Orange County FHA, VA & First Time Buyer Loan Information

In Orange County, CA Veterans have a few different options when it comes time to purchase a home. They can either go with a $0 down standard VA loan, or the CalVet program, which also has options for $0 down. But which is better? It can depend on several factors, including current interest rates and the purchase price of the home.

CalVet and the Contract of Sale

The CalVet loan program uses a Contract of Sale as the financing instrument, meaning CalVet purchases the property for the veteran at the close of escrow, and the sells the property to the veteran using a Contract of Sale. When the mortgage is paid off, ownership is transferred to the Veteran using a Grant Deed. By doing this, CalVet is able to offer group insurance rates, which for some properties can be beneficial. CalVet will lend on mobile homes in parks, which are typically difficult to get financing on. CalVet also requires that the Veteran remain in the home and not turn it into a rental. Although CalVet will issue a short term waiver on occupancy, this is an important factor to consider.

VA Loan Limits versus CalVet Loan Limits in Orange County, CA

The VA loan limit for 100% financing in Orange County for 2011 is $700,000. This means a Veteran can purchase a home in Irvine for $700,000 with Zero Down payment, and of course, no monthly Mortgage Insurance. It is also possible to purchase a home valued above the 100% financing limit. The Veteran would need a down payment equal to 25% of the difference between the purchase price and the 100% limit. For example, if a Veteran is purchasing a home in Irvine for $800,000, then a down payment of $25,000 would be required. (25% of $800,000 less $700,000 = $25,000).  That works out to a down payment of only 3.1%. CalVet will lend up to a limit of $521,250. In Orange County that will work for some properties, but not all. The $521,250 limit does allow for higher loan amounts in Riverside and San Bernardino counties, where the 100% financing limit is $417,000. So for some Veterans wishing to purchase a $500,000 home in the Inland Empire with $0 down payment, CalVet may be their best option. But in Orange County, at least in 2011 while the VA 100% financing limit is at $700,000, VA will offer the most flexibility.

CalVet Interest Rates vs VA Interest Rates

The CalVet loan program is funded through Bond Financing. Because of this, there are times when the CalVet program offers below market interest rates. But there are also times when CalVet offers above market interest rates. This is one of those times. Over the past three years VA mortgage rates have been very low, while CalVet rates have remained above market. Currently, as of September 28, 2011, CalVet interest rates range from 5.9% APR to 6.36% APR. The spread in interest rates between the CalVet and the standard VA loan program will be the primary reason why most Veterans in Orange County choose the VA program over the CalVet program.

Authored by Tim Storm, an Orange County, CA  VA Loan Loan Officer MLO 223456– Please contact my office atAlpine Mortgage Planning for more information about an Orange County, CA Jumbo Mortgage. 877-786-4243 x 7. www.OCHomeBuyerLoans.com

Contact us for your Orange County VA Loan: VA Loan PreApproval

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

The Department of Vertans Affairs announced on September 8, 2011, via VA Circular 26-11-12, that the Funding Fee will drop lower for VA loans closed on or after October 1, 2011. While we rarely get good news on the lending front these days, it is nice when something comes out that will actually save home buyers money.

New VA Funding Fee Chart

Below is a VA Funding Fee Chart comparing the old (higher) Funding Fee percentages to the new (loan closed on or after October 1, 2011).  

These changes will save thousands for most Veterans using VA financing to purchase homes in Orange County, where prices tend to be on the "high end" compared to most of the country. As an example, lets say Martha is purchasing a home in Irvine, CA for $600,000 using VA financing with zero down payment. If this is Martha's first time using her VA Eligibility, she would have 2.15% of the purchase price added to her loan. $600,000 * 2.15% is a $12,900 Funding Fee, resulting in a total VA loan of $612,900. But with the new lower percentages, Martha would only have 1.4%, or $8,400 added to her VA loan, a savings of $4,500. Considering that VA allows Zero Down financing in Orange County up to $700,000 and has no Monthly Mortgage Insurance like othwer types of "high loan to value" financing, it is somewhat surprising the Funding Fee was actually lowered. But we'll take it.  

