Tuesday, September 9, 2014

Mortgage Qualifications Are Getting Easier - But Not the Hoops

 

The paperwork requirements are still draconian for mortgages


No matter who you believe regarding the economic recovery, no one is claiming that housing has recovered as of this writing. Home prices are up, interest rates remain low, but overall transactions and new home starts remain very depressed. With fewer mortgages for both purchase and refinance being written, the supply demand curve is forcing financial institutions to modify their rules.

While no one thinks we are going back to the crazy Wild West rules of the mid 2000's, regulators and banks who tightened lending standards in reaction to the busted housing bubble, went much to far. Sanity is returning as the pendulum swings back towards the middle. In just the last few months for instance, credit score requirements have dropped from 640 to 600 at FHA, and some lenders are accepting 620 credit scores on conventional loans.

According to TheMortgageReports.com
23.9% of banks reported an easing of mortgage loan standards during this year's second quarter -- more than twice the percentage from earlier this year. Banks are reducing FICO requirements, lowering qualification hurdles, and bringing more loans to closing.
That's the good news. What has not changed is that your paperwork needs to be perfect! Underwriters for the banks and for the insurance companies are driving mortgage brokers and consumers nuts with their demands for details. However, if you are willing to live through a bit of frustration, now may be the best time in a decade to apply for a mortgage.

We will do our best to limit your frustrations by anticipating the paperwork and helping you to get it done right. Call today and we will help you with any questions you have, and help you make smart decisions with regard to the mortgage that will be best for you at this time.

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025

424-354-5325

bill.rayman@guaranteedrate.com
https://GuaranteedRate.com/BillRayman

Saturday, September 6, 2014

When Can I Get a Mortgage After a Chapter 7 Bankruptcy?

 


FHA rules require that you wait two years for a mortgage after Chapter 7


The medical bills piled higher and higher. The credit cards were maxed out, and because we'd missed some payments, they were now charging 24% interest. A consultant explained that we had no chance of paying off our debts within our lifetimes. We decided that circumstances like ours were exactly what bankruptcy was created to solve.

The attorney told us that we would be able to get credit right after the final adjudication, and he was right. Within months we received small credit lines on credit cards. Department store credit cards were also available. By year one, we were able to get a car lease, even though the upfront needed to be higher than average. But what about a mortgage.

The FHA sets the minimum. They have a rule that requires you to wait two years. Most lending institutions and other suppliers of premium mortgage insurance are going to require at least this two year standard.

Your credit report will be the next obstacle. In 2014 the banks and other mortgage lenders are requiring a 620 minimum credit score and FHA loans can go as low as 600. If you have been building up your credit during the years since your bankruptcy is is very likely that your credit score will now be in the mid 600's.

If you are hoping to purchase a new home or refinance your current home, and you've had a bankruptcy, we are ready to guide you through the process. Call Bill Rayman today to get the process started. 

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025

424-354-5325

bill.rayman@guaranteedrate.com
https://GuaranteedRate.com/BillRayman

Monday, August 25, 2014

Avoid These 5 Mistakes and Save Big Money on Your Mortgage

 You can effect the cost of your mortgage!


For most consumers, the largest single financial transaction of their life will be a mortgage. Unfortunately most borrowers approach the process of shopping for a mortgage with less care and analysis than they would for buying a new vacuum cleaner. This is likely because many folks feel that a mortgage is complex and confusing. Thus they allow lenders to control events.

