Home >> California Current >> Archive for the 'Refinance' CategoryBank of America Lends a Helping Hand to Select Californians

Archive for the 'Refinance' Category

Bank of America Lends a Helping Hand to Select Californians

Published

Heindrick

on October 10, 2008

in Refinance

. 5 Comments

In the midst of all the troubled mortgages and failing banks, Bank of America seems to be setting themselves apart from the competition. Earlier this week, BofA stated that they would provide more than $8 billion in loan modifications nationwide; with about $3.5 billion allocated for select residents of California.

Now, one can only hope that others banks would follow this move and respond just as kindly. But before you applaud BofA for this seemingly heartfelt gesture, keep in mind this move is due to a recent lawsuit settlement resulting from their takeover of Countrywide; and they are still continuing cases against Countrywide and CEO Angelo Mozilo.

For those of you in California wondering about the provisions, here’s a quick summary of the necessary qualifications:

- Covers subprime and Option Arm Adjustable Rate Mortgages originated between January 1^st 2004 to December 31^st 2007
- Eligible borrowers must either be 60 days late or face a serious mortgage rate adjustment
- Some adjustable rate mortgage holders may qualify for an extension of their introductory rates
- High interest rate mortgage holders may be eligible for rate reductions
- Option Arm mortgage holders may be eligible for principal reductions
- Some home owners will have their mortgages automatically adjusted, while others will receive notice of their eligibility
- Other incentives include waived prepayment penalties, rates as low as 3.5%, and value adjustments according to today’s market values.

Is it Enough?
Now, $3.5 billion sounds like a great deal of money, and it is. But compared to what’s going on in California, it just isn’t enough to make any substantial changes. For the home owners who can qualify, I’m sure you will feel a definite and substantial change. But what we can all look forward to is the precedent that such a move will make. With recent help such as the FHAs Hope For Homeowners program, we’re starting to see more of these big entities take active participation to help address the problems we’re all facing. It’s something that will help in the long run and something home owners can look forward to.

Fore more information, here are some quick links for you to check out:

San Jose Mercury News - Bank of America Offers Assistance to California Mortgages

SFGate - BofA OKs Foreclosure Relief for Californians

(14 votes, average: 4.93 out of 5)

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Summary of Governor Schwarzenegger Veto Against California Mortgage Reform Bill

Published

Heindrick

on September 30, 2008

in Refinance

. 2 Comments

This past week, California’s Governor Schwarzenegger vetoed a bill that aimed to severely reform the mortgage loan industry. Advocates of the bill state that the bill would have addressed many of the problems that we are now paying the price for here in California. In particular, many aspects of the bill would introduce increased oversight of mortgage brokers and restrictive measures against specific lending practices.

Mortgage Reform Bill Summary AB 1830

Outlaw many negative amortization loans ( home owners monthly payment is less than interest due on loan) because many now owe more than their homes are worth
Prevent mortgage brokers from steering borrowers into more expensive and riskier loans if they qualified for lower-cost mortgages
Prepayment penalties would be capped
A lack of fiduciary duty to borrowers could result in loss of state licensing and up to $10,000 for each violation.

Schwarzenegger’s Reasons Behind The Veto

Restrictions would have only applied to state-regulated mortgage brokers
Federally charted banks would not be regulated and this would lead to unequal protection for consumers
Increased litigations where plaintiffs have much to gain and little to lose. Lenders and defendants would not be able to recover legal fees.
Increased restrictions and disclosures would lead to consumer confusion

The Housing Bills He Did Pass
In July, Governor Schwarzenegger passed a bill, addressing the increasing inventory of foreclosures in California, requiring mortgage lenders to contact specific borrowers (loans made in 2003 to 2007) to discuss loan modifications prior to starting their foreclosure proceedings. He also approved bills requiring brokers to disclose their state license number upon first contact and allow regulators to suspend licenses for violations of state law.

In a related veto, Schwarzenegger stopped a bill requiring lenders to give a 90 day notice of adjustable rate loans about to reset higher with details of increased monthly payments. Again, Schwarzenegger cited that such notifications could lead to confusion.

Here in California, reform bills such as these could do a lot to prevent fraudulent brokers and illegal activity. Although this Mortgage Reform Bill did not go through, there are still ways to protect yourself from such predatory lending. Be sure to read my “3 tips to avoid getting taken advantage of” if you are interested in more information.