Of course the first step with VA financing is always to get PreApproved!

Authored by Tim Storm, an Orange County, CA  VA Loan Loan Officer MLO 223456– Please contact my office atAlpine Mortgage Planning for more information about an Orange County, CA Jumbo Mortgage. 877-786-4243 x 7. www.OCHomeBuyerLoans.com

Contact us for your Orange County VA Loan:

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

The VA Loan Limit in Orange County will remain at $700,000 on Zero Down purchases until December 2011. This "high balance" 100% financing loan limit is good through December 31, 2011. While the FHA and Conventional (Conforming) loan limits are going lower at the end of September 2011, the VA limits will remain intact for three more months. But if the lower FHA and Conventional limits are any indication, Veterans considering taking advantage of the high limit should get serious about it now!

Maximum VA Loan Limit for Orange County

VA does not actually have a maximum loan limit. However, most lenders will not lend more than $1,500,000 on a VA loan. VA does guaranty 25% of the loan amount, up to a $700,000 purchase price in Orange County. If a buyer wants to purchase a property at a value greater than the 100% limit, then a down payment equal to 25% of the difference between the 100% limit and the purchase price is required. This would be considered a "Jumbo VA Loan".

Example of Jumbo VA Loan

As an example of a Jumbo VA loan, let say Chris Lynch, a Veteran of Desert Storm, wants to purchase a home in Irvine for $800,000. Since this is $100,000 greater than tha $700,000 100% financing limit, Chris would need a down payment of $25,000. The VA loan (not including the financed Funding Fee) would be $775,000. Where else can someone purchase a property for $800,000 with a little more than 3% down payment.

PreApproval is Important Prior to the Home Search

Before getting too deep into the home search, the Veteran should contact a VA Lender who can provide customized VA loan scenarios, which will provide information on the price the Veteran will qualify for, as well as detailed information on the payment and amount needed to close escrow. The VA loan officer can also retrieve the Certificate of Eligibility, as well as provide an underwritten VA Loan PreApproval. Most home sellers will not accept an offer without a PreApproval letter from a direct lender. The PreApproval process only takes a few days, depending on the complexity of the Veterans documentation. The last three months will go by quickly. There is no telling what will happen with the Orange County VA loan 100% financing limit in 2012, so now is the time act for those Veterans looking at high end properties.

Authored by Tim Storm, an Orange County, CA Jumbo Mortgage Loan Officer MLO 223456– Please contact my office atAlpine Mortgage Planning for more information about an Orange County, CA Jumbo Mortgage. 877-786-4243 x 7. www.OCHomeBuyerLoans.com

Contact us for your Orange County Jumbo Mortgage:

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

The Asset Depletion mortgage loan is a great program for helping wealthy Orange County, CA home buyers qualify for a loan despite not having "enough" verified income on their tax returns. Over the past few years homes in upper end communities of Orange County, like Newport Beach and Laguna Beach, have been effected negatively by a lack of financing options for Jumbo and "Super Jumbo" loans. There are now more "niche loan" programs being offered which are serving as a way for "makes sense" underwriting to prevail.

What! I Don't Qualify? I Have $5,000,000 in the Bank!

We've all heard of the wealthy borrower with $5,000,000 in their bank and investment accounts, but for one reason or another doesn't show enough income on their tax returns over the last two years to qualify for a $1,000,000 loan. Well, Asset Depletion qualifying to the rescue.

What is Asset Depletion Qualifying?

Asset Depletion qualifying is where is the niche portfolio lender will derive an income from the borrowers assets and add it to their verifiable income from their tax returns. For example, lets say John Smith, who is 45 years old, wants to purchase a home on Lido Island. He needs a $1,000,000 loan to complete the transaction, but only shows $100,000 a year income on his tax returns. But he has $2,000,000 in his investment accounts that for one reason or another he does not want to withdraw. He may be trying to avoid capital gains or some other penalty for early withdrawal, or expects his investments to appreciate significantly. The lender will amortize his $2,000,000 over 30 years assuming a 5% return. This results in "income" of $10,736, which is added to his verifiable income of $8,333 a month. He now qualifies!

