Michael Regan (NMLS #275695) specializes in Marin, Sonoma, and Napa counties. You can reach him at 415-672-2499 or online at www.TheReganTeam.com
Follow me on twitter and become a fan on facebook.
Copyright © 2012 The Regan Team Home Loan Group. All Rights Reserved.
1 comment • Michael Regan- Petaluma Home Loans- Specializing in Sonoma & Marin Counties • June 22 2010 05:07PM
0 comments • Michael Regan- Petaluma Home Loans- Specializing in Sonoma & Marin Counties • June 22 2010 05:07PM
Michael Regan (NMLS #275695) specializes in Marin, Sonoma, and Napa counties. You can reach him at 415-672-2499 or online at www.TheReganTeam.com
Follow me on twitter and become a fan on facebook.
Copyright © 2012 The Regan Team Home Loan Group. All Rights Reserved.
0 comments • Michael Regan- Petaluma Home Loans- Specializing in Sonoma & Marin Counties • June 22 2010 05:06PMThe current lending environment is very temperamental; if you don’t follow the rules don’t expect a positive result. Go into the process knowing that we’re going to ask for a lot of documentation, some that doesn’t make sense, but know that if you follow these basic rules, have a great lender, you’ll get through it.
Don’t switch jobs – This one should be obvious. Don’t make any moves, not even if the new job is in the same line of work. Realize that if you change your employment status in anyway you could jeopardize everything.
Don’t add a 2nd job to qualify – We can’t use the income without seasoning, so it’s not going to help unless you’re willing to wait.
Don’t mix business and personal accounts – This is another HUGE problem that I see today. If you’ve got a business account DO NOT mix funds with your personal account, not even for a day. I know it can be tempting to give your business a quick infusion of cash and pay it right back but for the loan process it’s as though the money disappeared. So if you need $10k to close and you transferred $2k into your business account and then sent it back a week later, we can only use $8k and you’ll be short to close. Just don’t do it!
If you didn’t pay taxes on it, it doesn’t exist – I know one of the perks of being self employed is all the write offs but it also can hurt your chances of getting a loan. You may make $300k a year but after all the write offs your AGI shows $20k, you won’t qualify for that $400k home loan.
Don’t open up any new credit or use your existing credit more than usual – This is a big change. On the day of funding your credit report is pulled before the money is wired to the title company. If you apply for any new credit, forgot to pay a bill and the late shows up, or spent $15k on your child’s summer camp that you paid using your Discover card, you can jeopardize everything. In cases where new credit inquires show up you’ll have to explain why they’re there and the lender will have to check with the creditor to make sure no new credit has been issued. If you spent that $15k the file might have to go back to be re-underwritten to make sure you still qualify which will delay the closing. If a late shows up then your loan might be dead. From application to closing, don’t do anything with credit, leave it alone!
Don’t shop for a loan after you’re in contract – If you’re going to shop for a loan do it before you submit an offer. This is one of the biggest reasons deals fall through. It puts everyone involved in the process in an awkward situation and in this tight lending environment it’s just plain asking for trouble. Getting a mortgage is not like buying a pack of gum, there is a huge difference in skill and competence level from lender to lender. Just because you can save an eighth by switching, ask yourself if it’s worth losing this house? In this business, rates are all close enough, what’s important is getting the job done. Don’t find yourself being penny wise and pound foolish.
If you’re upside down don’t assume even if you qualify it can get done – This is a new one to watch out for. Because so many people are underwater in their current residence, those who can qualify paying both their current mortgage and the mortgage on the new owner occupied home aren’t guaranteed loan approval. Because of a trend where underwater homeowners buy a new home and then let their old home go into foreclosure, investors are tightening up and taking a fine tooth comb to every deal where it looks as though a buy and bail could happen. So even if you meet the guidelines, it doesn’t mean it’ll happen.
Don’t try to negotiate the deal yourself – I thought this was an obvious rule but when using a Real Estate Agent don’t call the listing agent and try to negotiate the deal yourself. I’ve seen this happen recently due to the high number of multiple offers. Realize that you’re working with a professional for their experience; it makes a difference.
Don’t offer more than you’re approved for without talking to your lender – This is critical; if your lender approved you for $460k, don’t bid $520k even if it’s your dream home. The pre-approval letter isn’t a suggestion…
Be wary about over bidding on home and hoping if the appraisal comes in low you can renegotiate – I’ve seen this happen a lot and it usually doesn’t end pretty. Many banks are catching on and countering with a no appraisal contingency. By the way if you do sign that counter be prepared to stand by it.
If you rent a home that is being foreclosed on and you’re trying to purchase a new home be prepared to show proof of rent payments - Most investors are pulling property profiles on your current residence before loan approval. If they see the home is going into foreclosure they want proof that you’ve been paying your rent with 12 months cancelled checks. If you can’t provide proof, they can’t provide a loan. The reason for this is a situation like this: mom and dad let their home go into foreclosure and have one of the kid’s buy a new home at today’s low prices, many investors look at this like a buy and bail. They see that you’ve been living rent free knowing that the home is going into foreclosure so they deem you a high risk and are unwilling to provide financing.
Find out if it’s a flip – This is another big issue. If the home you want is a flip call your lender and let them know. Flip rules are very strict and there are a lot of conditions that need to be met. For instance if a seller is unwilling to provide receipts explaining why there is so much immediate appreciation in the home price you may not have a deal. Realize flip properties are on the fringe so offer on them cautiously and with your eyes wide open.
These are just a few things to think about when you’re ready to purchase a new home. This should also give you a glance at why it’s so important to work with a skilled and knowledgeable lender to lead you through the process.
