The Loan Lady Blog

Check Please -- Your Credit!!

April 26, 2009

How long has it been since you checked your credit?  If it has been a while, take a few minutes to see what items show up on your credit report.  The best place to do this is www.annualcreditreport.com.  It is one of the best sites to get a 3-bureau report and your credit scores for free.  I have been told by one of the credit reporting agencies that this site uses the most up-to-date scoring models and is comparable to reports we run for loans.

When I run credit for a client, I always make time to go over the report together.  I ask the borrower to make sure he or she recognizes the accounts listed, the addresses listed for credit, and identify any items that look questionable.

I did this recently with a couple and they found a Discover Card account that they did not recogize. The wife investigated and found that it was a fraudulent account on which there had been charges but no payments.  Luckily for the couple, it was a new account and the nonpayment had not affected their credit negatively.  They were able to file a dispute, the creditor is investigating it, and the couple will probably put a Fraud Alert on their credit.

So just to be safe, make sure you monitor your credit on a regular basis.

Super-Sized Loans - Jumbo Financing Returns 

Sunday, April 26, 2009 

When the real estate market flattened and then turned south, Jumbo financing was the first to go.  Jumbo financing refers to loans that are above the conforming loan limit--below that limit loans are backed by Fannie Mae and Freddie Mac.

For far too long we struggled with a low conforming limit that maxed out at $417,000.  Obviously, this was ridiculous for our high cost California Bay Area.  In 2008 the conforming loan ceiling was increased to $729,750 , then dropped to $625,500 January 1, 2009, and in May will be back to $729,500.

Since Jumbo financing is not backed by Fannie Mae or Freddie Mac, funds from mortgage market investors became limited, or priced 2% to 3% above conforming loan rates.

Reasonably priced Jumbo financing is slowly making a comeback.  I have two programs that are better than anything else out there, both priced in the mid-5% range.  One is a portfolio lender than goes up to $900,000 with 25 to 30% down.  Another is an exclusive source of funds that offers loans up to $2,000,000 with 30% down, but will allow a 10% second behind it. 

If you need Jumbo financing, come see me.

FHA Rehabilitation Loan

April 23, 2009

To those of you who are shopping for a fixer-upper, and those of you who have a home that needs improvements, I have a loan program for you!

The FHA 203K Rehabilitation loan is financed on the "as-completed" value of the home.  Borrowers obtain contractor estimates for the work to be done, up to a maximum of $35,000.  The escrow closes and the funds are released to the contractor as a partial draw to begin and then paid as work is completed.

Repairs or replacements that are eligible include roofs, existing HVAC systems, plumbing and electrical systems, flooring, painting, deck work, purchase and installation of appliances, window and door replacement, and much more.

Repairs that are not allowed are major remodeling, such as relocation of a load-bearing wall, repair of structural damage, room additions or landscaping.

Additional allowances of $8000 and $2000 are available for energy efficiency improvements and weatherization.

Loan amounts go up to $729,750 with as little as 3.5 down payment.  Other FHA qualifying guidelines apply.

Please call me to find out more about this power product.

Refi Madness

April 21, 2009

With interest rates ranging between 4.5% and 5%, former clients have been calling to refinance their loans.  Many people plan to stay put in their current homes and want to lock in a low interest rate on a 30 year fixed loan.  But in cases where the value of the property has decreased, I am often unable to do anything.  There's just not enough equity in some properties to qualify for a refinance.

Now that I have the 105% refinance loan to offer courtesy of the new stimulus plan, I can at least do refinances of up to $417,000 on properties with limited on no equity. The rates are comparable to standard loans at 80% loan-to-value, but will finance up to 5% above the appraised value.

One of the things I love about the mortgage market is its adaptability.  As the real estate market moves through cycles, the mortgage market moves too, providing the tools needed to support home ownership.  Of course, sometimes this adaptability backfires, such as when free and easy money was extended on escalating property values.

With all of the challenges lenders have faced in the last couple of years, new legislation is bringing us tools and programs with the goal of turning the real estate slump around. Real estate often leads the country into a recession, but also leads it out as well.