What Assets are Acceptable for Asset Depletion?

• Cash or cash equivalent
• Money market accounts, savings accounts, checking accounts.
• Trust Funds
• Investment portfolio's -stocks, bonds, mutual funds, etc
• Retirement accounts - But only if the borrower is of retirement age (62).
• Also, this can be used with a Pledged Asset Loan

Benefit of an Asset Depletion Mortgage for Seniors

For Orange County seniors this can offer an alternative to a Reverse Mortgage. Once the borrower is 62, retirement accounts such as 401k's and IRA's are counted towards the borrowers "liquidable" assets. Also, the amortization period used by the lender in determining the derived income is shorter. The lender will subtract the borrowers age from 85 to determine the amortization period. For example, a 75 year old with $2,000,000 in "liquidable" assets would use an amortization period of 15 years and 5% to determine additional income. That comes to $21,213 in monthly income. A 65 year old would have an additional $13,199 added to their income for qualifying. (20 years, 5%) The lender will never amortize for greater that 30 years or less than 10 years.

Other Niche Loan Programs for Orange County Home Buyers

The Asset Depletion loan can be used in conjunction with other niche loan programs, like the Pledged Asset loan or loans for Foreign Nationals. The first step is to consult with a Orange County Jumbo Loan Expert who can discuss qualifications and prepare custom loan scenarios. As more niche loan program's are introduced, expect to see high end property values recover some of their losses from the past few years.

Authored by Tim Storm, an Orange County, CA Jumbo Mortgage Loan Officer MLO 223456– Please contact my office atAlpine Mortgage Planning for more information about an Orange County, CA Jumbo Mortgage. 877-786-4243 x 7. www.OCHomeBuyerLoans.com

Contact us for your Orange County Jumbo Mortgage:

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

Jumbo Loan financing in Orange County is making a comeback, as can be seen by the usage of the Pledged Asset Loan program. The Pledged Asset loan program allows a home buyer to buy a luxury home without continuing to control assets that would otherwise have been used on the down payment.

Example of a $4,000,000 Home Purchase in Newport Beach Using Pledged Assets

While most Orange County Jumbo Lenders require 25% or more down payment on a $4,000,000 home price, it is possible to only come up with a 10% down payment. Using Pledged Assets, the buyer would only need $400,000 for the down payment. The buyer would need to "pledge" assets towards what would have been the remainder of the down payment. In this example, this Portfolio Lender requires a 40% down payment. Since 10% will be the out of pocket down payment, the buyer would need to pledge 30%, or $1,200,000, towards the remaining down payment requirement.

Advantages of the Pledged Asset Loan Program for Orange County Home Buyers

• This program allows the borrower to maintain liquidity.
• The borrower is allowed to avoid capital gains taxes associated with the liquidation of assets.
• Eliminates the need to liquidate in order to obtain the cash needed for the down payment.
• The borrower continues to benefit from future interest, dividends, and/or the appreciation of their assets.

What Assets can be Pledged?

First, its important to note that the assets do not even need to be owned by the borrower. Another person, Trust, or entity can own the assets. Also, the property being purchased can be a Primary home, Second home, or Investment property. While some banks offering a Pledged Asset program require the pledged assets to be transferred to the lending bank, there are new programs offered that now allow for the assets to remain in their current accounts, provided the account is managed by an Investment Broker/Dealer in the United States. The owner of the assets, in this case the "Obligor" continues to control, invest, and trade in their investment account. Eligible assets can include Certificates of Deposit, stock, mutual funds, cash. Eligible assets do not inlude IRA's 401k's, options, annuities, or insurance benefits.

