HUD recently released FHA loan limits for 2010. In virtually all California counties, loan limits remained the same as 2009. Great news for San Mateo home buyers, the single unit limit will not roll back to $625,000 as once thought.

2010 FHA Loan Limits for San Mateo County

What about other Bay Area Counties? 2010 FHA Loan Limits for…

Santa Clara County, San Francisco County, Santa Cruz County, Napa County, Marin County, Alameda County, Contra Costa County, Monterey County, San Benito County

These counties have the same loan limits as San Mateo County which are:

Solano County

Sonoma County

What is an FHA Loan?

An FHA Loan is a mortgage loan insured by the Federal Government against default. Because they are backed by the Federal Government, lenders will accept lower standards than for a conventional loan because they are protected to some degree from the borrower’s default.

Main Benefits of an FHA Mortgage Loan

The main benefits of a San Mateo FHA loan today are:

• Only 3.5% down payment required
• Lower credit requirements than most programs making it easier to qualify
• Easier to accept gift funds from family
• Allows seller credits towards closing costs
• Not just for San Mateo first time home buyers – anyone can qualify

Need an FHA Loan?

Call me at (650) 520-0915 or email me at info@SanMateoMortgageBlog.com to schedule a no obligation consultation. I’ll help you determine whether or not an FHA loan is right for your San Mateo home purchase. If not, we’ll look at other programs and how they may benefit you more.

Enjoyed this Post? Why Not Subscribe?

If you have enjoyed San Mateo Mortgage Blog, please subscribe to our RSS feed.

Chris Williamson is a Mortgage Advisor with Mortgage California specializing in San Mateo Mortgage.

Related posts:

1. 2010 Conforming Loan Limits for San Mateo County
2. 2009 San Mateo County Conforming Loan Limits
3. 2009 San Mateo County Conforming Loan Limits
4. 2009 FHA Loan Limits in San Mateo County
5. New Bay Area FHA Loan Limits: Welcome to Our Neighborhood!

Mortgage rates have stabilized from last week and seem to be holding steady, but there are quite a few events this week that could cause the mortgage market to move.

More Govt Debt Hits the Mortgage Market

More Government debt hits the market this week as the US Treasury unloads $126B in securities.  Monday $8B in TIPS (Treasury Inflation Protected Securities) hit the market, Tuesday $44B in 2-Year Notes, Wednesday $42B in 5-Year Notes and $32B in 7 Years on Thursday.  The last round of auctions did not perform very well and caused the mortgage bond market lower which means higher interest rates.  This is one item I will be watching closely this week.

Bernanke Testifying to the House and Senate

On Wednesday and Thursday, Federal Reserve Chairman Ben Bernanke will be testifying on monetary policy before the House of Representatives Financial Services Committee and the US Senate Banking Committee.  His comments can be a potential market mover as big news will trump any technical signals we currently have.

Not Quite Ready to Lock? Proceed with Caution

The trend beginning this week is market stabilization, however we recommend to our clients that are floating their interest rates to proceed with caution and be ready to lock if investors start to shift their money out of the bond market.

Related posts:

1. San Mateo Mortgage Rate Update
2. Mortgage Interest Rates Predicted to Rise in 2010
3. How to Sell Your San Mateo Home Fast in a Buyers Market
4. Monthly Mortgage Payment Estimator
5. If My Financials Aren’t Perfect, I Won’t Get a Loan in Today’s Market

Big Banks May Be Nixing the Pre-Approval Process

As lenders begin to work through the lending guideline changes from January 2010, some bigger banks have discussed eliminating pre-approvals.  Instead, they are opting to wait until a potential borrower is under contract before the bank starts looking at and verifying your income, assets and credit score.  Having a different loan process is not such a huge deal unless the bank you’re working with has decided to cut out the most important part of the process, the pre-approval.

Why Will Big Banks Eliminate Pre-Approvals Upfront?

The main reason big banks want to stop issuing pre-approvals is because of all the added paperwork and disclosures required.  Some bigger banks don’t want to ‘clog up their system with pre-approvals that may not turn into real deals’…which means you as their customer are not important to them until you have entered into a legally binding contract with a seller to purchase a home.  Only then are they willing to spend time pre-approving you for a loan.  Biggest problem with waiting until you are under contract?  You could lose a lot of money!

