOAN PROGRAM | |
| Bankruptcy | Foreclosure/Pre-Foreclosure/Short Sale |
| Chapter 7 – 2 years from discharge or dismissl | 3 years since completion |
| Chapter 13 – 1 year of payout period has elapsed with | |
| payments made on time, must have written | |
| consent for the court appointed Trustee. |
| VA LOAN PROGRAM | |
| Bankruptcy | Foreclosure/Pre-Foreclosure/Short Sale |
| Chapter 7 – 2 years from discharge | 2 years since completion-Because a borrower has |
| Chapter 13 – 1 year of payout period has elapsed with | filed foreclosure does not disqualify the borrower. |
| payments made on time, must have written | Provide complete information on the facts and |
| consent for the court appointed Trustee | circumstances for the foreclosure |
| Exceptions | |
| Between 1-2 years from discharge: reasons beyond the borrowers control-Unemployment, prolonged strikes, | |
| medical bills not covered by insurance. Divorce is not considered beyond the borrower’s control. | |
Requirements for Re-Establishing Credit
After a bankruptcy, foreclosure, deed-in-lieu of foreclosure, or pre-foreclosure or short sale, the borrower’s credit will be considered re-established if all of the following are met:
- The waiting period and the related requirements are met.
- The loan receives a recommendation from Desktop Underwriter (DU) thaat is acceptable for delivery to Fannie Mae or, if manually underwritten, meets the minimum credit score requirements based on the parameters of the loan and the established eligibility requirements.
- The borrower has traditional credit history. Nontraditional credit or “thin files” are not acceptable.
There are several more exceptions that pertain to business owners and other criteria that can affect the approvability of the loan. Only a seasoned loan officer can truly help navigate through the added documentation needed to achieve an approved loan application. For more information on this topic and any other, please do not hesitate to contact me.
March 16, 2011 by Mark Estermyer · 8 Comments
FHA Home Loan Payments Will Increase
Inland Empire home buyers who will be using FHA financing just got hit with another blow from HUD. With yesterday’s announcement; beginning April 18, 2011, the Annual Mortgage Insurance Premiums charged by FHA will increase 25 basis points. Just last year on April 4, 2010, HUD increased the monthly MIP from .55 to .90 for all loans where the LTV is greater than 95%.
“After careful consideration and analysis, we determined it was necessary to increase the annual mortgage insurance premium at this time in order to bolster the FHA’s capital reserves and help private capital return to the housing market,” said FHA Commissioner David H. Stevens. “This quarter point increase in the annual MIP is a responsible step towards meeting the Congressionally mandated two percent reserve threshold, while allowing FHA to remain the most cost effective mortgage insurance option for borrowers with lower incomes and lower down payments.”
After the transition, a borrower holding a 30-year, fixed FHA-insured loan valued at $163,000 will be paying $151 per month in premiums, compare to $118 under the current rates.
Whether this recent increase will have yet another negative impact on home buyers using FHA financing and the overall housing recovery in the San Bernardino/Riverside area remains to be seen. If you or someone you know who is looking to purchase a home in the very near future, it may be in your best interest to look at speeding up that process.
To view the actual mortgagee letter issued by HUD, please click here. If you have any questions, please contact me anytime.
February 15, 2011 by Mark Estermyer · Leave a Comment
Are Inland Empire Home Loan Rates Increasing?
After more than 8 days of negative or no movement by mortgage backed securities, Inland Empire home buyers may have gotten a reprieve from the sliding away interest rates. This morning, MBS opened with some positive movement.
At the end of another volatile day yesterday, mortgage rates finished at levels close to April 2010. Home loan rates are around 5% now.
Economic signals indicate the recovery is gaining momentum. New claims for jobless benefits came in this week at the lowest levels in three years with the unemployment rate falling a full point over the past two months. Americans are also spending more and saving less, indicating a stronger confidence in the economy.
The exception is a slumping housing market, with foreclosures still on the rise along with a growing shadow inventory; home values are still being held down. Last years home sales numbers were the worst in more than a decade.
Even though the refinance market has come to a screaming halt, the good news is qualified home buyers are getting deals of a lifetime. Even though the increase in interest rates are decreasing the buying power, experts still consider today’s rates exceptionally low.
With the home buying season rapidly approaching, increasing interest rates could scare off some buyers. However for those who feel secure about their jobs, there is no better time to be looking for a home. If you have any questions about mortgage rates or qualifying for a home of your dreams, please contact me for details.
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February 11, 2011 by Mark Estermyer · Leave a Comment
