Orange County FHA, VA & First Time Buyer Loan Information

How Do I Cancel the Mortgage Insurance on my Orange County FHA Loan?

Tim Storm, Orange County FHA and VA Expert (Alpine Mortgage Planning) — Thu, 29 Dec 2011 02:26:34 -0500

A common question among Orange County FHA borrowers is "when will the monthly mortgage insurance drop from my loan?" Many think that when their loan reaches 80% of the properties appraised value the mortgage insurance will drop off. That is not necessarily the case. For one, the target loan to value is 78%, not 80%. Also, there are other requirements which need to be met before the mortgage insurance drops off. The 78% rule is based on the initial purchase price/appraised value at the loans inception. It is not based on the future appraised value. For example, if John Smith buys a beautiful Irvine home for $500,000 and only puts 3.5% down, his initial FHA loan, including the Up Front Mortgage Insurance Premium, would be $487,325. The monthly Mortgage Insurance, currently equal to 1.15%, would be $467. Assuming John does not make extra principal payments, it would take approximately 10 years to reach reach 78% of the $500,000 purchase price, or $390,000.

FHA Mortgage Insurance Remains for Minimum of 5 Years

Now let's assume John does make extra principal payments of $800 per month. By doing this, the loan balance would be paid down to less than 78% loan to value in a little over 5 years. However, this is where the 5 year rule comes into play. FHA requires the mortgage insurance to remain on loans with terms greater than 15 years for a minimum of 5 years. So even though John paid his loan down to 78% loan to value, he would still need to wait until a full 60 months had gone by before his mortgage insurance would drop off. In this example, if he had paid approximately $800 per month extra, his loan balance would be at 78% after 60 months.

Advantage of FHA 15 Year Fixed Program

Of course, if John could easily afford an extra $800 per month, he may want to seriously consider the FHA 15 year fixed program. Interest rates on the FHA 15 year fixed program tend to be .25 to .5% less. Plus, the monthy Mortgage Insurance factor (when putting 3.5% down) is only .5%, or less than half versus the 30 year fixed program. And best of all, FHA does not require a 60 month wait period to cancel MI on the 15 year fixed program. As soon as the loan hits 78% loan to value, the mortgage insurance can drop off. It is important to note that it is the Mortgage Insurance that allows FHA to function. FHA has the most flexible loan guidelines for home buyers putting less than 20% down payment on a home. Not only when it comes to down payment, but also credit and FICO scores, and debt to income ratios. Home buyers who are fortunate enough to have saved (or inherited?) a 20% down payment will not need mortgage insurance. For for those who can afford the mortgage payment but don't want to save, say $100,000 so they can purchase a $500,000 home, FHA is a great program. $17,500 is enough of a down payment for a $500,000 home. The all important first step to help determine what loan options will fit your goals and qualifications, contact a local Orange County FHA loan officer. The loan officer should be able to provide custom loan scenarios which will provide you with a complete breakdown of the purchase price, loan amount, payment, and estimated amount needed to close.

Authored by Tim Storm, an Orange County, CA FHA Mortgage Loan Officer MLO 223456– Please contact my office atAlpine Mortgage Planning for more information about an Orange County, CA Mortgage. 949-829-1846. www.OCHomeBuyerLoans.com

Contact us for your Orange County FHAMortgage:

949-829-1846 | tstorm (at) ochomebuyerloans.com

2012 VA Loan Limits for Southern California

Tim Storm, Orange County FHA and VA Expert (Alpine Mortgage Planning) — Sun, 11 Dec 2011 14:21:40 -0500

VA recently released the 2012 100% financing VA loan limits for southern California. Orange County, whose 2011 loan limit was $700,000, will drop down to $621,000. Based on a revised formula for calculating the loan limit, all "high cost" areas of the country experienced a drop in loan limits. Still, $621,000 will purchase a nice home in Orange County, especially considering this is the $0 down limit.

Jumbo VA Loan in Orange County

Just because the zero down loan limit for VA financing in Orange County is $621,000 does not mean that a Veteran cannot get a bigger loan on a more expensive home. A Jumbo VA loan occurs when an eligible VA borrower purchases a home for more than the 100% VA loan limit within the county. The VA borrower is required to have a down payment equal to at least 25% of the difference between the loan limit and the purchase price. For example, a Veteran buying a home in Irvine for $721,000 would need only a $25,000 down payment. The VA loan, not counting the VA Funding Fee, would be $696,000. ($721,000 purchase price - $621,000 loan limit = $100,000 difference. x 25% = $25,000 down payment. ) Not all lenders will fund a Jumbo VA loan. Many stay within the VA 100% limits, and some lenders outside of California are not comfortable with loans above $417,000. Consulting with a California VA Lender is important for those who are wanting to take advantage of their VA eligibility. With the VA limits remaining so high, upper income Veterans are rediscovering the VA loan program.

