If the down payment is a gift; Are gift taxes due? - 05/31/11 02:54 PM
A couple of times each year I get a call from a concerned parent. The parents want to gift their child money for the down payment and they are concerned that either they will have to pay the gift tax or the person receiving the gift will have to pay a tax. The chances are no one will have to pay a gift tax. There are limitations for gifts but they are rather large.Imagine you have two piggy banks. Piggy bank one is the annual gift tax and piggy bank two is the life time piggy bank for gift tax. Piggy … (0 comments)

Before you Buy- Pre-Qualify - 05/27/11 05:09 PM
It just makes sense to pre-qualify before you go out looking at homes to buy. When you make an offer the seller is going to want to see your pre-qualification letter from a reputable lender. Many times the seller may want to know your credit score and see a copy of your bank account to prove that you have the money for the down payment. To pre-qualify you should give your lender your bank statements to prove the source and amount of the down payment. You want to provide pay stubs, w-2's and even your past two years federal income taxes. … (0 comments)

FHA only requires a 3.5% down payment but the money must be tracked perfectly - 05/27/11 04:55 PM
FHA only requires a down payment of 3.5% of the purchase amount. The down payment can be gift. Also, FHA does allow for co-signers and the loan is easier than other loans to qualify for. Be aware that the down payment, no matter what the source, must be tracked perfectly as this video shows.http://www.youtube.com/watch?v=eqt2WMbOblkDoug JonesMortgage Magic NMLS 286668
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Save $95,000 on a $417,000 Loan- It's all in the math - 05/27/11 04:13 PM
The amount of interest that you will pay for any loan is based on the loan size, the interest rate and the frequency of payments. This video shows you how to save $95,000 on a $417,000 loan. I used $417,000 because at the time of this writing that is the conforming loan limit. Also I used a rate of 5.5%. That does not matter because the concept is the same no matter what the interest rate. Hope this video helps you save some money.http://www.youtube.com/watch?v=LGsp5myGmS0Doug JonesMortgage Magic NMLS 286668(408) 975-2400 X 110
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From NAR-- Congress wants HomeBuyers to put down 20% - 05/27/11 03:54 PM
A proposal before regulators to require a minimum of 20 percent down payment on all residential transactions, if allowed to take effect, would put home ownership out of reach for middle-income Americans. Please take time to visit the REALTOR® Action Center to answer the National Association of REALTORS® Call for Action and tell Congress this does not work for our industry or our country.According to NAR Research, 60 percent of recent home buyers made less than a 20 percent down payment, and it would take 14 years for a typical person to save a 20 percent down payment to buy a … (0 comments)

Debt Ratio Explained - 05/27/11 01:01 PM
When refinancing a mortgage or financing a purchase there are three components for loan approval; The Credit Score, The Down Payment or Equity and the Debt to Income Ratio. By far, the most confusing and the area where loan underwriters spend most of their time when reviewing a file is in the debt ratio section. The debt ratio is the monthly gross income vs. the monthly outgo. All expenses are not counted against you such as life insurance, utilities, car insurance, food expenses, child care, and gasoline to name only a few. The debts that are used in the calculation are … (1 comments)

You credit score will soon go down and you will pay more interest - 05/16/11 02:24 PM
Recently I wrote a blog that details how much a low credit score penalizes a home buyer. When I say "low credit score" I mean any score below 740. The one point from 740 to 739 will cost a home buyer just over $1000 http://activerain.com/blogsview/2296868/what-is-the-cost-of-a-low-credit-score-.We used to tell clients with credit scores above 700 that it was like have an "A" in a class. 700 was considered excellent.Very soon FICO will begin to use FICO 08. I have read the releases about this and they are pro and con but a credit industry insider said that this new program anticipates mortgage … (2 comments)