  1. Choices - Like any consumer product or service, you have choices when you want to secure a mortgage. There is plenty of competition for these large dollar transactions. Don't merely use the company you used last time, or the one recommended by your neighbor. You could save on both interest and costs by shopping around.
  2. Broker - One of your choices is whether to deal directly with a bank or use a broker. Don't assume your best deal is with a bank. While it is certainly possible to get the best deal at a bank, you are far more likely to find the lowest cost offer with a broker. The broker will shop your loan with various lending institutions to find the best deal on the market at that moment in time.
  3. Shopping for Brokers - In today's world, you have much more information to go on than just a few years ago. Don't go with the first broker you hear about. In addition to getting recommendations from friends and family, you can now evaluate online reviews offered by Google, Yelp, YellowPages.com, and others. This is a huge purchase, check out 5 or 10 different brokers before you make a decision. 
  4. Credit Repair - Your broker should be able to help you make some decisions about fixing your credit in order to improve your score. Unless your credit score is perfect, don't assume you can't make it better. In some cases, it may be worth spending a little money with a reputable credit repair company in order to improve your score. You may save substantial interest and/or costs for premium mortgage insurance over the life of the loan by increasing your score just a few points. 
  5. Lock Your Rate - During the course of your escrow, interest rates will fluctuate, if even just a few basis points. Don't expect to be lucky enough to pick the absolute bottom rate offered while you are in escrow, but do keep track and be willing to spend a little bit of money to lock a rate that could save you a lot of money over the length of the loan. A good broker will help you with this process, but an honest broker will tell you that they are not in the business of guessing the bottom of short term swings in rates. 
If you follow these five directions, you are likely to get the best possible deal on your mortgage. One more thought. Take your time and be wise in the entire decision. Don't overspend for the home, take actions based on emotion or pressure, or figure that anyone else involved in the process has your best interests at heart. The broker is the most likely to be invested in your success. He wants a great review on the internet, and he wants you to tell your friends to call him. Moreover, he only gets paid if you complete a deal.

Bill Rayman has a well deserved reputation for being the kind of broker who cares a huge amount about getting you into the home or condo that you have chosen for your family. His reviews reflect that concern, and he can provide you with dozens of referrals. Call Bill now to discuss your real estate plan.  424-354-5325

Thursday, August 7, 2014

Honest Credit Reports and Scores



Have you ever done an internet search to get your credit score or your credit report? Have you wondered if any of these offers are actually free, or if every one of them has some kind of gimmick to tease you out of your hard earned cash in order to get the information you actually need?

As of August 2014 there are a couple that we can recommend.  If you need your credit score, go to www.creditkarma.com. You don't need to leave a credit card, there is no cost, and the process is easy. 

For a good credit report from Experion, try https://www.annualcreditreport.com/requestReport/landingPage.action.  However, they will charge you for a credit score, and for some reason they only provided Experion, though I asked for all reports.

Please note that we do not receive any compensation from either of these companies for this review.

If you would like to receive a credit score that is specifically created for mortgages, and may be slightly different than those you find online, call Bill Rayman to discuss your mortgage needs.

Friday, August 1, 2014

Update - House Flipping in the Los Angeles Market Is HOT

 

Big money going into flipping million dollar homes


Disclaimer - Do not try this at home

There was a time long ago in Los Angeles where aspiring actors would fix up homes in between auditions and gigs, then resell for a profit (hopefully). More recently there have been local investment groups made up from the crafts that were very good at making money this way. Now it would appear that the market is really made up of big money professionals, including banks fixing up their own foreclosed properties. All that competition has dried up the flippin market. Or has it?

Turns out Los Angeles is #1 in the US for house flips. While the most likely neighborhood is still Mid City, Encino, Granada Hills, and Northridge all made the top 25 nationally according to Redfin.

It would appear that the easy, inexpensive flip like you see on TV is not happening in LA, but more expensive homes are being fully modernized and upgraded, often at a cost of over $100,000. With the upper end of the market currently the most active, these properties sell quickly with good gains.

To read much more on the subject, check out:

What's Up with the Flippin Market?

and

Scary Tales From the New Million-Dollar Fixer-Upper Flip Scene

 If you are considering purchasing a home to flip and need a mortgage to do so, or if you need a construction loan for the improvements, please give Bill Rayman a call at 424-354-5325.

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025

424-354-5325

bill.rayman@guaranteedrate.com

https://GuaranteedRate.com/BillRayman



Monday, July 21, 2014

What If Nobody Sells Their Home?

 

Mortgage Rate Lock In, Underwater, and Paid in Full Restrain Owners from Selling


During most of the post WWII era there has been a constant churn of homes. In California the assumption was that the average homeowner would move every five years. People moved to better neighborhoods, bigger homes, due to corporate transfer, for a better job, or to be close to or far from relatives. We may be seeing a very large cultural shift brought about by a demographic and financial pressures that are tending to keep people right where they are.

