Loan Considerations for Buy and Hold InvestorsAs far as investment loans, little or no money down loans are impossible.  However, lenders do permit the use of Home Equity Lines of Credit or second mortgages from other properties owned by the borrower as a source of down payment.  Or, self-employed borrowers are using funds from business lines of credit to fund down payments or renovations (please note: there are asset seasoning guidelines for doing so and the debt incurred by accessing other credit lines must be accounted for against the borrower’s debt-to-income ratio). Thus, we have clients leveraging themselves with other homes they own in order to get in with little or nothing down.  There are exceptions, but practically every lender requires Full Income Documentation on any investm... 12/16/2008

Loan Considerations for Fix & Flip / Short-Term InvestorsSecuring conventional financing on a fix & flip or short-term loan is not recommended.  Most conventional lenders sell off their mortgages to investors on the secondary market.  If the loan is paid off early (before six payments are made), the investor has not recovered their initial investment.  The investor will attempt to recover their loss from the lender, who will ultimately come after the loan originator.  The loan originator would then be obligated to pay back any premium paid out by the lender.  If such activity becomes habitual with the loan officer, the lender can cease doing business with them and their firm.Furthermore, conventional loans require conventional appraisals.  The lender will require that the home is a) hab... 12/16/2008

Loan Considerations for Jumbo MortgagesFor the Greater Metro Denver area, any loan amount greater than $417,000 is considered a jumbo loan.  Fannie Mae and Freddie Mac assign different thresholds for various regions across the country.  For instance, $417,000 is not considered a jumbo loan in a high cost city like San Francisco, yet there will still be higher rates for going above $417K.  Due to the size of jumbo loans, they are considered greater risk for lenders, resulting in higher rates.  Rates have fluctuated greatly over the past few years on jumbos.  As of today, a 30 year fixed could range from 7% - 8%; a full point higher than the prime rate below a loan amount of $417,000.  Five year ARMs are popular on jumbo loans, as they typically price out a half point lower than fixed pro... 12/16/2008

Loan Considerations for Loan Amounts Between $200K - $417KWith all the doom and gloom publications that are mostly exaggerated, many potential borrowers believe that home mortgage lending options have dried up.  While underwriters and investors are scrutinizing files more closely, attractive rates and terms still exist for owner occupied purchasers seeking a conforming loan limit (under $417,000).  FHA and VA can still lend up to 100% LTV and conventional permits up to 97% LTV.  There are certain guidelines to meet when going to these high LTVs, but they are not impossible to surmount.Every home buyer should first ask themselves what payment they feel comfortable in committing to on a monthly basis.  Too many buyers over-extended themselves in recent years on homes they simply could not... 12/16/2008

FHA First-Time Buyer Tax CreditIn an effort to boost the sagging real estate market and overall economy, first-time home buyers are being offered a limited time tax credit when purchasing a primary residence.  The highlights of the tax credit are:•    The tax credit is available for first-time home buyers only. •    The maximum credit amount is $7,500. •    The credit is available for homes purchased on or after April 9, 2008 and beforeJuly 1, 2009. •    Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit. •    The tax credit works like an interest-free loan and must be repaid over a 15-year period. Due to the volume of questions that can be generated with the above, I would recommend clicking on the below link for ... 12/16/2008

Loan considerations for a first time buyerLending guidelines are changing on a daily basis for every type of loan: conventional, FHA, VA & commercial.  Nevertheless, there are still very attractive first-time home buyer options available.   If you are or will be a first-time buyer, it is critical to speak with a loan officer before looking at homes.  It is a crushing feeling to view a home, picture making it your own and then find out that you cannot qualify to purchase it.  A loan officer will pull credit, analyze debt-to-income ratios, review assets and income and determine what you can afford.  Presuming a pre-qualification occurs, the loan officer will then be able to provide an array of loan options.  Presently, FHA loans are the predominant loan for first-time home buyers as they ... 12/16/2008

How can you improve your FICO score?To improve one’s credit score, it’s critical to understand the factors influencing a credit score.  The factors that contribute to a FICO score and the weighted percentages for each are as follows:•    35% — timeliness of payments •    30% — the ratio of used debt to allowable debt for consumer credit •    15% — length of credit history (the more credit history and showing proof of consistent timely payment, the better the score) •    10% — types of credit used  •    10% — recent credit inquiries and recent new credit The greatest driver behind a score is making timely payments on all accounts.  Scores will be adversely affected for any payment that is 30 days late or more.  Being late on a mortgage payment will not only crush one’s score, but will al... 12/16/2008