Why Waiting for a Pre-Approval is a Bad Idea!

The whole point of a pre-approval is to make sure you are a ready and capable borrower that can confidently move forward on a purchase contract to a seller.  What some of the big banks are issuing are glorified pre-qualifications (or estimates) at best as to what you can afford.

You Could Lose a Lot of Money and the House You Want to Buy!

Typically you have 30 days from the time the seller accepts your offer to close your transaction.  Why would anybody want to enter into a legally binding contract, put down up to 3% of the purchase price as a deposit, pay for inspections and appraisals (upwards of a $1000 or more), and to go through the emotional roller coaster of a purchase transaction only to find out at the end that you don’t qualify for financing?

If you would have received your pre-approval at the very beginning, you would you have taken out the unknown factor of “Will I be approved for this loan”?  A genuine pre-approval will save you money, time and the anxiety of not knowing if you are credit worthy.

Smart Sellers and Listing Agents Won’t Accept Your Offer

The fact of the matter is smart sellers and listing agents will not even accept your offer without a genuine pre-approval letter.  Listing agents who are representing their clients best interests will call the lender who issued the pre-approval and ask the Mortgage Advisor just how credit worthy is this buyer. They will also ask if the lender has verified the borrowers income, assets and credit score and has been fully approved for the loan.  If the lender answers no, most listing agents are going to advise their clients not to accept the purchase contract and find another buyer who is genuinely pre-approved.

Your Pre-Approval Letter May Not Be Worth the Paper It’s Written On

If you’re reading this and are relieved because you’ve already received a pre-approval letter from a big bank, the first question you should ask yourself is, “did my lender ask for and review my documentation?”

If you did not supply documentation to a lender and they gave you a pre-approval letter, all they gave you have is a glorified pre-qualification letter.  This means your approval is not worth the paper it’s written on.  So remember….pre-approval letter means verification of income, assets and credit.

When Should I Get Pre-Approved?

You should be fully pre-approved, we call this a “genuine pre-appoval” by a reputable lender BEFORE you start to even look for a house.  You need to know how much you can afford, if there are any mistakes in your credit report that need clearing up and if there is anything you need to work on to get pre-approved for financing before you start looking for a home.

Not Quite Ready to Get Pre-Approved but Want to Learn your Options?

If you’re not quite ready to go through the pre-approval process but want some information about what types of programs may fit your financial needs, we can schedule a time to sit down and talk about your options.  Of course, there is no obligation or charge for this meeting.  Call me at (650) 520-0915 or email me at info@SanMateoMortgageBlog.com to schedule a time to sit down and talk.

Received Something from a Bank and Want to Make Sure It’s a Genuine Pre-Approval?

If you are beginning the loan process or already in the process and want to make sure you have a genuine pre-approval letter, give me a call at (650) 520-0915 or send me an email at info@SanMateoMortgageBlog.com.  I still fully pre-approve all my clients at the very beginning, well before they start looking for a home.  It is the most important piece in the home buying process and will ensure a smoother and successful closing.

Related posts:

1. Biggest Problem with New GFE and How to Avoid It
2. What is a Genuine Pre-Approval and How Long is It Good For?
3. Why It is Imperative to Get a Pre-Approval Before Submitting an Offer
4. What Is and What Is NOT a Pre-Approval
5. New Good Faith Estimate Misses the Mark

Lender Not Required to Provide GFE until Borrower Under Contract

The new regulations do not require the lender to generate a GFE or hold the lender to their fees until the borrower is under contract with a property.  This means that you can’t realistically shop between lenders until you are under the time constraints of a purchase contract. Waiting until you are under contract to stop start shopping for your loan and then beginning the loan approval process is going to make it very difficult to close your transaction in a timely manner.

What Happens if I Don’t Have Loan Approval?

Worst case if you don’t have loan approval before your financing contingency is up (typically 14 to 17 days after you go into contract) you could very well lose the home of your dreams and could also lose your earnest money in the process.

How Can You Avoid Problems with Financing?

