How does pre-qualification work?

Posted on May 06

Question: If I work with a mortgage broker, do they actually ask the lenders to do the pre-qualification or do they actually do it themselves? how does it work?

The ‘normal’ process for a Pre-Qualification would involve the originator completing an application, pulling your credit, and reviewing your income & assets. A next step would include running your application through and electronic Underwriting process.

If you have a typical situation, the process is the same for a single person mortgage broker to the largest bank.

The impact on credit scores is more complicated, but, if you’re going to buy a home, your credit will need to be pulled, which will impact your score. If you decide to shop around, make sure all lenders pull the reports as close as possible to one another

10-15% down Jumbo portfolio loans in California?

Posted on May 08

Question: I am looking for a Jumbo loan on a purchase price of 1.1 million in California. 10-15% down, with 2-3 months reserves. Is anyone aware of banks that carry portfolio loans of this type?

Alternatively, is anyone doing attorney/professional jumbo loans with low down payments?

Our guidelines allow 80% LTV to a $1,000,000 loan. With superb credit and assets, it’s possible we would consider a 80% 1st, and a 5% HELOC to get your to 85% CLTV. Please contact me if you’d like additional information.

How do I figure out what it would cost to refinance my home loan?

Posted on June 05

Question: How do I figure out what it would cost to refinance my home loan, adding in the amount I have now in?

If you enter a quote request, you will receive some loan quote that will provide you the origination costs. You can then add those costs to the title and taxes required to close your transaction to the principal balance of your loan and one month’s interest to get an approximate new loan amount.

I owe 275000.00 at 5.25%. Should I refinance at a 15 year 4.25 % to pay off sooner?

Posted on June 22

Question: I owe 275000.00 at 5.25%. Now, 20 years left. Should I refinance at a 15 year 4.25 % to pay off sooner?

Before considering IF you can afford the new payment (presumably higher than your current), I suggest you consider the potential interest savings.

for 275k, 5.25% simple interest is $14,437; and 4.25% is $11,687; with a potential interest savings of almost $3,000 per year,

Since it looks like you can save more then enough interest to recover the costs, if the payment amount is ok with your budget a refinance appears to be a good idea.

I currently have a 30yr fixed home loan for 5.25%. When does it make sense to refinance?

Posted on July 03

Question: I currently have a 30yr fixed home loan for 5.25%. When does it make sense to refinance?

If your refinance cost is $2,500, then, you can get 4.50% and you would save $3,500 for the 1st year on a $400,000 loan, but, only $450 on a $60,000 loan.

If you calculate the interest savings, then, compare that to how long you’ll be in the home; you’ll have an accurate answer.

Is anyone offering 10% down on jumbo loan???

Posted on September 20

Question: I am looking to purchase a house at $575-$600k with 10% down. I have excellent credit and money in the bank for 20% down but, don’t want to put that much into the house when there is already equity built in. Any advice, suggestions?

US Bank lends to 90% LTV for a loan amount up to $650,000.

What is a Zero-Cost Refinance?

From my perspective, it makes economic sense to refinance anytime a Zero-Cost refinance is possible. “ZeroCost” is not a particular loan program – it is just a method used to increase the rate sufficiently to cover the closing costs, paying the costs and/or additional points will provide an even lower rate. Read More…

Some Considerations When Refinancing

When making a decision to refinance your mortgage, there are several factors to keep in mind. There are often many reasons to refinance your mortgage. Often it is to get at lower rate. Other times, it is to consolidate other debts such as expensive credit cards. For others, it is to get access to the equity in your home for home improvements, investments, college tuition or for other reasons. Read More…

Do You Qualify for a Mortgage Refinance

There are many factors that go into approving someone for a mortgage. Here is what you need to know. I get plenty of calls from homeowners who are looking to refinance their mortgages, but for a variety of reasons do not get approved. In this article, I want to share with you what an underwriter looks at when deciding to grant you a mortgage. Read More…

Question about impact of credit denial on credit record

Posted on 12 Feb

Question: Last year, we applied for a refinance through a local credit union. In the process, it was discovered that, one of the credit agencies had mixed a history of several delinquent accounts into my wife’s history. I took care of the mix-up and had the records corrected (took about 2-3 days). However, the Credit Unions (CU) took forever to re-check our credit. While waiting, we found another lender and cancelled our application with the CU.

End of story, right? We thought so.

We just got a letter from the CU. In it, they reference our last year application and say that, they are required (by law?) to provide a decision on the credit application – even if it was withdrawn. The letter goes on to state that, the reason our application was denied was due to the several delinquent accounts. Of course, since all of this was cleared up in last year, I no longer have the record of the interactions with the credit reporting agency.

