Archive for the 'First Time Home Buyer' Category

Looking for a reason to Refinance - How about the lowest rates in 40 years!!

by
Shashank
on June 28, 2010
in First Time Home Buyer and Mortgage Rates
.  Leave a reply

CNBC and Bankrate.com just reported that home loan rates are at their all time lows. Yes, all time lows! This is great news for anyone who has yet to refinance to take advantage of the lowest rates ever recorded, or to purchase that new home or investment property more affordably than ever before.

Both 30 Year and 15 Year Fixed Rates clipped down to their lowest levels. All this is incredible as just months ago, many experts had anticipated that rates would be well above 5% this summer and on their way to 6% by year end.

30_year_fixed_rate

Last month, NBC reported that nearly 50% of all people with a 30 Year Fixed rate had rates higher than 5.75% - do you know where your interest rate is at currently? It’s worth a look, and a call to me to help check it out!

Plus – in most parts of the country, home values as reported by both the National Association of Realtors and the S&P Case-Shiller Indices are higher than last year. If you were unable to refinance last year, the combination of your current home value and historic interest rates may provide you a greater opportunity to save money than ever before.

Finally, even if your home has lost value from when your loan was originated, you may still be able to refinance. There are some special programs available that might allow you to refinance without private mortgage insurance, even if your loan will now exceed 80% of the present value.

Don’t miss this chance to save money. Even if you have already taken advantage of the historic rates that have been offered, don’t miss this chance to help your family and friends. Call me today and we can discuss what options exist for you.

Time waits for no one…and when rates rise, they will rise quickly. Call me at 408.615.0655 to take advantage of these special rates or complete our rate quote form on the sidebar.

Share/Save/Bookmark

Fannie & Freddie make it difficult to qualify for ARM and Interest only loans

by
Shashank
on June 20, 2010
in First Time Home Buyer
.  Leave a reply

Fannie Mae and Freddie Mac are making the following changes to interest-only and 3/1 and 5/1 ARM Loan Programs. These changes go into effect immediately.

ARM & Interest Only Loans

Interest Only Product Changes

Interest only transactions are no longer available for Cash-out refinances, Investment properties and 2 to 4 unit properties.

Interest only loans are still eligible on following transactions:

• 1-unit purchase and rate/term transactions

• Primary residences or second homes with a:

- Maximum LTV and CLTV of 70%

-Minimum credit score of 720

-The borrower must have minimum reserves of 24 months

3/1 and 5/1 ARM Qualification Changes

Fannie Mae is changing the qualifying rate for 3/1 and 5/1 Arms to limit the impact of potential payment shock for ARM borrowers. The borrower’s now must qualify using the greater of the note rate plus 2%, or the fully indexed rate. Lets understand this using an example:

Say you are buying a $500,000 single family house with 20% down payment and your start rate on a 5/1 ARM is 4%. Per earlier guidelines, you could have qualified for this loan with an income of $5800/month assuming you had no other debts. But with the new guideline, you need to qualify at 6% (start rate +2%). So now the income that you need to qualify for the same loan would be $6900/month. Thats a jump of $1100/month or ~19%.

As you can see from the example above, qualifying for ARM loans is going to be more difficult moving forward. If you would like to understand what loan program is more suitable for your situation, contact me for a complimentary consultation or fill out our rate quote form.

Share/Save/Bookmark

FHA 203K Rehab loans for San Jose Homes

by
Shashank
on June 9, 2010
in FHA Loans and First Time Home Buyer
. 1 Comment


Have you found that “almost perfect” San Jose home in the right location that is selling at a reduced price because it needs a little rehab work?

Unfortunately, most mortgage loan programs require homes “in need of work” to be complete before the financing can be secured for the purchase transaction. Whether the property needs a little or a lot of work, most First-Time Home Buyers simply don’t have the up-front cash to invest in a property prior to actually securing the financing.

However, the FHA 203(k) Rehab Loan may be your answer to turning that “fixer-upper” into your dream home.

The FHA 203(k) Rehab Loan is a popular mortgage program designed for buyers that want to finance the cost of home improvements into a new loan.

The financing for this loan will include the purchase price, as well as the improvements you are either required to do to be able to live in the home, or that you want to do, such as upgrade the kitchen, bathroom, etc.

This is also a great loan program for San Jose Real Estate Agents trying to sell homes that need repair. Buyers will have an option to complete those repairs and upgrades without a large upfront financial commitment. Think of this as a one-time close construction loan. At closing, the seller receives their money and the rest is put into an escrow account for the buyer to use for rehabbing the property.

