by California FHA Mortgage Loan Expert on February 28, 2010
California USDA Loans Are A Great Alternative to FHA Loans.
Why?
Because USDA loans in California have no down payment requirement.
And no mortgage insurance.
Which means your monthly payment will be lower with a USDA loan than it will be with a FHA loan.
Here is a simple example of a comparison between an FHA loan and a USDA loan here in California:
A USDA loan in California would save you almost $5000 on what would be required for your down payment and approximately $30 a month in payments.
Purchase Price: $135,000.00
FHA
- Minimum Down Payment Required (3.5%) = $4725
- Estimated Monthly Payment = $941.30 **
- Interest Rate = 5.25%
- Annual Percentage Rate = 6.044%
- Term = 30 years
USDA
- Minimum Down Payment Required (0%) = $0.00
- Estimated Monthly Payment = $910.69 **
- Interest Rate = 5.25%
- Annual Percentage Rate = 5.730%
- Term = 30 years
** estimated monthly payment includes an estimated $150 for taxes and insurance
The USDA loan program here in California is designed to help homeowners who live in rural areas – or at least areas that are designated rural areas. You might be surprised to learn just how many areas are eligible for USDA financing that are not actually in the middle of nowhere. In fact, it is on the outskirts of many California towns that the most affordable homes are – and many of these homes are eligible for USDA financing.
USDA Property Eligibility and Income Information
California USDA Loan Program Highlights:
- No monthly mortgage insurance, 1-time guarantee fee of 2% that you finance into the loan.
- 102% Financing based on appraised value, if appraised value exceeds sales price, borrower can finance closing costs and repairs
- 30 Year fixed term
- No minimum cash contribution requirement
- No asset requirements.
- Borrowing of unsecured funds for closing allowed (with minimum credit score requirement).
- No First Time Homebuyer restrictions.
- No maximum on seller concessions and 100% gifting is allowed – You can purchase a home with no money of your own into the transaction.
- Previous housing payment is not required.
- Declining markets do not affect LTV.
If you are ready to save a lot of money, contact us (we are California USDA home loan experts) with questions and for more information today.
February 28, 2010
by California FHA Mortgage Loan Expert on February 23, 2010
What Not To Do Before Purchasing A Home
Finding the right home to purchase is the most exciting part of a real estate purchase, but most people do not realize that some of the most critical aspects of the entire process are the things you don’t do. If you want to conclude the deal successfully, it’s important to know what not to do before purchasing a home.
Avoid making any large purchases
For at least three to six months prior to your planned home purchase, avoid making any large purchases of any kind. This may sound extreme, but potential lenders are going to look at your spending habits and especially at the amount of debt you have already incurred; the more debt you owe, the less they will be willing to lend you for your home purchase.
A really good example is buying a car. You may find a great deal on exactly the model you want, and of course the dealer is going to be happy to help you finance it even if it means an extended loan term, a higher interest rate, or the like. The problem arises when you go to a potential mortgage lender looking for a home loan and they take a look at your income, your cash available, and your debt. Suddenly that car payment looms quite large because it increases your debt to income ratio and reduces the amount of mortgage loan you’re qualified to get.
The same advice holds true for all kinds of other major purchases, such as:
• Furniture
• Electronics
• Appliances
• Jewellery
• Vacations
Always put your home buying plans first, and avoid making large purchases that could derail those plans unexpectedly.
Keep your money safe and unmoved
Potential mortgage lenders will look at all aspects of your finances, and we do mean all aspects. This includes detailed examination of your entire financial situation, especially your source of funding for the down payment and the closing costs. Your checking accounts, savings accounts, certificates of deposit, mutual funds, retirement accounts, and the like are all of interest to your lender and you will be asked to provide at least two to three months worth of statements showing the amounts of money and where they are located.
If you have changed banks or moved money around between or among accounts during the previous two to three months, this can seriously complicate the process of getting the lender to approve your home loan. Why? It might seem tedious and even frustrating, but the lender has a responsibility to fully understand your finances and especially your sources of liquid assets. Anytime you move money around, such as between accounts, from one bank to another, or the like, the lender is going to want detailed receipts, cancelled checks, and everything else necessary to create an accurate paper trail of how, when, and where your money has moved around.
So if you want to make things easier on yourself (and on your loan officer), don’t move money around unnecessarily in the months prior to applying for a home loan.
About the Author:
I was born and raised in Central Toronto, spending my whole life in the neighborhoods that I now work, and in the Toronto Real Estate industry. I understand all the nuances of Toronto’s various communities & what Toronto real estate agents have to deal with.
I have dedicated my education to negotiating, marketing, business development and staying ahead of the curve with technology. I have attended international conferences, understand major agencies like Johnston and Daniel, all of which has helped me learn how I can provide more efficient, effective and thorough service.
February 23, 2010
by California FHA Mortgage Loan Expert on December 7, 2009
When will the housing market turn around in California? No one knows for sure – but according to the President of the California Mortgage Brokers Association, it could be at least another 18-24 months.
From the San Diego Union Tribune:
Ed Smith Jr., president of the California Mortgage Brokers Association, considers himself an optimist. But even as he mingles with convention-goers in Las Vegas, he’s not jumping on any bandwagon predicting an imminent turn in the housing market.
Smith, a 26-year industry veteran who operates a mortgage referral business in Spring Valley, estimates that it could take at least until the dawn of 2012 for the market to settle. In the meantime, the mortgage industry continues to go through tough times.
Independent brokers, who once held an estimated 60 percent to 70 percent of the mortgage market in California, now represent only 15 percent of the market. The nation’s three top banks — Citigroup, Wells Fargo and Bank of America — dominate more than 50 percent of the market, Smith said.
“It’s not good for the consumers if there’s only three choices of lenders,” he said. “It doesn’t give them a lot of latitude to shop around for the best deal.”
In the meantime, Smith said, one of the big topics of discussion among brokers is whether to merge with mortgage banking operations so that they can build stronger competition to the big banks.
When asked for a timeframe on when he sees the housing market turning:
QUESTION: One of the major questions these days is whether the housing market may be approaching a bottom, now that the economy appears to be stabilizing. What do you think?
ANSWER: I usually try to be as optimistic as possible, but I think it could take another 18 to 24 months for the real estate market to settle. There’s a huge “shadow inventory” out there of homes that have not yet been foreclosed upon. Some people say the shadow inventory may total as many as 7 million homes. Those homes are being slowly dribbled back into the market, but if it comes onto the market much faster, it will destabilize the market much faster than it is right now.
In San Diego, I’m not sure how long it will take for property values to get back to the place they were. And that’s not bad, because at the peak of the market, property values were so out of whack that the average person couldn’t pay for a loan. At the top of the market, I wouldn’t have even bought my own house if it was on the market.
December 7, 2009
