San Mateo Mortgage Blog

When Should I Run My Credit?

Chris Williamson — Mon, 13 Jul 2009 23:46:06 +0000

Q: I am thinking of buying a house in the next several months to a year. I want to get an idea of how much I can afford, but my friend told me not to have them run my credit until I am absolutely ready to buy because my credit score will go down. Is that true?

What Could Happen if I Wait?

A few weeks ago, a client came in ready to buy a home. They had been pre-qualified several months ago by their bank and were told they could afford a $750,000 home. They had been out looking and found a house they really liked and wanted to make an offer. They came in with all their information and I ran a credit report. Low and behold, there were two collections on their credit report that were not theirs. In their case, their credit score had dropped below the acceptable level and they no longer qualified for the loan. They had to call all of the credit agencies and get the collections removed. Then once the collections were removed, I arranged to have a rapid re-score, which did bring their credit score back up to an acceptable level. However, during the time it took for us to correct their report, which can take several days, the house was sold to someone else. Had they come in when they started looking for a home and received a genuine pre-approval, they could’ve avoided this problem and purchased the house with no problem.

Are these Horror Stories Frequent?

No. Most of the time we see credit reports with correct information. However, for the people who have had incorrect information on their credit report, or for others who could fix a few minor things to improve their credit score, it is worth it to check it out in advance.

Will the Free Credit Reports Suffice?

The free credit reports are good for consumers to check once a year to monitor their credit. However, they aren’t going to go into as much depth as a credit report we run. So, if there is something buried deep in the report, you may not catch it. The free credit report is a good start, but when you get serious about buying a home, you should go in and speak with a Mortgage Advisor.

Will My Credit Score Drop Dramatically?

Running your credit can affect your credit score anywhere from 2-50 points. There is no formula and it really depends on your specific situation. You do get a two week window when you are shopping for a mortgage loan. Let’s say you go to three places within 14 days of your first credit inquiry and each run your credit. This counts as one inquiry to your credit score.

Bottom Line?

You should run your credit and get a genuine pre-approval when you start seriously looking to buy a home. This should be before you find the house you want to make an offer on, but doesn’t need to be when you first start looking at homes online. You have to be comfortable about running your credit and should be careful about who runs it and when it is run. We’re more than willing to arrange a consultation with you where we can give you the information and help you decide when it is best for you to run your credit based on where you are in the home buying process.

Curious About How Much You Can Afford?

Come in and see us, send us an email or fill out our secure mortgage application and we’ll help give you an idea of the type of program that would best suit your needs. We’ll also give you an idea about how much you can afford and what the monthly payment would be and you can decide the price range you are comfortable looking.

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Stated Income Loans Are Back…But Only With Us!

Chris Williamson — Fri, 10 Jul 2009 04:52:04 +0000

Are you a self-employed borrower looking to obtain a stated home loan for up to $3,000,000? Maybe you have been turned down for a refinance because your net income is too low, but you can afford the monthly payments? Or, maybe you are thinking of buying a new home, but you either don’t qualify for a traditional full doc loan or you qualify for less money than you’d like. You’re in luck…

Stated Loans Up to $3,000,000 Are Back

We are pleased to announce we’re the only lender in Northern California able to offer a true stated loan product for purchases and refinances up to $3,000,000.

What is a Stated Loan?

A stated income home loan allows the borrower to state their income on the application form and the lender agrees not to verify the stated income with pay stubs and income tax returns. The borrower is required to show and verify their assets as well as submit their credit report and FICO score.

Because of stricter lending rules and tighter regulations, most lenders pulled their stated home loan products. For some time, stated loans, which were very popular for self-employed borrowers, were impossible to obtain. Luckily, we are the only lender in Northern California who can offer a true stated loan product to our clients.

Who Would Be Best Suited for a Stated Home Loan?