The letter from the CU goes on to state that “this notice has no impact on your consumer credit report or your credit score.” Is this true? It seems like a credit denial would be reported to the credit reporting agencies, or are denials not reported?

The bottom line is…I’m just curious as to how seriously I should treat this notification. I’m at least going to try and clear things up, but, the CU is not likely to make things easy (they’re already providing an out-of-state POC to mail responses to, vice a human to talk to).

It certainly does seem odd to me that, the CU would send such a notice 3+ year after denying/cancelling your loan.

A lender’s credit report will include previous inquiries (normally 24 months), which is why, many lenders ask new applicants to address recent inquiries; however, there is no way for a lender to know why the inquiry did not lead to a new credit/loan.

Since there is nearly zero chance the last year inquiry would be picked-up by a future lender, and even if it was, there is no way for a future lender to know the reason why that inquiry did not lead to new credit, I suggest you just ignore the letter.

For all of the advertisements we’re hearing about how ‘friendly’ and ‘non-big-bank’  Credit Unions are – this is a clear example of them operating under the same rules as the banks.

What do we do about a low-ball appraisal?

Posted on November 28

Question: Back in June, we tried to refinance. Had an appraisal done – house came in at 457k. Husband lost job. It was right before the bank checked his employment history, and so we couldn’t qualify for the mortgage.

Fast forward to last year. Husband has job, everything is in place to refinance. We’re just waiting for the new appraisal. When the appraisal came back, it came in at 415k. A huge difference from 5 months ago. The comps that were used were for un-remodeled houses similar to ours. (We just came out of a major remodel – total gut down to studs, new heating, electrical, plumbing, walls, ceilings, marble & granite baths and high-end kitchen. The new appraisal did use one of the comps that were on the first appraisal, but, he gave our house a much lower value vs this comp than the previous appraisal. There were also inaccuracies on the report on things, like the siding material, floor materials, he didn’t mention hardwood floors. The broker has filed a rebuttal/dispute with the appraisal company to have them look over the appraisal for errors.

Is there anything else that can be done while we’re waiting for the appraisal company to get back to us? The mortgage broker said, he doesn’t think they are going to change the appraisal. It seems so unfair, they can state their opinion, and then, it becomes law with no recourse for the person who actually paid for this thing!!

I would like to point out that, the appraiser’s valuation is not something that can be “low-balled”. The appraiser is a trained professional with education, licensing, and Errors & Omissions Insurance requirements. It is their job to as accurately as possible value the property. They put their license and career on the line with their appraisals.

Each lender has a process to go through to counter/dispute a low value; however, in the crazy market we’re now, it’s really difficult for us to comment, when there is a possibility the comps used 6 months ago have now expired and nearly perfect new ones are available.

It is great, your broker asked someone else to see if there is a problem with the accuracy or the appraisal however, a well trained loan originator should be able to identify problems with an appraisal and not hope someone else will catch them.

What’s the best approach to refinance?

Posted on October 22

Question: I’ve got a 6.375 APR loan with no points or PMI for 30 years fixed, that we got two years ago. The house was purchased for 260, but, is now valued by the county at 230 (I think it’s probably worth more). I’ve been paying a lot extra for it and have it down to 236. We have excellent credit, but, only about 5k to throw in a refinance. Should I slow down on paying the loan off to build up equity to refinance or can I somehow refinance it now?

Might your current loan include lender paid MI? Although, you didn’t tell us your original loan balance, based on your purchase price, you are a little over 90% LTV. My guess is that either you have lender paid MI, or a portfolio loan.

If you have lender paid MI; you could very possibly qualify for a streamline rate reduction loan through your current lender. If not, a good loan structure for you might be a new 80% 1st mortgage, and a simultaneous 2nd mortgage, likely limited to 90% CLTV (Combined Loan To Value), so you can avoid MI, and save about 2% off the rate of your 1st. Another option would be a Rate and Term refinance with MI.

Is it possible to refinance an investment property with a high loan-to-value ratio?

Posted on September 26

Question: I bought a condo 6 years ago for $375,000. At the time, it was my primary residence. By the time I relocated from Massachusetts to another state for work, the housing crisis had affected home values. My condo is currently valued by the county for real estate tax purposes at $356,000. I have a 30 year-fixed mortgage at 6.125%  with a balance of $267,800 and a 30 year home equity loan at 7.89%  with a balance of $72,000 (taken out to avoid PMI and to renovate the condo). I can’t get a refinance under HARP (I’ve tried), because, though the condo is my sole property, it is considered an investment property. I have a tenant, which helps with the mortgage payments, but, the rent doesn’t cover the mortgage costs, so, I have to supplement. I’ve paid the mortgage and home equity loans on time every month over the last 6 years and have a credit score of 770.

