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Guidelines for Purchasing a 3-4 Unit Property with FHA Financing in Alameda, CA
Direct Link:
http://www.youtube.com/user/RealEstateBuzzz?blend=1&ob=video-mustangbase#p/u/5/vRyNb2jdHZk
Are you a first time homebuyer interested in purchasing a 3-4 unit property in Alameda? Good news, with FHA financing you can do just that with a 3.5% down payment! Following are some of the guidelines for qualifying for this financing:
For starters, the property has to be your primary residence- meaning that you must live in one of the units.
Three to four unit self-sufficiency test:
The maximum mortgage for three and four unit properties is limited, so that the ratio of the monthly mortgage payment, divided by the monthly net rental income does not exceed 100 percent, regardless of the occupancy status.
• The monthly mortgage payment calculation for three and four unit properties includes the following:
Principal, interest, taxes, insurance (Principle, Interest, Taxes, and Insurance – PITI), including monthly mortgage insurance, and homeowner association dues computed at the note rate, if applicable.
• Net rental income for three and four unit property is calculated using the following formula
⇒ the appraiser’s estimate of fair market rent from all units, including the unit the borrower chooses for occupancy, and
⇒ minus the greater of the appraiser’s estimate for vacancies, or
⇒ vacancy factor used by the jurisdictional HOC.
This net rental income calculation is used to determine the maximum loan amount.
In layman’s terms, the total rents must be the same or greater of the total monthly mortgage payment, to include taxes, homeowners insurance, and the mortgage insurance. These rents must be determined by an FHA certified appraiser- meaning that you can’t use rental leases for this specific test.
So here is the biggest problem with writing an offer on a 3-4 unit building using FHA…
You don’t know what the building qualifies for until you receive the appraisal. In speaking to a few account executives for mortgage banks regarding this issue we believe a good rule of thumb is to use the standard ratio for conventional rental income. That is 75% of the gross rents.
For example if a building grosses $400 take 75% of the income, $3000 and the Principal, Interest, Taxes, and Insurance must be no more than $3000 a month.
Borrowers must still qualify for the mortgage based on:
⇒ income
⇒ credit
⇒ cash to close, and
⇒ projected rents received from remaining units.
⇒ 3 months reserves of borrower own funds (cannot be a gift)
Projected rent may only be considered gross income for qualifying purposes. It cannot be used to offset the monthly mortgage payment.
You still need to also qualify with the normal debt-to-income ratios in regards to your income, in which you can use the rental income. But you can only use 75% of the rental income for the purpose of this qualification. As the primary borrower, you can’t use what you would pay for that unit as rent to offset your mortgage. All you are including in order to qualify is your monthly gross income.
Feel free to contact The Werdmuller Group for any questions on the housing and finance markets!
Wendy Werdmuller, NMLS# 242612, info@garrick.biz, 510.846-3006.
Related Articles:
What’s the Difference Between Getting Pre Qualified and Pre Approved for a Mortgage?
Restoring FHA Loan Limits in Alameda, CA
The Truth About 203k Rehabilitation Home Loans
January 19, 2012 by Wendy Werdmuller · Leave a Comment
Restoring FHA Loan Limits in Alameda
The House of Representatives today voted to restore higher loan limits to $729,750!! This is great news considering that the high limits returned to $625,500 in October.
Here is a brief excerpt of an article published today at Bloomberg.com “For all of the objections from Republican lawmakers and interest groups, the measure survived congressional negotiations on the strength of last month’s Senate vote in favor of an amendment to boost limits for FHA loans and those purchased by Fannie Mae and Freddie Mac. The increase for Fannie Mae and Freddie Mac loans was dropped during the talks, and today’s vote leaves the FHA increase needing only a Senate vote and President Barack Obama’s signature to become law.
Lawmakers who back higher limits say withdrawing federal support could undermine a housing market that has struggled to recover from the 2008 credit crisis. The limits automatically returned to $625,500 in October, spurring lawmakers and housing lobbyists to press for a return to the higher level.”
Feel free to contact The Werdmuller Group for any questions on the housing and finance markets at info@garrick.biz or 510.282.5456.
