Posted on January 10th, 2017 No comments
Conforming loan limits for Fannie Mae have increased for 2017!
With the increase in housing affordability in the real estate market, conforming loan limits have increased for the first time since 2006. Here are the new limits for Fannie Mae loans for 2017 in Los Angeles county:
Conforming Loan Limits
1 Unit: $424,100
2 Units: $543,000
3 Units: $656,350
4 Units: $815,650
Conforming Loan Limits for High Cost Areas
1 Unit: $636,150
2 Units: $814,500
3 Units: $984,525
4 Units: $1,223,475
What does this mean for home buyers? Buyers have an opportunity to borrow more money (with a Fannie Mae product) which is good news since home prices have continued to climb since the market began its rebound toward the end of 2012. In fact, for the first time since the Great Recession, the average US home price has returned to pre-market crash levels. With the real estate recovery, the conforming loan limits should continue to have increases on an annual basis.
There is also talk about interest rates increasing over the next year. They have already ticked up above 4% for the first time in a couple of years. For those home buyers who are at their maximum borrowing power already, any additional rate increase could prevent them from getting a loan. And if rates continues to climb, it could have a slow down effect on the market, and ultimately put downward pressure on prices. But for now, for homes priced at $1.5 million and below, the tight inventory and high demand has continued to push prices up.
Posted on July 16th, 2013 No comments
It sounds like you’re actually getting a preapproval letter and not a simple prequalification letter.
Here’s the difference:
The prequal letter can be done relatively quickly – you could have this within the hour if the lender gets to it right away. It’s a cursory look at your numbers without an underwriter looking at all your financials. It’s not as reliable as a preapproval. For example, I had a listing a few months ago in which a buyer submitted a prequal letter from Bank of America. I spoke to the lender and he confirmed that the buyer could get the loan. But it turned out that when she eventually handed in all her financial documentation she was, in fact, not qualified for the loan. The initial prequal process involved the lender simply asking her a few questions. He took her at her word and provided her with the letter. The deal ended up falling through because she didn’t go through the preapproval process up front and she was poorly prequalified.
In order to get a preapproval letter, you need to submit all your information which is then sent through the underwriting system. This can definitely take a week. However, the difference is that the preapproval letter is stating that you are pre-approved for the loan. This letter holds more weight with sellers so it’s more valuable to you.
I would suggest that you call the lender and ask them explain to you exactly what their process is. Ask them to clarify if you will be getting a prequal or a preapproval. Ask them if your file is with an underwriter. If it’s with the underwriter, then try to hang in there a little longer.
By the way, if you’re not happy with the customer service you’re getting from your lender or you don’t feel like your lender has built a good rapport with you, you don’t have any obligation to work with them. You can always use the preapproval letter, and still get a loan from a different lender. You are free to shop rates. You should feel comfortable with the lender you are working with. Make sure they communicate well with you because this is crucial during a real estate transaction. Also, if you do decide to talk to another lender, I suggest you get a copy of your credit report from the first lender. They are supposed to send you a copy of it, but if for some reason you don’t receive it, just ask and they will send it to you. You can then give a copy of this credit report to other lenders so that they don’t need to pull your credit again. The credit bureaus are not supposed to penalize you for pulling your credit multiple times within a 30 day period (I believe) when you’re shopping lenders, but if you can avoid it altogether, I would.
Posted on June 11th, 2012 No comments
When buying a home, the buyer normallly chooses their own lender. When you buy a home, you should shop lenders and compare their rates. You will decide which lender to go with.
If the buyer is purchasing a REO (a property owned by the bank), the bank can not dictate which lender the buyer uses. However, the bank can require buyers to prequalify with a particular lender. Ultimately, the buyer can use whoever they want to finance their loan, but they will need to get an additional prequal letter from that lender in order to submit an offer.
A non-REO seller (anyone other than a bank), as part of their negotiations, can require a buyer to use a particular lender if they want to buy the property. This is absolutely legal. A seller may choose to do this because they trust a particular lender and they will feel more comfortable that the deal will go through. If the seller does not make this requirement, then the buyer can move ahead with their own lender.
Posted on April 6th, 2012 No comments
The upfront insurance premium charged on FHA-insured mortgages for home purchases will increase from 1 percent to 1.75 percent on April 9, and the annual FHA mortgage insurance premiums will rise by one-tenth of a percentage point.
Posted on December 29th, 2011 No comments
All Inclusive Trust Deeds were big in the 80s and 90s. They are starting to see a resurgence today. Bbut there are some major downsides to AITDs that you should be aware of. Here’s a little background on it. In the 80s interest rates reached incredible highs up to 18%. It was so expensive to get a loan that many buyers and sellers found a way to work around the high interest rates. The buyer would take on the seller’s loan (which was at a much lower rate) and then they would get a second loan to cover the difference between the 1st mortgage and the sales price. The 2nd loan was wrapped around the first hence the term “wraparound mortage” or AITD. The title would transfer to the buyer, but the seller would remain on the first loan; the buyer would just make the payments. In the 90s, banks responded by including a “due on sale” clause in their loan documents. This clause stipulated that if there was a transfer of title, the bank would have the right to “call” the loan or in other words, require the borrower to pay the loan in full.
In the past several years, interest rates have been so low that there hasn’t been a need for buyers to do a wraparound mortgage. However, today we have more and more sellers who are underwater. They don’t want to short sale, but they don’t want to continue to make huge mortgage payments either when they have lost so much equity in the property. Voila, the return of the AITD. A buyer can come in and take over the current loan. Again, the title is transferred but the seller remains on the mortgage. It sounds like a win-win for everyone. But so many things can go wrong. The buyer may decide he doesn’t want to make any more payments. The seller then is on the hook for the mortgage and he doesn’t even own the house any more. Or the lender could do a random check (which they do) and notice that there is a change in title. The “due on sale” clause kicks in. The bank can decide to call the loan. The bank will come after the seller for the money, and ultimately the the bank can foreclose on the property. An AITD sounds like a great way for a seller to remove himself from a mess, but if anything goes wrong, and there are so many different scenarios not discussed here, that I would recommend to stay far away from AITDs. If you do consider one, please consult an attorney.
Posted on October 16th, 2010 No comments
Congress just passed, and the President signed, legislation that extended the loan limits for Fannie, Freddie, and FHA. Conforming loan limits will remain at $729,750 through September 30, 2011.