To avoid all of this hassle, my advice is to work with somebody you can trust, have confidence in and is there to be a true advocate to you.  Even before the new regulations were in place, I have always provided my clients with an accurate estimate of closing costs and the funds needed to close their transactions at the very beginning of the loan process.  I do not wait until you are under contract, as I think you need to have a clear understanding of how much it is going to take to close the transaction before you start submitting offers.  If it is important to understand how much it is going to cost you to buy a home, ask your Mortgage Advisor to provide you with the breakdown of the costs before you start looking for a San Mateo home.

Want a Second Opinion?

I’d be happy to take a second look at your loan or Good Faith Estimate issued by another lender, free of charge.  I can help you determine whether this is the best loan program for you and if you are getting the best mortgage interest rate.

If you’re in good hands…we’ll tell you!  If there’s something you should be concerned about, we’ll tell you that too!  Then, you decide what the best course of action is.  Call me at (650) 520-0915 or email me at info@SanMateoMortgageBlog.com to schedule a no obligation consultation.

Will Big Banks Stop Issuing Pre-Approvals?

The new regulations have definitely turned the loan process upside down for most lenders.  So much so that I’ve heard some big time lenders may to stop issuing genuine pre-approvals to borrowers before they look for a home!  Tune in next time to learn the importance of getting a pre-approval before you start shopping for a home and why some lenders may stop issuing this service.

Related posts:

1. Big Banks May Stop Issuing Pre-Approvals
2. New Good Faith Estimate Misses the Mark
3. 12 Biggest Mistakes Consumers Make When Refinancing
4. Mortgage Disclosure Information Act: Will it Affect You?
5. How to Read the New Good Faith Estimate

At the beginning of 2010 new lending guidelines went into effect regarding how loan originators handle the loan process and how closing costs must be disclosed to the buyer.  One of the new rules included a nationwide standard Good Faith Estimate (GFE).  The purpose of the new Good Faith Estimate is to hold lenders to the fees they quote the buyer and make it easier to compare loan programs and fees between lenders.

New GFE’s Goal: Allow Buyers to Compare Loans

HUDs goal is to make sure that all lenders quote realistic fees and try to avoid any last minute closing cost surprises.  This is definitely a plus for the buyer but besides HUDs goal of quoting realistic fees, the new regulations were put into affect to help home buyers make an apples to apples comparison between loan products and fees from different lenders.

Does the New GFE Solve the Problem and Help Home Buyers Shop?

I’d say no.  The problem with the new GFE is that lenders are not required to provide a Good Faith Estimate or commit to any fees quoted until a home buyer has an accepted contract to purchase a certain property.  This means if you want to compare loan products from different lenders, you really can’t make an apples to apples comparison until you have an accepted contract, which, in my opinion, is too late.

Can’t I Start Shopping for a Loan After I Get an Accepted Contract?

Remember, when you are under contract, you are also under the time constraints of the contingencies in that contract.  (A contingency is a legal right to get out of the contract.)  In San Mateo County, you typically have 14-17 days to get final loan approval under the financing contingency.  Once the clock starts ticking on the contingencies, it is nearly impossible to start shopping for a mortgage loan and close your transaction on time.

Final Verdict? The New GFE Misses the Mark!

Although HUD had good intentions in standardizing the GFE so buyers can accurately compare loan products, the fact that they cannot start to compare loans until they have an accepted contract makes it impossible to gather the information and close the loan while staying within the time frames laid out in the contract.

In my next few posts I will explain how the fees are disclosed, how the loan process has been altered for the buyer and how lenders may start handling the pre-approval process.

Have Questions About the New GFE?

If you have any questions about the new Good Faith Estimate, or would like to schedule a time to sit down and go over the new rules and what you can do as a home buyer to make sure you have a successful transaction, give me a call at (650) 520-0915 or send me an email at info@SanMateoMortgageBlog.com.

Related posts:

1. How to Read the New Good Faith Estimate
2. Biggest Problem with New GFE and How to Avoid It
3. HUD’s Time-line for Buying a Home in San Mateo and Why It’s Wrong
4. Big Banks May Stop Issuing Pre-Approvals
5. Shop for a San Mateo Mortgage Advisor First to Get the Best Interest Rate

The Mortgage Industry is an Ever Changing Industry

As I always preach, the mortgage industry is a constantly evolving industry. It seems like every day we get new regulations, new disclosure requirements and new guidelines. The newest batch comes from The Department of Housing (HUD) in the form of changes to FHA financing.