(10 votes, average: 4.9 out of 5)

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Find Ways to Save Even If You Can’t Refinance

Published

Heindrick

on September 26, 2008

in Refinance

. 0 Comments

Forget the headlines, the breaking news, and the latest acquisitions. I know you’re concerned with the bottom line, and that bottom line is you. Who cares if mortgage rates are historically low if you aren’t able to refinance. If you have an adjustable rate loan that is about to spike or been scoping out the possibility of lower mortgage rates, you have probably seen how hard it is to refinance lately.

In parts of California, if you bought a house with the traditional twenty percent down, you’re still not guaranteed to qualify for a refinance today. Prices are returning back to their “normal” values and mortgage loans are harder to obtain because of tightening credit standards. Nowadays, excellent credit is only good credit, and good credit is only mediocre credit. I know we’re home to Disneyland, but say goodbye to the days of Mickey Mouse Lending. If you want to refinance, you had better be qualified.

So, What If You Can’t Refinance? Here are some ways you can still save:

Save Money with Loan Modifications
Lost your job? Suffered a financial hardship? Surprised by a significant change in your monthly mortgage? If you can present a substantial case to your lender, a loan modification is your next best option to a refinance. However, expect to meet a certain amount of resistance and get ready to “rumble” with your lender. Lenders may be more receptive because of the current crisis, but they are also overwhelmed by the growing number of those who need help. If you can present a convincing argument, a lender can modify your loan to reduce the interest rate or loan amount.

Save On Taxes by Re-Assessing Your Property Value
Can’t refinance because you don’t have enough equity? After you phone your friends and family about how this crazy market has taken away your equity, make sure you call the county and let them know as well. If your property value has dropped significantly since you purchased your home, having your property re-assessed will lower your property taxes. The savings may not be as much as a refinance, but every bit helps.

If you’re facing a foreclosure or your home is in jeopardy because you can’t refinance, make sure you actively look for help. Speak to your lender and contact mortgage professionals in your area. For more information, also check out helpful resources such as Hope Now and California Housing Finance Agency’s Foreclosure Avoidance Program.

(4 votes, average: 4.75 out of 5)

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Dropping Mortgage Rates – Three More Tips to Help You Refinance

Published

Heindrick

on September 18, 2008

in Refinance

. 0 Comments

Considering our economy and its current standing, it is more important than ever that you get serious if you want a chance at refinancing your home loan. Awhile back, I gave you a few tips to make sure you qualified for a home loan. With mortgage rates finally dipping below 6 percent, mortgage applications are surging. But while applications may surge, it hardly guarantees any of these people will get their money. Today, loans are harder to come by and even A-Paper Mr. and Mrs. Jones are having trouble.

Aside from strict guidelines, you’re battling against changing markets. Fannie, Freddie, Lehman Brothers, and Household-Big-Name-Bank all have their share of problems. Unfortunately, the consequences can trickle down onto you, the consumer. Here are a few tips to help you successfully refinance, despite this tough lending economy.

1. Get Ready
Organize. File. Prepare. Time is always an issue during a refinance. A few days of delay could mean changing rates, guidelines, or even bank failures. You’ll need to be detailed and organized, so there is no use in rushing. But start early, and start gathering your paperwork beforehand. As far as your credit is concerned, you want to obtain a credit report months in advance. This way you can correct mistakes and pay off debts beforehand so that it will be reported by the time you apply for a refinance.

2. Get Out There
Now that you’re armed and ready, get proactive. Ask for referrals from friends, research mortgage brokers in your area, and interview a handful of loan officers personally. These individuals and companies are going to be handling the finances of your home; you want to be able to trust them and be comfortable working with them. When you finally decide, keep the other potentials on your backburner-you never know when you might need their help.

3. Get Real
Don’t fall for any cheesy advertisements or dream rate offers. Worse of all, don’t fall for any “Yes-Men”. These individuals will guarantee you anything. “4.5%? No problem!” “No credit? No Problem!” Typically, these folks are either professional bait-and-switchers or serious time-vampires. Get real already. Find out what’s going on and demand actual results. If it’s low rates they promised, ask for it in writing. If they assured you that you can qualify, ask to see a lender approval. Often times, they might be scared to lose your business and will end up promising you the world. Give them a chance, but if time is dragging on, ask them what is really going on.

If you are interested in specifics, be sure to check out this page with even more refinancing tips. As of right now, lenders still prefer borrowers with strong credit and income, and more equity in their home. These tips won’t compensate your shortcomings, but keep them in mind and you’ll stand a better chance at successfully refinancing.

