Rates Are Incredible

Mortgage interest rates are so low right now.   And if you haven't checked out rates from Cal Coast Financial, you will be even more pleasantly surprised.   I have put together a table comparing the rates available from Cal Coast Financial today (5/21/2010) and 3 major banks.   I can beat their pricing on every loan product.   

Loan Type	Cal Coast Financial	Wells Fargo	Bank of America	Chase
Conforming 30 year fixed	4.75%  No Points APR 4.856%	4.75%   1 point APR 4.939%	4.75%  1.125 pts APR 4.896%	4.75%  1.25 pts APR 4.859%
Conforming 20 year fixed	4.375% No Points APR 4.517%		4.375% 1 Point APR 4.558%
Conforming 15 year fixed	4.00%  1/2 Point APR 4.180%	4.125%    1 Point APR 4.447%	4.125% 1.125 pts APR 4.376%	4.125% 1.25 pts APR 4.310%
Conforming 5 year ARM	3.375% No Points APR 3.927%	3.375% 1 Point APR 3.549%	3.5%  1.125 pts APR 3.557%	3.5%1 Point APR 3.796%
Jumbo Conforming 30 year fixed	4.75%  0.25 pts APR 4.813%	4.75      1 Point APR 4.886%	4.875% 0.75 pts APR 4.968%
Jumbo Conforming 5 year ARM	3.5%     No Points APR 3.932%	3.875    1 Point APR 3.679%	3.875% 1 Point APR 3.661%

These rates, of course, reflect the pricing for low loan to values (75% or less) and great credit scores.   Call or send me an email if you would like to get accurate pricing for your specific loan scenario.

Conforming loan amounts up to $417,000.   Jumbo conforming loan amounts vary by county.   In Alameda County, the Jumbo conforming limit for a single family residence is $729,750.  One point is equivalent to 1% of your loan amount.

I just got a loan funded today and received the following emails:

Listing Agent:  You made a believer out of me.  I never dreamed that you would close this escrow this soon after changing lenders.  I had a similar situation on another property and it took over a month to close.  You definitely got my attention and I plan to keep your contact info. Kudos to you.  Job well done.

Selling Agent:  Thanks Charity.  I was ready to pull the plug on this deal three weeks ago.

Here is the story behind those words.   I have been working with a first time home buyer, looking to purchase in Oakland, for over a year.  We have worked to improve credit and a few technical issues.   But finally, the buyer was in contract.  The underwriting went smoothly, but the appraisal was a whole other story.

The original appraisal came in $25,000 below the contract price.  The sellers agreed to lower the price.   Everything was in line to order loan documents when the desk review came back, cutting to value another $50,000.

We knew that the sellers would not be willing to lower the price again, and everyone was confident that the reduced contract price was supported by other comparable sales.   We asked for a rebuttal from the original appraiser, but the desk review appraiser would not budge from the reduced value that she assigned.  

I complained to the lender that it was unfair to have an appraisal review done by an appraiser in Southern California for the Oakland Hills.   The Oakland Hills is a difficult area to appraise, and having someone unfamiliar with the area setting value wasn't acceptable.   The lender indicated that we could order a field review, but that would take 15 days, but more than likely the field review would support the desk review appraisers value.  I knew that route wouldn't be acceptable to the sellers.  Who would want to grant an extension not knowing what the outcome would be.

The original lender also told me that the Automated Valuation Models (AVMs) indicated a value lower than that of the desk review appraisers value.  We talked to another lender that agreed to take our original appraisal and the new lender ordered AVMs immediately.   Those AVMs confirmed the first lenders number.  

I asked to review the AVMs (after all, the computer only picks properties and doesn't analyze them).   After reviewing the AVMs, I was convinced that the value was supported (because I could analyze the comps).

Next I needed to convince the listing agent.   When the sales price was reduced, the contract read  "no extensions will be granted."  I spoke to the listing agent, explained the situation, requested she approach the sellers for an extension, and outlined for her my plan of action.   

I told the listing agent that if the sellers agreed to an extension, I would order a desk review that would be completed within 4 hours.  The sellers granted the extension.   The desk review from a local appraiser came back support the first appraisers value.   Wow, the sellers knew the appraisal outcome before the extension was even signed.

And now, two weeks later, we are closing, and the buyer and the sellers are very, very happy.

Additional note of interest, the first lender ordered a field review and it also supported value.  

I love happy endings.

About a week ago, I received a call from a client in the process of purchasing her very first home.  Her friend is also a first time home buyer, but the friend is a little farther along with the home purchase transaction and had just gone in to sign the loan documents.   My client called me in a panic because her friend discovered at the closing table that the fees came in over $2000 higher than her loan officer quoted.    My client’ s question:   “Is this going to happen to me?”  

Another first time home buyer I am now working with began the home buying process using a loan officer he found on the internet.    He began shopping for homes and placed an offer.   When the realtor received the preapproval letter from the client’s initial loan officer, it wasn’t even a real preapproval.    When the realtor couldn’t reach the loan officer by phone for several days, he asked his client to begin working with me.  