Advantages of the VA loan Program for Orange County Veterans

No Down payment to $621,000 price
Minimal down payment for prices above $621,000
No Monthly Mortgage Insurance, as would be found on an FHA or Conventional loan with less than 20% down payment.
Flexible Debt to Income ratio qualifying. While Conventional financing won't allow debt to income ratios above 45% (with less than 20% down), VA approvals are common with debt to income ratios above 50%.
Flexible credit guidelines. Some California VA lenders will allow FICO scoring as low as 620.
Low Fixed Rates, especially taking when compared to "high balance" loans over $417,000.
Cashout refinances to 90%
Rate and Term refinance to 100% to $621,000 in Orange and Los Angeles counties.

Find a Great VA Lender in Orange County, CA

The most important step in securing a VA loan is to find the right lender. The loan officer should be able to provide custom VA loan scenarios along with a side by side analysis, based on the Veterans goals and qualifications. The lender should be able to provide a VA loan Preapproval, which will allow the VA eligible home buyer to confidently search for the home of their dreams.

Authored by Tim Storm, an Orange County, CA VA Mortgage Loan Officer MLO 223456– Please contact my office atAlpine Mortgage Planning for more information about an Orange County, CA Mortgage. 949-829-1846. www.OrangeCountyVALoans.com

Contact us for your Orange County VA Mortgage:

949-829-1846 | tstorm (at) ochomebuyerloans.com

FHA Versus Conventional Financing with PMI | Orange County, CA

Tim Storm, Orange County FHA and VA Expert (Alpine Mortgage Planning) — Fri, 25 Nov 2011 14:39:13 -0500

FHA financing has been a savior for Orange County homebuyers since the collapse of the mortgage industry in 2007. Prior to 2007 it was easy to buy a home in Orange County with $0 or very little down payment. But then things changed and low down payment Conventional financing went away. Private Mortgage Insurance companies struggled and would not insure 95% loan to value loans in most of California. But FHA came to the rescue. Not only did FHA allow for only 3.5% down payment, but also increased their loan limits to accommodate high priced areas like Orange County, CA.

Private Mortgage Insurance Makes a Comeback

Recently PMI companies have been more aggressive with their underwriting. While Fannie Mae guidelines allow for a 3% down payment, until recently you couldn't find a PMI company willing to insure the loan. Now, companies like MGIC, Radian, and United Guaranty will insure these high loan to value deals. Also, the insurance rates are very favorable when compared to the now increased FHA Mortgage Insurance rates.

97% Condo Loans- and It's not FHA

Today, in November 2011, only 10% of condo projects in Orange County that were FHA approved in 2010 are still FHA approved. FHA has dramatically tightened their Condo project approval guidelines. This has made it very difficult for a first time buyer to purchase a condo. It has also made it very difficult to sell a condo. But now it is possible to get a Conventional loan on a condo with only a 3% down payment. It is even possible to pay the PMI one time up front.

First Time Home Buyers Need to Compare

It is important to check all your options when researching loan programs. FHA may be the best option for some people while a Conventional loan with PMI is best for someone else. It is important to find a local Orange County loan officer who can prepare custom loan scenarios along with a side by side analysis of the available options. And of course, getting Preapproved for a mortgage is required before making an offer on a home.

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 Mortgage. 949-829-1846. www.OCHomeBuyerLoans.com

Contact us for your Orange County Mortgage:

949-829-1846 | tstorm (at) ochomebuyerloans.com

Orange County, CA FHA Loan Limits Reinstated to $729,750 through 2013

Tim Storm, Orange County FHA and VA Expert (Alpine Mortgage Planning) — Tue, 22 Nov 2011 14:34:55 -0500

The FHA loan limits for Orange County, CA had temporarily dropped from $729,750 down to $625,500 on October 1, 2011. But on Friday, November 19, President Obama signed a new bill that reinstates the higher loan limits for FHA loans in high cost areas, like Orange County and Los Angeles County. FHA, which only requires a 3.5% down payment, offers a solution for families with enough earning power to afford the payment on a $729,750 loan, but haven't a 20% down payment.

