Home Loan Do’s and Don’ts

A guide to making a smooth loan process

A guide to making a smooth loan process

Now that you have made the decision that you would like to buy a home there are some very important Do’s and Don’t that you need to keep in mind in order to prepare yourself for a smooth mortgage approval process.  The slightest misstep could cause significant difficulties and delays on the closing of your home.  Mortgage guidelines have some strict rules that need to be complied with in order to get you loan approved and it is you loan officer’s job to help guide you through the process and maneuver you around potential road blocks that could lead to a mortgage denial.  These Do’s and Don’t are designed to maximize you FICO scores, minimize your debt-to-income ratios, and assure your funds to close are allowable.

First the Do’s:

  • Do continue making your rent and credit payments on time
  • Do keep working at your current employer.
  • Do ask your loan officer before making any financial moves

Now the Don’ts:

  • Don’t deposit and cash in you bank accounts!
  • Don’t change jobs
  • Don’t make any major purchases. (car, furniture, refrigerator, etc.)
  • Don’t apply for or open and new credit. (even if you’re “preapproved”)
  • Don’t transfer credit card balances or consolidate any debt
  • Don’t pay charge offs or collections.(unless your loan officer says to do it)
  • Don’t close any credit card accounts
  • Don’t increase your credit card balances
  • Don’t change bank accounts.
  • Don’t pay off loans or credit cards (unless your loan officer says it’s ok)
  • Don’t give your landlord notice to move without asking your loan officer first

These are very important rules to following in the before and during you home loan process.  For more guidance to help you navigate to a fast and easy closing please call Dean Henderson at 661-726-9000.

Dean Henderson, CRMS
Financial Independence Mortgage
661-726-9000

VA Buyer Allowable & Non-Allowable Fees

VA Home Loans

by Dean Henderson, Certified Military Housing Specialist

As our market tightens up and seller concessions are becoming more difficult to get I am getting many questions about what to ask for when writing a VA loan offer.  There are several fees a Veteran is forbidden to pay for in a VA loan financed transaction regardless of their willingness to pay.  When writing an offer on a home using VA financing a buyer must ask for at least a minimum amount of concessions to cover the VA Buyer’s Non-Allowable costs and Fees.

When using the standard C.A.R. form RPA-CA I would suggest the following wording on page 1, line 3D Additional Financing Terms: “Seller to pay 3% towards buyer’s recurring & non-recurring closing costs and VA Buyer Non-Allowable Fees.”

The actual percentage you request is negotiable but make sure you have enough to cover all the VA non-allowables.

Here is a summary of allowable and non-allowable costs from The Department of Veteran Affairs.

ALLOWABLE CLOSING COSTS

A Veteran may pay any of the following reasonable closing costs and fees:

  • 1% origination fee
  • Reasonable and customary loan discount points
  • VA appraisal fee – Usually about $450 for a Single Family Residence
  • VA compliance inspector fees – Only if required by the NOV (Notice of Value)
  • Recording fees- Usually about $100 – $150
  • Taxes and stamps
  • Credit report fees – Financial Independence Mortgage does not charge for this
  • Pre-paid items/Impounds
  • Insurances (hazard and flood, when required)
  • Flood zone determination
  • Well and septic inspection fees
  • Survey, if required by lender or veteran, except for surveys of condominiums
  • Title insurance(ALTA), title examination, title endorsement, title policy, title search
  • Environmental protection lien endorsement
  • VA funding fee – This is usually financed in the loan
  • Closing protection letter – Should not exceed $35
  • Fraud protection report
  • Termite, provided the loan is a cash-out refinance – The borrower may never pay these fees for purchase transactions
  • If a fee is not listed above, assume VA does NOT permit the veteran to pay it

NON-ALLOWABLE BORROWER-PAID CLOSING COSTS

Generally, the veteran may NOT pay any of the fees listed below.  The seller must pay the non-allowable fees.

The non-allowable fees are:

  • Attorney fees other than for title commitments
  • Lender’s inspections, except construction loan inspections and inspections required on the appraisal/NOV
  • Loan closing or settlement/escrow fees
  • Doc prep, underwriting, loan application, admin or processing fees
  • Assignment fees
  • Photographs
  • Interest rate lock-in fees
  • E-Mail, fax, copying, postage, stationery, telephone or other overhead charges
  • Amortization schedules, Truth-in-Lending fees, etc.
  • Notary fees
  • Escrow fees or charges
  • Commitment fees or marketing fees of secondary purchasers
  • Trustee fees
  • Fees charged by third parties, regardless of affiliation with lender
  • Tax service fees
  • Termite inspection fee for a purchase transaction
  • Attorney fee that benefits the lender
  • Real Estate Broker fee or Transaction Coordinator Fees
  • Brokerage fees or commissions charged by real estate agents or real estate brokers in connection with a VA loan
  • Prepayment penalties financed through a refinance transaction – When the payoff states a pre-payment penalty is due, veterans may pay pre-payment penalties out-of-pocket only
  • FHA/VA inspection fees for builders (Normal new construction inspections of the dwelling are permitted when required by the appraiser)
  • Any portion of the seller’s lien(s) or short sale fees
  • For purchase transactions, the cost of required repairs and inspections must be paid by the seller. This policy applies to all purchases, including purchases of REO properties. VA does not permit the veteran to pay for repairs other than minor termite damage repairs.

