by Tim Storm | Jul 8, 2016 | Uncategorized
HomeReady is the newest home loan program offering from Fannie Mae and can save Orange County home buyers money. It’s designed to provide financing to creditworthy lower income borrowers in minority and low-income neighborhoods. It provides several benefits to borrowers like a reduced down payment, lower Loan Level Pricing Adjustments (LLPA’s), and reduced monthly Private Mortgage Insurance (PMI) premiums. Loans made through HomeReady can also be potentially refinanced up to 97% of the loan value. Eligibility for the HomeReady Loan Program There are some basic eligibility requirements for the HomeReady program, but for those that are eligible HomeReady offers quite a bit of flexibility in getting your loan application approved. HomeReady does not allow the borrower to own another home at the time of the new loan, but not require the borrower to be a first time buyer. That’s right, this program not not restricted to only first time buyers. An online Home Buyer Education course is required to be completed prior to closing. One of the coolest things about the HomeReady program is that it allows unconventional ways to establish a credit history. So for an Orange County home buyer with limited to no credit, providing alternative credit ( for example submitting proof of making a utility bill on time for 12 months) can be used in place of not having credit on the credit report. HomeReady also allows for the pooling of income from family members to help qualify the loan. Income limits still need to be met. Down Payment Requirement for HomeReady Home Loan Program The down payment requirement with HomeReady is lower compared to...
by Tim Storm | May 27, 2016 | Uncategorized
In Orange county, the FHA loan program is extremely popular amongst first time homebuyers compared to other mortgage programs. What many Orange County home buyers don’t always realize is that the FHA program can be the best home financing option for move up home buyers as well. Reasons for this include flexibility in underwriting guidelines, credit, and down payment. When is FHA Better Than Conventional Financing? FHA allows for approved lenders to provide loans with very low down payments to borrowers with less than perfect credit scores. The minimum down payment required is 3.5% of the loan amount and can be provided to borrowers with a credit score as low as 580. The FHA loan limit in Orange County in 2016 is $625,500. This means an Orange County home buyer can use FHA financing to buy a home up to $648,000 with only 3.5% down, which is better than any other Conventional loan program. The only program better than that is VA. (You would need to be a qualified active or retired military Veteran). The FHA program also has many other beneficial aspects for potential borrowers. Interest rates with an FHA loan are much lower than a majority of other programs. FHA also allows the down payment to be a gift from a source like a family member or charity. Because interest rates and loan pricing tends to be better with FHA than Conventional loans, it is easier for Orange County FHA lenders to cover the closing costs using a lender credit (which involves increasing the interest rate). If a borrower were to experience an extreme financial hardship, FHA...
by Tim Storm | Jan 14, 2016 | Conventional Loan
There are many common perceived hurdles to homeownership in Orange County, CA. However, studies have shown that many of the obstacles mentioned are perceived, not real. A recent study by Fannie Mae, What Do Consumers Know About The Mortgage Qualification Criteria?, revealed that many consumers are either unsure or misinformed regarding the minimum requirements necessary to obtain a mortgage. Let’s break down three such challenges. Down Payment Perceptions Many Orange County renters believe that the lack of a big enough down payment is preventing them from moving forward with the purchase of a home. According to the Fannie Mae report: 40% of all renters don’t know what down payment is required 15% think you need at least 20% down An additional 4% think you need at least 10% down The Reality There are programs offered by Fannie Mae, Freddie Mac and FHA that require as little as 3-3.5% down. VA actually allows $0 down payment up to a purchase price of $625,500 in Orange County. According to the National Association of Realtors, the typical down payment for a first time buyer is 6%. Credit Score Perceptions Many Orange County renters believe they do not have a high enough FICO score to move forward with the purchase of a home. According to the Fannie Mae report: 54% of all renters don’t know what credit score is required 5% think you need at least a 740 credit score The Reality Many mortgages are closed where the borrower has a FICO score less than 700. According to Ellie Mae, the average credit score on a closed FHA purchase is 687 and the average...
by Tim Storm | Jan 7, 2016 | Conventional Loan
There are many benefits to homeownership in Orange County, CA. One of the top ones is being able to protect yourself from rising rents and lock in your housing cost for the life of your mortgage. Rents have increased quickly over the past few years in Orange County, CA which is leaving many renters feeling trapped. They feel as though they have missed out on low prices and are not sure whether to wait for prices to drop again (will that happen any time soon) or move inland, like to the Inland Empire (Riverside or San Bernardino county). Don’t Become Trapped Renting in Orange County Jonathan Smoke, Chief Economist at realtor.com recently reported on what he calls a “Rental Affordability Crisis”. He warns that, “Low rental vacancies and a lack of new rental construction are pushing up rents, and we expect that they’ll outpace home price appreciation in the year ahead.” This is especially true in Orange County. The Joint Center for Housing Studies at Harvard University recently released their 2015 Report on Rental Housing, in which they reported that 49% of rental households are cost-burdened, meaning they spend more than 30% of their income on housing. These households struggle to save for a rainy day and pay other bills, such as food and healthcare. It’s Cheaper to Buy Than Rent In Smoke’s article, he went on to say, “Housing is central to the health and well-being of our country and our local communities. In addition, this (rental affordability) crisis threatens the future value of owned housing, as the burdensome level of rents will trap more aspiring owners into...
by Tim Storm | Jan 6, 2016 | VA Home Loan
VA loan limits for 2016 in southern California were recently announced, and are mostly unchanged from the limits for 2015. The VA loan limit for Orange County in 2016 will be $625,500. Los Angeles will be the same. And while the $625,500 is great for most VA borrowers, it is important to know that it is possible to get a VA loan as high as $1,500,000, because $625,500 is the $o down payment 100% financing limit, not the total loan amount limit. VA 100% Financing Loan Limit When we say that the VA 100% financing loan limit for Orange County is $625,500, we mean that a California Veteran can purchase a home in Orange County for a price as high as $625,500 with No Down Payment. And in many cases the lender can even price the loan with a “lender credit” that will cover the closing costs so that the Veteran won’t funds to close. This works out to be an awesome loan program for those that are eligible. What about the Jumbo VA Loan Program? A Jumbo VA Loan occurs when a Veteran purchases a home for higher than the 100% financing limit (and wants to get the maximum loan amount possible. ) A small down payment is required equal to 25% of the difference between their “higher” purchase price and the 100% financing limit ($625,500 in Orange County). For example, if a Veteran purchases a home for $675,500, or an even $50,000 above the 100% financing limit, then they would need a down payment equal to $12,500. The resulting VA loan would be $663,000. The actual down...
