Category Archives: FannieMae/FreddieMac

2019 Loan Limit Increase Available Now to $726,525

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It has happened again! For the third year in a row, the Federal Housing Finance Authority (FHFA) has increased the amount of money that can be borrowed through a standard home loan.

Not planning to buy soon? Please keep reading to see why this news can still be important to you.

The details:

• The standard loan limit (also known as conforming loan limit) rose by 6.9% to a maximum amount of $484,350 in low cost counties like Kern, Riverside and San Bernardino for Conventional and VA Loans. In certain high cost areas like Los Angeles and Orange Counties, the new limit is $726,525.  FHA Loan limits in low cost counties like Kern, Riverside and San Bernardino will be $314,817.
• The percentage increase is equal to the national appreciation average over the last year.
• Loan limits were kept high for 10 years, even as values declined. Now that the market has surpassed prior peaks, loan limits are on the rise again.

This means you may be able to:

• Purchase a higher priced home with more financing options, possibly including lower rates.
• Refinance an existing, higher-rate “jumbo” loan and possibly drop mortgage insurance premiums, too.
• Combine a 1st and 2nd mortgage.

If you have questions about what this change could mean for you, please reach out. And if you have friends who may benefit from this news, please pass it along. I’ll be honored to help.

Sincerely,
Dean Henderson
Financial Independence Mortgage
President
NMLS 233298
(661) 726-9000
[email protected]
deanhenderson.com

What a Government Shutdown Means for REALTORS®

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2018 Federal Government Shutdown

What a Government Shutdown Means for REALTORS®

Congress has failed to approve a Continuing Resolution (CR) providing funding for most government operations. Therefore, spending authority for most of the government expired at midnight on January 19, 2018. Until legislation providing for funding is signed into law, many offices and programs of the federal government are now shut down. This means many, but not all, government programs, including some that impact federal housing and mortgage programs, have been suspended or slowed due to the lapse in government funding. The Office of Management and Budget (OMB) requires each agency to have contingency plans in place. The information below is based on NAR staff review of agency contingency plans for the current shutdown and past experience with previous shutdowns and near-shutdowns.

NFIP National Flood Insurance Program

An extension of the National Flood Insurance Program (NFIP) was attached to the CR that Congress failed to pass. This means that for the duration of the shutdown, the NFIP will not be able to issue new or renew flood insurance policies. However, existing policies will not be affected until 30 days after their expiration date. Homebuyers will also be able to assume existing policies and claims will continue to be processed and paid as usual. For more detailed information, FEMA’s latest guidance to insurance companies can be found here(link is external).

Federal Housing Administration

HUD’s Contingency Plan states that FHA will endorse new loans in the Single Family Mortgage Loan Program except for HECM loans. It will not make new commitments in the Multi-family Program during the shutdown. FHA will maintain operational activities including paying claims and collecting premiums. FHA Contractors managing the REO/HUD Homes portfolio can continue to operate. Loss mitigation programs will continue to operate. You can expect some delays with FHA processing due to short staffing. (See the HUD Contingency Plan for Possible Lapse in Appropriations(link is external) for more info.)

Government Sponsored Enterprises

During previous shutdowns, Fannie Mae and Freddie Mac have continued normal operations, just as their regulator, the Federal Housing Finance Agency, since they are not reliant on appropriated funds. Fannie and Freddie are expected to announce relaxed procedures that would permit closings to go forward without federal verification of Social Security numbers and IRS tax transcripts. However, lenders would still have to obtain federal verification of both before the GSE’s will accept loans for purchase. Any relaxed requirements would not apply to loan modification re-financings.

Rural Housing Programs

The U.S. Department of Agriculture will not issue new rural housing Direct Loans or Guaranteed Loans. Scheduled closings of Direct Loans will not occur. Scheduled closings of Guaranteed Loans without the guarantee previously issued would be closed at the lender’s own risk.

VA Loan Guaranty Program

The VA loan guaranty program will be operational. The VA has determined that housing is an “essential service.” In addition, VA projects that “95.5% of VA employees would either be fully funded or required to perform excepted functions during a shutdown” (Download the VA Contingency Plan here(link is external) for more info.)

Internal Revenue Service

The IRS is closed and has suspended the processing of all forms, including requests for tax return transcripts (Form 4506T). While FHA and VA do not require these transcripts, they are required by many lenders for many kinds of loans, including FHA and VA, so delays can be expected if the shutdown is protracted. We have received indications that many loan originators are adopting revised policies during the shutdown, such as allowing for processing and closings with income verification to follow, as long as the borrower has signed a Form 4506T requesting IRS tax transcripts. On loans requiring a Form 4506T Fannie Mae and Freddie Mac are expected to adopt relaxed provisions allowing closings but subject to tax transcript verification before the GSE’s purchase the loans.

