Northeast Los Angeles HomeBuying Seminar

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thinking about buying a home?

Then mark your calendar and please join us Monday evening, March 12 , 2012 from 6:00 - 8:00 PM  at  Universal Bank, 2575 Colorado Boulevard, Eagle Rock for an intensive homebuying seminar.

 

We'll be talking about the the importance of pre-approval as a starting point of the loan process, and the many different types of real estate sales: Traditional, Short Sales, Foreclosure.

 

The panel of veteran real estate experts Dan Jordinelli, Pat Barr, and Griff Lares will be available for questions and answers.

 

This is a Free Event and Refreshments will be served.  To RSVP please contact Shirley Pascal, VP/Branch Manager 323-254-2251

 

Cheryl Johnson

Bob Taylor Properties, Inc.

5526 N. Figueroa Street, Los Angeles CA 90042

http://www.bob-taylor.com

323-257-1080

Fax 323-254-8067

DRE# 01304057

DRE# 00843761


Los Angeles Veteran Home Buyers Benefit From Lower Funding Fees (as of November 18, 2011)

N.B:  On the day before I published this, HR 674 passed, reverting the funding fee amounts to the “old” levels.  It was updated in VA Circular 26-11-19, published November 22, 2011.  The “new” lower funding fee schedule was in effect for three days, from Nov 18-21.  Sorry for the confusion.

The Veterans Administration announced that is will be charging lower funding fees, to VA-eligible homebuyers, when issuing the VA mortgage guaranty.  Previously, Los Angeles veterans, looking to purchase their first home with no-money down, paid a 2.15% funding fee.  Last week, that funding fee was reduced to 1.40% of the loan amount. 

Veterans, who were using the VA mortgage for the second (or third, fourth, etc) time, used to pay a 3.30% funding fee for a VA zero-down home loan.  That fee has been reduced to 2.80%.

Los Angeles veterans, who choose to use a down payment when purchasing a home, can still use their VA home loan.  The new funding fee, for a 5% down payment, is now .75%.  The new funding fee, for a 10% down payment, is now .50%

A full chart of the new VA funding fee schedule is available on Brian Brady's Mortgage Rates Report.  Please direct any and all questions via telephone to (858)-777-9751


2011 FHA and VA Loan Limits for Los Angeles County

Los Angeles County 2011 VA loan limits dropped to $700,000, as did Orange county,  The 2011 VA loan limits for Ventura County was set at $562.500.  Riverside and San Bernandino counties' limits remain at $417,000. These loan limits are the maximum base mortgage amount for a zero-down VA home loan.

2011 FHA loan limits for Los Anegeles County are $729.750 as is Orange County.  Riverside and San Bernandino Counties have an 2011 FHA loan limit of $500,000.

View the full list of 2011 VA loan limits for California counties.

VA mortgages allow veterans to borrow above the county loan limit if the buyer has a down payment.  You can use this VA mortgage down payment requirement formula to calculate the amount needed.  Los Angeles County homebuyers have found VA loans to be a particularly good option for loan amounts up to $1,000,000, because of the low down payment requirement, in 2009 and 2010.

VA loans do not require private mortgage insurance (PMI) because they are insured by the VA, which collects a funding fee from the buyer.  This makes most VA loans a less expensive option than FHA or conventional loans, where PMI is required.


Los Angeles Mortgage Rates Report- June 17, 2010

Q: Why are mortgage rates in Los Angeles low but nobody ever seems to get the rate that's advertised?

A:  It's getting harder and harder to qualify for the "best offered" mortgage rate.

Let me start at the beginning:  How do Los Angelenos qualify for the "best" mortgage rate?

Firstly, have great credit.  This means you need to have a credit score of 740 or higher.  For each 20 points below the magic 740, there is an upfront fee to qualify for that great rate.  Credit score of 640 are the minimum for both conventional and FHA loans and VA loans will fund down to 600 credit score. 

but...that's not all!

Secondly, your debt-to-income ration has to be aligned with the underwriting guidelines.  For conventional loans, your monthly debt payments (inclusive of your total housing expense) can't exceed 36% of your monthly income.  If it does, there's an upfront fee to qualify for that great rate.  If it exceeds 45%, no loan conventional loans are available.  For FHA loans, the debt-to-income ratio allows up to 55%.  VA loans use a different underwriting formula called residual income analysis.