New FHA Financing Rules for San Mateo Borrowers

In an effort to strengthen FHA’s capital reserve and to manage their risk while continuing to support the nation’s housing market recovery, FHA’s Commissioner David Stevens announced the following policy changes that will affect all San Mateo FHA borrowers.

• For all FHA loans with case numbers that are assigned April 5, 2010 or later, FHA has increased their upfront mortgage insurance premium for purchases and non-streamline refinances from 1.75% to 2.25% of the base loan amount. For FHA to FHA streamline refinances, the increase is from 1.5% to 2.25%. Most San Mateo borrowers finance this upfront mortgage insurance premium with their loan amount, but you do have the option to pay this as a closing cost.

More Changes for San Mateo FHA Loans Scheduled for Later in 2010

Other announced changes that will take place later in the year are:

• Seller contributions towards a San Mateo home buyer’s closings costs have been reduced from 6% of the purchase price down to 3% of the purchase price. This means that a borrower will have to put more of their own skin into the game on top of their 3.5% down payment
• IF you want to put the minimum 3.5% down on your home purchase, you must have a credit score over 580. If you are 580 or below, you will be required to put 10% down on your purchase.

Considering an FHA Loan? Get it While Today’s Guidelines are Still in Place

With these impending changes coming soon to an FHA purchase near you, give me a call at (650) 520-0915 or send me an email at info@SanMateoMortgageBlog.com and let’s see if we can get a jump on your FHA financing while the current guidelines are in place.

Enjoyed this Post? Why Not Subscribe?

If you have enjoyed San Mateo Mortgage Blog – Bay Area Mortgage Broker, please subscribe to our RSS feed.

Chris Williamson is a Mortgage Advisor with Mortgage California specializing in San Mateo Mortgage.

Related posts:

1. FHA Streamline Refinance Guidelines Changing in 2010
2. FHA Summer Preview: Creating Thrills for the San Mateo County Borrower
3. Mortgage Interest Rates Predicted to Rise in 2010
4. Consider this Before Determining Whether an FHA Loan is Right for the Bay Area Borrower
5. 2009 FHA Loan Limits in San Mateo County

2009 Saw Historic Mortgage Interest Rate Lows

2009 was a historic year for low San Mateo mortgage interest rates. We had 3 periods throughout the year where rates dipped into the 4% range: January, March/April and November/December. With the 2010 right around the corner, new opportunities and increasing mortgage interest rates are ahead.

Why Were Mortgage Interest Rates Low in 2009?

At the beginning of 2009 the Fed agreed to purchase up to $1.25 trillion of mortgage backed securities to help stimulate the economy. Because of this commitment, interest rates dropped to these historic lows. It’s the classic case of supply and demand.

Fed’s Commitment to Purchase Mortgage Backed Securities Ends March 2010

The commitment from the Fed to purchase mortgage backed securities will come to an end this March. In anticipation, the Fed has slowed their purchasing of mortgage backed securities only buying $15 billion last week compared to the $20-$25 billion per week the Fed was purchasing just a few months ago.

Why Will San Mateo Mortgage Interest Rates Rise in 2010?

When a loan is made and closes escrow, it takes about 4 months for it to be packaged and sold on the secondary market. So, what was happening 4 months ago? Four months ago there was an increase of loan origination at the end of summer and into the fall because of low mortgage interest rates and the anticipation of the expiration of the tax credit. These mortgage backed securities originated 4 months ago are just starting to hit the market at the same time the Fed is slowing their purchasing of mortgage backed securities. The result is that in the last couple of weeks we’ve seen a slight rise in interest rates into the low to mid 5% range.

What’s going to happen when the Fed stops purchasing all together? Well the supply is still going to be there and the demand won’t be. This can only mean a rise in mortgage interest rates.

How High will Mortgage Interest Rates Climb?

