Orange County FHA, VA & First Time Buyer Loan Information

Guidelines for FHA Streamline in Orange County, CA

Sun, 13 Jun 2010 12:20:48 -0700

Orange County homeowners with an FHA loan have been able to lower their interest rates by taking advantage of the FHA Streamline Refinance program. With mortgage rates near all times lows, there has never been a better time to at least research whether a FHA Streamline with help your financial position.

What is an FHA Streamline?

The borrower must currently have an FHA loan, because the Streamline program "Streamlines" the refinance process for people who already have been approved by FHA. The lower rate must provide a true benefit for the borrower. FHA guidelines require that the borrowers total PITI payment must drop by at least 5%. For example, if your total PITI (Principle, interest, taxes, and insurance) is 2,000 per month then the new payment must drop the payment to at least $1,900. While there are several factors that have an effect on this calculation, a rate drop of .5% at a minimum is typically needed to meet this threshold.

FHA updated several guidelines at the end of 2009 which were meant to protect FHA borrowers. The borrower must have had their loan for at least 6 months. Typically it will need to be a little longer, because FHA needs to have received at least the 6th Monthly Mortgage Insurance payment from the lender. So if you are making your payment 15 days after the due date, and it takes the lender two or three weeks to forward the MI to FHA, you may need to be in your loan for 7 months before having access to an FHA Streamline Refinance.

No Appraisal, No Credit, No Income

The FHA Streamline is fairly "painless" compared to the loan process when you bought your home. No appraisal is required, unless you are choosing to add closing costs to your loan. Most Streamlines are closed with all closing costs credited by the lender, so why go through the effort and expense of having an appraisal? While technically no credit report is required, most lenders require a minimum FICO score of 620, so a credit report will be run. Also, the lender will use the credit to verify the mortgage rating. Multiple 30 day late's are not acceptable. But don't worry about collection accounts or other items on the credit report, because they will not be on the loan application and are not used in the underwriting process. Also, debt to income ratios are not calculated. No tax returns, W2's, or paystub's. The new lender will need to verify that you "have a job", but will not review the income.

The First Step for Orange County FHA Loan Borrowers

The first step for current Orange County FHA borrowers is to find a local Orange County FHA Expert who can help them determine whether a Streamline Refinance makes sense. Even though all closing costs are credited by the lender, there are other things to consider. The UpFront Mortgage Insurance Premium will be adjusted up, which does factor into the "breakeven analysis". Also, how long will you remain in the home? Maybe a 5 year adjustable rate mortgage with a lower rate will provide more benefit. Finding an Orange County Loan Officer you can trust will help you make an informed decision.

***Updated April 30, 2012

On March 6, 2012 FHA announced an improvement to the FHA Streamline Refinance program. Now, FHA borrowers who loans were closed and endorsed on or before May 31, 2009 will get the keep their current annual mortgage insurance premium rate. Mortgage insurance rates on FHA loans have doubled over the past 18 months, so this announcement will save Orange County FHA borrowers thousands of dollars.

Authored by Tim Storm, an Orange County, CA Loan Officer - Please contact my office at Emery Financial Group for more information about an Orange County, CA home loan. 877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County VA Mortgage:

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

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

FHA Streamline Refinance | The Easiest Home Loan in Orange County

Sun, 27 Jun 2010 21:14:56 -0700

The FHA Streamline Refinance is by far the easiest loan program available for Orange County, CA home owners. Of course, the catch is, in order to take advantage of this program you must already have an FHA loan. This is strictly an FHA to FHA refinance program.

What Makes the FHA Streamline Refinance so Easy?

No Appraisal required (not kidding about this)
No income documentation required, meaning there are no "debt to income" calculations run on this program.
Very little paperwork (obvious just by the fact that there is no income documentation)
Little or no closing costs. Most lenders will waive their typical lender fees and issue a credit to the FHA borrower to cover escrow, title, recording and other closing costs.

While the Streamline program is very easy, there are a few requirements that must be met. Below are a few of the conditions that must be met.

