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Residential Mortgages – News, Tips, Advice

Unique Mortgage Programs

1.  Jumbo fixed rate mortgages & ARMs (adjustable rate mortgages):
         –$900,000 to 80% LTV – interest only 3 & 5 year ARMS available
         –$1.2M to 70% LTV
2.  No mortgage insurance (PMI)
3.  Refinances: 1 Loan up to 90% LTV – $800,000 maximum loan amount, no PMI
4.  No adjustment to rate up to $1M
5.  First position HELOCs (home equity lines) to $350,000
6.  Stand-alone 2nds: HELOCs and convertible to fixed 15 and 20 year term products
7.  Cash out – up to $200,000 cash-in-hand
8.  3-4 unit owner occupied program up to 80% LTV – $900,000 maximum loan amount, no adjustment to rate
9.   Automatic 45 day lock
10.  Gift funds are allowed for down payment

Unique mortgage programs for foreign nationals:

1.  For foreign national max Loan-to-Value is 50%.
2.  Require copy of passport with a valid visa to enter the USA. Visa can be any including tourist (B, F, J, H, L type)
3.  Loan can be closed under power of attorney. Power of attorney has to be notarized by the US embassy.
4.  No need for US credit. No social security number is OK. No income or assets verifications.
5.  Do not require the borrower to have a bank account here.

April 19, 2010 Posted by | Unique Mortgage Programs | , , , , , , , , , , , , , , , , | Leave a comment

Home Equity Line of Credit (HELOC)

A HELOC is a mortgage loan, which is usually in subordinate position (2nd position) that allows borrowers to draw multiple advances of the loan proceeds at their own discretion. It is also called an open end mortgage, which means you can take money then return it then take it again as many times as you wish during a draw period.

Before the financial crisis there was a technique to split a high LTV (Loan-to-Value) loan over 80% into two loans: the 1st mortgage up to 80% LTV; and the 2nd mortgage or HELOC which covers a loan amount over 80% LTV not to pay PMI. On today’s market the 2nd position HELOC is available up to 85% CLTV (Combined LTV which includes 1st and 2nd mortgages). For example: You purchase a house for $650K market price and you need a loan amount 520K (80% LTV) which is a jumbo (non conforming) loan. To get a better rate it is wise to split one mortgage into two mortgages: the 1st mortgage up to $417K (64% LTV) for single family residence which gives you a lower rate (so called conforming loan) and the 2nd position HELOC or 2nd fixed mortgage for $103K (16% LTV).  64% LTV + 16% LTV = 80% CLTV.  The best option in this situation is HELOC which offers you a lower rate than 2nd fixed mortgage.

You can even obtain HELOC as the 1st position mortgage up to 75% of the property value and up to $350K limit amount. Current HELOC rate is lower than the 1st fixed mortgage rates and it is based on the prime rate that is 3.25% (the lowest rate in 95-year history) plus adjustments. The Fed said it expected to keep its rate at “exceptionally low levels … for some time.” Using HELOC as a substitute for the first mortgage is risky because HELOC rate is always adjustable and some day it will go up. But with HELOC you can enjoy interest-only payments.

HELOC Par Rates = Prime Rate (3.25%) + Margin

HELOC has a draw period during which the borrower can use the line, and a repayment period during which it must be repaid. Draw periods are usually 10-15 years, during which the borrower is only required to pay interest. Repayment periods are usually 10-20 years, during which the borrower must make full payments (principal + interest) to pay off the loan.

July 17, 2009 Posted by | Home Equity Line (HELOC) | , , , , , , , , , , , , , | 1 Comment

Introducing Super Conforming and Changes to Standard Conforming Loans with an LTV > 80%

I. Introduction of Super (Jumbo) Conforming

Banks are pleased to announce Phase I of the Super Conforming loan program utilizing the new 2009 loan limits established in accordance with the Housing and Economic Recovery Act. 

The new Super Conforming loan limit for 1-Unit properties in most areas is $625,500.

The Super Conforming products that are initially available are 30 Year Fixed, 15 Year Fixed, and 5/1 LIBOR ARM (5/2/5). 
Please ask your broker the Program Guidelines for complete information.  A future release with expanded eligibility is anticipated as more complete production information becomes available. 

