Santa Rosa Home Loan - Sonoma County Home Loan - Ascent Home Loans

Everyday one can't pass a TV or newspaper stand without seeing a story on the spiraling economy, home prices, employees losing their jobs. You here it on the radio, stanfing in line for a coffee and even in restaurants.  The latter is what provoked this blog being written,

As I sat enjoying my lunch at a local restairant here in Santa Rosa, I couldn't help but overhear 3 businesman at the table behind me expressing their opnions about the economy and what they might do with their stock investments and 401 K's. All three must have been friends for sometime being that they were freely passing information berween each other how much they had in their respective 401K's, stock inventments and the remaining equity in their homes. Whether each qwas telling the truth or had inflated what they ahd accumulayed, they each seemed to have done well for themselves. What did strike a nervious cord inside me was when the conversation turned towards the subject of makeing ones house and credit card payments.

One of the businessmen changed the subject to one of his buddies who had a buddy that was ojne of the few and far betwwen lucjy ones who was ablee to ahvhe hie loan modifoed so he could remain in his home.    

Over the past year, there have been numerous failures in the banking and lending industries. Even the government tried with it's own feeble attempts to help borrowers with several failed programs such as Hope Now, FHASelect and the up and coming Recovery Act of 2008,  But who would have thought that the government taking over Fannie Mae and Freddie Mac would actually be the first thing to help borrowers to begin to refinance and purchase a new home.

Since the takeover of Fannie and Freddie, interest rates have dropped near;y 3/4% in some instances. Today you can find, depending on your credit score, debt-to-income ratio and LTV, a 30 year fixed loan for around 5.50% That's nearly a 7/8% drop from rates just 3 weeks ago! A 15 year fixed rate for 5.25%.

Does this mean the housing market will now turn around? Hardly. No one knows what is going to happen in the future and in fact how well the governemnt will run Fannie and Freddie. Along with that, there are still billions of dollars worth of option arm loans that will be resetting in 2009 and 2010. If rates do not continue to stay steady or even go lower, we will be right back where we were before the takeover of Fannie and Freddie. To answer my own question about whether the takeover will help? Who knows, but it is a start. 

Take advantage of the lower rates by calling me today. Whether looking to refiance or purchase a new home, I will not only find you the best rate, but also the best program to fit your lending needs.

**Update  Well that didn't last long. Rates were down for 7 days until they jumped back up due to the rescue/bailout debate, Depending on whether this passes, we will see what happens to rates.

It's just been over a year since the housing market has crumbled. Even though there was a little pickup in business in the middle of summer, that small jolt seems to be waning. So once again, here you sit thinking about all the renovations you've done to your home. The painting, updated the kitchen and bathrooms. You might even had hired a professional to come in and stage your home for an open house. But here you are, your home has had numerous potential buyers, but so have many other homes. They too have done the same upgrades to their homes. So what can you offer that they can't?

With the economy slipping downwards and gasoline and food prices soaring, families are having a very hard time making ends meet. So what can you offer those potential buyers something that could help them in these trying times. A growing number of sellers are adding landscaped gardens to the properties. No, not a tranquil tea garden or shrubs trimmed like a bear, but a fully landscaped vegetable garden.

There are home sellers spending anywhere between $10,000 all the way up to $100,000 on beautiful landscaped vegetable gardens. Some going as far as having granite edged raised beds along with tranquil waterfalls or fish ponds. Vegetables are planted according to color schemes. If one thinks about it, the possibilities are endless. One could plant so that they will have ready to pick or show off vegetable plants all the way into the late fall.

Remember, you do not have to be selling your home on the upper end of the market to put these ideas to good use, One thing you should plan for is a raised bed garden. They are much easier to maintain, and they also allow you to put some type of wire mesh underneath to keep the little critters away such as moles.

Let your mind flow with the possibilities, but always keep in mind that your are doing this to give yourself a little edge against the homes for sale down the street. Sticking plants in a small plot of dirt is not going to help. Make it presentable. A work of art so to speak. Then when the next buyer comes through and compliments you on your garden, you can pull a fresh homegrown carrot out of the ground and dangle it in front of them.

There has been much hoopla about the changes that have been made for the past year in regards to Fannie Mae, Freddie Mac and FHA. Freddie and Fannie have created Agency Jumbos along with FHA creating it's own FHA Jumbo loan program. Loan limits have been raised to help struggling borrowers refinance out their adjustable loan programs into 30 year fixed. But even though the stimulus package signed back in March of this year was passed to help current and first time home buyers, it missed the mark in helping out one of the most important citizens of our country. The men and women of the armed forces.