Read more..

Share/Save/Bookmark

Who pays for what in a Santa Clara County Home Purchase

by
Shashank
on May 2, 2010
in First Time Home Buyer
. 1 Comment

Closing cost in Santa Clara CountyWhether you are buying or selling a home in Santa Clara County, you should be aware of what fees is paid by which party. Note that the fees I have listed below vary by county to county and is negotiable by contract. These are not an all inclusive list, but I have tried to include the most common items.

Fees generally paid by seller:

  • Real estate commission
  • Document transfer tax  ($1.10 per $1000.00 of sales price)
  • Any city transfer or conveyance tax
  • Owner’s title insurance premium
  • Escrow Fee
  • Tax proration (for any unpaid taxes at the time of transfer of title)
  • Recording charges to clear all documents of record to the seller
  • Any delinquent taxes, judgments, liens against the seller

Fees generally paid by the buyer:

  • Lenders title insurance premium
  • Notary Fees
  • Recording charges for all documents in buyer’s name
  • Tax proration from the date of acquisition
  • Interest on new loan from date of funding to 30 day prior to first payment date
  • Hazard Insurance premium for first year
  • County preliminary change of ownership fee

If you are looking to buy or sell in Santa Clara county and have any questions pertaining to the process or need a referral for a real estate agent, email me at shashank@arcuslending.com. To remain updated on the real estate/mortgage market you can follow me on Twitter.

Share/Save/Bookmark

Everything you wanted to know about FHA condominium approval

by
Shashank
on April 12, 2010
in FHA Loans and First Time Home Buyer
. 1 Comment

FHA CondominiumIn this blog post I will try to answer all FAQs related to FHA condominium project approval.  Beginning this year, FHA made some major changes to the Condominium process. I have done a lot of speaking on this topic and have written several blog posts. In this post, I am trying to get the most frequently asked questions and answers to those questions in one post:

Where can I go to find if the FHA project is already approved?

Go to FHA Condominium page to check if a project is approved with FHA. You can also check for all the approved projects by State, City or Zip code. Make sure in the “Approval Method” you pick “HRAP/DELRAP”.

What are the documents required to obtain project approval?

Click here to download the FHA mortgagee letter and scroll down to page # 16 to get a list of documents required for project approvals on condos which are either proposed, existing or converted. The same document also talks about the eligibility parameters of condominiums for FHA approval. Be sure to read the other mortgagee letter that gives some respite in the guidelines till  Dec 31, 2010.

How much time it would take to get a Condominium project FHA approved?

FHA in a notice sent on 4/9 mentioned that processing time for condo project is approximately 30 days from the receipt of a complete application.

Where can I go if I have more questions?

You can email to a dedicated mailbox at FHA at CondoProjectApprovalInquiries@hud.gov. The response time can exceed 72 hours.

You can also go to FHA page for frequently asked questions on condominium project approval.

And of course, you can always contact me by email at shashank@arcuslending.com.

Share/Save/Bookmark

It’s official - CA $10,000 Home Buyer Tax Credit has been extended

by
Shashank
on March 27, 2010
in First Time Home Buyer
. 1 Comment

On March 25, 2010 Governor Schwarzenegger signed Assembly Bill 183 which provides $200 million for home buyer tax credits. The $200 million will be divided between first-time homebuyers and “move up” homebuyers. The following a summary of the legislation:

The Tax Credit: Eligible purchasers may qualify for a credit against their state income taxes in an amount equal to the lesser of 5% of the purchase price or $10,000. The credit will be applied over a three-year period. The credit may only be applied to the purchase of one qualified property.

Property Eligibility: To qualify for the credit the property purchased must be a single-family residence, either detached or attached, that is the principal residence of the purchaser. The property may be newly constructed or a “resale” home.

Homebuyer Eligibility: First-time and “move-up” homebuyers who are at least 18 years of age. “First-Time” homebuyer means any individual who had no ownership interest in a principal residence for at least the preceding three-years.

Occupancy Requirements: Purchasers will be required to live in the home for at least two years or forfeit the credit.

Deadline: To qualify for the credit a property must be purchased on or after May 1, 2010, and on or before December 31, 2010.

If you would like to find out about how to qualify for this credit, call me at 408.905.6261.

Share/Save/Bookmark

How to claim your $8000 First Time Home Buyer Tax Credit

by
Shashank
on March 21, 2010
in First Time Home Buyer
. 1 Comment

Here’s how you can claim your $8000 First Time Home Buyer Credit. The video that I created also talks about how a repeat buyer can claim the $6500 Home Buyer Credit.