Generally, self-employed borrowers with business write offs are the best candidates. Write offs decrease a self-employed borrowers net income, which is not factored in when applying for a full doc loan (where they verify your income with tax returns). Therefore, self-employed borrowers tend to qualify for less money, or may not even qualify at all. With a stated income loan product, the borrower is able to qualify for the most possible when purchasing a new home or refinancing their current home.

What Kind of a Down Payment is Required?

This stated loan product requires a 30% down payment on loan amounts to $3,000,000.

What is the Minimum Credit (FICO) Score Required?

The minimum credit (FICO) score required for this stated loan product is 700.

Other Requirements to Obtain a Stated Loan

Some other requirements of the stated loan products:

Money can be used for a purchase or refinance
Secondary financing is not allowed
Property must be the borrower’s primary residence
Property must be owner-occupied
Property must be a single family residence
Borrower cannot be a first time home buyer

What Counties are Eligible?

This stated loan product is available in the following counties:

San Mateo County
San Francisco County
Marin County
Sonoma County
Napa County
Contra Costa County
Los Angeles County
Orange County
Santa Barbara County
Ventura County

Do You Need a Stated Home Loan?

If you would like to explore the possibility of getting a stated home loan for a home purchase or refinance, please call me at (650) 520-0915, email me or apply online with our secure online mortgage application. We’ll take a look at your situation and determine how much you qualify for with no cost or obligation to you whatsoever.

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Mortgage Myth Busted: I Must Have Steller Credit to Buy a Home

Chris Williamson — Mon, 29 Jun 2009 21:19:09 +0000

Many people think they need to have stellar credit and no debt in order to get a home loan. That’s just simply not true. Different loan programs have different credit score qualifications. Some programs will accept credit scores as low as 580. For those of you who haven’t established credit, or don’t have an extensive credit history, other programs will even allow you to use alternative credit (rental history, utility bill history, etc) to qualify.

How Often Should I Check My Credit?

We recommend you check your credit score yearly. You can do this for free by going to www.AnnualCreditReport.com. At this site you can run your own credit report with each of the three credit reporting bureaus. Although the report will not be as detailed as our report because our report pulls a more thorough history, you will get a sense of where your credit is and if there are any errors. Running your credit at this site once per year will not affect your credit score and is a good way to keep tabs on your credit history.

What Should I Avoid When Thinking About Buying a Home?

Remember, even though you don’t need perfect credit to get a home loan, you should avoid large purchases like cars before and during the home buying process because large purchases may have a negative impact on your ability to qualify for a home loan.

Free Report: How Does Your Credit Affect You as a Home Buyer?

For our free 5 page report on your credit and how it affects you as a home buyer, please fill out the form below and it will be sent to your email immediately.

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Have Questions About Your Credit?

To discuss your credit score and its impact on your home purchase in further detail, please send me an email or give me a call at (650) 520-0915.

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July 11th: First Time Home Buyer Class

Chris Williamson — Wed, 24 Jun 2009 23:08:38 +0000

Are you a first time home buyer looking to purchase a Bay Area home and don’t know where to start? We have just the place!

San Mateo First Time Home Buyer Class

On Saturday, July 11that 10am we’ll be presenting a 90 minute program designed for San Mateo first time home buyers just like you. Buying a home for the first time can be a stressful and scary process for most people. We’ve found when you’re armed with the information you need to be successful, the process can be fun and exciting.

What Will You Learn?

In our jam packed 90 minute session, you’ll learn about

Low down payment programs (0-3.5% down payment) for first time home buyers
How you can receive up to $18,000 in tax credits for purchasing a home before November 30
How you can get up to $8,000 in closing cost credits from the federal government
Your credit score and how it affects you as a San Mateo County first time home buyer
The steps to buying your first home in San Mateo County
The pitfalls and rewards of buying short sales and foreclosures in San Mateo County

Please let us know you’re coming so we can reserve a seat and don’t have to turn you away at the door. You can register by filling out the form below or by calling (650) 520-0915.

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Don’t let a few unanswered questions keep you from owning a home in 2009!