After just a quick review of the client’s financial information, my first question to the realtor was:  “Did you ask for a credit towards closing costs for this client?”    The answer came back, “No, I didn’t know I needed to.”   I advised the realtor that the client didn’t have enough funds to pay closing costs.   After verifying all the financial information, it turned this first time home buyer didn’t even have enough funds for the down payment.

What both these clients didn’t know was going to cost them.   The homebuyer in the first example is not going to be able to purchase that home after all because she didn’t have the extra funds and didn’t have a family member to gift her the money.    Very likely she will lose her Earnest Money Deposit.    An expensive mistake which was totally avoidable if her loan officer had advised her and her realtor correctly.

The second first time home buyer entered into the home purchase process totally unaware that there are substantial closing costs involved in purchasing a home.  He mistakenly believed his only monetary investment was his down payment.   Again, this was the responsibility of his loan officer to advise him of the cost involved and provide him with a Good Faith Estimate of all the fees and costs involved.     For him, the preapproval should never have been issued because he was not yet ready to purchase a home.   

When my homebuyer asked, “Is this going to happen to me?”  I was happy to tell her, NO.  I reminded her that we had talked about exactly these scenarios when we first met to sign the application paperwork.    I told her that my fees might look higher when you compare them to other loan officers, but I make sure that my clients have the complete picture.  We discussed how I disclose ALL the potential fees and costs of inspections on my initial Good Faith Estimate.   And when we sat down at the table to sign her loan documents yesterday, she was so happy to see that everything was exactly as I had told her,  no extra funds needed to close.

It may appear that the loan officer that issues the quick preapproval or gives the best sales talk is the better choice.  But I have had loan files sent over to me by realtors when the original loan officer couldn’t get the loan closed.   They issued the quick preapproval and then I discover that the home buyer wasn’t properly qualified and there was no chance that the home purchase would ever close, all because the loan officer didn’t take more time and properly qualify the client.   

It is far better to work with a loan officer that is thorough in the loan preapproval process than to get the quick preapproval letter.   Imagine having given notice on the place you are renting and then finding out that you can’t close on your home purchase.   Suddenly you could find yourself homeless and no where to go with a loan officer that won’t answer the phone when you call.    Make sure the loan officer spends the time to answer all your questions and collects all the pertinent information to do a full and complete preapproval.  

Purchasing a home is one of the biggest financial decisions you will make and there is a lot of money involved.   Make sure you are going through the process with someone you trust, not just the person that quotes you the lowest rates and fees.    This is especially true for the first time home buyer who is unfamiliar with the process and the costs involved.

Many renters may have the income to qualify for the payment on a home, but the tough issue is coming up with the money for the down payment.    And with the $8000 First Time Home Buyer Tax Credit deadline only a few months away,  you may be looking for ways to save money faster.  Here are a few great suggestion to help you save that down payment faster.

1.   Find out how much you can borrow from your 401K for a home purchase.

2.  Ask family members if they can gift you money for a down payment.   While the full lump sum might be difficult for a single family member, maybe several members can spare a couple of hundreds dollars to help out.

3.  Ask your employer if they have a program to assist with a down payment on a home.

4.  Check your paystub and find out how much you are paying each pay period in Federal and State income taxes.   If you are paying several hundred dollars per pay period in Federal and State income taxes, why not revise your W4 withholdings as on January 1, 2010 and lower those taxes to almost zero.   Take that additional money and save it for your down payment.   Once the money is saved and the home purchased, you can revise your W4 again and start paying Federal and State income taxes again.

I have a client that is short a couple of thousand dollars for his down payment.   This client is paid weekly and is paying over $300 per pay period in Federal and State Taxes.   In less than 2 months, he will have the balance of his down payment saved.

New down payment assistance funds have recently been released to help Californians purchase homes.  This program is called Access and takes the form of a loan for up to 3% of the purchase price.   This loan, when combined with a 96.5% FHA loan, allows homebuyers to purchase a home for only 1/2% down.   These funds are different from most other down payment assistance in that:

1.   The Access Program can be used anywhere in California

2.   There is NO First Time Home Buyer Requirement

3.   There is NO minimum Buyer Contribution

4.  There is No Minimum FICO score requirement*

5.   There are No Sales Price Limits

6.   Income Limits are based on 120% of the Median County Income

7.   Income limits determined by Qualifying Income, not Household Income**

8.   Home to be purchased must be your primary residence, but you may own other properties.

9.   Seller credit of up to 6% of the sales price allowed for Closing Costs.

This program removes so many of the restrictions that make it difficult for many homebuyers to take advantage of other down payment assistance programs.   Current home prices have made the housing market more affordable in years, and many people who can qualify for the mortgage payment find their only challenge to homeownership is finding the money for the down payment.  Access can opens doors for many of these people.

*No Minimum FICO score.   While this program does not have a minimum FICO score requirement, the program does not allow for any 30+ day late payments or new collections within the past 12 months.  

**Qualifying vs. Household Income.  Most down payment assistance programs look at household income.   That means that even if a parent or child over 18 lives with you (but will not be responsible for the loan) their income must be included in the Household Income calculation.  This loan only looks at the income being used to qualify for the loan.  

If you have questions about whether you would be able to qualify for this loan program, email charity@lendscape.com with your questions.