A lot of people ask this question and it’s a great question.
And the answer is- That depends. You see, guidelines are always changing and will continue to change over the next few years.
In fact they JUST changed! So here is how it stands today…
CONVENTIONAL
Bankruptcy – You may apply for a Conventional, Fannie Mae loan after your bankruptcy has been discharged for FOUR (4) years.
Foreclosure – Home was given back to the bank – no owner participation.
- 7 years from the date the foreclosure was completed and transferred back to the bank if the borrower had NO extenuating circumstances. Minimum FICO of 680 required.
- 3 years from the date the foreclosure was completed and transferred back to bank with acceptable extenuating circumstances, AND 10% down payment. Primary home purchase and rate/term refinance only. Non‐owner and second homes not allowed
Short Sale / Deed in Lieu of Foreclosure -
Short Sale- Home sold, but sales price didn’t cover amount owed.
Deed‐in‐Lieu- Home returned to lender in exchange for canceling the loan.
- 7 years from date sale closed and transferred to new owner or transferred back to the bank for less than 10% down payment and minimum FICO 680.
- 4 years from date sale closed and transferred to new owner or transferred back to the bank with 10% down payment and minimum FICO 680.
- 2 years from date sale closed and transferred to new owner or transferred back to the bank may be possible with acceptable extenuating circumstances and 10% down payment.
Bankruptcy Chapter 7- Debts are discharged through BK, client does not pay any debts owing.
- 4 years from date of discharge - 2 years from discharge date may be possible with acceptable extenuating circumstances
Bankruptcy Chapter 13- Debts are paid back on a monthly scheduled payment plan by client.
- 2 years from date of discharge or
- 4 years from dismissal date
FHA (DETERMINED BY DATE OF CREDIT APPROVAL)
Foreclosure, Deed‐in‐Lieu of Foreclosure
Foreclosure: Home was given back to the bank – no owner participation.
Deed in Lieu: Home returned to lender in exchange for canceling loan.
- 3 years from date foreclosure was completed and transferred back to bank.
- Less than 3 years, but not less than 12 months from date foreclosure was completed and transferred back to bank may be acceptable depending on the results of acceptable extenuating circumstances.
Short Sale- Home sold, but sales price didn’t cover amount owed.
- 3 years from date sale closed and transferred to new owner. - No waiting period if borrower had no late payments on any mortgages and consumer debts within the 12 month period preceding the short sale, AND borrower is not taking advantage of declining market conditions. Subject property may not be in the same geographic region.
Bankruptcy Chapter 7- Debts are discharged through BK, client does not pay any debts owing.
- 2 years from date of discharge with re‐established credit paid as agreed or no new credit obligations incurred.
- Less than 2 years, but not less than 12 months from date of discharge may be acceptable if the bankruptcy was caused by acceptable extenuating circumstances, and the borrower has since exhibited a documented ability to manage financial affairs in a responsible manner.
Bankruptcy Chapter 13- Debts are paid back on a monthly scheduled payment plan by client.
- 1 year payout period under bankruptcy has elapsed and the borrower’s payment performance has been satisfactory; and all required payments made on time.
VA (DETERMINED BY DATE OF CREDIT APPROVAL)
Foreclosure, Deed‐in‐Lieu of Foreclosure Foreclosure: Home was given back to the bank – no owner participation.
Deed in Lieu: Home returned to lender in exchange for canceling loan.
- 2 years from date foreclosure was completed and transferred back to the bank.
- 12‐23 months from date foreclosure was completed and transferred back to bank; if credit re-established and paid as agreed, and was caused by acceptable extenuating circumstances.
Short Sale: Home sold but sales price didn’t cover amount owed.
- 2 years from date sale closed and transferred to new owner. - No waiting period if borrower has no late payments on any mortgages and consumer debts within the last 12 month period preceding the short sale, AND the borrower is not taking advantage of a declining market.
Bankruptcy Chapter 7- Debts are discharged through BK, client does not pay any debts owing.