Nobody has a crystal ball. To say where rates will be in 3 months, 6 months or a year from now will is just a guess. However, a good indication of where rates may be in 3 months is to go back to where rates were before the Fed started purchasing Mortgage Backed Securities, which was around 6.5%. How high can they go in 2010? If you listen to the experts, don’t be shocked if rates at the end of 2010 are at 7%, 8% or even higher.

How Can You Avoid Climbing Mortgage Interest Rates?

If you are looking to purchase a home or refinance your mortgage, the next month will be your prime opportunity. There will be a continuous supply of mortgage backed securities hitting the market as the Fed scales back their purchases of mortgage backed securities. In my opinion, rates will continue to move higher and higher over the next several months.

Once the Feds purchasing commitment is over, there is no doubt mortgage interest rates will be significantly higher. The only question will be, how high? Now is the time to purchase a San Mateo home or to lower your monthly mortgage payments by refinancing while rates are still at historic lows, possibly for the last time.

Need a Mortgage Loan?

Call me at (650) 520-0915 or email me at info@SanMateoMortgageBlog.com to set up a no obligation consultation. If you’re ready to get started right away, you can fill out our secure online mortgage application or our quick mortgage application or click on the buttons below.

Sign Up for Upcoming Classes and Webinars

To view a list of our upcoming home buyer education classes and webinars, check out our Class Schedule page or click on the Sign Up button below.

Enjoyed this Post? Why Not Subscribe?

If you have enjoyed San Mateo Mortgage Blog, please subscribe to our RSS feed.

Chris Williamson is a Mortgage Advisor with Mortgage California specializing in San Mateo Mortgage.

Related posts:

1. How Mortgage Interest Rates Affect Your Monthly Payment
2. FHA Announces Increased Upfront Mortgage Insurance for April 2010
3. One Last Chance to Refinance at Historic Low Interest Rates
4. Mortgage Market Update Week of Feb 23
5. 2010 FHA Loan Limits for San Mateo County

As the ever changing lending world keeps turning and churning out new changes and regulations, we’ve got the latest updates on FHA financing for San Mateo condos. The Dept. of Housing (HUD) has announced a temporary change to their FHA condo financing policy that took effect December 7,2009 and will expire December 31,2010.

The Biggest Changes for Financing a San Mateo Condo with FHA

“Spot Loan” Approval Process

HUD stated in their November 6, 2009 mortgage letter they would be eliminating spot approvals for San Mateo condos as of December 7, 2009, which has now been extended to February 1, 2010. Spot approvals are required by lenders for complexes that are not on the FHA or HUD condominium approval list. This means that we can currently approve one specific unit in an unapproved complex.

On February 1, 2010 the new regulations will eliminate the practice of spot approvals. After February 1, 2010, we will no longer be able to just approve one San Mateo condo; we will have to approve the entire complex. This translates to more time and more paperwork to get a San Mateo condo approved when the complex is not on the HUD or FHA approved condominium list. The complex approval can add additional weeks to your transaction and there are no guarantees the complex will even be approved.

FHA Concentration Requirements

One positive for San Mateo borrowers in the new condo financing regulations are an increase in the allowed percentage of units encumbered by FHA loans in a particular complex from 30% to 50%. If a condo complex has four or more units, only 50% of the units can have an FHA loan. However in the temporary guidelines this percentage can be increased to 100% concentration of FHA loans in a complex if:

• The complex is 100% complete and construction has been completed for at least 1 year.
• 100% of the units have been sold and no entity owns more than 10% of the units ( for 10 or fewer units an investor may own no more than 1 unit)
• The project’s budget provides for the funding of replacement reserves for capital expenditures and deferred maintenance in an account representing at least 10% of the budget
• Control of the Homeowner’s Association has transferred to the owners
• The owner-occupancy ratio is at least 50%

Owner-Occupancy Requirement

At least 50% of the units in a project must be owner-occupied or sold to owners who intend to occupy the units. For under construction or projects still in their initial marketing period, FHA will allow a minimum of 50% owner occupancy for the number of presold units. Vacant or tenant-occupied foreclosures do not count in this number.

Pre-Sale Requirements

For new construction, the pre-sale requirement will be temporarily reduced to 30%, down from 50%, meaning 30% of the units must be sold before HUD will lend on the property.

Considering Buying a Condo in San Mateo?