Still, there's more!

Finally, the collateral position needs to be solid.  There are three components to the collateral position:

  • how much equity (or down payment) you have in the home
  • the type of property
  • the use of the property

Equity positions of 25% or more are required for the best conventional loan rate.  FHA loans allow for as little as 3.5% and VA loans have no equity requirement.

The "safest" property is a single-family detached home (not on more than five acres).  If the property is more than five acres...upfront fee.  If the property is an attached home or condo, even more upfront fees.  Manufactured homes are nearly impossible to finance.

Owner-occupied homes have no additional upfront fees nor do vacation homes.  Investment properties have a healthy upfront fee.

In some cases, "upfront fees" can be traded off for a higher rate.  Does this sound confusing?  It is to me and I deal with it daily.  This is why you haven't seen me post the Los Angeles Mortgage Rates Report in over a year.  Rather than represent rates that most folks can't get, I spent thousands of dollars on a search engine, which allows you to input the relevant criteria, to get competitive rate quotes.

Search for your personalized mortgage rate quote here.


2010 VA Jumbo Mortgage Limit Drops in Los Angeles County

Los Angeles VA jumbo loan limits will be reduced to $593,750, from the 2009 limit of $737,500, in response to the lower median home prices.  Los Angeles veterans looking for a VA home loan above that limit will be required to put down 25% of the difference between the new loan limit and the higher sales price.

EXAMPLE:

An eligible veteran, looking to purchase a home for $693,750, will need a down payment of $25,000 which equals the 25% of the $100,000 difference.

An eligible veteran, purchasing a home for $993,750 will be required to put down $100,000 which is 25% of the difference between the sales price and 2010 loan limit.

Median prices across Southern California stabilized in 2009 in response to the high balance loan program, foreclosure stays, and home buyer tax credits.  Los Angeles County's median price dropped from $355,000, in October, 2008 to $325,000, in October, 2009.  It is anticipated that the 2010 VA loan limit should facilitate approximately 75% of the sales prices for 2010.

2010 VA loan limits in Southern California:

San Diego ..................$437,500

Los Angeles................$593,750

Orange ......................$593,750

Riverside.....................$417,000

San Bernardino............$417,000

Imperial.......................$417,000


VA Jumbo Mortgages Help Finance Million-Dollar LA Properties

I stated at the beginning of the year that VA jumbo mortgages could very well be the product that helped stabilize the middle-market ($500,000- $1,000,000) in Los Angeles real estate.  Let me share with you how they work and give you some cases where we were able to fund loans this year.

The current zero-down VA jumbo mortgage limit is $737,500.  This means that a qualified veteran is eligible to purchase a a home, up to that limit, with no down payment required.  That's pretty straightforward.  Did you know that VA loans go up to $1,080,000 with a down payment?  The down payment requirement for a VA jumbo mortgage is essentially 25% of the difference between the purchase price and the county loan limit ($737,500 in Los Angeles County).  

Here are some examples of funded VA loans, in LA county, this year:

  • We funded a purchase for $1,080,000 in Rancho Palos Verdes.  The down payment requirement, combined with closing costs, was less than $100,000.  The rate was 6% (which is typical for jumbo mortgages). What made this transaction unique was that the loan amount was 92% of the purchase price and VA loans have no mortgage insurance.
  • We funded a three-unit transaction for about $700,000 with no down-payment requirement, in Los Angeles. That rate was 5.5% for a 30-year, fixed rate loan.
  • One veteran and his wife bought a townhouse in Redondo Beach for $800,000.  Their downpayment and closing costs were just under $40,000.  The rate was 5.75% for a 30-year fixed rate loan.

Most veterans who served after 1980 are eligible for the VA home loan benefit.  While eligibility doesn't guarantee approval, if the veteran's credit and income supports the loan, a VA jumbo mortgage might very well be the loan solution that allows for a low down payment for a seven-figure purchase price.

Many Californians are eligible for VA home loan benefits.  Some of the more famous veterans include Easy Rider Dennis Hopper, Kirk Douglas, Sidney Poitier, Chuck Norris, ER's Troy Evans, and Pat Sajac.  All are eligible for a VA home loan (although I doubt they need one).