- 2 years from date of discharge.
- 12‐ 23 months from date of discharge if credit is re‐established and paid as agreed; and was caused by acceptable extenuating circumstances.
Bankruptcy Chapter 13- Debts are paid back on a monthly scheduled payment plan by client.
- 1 year payout period under bankruptcy has elapsed and the borrower’s payment performance has been satisfactory and all required payments made on time.
When you are ready to get back into the housing market or for more information please contact me at 510-282-5456 or info@garrick.biz.
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Feds Announce Bay Area Real Estate Mortgage Interest Rates to Stay Low Until 2014
I receive a lot of questions regarding what fees a Veteran is allowed and not allowed to pay in a real estate transaction in Alameda. Here is a summary of allowable and unallowable costs from one of the lenders I frequently work with.
ALLOWABLE CLOSING COSTS
A Veteran may pay any of the following reasonable closing costs and fees:
1% origination fee for purchase and cash-out loans, the origination fee is calculated using the total loan amount, including the financed funding fee
For IRRRLs, the origination fee is calculated using the payoff minus any cash payments by the veteran, if applicable
Reasonable discount points: Brokers may charge only those discount points required to buy down the loan’s interest rate – Correspondents/VA Automatic customers are exempt from this requirement, however, the discount points charged must be reasonable and customary
VA appraisal fee – The veteran may not pay a fee higher than the maximum allowable appraisal fee for the state in which the property is located – See VA Appraisal Fee Schedules
VA compliance inspector fees – Only if required by the NOV (Notice of Value)
Recording fees
Taxes and stamps
Credit report fees – a $50 credit evaluation fee may be paid in lieu of the credit report fee for automated underwriting approvals
Pre-paid items
Insurances (hazard and flood, when required)
Flood zone determination
Well and septic inspection fees
Survey, if required by lender or veteran, except for surveys of condominiums
Title insurance, title examination, title endorsement, title policy, title search
Environmental protection lien endorsement
Express mail fees for refinances if the saved per diem interest cost to the veteran will exceed the cost of the special handling – Anything over $50, provide the invoice to verify fee
VA funding fee
Mortgage Electronic Registration System (MERS) fee
Closing protection letter – Should not exceed $35
Fraud protection report
Termite, provided the loan is a cash-out refinance – The borrower may never pay these fees for purchase transactions
If a fee is not listed above, assume VA does NOT permit the veteran to pay it
NON-ALLOWABLE BORROWER-PAID CLOSING COSTS
Generally, the veteran may NOT pay any of the fees listed below, but the seller or lender may pay the non-allowable fees. However, if no origination fee is charged and the fee is not listed in the section below that itemizes fees the Veteran may never pay, the Veteran may pay non-allowable costs up to 1% of the purchase price. The veteran may also pay a combination of non-allowable fees and an origination fee, provided the combination does not exceed 1% of the purchase price.
The non-allowable fees are:
Attorney fees other than for title commitments
Lender’s appraisals
Lender’s inspections, except construction loan inspections and inspections required on the appraisal/NOV
Loan closing or settlement fees
Doc prep, underwriting, loan application, admin or processing fees
Assignment fees
Photographs
Interest rate lock-in fees
E-Mail, fax, copying, postage, stationery, telephone or other overhead charges
Amortization schedules, Truth-in-Lending fees, etc.
Notary fees
Escrow fees or charges
Commitment fees or marketing fees of secondary purchasers
Trustee fees
Fees charged by third parties, regardless of affiliation with lender
Tax service fees
Termite inspection fee for a purchase transaction
Attorney fee that benefits the lender
Broker fee
Brokerage fees or commissions charged by real estate agents or real estate brokers in connection with a VA loan
Prepayment penalties financed through a refinance transaction – When the payoff states a pre-payment penalty is due, veterans may pay pre-payment penalties out-of-pocket only
FHA/VA inspection fees for builders (Normal new construction inspections of the dwelling are permitted when required by the appraiser)
Any portion of the seller’s lien(s) or short sale fees
For purchase transactions, the cost of required repairs and inspections must be paid by the seller. This policy applies to all purchases, including purchases of REO properties. VA does not permit the veteran to pay for repairs other than minor termite damage repairs
For more information about VA financing feel free to call 510-282-5456 or email info@garrick.biz.