Purchase an Orange County Home for $750,000 with 3.5% Down Payment

While a typical Conventional (Fannie Mae or Freddie Mac) loan program requires a 20% down payment to purchase a $750,000 home, FHA only requires 3.5%. The FHA down payment would only be $26,250, versus $150,000 down using a Fannie/Freddie program. Assuming a final FHA loan amount of $730,987 (including the 1% Upfront Mortgage Insurance Premium) at an interest rate of 4% (4.773 APR), the principal and interest payment would be $3,513. The Monthly Mortgage Insurance would be $693. Taxes and insurance would be approximately $937. (Using 1.25% for property tax rate and .25% for insurance rate.) The total PITI (principal, interest, taxes and insurance) would be approximately $5,143. Approximately $3,200 of this is deductible mortgage interest and property taxes. A family with income of $150,000 would qualify for this, depending on their other monthly debt payment and credit. And of course, the income needs to be fully documentable.

It is of course important for a family looking to purchase a home to make sure the new mortgage payment fits in with their budget and future goals. Make sure money is left over for savings, college funding, and meals and entertainment. Also, consulting with a CPA is an important step in determining how the mortgage interest deduction will effect income taxes for the better.

The Perfect Storm - Low Rates and Affordable home Prices

Affordability has not been this good in over 30 years. In many parts of California it is now cheaper to own a home than to rent the same home. This is why so many real estate investors are building their portfolios with single family homes and condos. They are able to rent the home for more than the mortgage payment. Orange County renters who are considering a home purchase should first contact an Orange County lender who can provide custom loan scenarios based on their qualifications and goals. The scenarios should show them a side by side analysis of the different loan options available. Besides the FHA loan program, the VA loan program is also an excellent option, allowing for 100% financing up to a $700,000 home price in Orange County. There are also some high loan to value options available with Conventional financing using Private Mortgage Insurance (PMI). The first step is to investigate all the potential financing options and then determine which is best for you.

Contact us for your Orange County Mortgage:

949-829-1846 | tstorm (at) ochomebuyerloans.com

Story of an Orange County First Time Home Buyer

Tim Storm, Orange County FHA and VA Expert (Alpine Mortgage Planning) — Sat, 19 Nov 2011 19:49:05 -0500

Buying a home in Orange County, CA is not the easiest thing to do. But it's not as difficult as some make it out to be. Long gone are the days of needing 20% down payment to purchase a home. While zero down loan programs are mostly gone, except for a few specialized programs like the VA loan, which is for active duty military and retired veterans, there are programs like FHA, which only require a 3.5% down payment. But this article is about a recent home buyers journey to buy a home in Orange County.

Mike and Heather Didn't Like Paying Rent

Mike and Heather had been paying rent for more than 7 years. In 2006 they had tried to buy a home, but Orange County home prices had gotten so high that it didn't seem possible. They continued to rent since renting was cheaper than owning. But eventually reality set in for the real estate market and prices dropped. Dramatically. Homes that were valued at nearly $700,000 at their peak were now selling for $400,000 in 2011. A Jumbo loan is not needed anymore to buy a home in Orange County. Not only that, but interest rates dropped to all time lows, hovering in the high 3's to low 4 percent range.

In 2011 it's Cheaper to Buy a Home Than Rent

Mike and Heather's rent kept increasing every year. Also they had a one year old and had another on the way. They not only would need more space, but also wanted to get established in the good school district. They decided to check into buying a home again after a friend purchased a home for $400,000 and mentioned that his payment was less than $2,700 per month, counting taxes and insurance. When calculating out the tax savings they would have because of the mortgage interest deduction, Mike knew it was time to get serious. Not sure where to start, they went to the Internet to search for homes. But they quickly realized that they needed to know how much they qualified for. Or more importantly, how much home they could buy while still keeping their payment within their budget. They tried a few of the "big banks" but couldn't find a loan officer who gave them straight answers or who seemed able to answer their questions. It was actually difficult to even get a return phone call from the big banks. They decided to narrow the lender search to someone local. Through the Internet they found Tim Storm (yeah, me. I usually don't incorporate myself into these stories but someone had to do it.) Tim was able to prepare custom loan scenarios based on multiple home prices, multiple home programs, and multiple down payment amounts.

