Real Estate Purchase Mortgages, Mortgage Refinancing, & Hard Money Lending
Shane and Fernando
shopping for a purchase loan deal for a prospective client.
How much equity do you require to do a refi at this point?
You can do FHA refinance up to 97%, which means at least 3% equity, but the Catch 22 is that most people who need to refinance or want to bought at 100% financing in the last two or three years . When you do have equity, someone that stayed conservative, right now is an excellent time to get low rates. Actually today earlier this morning, we had 4.5% for a 30-year mortgage, which we hadn't seen since July, 2003 -- those types of rates. We are in the low 5% and if you lock on the right day, you can get 4% for a 30-year fixed mortgage.
How tough is it to qualify these days? Somebody walks in off the street and says, "I want to buy a house." What are you going to tell them?
A lot of people think the most important thing is credit, but it's not. Most people think you have to have a 700+ FICO score, which is not true. You can have low 600s even high 500s. The most important thing right now is income and the amount of debt you have. If you are bringing in $4,000 per month but you have credit cards, car loans, student loans, and who knows what other types of loans that take up $3,000 per month, you pretty much are not going to qualify. But if you are someone who barely uses credit cards, doesn't have a lot of debt, has a nice solid income, has been employed for at least one year -- they like to see two years -- you have a good chance.
What about the down payment?
In California, we still have 100% financing, although there are certain limitations. The California Financing Housing Authority has a program that will allow 100% financing, but there are income limitations, meaning you can't make more than a certain amount. Right now, for one or two people, they can't make more than $92,000. If it's a family of three or more, as long as they are not making $106,000 per year, there is a possibility that we can obtain 100% financing. The more traditional way is FHA, which requires 3.5% down payment. The FHA program offers financing with the smallest down payment where we don't have to worry about income limitations and so on.
What is involved in qualifying for FHA?
It's the same as conventional. They both run through the same automated Fannie Mae and Freddie Mac underwriting systems. It just has to qualify for purchase with the FHA. One big thing right now is the condition of the home. Some of these bank-owned properties the FHA will not finance because they are in poor condition. They need to have work done. The home needs to be in good condition.
The FHA is a little more lenient than traditional Fannie Mae and Freddie Mac underwriting. FHA loans can be an option for the buyer that needs to make a very minimal down payment. With FHA, a buyer can put down as little as 3.5%.
California Mortgage Home Loan Brokers,
a Los Angeles mortgage company
Attn: Michael McKown
575 Elm St., Suite #18
Long Beach, CA 90802
818-433-4050 Local
888-632-9939 Toll Free
E-mail to Michael