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MORTGAGE LENDERS

Providing mortgage financing for real property, these lenders take on several forms. A mortgage banker (Chase for example) provides loans generally with its own funds or a mortgage lender (Countrywide for example) uses investor capital to funds many loans. Mortgage brokers bring together an outside lender and a borrower. Since each individual borrower has specific needs, many lenders work with portfolio loans (held by the bank), government insured loans ("Fannie Mae", "Freddie Mac", FHA, VA) or with other lending institutions as well as their own.

With years of local experience and working with numerous locally based lenders on a regular basis, I would be happy to recommend the best to you.

Whether you are buying or selling, the key to the sale is financing. Helping you determine monthly payments, down payment options and closing costs, I can direct you in the right direction-NOT ALL LENDERS WORK ALIKE! 


 

Qualifying

Remember that lenders want to make loans; so do not pre-judge your ability to borrow.  Most importantly, if you are considering a home purchase, do not change your financial condition before consulting with a lending professional. That means do not move money from one account to another, avoid big ticket purchases such as automobiles, try not to change jobs & make your home purchase the priority in your life

Working with a lender of choice, I will help you obtain the best possible terms that fit your needs. 

The lender typically weighs three criteria to determine your ability to borrow: CASH, CREDIT & INCOME. Think of a loan as a three legged tower--two legs can be broken and a lender may still make the loan. For example, a buyer make have little cash for a down payment and problem credit, but good income.  Chances are this buyer can obtain a loan, so a mix of these issues will determine your ability to borrow. 

CASH on hand can even be in the form of a gift or in a savings account or an investment account. However, no down loans have become common place in the last few years. Even with all the controversy these days regarding 100% financing, these loans are still available, although with tougher underwriting criteria.

CREDIT as reported and scored by authorized agencies reports how much you owe and to whom, whether you pay late or on time or not at all.  Major credit "dings" are charge offs, unpaid collection accounts, bankruptcies, repositions or foreclosures. Even major problems, if far enough in the past or "repaired" may NOT prevent you from obtaining a loan.

Credit repair simply means reviewing your credit report, correcting mistakes, settlement of problem accounts and good financial management.  If you are not able to obtain a home loan today, many borrowers often repair their credit sufficiently to obtain financing in as little as 6 months. Anyone may obtain their credit report for free once a year.

Credit Scoring is widely used by most lenders to quickly determine your credit worthiness. Many factors effect the score such as delinquencies, charge offs, payment history and numerous others factors including how often you apply for credit & how much you use.  If you order a credit report, make sure that it does not appear as a credit inquiry from a credit grantor. The inquiry itself may lower your credit score or trigger other inquiries. Be careful when granting authorization for a credit report.

I, myself made an inquiry for a home loan recently through an internet ad. That inquiry triggered 18 credit inquiries in 4 days, damaging my credit score and these inquiries stay on your report for two years. The three primary credit reporting agencies are Experian, Trans Union and Equifax, all accessible through the internet.

INCOME, reported either by W-2's, tax returns or bank statements shows your ability to service a loan.  

 


 

LOANS

A Thirty-year, fixed-rate conventional loan consists of a mortgage with monthly payments of principal & interest that remain constant throughout the life of the loan. In 2007 conventional conforming fixed-rate loans were available up to $417,000. Low down payment loans were normal and NO down were common place. Now with the loan crisis, things have changed.

Federal lending guidelines for primary residence loans now allow a new high for "conforming" rates of $729,750. This so called "Jumbo-Conforming" loan has many restrictions but the FHA product seems to offer the most benefits for some borrowers. FHA offers 3-5% down to the new higher loan limits.  100% gift funds allowed, non occupant co-borrowers, closing costs can be incorporated into the loan and more liberal debt and credit underwriting.

Some lenders still allows Seller to pay for HOA dues and up to 6 months PITI, 5% down on Jumbo loans.  20% down stated income on SALARIED and self employed borrowers with FICO scores as low as 620.


Here is a quick summary of the New HUD and Conforming Limits by the areas that I think are the most relevant.

Los Angeles       $729,750
Riverside         $500,000
San Bernardino          $500,000
San Diego         $697,500
San Luis Obispo   $687,500
Santa Barbara           $729,750
Ventura                 $729,750
 

Keep in mind that most home owners move within 10 years, so examine your loan alternatives with that in mind.

Fifteen-year, fixed rate financing has a larger monthly payment than a 30-year loan, but a lower interest rate and smaller potential interest cost. As appealing as this loan may appear, it locks the borrower into higher payments which may become unaffordable at some future time.  Home buyers should always be careful when choosing a loan.  If the borrower has extra money, he/she may make additional principal payments and reduce the term of a 30 year loan without being locked into higher payments.