To read the full Bloomberg Article click here:
U.S. House Backs FHA Loan-Limit Boost Over Republican Objections
November 18, 2011 by Wendy Werdmuller · Leave a Comment
Hot Cars Hot Models and Hot Mortgage Insurance Returns to the Real Estate Purchase Market in Alameda
Having trouble viewing?
http://www.youtube.com/user/RealEstateBuzzz?feature=mhee#p/u/0/1dhV0cuEX9s
Did you know that Conventional Mortgage Insurance is back?
Home Buyers have more opportunity than they have had since January 2008!!!
With National Conforming Loan limits of $417,000 and below home buyers can once again put just 3% down if they have a 680 fico credit score! FHA currently still requires 3.5% down and a 96.5% loan to value. Conventional mortgage loan pricing does have pricing hits associated with higher loan to value loans so FHA financing may have a lower interest rate. FHA financing however, has both upfront and monthly mortgage insurance. As a consumer, it’s important to go over both options very carefully with your mortgage professional.
On High Balance Loans now going to $625,500.00 from $729,750 in high cost counties like Alameda, Contra Costa, Santa Clara, and San Francisco, Conventional Financing has a minimum down payment of 10%. A borrower must have a 620 fico however with a lower credit score there will be hits to both mortgage insurance and interest rate. The maximum purchase price for conventional high balance loans in high cost areas is $695,000.
FHA also goes to $625,500. FHA allows just 3.5% down on their high balance loans as well allowing a borrower to purchase upwards of $648,186 in high cost areas like Alameda, Contra Costa, Santa Clara, and San Francisco.
Loans above 625,500 are available and still very favorable, however because this is primarily portfolio money the most attractive terms are adjustable rate mortgages fixed for a maximum of 10 years. The good news is Mortgage Insurance is available for Jumbo Loan as well. Currently a home buyer can purchase a home using jumbo financing and 10% down to borrower up to 2 Million!
Related Videos:
FHA vs Conventional Financing:
http://www.youtube.com/user/RealEstateBuzzz?feature=mhee#p/u/18/9aCQ0pI2Ky8
The Top 5 Questions Home Buyers Have When Getting a Home Loan
http://www.youtube.com/user/RealEstateBuzzz?feature=mhee#p/u/17/TjV5MPWETK0
October 18, 2011 by Wendy Werdmuller · Leave a Comment
The New Government Refinance Program ALAMEDA MORTGAGE MINUTE REAL ESTATE
Having trouble viewing? Watch on You Tube!
<a href=”http://youtu.be/tLW3_dfS_SI” target=”_blank”>http://youtu.be/tLW3_dfS_SI</a>
September 1, 2011 by Wendy Werdmuller · Leave a Comment
VA has announced changes to the VA Funding Fee effective for all loans closed on or after October 1, 2011
Alameda: WHOOOHOOOO!!! Can you believe good news in the mortgage industry??? When I heard there were changes to VA funding fees I thought for sure we would see a spike like we have in monthly mortgage insurance premiums on FHA loans. Fortunately, unlike the up front FHA MIP the VA funding fee is going DOWN!
On October 1st qualified active duty VA borrowers will be able to get a 100% LTV VA loan and the funding fee will only be 1.40%!! Here is a breakdown of the savings for first time use of entitlement:
No down payment: Current Rate – 2.15%
Loans Closed on or After 10/01/2011 – 1.4%
5% down payment: Current Rate – 1.5%
Loans Closed on or After 10/01/2011 – .75%
10% down payment: Current Rate – 1.25%
Loans Closed on or After 10/01/2011 – .50%
If you or someone you know are looking to purchase a home using VA financing this is great news! Please contact the Werdmuller group for more information or to get prequalified today!
Related articles:
How to Purchase a home with a VA Loan in Alameda, CA
VA Loan Requirements and Eligibility in Alameda, CA
Approved Property Types and Loan Limits for a VA Loan
VA Mortgage Loans in Alameda, CA- A Piece if Island History
Life After Short Sale the True Story of Ricky and Liz
No Flash? Having Trouble Viewing?
