California Public Employees - CalPERS Loans

If you're a California Public Employee, then you're a member of CalPERS, the California Public Employee Retirement System.

And if you're a member of PERS, then one of your benefits is the CalPERS home loan.

The CalPERS mortgage loan program is for purchase or refinance, has controlled closing costs, and has a competitive interest rate.  For example, today's 30yr fixed was at 5.875%.

Here are some of the great benefits of the CalPERS loan:

Free 60-day rate lock, with two automatic float downs.  This means that PERS actually requires your lender to lower your note rate if the interest rates have dropped on the day that you get approval or on the day that the loan documents are drawn.  Not too long ago I did one of these loans for a client and mentioned the free rate float downs as a passing thought.  I also mentioned that I didn't see the interest rates dropping.  I WAS WRONG.  When her loan closed she had a nice surprise - we dropped her interest rate by .25%!

100% financing option.  Typically, to get a conventional loan, you have to put at least 5% down.  With the PERS loan, you can actually take a personal loan (called a PRASL) against your PERS retirement for this 5%.  This is the only acces you have to your PERS retirement, so if you're a first-time buyer, use it!  The PRASL can only be 50% of your vested retirement, and maxes out at just over $18,000.  For example, if you have $35,000 in your PERS account and by a $350,000 home, you can use a personal loan, secured against your PERS account, for $17,500.  This comes in handy in affordable markets (like Hemet, for instance).

Lower MI.  PERS has lower mortgage insurance rates, which will save you money on your monthly payment.  Even if you're getting cash out on your loan over 80%, there are no 'hits' or additions to your MI rate.  Combine this with the fact that MI will soon be tax deductible (see my other blog post HERE) and you're in the money

Things to keep in mind with a PERS loan:

• You can only have one PERS loan at any time.
• A PERS loan is only good for your primary residence.  You would need some other loan solution for an investment property or a second or vacation home.
• You don't have to be a public employee right now for a PERS loan, just so long as you have a PERS account (retired, etc).