Seemingly the most pressing of these outside pressures is low interest rates. More than 1/3 of all home mortgages are under 4%. With interest rates now closer to 4.25%, even a move to a similarly priced home will result in higher payments. It isn't unusual to hear homeowners say: "Why would I ever sell? I might rent it out, but with these interest rates, I'd be crazy to sell."

So that leaves 2/3 of the homes that are not faced with mortgage rate lock in. But half of those remaining have no mortgage at all. Some of those are recent purchases by investors and foreign buyers paying all cash for homes.

While owners with no mortgage have the most freedom to sell without consequence, they are also the least likely to sell. For investors, the incentive would only be there if the prices get ahead of the real rate of return. For those who paid off the mortgage and have lived in the home for decades, the most likely sale  is only in probate.

Statistically, the issue gets a bit sticky with the last group. 40% of all homes are still underwater - they owe more on the mortgage than the home is worth. Certainly some of the under 4% mortgage might be in this group, which would explain why the total is over 100%.  One can also surmise that there are very few holding mortgages over 5% who owe any substantial amount.

Others are reporting that millenials are perfectly fine with living with mom and dad or renting. They like the freedom to change locations as they change jobs, get married, or add kids. They are putting off the home ownership piece until their lives settle down.

As noted elsewhere in this blog, the balancing act between demand and supply seems precarious. The possible tipping points are many. An influx of legal and or illegal immigrants can drive demand and thus rental and purchase prices. An improving economy will result in some folks moving out on their own or going from three sharing space to two.  The current economic expansion has not reached the lower middle class, so millions continue to share space who would rather be on their own.

The odds seem to favor a continuation of increased rents and purchase prices, especially in nicer neighborhoods. However, rent pressures are also increasing in the lesser precincts as the population grows faster than new housing units are being added.

If you are interested in a mortgage at what are STILL historic low rates, where you also may say in a year or two, "Why would I ever sell this property with this interest rate?" call Bill Rayman today before the rates go higher.  424-354-5325

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025
bill.rayman@guaranteedrate.com

https://GuaranteedRate.com/BillRayman


Saturday, July 5, 2014

70% of Landlords in LA County Plan to Raise Rents in the Next Year

 

Time to buy a Home in Los Angeles? Rents are out of control!


On the 5th of July the temperature in the various Los Angeles valleys is 96. But as we say, it is a dry heat, and the breeze makes it feel like 93. On the West side of the 405 Fwy, most cities are around 80. Is it any wonder people still want to live here, regardless of traffic and the cost of living?

But is there a limit? 


33% of LA County renters spend more than half their income on monthly rent, reports a Harvard University's Joint Center for Housing Studies. Meanwhile wages have been down over the past six years. What are the options?

With the median apartment rent at almost $1500 a month, does it make more sense to buy? What kind of home can you own with a payment of $1500 a month in this market?  A rough estimate would put the cost of that home at $300,000. Assuming $60,000 down, the mortgage would be $240,000. With property taxes and expenses, and an interest rate of 4.2%, you should be at or around $1500.

So what does a $300,000 home in Los Angeles look like?  


A 2 bedroom home in Seal Beach, Hawthorne, Inglewood, Gardena, or San Pedro will keep you on the cooler climates, though the neighborhoods are as you would expect. You can do a lot better with a condo in any of those areas; better neighborhood, newer facility, and more amenities. You will definitely have a nicer overall home for the same money or less. 

You don't have $60,000 down, and can't afford $1500 a month. Go further inland. You can buy a home in Los Angeles for under $150,000, use an FHA insured mortgage and only put down $5000. Now your overall out of pocket might be under $1000 per month.

You can get a starter condo or home in this difficult market, and now may be the best time. Business seems to be picking up a bit. If the economy bounces back even to a 3% annual expansion, prices and mortgage rates will both go up. If you'd like to discuss what you can afford and qualify for in a mortgage in Los Angeles, give Bill Rayman a call at 424-354-5325.

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025

424-354-5325

bill.rayman@guaranteedrate.com
https://GuaranteedRate.com/BillRayman