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If you know a loan officer, I am sure you have heard him complain about the new Good Faith Estimates…if you don’t believe, just ask my friends, family and co-workers!! It is a lot of what people have said, very detailed, even more complicated when every bank has its own addition or twist, extra requirement. It is now 3 pages, and any loan originated after 01/01/2010 is required to use the new version. There many boxes and sections that ask for specific fees for all charges, including YSP. This was created to education the borrower more. I believe the idea behind it was good, but I also believe they could have done a much better job, without making it so complicated for everyone else.

The one good thing I will say about it, is this, since some of the…

Fannie Mae has new underwriting guidelines that will go into effect on 12/12/2009. The changes have been documented in their announcements over the past few months. I will try to go over some of the most important changes. For a copy of the Release Notes, please contact me, and I can email them you. The biggest change will be the max debt ratio will now be 45%. There is a little flexibility to go to 50% debt ratio, with strong compensating factors. This change will not apply to DU refi plus files, but that could change in the coming months.

They have raised the minimum credit score to 620 for all case files. On foreclosures older than 5 years, but less than 7, borrowers will need at least 10% down, and a 680 FICO score. Borrowers will not be permitted…

I know that Fannie and Freddie say they are maxing 4 mortgages to individual borrowers, but there are portfolio banks that will allow you to go to more than 4 mortgages. Portfolio banks are banks that do not sell their loans to Fannie or Freddie. That allows them to set their own guidelines, and limits. We have one portfolio bank that will let a borrower own up to 10 properties. You still need to qualify, and the rates are very competitive, so it’s a great option for those investors with multiple homes, or looking to pick up a few more. I know everyone hears that it’s a great time to pick up properties, and I do agree. I also believe it must be done with proper due diligence and setting realistic expectations. One thing a lot of investors don’t do when…

If you are looking to buy in DC, please be aware of the real estate taxes on vacant properties. The DC government raises the real estate taxes drastically on vacant properties. The reason being, is that they want the owners to either sell them or rent them, therefore minimizing the over vacant properties in the DC and hurting home values. This applies to all residential homes. The DC taxes are usually based on the sales price, minus the Homestead exemption (which is $67,500), times the rate of .88 cents per 100. If you purchase a DC property make sure all parties are aware of this. This is not a deal-killer, as long as you can get in front of it. I am working on one right now, and I notified everyone, including the bank and underwriter, and we resolved it…

There are some areas that have a high number of manufactures homes, and borrowers who are either looking to buy or refinance these types of homes, should know some of the conditions and documents that banks will ask for. First, a great program for manufactured homes is FHA. With FHA you can go to max financing which is 96.5% loan-to-value for a purchase or a rate and term refi. On a cash-out, you will be maxed at 85%. A lot of banks will also go down to a low loan amount, I have seen as low as 50k. Here are some of the items banks and underwriters will ask for; A DOT tag, DOT is Department of Transportation.  You may also need to provide an engineering certificate stating the house is on a permanent foundation and that any attached structures or additions…

Right now buyers believe that buying a short sale home is a great bargain, and for the most part, they are wrong. When an offer is made on a short sale, the banks are taking up to 120 days to approve it. As a buyer, you need to wait for that third party approval, and therefore you cannot lock a rate until then. You are taking a big risk by missing out on historically low rates.

What potential buyers should be looking at, is homes for sale by individual owners. You can still get a great bargain, and lock in for 30-45 days, and take advantage of super low rates, while also receiving seller help to cover your closing costs. Potential buyers should look for some common signs; uncut lawns, vacant properties, homes listed for over 90 days, etc. Buying from…

A great investment opportunity that buyers are over-looking are multi-unit homes. Multi-units are considered 1-4 unit buildings. Anything over 4 units is considered a commercial property.  You can purchase these properties using an FHA loan. FHA offers awesome advantages. The first being a 3.5% down payment. The second being, on 3-4 multi-units, you can use projected rental income on the remaining units, you will NOT be occupying. This will be calculated by, “The appraiser’s estimate for fair market rent from all units, including the unit the borrower chooses for occupancy, and minus the greater of the; appraiser’s estimate for vacancies or the vacancy factor used by jurisdictional HOC”. (This is from MRI FHA Standards guideline book, section 603.03, third…

In this very strict market, underwriters are flagging everything. One item I have seen a lot of recently is customers turning in bank print-outs. There is nothing wrong with them, as long as they have a few key items. If they can printed on letterhead, that would be great. If not, please make sure you have a bank representative stamp, date and sign it the print-out. Also, please make sure they circle key information, like your account number, or your SS number. If you are using the print out to source and verify an Earnest Money Deposit, please also circle the EMD.

Please be aware, when you submit a bank statement for an EMD, banks will require a corresponding bank statement to show the check has cleared, and also that you have enough to cover any…