August 22, 2011 by Wendy Werdmuller · Leave a Comment
Life After Short Sale The True Story of Ricky and Liz
August 19, 2011 by Wendy Werdmuller · Leave a Comment
What a AA+ S&P Credit Rating Means to Real Estate ALAMEDA MORTGAGE MINUTE
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http://www.youtube.com/watch?v=sVZrpqHtI5Y
ALAMEDA CA; August 5th at night, Standard & Poor’s rating agency lowered the long-term rating of the U.S. government and federal agencies from AAA to AA+, for the first time in U.S. history.
Standard & Poor’s (S&P) is a United States–based financial-services company. It is a division of the McGraw-Hill Companies that publish financial research and analysis on stocks and bonds.
S&P stated the primary reasons for their downgrading the credit of the U.S. sovereign debt were twofold: Rising Debt Burden and Negative Outlook.
S&P States
•The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.
Now this is just another point to prove that while it may seem like we are living in this world of technology but we are closer to the great depression than you might think we just have internet, cell phones, and deodorant.
What does this mean to Real estate?
A number of Wall Street analysts are now predicting that interest rates across the board in the U.S. are assumed to rise in the coming months.
For future home buyers, fixed rate mortgages are now expected to go higher as well, thus making it even harder for millions of consumers to qualify for a new mortgage,
Some industry experts predict little impact…
Billionaire Warren Buffett said “Standard & Poor’s erred when it lowered the U.S. credit rating and reiterated his view that the economy will avoid a second recession. The U.S., which was cut Aug. 5 to AA+ from AAA at S&P, merits a ‘quadruple A’ rating.”
-World Property Channel
August 11, 2011 by Wendy Werdmuller · Leave a Comment
Debt Ceiling Raised Mortgage Rates Go Nuts Alameda Mortgage Minute
Having trouble viewing:
http://www.youtube.com/watch?v=Db_JxgC2xu4
SUMMARY:
President Barack Obama signed legislation Tuesday to raise the U.S. debt ceiling, avoiding a potential government default only hours before the deadline.
“It is an important first step to insuring that, as a nation, we live within our means,” Obama said.
The new law immediately allowed the Treasury to borrow an additional $400 billion, with more borrowing allowed later. It is also intended to reduce the nation’s $14.3 trillion deficit by at least $2.1 trillion over 10 years. The House of Representatives passed the bill on Monday by a vote of 269 to 161, after weeks of intense debate.
Failing to raise the federal debt ceiling, which is the maximum amount that the federal government can borrow without additional congressional action, would cause interest rates to climb, perhaps sharply, and they would remain higher than they otherwise would. Mortgage rates, among other interest rates, would rise alongside interest rates on U.S. Treasury bonds, making homes less affordable and depressing house sales and prices.
The last time the 10-year Treasury yield — a key benchmark for mortgage rates — fell this far was in the fall of 2010, when it dropped to 2.5%. Yields plummeted to around 2% at the end of 2008.
So for the time being rates are once again at all-time lows, so if you are a real estate agent it’s time to call your buyers and if you haven’t taken advantage of the refinance market call me today…ESPECIALLY IF YOU HAVE A LOAN BETWEEN $625,500 AND $729,750- WE HAVE UNTIL SEPTEMBER 30TH TO FUND THOSE.
Thanks for watching Mortgage Minute!
August 5, 2011 by Wendy Werdmuller · Leave a Comment
The Double Dip Recession of Real Estate Proven in Case-Shiller Report Alameda
Clearly this article is much longer than usual but the content is important…
Today I am floored. All the gains of the real estate market we saw from the Bush administration are officially gone. Lately, in The Werdmuller Group’s local market, Alameda, with somewhat of an emphasis on Harbor Bay Isle/ Bay Farm Island, I have seen huge losses in equity on properties I thought would appraise with no problem. Also, clients of mine who purchased in 2008, after the whole credit crisis thing had resided…mostly…have lost about 180K on a property they purchased for just under 600K.