Our men and women who train and serve to protect our country were left out in the cold due to the VA loan program not being included in the stimulus package modifications. But now with the new Housing and Economic Recovery Act of 2008 passed and signed by the Congress, Senate and President, the loan limits with which the VA will guaranty up to 100% LTV have now been raised. This change also includes VA Jumbo Loans. What, you didn't know the VA had a jumbo loan program? Well. yes it does.

Previously to the Housing Recovery Act. VA loans were guaranteed up to $417,000, which meant a veteran could purchase a home with a zero down payment or 100% LTV up to $417,000. However. if that same veteran wanted to purchase a home above the $417,000, it would be considered a VA Jumbo loan. VA Jumbo loans are calculated much different than a standard conforming VA loan. On top of that there is a requirement of a 25% down payment. I can just here some of you now, "If I had a 25% down payment I wouldn't need a VA loan." As I mentioned, a VA loan is calculated differently. Here is an example.

Prior to the Recovery Housing Act signed on July 30th 2008.

1. Veteran wishes to purchase a home for $600,000
2. The 100% LTV/no money down policy still applies for the first $417,000.
3. You then take the difference between the purchase price of $600,000 and the $417,000, which is $183,000.
4. The veterans 25% down payment is now based on the $183,000 difference. You then take 25% of $183,000 which is $45,750. On a $600,000, that is a down payment of $45,750 which is an 8% down payment.

Now let's take a look at the same example with the changes made in the Recovery Housing Act of 2008. One of the most important changes is that the VA will now guaranty a loan up to 100%LTV to 25% of the current Fannie/Freddie stimulus package loan limits. For example the current Fannie/Freddie limit for Sonoma County is $662,500. 25% of that is $469,875, Let's look at how that affects the previous example.

1. Veteran wishes to purchase a home for $600,000.
2. With the new limits, the no money down policy now applies to the first $496,875.
3. You then take the difference between the purchase price and $469,875 which is $103,725.
4. The veterans down payment is now based on the $103,725 difference. Again you take 25% of $103,725 or a down payment of $25,931.25. That is a down payment of 4%.

Of course once you begin moving into the jumbo loan arena there are restrictions. Loans above the $417,000 watermark usually come with credit score restrictions. On average the credit score minimum is 660 at the moment. The veteran must also have at least 2 months of reserves equal to their monthly payment. However, the current maximum loan amount is $1,000,000.

Compared to the current jumbo rates, the VA Jumbo loans are running about 1.00 - 1.50 points below standard jumbo rates, and the borrower does not have to put down 20 -25% down payment as in standard jumbos. Remember, there is no monthly private mortgage insurance, although there is a one time funding fee that can range from 1.25% to 3.3% of the purchase price.

Over the past year since the mortgage and housing implosion has started, we have only heard about Fannie Mae this, and Freddie Mac that. Mortgage companies have come and gone, some deservedly.  Fannie, Freddie and FHA maximum loan limits have been adjusted upwards, thanks to the stimulus package and soon to a more permanent status by the Congress, Senate and President. Many new programs have been developed such as FHASecure and Hope Now to help borrowers who have an adjustable mortgage about to reset. But what about the runt of the loan program litter that no one is paying any attention too. What about the good old VA loan? Being one of the last of it's breed of 100% financing, the VA loan is for veterans and active duty military personnel, members of the reserve and National Guard.

What are some of the advantages of using a VA loan?

1. VA loans are assumable as long as the buyer can qualify.
2. The veteran does not have to be a first time home buyer and can reuse their benefit.
3. The amount of closing costs charged to the borrower are limited by VA.
4. The seller can pay up to 4% of the closing costs.
5. Prepayment of the loan without a penalty.
6. There is no private mortgage insurance.
7. Up to 100% of the purchase price can be financed

What are some of the requirements for a VA loan?

1. Loans are generally limited to the confirming loan limit of $417,000. However, with a down payment this loan amount may be exceeded.
2. The veteran must occupy the home as his/her primary residence.
3. The veteran must have the necessary money to pay for certain closing costs and the earnest money deposit.
4. VA does require that the veteran pay an up front VA funding fee, however VA does allow this fee to be financed and added to the loan amount.
5. The closing costs that a seller may pay for are limited.
6. Although the VA is insuring the loan, the veteran must be able to qualify with their credit and income.

So, if you are a veteran, active duty military personnel or a member of the reserve and National Guard, you may want to think about using your VA loan benefits. Don't forget, sometimes picking the runt of the litter can be the best decision you have ever made. For more information, or if you are interested in applying for a VA loan, please do not hesitate to call me at 707-494-8532 or 800-392-0674. You can also apply by using my secure online application by clicking here apply online.