 An adjustable rate mortgage (ARM) is a form of financing which typically has an initial "start" rate lasting six months or a year, and then rates which change on a regular schedule. The initial "start" rate is beneficial to borrowers, which may not other wise, qualify for a loan. Because the interest rate changes, monthly payments can also rise or fall. The interest rate changes are based on an index such as the average price of Treasury bills over six months or a year, the 11th District Cost of Funds Index or the LIBOR rate (the London Interbank Offer Rate) and the Margin. The margin is best described as the lenders profit. Most ARMs have annual and lifetime interest caps and monthly payment caps.

Some ARM mortgages allow lenders to collect "negative amortization," an expression which means the interest cost is greater than the minimum monthly payment, so the borrower may make smaller payments, but the size of the loan balance increases. If the borrower pays more than the minimum interest payment in order to reduce the balance of the loan, the effect is to reduce the minimum monthly payment rather than reduce the term as in pre-paying a fixed rate loan. Self employed or commission sales people whose income varies from year to year may often prefer this type of loan.

Finally, some ARM loans are tied to the "prime rate", especially home equity loans. The "prime" is the rate banks charge their most credit worthy customers. It is tied to the Federal Reserve cost of funds rate. The "FED" has begun lowering this rate in recent months after raising it for the past couple of years, so ARM loans tied to the prime rate have seen a real growth in interest rates.

A jumbo loan is, essentially, a 30-year mortgage but with a loan amount above the conventional conforming loan limit of $417,000 for a single-family home.  Because a larger loan amount is outstanding, lenders have more risk and so interest rates are somewhat higher than for conforming financing. Again the so called Jumbo-Conforming loan is now available for amounts up to $729,750

A variety of other loans, convertible or interest only fixed, due in 3, 5, or 7 years offer a combination of rates and terms. As an example, if a borrower only plans to keep a home for five years, knowing that his job will change, he may prefer a loan with a lower rate for the first five years, although the loan is amortized for a full 30 years. Typically these loans then convert to a new rate calculation which may require refinancing.

Stated Income Loans are common with self-employed or commission sales people whose income varies. Rather than provide W-2 or tax returns, such a loan may only require an application with no proof of income.  Such a loan, used wisely can be beneficial, but recently some of these loans have failed and adversely affected the "sub-prime" loan market, causing higher rates and more restrictive lending practices.

When obtaining financing, even though a lender may be willing to loan you more, consider what payment you and your family are comfortable making each month.

Loans have a nominal interest rate and an annual percentage rate (APR). The APR is important because it includes not only the interest rate, but also such costs as points (loan discount fees), per diem interest, mortgage insurance and other expenses.


Get the Facts Directly from the Source

United States VA Home Loan Program

Federal Housing Administration (FHA)

Fannie Mae

Freddie Mac

Wells Fargo Home Mortgage

Washington Mutual Mortgage

Chase Mortgage

Countrywide Home Loans

Downey Savings


For a personal evaluation with an area specialist, contact:  

Laurie Perr 805-585-2329 at Chase Home Finance*

    2151 Alessandro Drive Ventura 805-585-2320
 

Viola Tovias 805-411-4615 at Countrywide Home Loans*

    1708 S. Victoria Ave., #B, Ventura 805-650-6566

 

Brian Minkow 805-496-6357 at Washington Mutual Home Loan Center*

    3960 E. Thousand Oaks Blvd., Westlake Village 805.496.0090
   

*Countrywide, Washington Mutual & Chase are among the nation's largest lenders and offer a variety of programs. 

 

Darryl Colvin 800-809-8361 at Downey Savings**

    **Downey Savings is a portfolio lender. They use their own money to lend and do an excellent job for people who are self-employed or whose income fluctuates such as commission sale people that may not qualify for conforming loans.

 


Contact Information

Telephone
business:      805-984-1995
home office: 805-984-4199
           cell:          805-377-1090
FAX
business:       805-985-1242
home office: 805-984-0438
Postal address
  •         Surfside-Anacapa Real Estate
  •         127 N. Ventura Road
  •         Port Hueneme, CA 93041
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    Electronic mail
    General Information, Sales & support:
    hal.cutler@verizon.net
     


     

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    Send mail to hal.cutler@verizon.net with questions or comments about this web site. Surfside-Anacapa Real Estate is independently Owned and Operated. Information contained herein is deemed reliable, but not guaranteed.  References to size or square footage is taken from public records but is not verified. If your property is listed with a Broker, this site is not intended as a solicitation of  the listing.  Property offered is subject to prior sale.  Consult a qualified specialist for legal or tax issues.
    Copyright © 2001 HAL CUTLER - Realtor
    Last modified: March 21, 2008 18:34