Quick Reference Guide for Conventional Loans

This is the third in a series of posts meant to provide you with a some quick and easy guidelines for the most common and popular loans - as well as a few niches - in addition to defining some benefits of the various loan programs for the right customers.  On Monday I provided a quick reference guide for FHA loans and on Tuesday, the quick reference guide was for VA loans.  Today, as promised, conventional loans is the quick reference flavor of the day.  Feel free to call or email if you have any questions or you can leave comments down below and I will address those as well.  Here you go:

Conventional loans offer several alternatives to fill the gaps:

Program guidelines:

            Loan-to-Value:  up to 97%

            Debt-to-Income Ratio:  as high as 45%

            Minimum Credit Score:  620+ (best with 680+)

            Mortgage Insurance: 

            1)    required on loans over 80% LTV

            2)    no up-front MI, only monthly (97% is better than FHA with the same monthly factor and no up-front insurance)

Reserves:  typically 2 months PITI but depends on the program

            Bankruptcy:  Need re-established credit

            1)    Chapter 7 – eligible 4 years from the discharge date

            2)    Chapter 13 – eligible 2 year from the filing with Trustee’s approval

Foreclosure / short sale:  eligible 7 years from the foreclosure date or sale date.

Benefits to the buyer:

            1)    Lots of down-payment / loan program options

            2)    Non-owner occupied and 2^nd home financing allowed

            3)    Debt ratios up to 45%

            4)   Reserve requirements dependent upon program

            5)   Lowest payment option available with 20% down and no mortgage insurance.

D. Jed Wunderli
Certified Mortgage Planner
Alterra Home Loans
702-812-1214

Quick reference guide for VA loans

In yesterday's post, I provided some basic guidelines for the standard FHA loan and the benefits to the home buyer.  In today's post, I am providing a quick reference to basic guidelines for VA loans and the associated benefits to home buyers.  Feel free to call or email (or leave a comment) if you have any quesitons regarding any of the loans in this series.  Tomorrow I will be discussing conventional loans.  Here you go:

          For your VA buyer with the right credentials, nothing beats a VA loan.

       

          Program guidelines:

              Loan-to-Value:  100%

                  Debt-to-Income Ratio:  as high as 55%

                  Minimum Credit Score:  640+

                   VA Funding Fee (no monthly mortgage insurance):  

                             1) 2.15% for first-time users (financed)

                             2) 3.30% for subsequent users

                   Reserves:  None required

                   Bankruptcy:  Need re-established credit

                             1) Chapter 7 – eligible 2 years from the discharge date

                             2) Chapter 13 – eligible 1 year from the filing with          Trustee’s approval

                   Foreclosure / short sale:  eligible three years from the                    foreclosure date or sale date.

     Benefits to the buyer:

                   1)  No down-payment requirement – 100% financing

                   2)  higher debt-ratio allowances – as high as 55%

                   3)  no reserve requirements

                   4)  more flexible than conventional financing with regard to credit issues

                   5)  Seller can pay up to 6% in closing costs

                   6)  Lower payment than FHA since there is no monthly mortgage insurance

D. Jed Wunderli
Certified Mortgage Planner
Alterra Home Loans
702-812-1214

Loan Program Quick Reference Series

I thought I would write a short series highlighting a number of different loan programs that are available, their main guidelines, and the key benefits to the home buyer.  The featured loan for today is the standard FHA loan.

           FHA is the most popular loan right now.  Here’s why:

           Program guidelines:

                  Loan-to-Value:  96.5%

                        Debt-to-Income Ratio:  as high as 55%

                        Minimum Credit Score:  none, but prefer 640+

                        Mortgage Insurance: 

1)      Up-front = 1% of base loan amount (financed)

2)      Annual (paid monthly) = 1.15% of base loan amount

            Reserves:  None required

                        Bankruptcy:  Need re-established credit

1)      Chapter 7 – eligible 2 years from the discharge date

2)      Chapter 13 – eligible 1 year from the filing with Trustee’s approval

            Foreclosure / short sale:  eligible three years from the foreclosure date or sale date.