If you have any questions about Home Buyer Tax Credit watch this Video blog or contact me at shashank@arcuslending.com.

Share/Save/Bookmark

$10,000 California First Time Home Buyer Tax Credit may be extended

by
Shashank
on March 20, 2010
in First Time Home Buyer
.  Leave a reply

As reported in my blog posted on Jan 14th the California governor is considering to extend the $10,000 First-Time Home buyer Tax Credit that expired last year.

Here is the link to that blog post that gives you all the details - CA Proposes extension of $10,000 First-Time Home Buyer Tax Credit

Here is the video of a recent Press Conference by the Governor on this topic:

Share/Save/Bookmark

Stimulus Deadlines Threaten Rates and Affordability; Act NOW!

by
Shashank
on March 17, 2010
in First Time Home Buyer and Mortgage Rates
.  Leave a reply

Time to act is nowThe great author and speaker Og Mandino once said, “I will act now. I will act now. I will act now.”

This is great advice for prospective homebuyers over the next 45 days, as two key government programs that have kept home ownership more affordable than ever wind down to their completion.

First, the Federal Reserve’s Mortgage Backed Securities (MBS) purchase program will come to an end on March 31, just two weeks away! Without this program home loan rates could have been at least 1.00% higher…and potentially even higher…over the last year. Throughout 2009, the Federal Reserve was the primary buyer for MBS, purchasing as much as 80% of the supply in a given month. When this program ends, a lack of willing buyers will likely cause MBS prices to drop and rates to rise as a result.

The second shot will come on April 30th, which is the deadline for purchasers to get under contract to qualify for the Home Buyer Tax Credit program, which has been providing a tax credit of up to $8,000 to first time homebuyers and up to $6,500 to repeat purchasers.

Just How Much Will Waiting Cost?

While no one knows for certain what the future holds, two things appear clear. Home loan rates will likely be higher in the future, and free money from the government will be gone. These deadlines will affect both affordability to purchase and the opportunity to refi.

In a recent Wall Street Journal article, it was estimated that 37% of all borrowers with a 30-year fixed rate have interest rates of 6% or higher. The article also quotes Credit Suisse that more than half could lower their rate by nearly 0.75%.

For prospective homebuyers, any increase in interest rates erodes your purchasing power. In other words, a 1% increase in rate represents an approximate decline in purchasing power by 10%. For example, if rates increase by 1%, people who qualify for a $200,000 purchase price today may only qualify for a purchase price of $180,000 afterwards.

If you or anyone you know is looking to purchase or refinance a home, waiting could be costly! Act now…so you can save later! Contact me for a complimentary mortgage planning session or complete the rate quote form.

Share/Save/Bookmark

Overview of the Appraisal Process

by
Shashank
on March 16, 2010
in First Time Home Buyer
.  Leave a reply

AppraisalOne of the most critical parts of getting a mortgage is Appraisal. The purpose of an appraisal is to confirm the sales price for the lender.

What is an Appraisal?

An appraisal is a professional estimate of the value of the property that you are planning to purchase. The person who does the appraisal is called an appraiser.

Why do we need appraisal?

Lenders always require a home appraisal before they will issue a mortgage. They do this to protect their investment: if the actual market value of the property is lower than the sales price, and you default on your mortgage, the lender won’t be able to sell the property for enough money to cover the loan.

Cost & Time:

It usually costs between $350-$550 for an appraisal, depending on your property type and location. More expensive homes or homes that have more than 1 unit cost higher to get appraised.  The appraisal process usually takes anything between 3-10 business days.

Who chooses the Appraiser?

Recently implemented Home Valuation Code of Conduct (HVCC) prohibits mortgage brokers and commission-based lender staff from the ordering the appraisal or communicating directly with the appraiser at any stage during the transaction. The appraisal is usually ordered via an appraisal management company (AMC) that picks an appraiser on a random basis from the pool of appraisers available to them.

How does the appraiser arrive at the property value?

The most important component in arriving at the value is what is called comparable sales (or comps in short). These are similar properties usually located within a mile and have sold in last 90 days. The appraiser compares mainly the below features of the property against the comparables to arrive at the value

  • Square footage
  • Appearance
  • Amenities
  • Condition

So a large 4 bedroom home in an area where mostly 3 bedroom homes have recently sold will have a higher value, and a house with peeling paint and a patchy lawn in a well-manicured suburb will appraise at a lower amount than otherwise similar properties.

What if the property appraises for less than the sales price?