To help San Mateo home buyers make sense of all of the condo financing new rules and regulations, I’ll be presenting a seminar with Raymond Stoklosa, Broker at The RayChel Realty Group in San Mateo to discuss the new condo financing rules, the pros and cons of buying a condo and what you can do to protect yourself. This program will be presented in San Mateo.

I’ll also be presenting a webinar that discusses the new condo financing rules and guidelines. This program will be presented online and can be accessed through any computer with an internet connection.

Sign Up Info for Upcoming Classes and Webinars

For sign up information and dates all of our upcoming home buyer education workshops and webinars, check our Class Schedule page or click the Sign Up button below.

Enjoyed this Post? Why Not Subscribe?

If you have enjoyed San Mateo Mortgage Blog – Bay Area Mortgage Broker, please subscribe to our RSS feed.

Chris Williamson is a Mortgage Advisor with Mortgage California specializing in San Mateo Mortgage.

Related posts:

1. Using FHA Financing to Finance a San Mateo Condo? Get Your Lender Involved Early
2. Webinar: Financing a Condo in San Mateo
3. 9 Questions to Ask When Financing a Condo with FHA
4. Consider this Before Determining Whether an FHA Loan is Right for the Bay Area Borrower
5. 2010 FHA Loan Limits for San Mateo County

Big Lending News that Could Affect Many San Mateo Home Buyers

Yesterday, the lending world got some big news that could affect many San Mateo home buyer’s mortgage loans. Fannie Mae and Freddie Mac, the quasi government institutions that buy mortgage loans on the secondary market, announced they would only allow up to 45% debt to income ratios (from 55%) for all loans locked after December 12th, 2009.

What are Debt to Income Ratios?

Basically, your debt to income ratio is the percentage of your monthly mortgage payment as compared to your gross monthly income. For example, you make $6,000 in gross income per month and your mortgage payment is $3,000, your debt to income ratio is 50%. Under these guidelines, you would have to keep your mortgage payment under $2,700 to qualify.

Why is this News so Drastic for San Mateo Borrowers?

We were told before that as long as we had an automated approval for San Mateo borrowers before December 12th for debt to income ratios between 45-55%, lenders would accept those loans. But yesterday, Fannie Mae and Freddie Mac announced the loans had to be locked before December 10th to be acceptable. If you are not in contract – which is the only time you can lock your loan with most lenders – and are counting on being able to qualify for a loan amount of $500,000 at 54% of your gross income your only option now is FHA financing. Your conventional loan affordability just went down by several thousand dollars.

If you are one of the lucky ones that have their loan already locked at the higher ratio, you have to make sure your lender funds your loan by January 25, 2010 for your loan amount to be honored.

Is 55% Debt to Income Ratio Still Available?

Yes. These rules only affect loans that are bought by Fannie Mae and Freddie Mac (most conventional loans). FHA (a government backed loan) financing is still available for up to 55% debt to income ratio. So, if you are planning on going this route, no changes for you…yet.

Planning on Buying a San Mateo Home Soon?

Since lending rules can change at any time, you should consider moving your purchase up to make sure you can take advantage of the home buyer tax credit and affordable interest rates. Rates, programs and rules can change at the drop of a hat and I would hate for you to lose your chances of becoming a home owner because you dragged your feet.

Ready to Get Pre-Approved?

When starting the home buying process, the very first step is to get pre-approved so you know what you qualify for in today’s lending market. If you’d like to find out how much you’ll qualify for, give me a call at (650) 520-0915 or send me an email at info@SanMateoMortgageBlog.com for a free, no obligation consultation.

Enjoyed this Post? Why Not Subscribe?

If you have enjoyed San Mateo Mortgage Blog, please subscribe to our RSS feed.

Chris Williamson is a Mortgage Advisor with Mortgage California specializing in San Mateo Mortgage.

Related posts:

1. Maximum Allowed Debt Ratios for San Mateo Mortgage Loans
2. The CIA of Lending: I is for Income
3. 2009 San Mateo County Conforming Loan Limits
4. The New Housing Law: More Changes for San Mateo Borrowers
5. Shop for a San Mateo Mortgage Advisor First to Get the Best Interest Rate