For the past couple weeks mortgage rates have been inching up. That changed today, January 25th 2012 when we saw a huge rally in interest rates largely in part to the FOMC statement that rates are staying low until “late 2014”!!!
Let’s flashback to the December 13th meeting…
“The Committee also decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013."
Now this week, January 25th meeting…
“The Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014."
According to RateAlert’s David Shirmeyer outside of a dramatic failure overseas we shouldn’t see rates go much lower than where they are. That being said we shouldn’t see rates getting much higher either thanks to the fed announcement.
Mortgage rates are once again at all-time lows! While mortgage interest rates certainly don’t seem like they will go higher overnight there is more risk than reward in waiting once rates get below 4%. Lenders get very busy when rates are this low and often times raise rates just to slow down the volume.
To request accurate information including a quick rate quote online visit "http://www.garrick.biz".
Are you a first time homebuyer interested in purchasing a 3-4 unit property in Oakland? Good news, with FHA financing you can do just that with a 3.5% down payment! Following are some of the guidelines for qualifying for this financing:
For starters, the property has to be your primary residence- meaning that you must live in one of the units.
Three to four unit self-sufficiency test:
The maximum mortgage for three and four unit properties is limited, so that the ratio of the monthly mortgage payment, divided by the monthly net rental income does not exceed 100 percent, regardless of the occupancy status.
• The monthly mortgage payment calculation for three and four unit properties includes the following:
Principal, interest, taxes, insurance (Principle, Interest, Taxes, and Insurance - PITI), including monthly mortgage insurance, and homeowner association dues computed at the note rate, if applicable.
• Net rental income for three and four unit property is calculated using the following formula:
⇒ the appraiser's estimate of fair market rent from all units, including the unit the borrower chooses for occupancy, and
⇒ minus the greater of the appraiser's estimate for vacancies, or ⇒ vacancy factor used by the jurisdictional HOC. This net rental income calculation is used to determine the maximum loan amount.
In layman's terms, the total rents must be the same or greater of the total monthly mortgage payment, to include taxes, homeowners insurance, and the mortgage insurance. These rents must be determined by an FHA certified appraiser- meaning that you can't use rental leases for this specific test.
So here is the biggest problem with writing an offer on a 3-4 unit building using FHA…
You don’t know what the building qualifies for until you receive the appraisal. In speaking to a few account executives for mortgage banks regarding this issue we believe a good rule of thumb is to use the standard ratio for conventional rental income. That is 75% of the gross rents.
For example if a building grosses $400 take 75% of the income, $3000 and the Principal, Interest, Taxes, and Insurance must be no more than $3000 a month.
Borrowers must still qualify for the mortgage based on:
⇒ income
⇒ credit
⇒ cash to close, and
⇒ projected rents received from remaining units.
⇒ 3 months reserves of borrower own funds (cannot be a gift)
Projected rent may only be considered gross income for qualifying purposes. It cannot be used to offset the monthly mortgage payment.
You still need to also qualify with the normal debt-to-income ratios in regards to your income, in which you can use the rental income. But you can only use 75% of the rental income for the purpose of this qualification. As the primary borrower, you can't use what you would pay for that unit as rent to offset your mortgage. All you are including in order to qualify is your monthly gross income.
Feel free to contact The Werdmuller Group for any questions on the housing and finance markets!
Buy and bail is the result of buying a new home with the intention of bailing on the old. It is considered mortgage fraud. A Borrower must have 30% equity AND two years of Rental Income to use market rents on their current property.
If you have questions comment below or give me a jingle! Please forward if you know someone who could benefit.