Though it can cause everyone involved in the transaction to panic; note that there are several options for the deal to still happen. If you wrote your offer contract to include a contingency requiring the property to be valued at the selling price or higher, you can:

  • Walk away from the deal
  • Negotiate with the seller to reduce the selling price
  • Put more money down to cover the difference between appraised value and the selling price
  • Request another appraisal

This post has been taken from my book “First Time Home Buying 101″. The book gives a step-by-step guide to home ownership and is available for sale at Amazon.com.

Share/Save/Bookmark

9 Benefits of Home-Ownership

by
Shashank
on March 15, 2010
in First Time Home Buyer
.  Leave a reply

HomeownershipHome ownership is the greatest American Dream, is it not? Even in this era of record foreclosures, the percentage of U.S. households that now own, rather than rent, is an all time high. It’s not a surprise given several benefits of homeownership.

Rent vs. Buy

No Matter what you are currently paying for rent, your total cash outlay over a period of several years will probably add up to a much higher total than you may have realized. Compare a renter who pays $1800/month with 5% increase in rent every year and a homeowner who buys a $500,000 home and the home appreciates at 5% every year.

In the above example a renter ends up paying ~$120,000 in rents over a 5 year period while a homeowner ends up building ~$140,000 in equity. These numbers may or may not be true in all real life scenarios, but it gives you an idea.

Tax Benefits

When you are figuring out how much you can afford to commit to monthly mortgage payments, do not forget about the tax benefits. The US government allows tax incentives that make it possible for many homeowners to exceed the standard yearly deduction. The following three components of your home mortgage are tax deductible:

  • Interest on your home mortgage.
  • Property taxes.
  • Loan points for a purchase mortgage

Homeowners Have More Stability

Owners typically stay in their home 12 years whereas renters stay no more than 3 years. Remaining in one neighborhood for several years lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.

Appreciation of Property

As home prices have fallen precipitously in today’s tough economy, the basis for realizing appreciation in future years is very strong. Historically, even with other periods of declining value, home prices have exceeded consumer inflation. From 1972 through 2005, home prices increased on average 6.5%, according to the National Association of Realtors®.

Forced Saving

The monthly payment helps in repayment of the principal amount, thereby increasing the equity of the house. Also when you sell you can generally take up to $250,000 ($500,000 for married couple) as gain without owing any federal income tax.

Increased Net Worth

Few things have a greater impact on net worth than owning a home. In a comparison of renters versus homeowners, the Federal Reserve Board of Consumer Finance found that the average net worth of renters was just $4,000 compared to homeowners at $184,400.

Positive Environments for Families

Children of homeowners are 59% more likely to become homeowners. Their children are also 25% more likely to graduate from high school and 16% more likely to graduate from college.

Having a place you can call your own

There can be no other benefit that can beat the emotional satisfaction of home ownership. Whether it’s having the nicest lawn on the block or having your own backyard and garage or being able to color the walls the way you want, is so much more fun than renting.

Special $8000 Federal Tax credit

And for a limited period of time, you can also get $8000 in Federal Tax credit if you are a First-Time home buyer.

If you are considering buying a house and would like someone to help you navigate through the process. Contact me for a complimentary session. You may also consider buying my book First Time Home Buying 101 which gives a step-by-step guide to homeownership.

Share/Save/Bookmark

Fixed Rate vs Adjustable Rate Mortgage (ARM)

by
Shashank
on March 14, 2010
in First Time Home Buyer and Mortgage Rates
.  Leave a reply

Whether you are buying a new home or planning to refinance, you may be asking the question - ARM vs Fixed mortgage rate - which one is better? When you are trying to make a decision on whether to take an Adjustable Rate Mortgage or a Fixed, you should consider two factors:

  • How long you plan to stay in the property?
  • What is the difference in the interest rate between an ARM & a Fixed?

Let me elaborate this:

Rates on ARMs are usually lower than fixed rate loans. But the rates are fixed only for 5 or 7 years. So if you do plan to live in your house for more than that period, you may risk your mortgage adjusting into a very high rate prevalent at that time. However, if the current interest rate difference is substantial you may still want to take the risk.

arm_vs_fixed

This chart assumes a $400,000 loan, the fixed rate is 5.25%, while for a 5 year ARM the start rate is 4.5%. In 5 years you would have saved $10,920 in monthly payments on an ARM loan. Assume, the rate on the ARM adjusts to 6% after that and you pay the same rate for next 25 years. In that case, if you kept the loan for 30 years - on a Fixed rate, you would have saved $31,080 in mortgage payments.