Social Security Administration

The Social Security Administration is closed and has suspended most customer service functions. According to the SSA Contingency Plan, verifying Social Security numbers through the Consent Based SSN Verification Service will also be suspended during the shutdown, a further complication for mortgage processing. As with IRS income verification, policies vary among lenders, with many choosing to exercise forbearance during the shutdown period subject to subsequent verification. Fannie Mae and Freddie Mac are expected to adopt policies to allow for closing subject to subsequent verification and before GSE purchase of the loan.

For more information contact:

Dean Henderson, CRMS
(661)726-9000

Fannie Mae/Freddie Mac Raise Conforming Loan Limits to $453,100 in 2018

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freddie-fannie-logos-300x215November 28, 2017  Ben Lane HousingWire

Last year, the Federal Housing Finance Agency increased the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac for the first time since the housing crisis.

And now, the FHFA is doing it again.

For the second year in a row, and the second time since 2006, the FHFA is increasing the conforming loan limits for Fannie and Freddie in 2018.

The FHFA announced Tuesday that it is increasing the conforming loan limits from $424,100 to $453,100 for 2018.

The conforming loan limits for Fannie and Freddie are determined by the Housing and Economic Recovery Act of 2008, which established the baseline loan limit at $417,000 and mandated that, after a period of price declines, the baseline loan limit cannot rise again until home prices return to pre-decline levels.

Fannie and Freddie’s conforming loan limits stayed at $417,000 until last year, when the FHFA finally increased the loan limit to $424,100.

But, as the FHFA noted Tuesday, home prices are on the rise, which necessitates a second straight yearly increase in the conforming loan limit.

The FHFA’s third quarter 2017 House Price Index report, which includes estimates for the increase in the average U.S. home value over the last four quarters, showed that house prices increased 6.8%, on average, between the third quarters of 2016 and 2017.

Therefore, the FHFA said that the baseline maximum conforming loan limit in 2018 will increase by the same percentage – from $424,100 to $453,100.

Loan limits will also be increasing in what the FHFA calls “high-cost areas,” where 115% of the local median home value exceeds the baseline loan limit.

Under HERA, the maximum loan limit in those “high-cost areas” is calculated as a multiple of the area median home value, while setting a “ceiling” on that limit of 150% of the baseline loan limit.

According to the FHFA, median home values “generally increased” in high-cost areas in 2017, which drove up the maximum loan limits in many of those areas.

Therefore, the new ceiling loan limit for one-unit properties in most high-cost areas will be $679,650 (which is 150% of $453,100) for one-unit properties in the contiguous U.S.

In 2017, the high-cost loan limit was $636,150.

According to the FHFA, special statutory provisions establish different loan limit calculations for Alaska, Hawaii, Guam, and the U.S. Virgin Islands.

In these areas, the baseline loan limit will be $679,650 for one-unit properties, but the FHFA notes that loan limits may be higher in some specific locations.

For a full look at the conforming loan limits, by county, click here.

The FHFA notes that as a result of “generally rising home values, the increase in the baseline loan limit, and the increase in the ceiling loan limit,” the 2018 maximum conforming loan limit will be higher in all but 71 counties or county equivalents in the U.S. than it was in 2017.

 

New Conventional 1% Down Loan

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1% down_newbestfriendBuy a Home With a 1% Down Conventional Mortgage And No Monthly PMI

The conventional 1% down mortgage is the best financing option in the market to help homebuyers purchase a home with a low down payment. This mortgage program is available to ALL homebuyers and you do not have to be a first time buyer to qualify. Buyers also have the option of removing the mortgage insurance “PMI” from their payment so they can obtain an even lower monthly payment. I included a Question & Answer section below so you know how to qualify for this program.

The 1% Down Conventional Mortgage Program

The conventional 1% down mortgage is very popular with homebuyers, as it is helping them purchase a home with a low down payment and a low fixed rate.

With rising health-care costs and student loan debts that many people have these days, it is getting more and more difficult for homebuyers to save up for a down payment to purchase a home. 

Until recently, buyers had to put down 3% to qualify for conventional financing, or they were stuck with 3.5% down FHA financing and their expensive monthly mortgage insurance if they only had a minimum down payment.

This 1% down mortgage program is helping more buyers obtain homeownership sooner.