My question is, whether there are any refinance options for someone like me (or loan consolidation options that merge the two outstanding loans into a 30 year fixed loan)? The bank that manages my mortgage says that, if the condo was my primary residence or a second home, I would have no problem getting a refinance under HARP. Unfortunately, because it is now considered an investment property, my risk category has increased and it doesn’t matter whether I have a history of paying more than the minimum over time; Freddie Mac rules (Freddie Mac is the investor in my mortgage) don’t allow them to help me.

You have a few options. Most likely you can refinance your 1st to a much lower rate – likely about 5%; if your 2nd will subordinate.

If the 2nd won’t subordinate, you could get up to 80% LTV; but, there are some costly pricing adjustments that would probably make your current financing more attractive.

For Income analysis, your lender will consider your 1040 Schedule E to determine your income/loss.

How to Refinance Jumbo Loan at 90% loan to value?

Posted on September 18

Question: I owe 1.020 mil on house that just appraised at 1.125 mil. Is there anyone or anyway to refinance. I am currently paying 6.25, payments are on time and I meet all other requirements?

A portfolio loan to 90% is possible with a direct lender. Although only available with ARMs; you should be able to save about 2% from your 6.25% rate on a 5/1 ARM which could save you quite a nice sum of money. Let me know if you need more information.

Are 100% ARM loans available?

Posted on August 22

Question:  We are changing jobs and will be moving half way across the U.S. We are trying to purchase a home without being contingent upon the sale of our existing home. We then will use the proceeds of the sale of our current home to put into the mortgage somehow. So, is there an option to do an 80/20 primary secondary (the proceeds of our sale should about cover the secondary)? Or, are there any 100% ARMs out there that I could get, and then refinance to conventional upon the sale of our home?

We will offer an 80% 1st mortgage on your new home, and the remaining percentage secured by your existing home.

Loan implications for someone relocating

Posted on August 17

Question: I will be relocating from MI to PA for a new job (approx 350 miles). The home that I currently own in MI is very underwater so I am in no position to sell at this point. I would like to understand the implications/requirements/programs that may be applicable to my purchase of home in PA (this would become my primary residence). Any advice or pointers to details would be greatly appreciated.

The biggest obstacle would be that, without 30% equity in your MI home, we would need you to qualify with both payments, and also have at least 6 months reserves, plus the down payment for the PA home.

We would not restrict programs for your new purchase – so long as your DTI and down-payment/reserves are within guidelines.

What’s the best way to refinance?

Posted on August 08

Question: I owe $1.15 mil at 6% on a house. Now, it’s worth about $1.75 mil in OC. What’s the best way to refinance?

We allow up to 75% LTV for loans between $1M and $1.5M. Your self-employed status isn’t a concern as long as your income is sufficient. We should be able to accept a 50% DTI for your loan on our Fixed Rate refinance, and possibly higher with our ARMs.

Please let me know if I can be of assistance to you.

Refi Strategy… seeking advice

Posted on March 18

Question : I have primary mortgage and a HELOC at 2 different banks.I’m considering to refinance and possibly consolidate the 2 mortgages into 1 loan to reduce monthly payment amount. Below is my current situation

My credit: excellent, full-time employed.
1st mortgage principal balance: 236k (5.25% fixed 30yr conventional) $1930/month
Escrow: Tax $4754, Hazard Insurance $590
2nd mortgage HELOC balance: 64k (6.83% fixed interest) $520/month
Home Value: 347K

When I contacted my primary mortgage, I was told that I would not qualify for consolidation refi because this is considered ‘cash out option’ and the LTV will exceeds 80%. So, I am proceeding to refinance only the primary mortgage (subject to agreement of 2nd lender for subordination).

Are there other options I can consider to reduce my monthly payment? Should I look into FHA (not sure if I qualify for this)? I am not interested in ARM.

Any advice/ideas will be appreciated!

Answer :
I would probably redo both loans, a 277,600 1st (or whatever 80% provides) and a new HELOC for the balance – most major banks offer HELOCs with adjustable rates in the mid 4′; if you attack the balance on the HELOC, you won’t have much rate adjustment risk.

I am looking for a competitive mortgage as a foreign investor

Posted on March 17

Question : I am a foreign investor looking to purchase a duplex (one unit to use as a vacation property and the other as a rental) and looking for a competitive loan.

Answer :
There are a few investors that offer loans for foreign investors – but, not too many. I would be glad to give you an idea of the rates you can expect if you’d like to email .