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Mortgage Myth Busted: I Don’t Have 20% to Put Down So I Can’t Buy Now

Chris Williamson — Mon, 22 Jun 2009 19:21:39 +0000

In the past, lenders have required at least 20% down payment on a home loan. However, new financing programs only require you to put 3% down, or even 0% down in certain geographical areas of the Peninsula. (For a $300,000 home, a 3% down payment is $9,000.)

How Can I Buy With No Money Out of My Own Pocket?

Certain programs allow your down payment and closing costs to be a gift. This means if Mom or Dad, or other family members are willing to put up the money for your down payment and closing costs, you could potentially come to the closing table with none of your own money. As long as you can qualify for the loan and can make the monthly payments, gift money is ok.

What if I Don’t Have Any Family Members Willing to Give Me Money to Buy a Home?

As a first time home buyer, if you purchase a home before December 1, 2009, you qualify for an $8,000 tax credit from the federal government, which may now be used towards closing costs. Also, with certain loan programs, sellers are allowed to contribute up to 6% of the purchase price towards closing costs as well. Plus, if you buy a new home, you may be eligible for California’s $10,000 tax credit in addition to the federal income tax credit.

I’ve Heard You Need Cash Reserves to Qualify

Not always. Certain loan programs do not require cash reserves. Before, lenders required you had a few months cash reserves in the bank so you could still make your mortgage payment if you lost your job. Now, there are programs available that will allow you to spend every last penny in your bank account in order to close the loan, although we don’t recommend you do that.

How Can I Find Out How Much I Can Afford?

To find out how much you can afford, send us an email or give us a call at (650) 520-0915. We’ll evaluate your financial situation and show you what you can afford with no obligation or commitment.

Ready to apply now? Check out our secure online mortgage application.

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How does the CalSTRS 80/17 Home Loan Program Differ from Conventional Financing?

Chris Williamson — Thu, 18 Jun 2009 15:00:15 +0000

Max Down Payment is 3% of the Purchase Price with the 80/17 Program

Keep in mind with the 80/17 CalSTRS Home Loan program you are only allowed to put 3% down payment, no more. Most programs allow you to put more down if you want to purchase a more expensive home. For example, if you were approved for a purchase price of $500,000, you would put $15,000 down and get a $400,000 first mortgage and an $85,000 deferred second mortgage. If you wanted to purchase a home for $510,000 and thought you could just increase your down payment to $25,000 and purchase the home, you could not use the 80/17 loan program. The maximum amount you could purchase would be $500,000.

Since the 80/17 program offers a deferred 17% loan with no payments for 5 years, borrowers are not allowed to put more than 3% down to increase their purchasing power. For borrowers who would prefer to put more down, they should probably go with the conventional CalSTRS programs.

How Does the 80/17 Measure Up to Conventional Financing?

The CalSTRS program does offer traditional conventional financing with loan amounts up to $834,000 as well as the 80/17 deferred second loan plan for loan amounts up to $650,000. Because the 17% deferred loan is not factored into today’s affordability, you can afford 17% more than you would be able to afford with conventional financing.

For example, a borrower who qualifies for a $500,000 purchase price with the 80/17 CalSTRS program would only qualify for a $435,000 purchase price and have to put down 3.5% down with an FHA loan. So, for borrowers who don’t have at least 10-20% to put down, the 80/17 program is usually the best option.

Ready to Explore How Much You Can Afford with CalSTRS?

Call us at (650) 520-0915 or email us today and we will arrange a free, no obligation consultation to explore your financial situation and how you can best position yourself to finance your home.

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Home Loan Program Just for California Teachers!

Chris Williamson — Mon, 15 Jun 2009 15:00:44 +0000

Are You a California Teacher Looking to Buy a Home?

If you are a teacher in California looking to buy a home, you should consider the CalSTRS Home Loan Program before selecting a mortgage. With CalSTRS Home Loan Program teachers who are members of CalSTRS can buy a new home, refinance to a lower payment or take cash out with these competitive rate programs.