As you can see in the example if you were to keep the house for 5 years it absolutely made sense to get an ARM. However if you kept the loan for 30 years the fixed rate option made more sense. So make sure you factor both aspects mentioned at the beginning of the post before deciding on what kind of loan program works better for you.

If you would like help on deciding which program is better suited for your situation contact me or fill out our rate quote form.

Share/Save/Bookmark

Documents needed for San Jose First-Time Home Buyer Mortgage Pre-Approval

by
Shashank
on March 14, 2010
in First Time Home Buyer
. 2 Comments

Mortgage Pre-approvalAs a San Jose First-Time Home Buyer you should get a mortgage pre-approval done before you start looking for a house. Pre-approval helps you in 3 ways:

  1. It lets you know how much mortgage you can qualify for. This will help you search for homes in the same price range
  2. It  gives you an estimate of what your total housing payment would be, and
  3. If you like a house and would like to make an offer; a  “Pre-approval” letter makes your offer stronger.

You start the process by completing a loan application. You may also be required to submit few documents. Commonly requested items include:

For Wage Earners:

  • Last 2 year W2s
  • 2 most recent Pay Stubs
  • 2 most recent bank statements, 401(K) statements, Statement of any other liquid assets
  • If Bonus/Commission income – Last 2 year Tax returns

For Self Employed:

  • 2 Most Recent all bank statements
  • Last 2 year Tax returns
  • Last Quarter P&L statement

If you are a San Jose First-Time Home Buyer and would like to know how much you can qualify for, contact me for a complimentary session. I can be reached via email at Shashank@ArcusLending.com or via phone at 408.905.6261.

Share/Save/Bookmark

A Video on How Mortgage Interest Rates move?

by
Shashank
on March 6, 2010
in First Time Home Buyer and Mortgage Rates
. 1 Comment

If you watched the Mortgage Rates recently, it has been very volatile. Sometimes, going up and down several times a day. Have you ever wondered what makes mortgage rates go up and down? Watch this clip which explains the dynamic between bonds and mortgage rates - in simple terms.

(Video created by Dustin Hughes and Nick Mallory, www.edgevolution.com and www.thelendingjournal.com)

I subscribe to live bond market movements and tweet about it. If you would like to be updated about live mortgage rates follow me on Twitter or get our Live Mortgage Rate Quote .

Share/Save/Bookmark

New FHA Loan guidelines for San Jose Condominiums

by
Shashank
on February 1, 2010
in FHA Loans and First Time Home Buyer
.  Leave a reply

Some major changes went into effect today for FHA loans on San Jose & rest of the Bay Area Condominiums.

I. Elimination of “Spot Loan” Approval Process

If a condo project was not approved by FHA, a “spot approval” was allowed just for financing one unit. This process has been eliminated as of today. Now the entire project has to be approved either directly by HUD (process called HRAP) or by a Direct Endorsed Lender (process called DELRAP). With all the liabilities involved around the process most of the direct endorsed lenders would prefer HUD to directly approve the project. This can cause major delays at 2 ends:

  1. Collecting all the required documents from Home Owner’s association (HOA)
  2. HUD’s review of those documents to approve/reject the project

Dont be surprised if FHA loans on un-approved condominium projects take 60 days or more to close at least till the time HUD comes up with faster turn times or a more efficient process.

II. FHA Concentration Requirements

  • The FHA concentration (Percentage of units which has FHA loans in a project) requirement will be increased temporarily to 50 percent.
  • Exceptions to 50 percent Concentration Level - The FHA concentration may be increased up to 100 percent if the project meets all of the basic condominium standards plus some of the additional items.

III. Owner-Occupancy Requirements

  • At least 50 percent of the units in a project must be owner-occupied or sold to owners who intend to occupy the units. For proposed, under construction, or projects still in their initial marketing period, FHA will allow a minimum owner occupancy amount equal to 50 percent of the number of presold units.
  • Vacant or tenant-occupied real estate owned (REOs), including properties that are bank owned, may be excluded from the calculation of the required owner-occupancy percentage (should be removed from both the numerator and denominator).

IV. Pre-Sale Requirements

  • In the case of new construction, the pre-sale requirement will be reduced temporarily to 30 percent.

As of today, 45 condominium projects are approved in San Jose. If you are a buyer or a seller and would like to know if a certain project is approved or not, call me at 408.905.6261 or email me at Shashank@ArcusLending.com

Also read - FHA is changing guidelines for condominiums

Share/Save/Bookmark