First Step: Get Pre-approved

| Daniel Montgomery

The first step in the home-buying process is to find out home much home you can afford.  Many websites offer affordability calculators which can give you a ball-park idea of your ideal home budget, however to really get a good picture of everything involved, get a pre-approval letter from a qualified lender. What is a […]

The first step in the home-buying process is to find out home much home you can afford.  Many websites offer affordability calculators which can give you a ball-park idea of your ideal home budget, however to really get a good picture of everything involved, get a pre-approval letter from a qualified lender.

What is a pre-approval letter?

In general, a pre-approval letter is a preliminary determination that a borrower would qualify for a particular loan amount under that lender’s guidelines.  The lender makes this determination based on the borrower’s income and credit information.

Why are pre-approval letters important?

A pre-approval letter shows that you’re a valid buyer and able to act quickly when you find a home.  They can also make you stand out in this competitive real estate market. If you make an offer on a house without being pre-approved, your offer may not be taken as seriously as an offer from another prospective buyer that has been pre-approved.   Be sure to keep in mind though, that having a pre-approval letter does not guarantee that your offer will be accepted by a seller.

What if you can’t get pre-approved?

Be sure to get a copy of your credit report and review it for accuracy; if anything needs to be corrected, do it!  That could help raise your credit score.  Generally scores that are 720 and above are the most favorable, however there are some programs that cater to lower scores.   Also, work to get your debt to income ratio under 40%– under 36% is preferable, if not required, depending on the lender requirements.

If you don’t have a lender that you’re currently working with, shoot me an email for references of some fantastic lenders I’ve worked with recently.

 

FHA Flipping Rule & VA Loan Amount Updates

| Robin Watson-Bird, Ph.D., Broker

Just received this great loan update from Peggy Valley of Summit Funding:   FHA Here is some additional information on the new FHA rule out this week. If there are more changes, I will be letting you know.   1)      FLIPPED property owned less than 90 days – no FHA loan availability 2)      Flipped property owned 91-180 […]

Just received this great loan update from Peggy Valley of Summit Funding:

 

FHA

Here is some additional information on the new FHA rule out this week. If there are more changes, I will be letting you know.

 

1)      FLIPPED property owned less than 90 days – no FHA loan availability

2)      Flipped property owned 91-180 days – 2 appraisals required

a)      If the property value is more than 5% above the acquisition price the seller will need to justify the increase. This can include receipts, list of improvements, etc.

b)      The underwriter will have discretion as to how they look at the improvements and may ask for more detail.

c)       Also, they added another caveat – a flipped within a year of acquisition will be under extra scrutiny per FHA guidelines. If the property has been sold more than once they will  look at the history and the lowest price for the property.

So bottomline, FHA must have been having some issues with flipped properties over the past few years to make the above changes. Extra work will be required.

 

VA

VA loan limits:

1)      The VA loan limit for Alameda and Contra Costa County has been reduced from $1,050,000 to $625,500 effective midnight December 31, 2014.

2)      In order to meet and use the current guidelines the borrower MUST a) be in a ratified contract, b) have a loan application issued, and c) a VA case number pulled.

3)      So what makes for an application in today’s day and age you might ask? Ratified contract, fees from the title company, and the application electronically signed or manually signed, case number is a number being pulling by the bank so that means during regular business hours, no midnight work.

4)      The impact is that the borrower will have to come in with more funds. For example, currently if the borrower is purchasing $1,050,000 there would be zero down. With the new guidelines, same  sales price, the borrower would have to come in with $106,125 or 10.12% for downpayment.

5)      You may ask, then why use VA loans. Great question and here are the awesome answers:

a)      On a recently priced loan the borrower got a rate of 3.875% for 30 yrs AND $3300 in credits. Can’t get that anywhere else on a loan over $1M

b)      There is no mortgage insurance

c)       There is no second with an index that moves.

d)      Higher ratios are allowed

e)      AND a veteran can pay  up to 1% of the loan amount toward termite/non-allowables, etc. as long as they didn’t pay an origination fee.  None of my clients do.

f)       So the loan is a win-win for all parties

 

Peggy is a very experienced and dedicated loan agent with awesome follow-up and competitive loan products. You can reach her at peggy.valley@summitfunding.net or by calling 925-890-5255. She is very approachable,  but I would be happy to make the introduction for you if you want, just let me know. 