The Pledged Asset mortgage program is the perfect solution for high net worth individuals or company owners who "have the cash" but prefer to invest it rather than put it into the equity of their home. The Pledged Asset program goes hand in hand with a few other Orange County Portfolio Lender programs, such as the Asset Depletion loan program and the Foreign National loan program. These programs are flexible in many ways, but also do have guidelines that need to be met. The first step is to talk with a Jumbo Loan Expert who can help determine eligibility and also provide customized loan scenarios.

Authored by Tim Storm, an Orange County, CA  Loan Officer MLO#223456 with 22 year experience closing  loans- Please contact my office at Alpine Mortgage Planning for more information about an Orange County, CA home loan. 877-786-4243 x 7.

 Call our office today and see how we can help you and your family. 

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

* Alpine Mortgage Planning is licensed and supervised by the Department of Corporations under the California Residential Mortgage Lending Act. NMLS 81395.

Foreign Nationals have had a difficult time finding financing to purchase homes in California. But over the past few months some Portfolio lenders have begun to offer home loans for this "niche". While this is truly a "niche" and does require a large down payment, the Jumbo underwriting guidelines in California are very flexible.

Great Program for Coastal Areas like Newport Beach & Laguna Beach

A Foreign National is considered to be someone who visits the United States for short periods of time but is a legal resident of another country. Citizens of Canada, along with European and Asian countries are quickly figuring out that there are great deals on luxury properties in coastal town and cities of Orange and Los Angeles Counties. The cities of Newport Beach and Laguna Beach are seeing increased interest in real estate by Foreign Nationals.

Foreign National Loan Program Guidelines

Below are a few of the pertinent things to know about the financing options available for Foreign Nationals.

• Typically 50% is the max loan to value, although exceptions are possible on a case by case basis.
• No FICO score is required.
• Foreign income and assets can be used in qualifying.
• Second Home are allowed.
• Vesting is allowed in Trusts, Corporations, LLC's, and Partnerships.
• Non-Permanent Residents Aliens are allowed.
• Flexible underwriting. For example, the lender will use "Asset Depletion", which helps to boost the borrowers income used for qualifying. The lender will amortize the borrowers liquid assets over 30 years (this can be less depending on age of borrower) using a 5% return.
• Pledged Assets are allowed to help lower the amount of the down payment. This helps keep the 50% down payment guidelines from hurting too much. The borrower can keep their Assets with their current accounts. Transferring assets is not required.

Loan Parameters for Foreign National Home Buyers

The loan amount can be between $300,000 and $5,000,000, but on a case by case basis it's possible to go as high as $10,000,000. The loan programs offered tend to be 3, 5, and 7 year Adjustable Rate Mortgages. With these types of programs the interest rate is fixed for the first 3, 5, or 7 years before adjusting semi-annually based on a fixed margin over an adjusting index. ARM mortgage rates in California have remained low through the first quarter of 2011.

Authored by Tim Storm, an Orange County, CA  Loan Officer with 22 year experience closing  loans- Please contact my office at Alpine Mortgage Planning for more information about an Orange County, CA home loan. 877-786-4243 x 7. MLO#223456

 Call our office today and see how we can help you and your family. 

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Alpine Mortgage Planning is licensed and supervised by the Department of Corporations under the California Residential Mortgage Lending Act. NMLS 81395

Yes, it is possible to purchase a $700,000 home in Orange County, CA with NO Down Payment, ZERO DOWN, using a VA loan. While there are some lenders who may not allow it, according to VA loan guidelines, Orange County VA lenders can fund 100% financed properties up to a $700,000 price. (This also work on Los Angeles. The limit is only slightly lower in San Diego.) Surprisingly, many Veterans and their real estate agents are not aware of how flexible VA financing can be.