Los Angeles homeowners can get a 4.5% mortgage rate in March

  ...if you like the terms. Here's the rub:Finishline

  • it's for a fifteen-year, fixed-rate mortgage and...
  • it costs 1.25% in points and...
  • the loan amount has to be for $250,000 to $417,000 and...
  • you have to have a 700 credit score or higher and...
  • all of your monthly debts (including the new payment) can't exceed 40% of your documented income and...
  • you must have at least 20% in equity if it's a purchase transaction or....
  • you must have at least 20% in equity if it's a refinance of your purchase loan (no cash out) or...
  • you must have at least 40% equity if it's a refinance where you took cash out of the house.

Lots of restrictions but it's here.  Contact me if you want to give it a go.

PS:  This might not be that bad of an idea if your rate is 6% or higher.  If you took out a $300,000 loan, at 6%, for thirty years, your payment is $1798. Refinancing your mortgage to a 15-year loan, at 4.5% would raise your payment to $2294.  That's only $500 a month. 

That's an extra $90,000 that you'll pay towards your mortgage over 15 years.  If you bought your home in 2006, you still have 27 years left.  If we could knock off 144 payments at $1798, you'd save $259,000.  So...

It costs you $3750 in points PLUS another $3000 in closing costs PLUS the $90,000 extra (the higher payments).  Pay out $97,000, over fifteen years, and save $259,000?  Hmmm, maybe you'd do better in your 401-k.

Then again, maybe not.  I'm just sayin'.

I'll run the numbers for you if you contact me.


Lower Los Angeles County Loan Limits in 2009

In my 2009 San Diego Real Estate Outlook, I suggested that lower loan limits could cause a convergence of home prices.  I expect the mid-priced homes ($500,000 to $1,000,000) to decline towards the loan limits while lower priced homes (under $500,000) already dove in 2008.

Southern California Loan Limits For 2009:

Loan Type         San Diego          Orange          Los Angeles

VA                    $697,500           $729,750       $729,750      

FHA                  $546,250          $625,500        $625,500

Conforming        $546,250          $625,500        $625,500

Originally Posted on Millionaire Real Estate Lender


FHA Hope For Los Angeles Homeowners

The FHA Hope for Homeowners loan program was released this month. The stated goal of the plan is to help homeowners, who are paying mortgages that are significantly more expensive than when they bought the home (due to rate adjustments), get a home loan they can afford.

Key components of the FHA Hope For Homeowners loan program are not limited to but include:

  • An appraisal will be performed and the maximum loan amount will be 90% of that appraised value.  All subordinate liens will be extinguished and the exiting lienholder will have to agree to a loss of principal.
  • The current housing payment must be more than 31% of the homeowner’s gross monthly income.
  • The homeowner must not have misrepresented his/her income on the original loan application.
  • The homeowner must get a new 30-year fixed rate loan and qualify based upon documented income.
  • The homeowner must agree to an declining equity sharing agreement (for the existing equity), with the FHA, for a specified period of time.
  • The homeowner will share in future appreciation with the FHA.
  • The program is completely voluntary; existing lienholders don’t have to participate.

Mary Miller compiled some comments from Mortgages Unzipped authors which demonstrates the difficulty of the program. Loan originators may be hesitant to work with you because of the low probability of a successful funding.  That low probability is due to the fact that existing lienholders may have to take significant writedowns.  I wouldn’t blame an originator who refuses to participate in the FHA Hope For Homeowners Program; loan originators aren’t paid on unsuccessful fundings.

Nonetheless, we welcome loan applications, under the FHA Hope for Homeowners, for Californians in “upside-down mortgages”.  We recently hired a team member with the skill set to work with lenders’ loss mitigation departments.  That specific expertise, combined with our long history as a HUD lender, leads us to believe that we can assist folks who desperately want to retain their California home.  We offer this program with a few conditions:

  • We must determine your maximum qualified loan through full income documentation at application.  If you can qualify for a loan amount that might be a reasonable offer to the existing lienholder, we’ll proceed to an appraisal.
  • You must pay for the appraisal and credit report upfront; that should be about $500.  The appraised valuation is a key component of the program so that valuation must be established prior to the offer to the existing lienholder.
  • We expect to earn a 2% fee, whether paid by you or the new lender ( through yield spread premium). That’s twice the amount we earn for new loan originations.  We think this higher fee is reasonable considering the amount of work required and the low probability of loan funding.  We only receive this fee if we are successful in funding your new loan.