The Orange County FHA home loan payment, including principle, interest, taxes, and insurance, must drop by a minimum of 5%. For example, if an FHA home owner in Placentia has a total PITI payment of $2,000 per month, then the new payment must be $1,900 or less.
The FHA home loan borrower must currently have a job. This will be verified. Debt to income ratios are not calculated, but the Orange County FHA loan company must make sure the FHA borrower at least has a job.
Assets used to close need to be verified. Closing costs cannot be added to the new loan, unless an appraisal is being used to verify the property value. It is typically more beneficial for the FHA borrower to not finance closing costs into their loan over the next 30 years. Take a slightly higher rate and have the lender credit the closing costs. While 30 days interest can be financed into the loan (some lenders like to call this "skipping a payment", but the more appropriate description is to "finance a payment"), some money will still be needed to close to cover the new impound account for taxes and insurance. Even this is a "wash" since the old, or current, impound account will be refunded back to the borrower a few weeks after the close.
The FHA borrower cannot be late on their mortgage.
The FHA loan being refinanced must already have 6 payments made. In reality, 6 Mortgage Insurance payments must be received by FHA. Typically, the 6th Mortgage Insurance payment will not be received until about 30 days after the 6th payment is made.

The purpose of this program is to allow FHA borrowers to take advantage of low rates without needing to jump through the hoops they had to when they first bought their home. FHA makes sure borrowers are not taken advantage of by requiring the 5% payment drop, along with not allowing closing to be added to the loan if no appraisal is being used. With mortgage rates are current all time low's, there has not been a better time to do a Streamline Refinance in years. To meet the 5% requirement, an FHA borrower's current rate probably needs to be 5.5% or higher.

***Updated on April 30, 2012***

On March 6, 2012 FHA announced an improvement to the FHA Streamline program, allowing FHA borrowers whose loans closed and were FHA endorsed prior to June 1, 2009 to keep their current monthly mortgage insurance factor. This will create big savings for those who have not already taken advantage of this FHA refinance program.

Authored by Tim Storm, an Orange County, CA Home Loan Officer - Please contact my office at Emery Financial Group for more information about an Orange County home loan. 877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County FHA Home Mortgage:

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

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

Increase to FHA Mortgage Insurance will Effect Orange County FHA Streamline Refinances

Sat, 07 Aug 2010 18:55:22 -0700

Orange County FHA borrowers who are considering an FHA Streamline Refinance due to the recent drop in interest rates should move quickly to figure out whether a Streamline will benefit them or not. Because changes are coming. On August 5 FHA announced it's intention to increase the Monthly Mortgage Insurance percentage from .55% to .9% for loans over 95% loan to value. The Up Front Mortgage Insurance Premium (UFMIP) will decrease from 2.25% to 1%. This is to go into effect on September 7, 2010.

***Updated on April 30, 2012*** --- FHA announced on March 6, 2012 changes to the FHA Streamline refinance program, and that FHA borrowers whose FHA loans were closed and endorsed prior to June 1, 2009 will be able to keep their currently monthly mortgage insurance premium. In many cases this will result in significant savings for Orange County FHA borrowers.

How Does The MMI Increase Effect FHA Streamline Borrowers?

Let's assume a typical $400,000 FHA loan on a home in Irvine, CA. If the borrower has a current rate of 5.25%, they're principal, interest, and mortgage insurance payment would be approximately $2,392. If this borrower is being offered Streamline rate of 4.5%, the new payment (after taking into consideration a loan amount increase due to the UFMIP adjustment) would be approximately $2,232. That's an easy $160 monthly savings. But now, assuming the new monthly Mortgage Insurance will be .9%, the payment (and assuming a lower loan amount since the UPMIP will be less) would be approximately $2,315, or only a $77 payment drop. FHA actually requires that the payment, including taxes, insurance, and HOA, must drop by 5% for the borrower to be eligible for an FHA Streamline. This example would not qualify for a Streamline using the new Mortgage Insurance percentage. . Not even close.

Currently, for an Orange County FHA borrower to be eligible for an FHA Streamline they will need to drop their interest rate by at least .625%. This can vary depending on when they initially got their loan, along with other factors such as whether or not they have a Home Owners Association payment and how much it is. With the new calculation, FHA borrowers will most likely need to drop their rate by 1.125% to 1.25% to qualify for the 5% drop.

What is so Good About the FHA Streamline Refinance Program?