VA Financing Makes a Comeback in Orange County

A few years ago, prior to 2008, the VA loan limit was only $417,000. At the time there were all types of alternative loan programs that allowed home buyers to purchase a property with $0 down and to much higher prices than $417,000. In Orange County it was difficult to find a property for less than $500,000, so programs like FHA and VA were seldom utilized. Fast forward to 2011, and VA and FHA financing create buying opportunities that have helped the Orange County real estate market tremendously. But while the FHA program is widely used, the VA program is only available to eligible veterans or active duty military. There are not many active duty military living in Orange County, unless a Camp Pendleton Marine wants to buy a property in south Orange County. But there are plenty of Veterans living in Orange County who are now working as attorneys, accountants, computer specialists, etc and have the ability to purchase a luxury Orange County home.

Typical Orange County Veteran Home Purchase

Many of these Veterans even have enough cash for a 20% down payment. But upon learning how high the Orange County VA loan limit is, would rather put 5% down or less and keep money in the bank for a rainy day.

Advantages of a VA Loan for Orange County Veterans

• Low 30 year fixed rates. As a matter of fact, the "VA Jumbo Loan" 30 year fixed rate is typically lower than the "high balance" Conforming 30 year fixed rate. The spread is even more when compared to a true Portolio Jumbo Loan.
• VA has no Monthly Mortgage Insurance, even at 100% loan to value. While VA does have a one time Funding Fee, which is financed into the loan, there is no monthly MI, like FHA has and Conventional financing has when the down payment is less than 20%.
• Debt to Income ratios can be higher than those allowed by Fannie Mae/Freddie Mac. VA does look at "residual income" very closely, but this is rarely an issue in Orange County.
• FICO scores can be lower on a VA loan than on Conventional financing. Most VA lenders will allow FICO scores as low as 640
• VA allows refinance from Conventional loan to VA up to 100% loan to value. So yes, for those Veterans who have a Conventional loan and have seen their property value erode to the point that they have no equity, a VA loan may be the answer. Refinance a $700,000 loan at 100% loan to value.

The first step an Veteran should take is to  talk to a local Orange County, CA VA Loan officer who has experience with VA financing and can quickly answer questions and provide customized loan scenarios.  With the Orange County VA loan limits for 100% financing at $700,000, this program can't be beat. The actual VA loan limit is $1,000,000, but in Orange County the Veteran would need a little bit of a down payment. For example, it is possible for an to purchase a home for $1,100,000 with a $1,000,000 VA loan. This type of program is known as a VA Jumbo Loan. We'll discuss that more in another post.

Authored by Tim Storm, an Orange County, CA VA Loan Officer with 22 year experience closing FHA and VA loans– Please contact my office at Alpine Mortgage Planning for more information about an Orange County, CA home loan. 877-786-4243 x 7. MLO # 223456

www.OrangeCountyVALoans.com

Call our office today and see how we can help you and your family. 

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Alpine Mortgage Planning is licensed and supervised by the Department of Corporations under the California Residential Mortgage Lending Act. NMLS 81395

The 2011 FHA loan limits in Orange County will remain at the high levels seen in 2010. Los Angeles and Orange Counties will continue to have a maximum loan amount of $729,750 for a One unit property. The amazing thing about FHA continuing to allow loan amounts at this level, is that FHA also only requires a 3.5% own payment at these high levels.  This makes it possible to purchase an Orange County home for a little over $750,000 with only 3.5% down. A First Time home buyer purchasing a property for $755,000 would only need $26,425 down payment.

The FHA Loan Program Continues to be Very Popular in Orange County

The FHA loan program began it's comeback at the end of 2007, just as many other "new fangled" loan programs were making a quick exit as a result of overly flexible underwriting guidelines. The help keep the real estate market from collapsing, FHA increased the loan limits to levels never previously seen, at least for the FHA program. For example, the FHA loan limit in Orange County in 2006 was $362,790. At the time, a $362,790 loan would not have purchase 95% of the homes in Orange County. But with "Jumbo" financing nearly non-existent, FHA, along with Fannie Mae and Freddie Mac, stepped in to increase the loan limits for Conventional and Government loans.