Choosing the Best Loan Program

FHA seemed like a good option since it only required 3.5% down. The interest rate was very low and it was fixed. But Tim also showed a Conventional program with 5% down payment. And he showed how the monthly mortgage insurance could be eliminated by paying a one time up front premium. This saved more than $200 per month on a $400,000 purchase price when compared to the FHA program. And it was nice to not have a monthly mortgage insurance payment.

PreApproved and Ready to Buy A Home

Now they were ready. After providing all their income and asset documentation, completing a loan application, running credit, giving a pint of blood and their first born (well, not the last two items, but you get the picture), they were Preapproved for the loan. They were now "confident" home buyers since they knew exactly what they qualified for and what their payment was going to be. And being Preapproved also meant a fast 30 day escrow would help in negotiations.

Hire a Real Estate Agent for Best Results

Of course it helps to have a great agent on your side. What many home buyers don't realize is that the seller pays the buyers agent, not the buyer. There is not a cost to the buyer to have representation. Fortunately Mike and Heather were referred to an agent that was able to help them out. The agent set them up on a custom Multiple Listing Service property search so that they were able to stay on top of the newest listings that fit their criteria for a home. After a few hits and misses, and visiting a few homes which helped to narrow down their "needs" list for a home, Mike and Heather made an offer on a very nice home in a family oriented, tree lined Orange County neighborhood. Their agent guided them through a few counter offers and within a week they had an accepted offer at a price of $395,000.

30 Day's to Close the Loan and Move into their Home

Within 30 days (being PreApproved made the 30 days fly by) escrow was closed. Of course there were inspections and and few things that needed to be fixed prior to closing (this is where it's nice to have a good buyers agent on your side), Mike and Heather were ready to move into their home.

Mike and Heather are now are happily in their home. And with only 5% down payment and no monthly mortgage insurance, they know they don't need to worry about a landlord increasing their payment anymore. Now if they can figure out a way to "fix" their child care costs, everything will be perfect.

Contact us for your Orange County Mortgage:

949-829-1846 | tstorm (at) ochomebuyerloans.com

The Difference Between CalVet and the VA Loan Programs for Orange County, CA Veterans

Tim Storm, Orange County FHA and VA Expert (Alpine Mortgage Planning) — Wed, 28 Sep 2011 13:18:01 -0400

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

Lower VA Funding Fee Means Savings for Orange County Veterans

Tim Storm, Orange County FHA and VA Expert (Alpine Mortgage Planning) — Wed, 21 Sep 2011 13:10:36 -0400

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!

Contact us for your Orange County VA Loan:

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

VA Loan Limit in Orange County at $700,000 Until December 2011

Tim Storm, Orange County FHA and VA Expert (Alpine Mortgage Planning) — Mon, 12 Sep 2011 14:58:57 -0400

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.

Contact us for your Orange County Jumbo Mortgage:

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

2011 To Be Great Year for VA Loan Program in Orange County, CA

Tim Storm, Orange County FHA and VA Expert (Alpine Mortgage Planning) — Thu, 06 Jan 2011 23:32:56 -0500

VA loans will be even more popular in 2011 than in 2010 in Orange County. There are several reasons, besides the most obvious reason being that no down payment is required up to a $700,000 purchase price. Up until recently, Orange County Veterans have not realized the benefits that the VA loan program offered them.

Benefits of the VA Loan Program for Orange County Veterans

2011 VA Loan Limits are higher. 100% Financing up to $700,000 in Orange and Los Angeles Counties in 2011. This is actually an increase from 2010, when the 100% financing limit was $593,750. Even that was great, but $700,000 is better.
VA allows "cash out" refinancing up to 90% of the property value. This is much better than Conventional financing, which would have severe pricing "hits" for doing a "cash out" refinance at even 80% of the properties value on a loan amount under $417,000. Most Conventional loan guidelines consider combining a 1st and 2nd to be a "cash out" refinance. With the drop in property values since 2007, many homeowners have not been able to combine their 1st and 2nd mortgages because of the tight Conventional loan guidelines. But California Veterans have the ability to combine their 1st and 2nd up to 90% of the properties value.
VA guidelines are more flexible when it comes to credit as compared to Conventional guidelines. Even if a Veteran has 20% down payment, a VA loan may be the best option if they've had a Short Sale, bankruptcy, or other credit issues in the past few years.
VA allows for higher "debt to income" ratios than Conventional financing. While Fannie Mae does not allow debt to income ratios above 45% without an exception, and even then will not go over 50%, VA is more interested in "residual income" that the debt to income ratios. On higher loan amounts this allows for quite a bit of flexibility.

