Loans

Posted at 9:35 PM, Feb. 27, 2007

I wanted to take a moment and provide you with a little market update since this morning has provided us with a more news tthen we probably wanted to know.   The market has had a pull back of over 500 points and fears of a cooling market not only here in the U.S. but also in China. We have seen a little rebound, however at the close the market looks like it will finish at about 400 points lower today, marking one of the largest single day declines in the history of Wall Street. The NASDAQ fared much better however with only a 96 drop from yesterday’s high.

The “GOOD” news is that the 10 year note that drives the 30 year Fixed rate dropped to 4.51% which was down .22 bases points off of yesterdays close of 4.73. Translated this means if you've got a loan in the process it's time to lock your rate tooday, or tomorrow.  Rates should be positively impacted from the activity in the market place today.

A recent increase in FHA Limits for Single Family Residences has raised the limit for Clark County as of January 1, 2007 to $304,000,  FHA loans are for Primary residence and must be a Full Doc loan.

Last Week in the News

Posted at 10:41 AM, Feb. 5, 2007

Citing healthy economic growth and reduced inflation, the Federal Reserve on January 31 held its key federal funds rate at 5.25%. The fed funds rate is the overnight interest rate that banks charge one another to borrow money. It was the fifth straight time the Fed has held steady, a move that was widely expected by Wall Street analysts.

In the final quarter of 2006, the economy grew at a faster-than-expected 3.5% pace, despite lagging automotive and real estate markets, the Commerce Department said January 31. The performance exceeded analysts' forecasts for a 3% growth rate. For all of 2006, the gross domestic product (GDP) increased by 3.4%, an improvement over 2005's 3.2% showing.

Pending sales of existing homes in December increased at a seasonally adjusted annual rate of 4.9%, the National Association of Realtors (NAR) said February 1. The climb was the biggest since March 2004. "Some of the monthly gain may be weather-related, but it appears buyers are becoming more comfortable, sensing the timing is good and that their local market has bottomed out," said David Lereah, NAR's chief economist.

For all of 2006, income climbed 6.4%, the biggest annual gain since 8.0% in 2000, the Commerce Department reported February 1. However, the personal savings rate for 2006 was a minus 1%, meaning that people spent not only all the money they earned, but also dipped into savings or increased borrowing to finance purchases. The 2006 figure was lower than the negative 0.4% in 2005 and was the poorest showing since a minus 1.5% savings rate in 1933 during the Great Depression.

Some of the more common loan types and the needed paperwork

Posted at 9:23 PM, Jan. 27, 2007

Full document:  Taxes, 1099s, W2s, pay stubs, bank statements, investor statements, lease agreements.

Stated income/ verified assets:  Verify employment, ensure it is realistic to profession listed and provide bank statements and any other financials to prove assets

Stated income/ stated assets:  Just verify employment and ensure it is realistic for profession listed on the application.  No need to prove, but assets must be reasonable.

Verified income/ stated assets:  Prove income history with taxes, 1099s, W2s but do not prove assets at all.

Lite document:  Similar to Full Doc loan but instead of showing income history over 24 months, we prove just 12 months. 

No Ratio:  Verify employment but we do not lend as much weight to the income needed to support our client’s ability to pay this loan each month.  We do have to provide assets on this loan.  There is no debt to income ratio on this loan at all.

No Document:  Do not prove employment, salary, or income.  Nothing! Credit is king!

The above are the most common loans I write across the United States.  I always try to write the most aggressive loans (meaning best rates) for our clients.  However, every company and every investor has a great memory so I have to project the appropriate amount of foresight so I do not limit our client’s ability to secure future loans. 

For example, if I wrote a loan as a full document today and then 6 months later we wanted to write a stated income loan, the underwriter would most likely not permit this.  Even if the underwriter somehow let it through, the investor always reserves the right to come back after the loan officer and/or client for anything they feel is a misrepresentation or that could put the loan and the investor’s financial health at risk.

Here’s the rule: The less information we provide to the investor, the higher the rates will be for the client.

 Andrew Hoelzel, Meridas Capital - 702-938-7734

Loan Pre-Approval

Posted at 10:10 PM, Jan. 15, 2007

One of the first things I do when I work with buyers is to have them pre-approved with a lender.  Pre-qualifying for a loan is only based on verbal information given to the lender from a buyer.  Pre-approval is when the buyer has sat down with a lender and filled out an application.   It usually takes a couple days to verify the information and then the lender supplies you and your REALTOR® with a letter stating you have been approved for X amount of dollars. A pre-approval letter is GREAT ammunition when writing and presenting a purchase contract.  Sellers love to be able to see that the buyer is serious enough to have met a lender and that they actually do qualify to purchase the home at the price the buyer is offering. 

It is always best to do this at the beginning of the home search so that you are not wasting your time or your REALTORS® time.   You may think you can only qualify to purchase a home in the $200K range, when in fact after taking all into consideration, your lender says you actually qualify for $250.  Or it could be vice versa.  You spend weeks looking for the perfect home only to find out you don't qualify for the price of the home.  How frustrating can that be!! 

You want to be sure and take the following items (for all parties applying for the loan) to the lender:

• Driver's Licenses
• Social Security Card
• Last 2 pay stubs
• Last 2 years W-2/Tax returns
• 1st and 2nd mortgage statements on any property you currently own
• Hazard Insurance Declarations page
• DD214 or eligibility certificate (if applying for a VA loan)

I have several preferred lenders that I use.  If you need some help getting started on this please e-mail me

PMI Deductable in 2007

Posted at 4:09 PM, Jan. 7, 2007