(6 votes, average: 4.17 out of 5)

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California Housing Crisis Lures Investors

Published

Heindrick

on September 9, 2008

in Refinance

. 3 Comments

“Buy when there’s blood in the streets”

Sure, median home prices in California might be 60 percent of what they used to be last year. But that isn’t scaring investors away. In fact, it is doing quite the opposite.

It seems that the apparently weak and slowing housing crisis in California has attracted its fair share of investor interest.

Associations and advertisements might spread the cliché slogan “It’s a great time to buy. Prices are dropping and rates are historically low.” You’ve heard it. And I know I’ve said a few times myself. Well this time there is some statistical data that puts some meat behind this story.

According to a research project by RightNow Consulting, July 2008 showed 11.41% of residential purchases were made by investors, compared to the 6.74% from July 2007. That’s a 69% increase in investor activity compared to last years data. The study was conducted by analyzing the property data and including all the non-owner occupied purchase transactions in all California counties. Homes that were not financed or were refinance transactions were removed from the property data.

California Gold Rush. Hardly. But one thing is for sure - investors see the potential of this weak market. Rentals are incredibly strong and home prices keep producing bargain discount homes. Financing these homes is certainly tougher, but sliding home prices makes it much easier for these investors to come up with the required 25-35% percent down payment. Mortgage rates have been historically low; and with the recent bailout of Fannie and Freddie, rates will see even greater improvements. Bottom line, investors will continue to hang around as long as we are still bleeding.

(13 votes, average: 4.92 out of 5)

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Tips for the Self Employed Considering a Mortgage Refinance

Published

Heindrick

on August 20, 2008

in Refinance

. 1 Comment

Oh the joys of being self-employed - the flexibility, the freedom, and the write-offs. But as soon as you start shopping for a home loan, you will find that all that flexibility and freedom gets thrown right out the window.

In its place are stacks of paperwork and documentation that your wage-earning counterparts can often avoid; tie this in with the current lending standards and you may just want to throw in the towel already. Well, all hope is not loss, you will just have to work a bit harder and endure a bit more to get your next home loan. But you are self employed, so hard work and patience shouldn’t scare you right?

Why All The Fuss?

Lenders know that your income is quite sensitive. So while you may have made a killing last year, they know there is no guarantee you will do the same this year.
You make how much? Are you sure? One of the benefits of being self-employed is the ability to write off certain deductions and business expenses - and boy do you use it. As a result, your income shrinks significantly on your financial paperwork.
Abuse of stated income and low documentation. Stated Income and Low Doc loans were catered towards the self-employed borrower due to the nature of their income. But because of recent abuse, lenders are now wary to accept such little documentation on their loans nowadays.

Gather Your Documentation. All of it.

Income Verification - Lenders will want to see proof of your self-employment income through two years of tax returns, profit and loss statements.
Asset Verification - If you claim a certain income, lenders will want to see your assets supporting that type of income. Have your bank statements, investment records, and any other savings documents ready on hand. In addition, some lenders may look at your bank statements to see if the cash flow of deposits supports your income as well.

Keep all this in mind months before refinancing so that you will have time to better prepare yourself. I didn’t mention it too much in this post, but your credit and LTV better be in great shape too. The last thing you want is to take additional hits for low credit and little equity. If you were thinking of purchasing a home, start saving for your down payment too - the advertisements you see are typically aimed towards wage earners and lenders will like to see a larger down payment from you. Read more about qualifying for a home loan today.

(8 votes, average: 4.75 out of 5)

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4 Simple Things You Should Do Before Refinancing

Published

Heindrick

on August 13, 2008

in Refinance

. 4 Comments

Although refinancing has taken a step back due to tightening guidelines, many people are still looking for ways to lower their rates or “fix” their ARMs. Here are four things I recommend you do beforehand so that you can find the best deal when refinancing.

Have a Credit Report Ready
At this point in time, you’re primary focus is not going to be on the score itself. Instead, you want to make sure all the details and reported accounts are 100% accurate. Having a credit report beforehand will give you an advantage as you now have time to dispute any mistakes and also take action to perhaps raise your score. For this initial credit report, you don’t necessarily need a report from a mortgage company. In this case, you can go to http://www.annualcreditreport.com/ for you free annual credit report; it won’t give you a score, but it will give you an idea of what is being reported and a chance to catch any possible mistakes

Find Out What Your Home is Worth
One of the biggest factors affected by this housing situation is the issue of declining values. Before starting the refinance process, you want to get a general idea of your home’s true value. When I say “true” value, I mean get a substantiated comparison check - not just a value off the top of your head or the value from a few months ago. There are sites that will estimate your value, but the best thing you can do is to look at comparable sales in your area. Have a mortgage consultant or appraiser take a quick look at recently sold homes in your area that match your property. Finding this estimate is important because lenders are looking heavily into the amount of equity invested in your home.