Without a doubt, this is, and probably will be the most personal video I have or will make. I had an epiphany of sorts at the Mortgage Success Source Mastery Business Plan when I saw and met Jeffrey Gitomer.
I made this video mainly so his presentation would stay fresh in my head and to help me strive to have the best year ever. My hopes are that you get the same motivation to have a great year, whatever year, month, or day it is on the calendar.
If you like this video please share, click the like button, etc. and thank you so much for watching!
Friday President Barack Obama signed a bill that reinstates the recently expired higher loan limits that were in effect for FHA and VA loans through December 31, 2013 but does not provide this extension to Freddie Mac and Fannie Mae.
According to the article on Mortgage News Daily, “The new legislation also sets an annual fee for loans guaranteed by Freddie Mac and Fannie Mae.This fee is in the amount of 15 basis points on the outstanding principal balance of the loan and is "independent of any guarantee fees upfront on ongoing, charged to the borrower, and the premium loan fee shall not be affected by changes in guarantee fees."The fee, according to the bill, is expected to achieve an annual income of $300 million in revenue which "shall be used to pay for costs associated with maintaining loan limits established under this section. “
This is great news for homebuyers who are refinancing or purchasing a home with FHA financing!Feel free to contact The Werdmuller Group for any questions on the housing and finance markets at info@garrick.biz or 510.282.5456.
The House of Representatives today voted to restore higher loan limits to $729,750!! This is great news considering that the high limits returned to $625,500 in October.
Here is a brief excerpt of an article published today at Bloomberg.com “For all of the objections from Republican lawmakers and interest groups, the measure survived congressional negotiations on the strength of last month’s Senate vote in favor of an amendment to boost limits for FHA loans and those purchased by Fannie Mae and Freddie Mac. The increase for Fannie Mae and Freddie Mac loans was dropped during the talks, and today’s vote leaves the FHA increase needing only a Senate vote and President Barack Obama’s signature to become law.
Lawmakers who back higher limits say withdrawing federal support could undermine a housing market that has struggled to recover from the 2008 credit crisis. The limits automatically returned to $625,500 in October, spurring lawmakers and housing lobbyists to press for a return to the higher level.”
Feel free to contact The Werdmuller Group for any questions on the housing and finance markets at info@garrick.biz or 510.282.5456.
THE Home Affordable Refinance Program has been “re stringed”
HARP was designed to assist distressed borrowers who are current on their mortgages but “underwater” meaning they owe more than their home is worth.
It’s no surprise several studies identified these borrowers as being likely to strategically default on or walk away from their homes and foreclose.
While regulations won't be finalized until November 15th the changes to “Harp 2” include -
•Removing the 125 percent loan-to-value. •Waiving risk-based fees on borrowers who take shorter term mortgages and reducing those fees for others.
•Eliminating the need for a new property appraisal where there is a reliable AVM (automated valuation model) estimate provided by the GSEs
•Eliminating certain representations and warranties required of lenders to obtain the GSE guarantee. This will protect lenders from many of the buy-back requirements they face under current guidelines
•Extending availability of the program through the end of 2013
These changes may allow double the homw owners the opportunity to refinance but still will help only borrowers who are current on their payment and who have loans guaranteed by one of the GSE's, Fannie or Freddie prior to July 2009. Thus it will impact only a small percentage of underwater borrowers.
Credit Suisse estimates 720k borrowers will be able to refinance which translates to between $2 and $3 billion in interest savings; so HARP 2 will not have a huge effect on the economy or on the real estate market.
To find out if your home is owned by Fannie or Freddie you can contact my team at info@garrick.biz .
The program is set to come out November 15th 2011.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
I receive a lot of questions regarding what fees a Veteran is allowed and not allowed to pay in a real estate transaction in Alameda. Here is a summary of allowable and unallowable costs from one of the lenders I frequently work with.
h 2012 when we saw a huge rally in interest rates largely in part to the FOMC statement that rates are staying low until “late 2014”!!!
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