What is the cost of a low credit score? - 05/14/11 07:36 PM
There are many variables in pricing a loan. In this blog I want to simply compare one component with hard dollars. The situation: A $417,000 loan 4.875% and no points to the client with a credit score of 740 and a loan to value of 75%.. If that client has a score of 739... I know, it is only 1 point but if the client has a score of 739 the cost is a quarter point or $1042. Here is the breakdown in score and cost. There are other costs to a loan - I am only showing the Fannie Mae … (2 comments)

3.92% possible when the rate is 4.75% ? yes, read on - 05/14/11 07:33 PM
This blog shows some of the possibilites available to first time home buyers.Is it possible to get a 3.92% interest rate when the actual note rate on the loan is 4.75% ? The answer is "Yes" and here is the explanation.The answer is by using the Down Payment Assistance Programs and the MCC program and blending the interest rates. The City of San Jose offers their "Welcome Home" program for qualified first time home buyers. The loan requires no payments and is for $25,000. MCC is a program for first time home buyers and allows a tax credit. Having said that, … (1 comments)

Getting Back to Basic Economics - 05/14/11 07:31 PM
Someone sent me this story a while ago and I re-read it this morning. It really does capture the idea that money has no value unless it circulates.
It's a slow day in some little town.The sun is hot...the streets are deserted.Times are tough, everybody is in debt, and everybody lives on credit.On this particular day a rich tourist from the west is driving through town.
He stops at the motel and lays a $100 bill on the desk saying he wantsto inspect the rooms upstairs in order to pick one and spend the night.
As soon as the man walks … (0 comments)

The FHA Loan Boxes - 05/14/11 07:28 PM
All loans have underwriting guidelines or 'rules'. All real estate loans work with three boxes for loan approval. For very large loans with low interest rates those boxes are small; very small, which means the approval is more difficult. The FHA boxes are all large which means the approval process is much easier.Box 1-- the down payment. Most loans require a 20% down payment but there are loans that require only 5% down. In 99% of the cases the loans with only 5% down require that the down payment comes from the borrowers savings. The FHA box is bigger because it … (0 comments)

FHA Loan Comparison - 05/12/11 07:40 PM
These are breakdowns for FHA loans based on 30 years and a 5% interest rate. The insurance and tax rates are based on loans in California. This is to show the MIP upfront and monthly costs. 
 This breakdown shows the real estate tax estimates based on 1.25% of the purchase price.  It also shows the homeowner insurance and the mortgage insurance up front and monthly cost.
If you are considering purchasing it is a good idea to get a numbers breakdown of the loan.  Also, and I have not included it here, it is a good idea to get a break … (0 comments)

If you price it right; they will come - 05/09/11 01:58 PM
On Saturday I attended an open house that is listed by a Realtor friend. This morning there are already four offers and there were more than 25 people who visited the open house.I have another Realtor friend who has a listing that has been on the market for 9 months and there have been no offers.Suppose I have a Purchase Meter with a needle that swings back and forth. On the left is the word "Buyers" and on the right the word "Sellers". If I had such a meter the needle would be stuck all the way on the left and … (1 comments)

White House Value Drops - 05/05/11 09:13 PM
According to Zillow the White House is now valued at $262,775,000. When I last checked with Zillow just over a year ago the home was valued at $330,000,000. Could it be the White House is headed for a short sale?This home is on 18 acres and was built in 1792 and last remodeled in 1949. It has 16 bedrooms and 35 bath rooms and the square footage of the house is 55,000 square feet--over an acre.Forget buying it. The monthly payments would be more than $1,000,000 each month and the up keep would be awful....has not been remodeled since 1949- that … (4 comments)

Mortgage Forgiveness Debt Relief Act - 05/05/11 02:01 PM
I know this is long but it comes from the Horse's mouth. Never did understand that expression but I remember Mr Ed the talking Horse and Francis the talking Mule from the movies. The banks are sending 1099's to people who have sold their homes in a short sale. Will you have to pay taxes on that income? Many of the answers are here and this comes directly from the IRS. Every situatlion is different and you really do want an expert to file your taxes if you are in this situation. Don't try to go this alone; an expert can … (0 comments)