To qualify for this new program, a buyer only has to come up with 1% down. Then the lender gives the buyer a 2% lender credit towards the down payment giving the buyer 3% equity at closing.

Please note, there is NO 2nd mortgage or outside down payment assistance programs involved with this 1% down mortgage program. This is a regular conventional financing program.

Buyers can also get a gift for the 1% down payment, so now prospective buyers can reach out to family and ask for a gift to help them purchase a home.

There is also an option to eliminate the monthly mortgage insurance “PMI” from the mortgage payment, so this is helping buyers obtain an even lower monthly payment. This is a great option for buyers, so now they don’t have to worry about having to remove the monthly PMI from their mortgage payment.

With FHA financing, if you put down less than 10% with FHA, you have to pay the monthly mortgage insurance for the life of the loan,

Rising Rents

With Rising Rents, Owning a Home is a Better Investment

With monthly rents continuing to rise in most parts of California, home ownership is looking like a much better investment for renters.

As you can see below, just a 4% increase in annual rent, can drive a $1,500 monthly rent up to $1,974 in just 8 years, an increase of $474, which is a 32% increase in overall rent.

Compare this to buying a home and obtaining a low fixed rate and monthly payment that will never change. When you own a home, it is a great hedge against inflation for the future, whereas rent will continue to go up over time.

With the new 1% down program, you can now get into a home for the price of a couple of month’s rent. With mortgage rates also still near all time lows, the cost of borrowing money to finance a home is still very good.

FAQ

Frequently Asked Questions for the Conventional 1% down mortgage

Here are the most frequently asked questions that buyers and real estate agents have in regards to the new conventional 1% down loan option.

1. What is the maximum loan amount with 1% down?

The maximum loan with 1% down is $424,100, which is the conventional loan limit.

If you need to borrow over $424,100, the minimum down payment is only 5% down.

2. Can I receive the 1% down payment as a gift?

Yes, the 1% down payment can be gifted on this program. Closing costs and reserves can also be gifted if needed.

3. What credit score is required to qualify for this program?

We require a 700 credit score to qualify for this loan program.

4. Is the 1% down program for 1st time buyers only?

No, you just cannot own another home at the time of closing.

5. Is private mortgage insurance “PMI” required with the 1% down mortgage program?

Yes, borrowers are required to pay private mortgage insurance “PMI” on the 1% down mortgage. The amount of monthly mortgage insurance you pay will depend on your credit score. There is also an option to eliminate the monthly PMI from the mortgage payment.

6. How do you eliminate the monthly mortgage insurance “PMI’ option on this program?

It’s very simple. All you have to do is take a slightly higher interest rate than normal, say from 3.75% to 4%, and we use a lender credit with the higher interest rate to eliminate the PMI from the mortgage payment. This is also known as lender paid mortgage insurance.

7.  Can I get 1% down on 2nd homes or Investment Properties?

No, the 1% down is for Primary Residences only. On 2nd homes, you only have to put down 10% to obtain the No PMI payment option. On investment properties this program is not available, as you have to put down 20%, which eliminates the Mortgage insurance anyway.

8. Do condos qualify for this program?

Yes, you can also purchase a condo using this program with only 1% down and get the No PMI option.

9. Can I use an adjustable-rate mortgage with the 1% down mortgage?

No, the 1% down mortgage requires a 30-year fixed rate mortgage only.

10. What is the maximum number of units for a home with the 1% down payment mortgage?

The 3 percent down mortgage is for single-unit homes only. This includes single-family detached homes and single-family attached homes such as condominiums and town homes. 2-unit homes, 3-unit homes, and 4-unit homes cannot be financed with the conventional 3% down mortgage.

11. But FHA mortgage rates are lower than this program?

Yes FHA interest rates are lower, but when you factor in the very expensive FHA monthly mortgage insurance, the FHA overall monthly payment will always be higher than this 1% down No PMI option.

12. What if I put down 3% or 5%, will I get a lower rate?

Yes, if you put down 3% or 5% for the down payment, you will get a lower interest rate. With Conventional Financing, The larger the down payment, the lower the interest rate you will get.

Helpful Tips

4 other reasons the Conventional 1% down program will benefit home buyers vs FHA financing

There are some other great benefits to using this conventional program vs FHA financing, so you have have more available homes to choose from.

1. This conventional program is a great option for buyers in complexes that are NON FHA approved, so now you have more inventory to choose from and agents have more homes to show them!

2. This conventional program will help you afford to purchase a single family home instead of a condo, as it frees up having to pay monthly mortgage insurance and HOA dues, which can amount to roughly $600-$700 a month on a typical condo. This will open up a lot more inventory you to purchase.

