Danny Salas

Archive for the 'Loan Qualification' Category

VA…The BEST Loan In The Industry! “Generally” Speaking

The General Loan...VA

VA:  The “General” Loan

Where else can you obtain 100% financing without mortgage insurance…with ONE loan?  Well, USDA, loans, but…OTHER THAN THAT?  NOWHERE!  That’s right…VA Loans enable a veteran to obtain 100% financing, have the seller pay most bank fees, and also have the seller credit 4% of the sales price toward other closing costs and prepaid items like taxes and homeowner’s insurance.   In most cases, the VA buyer can move into the home with almost nothing down.  AND NOT HAVE A PAYMENT FOR UP TO ALMOST TWO MONTHS!  You just cannot do any better than VA Loans…they’re the best.  So, in a previous article, I may have mentioned that FHA is King; VA must be “The General Loan.”  I like that…”VA…The General Loan.”  Coin that!

Getting In With No Money

Let’s give an example…VA allows a veteran to put nothing down…0%!  So, automatically, we’re at 100% financing.  Then, over and above that, they allow a seller to credit up to 4% of the sales price, towards a buyer’s closing costs and impound account.  Even more desirable, the veteran is NOT allowed to pay many fees that most borrowers do have to pay.

The Critical Offer

When writing an offer, make sure you understand that the buyer is NOT allowed to pay certain fees.  Really, the only fees a veteran may pay is an origination fee, reasonable discount fees (to buy the rate down), credit report, flood certificate, appraisal, and title fees.  Any other “bank fees,” must be paid for by the seller.  So, if your lender has a tax service fee, a processing fee, an administration fee, an underwriting fee, or any other “bank fee,” prepare to have the seller pay for these fees.

Title And Escrow Fees Can Be Sticky

Also, keep in mind that there are VA guidelines regarding title and escrow:  Escrow must be paid for, by the seller.  Also, depending on how the contract is written, you may be able to have the seller pay all title fees, as well.  What I mean by that is VA’s guidelines state that title is to be paid according to “what is typical for the area.”  So, in Butte County, we generally structure the buyer and seller paying 50% of the CLTA Title Policy.  We generally structure that the buyer will pay the ALTA Title Insurance Policy.  However, if you write the contract to state that seller is to pay CLTA and ALTA Title insurance policies, than you free up more of the 4% seller credit funds that can go toward the buyer’s impound account and other costs.  Most VA underwriters don’t happen to live in the actual county that the contract is being written.  Therefore, what is typical for the area, is generally passed along as to what is written in the contract.

VA Rank

So, VA is a four-star loan.  The General Loan.  Feel free to call me when writing a VA contract.  We can go over the particulars, together.

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$8,000 Tax Credit…Alive Into 2010?

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Chico, CA Interest Rates Market Report – Economic Influences – September 30, 2009

Rates Are Still Low

I’m Down With ADP…Yeah, You Know Me…

Yeah, well I’m NOT so down with American Data Processing (ADP).  ADP is an American payroll company that releases its own unemployment statistics, separate from the government’s statistics.  Sometimes they’re right on…and other times…well let’s just say that other times…they’re just plain rediculous.  So, you have to be careful with the information that they report. 

254,000 Jobs Cut

ADP reported that the private sector of business cut 254,000 jobs.  They only expected that 200,000 jobs would be cut.  So, you’d think that the market would consider that horrible information and interest rates would plunge downwardly.  Part of the problem is the media.  Remember when we were losing 380,000 jobs, or more, a month?  The media’s take on this is that a loss of 254,000 is almost like Christmas!  Well, my take is that there is almost nobody left to lose their job.  So, where’s the good news in that?

The Real Jobs Numbers

So, let’s take a look at where we really are.  The population of the work force of the United States grows, at 1.5 Million people per year.  So, that’s 125 thousand new jobs a month.  So, if we’re losing 254,000 and the work force is growing at 125 thousand…that puts us at 379,000.  That number close to any other number mentioned in this article?  Now think about this…ten percent of that work force is unemployed.  So, fifteen million people are out of work.  But think about the people whose unemployment compensation has run out.  Also, if you don’t physically look for work in a four week period, you’re not included in those numbers, either.  That bring unemployment to more like, eleven percent.  Now, many of the Americans that lost their jobs over the past couple of years, had to settle for part-time jobs.  That’s another six percent.  So, realistically, The United States of America is seventeen percent (17%) unemployed.  UGLY!

What’s Your Point, Danny?

We’ve got a long way to go.  To put it mildly, we would have to have the best employment period, ever on record over a ten year course, to get back to normal six percent (6%) unemployment.  I know, “Danny Doom & Gloom.”  But, don’t let the media tell you that things are golly and rosy out there.  They’re not.  So, this information should keeps low, however, when the government stops buying Mortgage-Backed Securities, rates will move up.  And when inflation moves up, that’s when things could get ugly.  SO BUY NOW!  When I say that employment figures should keep rates down, I’m looking at the 7.0% range, in a couple years. 

Float Like A Butterfly

So, we’ll be ready to “sting like a bee,” with a quick finger on the lock button, but let’s see how the day pans out, before locking.  If you have time…

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90-Day “Flipping Rule” Fannie/Freddie/and FHA

What’s “Flipping?”

Here’s the deal…Different banks have different contracts with Fannie Mae and Freddie Mac.  That’s why Bank of America can’t do some loans that Wells Fargo can.  Period!  One interesting opportunity, that we’re seeing a lot of currently, is buying a property that has been foreclosed on, for an extremely low price, then turning around, fixing it up, and selling it for a significant profit.  Otherwise known as, “flipping,” in the industry.

The 90 Day Rule

Here’s a general rule.  When someone buys a home for a certain price, and tries to immediately sell it for more (immediately, here, means 90 days), banks have rules.  One of those rules is that you may not “flip” the property.  The key word, here, is “banks.”  Fannie Mae and Freddie Mac DON’T CARE if you turn and sell the property, immediately.  FHA Does!

Want To Turn An Immediate Profit?

So, what do people do if they’re trying to turn a quick profit?  Well, work with me, of course!  Here’s why!

What’s The Deal?

Fannie Mae and Freddie Mac’s guidelines are clear…you may purchase a home, fix it up, and sell it, promptly.  Even for a profit.  So, why don’t many banks allow a buyer to come in and purchase a “flipper” within the 90 days?  Let’s talk about FHA’s guidelines.

FHA “Flipping” Guidelines

 If you care, read about them, here!

Hey Investor, You Can Still Flip!

So,as I stated above, Fannie Mae and Freddie Mac have different contracts with different banks.  So, if Fannie Mae doesn’t care if you “flip” a property and Freddie Mac doesn’t care if you “flip” a property, why don’t banks let you?

Many banks interpret FHA’s guidelines as their guidelines, regarding flipping. But some banks’ legal departments understand these guidelines…particularly.  So, guess who knows which banks interpret Fannie/Freddie Guidelines regarding “flipping,” as opposed to FHA’s guidelines regarding “flipping?”  I DO!

So, if your listed home doesn’t meet FHA’s criteria, regarding “flipping,” but does Fannie/Freddie’s criteria…and you want to “flip” that home, immediately, for a profit…call me!  Access has contracts with banks that allow it!

 

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