State of Lending 2012
The Lending/Borrowing Equation for 2012
When financial experts speak: it is time to listen. We’re listening, and what we’re hearing is that although the state of lending has undergone a major transition, the savvy borrower tunes the media out. Instead, listen to a financial expert. By collecting advice specific to your situation and to the deal at hand, you will save money, save time, and be ready to jump into the market at the most opportune moment. We would love to connect you with the right advisor for you. For one expert’s voice, we are excerpting a financial advisor’s comments right here:
Conventional –Of course we still do the standard 80% conventional loans, but we also have low down programs – Fannie Homepath and Freddie Home Possible – up to 97% loan with MI down to 640 score – We also have up to 95% Lender Paid MI – slightly higher rate, but no MI – better payment – qualify for more house - many people are not aware that we can get to higher LTV’s again with conventional lending that will yield better payments for those who can meet more stringent Debt to Income ratios than FHA – We are allowed 45% with Fannie Mae and 50% on Freddie Mac.
Jumbos- Up to 5 Million at 70% with no origination fee – We will beat any terms.
FHA 203B Standard – If Debt ratio exceeds 50% and we cannot use a conventional loan, FHA 203B will allow us to go to 60% with compensating factors. Lower credit scores are allowed at some lenders – credit scores from 500-580 can borrow 90% and 580 + can borrow the full 96.5% – Rates tend to be lower than conventional but the MI is more – The down payment is still only 3.5%. Sellers can contribute up to 6% toward closing costs. Manufactured Home and New Land/Manufactured Home put- together’s still allowed.
FHA 203K Rehab- The 203K allows one to purchase and up to $100,000 to rehabilitate property all in one loan with just 3.5% down and a 620 score and up to 55% DTI. Rehab money can be used for energy efficiency upgrades, additional Square footage – basically allows you to rebuild a home from the ground up – Why build when there are so many existing homes on the market and you can build from the foundation and walls that exist
VA – Serving those who served is more satisfying than ever before and more vets are in the market now that Iraq has ended and Afghanistan is winding down. 100% financing with 580 score and 90% with 500 to 620 – No credit score requirements and up to 45% DTI requirement.
USDA Guaranteed Rural Housing – USDA GRH has the attractive features of being: A Conventional loan with NO down payment, NO monthly Private Mortgage Insurance, Up to 6% seller closing costs contribution allowed for all reasonable closing cost and pre-paid items, ( my costs rarely exceed 3-and never exceed 4% max ), NO hit to the rate for the zero down high LTV product – Comparable rates to conventional – exact rates and prices change daily, NOT a first time home buyer program- unrestricted, Gift funds from anyone to close – (Fha requires family member no further than 1st cousin), No post-closing reserves needed, No seasoning requirement to sell- No 90 day hold rule. However – Geographic and income restrictions do apply – basically everywhere outside of the Santa Fe City limits is qualified – even LOS ALAMOS - the USDA link to see the maps and geographical qualifications is http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do You can zoom in to actual street names in some area – if you are in doubt you can enter the actual address- Let me know if you need any help with that – once we verify geographic we than have to look at income – it caps at 115% of median – Santa Fe County levels are Family of 1-4 78000 and Family of 4+ 102950 – other county limits are available – call me – most people are under that – no problem – they do allow an allowance for dependent care so young families and those with dependent elders have an easier time qualifying for this product The next hurdle will be the prequalification of the debt to Income ratio – The DTI requirement for USDA GRH is lower at 41% than even Fannie Mae conventional – So even though they have no down payment they have to live well within their means If the debt ratio is too high for USDA GRH but they have 3.5% down payment, we can switch to FHA in most cases New Manufactured homes out of a dealership are allowed but not existing Man Homes on this program.
Reverse Purchase- This is my favorite program and it is drastically under used and under promoted. This program is really designed for Seniors over 62 who have sold their large family home or intend to or for any other reason have a larger than normal – 30-40% -down payment, but maybe do not have the credit or income they once did - and are relocating or just doing a down grade to smaller and more manageable property. The buyer does not have to have any certain credit score nor are they required to document income. So it is perfect for someone who has retired or semi-retired and is accustom to a certain lifestyle and home quality that they might not have the income to meet debt ratio requirements for. The Reverse Purchase has one other nice feature – It has no payment required for the rest of your life.
A client said it best, “Right as we were ready to retire- the market crashed – although we had plenty of adequate savings for down payment, we found that we did not qualify for a mortgage as we could no longer prove we had enough verifiable income for a home we were willing to live in. With Drew’s help and a Reverse Mortgage we are in our home and saved our retirement. We now live in a beautiful new home in a warm climate with no payment ever and no worries about losing our home ever – saved our retirement.”
I got paid, but even better- I saved someone’s retirement – Do you think that makes me happy? It does and it will make you happy too.
Portfolio- LOW and NO Credit Scores and High Debt Ratios - We recently licensed with a new portfolio lender –they make and keep every loan they make. The underwriting is not as loose as the old sub-prime, but not as tight as Conventional/FHA/VA/USDA. It is based on Fannie Freddie guidelines, but since they keep the files and do not sell them, the interpretation of those guidelines is flexible, and closer to what HUD allows without the stringent overlays of Fannie Freddie resellers. Rates and terms are higher but the guidelines are more relaxed. If people have been declined we can try to save the deal – For example, they allow 58% Debt to Income ratios and investor’s can do 85% loans with no MI – Credit down to 530 with VA/FHA
Ranches and Hobby Farms – This is a great market for new Mexico and have been difficult to get done up until recently – When a property that has an income producing element to it may still be considered a residential property. So, even though there is income from the property on the tax returns, we will still underwrite it as a residential loan as long as the income produced by the property is reasonable and not the primary source of income for the borrower. The guidelines state the income being produced by the property must be 10% or less of the borrower’s total income, however, for the right scenarios we can make exceptions to this rule. We’ll also allow the borrower to use the income from the property to qualify for the loan. Examples include properties with vineyards, orchards, horses, etc.
In Closing
Remember the 1988 Democratic convention when Bill Clinton got cheers for finally uttering those two words- In closing !
Of course I would like to talk to you about our Service Difference for the City Different. We provide concierge –level service with all calls returned promptly, after hour’s appointments and document pick services when needed. We also offer totally transparent pricing and I will beat any written estimate anyone will submit to me. Banks are flooded and let’s face it – they get paid the same whether they put effort into your loan, or if they decline the loan- I only get paid like you – to succeed. We do not take no for an answer without a fight. We all go to the same lenders and dip into the same rate pools for rates and fees – Service and response times are what matter and mine are stellar! Did I mention I return calls promptly ?
Please feel free to let me know if you have questions, need clarification or just do not want to receive these quarterly educational pieces. If so and it is just about the email flow, please let me know how else I might communicate with you – a brief explanation would help us understand whether it is us or the email that is generating the unsubscribe request- if you prefer a call – let me know that as well, please. We strive to maintain the list and remove those who request removal – If we missed you please just nicely ask again and we will make sure to get you off the list this time for sure.
Drew Richman, ACCEPTANCE CAPITAL MORTGAGE CORPORATION, Branch Manager –
Mortgage Broker/Banker NMLS #289152, Never a complaint !
Please look it up. www.nmlsconsumeraccess.com
drichman@acceptancecapital.com
www.myacmc.com/new-mexico.html(505) 216-9807
I hope that you have enjoyed these words of wisdom from an expert. I strive to help you find the perfect advice to make your real estate transaction as rewarding as possible.