Over the past few months I have had both current clients and potential clients calling and asking why haven't the interest rates dropped more. "The Fed Funds Rate is really low." "How long will it take for mortgage rates to go down also?" "I'm going to wait a little longer, I know they will drop because of the Fed Funds Rate."

Unfortunately, many borrowers and even some loan officers get confused when is comes down to who actually sets the mortgage interest rates. First of all, the Fed Funds Rate has actually nothing to do with where mortgage interest rates are. The Fed Funds Rate is actually the interest rate that banks lend to each other overnight. The lower the rate, the more liquidity there is between the banks. It is a short term rate that signals the Federal Reserves view as the state to the money supply.

Well. if the Federal Reserve doesn't set rates, who does? I'm sure many of you reading this have seen the videos from the Chicago Board of Trade with all the members running around in their different colored coats, flashing hand signals, shouting buy or sell at the top of their lungs. It is there at the CBT, where other commodities are traded, are where the initial rates are set. Most long term mortgage rates are linked to the 10 Year Treasury Notes traded on the exchange. Why the 10 year Notes? Mainly because they are considered one of the safest bond instruments in the world. When the 10 Year Note goes up in price and the yield goes down, over the course of the next few days. the lower price will be reflected in the conforming mortgage rates.

 But with the higher priced homes in California, where most are above the conforming loan limit, we move into the jumbo loan range above $417,000. Since the stimulus package things have changed for the jumbo market. Now that Fannie Mae and Freddie Mac are involved, we now have what are known as Agency Jumbos. These are jumbos that range between $417,001 and $662,500 here in Sonoma County, and are priced by Fannie and Freddie themselves. Up until the end of April however, the difference between the conforming rate and agency jumbo rates was still wide. It was  nearly ½ point to ¾ points. But in late April, both Fannie and Freddie narrowed that gap down to ¼ to 3/8 points difference. Loans above the $662,500 mark are still considered jumbo loans and are priced by the lenders themselves at a much higher rate than the agency jumbos to attract investors to purchase them. Compared to agency jumbos, the standard jumbos are priced somewhere around 7.625% to 8 ½ %.  Why so high? Because investors are skittish about the higher loan amounts and want incentive to buy them.

There you have it. A very simplified explanation of who sets interest rates. So the next time someone says that the fed funds rate was lowered hwy hasn't the interest rates gone down. You can pass it along.

As we go through life, there are a number of firsts for all of us. The first time we take a step. Our first word. First time we drive a car. But one of the scariest firsts is the first time we purchase a home.All the processes and steps we have to learn and remember. Finding a real estate agent and lender. Calculating and re-calculating your income and debts, and even after all those calculations, still not sure if you want to go through with it. How will you make the payments? What if one of us loses our job? What will the housing market do? It is a hard decision to make when thinking about purchasing your first home.

Does purchasing a home have to be that daunting? No it doesn't. Sure there are a lot of new things to learn, but once the excitement and nervousnessgo away, you will sit back and realize the whole process was not that difficult. The most important, and I must stress MOST important thing to do is ask questions. Do not assume anything. When it comes to purchasing a home, there are no dumb questions. You are investing a large chunk of your savings and income into this home, and if you are using a real estate agent or lender that doesn't want to take the time, or skirts around the answer to your question, you have the wrong people working for you. Yes, I said working for you. Sometimes in the process the working relationship can get a little muddy. But, who ever you choose as a lender or agent, they are working for you, not the other way around. If you have worked out your budget and know you cannot afford a house for more than $300,000 and your agent is showing you homes for $375,000 and up, you have  the wrong agent.  Same goes for the lender. If the lender you have chosen is trying to approve you for a loan amount that will strap you if one little thing goes wrong, that's the wrong lender.

One of the best ways to relieve the stress of looking for a home is before you start looking get pre-approved. What that means is that the lender views the necessary documentation it will take to get you approved. From there, he/she can run you through their automated underwriting system to see at what loan amount you will approve at. This way once you know what your upper loan limits are, it relieves you of the stress of guessing whether you can afford that home you just saw in the paper. It is usually just a simple process. All you have to supply your lender is an application, 2 months most current bank statements, 30 days of most current pay-stubs, and 2 years W2's. If you are self-employed, then 2years of 1040's must also be supplied. That's it. From the above documentation a lender will be able to tell you what type of programs and what your maximum loan amount will be that you can approve for.

Now this process does differ amongst lenders, meaning some charge a non-refundable application fee and such. But most, like myself do not charge the borrower any upfront fees to get approved.  So next time you're wondering if you can be approved, get your paperwork together and contact myself or another lender and see just hoe much of a home you can afford.

Never before have things changed so quickly in the mortgage industry. Interest rates increase and decrease depending on the markets, on an hourly basis. Loan programs are being changed sometimes on a daily basis, others are being discontinued all together.