Closing a VA Loan in Orange County is Easy

Closing a VA loan is much easier than some think. While the large banks can take 60 days or more to close a Conventional loan, a good Orange County Direct VA lender can close a VA loan in 30 days, maybe less. The key is to work with a Orange County VA loan Expert who knows what items are needed to complete the file, before the VA underwriter reviews the file. The VA loan expert should be able to provide accurate loan scenarios before the loan process starts, allowing the borrower to consider all options before paying for an appraisal.

Authored by Tim Storm, an Orange County, CA VA Loan Expert – Please contact my office at Alpine Mortgage Planning for more information about an Orange County, CA VA Loan. 877-786-4243 x 7.

www.OCFHALoans.com

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

How an Asset Depletion Loan Benefits Wealthy Orange County Homebuyers

Tim Storm, Orange County FHA and VA Expert (Alpine Mortgage Planning) — Thu, 05 May 2011 14:00:32 -0400

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.

Contact us for your Orange County Jumbo Mortgage:

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

Pledged Asset Mortgage Allows for 90% Financing on Jumbo Loans in Orange County, CA

Tim Storm, Orange County FHA and VA Expert (Alpine Mortgage Planning) — Thu, 28 Apr 2011 01:40:52 -0400

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.

Mortgage Loan Programs Available for Foreign Nationals in Orange County, CA

Tim Storm, Orange County FHA and VA Expert (Alpine Mortgage Planning) — Wed, 20 Apr 2011 17:46:51 -0400

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

Zero Down to $700,000 in Orange County, CA with a VA Loan

Tim Storm, Orange County FHA and VA Expert (Alpine Mortgage Planning) — Tue, 29 Mar 2011 02:45:24 -0400

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

Learn How the FHA 203K Streamline Loan Can Help Orange County First Time Home Buyers

Tim Storm, Orange County FHA and VA Expert (Alpine Mortgage Planning) — Thu, 27 Aug 2009 17:07:44 -0400

The FHA 203K Rehab loan program is a great loan for Orange County First Time Buyers. Currently there is a very tight supply of homes available in southern California, especially in the $250,000 to $500,000 price, which is a sweet spot for Orange County First Time Buyers. It has been frustrating for these new buyers to get an offer accepted. After going through the FHA Loan PreApproval process, they were ready to make an offer and close escrow 30 days later. So they thought. It's tough to compete against two or three other offers, let alone 20 or 30, especially when some of those offers are "all cash." New home buyers should keep their options open.

FHA 203K Streamline Program is the Solution

What does it take to separate from the crowd? How about a program that will allow even a buyer with only 3.5% down payment to purchase a home in need of repair. These homes will scare away most home buyers who either do not have the vision or do not want to take the time or deal with the expense in fixing up a home. The FHA 203K Streamline program will allow a home buyer to include up to $35,000 in improvement costs into the FHA purchase loan. One loan is used for the purchase and the cost to rehab the home. While this program is available to all FHA approved lenders, not all lenders want to deal with the extra work that goes into this loan program. But there are local lenders who do have experience closing Orange County FHA 203K Streamlines.

The buyer does not need to be a First Time buyer and there are no income limits. The property can be a single family home, or have as many as 4 units. The buyer does need move into the property since this loan is not available to investors.

FHA 203K Streamline is Available for Orange County FHA Approved Condo's

The condo must be within an FHA approved project. To check whether a condo is FHA approved, go to the HUD website. Rehab of a condo is limited to the interior of the unit. Also, only 25% of the total units can be undergoing rehab at any one time. The maximum mortgage amount amount cannot be more than 100% of the after approved value. (FHA allows 110% of value on non-condo loans.)

It will take a little longer to close a 203K loan. Once the escrow begins, it will take approximately 60 days to close escrow, provided the buyer moves quickly and works with a contractor who is experienced with the 203K loan product. Most delays in closing with the 203K loan have to do with borrower indecision when it comes to choosing a contractor and then staying within the predetermined budget. This is why it is important to work with 203K experienced lenders and contractors.