Organize and File
During the refinance process, you want to focus on getting what you want and having the process as streamlined as possible. That being said, nothing slows down the process more than being frazzled and trying to find lost paperwork. From bank statements to pay stubs, organize these important documents as soon as you can. File them in a folder and make copies so you can hang onto the originals. This commonly includes pay stubs, W-2s, tax returns, bank statements, lease agreements, and retirement savings. Lender guidelines will vary, but generally you want to document sources of income and assets with some kind of paperwork.

Go Shopping
First of all, ask trustworthy friends or family for solid references - be sure to ask how their experience was and if they would go back to them in the future. If you found a few brokers or banks you would like to choose from, compare what they each have to offer. While rates and fees are important, make sure these individuals are ones you can work with. If you do end up deciding, keep the other “potentials” in mind - you never know when things might go sour and it will help to have these backups.

By taking these steps, you will simplify the refinance process on your end greatly. Want more information? Here’s another post about qualifying for a home loan in today’s market.

(8 votes, average: 4.5 out of 5)

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Short Term Interest Rates Still a Viable Option

Published

Heindrick

on August 8, 2008

in Refinance

. 1 Comment

Although we are certainly paying the price for the exotic loans of the past - short term mortgage loans can still be practical in today’s housing market. Whether you are considering refinancing into an ARM or making an interest-only payment - my advice is to plan carefully. If you simply are attracted to the introductory rates of ARMs or the low monthly payments, please continue reading this post as well as every financial headline you can get your hands on. The fact is, short term mortgages play an integral role to the investment markets but can still be quite dangerous in the wrong hands.

What is considered Short-term?
A mortgage that carries an adjustable rate period such as a 5/1 or 7/1 can be considered short term. Typically these types of mortgages offer significantly reduced introductory rates as well as allowing interest-only payments. As you can see, you can guess what type of market would be tempted - the subprime folk.

Short-term mortgages today
Well, in today’s market - values are dropping and rates have climbed a bit. With this in mind, savvy consumers can certainly utilize the functionality of a short-term mortgage. Again I must reiterate that the attractiveness of short-term mortgages should not be their introductory rates and interest only payments. Before exploring short-term mortgages, you should make sure you can still qualify under “traditional” guidelines and realize that a short-term mortgage is exactly that - a short-term plan.

So Who Are the “Savvy” Consumers?
In this market, the “savvy” consumer would be investors whose goals are complimented by these short-term mortgages. The introductory rates are fine because their long term goal for most of these properties are well below the 10 year mark, and thus makes no sense to lock in an interest rate for the next 30 years. And investors will see the interest-only options as a means of managing cash flow and avoid having to invest even more money into these properties. Now an investor could be anyone, but they are certainly not just your typical homeowner. The average homeowner is better off with a traditional fixed rate mortgage, as this carries greater security and caters to their long-term goal of home ownership.

The economy is tough, and markets are certainly complex - but with the right planning and research, you can see how short-term mortgages are still quite a viable option. Remember though, when considering a mortgage of any sort, make sure you speak with a qualified professional to evaluate your options and see if the loan is right for you.

(7 votes, average: 4.43 out of 5)

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Qualify for a Home Loan Today

Published

Heindrick

on July 28, 2008

in Refinance

. 14 Comments

With lending guidelines tightening up, here are a few tips that that will help you qualify for a home loan purchase or refinance today.

Establish Your Value as a Borrower
The most important factors in today’s guidelines are your credit history and your value as a borrower. Lenders want to make sure you are worthy of credit based on your credit history and they also want to know if you can pay it back.

Prepare Your Credit
- Do not make any big purchases. As tempting it may be to buy that plasma tv or leather sofa for your brand new home, a major purchase could jeopardize your credit history. It may not drop your score, but lenders will see these purchases as added liabilities. As a result, your debt to income ratio could suffer and you could pay a higher interest rate or worse yet, not even qualify for the loan product.
- Credit Inquiries. It is certainly a very savvy move on your part to shop around for the best deal, but keep your eye on the credit inquiries. In today’s market, lenders will not make an exception for your FICO if you miss the cutoff by a few points. Lenders see these inquiries as possible future debt liabilities. As long as you limit these mortgage inquires within the 25-30 day grace period - credit reporting agencies will understand you are shopping around for a good deal.
- Credit Score Preparation. If you are in the market for a new home or looking to refinance, I hope you know your credit score before you even apply. What I mean is that long before you enter the loan process, you should examine your credit. Don’t wait for your agent to let you know you could have qualified for such and such product if only your score was 40 points higher. Be proactive and take the steps to strengthen your credit so you can get the best loan terms possible.