The FHA Streamline Refinance program makes it easy for Orange County FHA borrowers to take advantage of a drop in FHA interest rates without needing to fully qualify for the loan again. Streamlines can be done with no appraisal and no income documentation. This makes it a much easier, or "streamlined" loan process than when they borrower initially purchased their home. A Streamline is not for everyone. Because of an adjustment in the UPMIP, which is financed into the loan, a "break even" analysis does need to be reviewed before jumping into a Streamline Refi. It can quite often take 24 to 30 months to break even after considering the loan amount increase.

Orange County FHA borrowers should at least check if an FHA Streamline is right for them before September 7, which is when the changes are set to occur. An Orange County FHA Streamline lender can provide a detailed analysis which can help to make the right decision.

Authored by Tim Storm, an Orange County, CA Home Loan Officer - Please contact my office at Emery Financial Group for more information about an Orange County home loan. 877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County FHA Home Mortgage:

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

2012 Changes to FHA Streamline Refinance program in Orange County

Tue, 24 Apr 2012 08:41:08 -0700

HUD recently announced changes to the FHA Streamline Refinance program that will offer tremendous savings to current Orange County FHA borrowers. In Mortgagee Letter 12-4, dated March 6, 2012, it was announced that FHA borrowers taking advantage of the FHA Streamline Refinance program, whose FHA loans were endorsed prior to May 31, 2009, would be eligible to refinance without having to adjust to the currently higher monthly mortgage insurance premiums.

Higher FHA Mortgage Insurance Premiums

Over the past 18 months HUD has increased the Monthly Mortgage Insurance premiums three times. Currently, the MMI for a typical Orange County FHA borrower, at 96.5% loan to value, is 1.25%. On a $350,000 base FHA loan, the MMI would be $364 per month. For an FHA borrower who had gotten their loan prior to May 31, 2009, when the FHA mortgage insurance was only .55, or $165 per month on a $350,000 base loan amount, the increase quite often was too much to be offset by the much lower interest rates available. In addition, after three years the initial Up Front Mortgage Premium (UFMIP) is completely gone, meaning that in order to FHA Streamline Refinance, the borrower would have to deal with a loan amount increase equal to 1.75% of their loan balance (under the current guidelines. ) Although the FHA Streamline program is typically closed as a "no cost" program, the loan amount increase due to the UPMIP, along with the more than double increase in the Monthly Mortgage Insurance, served as a major deterrent.

Important Changes to FHA Streamline Program - Mortgagee Letter 12-4

Current FHA loan must have been closed AND endorsed by FHA prior to May 31, 2009
The new Annual Mortgage Insurance Premium will be .55%, regardless of the based loan amount.
The Up Front Mortgage Insurance Premium will be .1% (rather than the new 1.75%) of the base loan amount.
The FHA Case Number cannot be assigned until on or after June 11, 2012

Example of Savings on 2102 FHA Streamline Program

As an example, let's assume Johnny Smith bought a home in Irvine for $426,000 in March, 2009. He took full advantage of the low down payment offered with FHA financing, ending up with an FHA loan of $418,284 at an interest rate of 5%. His principal and interest payment is $2,245, and his current MMI is $182. The current balance of his 30 year fixed loan, after 36 months, is $398,223. Johnny can now refinance to an interest rate of 3.75% (4.411% APR). His new principle and interest would be $1,845, and the new MMI would remain at $182 (.55%*$398,223/12). His total monthly savings would be $400 per month. Johnny can pocket the money, put it into savings, or use the savings to pay the principal on his loan down more quickly. Let's assume Johnny decides to continue making a payment equal to his current (5%) payment, but with the $400 going straight to principal. Over 5 years he would save $26,352. Even better, he would knock 63 months off the end of his loan, saving $143,768 over the life of the loan. To see a Side by Side Analysis video presentation of this Click Here.

What is Needed to Qualify for an FHA Streamline Refinance?

Current loan must be FHA
No late payments in last 12 months
Loan must have closed AND been endorsed by HUD May 31, 2009 or prior.
A job. The lender will verify the borrower has a job, but will not verify income.
Most lenders require a 640 minimum FICO score.

The FHA Streamline Refinance Program Does Not Require:

No Appraisal
No income documentation
No closing costs - most lenders will close an FHA Streamline refinance with all closing costs credited using a lender credit. FHA does not allow closing costs to be financed into the loan.