         Benefits to the buyer:

            1)   small down-payment requirement

2)   higher debt-ratio allowances – as high as 55%

3)      no reserve requirements

4)      more flexible than conventional financing with regard to credit issues

5)      Seller can pay up to 6% in closing costs

Next I'll highlight VA loans.  Feel free to call or email if you have any questions regarding FHA or any other loan programs:  Jed Wunderli 702-812-1214.

Southern Nevada Realtors Mastermind Group facebook page

Henderson, NV - I just launched a facebook page - Southern Nevada Realtors Mastermind Group - for the purpose of having a forum where Southern Nevada Realtors could share their ideas and experience regarding marketing, short sale transactions, and anything else that my help fellow Realtors get more deals closed in a timely fashion.  I would like to get title people, CPAs and attorneys on the site as well to draw upon their expertise. 

There is a discussions page where you can start an original discussion or post a good article you have found (please give proper credit to the author).  I also have an Events tab where we can share events that would be of interest to those who are on the site.  Seminars, webinars, lunch-and-learns, and charity events  along with special entertainment would be good things to include here.

A links tab will allow everyone to share links to sites that will get us to a great article or a valuable resource.

I want this site to be of benefit to all the professionals who use it.  Feel free to make suggestions as to what else the site could have to benefit the community, after all, it is your site.

Las Vegas and Henderson Realtors benefit from quality pre-approvals

Las Vegas and Henderson Realtors are benefiting from quality, underwritten pre-approvals, not just an automated approval. Let me start by saying I've never been a big fan of the term "pre-approval." What is a pre-approval? The term suggests that it's something before the approval yet what we are giving is some degree of an approval. Hence, it is a pre-fully underwritten approval but the true purpose of the pre-approval is for the buyer to be able to make a solid offer. It would make more sense to me for it to be termed a pre-offer approval or something along those lines.

That said, I spoke with a listing agent yesterday who said that his short-sale that has been going on since the Christmas holidays and it just blew up the night before and wondered if I could save the deal. The buyer and both agents were frustrated because they had an initial approval and the buyer even told me that he had given the loan officer all of his documentation months ago so why are they just finding out now? The reason is that most loan officers take an application, relying solely on the verbal information provided by the borrower and then pull credit an run it through the automated underwriting system. The approval letters most agents get is only based on verbal information which is usually not very accurate.
A small percentage of loan officers collect documentation and perform income calculations off the pay stubs and W-2s which is better but still not good enough. The thing that killed this deal was the non-reimbursed business expenses on line 21 of Schedule A of the tax returns. I was able to do a couple of things and restructure the deal and presented to my underwriter and I think we might be able to save the deal. The important thing to understand is that if you want to minimize your surprises during the escrow process, make sure your loan officer is analyzing all of the documentation. I have also seen deals blow up for information that was on the bank statements that wasn't properly reviewed by the loan officer. Las Vegas and Henderson Realtors benefit from quality pre-offer approvals, not from automated approvals with no real analysis.

If you are a Las Vegas or Henderson agent and would like to benefit from a quality pre-offer approval, you can have your clients apply here and click on the "Yes" button for the Patriot Act information and they can complete and application on line or they can call me. Additionally, if they would like to understand more about the mortgage process, feel free to go to the Client Resource Center and click on the Free Report to download it in PDF.
Alterra Home Loans, the company I work for, is committed to providing quality pre-offer approvals by allowing the loan officers to submit files to underwriting without subject property. This way, the loan officer's work is double checked by the underwriter so we are able to issue a solid approval subject only to a fully-executed offer and acceptance, an appraisal and title. In this case, Las Vegas and Henderson Realtors benefit from a quality pre-offer approval. Please feel free to comment and talk about your experiences or what you have heard regarding this.