Establish Your Income.
Now, I wish that you could boost your income if I simply told you to, but we all know that is another story. However, lenders are looking very deeply into your income these days, so it is important to you establish this value correctly.

- Gather your documents. Collect and file your pay stubs as well as your W-2 forms
- If you are self -employed. Make sure you have your tax returns as well as your profit and loss statements for the last 2 years.
- If you own property. Have your lease agreements to document the rental income and the current lender and loan information for each property
- Show me the money. If you document a certain income, lenders will want to see the supporting assets. Make sure you have the bank statements, 401Ks, or investment statements to support your income.
- Be Honest. Nothing wastes more time than having to deal with corrected documents and having to re-verify the numbers. Save your time and your integrity - be honest.

Bottom Line - Come Prepared
While your mortgage broker can work out the details, being prepared will speed up the process and give you a better chance at securing your loan sooner. In the last year, guidelines have not only become tighter, they have become more volatile. Over a weekend or even during the workweek - guidelines can change at a moments notice. By preparing yourself, you will have done your part to making sure you can qualify today.

Source: www.fairisaac.com , www.myfico.com

(3 votes, average: 4.67 out of 5)

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House Passes Rescue Bill to Stimulate Housing Economy

Published

Heindrick

on July 25, 2008

in Refinance

. 4 Comments

President Bush has favored stricter guidelines for the mortgage lending business and up until Wednesday he has threatened to veto a bill that would hand $3.9 billion to local governments as a bailout. As of Wednesday however, it is speculated that he will sign the “multi-use” legislation and the senate will likely pass on it as well.Treasury secretary Henry Paulson commented that it was easy to advise President Bush to sign this rescue package because he felt it necessary to “stabilize the troubled housing and credit markets.” As a result, the House voted 272-152 and it is expected to become law quite soon as heavy speculation agrees that both Senate and Bush will approve.

Key Highlights of Legislation

FHA Changes
- Mortgage limits for high cost area increased to $625,000 from $417,000
- Cash Down payment is set at 3.5%
- Seller Down Payment Assistance will be terminated on September 30
- Rescue fund for special refinance programs into FHA fixed rate products
Fannie Mae and Freddie Mac
- Temporary powers to provide liquidity and capital
- Treasury to offer unlimited line of credit to Fannie and Freddie over the next 18 months
- Treasury has authority to buy stock in companies if necessary
First time Home buyer credits
- Tax refund incentives for first time home buyer up to 10% of purchase price not to exceed $7,500
Grants for States
- Grants totaling about $3.9 billion to buy and rehabilitated foreclosed properties

How does this help you?

The bill is primarily focused on helping troubled “at-risk” homeowners as well as injecting capital and supporting the two major government sponsored enterprises - Fannie Mae and Freddie Mac. This is good news for California residents as the FHA changes will support mortgage limits which are needed for our above average median home prices. In addition, the bill itself will specifically aim to refinance “at-risk” borrowers into new fixed-rate FHA loans. First-time home buyers should speak to their local mortgage consultant to see if they will qualify for the new tax-refund incentive worth up to $7,500.

Sources: NYT,CNN Money

(12 votes, average: 4.92 out of 5)

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Heindrick So

About the Author:

Heindrick So is a mortgage consultant at a local Bay Area Real Estate Brokerage - specializing in residential wholesale lending.

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California Current

Archive for the 'Refinance' Category

Bank of America Lends a Helping Hand to Select Californians

Summary of Governor Schwarzenegger Veto Against California Mortgage Reform Bill

Find Ways to Save Even If You Can’t Refinance

Dropping Mortgage Rates – Three More Tips to Help You Refinance

California Housing Crisis Lures Investors

Tips for the Self Employed Considering a Mortgage Refinance

4 Simple Things You Should Do Before Refinancing

Short Term Interest Rates Still a Viable Option

Qualify for a Home Loan Today

House Passes Rescue Bill to Stimulate Housing Economy

Key Highlights of Legislation

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