I have been saying for months to clients “It’s unbelievable what is happening” however, I was still shocked! Because the Mortgage News Daily’s Matthew Graham will say it far better than I…
“The indices, which are billed by S&P as the leading measure of U.S. home prices, are constructed to track the price path of typical single-family homes in a number of metropolitan statistical areas (MSAs). The study uses matched price pairs of individual houses to construct a 20-City Composite Index and a 10-City Composite Index which are updated monthly. The indices have a base value of 100 which was set in January 2000. Thus a current index value of 150 indicates there has been a 50% appreciation since that date for a typical home in the subject market.”
Excerpts From The Release…
The U.S. National Home Price Index declined by 4.2% in the first quarter of 2011, after having fallen 3.6% in the fourth quarter of 2010. The National Index hit a new recession low with the first quarter’s data and posted an annual decline of 5.1% versus the first quarter of 2010. Nationally, home prices are back to their mid-2002 levels.
Twelve of the 20 MSAs and the 20-City Composite also posted new index lows in March. With an index value of 138.16, the 20-City Composite fell below its earlier reported April 2009 low of 139.26. Minneapolis posted a double-digit 10.0% annual decline, the first market to be back in this territory since March 2010 when Las Vegas was down 12.0% on an annual basis.
Eleven cities and both Composites have posted at least eight consecutive months of negative month-over month returns. Of these, eight cities are down 1% or more.
“This month’s report is marked by the confirmation of a double-dip in home prices across much of the nation. The National Index, the 20-City Composite and 12 MSAs all hit new lows with data reported through March 2011. The National Index fell 4.2% over the first quarter alone, and is down 5.1% compared to its year-ago level. Home prices continue on their downward spiral with no relief in sight.” says David M. Blitzer, Chairman of the Index Committee at S&P Indices.
“The rebound in prices seen in 2009 and 2010 was largely due to the first-time home buyers tax credit. Excluding the results of that policy, there has been no recovery or even stabilization in home prices during or after the recent recession. Further, while last year saw signs of an economic recovery, the most recent data do not point to renewed gains.”
“Since December 2010, we have found an increasing number of markets posting new lows. In March 2011, 12 cities – Atlanta, Charlotte, Chicago, Cleveland, Detroit, Las Vegas, Miami, Minneapolis, New York, Phoenix, Portland (OR) and Tampa – fell to their lowest levels as measured by the current housing cycle.”
In the midst of all these falling prices and record lows, Washington DC was the only city where home prices increased on both a monthly (+1.1%) and annual (+4.3%) basis. Seattle was up a modest 0.1% for the month, but still down 7.5% versus March 2010.
S&P/Case-Shiller reports data on both a seasonally adjusted and non-adjusted basis but recommends using the latter as being a more reliable indicator. We have used only the non-adjusted data in compiling this summary.”
The good news for the Bay Area is we didn’t make the list this time. Poor Las Vegas and Phoenix! Are there two cities that have been hit harder???
I predict these will be the “HOT” Mortgages for the Werdmuller Group, of First Priority Financial, for the summer based on what I see…
FHA 203K – first and foremost – We have a great HUD consultant, as well as contactors, and realtors ready to write the deal. This loan allows for construction costs to be built into the loan with Purchase or Refinance.
The Truth About the 203K Rehabilitation Loan in San Francisco
What’s the Difference Between a Full 203K and Streamline Mortgage in Alameda?
FHA 203B – This loan with the increase in FHA loan limits in 2008 has definitely helped the housing market and first time buyers trying to take advantage of the market. Just 3.5% down up to $729.750. Also, this will be a great option for those who foreclosed and short sold recently trying to get back into the market.
How to Purchase a Home One Day After a Short Sale
Private Money – Cash is king – right now cash deal are 1/3rd the market. That means if you are a loan officer reading this, you and I cannot compete on 1/3rd of the market. This is also truly astonishing! However, we work with many investors and private money offering short terms, quick funding, and can blanket several flips with 1 loan allowing the all cash buyer to take out cash after purchase to buy more all cash properties. We at the Werdmuller Group are currently working on financing 15 properties with 1 loan.
The VA LOAN – We have been posting extensive information on Va Financing because basically, if you are in the military it is WAY cheaper to buy than rent – also if you are at 100% Loan to Value, we can still put you in a refinance loan in the mid 4’s!
Details….