3. Conventional does NOT have an anti-home flipping policy, which means conventional buyers are allowed to purchase homes that are being fixed up and flipped by investors with less restrictions. So now you don’t have to worry about the FHA’s strict anti-home flipping policies. FHA buyers have to wait 90 days before they can buy a flipped home.

4. Compared to conventional financing, FHA appraisals can be a little more strict in terms of asking sellers for repairs on a property, so this is another benefit of going conventional.

If you would like to get approved for this program, or you have any questions about any of this information above, please feel free to contact me directly at 661-726-9000.

Dean Henderson, CRMS
President
Financial Independence Mortgage
661-726-9000
NMLS 233298
CA BRE LIC# 01055950

Understanding and Managing Credit Scores

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Managing Credit Score BubbleUnderstanding the makeup of your credit score is the first step toward managing and improving it.

As you might expect, payment history is the most influential component in your credit score, followed closely by the amounts you owe. To lesser degrees, the length of time you’ve utilized credit, the number of new accounts or inquiries you have, and the various types of credit accounts you hold also impact your score. Overall reporting also looks at how these factors relate to each other in the context of your personal usage.

To help achieve or maintain a healthy score, always remember the following:

Have a system to assure your bills are always paid on time.

Avoid late payments or the excessive use of credit by maintaining a cash “cushion” to pay for unexpected expenses. Don’t “max out” your cards. It’s better to have a high credit limit with a low balance.

Never close old accounts as the age of these can actually help your score.

If you shop for credit, do so in the shortest time period possible to minimize inquiries counted against you.

Don’t be afraid to use credit. You need several accounts in order to have a credit score. Just be sure to keep corresponding payments within your means.

If you have established credit, don’t open new accounts solely for the sake of earning a discount on a new purchase. In the long run, you may spend more than you save up front by paying higher interest rates due to a lower score. Having more accounts also increases the task of making payments and the possibility of missing one.

If you have questions about managing your credit, give us a call. We’re happy to help.

Dean Henderson, CRMS
Financial Independence Mortgage
President
NMLS 233298
(661) 726-9000
[email protected]

Home Loan Do’s and Don’ts

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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

New Down Payments Assistance Programs

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Down Payment Assistance Program

CalHFA MyHome Assistance Programs

California Housing Finance Agency Launches New Mortgage Assistance Program Helps first-time homebuyers with down payment and closing costs

The California Housing Finance Agency has launched the MyHome Assistance Program for first-time homebuyers who may need help with down payment or closing costs when purchasing a home.

Buyers can receive up to 5% in assistance, low interest rates and deferred payments through MyHome. The program is available to first-time employed buyers with good credit, and can be combined with all CalHFA first mortgage programs and the Mortgage Credit Certificate program, which provides a federal income tax credit that may lower taxes and increase disposable income.

“The lack of savings for a down payment is often the barrier to purchase for first-time homebuyers, even though they can afford the monthly payments,” said CalHFA’s Executive Director, Tia Boatman Patterson. “This new program bundles the first mortgage with down payment and closing cost assistance for our borrowers to make the home buying process simple, affordable and, most importantly, attainable.”

Since 1975, CalHFA has partnered, promoted and preserved safe, affordable housing for Californians, expanding opportunities to hundreds of thousands of residents. CalHFA’s line-up of programs and products demonstrates its commitment to lending with a purpose.

“I’ve got families I’ve been working with for a year, and with MyHome they can finally purchase their first home,” said Ed Bañuelos of Academy Mortgage in Burbank. “This program is awesome, and has a lot to offer people looking to buy a mid-priced home.”

CalHFA offers more programs that help low to moderate income homebuyers including the CalPLUS FHA program, which is a first mortgage loan insured by the Federal Housing Administration, and the CalPLUS Conventional program, a first mortgage loan insured through private mortgage insurance. These loans can be combined with CalHFA’s Zero Interest Program (ZIP) for down payment assistance and/or closing costs – 3.5% assistance for a CalPLUS FHA loan and 3% for a CalPLUS conventional loan.

Help is also available through the Extra Credit Teacher Home Purchase Program, a special program for eligible teachers, administrators and staff in California schools, and the CalHFA Energy Efficient Mortgage + Grant Loan Program that assists with the costs of energy-efficient home improvements.

The California Housing Finance Agency was created in 1975 with the goal of helping more Californians find a place to call home. Its Single Family Lending division has invested more than $19.5 billion to help.

To inquire about this program please call Dean Henderson at (661)726-9000.

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

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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.