Michael Regan (NMLS #275695) specializes in Marin, Sonoma, and Napa counties. You can reach him at 415-672-2499 or online at www.TheReganTeam.com
Follow me on twitter and become a fan on facebook.
Copyright © 2012 The Regan Team Home Loan Group. All Rights Reserved.
0 comments • Michael Regan- Petaluma Home Loans- Specializing in Sonoma & Marin Counties • June 20 2010 11:14PMFour years ago a borrower could own several homes, all with loans, and all would be classified as owner occupied. Of course the reality is that no one checked as long as the loan payment was made. In truth most were investment properties but the borrower didn’t want to pay the higher rate and come up with the increased down payment. Those times have been over for a while but now Fannie Mae is really cracking down.
This except is from the new Fannie Mae selling guide:
“Lenders are responsible for implementing practices to identify potential misrepresentation, investigate potential red flags, and take appropriate steps to verify occupancy.
Some examples include: In a refinance transaction of a primary residence, if the borrower indicates a current address that is different from the property address, the lender should investigate and obtain additional documentation as appropriate.
If the borrower purchased a primary residence and soon thereafter purchased another primary residence, the lender should obtain documentation that confirms that the home most recently purchased will be the borrower’s primary residence. Appropriate documentation will depend on the circumstances, but possibilities include a contract with a moving company and utility records.
Steps that lenders might take to confirm occupancy include:
-Review the hazard insurance policy or utility bills to confirm occupancy of the property.
-Employ third-party services that specialize in investigating occupancy information.”
So what does this mean? If there is any question of occupancy on the new primary residence be prepared to provide proof. The new trend is to use a 3rd party provider to go out to the property after escrow closes to verify the new owners do in fact live there. In some cases certain investors are requiring this inspection be done prior to the loan being bought from the originating lender. Borrowers in question should also expect to see an additional inspection fee disclosed on their GFE in case one is needed.
Banks are taking this very seriously because if they fund a loan and find out the borrower does not intend to occupy the home in a post close inspection they could be stuck with the loan. Banks are generally not in the business to keep a loan on their books, they want it sold off to an investor so they can re-lend the money.
The other consequence that we may see more often is the due in full clause. Almost every note I’ve come across contains a due in full clause that states if a borrower committed any type of misrepresentation or fraud to obtain the mortgage, the lender can call it due in full immediately.
The moral of this story is if you’re thinking about omitting the fact the new home you’re buying is not going to be your primary residence and you’re saying it is to get the better pricing/terms, don’t. Realize there’s a good chance someone will come out to verify and unless you have the cash to pay the loan off, it would be wise to error on the side of caution and be truthful.
Michael Regan (NMLS #275695) specializes in Marin, Sonoma, and Napa counties. You can reach him at 415-672-2499 or online at www.TheReganTeam.com
Follow me on twitter and become a fan on facebook.
Copyright © 2012 The Regan Team Home Loan Group. All Rights Reserved.
1 comment • Michael Regan- Petaluma Home Loans- Specializing in Sonoma & Marin Counties • June 13 2010 09:13PM*I am not a lawyer; this post is purely for informational use only. Please contact a legal professional for advice.*
On May 27th Fannie Mae implemented a new rule concerning foreclosures. Some states have a redemption period following a foreclosure, during which time the foreclosed upon homeowner can reclaim their property.
The new rule states that in these cases where the foreclosed upon homeowner has the ability to reclaim their home, Fannie deems the property to have an unacceptable title defect, and will not purchase said loan until the redemption period has ended.
In California for instance, the redemption period is 365 days, but only applies to judicial foreclosures. As an agent, if you’ve got a conventional loan client bidding on a REO, do your homework and find out how the home was taken back by the bank. This will help to eliminate this new issue.
For more information on Fannie Mae’s new rule click HERE
For information about state specific redemption periods click HERE
Michael Regan (NMLS #275695) specializes in Marin, Sonoma, and Napa counties. You can reach him at 415-672-2499 or online at www.TheReganTeam.com
Follow me on twitter and become a fan on facebook.
Copyright © 2012 The Regan Team Home Loan Group. All Rights Reserved.
0 comments • Michael Regan- Petaluma Home Loans- Specializing in Sonoma & Marin Counties • June 07 2010 11:17AMMany home owners today have little to no equity in their current residences but that doesn’t mean they can’t purchase a new home. In these situations it’s imperative that these clients are pre-approved because the guidelines are getting stricter.
The existing buy and bail policy is if the borrowers don’t have 30% equity in their current residence, a lender will not use any rental income to offset the payment. The borrowers must qualify with both home payments. This has definitely put a dent in the move up market but there’s a new speed bump to pay attention to.
The issue I’m seeing come up more often is because of the negative equity position in their current home; many banks are declining to approve a new purchase loan out of fear of a buy and bail. In cases like this I have an underwriter look at the complete file before even issuing a pre-approval. Even though the borrowers may qualify many investors are becoming leery unless there is a very good reason.
So for any one looking to move up without equity in their current residence, be aware that these issues could arise and realize you’re on the bubble.
Michael Regan (NMLS #275695) specializes in Marin, Sonoma, and Napa counties. You can reach him at 415-672-2499 or online at www.TheReganTeam.com
Follow me on twitter and become a fan on facebook.
Copyright © 2012 The Regan Team Home Loan Group. All Rights Reserved.
1 comment • Michael Regan- Petaluma Home Loans- Specializing in Sonoma & Marin Counties • June 01 2010 03:24PMContent © 2009 'Frequent Contributors'. Design © 2009 ActiveRain Corp.
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