The Orange County FHA lender cannot pull the FHA Case Number until June 11, 2012. However, lenders can get the application going, lock the rate, and prepare for a quick closing once June 11, 2012 comes. So for those Orange County FHA borrowers who have held out and not refinanced because they didn't want to deal with the higher Mortgage Insurance rates, now is the time to finally take advantage of low interest rates.

Authored by Tim Storm, an Orange County, FHA Refinance Loan Officer MLO 223456– Please contact my office at Emery Financial for more information about an Orange County, CA Mortgage. 949-829-1846.

Contact us for your Orange County FHA Streamline Refinance:

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

HARP 2.0 Refinance Program for Orange County, CA Home Owners

Sat, 17 Mar 2012 14:27:02 -0700

Orange County, California homeowners who have not been able to refinance up until now because of low property values may be pleasantly surprised to learn about HARP 2.0. The Home Affordable Refinance Program, also known as HARP has been around for a few years. But with new upgrades to the program, more people will be able to benefit than ever.

Refinance Orange County Condo with HARP

Previous versions of HARP capped the amount of “negative equity” a borrower could have at 105% an 125% loan to value. HARP 2.0 now allows ANY loan to value. This means that if a homeowner bought a condo, for example in Laguna Niguel or Aliso Viejo, for $500,000 with a $400,000 loan, and now the condo is worth less than $300,000 (there are area of Orange County, especially with certain condo complexes where this happened), they can still refinance. Even better, the homeowner doesn’t need to still live in the home. It can be a rental. As long as payments are being made on time and the borrower qualifies, they will be able to refinance into a very low interest rate.

Not everyone who is upside down on their mortgage will qualify. The most important rule is that the loan needs to be owned by either Fannie Mae or Freddie Mac. Generally, Fannie Mae and Freddie Mac were not doing Stated Income or No Documentation loans. So an Orange County homeowner who bought their home with a Stated Income loan in 2007 probably does not have a Fannie Mae or Freddie Mac owned loan. Also, neither Fannie nor Freddie ever did negatively amortizing loans. So if you started with a 1% interest rate, and your loan amount went up rather than down, then you most likely do not have a Fannie Mae or Freddie Mac loan.

How Do I Figure out if my Orange County loan is Fannie Mae or Freddie Mac?

Orange County homeowners can go to the Fannie Mae Lookup site or the Freddie Mac Lookup Site. By entering in basic property information, you will be able to determine whether your loan is owned by Fannie Mae or Freddie Mac. You an also contact a local Orange County HARP loan officer who can quickly check your loan ownership. If it turns out you do qualify, the loan officer should also be able to prepare a Side by Side analysis of your current loan as it compares to a new HARP 2.0 refinance. You will be able to refinance into either a 30 year fixed, or choose a shorter term. Many homeowners are finding that although they won’t achieve a lower monthly payment by choosing a 20 year or 15 year fixed program, the interest rate is so low, especially on the 15 year fixed, that the actual interest savings over the life of the loan are too much to pass up. Having your home paid off in 15 years, especially if you are hoping to retire in 15 years, is a great way to go.

Authored by Tim Storm, an Orange County, CA HARP Refinance Loan Officer MLO 223456– Please contact my office at Emery Financial for more information about an Orange County, CA Mortgage. 949-829-1846. www.OCHomeBuyerLoans.com

Contact us for your Orange County HARP Refinance:

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

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

Thu, 29 Dec 2011 02:26:34 -0800

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 at Emery Financial 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

Sun, 11 Dec 2011 14:21:40 -0800

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 atEmery Financial 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

Fri, 25 Nov 2011 14:39:13 -0800

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 at Emery Financial 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

Tue, 22 Nov 2011 14:34:55 -0800

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

Sat, 19 Nov 2011 19:49:05 -0800

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

Wed, 28 Sep 2011 13:18:01 -0700

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 at Emery Financial 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

Wed, 21 Sep 2011 13:10:36 -0700

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

Mon, 12 Sep 2011 14:58:57 -0700

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 at Emery Financial 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

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

Thu, 06 Jan 2011 23:32:56 -0800

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 Emery Financial 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

How an Asset Depletion Loan Benefits Wealthy Orange County Homebuyers

Thu, 05 May 2011 14:00:32 -0700

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