The FHA Hope for Homeowners Loan program offers Californians a chance to stay in their homes at a reasonable price.  If your intention is to live in your home for 5-10 years, this may be a workable solution for you.

While the plan isn’t perfect we know that certain sub-prime lenders have sold their loans at a significant discount and will welcome any and all offers that allow them to make a profit.  For example, if you have a loan with First Franklin, this program might make sense for you.  First Franklin was purchased by Merrill Lynch, in early 2007.  Merrill Lynch sold these loans, for 33 cents on the dollar, this past summer.  What that means is that they sold your $500,000 loan to an investor for $165,000.  If we have to approach First Franklin’s loss mitigation department with a $350,000 payoff for that $500,000 loan, the new investor stands to more than double his money in a few months.  That’s a reasonable proposition to entertain.

Not all loan servicers will be that cooperative, though.  We believe that our connections with Wall Street and secondary mortgage market investors will be a distinct advantage to you, the beleaguered California homeowner.  The FHA Hope for Homeowners Loan program isn’t perfect but it may offer you significant relief.  Please contact me if you have questions about it.

Originally posted on Mortgages Unzipped


FHA Jumbo ARM Programs Benefit First-Time Home Buyers

Did you know that Los Angelenos could get an adjustable rate mortgage through the FHA-insured loan program?  ARMs are a dirty word in the media today. As millions of homeowners have their ARM rates adjusted, the press peddles fear, causing new home buyers to overpay on the FHA home loans.

Let's look at my favorite, the FHA JUMBO 5-year ARM at 5.625% versus the FHA JUMBO 30 Year fixed rate mortgage at 6.375%.  That's a .75% difference in rate and for a JUMBO loan, that adds up to some substantial savings!  On a $600,000 mortgage, the interest savings, over the five year period, is over $20,000; that's the price of a low mileage, gently-used BMW.

The risk of a five year ARM is the reset.  If you funded a FHA JUMBO 5-year ARM today, the rate (and payment) would adjust in January, 2014.  The risk, however, is nowhere near the reset risk of yesterday's Alt-A and sub-prime home loans.  Rate adjustments are based on two factors: index and margin.  FHA loans can be offered with a LIBOR or Treasury Index and have margins that range from 2.25% to 2.75%.  Peter G. Miller, syndicated columnist, believes the lowest margin may be the best choice:

While indexes move up and down, you at least want to compare the LIBOR and Treasury measures. If the LIBOR margin is within .25 to .50 of the Treasury index, then either index might be attractive. But if the margin gap is more than .25 to .50, then you might favor the Treasury index, if the margin is less than .25 to .50 then the LIBOR might be a better choice.

The view here is that a lower margin is best because the margin is fixed for the life of the loan. That said, who knows how indexes will move in the future?

The other risk for a rate adjustment is the "cap".  Simply put, a "rate cap" is the maximum allowable adjustment, up or down, for the rate (and payment) when the five year period is up.  FHA loans have two interest rate cap structures:  a 1/5 for 3-year ARM periods or a 2/6 for longer periods.

In our example, if we obtained a 5/1 FHA JUMBO ARM at 5.625%, the rate could adjust as high as 7.625%, in 2014.  It could adjust as high as 11.625%, if interest rates went straight up for eight years (and never came down).  If that were to happen, bank savings' rates would skyrocket from today's 3% to over 9%.  There IS a silver lining amidst any storm cloud.

FHA loans are easy to refinance.  The FHA streamlined refinance program allows for a homeowner to refinance her FHA loan with no income or asset documentation.  This common-sense approach grants a FHA loan approval if the homeowner can demonstrate that her last twelve mortgage payments were timely.  It can even be offered without an appraisal.

In Los Angeles, the average hold time for a home is 5-7 years.  This means that the average Los Angeleno will most likely sell his home during that period.  If you're a first-time homebuyer, chances are that you're leaving a LOT of money on the table by insisting on a FHA JUMBO 30 year loan rather than a 5-year ARM.  Do your homework and compare costs.

Originally posted on MillionaireRealEstateLender.com