Who is Eligible?

If you are a California teacher who is a member of CalSTRS or if you receive a paycheck from a California public school (custodians, administrators, teacher’s aides), you are eligible for the CalSTRS Home Loan Program.

What Programs Are Available?

With the conventional 15 or 30 Year fixed rate program, competitive rates are available for the purchase of a new home or refinancing your existing home on loan amounts up to $834.000.

With the 80/17 Program, borrowers put 3% down and get an 80% first mortgage and a 17% deferred second mortgage that has no payments due for 5 years. Loan amounts for this program are up to $650,000.

Tell Me More About the 80/17 Program

With the 80/17 program, California teachers are able to qualify for a higher loan amount than they would with conventional financing due to the deferred second mortgage because the deferred payment is not factored into the borrower’s affordability. For example, a borrower with $72,000 gross yearly income and no debt would qualify for a $500,000 loan amount with the CalSTRS 80/17 program, $435,000 with the FHA 3.5% down payment program and $335,000 with a conventional 5% down payment loan. With the CalSTRS loan, the borrower would need $15,000 for a down payment, the FHA loan would require a $15,225 down payment and the conventional loan would require a $16,750 down payment.

Interest will accrue on the deferred loan over the 5 years, but no payments will be required. At that point, you can either pay the increased mortgage payment, or refinance to a CalSTRS conventional loan program or other loan program.

Don’t worry about forgetting this deadline. We monitor our client’s mortgages with our Mortgage Adoption Center and will contact you yearly to reevaluate the suitability of the loan program for your financial goals at no charge to you. We’ll also continue to monitor the market and alert you when there is an opportunity for you to save money on your mortgage for the life of the loan!

Ready to Explore How Much You Can Afford with CalSTRS?

Call us at (650) 520-0915 or email us today and we will arrange a free, no obligation consultation to explore your financial situation and how you can best position yourself to finance your home.

Stay tuned for our next post comparing the CalSTRS 80/17 Home Loan Program to conventional financing.

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The New Appraisal Process

Chris Williamson — Sat, 13 Jun 2009 01:12:04 +0000

Effective May 1, 2009 a new appraisal process for Bay Area homes went into effect, called the Home Valuation Code of Conduct. This new Code requires a third party service to schedule an appraisal and claims to provide enhanced protections for homebuyers, mortgage investors and the housing market. It used to be when a buyer had an accepted contract on a house, or when a home owner was in the process of a refinance, the lender would call a local appraiser to schedule an appraisal of the home. Now, the lender must call a third party service who will randomly select an appraiser and send them out.

So… What’s the Problem?

Even though this system has been in place for a month, we’ve heard several horror stories so far. Some lenders are farming their appraisals out to out of area appraisers who charge less, but don’t necessarily know the area. Thus, the home may not be accurately assessed by a local professional with local real estate market knowledge and expertise. Also, some lenders have been known to take 12-14 days to get an appraiser out there. When you have a financing contingency of 14 days, it doesn’t give much time to work out any problems that could arise and you (or your client) could lose the house of their dreams.

How Does Our System Ensure You Won’t Experience Any of These Problems?

Our system only orders appraisals from appraisers who meet our strict guidelines for costs and turn times. Plus, we only order appraisals from appraisers who service the property’s zip code, not just county, which eliminates the chance of getting an out of area appraiser who is not familiar with the local real estate market. We also have a department dedicated to expediting reports and reducing costs and turn times.

Want to Make Sure None of These Horror Stories are Your Stories?

Don’t trust your next transaction with a lender who could jeopardize its success. Please give me a call or send me an email to discuss these new regulations and how we can work together to ensure its effects are minimal.