How to Purchase Home with a VA Loan in Alameda, CA
Approved Property Types and Loan Limits for VA Loans
VA Loan Requirements and Eligibility in Alameda, CA
We are doing great things for our clients, our referral partners, our local market, our industry, and the National Economy on the local level, where it starts, contact us today for superior everything. 510.282.5456.
June 1, 2011 by Wendy Werdmuller · Leave a Comment
Seven Things Your Agent Should Know About Your Mortgage Approval
While many experienced real estate agents have a general understanding of the mortgage approval process, there are a few important details that frequently get overlooked which may cause a purchase to be delayed or denied.
New regulation, updated disclosures, appraisal guidelines, mortgage rate pricing premiums, credit score, secondary approval layering, rescission deadlines, property type, HOA insurance requirements, title and property flip rules are just a few of the daily changes that can have a serious impact on a borrower’s home loan financing.
With today’s volatile lending environment, it’s obviously important for home buyers to get a full loan approval which clearly defines all contingencies that pertain to each unique home buyer’s scenario prior to spending any time looking at new homes with an agent.
Either way, we’ve listed a few of the top things your agent should keep in mind while showing you new properties:
Caution – Agents Beware:
Property Type –
High-Rise, Condo, Town House, Single Family Residence, Dome Home or Shoe House… all have specific lending guidelines that can influence down payment, credit score and mortgage insurance requirements.
Need to sell one home before moving into another? Is a property considered a second home if it’s in the same city? What if I’m buying a home for my children to live in, it is still considered an investment property?
These are just a few of several possible residence related questions that should be addressed by your agent and loan officer at the initial loan application.
Mortgage Rates are typically locked for a 30 day period, and one of the only ways to get a new rate is to switch mortgage lenders. Rates also have certain adjustments for property / residence type, credit score and down payment which could have a big impact on monthly payments and therefore approvals.
A 1% increase in rate could literally mean the difference between an approval or denial.
Underwriters watch the news as well. Borrowers who work in a volatile industry during hard economic times may have to jump through a few extra hoops to prove that their employment and income is secure.
Job changes, periods of unemployment or property location in relation to the subject property are other things to consider that may cause a speed bump in the approval process.
Title / Property Flip –
A Flip is considered a property that has been purchased by an investor and quickly sold to a new buyer within a 30-90 day period. Generally, an investor will do a little rehab work, fresh paint, landscaping…. and try to re-sell the property for a significant profit margin.
While it seems like a perfectly fair transaction, many lenders have strict guidelines in place that prevent borrowers from obtaining financing on properties that have a previous owner with less than 90 days of documented ownership.
These rules change frequently, and are specific to particular property types, so make sure your agent is aware of all the boundaries associated with your approval letter.
Homeowner’s Association Insurance –
Some lenders require Condos and Town House communities to have sufficient insurance and reserves coverage pertaining to specific ratios on units that are owner occupied vs rented.
It may also take a few weeks and cost up to $300 to receive an HOA Certification, so make sure your Due-Diligence period is set accordingly in the purchase contract.
Appraisal Ordering Procedures –
Appraisal ordering guidelines are changing quite frequently as regulators implement many new consumer protection laws created to prevent future foreclosure epidemics.
Unfortunately, some of the new appraisal regulations have proven to slow the home buying process down, as well as confuse lenders about the true estimate of neighborhood values.
VA, FHA and Conventional loan programs all have separate appraisal ordering policies, so make sure your agent is aware of which loan you’re approved for so that they document any anticipated delays in the purchase contract.
For example, if an appraisal takes three weeks and the average time for an approval is two weeks, then it probably isn’t smart to write a purchase contract with a four week close of escrow.
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Related Articles – Home Buying Process:
- Home Buying Process
- First-Time Home Buyer Credit Checklist
- Assembling Your Home Buying Team – Knowing The Players
- Important Factors To Consider When Getting Financing On A Foreclosure, Short Sale or New Construction
- Where Does My Earnest Money Go?
- HOA Hurdles to be Aware of When Looking at New Properties
- What You Need To Know About The Home Inspection Process
April 1, 2010 by Wendy Werdmuller · Leave a Comment