Eligible Repairs and Improvements Typical for an Orange County Home

Roofs, gutters and downspouts
HVAC systems (heating, venting and air conditioning)
Plumbing and electrical
Minor kitchen and bath remodels
Flooring: carpet, tile, wood, etc.
Interior and exterior painting
New windows and doors
Weather stripping & insulation
Improvements for persons with disabilities
Energy efficient improvements
Stabilizing or removing lead-based paint
Decks, patios, porches
Purchase of new kitchen appliances or washer / dryer

Repairs or Improvement not Allowed

Landscaping or yard work
Major remodeling
Moving a load-bearing wall
Room additions or add-ons to the home
Fixing structural damage

Orange County FHA 203K Loan Limit

For 2011 the FHA loan limit for Orange County is $729,750. The limit is the same for the 203K Streamline program. This means the max loan amount before adding the cost of improvements, assuming the borrower is going for the max of $35,000 in improvements, would be $694,750. With $35,000 added to the loan for improvement, the total loan amount would be at the Orange County limit of $729,750.

This is a great program for the right home buyer and the right property. The first step is to get prequalified and then PreApproved for an FHA loan. The PreApproval process for a FHA 203K loan is no different than for a normal FHA loan (FHA 203B).

Authored by Tim Storm, an Orange County, CA Loan Officer - Please contact my office at Trust One Mortgage 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. Ask for your Free First Time Home Buyer Report.

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

Orange County Homeowners Experience Benefits of the FHA 15 Year Fixed

Tim Storm, Orange County FHA and VA Expert (Alpine Mortgage Planning) — Thu, 13 Jan 2011 17:37:11 -0500

The FHA 15 year fixed program is a great program for Orange County home owners and home buyers. While the downside is the higher payment that comes with a shorter amortization, for those that can handle it, there are thousands of dollars to be saved.

Prior to 2007, many homeowners and people in the mortgage industry felt paying down a mortgage was not a smart thing to do. The mortgage interest deduction was considered too big an advantage to give up. But over the past few years, as many homeowners have experienced the downside of having a "big mortgage", many homeowners have chosen to go with a 15 year fixed. FHA actually offers a great 15 year fixed program. Below are a few of the reasons why the FHA 15 year fixed is so good.

FHA 15 Year Fixed Advantages for Orange County Home Owners

The interest rate is lower, by .375 to .5% in rate, as compared to a 30 year fixed program.
The Monthly Mortgage Insurance is less on the FHA 15 year fixed than on the FHA 30 year fixed. And at 90% loan to value or less, the MMI is completely waived.
The FHA 15 year fixed is more flexible with underwriting and FICO scores than Conventional Fannie Mae and Freddie Mac programs.
FHA allows the combining of a 1st and 2nd mortgage up to 97.75% loan to value, up to a $729,750 loan amount in Orange and Los Angeles counties. Most Conventional lenders will consider this a "cash out" refinance, and won't allow financing over 60 to 65% loan to value.
FHA will even allow a "cash out" refinance to 85% loan to value for those who have credit card debt to consolidate.

Example of an FHA 15 Year Fixed in the Orange County City of Irvine

Recently, an Irvine home owner named Mike Jones was considering a refinance. His first mortgage was $440,000 at an interest rate of 5.5%. His payment was $2,611 and he had 27 years remaining on the loan. He also had a 2nd mortgage at a 30 year fixed rate of 6.5% in the amount of $85,000. His payment was $568 and he had 27 years remaining. He had called multiple lenders looking for a way to combine his loan, but due to the drop in his properties value from $700,000 to the current $610,000, it didn't seem possible. For a Conventional loan, lenders wanted his property to be valued at over $850,000. He did find one lender who would go as high as 80% loan to value, but the interest rate would not have been an improvement. Then, Mike contacted a local Orange County Direct FHA Lender located in Irvine, and learned about the FHA program. The downside was his combined mortgage payment would be $4,073, which was $894 higher than his current payment. But the interest rate would be 4.375% (4.534 APR) and there would be no Monthly Mortgage Insurance. Although his payment would be higher, the net effect would be savings over the life of the loan of approximately $300,000. That was hard to pass up. Mike closed the deal and went from the feeling of "my house will never be paid off" to a feeling of "now I can retire in 15 years".

Find an Orange County FHA Expert

Not all lenders know the in's and out's of FHA. Finding an FHA Expert who can prepare personalized loan scenarios based on an individuals situation is critical, before money is spent on an appraisal. Many of the best OC FHA loan officers are able to not only prepare scenarios, but present them in a manner that is easy to understand. Incorporating video into the presentation can help the borrower not only better understand his/her options, but also be able to quickly share the scenarios with his/her spouse or financial advisor. With interest rates remaining low, now is a great time to check into an FHA program.

Authored by Tim Storm, an Orange County, CA Loan Officer with 20 year experience– 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.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

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