With this in mind, first time homebuyers who were counting on the first time homebuyer loan programs with 100 % LTV or 0 down must be aware that those programs are no longer offered. Over the past month the MI or better known as mortgage insurance companies have cut back their exposure to these types of loans. They will now only insure loans to a maximum LTV of 97% on first time loans. That means the borrower must have at the very least a down payment of 3%. For example if you were looking to purchase a home for $300,000, you would need a down-payment of $9,000. Now for those of you whose stomaches just turned, please be aware that many of these programs allow for the down payment to come from other sources, such as relatives, employers or charitable organizations.

First time borrowers must also be aware that many of the credit score criteria have changed also. The majority of first time homebuyer programs now require much higher credit scores to be considered for approval. For example, if you wanted to apply for a loan with an LTV of 95,01 to 97% you would have to have a minimum credit score of 680. With a credit score below the 680 watermark, you will have to put down a down-payment of at least 5% or a 95% LTV. If you do fall in the range below 680, the minimum credit score for these programs is 620.

However, do not feel that you have been shut out of the market. FHA loan programs may be the way for many first time homebuyers to go. Although they also require a 3% down payment, they too allow for assistance with the down payment. On top of that, interest rates are usually lower then many of the conforming first time home-buyer programs. Also, many lenders will allow credit scores down to the 580 mark.

All in all there are still programs avaiable for the first time homebuyer. One thing to keep in mind is that it is very important with the many changes going on within the market, that you get pre-approved before looking for a home. That way a loan officer can let you know what your maximum loan amount is, thus giving you an idea what range of properties you can be looking it.

For more information in regards to first time homebuyer programs, please call Scott Dovala Branch Manager Ascent Home Loans of Santa Rosa Ca. Office 707-494-8532 or toll free 877-392-0674 

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Over the past few months, I have had the same recurring question from borrowers in regards to what does locking a loan mean and floating a loan. Both principles are pretty straight forward and easy to explain.

LOCK A LOAN 

When your loan officer suggests that you lock your loan, what he/she is actually telling you is to lock in the current interest rate you have been offered. There are many reasons why they may suggest this, but typically it is because there is a possibility that rate may change by the end of the day, or in fact in todays market, the loan program in which you are applying for may be changing guidelines and you might not qualify after the change date. Most borrowers do not realize that mortgage interest rates can adjust upward and downward on a daily and even sometimes an hourly basis. With current market conditions in the bond markets, interest rates can change very quickly. When a loan is locked what is created is an agreement between the lender and the borrower to guarantee the loan at a specified interest rate. Another item to consider is the length of the lock. Interest rate locks come in 15,30,45 and 60 day locks. What determines which time period to use depends on several factors, but mostly will the loan be able to close within that time period. If the loan process goes beyond the time period locked, then the lock is canceled and the interest rate offered is no longer valid. One thing to remember, a lock is not the same as a rate quote. When you call and ask what the rates are today and the loan officer quotes you a specific rate, that does not mean that rate is locked in. Your loan officer has to specifically lock in the rate. What I do with my customers when I lock in their rate is I will send them a copy of their lock so no misunderstandings can be had. Many loan officers do no do this, so request it when you decide the time is right to lock your loan rate.

FLOAT A LOAN 

When you float a loan what you are actually doing is registering the loan with the lender. Basically what this is telling the lender is that you are serious about getting the loan, but you are willing to take the risk that by the time you close your loan, interest rates will not go up and are more likely to be lower. The one thing to be aware of is don't get caught up in the day to day changes in interest rates. Just like a stock trader, no one can call the bottom of a market. I have seen many borrowers take the risk of floating their loan and losing in the end because interest rates spiked up. Also, you should not float your rate trying to save 1/8 or 1/4 of a point. The risk is not worth what little savings you may end up with.

In todays volatile market place, depending on your situation, it might be best to lock in your interest rate. I have seen conforming rates jump 1/2 to 1 point higher in just a few short days and fall just the same. If you have further questions, you can call me at 707-494-8532 or 877-397-0674.

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With the markets fluctuating this week, the 30 year fixed rate has dropped back down to the levels seen 3 weeks ago at 5.50%. If you are currently in a high interest rate adjustable mortgage, now may be the time to refinance.

Here is an example of savings.

if you currently have an ARM with an interest rate of 8.0% with a $435,000 loan, you are paying principal and interest of $3191.88. If you refinanced at the current rate of 5.50%, your monthly principal and interest would be $2469.99. A monthly savings of $722. That's a yearly savings of $8664.

Don't forget, interest rates can change daily, sometimes hourly, so call today for a free quote and let's see what we can do to help you save some money.