For more information about VA Home Loans please contact:

Dean Henderson, CRMS, GRI, CMHS

USA Cares
Certified Military Housing Specialist
(661)726-9000

Waiting Period to Buy Again After a Foreclosure, Short Sale, or Loan Modification?

How long is the waiting period to buy again?By Dean Henderson, CRMS

One of the most common questions I get asked these days is how long does someone need to wait before they qualify for a new mortgage if they have experienced a foreclosure, short sale or loan modification in the past?  Currently, mortgage underwriters are treating all of these events the same.

While re-establishing credit and meeting other lending guidelines will be necessary, there are minimum waiting periods for getting new mortgage loans after these significant negative credit events.

Below are the timelines for obtaining new loans for Conventional Conforming Mortgage Loans (Fannie Mae and Freddie Mac), FHA (Federal Housing Administration Insured Loans),  USDA-RD (United States Department of Agriculture Rural Development Loans) and VA (Veterans Administration Guaranteed Loan).

These are the most common time frames. There may be some rare exceptions to these timelines. These basic guidelines do not serve as a substitute for a discussion with a mortgage professional about your specific situation.

Conventional Loans (Fannie Mae & Freddie Mac) – 7 Years

The waiting period to buy again after a foreclosure, short sale or loan modification is 7 years.  This timeframe may be reduced if the previous short sold property or modified loan was never late and the borrower is putting a large down payment on the new mortgage.  How the previous lender has rated the previous mortgage on the credit report can also have and impact on the waiting period.

FHA (Federal Housing Administration Insured Loans) – 3 Years

The waiting period to buy again after a foreclosure, short sale or loan modification is 3 years.  How the previous lender has rated the previous mortgage on the credit report can have and impact on the waiting period.  FHA does provide some very rare exceptions where the time frame can be reduced which, for example, includes the death of spouse who was the primary wage-earner at the time of the foreclosure, short sale or loan modification.

USDA-RD (United States Department of Agriculture Rural Development Loans) – 3 Years

Like FHA loans the waiting period to buy again after a foreclosure, short sale or loan modification is 3 years.  How the previous lender has rated the previous mortgage on the credit report can have and impact on the waiting period.

VA (Veterans Administration Guaranteed Loan) – 2 Years

VA has the shortest waiting period.  The waiting period to buy again after a foreclosure, short sale or loan modification is only 2 years.  If the previously foreclosed property was a VA loan there may be some issues regarding the reinstatement of the veterans full entitlement benefits.  This can be determined when we order a new Certificate of Eligibility from the US Department of Veteran Affairs.

To find out more specific information regarding these guidelines call Dean Henderson at 661-726-9000.

New VA Loan Limits for 2012

 

The United States Department of Veteran Affairs just released the new loan limits for VA Loans for 2012. These limits vary by county. Higher costs counties will enjoy higher VA loan limits. Included in the high cost counties locally are Los Angeles County, Orange County, Ventura County and San Diego County.

Other Counties which are not considered high cost Counties include Kern, Riverside and San Bernardino. These counties will remain at the lower maximum limit of $417,000 with zero down payments.

The maximum VA Loan Limit with zero down in the high cost Counties will be as follows:

Los Angeles County $621,000
Orange County $621,000
Ventura County $518,650
San Diego County $477,000

For a Veteran who wishes to exceed these maximum loan limits they can still get a VA loan but there will be a down payment requirement for the amount borrowed over the County Maximum limit. So, for instance, if a Veteran wants to buy a home for $700,000 in Los Angeles County they will get zero down for the first $621,000 and then the remaining $79,000 will be subject to a down payment of 25% of the $79,000 which is $19,750. In this example the buyer would get a VA loan in the amount of $680,250 which is 97.18% of the sales price. Their down payment of $19,750 would be less than 3% of the sales price.

For more information about VA Loans contact Dean Henderson at 661-726-9000. Dean has been originating and closing VA loans for over 20 years. He is Certified Military Housing Specialist, Certified Cal-Vet Broker, and Approved by the United States Department of Veteran Affairs.

For a Free VA Loan Pre-Qualification call Dean Henderson at 661-726-9000.

You can also visit:
www.CalVet-Loans.com

 

VA Funding Fee Changes 01-Oct-11

Changes to VA Funding Fee!

Per current United States Code and recently passed Public Law 112-026 (Restoring GI Bill Fairness Act of 2011), VA Funding Fees are set to decrease for VA transactions funded after September 30, 2011. Unless Congress passes further legislation, VA Funding fees are updated as indicated the chart below:

If you have any questions about this, or would like to see if you or a loved one is eligible for a VA loan – or any other type of mortgage, feel free to contact me directly any time.

Dean Henderson
(661)726-9000
dean@avrefi.com