California Mortgage News

This specialized loan helps borrowers qualify for purchase financing on their new home, without needing to sell their current residence. Beyond the difficulty of qualifying for purchase financing while carrying mortgage and housing costs on the departing residence, few would-be buyers are willing to sell their old home for fear of being left high and dry in today’s low inventory market. For buyers with 20% down payment funds, this loan solves both problems. It also offers several other features to facilitate the purchase of that dream home.

Rental offset income: with today’s prices, few buyers can qualify for purchase financing while carrying the housing costs on their current residence. This loan allows 75% of market rent to offset the costs of the departing residence without needing a signed rental agreement, landlord history, or first month’s rent check deposit. 

Asset Depletion: if the new purchase loan is still too big to qualify with a borrower’s standard income, the underwriter will give consideration of “potential” income from the borrower’s other assets, including cash, investments, and retirement funds if they are of retirement age. This “income” can be added to the borrower’s other income sources to help qualify for the loan, without drawing against the assets.

Ability to pay down purchase loan once departing residence is sold: Interest Only ARMs are offered, with the 5-year fixed as the most popular option. The interest only feature keeps payments low while the old house is prepared and properly marketed for sale. Once sold, proceeds can be applied against the purchase loan’s balance and monthly payments will drop in step. 

Make a non-sales contingent offer on the new house: in today’s “seller’s market” the odds of getting your purchase offer accepted, continent on the sale of the old home, are next to nil. With this loan, qualification is not based upon sale of the old home, so you are free to make a non-sales contingent offer!

Here are some details on this great loan that allows buyers to purchase before selling their current home: 

Enables many borrowers who could not qualify carrying two homes to offset expenses and find additional income for a non-sales contingent offer on their new home!
Use 75% of rental survey income on departing residence to offset expenses and help qualify for the new purchase.
No signed lease or first month’s deposit required!
No minimum equity position on departing residence!
No landlord experience to qualify.
Additional qualifying “income” can be derived through a generous “asset depletion formula applied against the borrower’s investments.
80% financing to $1,000,000; 75% to $1,500,000; 70% to $2,000,000.
3, 5, and 7-year ARMs available at competitive rates.
Interest Only option available.
OK with 25-day close.
Once departing residence sells, can use proceeds to pay down or pay-off financing on new home. Loan will recast, with new payments based on the reduced principal!
Posted in:Marin Update and tagged: California Mortgage
Posted by Nicholas Ballard on October 10th, 2018 4:06 PM

Newly Increased Conforming Loan Limits for 2018: The Federal Housing Finance Agency (FHFA) recently announced new conforming loans limits for 2018, marking the second, and consecutive, increase since 2006. The increased loan limits are for conforming loans sold through Fannie Mae and Freddie Mac, with individual loan limits for 1 to 4-unit properties broken out on a county-by-county basis. The maximum “true” conforming limit has been increased from $424,100 to $453,100 for all California counties. Counties meeting the definition of “high-cost areas” will have increased “high balance” loan limits of up to $679,650, an increase of $43,500 over the 2017 maximum high balance limit of $636,150. Updated limits for FHA insured loans to 96.5% financing and VA loans with 100% financing have also been released. (Note: in addition to 100% financing, the VA guarantees support much larger loans and purchases with small down payments.)

Loans exceeding a given county’s high balance conforming limit are deemed “jumbo” and typically have far more demanding underwriting requirements. Conforming loans sold through Fannie Mae and Freddie Mac are far more liberal with respect to loan-to-value and debt-to-income ratios, as well as credit scores and asset requirements. For example, true conforming loans are offered with down payments as low as 3% and the high balance product (now $679,650 in most Bay Area counties and Los Angeles) will support a 95% financed purchase of $715,421.

Below is a breakdown of new 2018 conforming loan limits for some of California's more active counties. For “High Cost Areas” the maximum high balance conforming limit is offered; for areas not deemed “High Cost”, the newly increased true conforming limit of $453,100 is listed.

For loan limits on all California counties:  www.ballardloans.com/2018loanlimits

Posted by Nicholas Ballard on January 12th, 2018 5:11 PM