 

 

FHA Changes Effective January 1, 2014

| Robin Watson-Bird, Ph.D., Broker

Effective January 1, 2015, FHA will have let their 90 day waiver on flipped properties lapse. This means that after January 1, 2015, a borrower wanting to purchase a flip will have to wait 6 mos + 1 day to purchase. I suspect this is going to bring an uproar in the real estate industry. […]

Effective January 1, 2015, FHA will have let their 90 day waiver on flipped properties lapse. This means that after January 1, 2015, a borrower wanting to purchase a flip will have to wait 6 mos + 1 day to purchase.

I suspect this is going to bring an uproar in the real estate industry. I will keep you updated as things change.

So what does this mean for borrowers – for those wanting to purchase a flip they will need to be in a ratified contract, have a loan application in process AND have a case number pulled by 12/31/14. This will be difficult since everyone will be pretty much closed on 12/30/14.

 

This change will affect both buyers as well as sellers who are flipping properties. In my opinion, it will likely slow the sale of flipped homes and even lower the price of them in areas where FHA financing is the norm and so is flipping property since supply and demand will be affected.

Feel free to contact me if you would like to discuss this change and how it may affect you or your area.

(parts of this update were  excerpted from an email provided courtesy of Peggy Valley at Summit Funding, peggy.valley@summitfunding.net, 925-890-5255. The opinion is mine, however)

Welcome

| Daniel Montgomery

Whether you’re a first time buyer or an experienced investor, you’ll find useful information about how to choose the “right” property, making an offer, negotiating, financing, mortgage rates, moving, and everything involved in making an informed home buying decision in today’s market. If you currently own property and are thinking about selling it, this site […]

Whether you’re a first time buyer or an experienced investor, you’ll find useful information about how to choose the “right” property, making an offer, negotiating, financing, mortgage rates, moving, and everything involved in making an informed home buying decision in today’s market. If you currently own property and are thinking about selling it, this site contains information about preparing your home for sale, selecting the right agent, pricing your home appropriately, marketing it effectively, going through the inspection process, and receiving a timely market evaluation.

Please use my website as a continued resource and if you need more information on anything, please feel free to call or email me. My contact information is listed on the About page.

Thanks for visiting!

PRIVATE Contemporary Luxury Home in Danville with Amazing Views

| Robin Watson-Bird, Ph.D., Broker

Uber contemporary Like New and PRIVATE 4 bedroom 3 1/2 bath 4180 sq. ft house with 4 car garage, Chef’s Kitchen, Climate Controlled Wine Cellar, Huge Master with Large Jetted Tub with great views and Huge Dressing Closet, Sauna, Separate Living & Family Rooms, Full Wall Sized Fireplace in Living Room, Full Bar, formal and informal dining […]

Uber contemporary Like New and PRIVATE 4 bedroom 3 1/2 bath 4180 sq. ft house with 4 car garage, Chef’s Kitchen, Climate Controlled Wine Cellar, Huge Master with Large Jetted Tub with great views and Huge Dressing Closet, Sauna, Separate Living & Family Rooms, Full Wall Sized Fireplace in Living Room, Full Bar, formal and informal dining areas, and relaxing nooks with AMAZING views of Mt. Diablo and the surrounding foothills from the nearly all glass west wall of the home. Access to Las Trampas from the flat landscaped back yard with grass, gazebo, garden area, and covered deck. This property is only a couple minutes from downtown Westside Danville, but you have privacy like being tucked away in the mountains. The home was originally built in 1968, but all remodeling and additions were finished in 2012, so this house is like new. European finishes, professional grade appliances, built in espresso station, Cementi Tile, polished concrete entry and stairs, etc. Too many bells and whistles to list here.IMG_9768

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For more pics or a private showing, visit http://nopressurerealty.com/listings/0,89638/Private_West_Side_Danville_Hills_Close_to_Downtown_Danville_CA_94526/

or contact Robin Watson-Bird directly at 925-577-8692