With the new stimulus package being nearly passed by the President, now is the time for Mendocino Homeowners to start thinking about refinancing out of those higher interest option arm rates or purchasing a new home in Mendocino CA.
We all know how California has suffered through this housing slump, mainly because of our higher median home prices. The majority of Californians could not even think about refinancing their homes due to the fact that our homes are still to far above the conforming loan limit of $417,000. While we sat and watched many parts of the country such as the Midwest and Southern portions of the US refinance into lower conforming rates, we were basically held hostage by the secondary markets where loans are bought and sold. Since the credit crisis became news, the secondary market has virtually closed down the jumbo loan market by hiking the interest rates in some instances up to 11%.
For homeowners and future homebuyers, the new package will raise the current conforming loan limits of Fannie Mae and Freddie Mac from $ 417,000 to $729,750. Most importantly, for those homeowners with less than perfect credit scores, the package will also raise the loan limits on FHA loans from $362,790 in California to $729,750. Now with these changes Californians looking to refinance out of those high adjustable rates hovering between 7.00% to 11.00% will be allowed to apply for a lower rate. First-Time Homebuyers along with previous homeowners will now be able to purchase a home, seeing how this change should settle down the fluctuations in home prices.
One thing that both future and current homeowners must be made aware of however, is that the days of applying for a stated income/stated asset loan have all but gone to the wayside. Yes, there still are some stated income loans around, but the requirements are much stiffer then when borrowers previously applied. Fico's for most of these programs will not allow a borrower to be approved with less than a 720 credit score and 25% down. What will this mean when applying for a loan? You must be prepared to be fully documented. When applying for a loan a borrower or co-borrowers will have to supply 2 months of their most current bank statements along with 30 days of their most current pay-stubs along with 2 years W-2's. Those that are self-employed will also have to supply 2 years of 1040's. As the loan progresses the underwriter may ask for additional paperwork if clarification is needed, but most times, depending on your credit score, the above initial paperwork is all that is needed to achieve approval. For those with lower credit scores, FHA is the way to go. FHA is far more forgiving when it comes to a borrowers credit problems and misfortunes. A word of warning though, make sure the lender that you use to apply for an FHA loan is approved to close FHA loans.
For those wishing to learn more about the above programs or those looking to get a nife no-obligation pre-qualification, please call Scott Dovala, Branch Manager at Ascent Home Loans in santa Rosa CA toll-free at 877-392-0674 or 707-494-8532. Scott can also be reached by email at sdovala@ascenthomeloans.com, or visit my website at Ascent Home Loans.
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