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California’s New Home Buyer Tax Credit

Chris Williamson — Mon, 08 Jun 2009 15:00:36 +0000

Recently, California introduced their own tax credit for home buyers purchasing a home in California between March 1, 2009 and February 28, 2010. While the federal income tax credit is 10% of the purchase price not to exceed $8,000, California’s tax credit is 5% of the purchase price not to exceed $10,000. The California tax credit is distributed on a first come first-served basis until the $100 million maximum allocated funds is used. There is no maximum with the Federal income tax plan.

What Properties are Eligible?

Just like the Federal plan, single family residences, whether they are detached or attached, condominium, cooperative project unit, house boat , manufactured home or mobile homes are eligible for the credit. However, the home needs to be new construction (you are the first occupant of the home) if you use the California plan.

Do I Have to Be a First Time Home Buyer?

Unlike the federal income tax credit plan, those wishing to take advantage of the California income tax credit need not be a first time home buyer.

Does the Credit Need to Be Repaid?

As long as the buyer resides in the home for 2 years after purchase, they will not have to repay the California tax credit. Under the federal income tax credit, buyers must stay in their homes for at least 36 months.

Are There Income Restrictions?

Not with the California income tax credit plan. The Federal tax credit plan phases out the credit if gross income is over $75,000 ($150,000 for joint filers) and is not available to those who make more than $95,000 ($170,000 for joint filers).

When Can I Claim the CA Tax Credit?

You can claim 1/3 (or up to $3,333) each year for 3 successive years. If you decide to go with the California plan, make sure you have your escrow company fax FTB Form 3528-A within one week of closing. Then, you must file it with your tax returns.

Can I Use Both the Federal and California Tax Credit Plan?

Yes! As long as both purchases qualify, you can use both tax credits for a total of $18,000 in tax credits.

How Can I Get More Information Comparing the Two Plans?

Please fill out the form below to get our spreadsheet comparing the Federal Income tax credit plan to the California income tax credit plan. The spreadsheet will be sent to you instantly via email.

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Have Questions?

Please call us at (650) 520-0915 or email us to discuss how you can utilize either income tax credits when you purchase a home in 2009.

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Realtors: Learn How to Increase Your Buyer Base with FHA and CalSTRS

Chris Williamson — Thu, 04 Jun 2009 23:15:29 +0000

With home prices and mortgage payments as high as they are in San Mateo County, a lot of buyers aren’t going to have 20% or more to put down on a house, especially if it is their first house. Savvy real estate agents who are familiar with lower down payment loan programs will increase their buyer base and close more deals.

What Types of Lower Down Payment Programs Are Available Today?

There are a few lower down payment loan programs available in the San Mateo County real estate market today. The three most common programs are:

#1: FHA

An FHA loan is a government insured loan that allows home buyers to put as little as 3.5% down for a loan amount of up to $729,750. Several Realtors, especially those of you who have been around for a while, know the old FHA and red flags go up when a client wants to use this loan program. However, the new FHA is much more reliable, takes less time to close and does not have as many restrictions as the FHA of years past.

#2: FHA 203k Streamline

This program is another product of the FHA program and allows buyers to finance $35,000 to fix cosmetic repairs into their first mortgage. Buyers who don’t have extra money in their account to shell out for cosmetic repairs after paying their down payment and closing costs will now have the option to look at properties that need cosmetic work.

#3: CalSTRS

CalSTRS is an exclusive loan programs for teachers and others who are employed by the public schools and pay into CalSTRS. This program allows the buyer to get an 80% first mortgage, 17% deferred second mortgage, with a 3% down payment and no mortgage insurance. With this exclusive loan program, California teachers will qualify for a higher loan payment than a traditional mortgage or an FHA loan because of the deferred 17% second mortgage.

How Can I Learn More About These Programs and How They Will Increase My Business?

I will be presenting a program at Chevy’s in Foster City next Wednesday June 10th from 3-5pm. Appetizers will be served.

The program is free to attend, but because of space limitations, reservations are required. To register, please call me at 650-520-0915, email me or fill out the form below. I look forward to meeting you there!

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