FHA Has Many Advantages for Orange County Home Buyers

FHA financing only requires 3.5% down payment, but that is not the only reason such a large percentage of Orange County home buyers choose FHA financing over other available options. FHA is also more flexible when it comes to credit. Most lenders will allow FICO scores as low as 640 on an FHA loan, even with the minimum down payment. Plus the "debt to income" ratios can easily be pushed to 50%, while Conventional financing cap's out at 45% in most cases.  While definitely not a "subprime" program, the underwriting guidelines do tend to be more flexible and "makes sense" than Conventional financing. The only type of financing that can be considered better than an FHA loan would be a VA loan. VA loan eligible home buyers in Orange County can purchase a home for $593,750 with $0 down, which is hard to beat. (But to be eligible you must have been in the military.)

Orange County FHA Loan Limits

One Unit       $729,750

Two Units     $934,200

Three Units   $1,129,250

Four Units     $1,403,400

The first step in determining your options for financing a home is to talk with an experienced Orange County FHA loan expert. The loan officer should be able to prepare customized loan scenarios which will show you a complete breakdown, including purchase price, loan amount, payment, closing costs, and the amount needed to close. He should also be able to help you determine whether you will need the seller to pay your closing costs, and if so, how much of a credit will be needed. By knowing these things before making an offer on a home, the chances for a "smooth closing' are high.

Contact us for your Orange County VA Loan:

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Alpine Mortgage Planning is licensed and supervised by the Department of Corporations under the California Residential Mortgage Lending Act. NMLS 81395

Jumbo loans are making a comeback in Orange County. A mortgage is considered "Jumbo" in Orange County when the balance is greater than $729,750. The $729,750 limit is the max amount for a Conforming Fannie Mae/Freddie Mac loan. It is also the max limit for a FHA loan, which only requires a 3.5% down payment. While the $729,750 limit covers most properties in Orange County, the higher priced areas have had limited financing options since the mortgage meltdown began in late 2007.

More Jumbo Programs Available

Lenders are more willing to fund Jumbo programs in 2010 than over the past few years, as can be seen by the competitive interest rates offered on thee programs. Depending on the loan amount and loan to value, interest rates on 3 and 5 year hybrid adjustable rate mortgages have been in the mid 3%  to high 4% range, while even the 30 year fixed programs are experiencing low rates. But it the actual underwriting guidelines that are loosening. There are even Jumbo loan programs for investors, up to $3,000,000 at 65% loan to value.

Loan to Value for Orange County Jumbo Loans

We probably won't see 100% financing on $1,000,000 properties any time soon, but it's good to see 80% financing again. The "piggy back" loan is back. For example, one lender offers the following scenario. On a $1,230,000 purchase price, the first mortgage will be $729,750, along with a Home Equity Line of Credit of $250,000, resulting in only 20% down on a $1,230,000 home. An even more aggressive scenario would be for a $4,000,000 purchase price. The first mortgage can be $3,000,000 (75% loan to value) along with a 2nd of $200,000, resulting in only a 20% down payment on a $4,000,000 purchase price.

It does take perfect credit, plenty of verifiable income, and reserves in the bank after the closing. For those Orange County home buyers wanting to keep the down payment to a minimum on a $1,000,000 plus home, they should have a FICO score in the 740 and up range and plan on having between 12 and 24 months of mortgage payment in reserves after closing.

Who is Offering These Programs?

The secondary market for Jumbo loans has not made a comeback yet, so who is funding these loans? A combination of "big" banks, Portfolio Lenders, Credit Unions, and mortgage banks. To find out about the programs available, Orange County home buyers and owners need to contact an experienced Orange County lender who has knowledge about and access to the wide variety loan options.

Authored by Tim Storm, an Orange County, CA Loan Officer with 20 year experience– Please contact my office at Trust One Mortgage Corporation for more information about an Orange County, CA home loan. 877-786-4243 x 7.

www.OCFHALoans.com

Call our office today and see how we can help you and your family. 

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Trust One Mortgage Corporation is licensed and supervised by the California Department of Real Estate (“DRE”), License # 01087829