II. Changes to Standard Conforming Loans with an LTV > 80%

Effective for loans locked on or after Monday, November 17, 2008, some banks will release the following changes for loans with an LTV (Loan-to-Value) greater than 80%:

-Eliminated the additional reserve requirements when the LTV is greater than 80%. Reserves are still required per loan program and transaction type – usually, 2 months PITI (principal, interest, tax, insurance).
-Maximum DTI (Debt-to-Income ratio) can be increased up to 55% on Interest Only products.
-Minimum FICO Score of 680 is required. Additional FICO requirements apply in Declining Markets.
-Maximum 31%-41% DTI on 2-Unit Primary Residence Purchase and No Cash Out transactions.
-Cash-out is restricted to 1-Unit Primary Residence, no longer available on 2-Unit Primary Residences or Second Homes.
-Construction-to-Perm financing is permitted only on 1-Unit Primary Residence Purchase and No Cash Out transactions, no longer available on Cash Out transactions and Second Homes.
These changes apply to Standard Conforming loans with an LTV greater than 80%. Please review with your broker Maximum LTV’s / CLTV’s and Loan Limits of the Program Guidelines for complete information.

We still have banks that have: a Conforming Jumbo up to $750K with no bump to rate, no bump for cash-out, up to 90% LTV, no reserve requirements, 1 day off MLS, minimum FICO of 650; or Jumbo up to $900K with low adjustment.

Read High LTV Mortgages On Today’s Market

November 18, 2008 Posted by | New Rules and Guidelines | , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 1 Comment

Declining Real Estate Market – High/Low Risk States

Currently mortgage products and guidelines change almost daily with regards to the high risk Real Estate market. Guidelines became more strict and demanding. Due to declining property values or oversupply, some banks do not originate loans in the high risk States or Counties. Some banks might impose additional overlays or restrictions (such as, but not limited to: maximum Loan-to-Value ratio, maximum Debt-to-Income ratio, minimum Credit Score, loan amount limitations, documentation age, Home Equity loans and simultaneous transaction requirements) – especially for Cash-out refinance, Interest-only payment feature, 2-4 unit properties, Investment transactions. Lenders might provide different rates and adjustments for different States.

Market Classification Levels

 

 

Lower Risk

Moderate Risk

Higher Risk

Colorado

Arkansas

Arizona

Delaware

Connecticut

California

Idaho

Hawaii

District of Columbia

Kentucky

Indiana

Florida

Maryland*

Mississippi

Illinois

Massachusetts**

New Jersey

Michigan

Minnesota

Ohio

Nevada***

New Hampshire

Pennsylvania

New York

Oregon

South Carolina

Rhode Island

Utah

Tennessee

Virginia

Washington

West Virginia

 

Wisconsin

 

 

 

 

 

 

Exceptions:

*Maryland – High risk:  Calvert County, Charles County, Frederick County, Montgomery County, Prince George’s County

**Massachusetts – Moderate risk:  Barnstable County, Bristol County, Worcester County

***Nevada – Low risk:  Carson City

 

10 Best And 10 Worst U.S. Housing Markets

November 12, 2008 Posted by | High/Low Risk States | , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 4 Comments

High Loan-To-Value Mortgages On Today’s Market

Mortgages with Loan-To-Value (LTV) higher than 80% are considered high LTV mortgages. Most lenders generally require mortgage insurance when LTV is over 80% due to a higher risk. Private Mortgage Insurance (PMI) is provided by a private mortgage insurance companies which protect lenders against loss if a borrower defaults. Recently PMI became tax deductible.

There are few ways PMI is paid:
1)  Borrowers will pay mortgage insurance premium in addition to a regular payment (principal, interest, real estate tax, hazard and flood insurance if required).
2)  LPMI – lenders will pay borrower’s mortgage insurance for them.  With LPMI, the lender pays a borrower’s mortgage insurance by rolling the cost into the interest rate or by adjusting the fee. It means your rate on the mortgage will increase.
3)  Lenders do not require a mortgage insurance premium. From our knowledge and experience though the lender doesn’t require PMI, they will still increase your interest rate.
High LTV loans are still available up to 90-95% for full documentation loans.

Before the financial crisis there was a technique to cover LTV over 80% to obtain a second mortgage or a home equity line of credit (HELOC) that cost was less than PMI. These days 2nd mortgages or HELOC for high LTV loans are not longer available due to a high risk.

 

Read Changes to High LTV Conforming Loans

November 7, 2008 Posted by | High Loan-To-Value Mortgages | , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 8 Comments

   

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