Entries from Searchlight Crusade tagged with 'loan qualification'
"Buy and Bail" or Buying One Home Before Foreclosure on Another
This has been a noticeable phenomenon for quite a while in San Diego. I've been loath to talk about it because I didn't want to be giving fraudsters ideas. Most lenders have now put into place safeguards against this measure....
Seller Carrybacks
A seller carryback is when the seller agrees to "carry back" at least part of the purchase price themselves. In other words, instead of getting the full sales price of the property (less outstanding liens), the seller accepts a...
The Return of Portfolio Lending
Fannie and Freddie long had a policy that they would not fund investment property (non-owner occupied) beyond 10 loans. Although it did impact a certain number of investors, for most folks that rule just never came into play. They have...
The Escrow Process and Reasons for Falling Out
There are all sorts of reasons why escrow falls through, but they fall into three main categories. They can best be described as failures of qualification, failures of the property itself, and failures of execution. Before I get into the...
Personal Loans For A Real Estate Down Payment
With the down payment presenting the largest difficulty for most people want to buy right now, I am covering every base I can think of as a place to get a down payment. I have covered VA Loans, FHA loans...
What Do Loan Qualification Standards Accomplish?
If you don't know the answer to this, don't be embarrassed. Lots of alleged professionals forgot the answers to these questions for several years, if indeed, they ever knew. It seems like quite a few still don't know the answer...
Magical Thinking About Mortgage Loans
(This is an updated reprint of an article written in February 2007. The Era of Make Believe Loans that made it easier to qualify people for inflated loan amounts ended abruptly a few days later, but the sort of thinking...
Rent to Own and Lease With Option to Buy
This has always been a portion of the market, but right now, more and more people are emphasizing it, or at least the ones who are able. Actual Rent to Own is rare these days, a sign that the...
What If You Cannot Refinance Later?
People always assume they'll be able to refinance later. Even most of my articles have it as an implicit assumption. But what if you can't refinance later? There are situations where it happens. Many situations, as millions of people...
Fixed rate, Balloon, ARM and Hybrid Loans
One of the things that always seems to be aiming to confuse mortgage consumers is advertising based upon whether the loan is fixed rate, and for how long. First, I need to acquaint you with two concepts: amortization and term....
Can They Force You To Pay Off Your Car or Other Debts In Order To Get A Loan?
The short answer is not only "yes" but "damned straight" I refinanced my house, and the lender put as one of my payoffs my Acura lease that I have 3 years left, whick equals about $19,000. I told him that...
Loan Qualification Standards: Qualifying Rate and Payment
Somebody asked me about a deferred payment mortgage for a purchase. The long and the short of the story is that they don't have any cash to put down, and they can't qualify for the payments under any kind of...
When to Get A Buyer's Agent and Start Looking at Property
Once we figure out when we are going to be ready to buy, how early is too soon to get a buyer's agent and start looking. You are ready for a Buyer's Agent when you are ready to act...
Can You Change Lenders After the Loan is Approved?
This question brought someone to the site Can I change lenders after the loan is approved? The answer is yes, but you need to start the loan process all over again. Actually, you can change lenders any time you want...
Rental History and Payment Shock in Applying for a Mortgage
First, I just got engaged, and my fiancee and I have been discussing what we want in a house after we get married. It will be the first house for both of us. She spent the last two years...
What Buyers Need: What Sellers Should Want to Supply When Selling
(This is a companion article to What Sellers Need: What Buyers Should Want to Supply) Quite often, I hear people talking about the real estate market as if it's all some amorphous blob, and buyers and sellers are no more...
What Sellers Need: What Buyers Should Want to Supply When Making An Offer
(This is a companion article to What Buyers Need: What Sellers Should Want to Supply) Quite often, I hear people talking about the real estate market as if it's all some amorphous blob, and buyers and sellers are no more...
Don't Allow Yourself To Become A Victim of Bad Real Estate Practice
This woman made herself a victim stayed in a hotel for 7 weeks looking for my "Dream Home." And, when I found it, even though it wasn't in my price range, I knew I would do anything I could to...
Credit Reports: What They Are and How They Work
I went to a "direct from the providers" seminar on credit reports and credit scores. Some of this information has changed from previous information, and some of it will change in the future. Credit Reporting, FICO scores, and related items...
Conforming and Jumbo Only Apply to "A Paper" Conventional Financing
This is something that many folks don't understand about the loan market. The labels "conforming", "jumbo" or, more accurately, "non-conforming" and "temporary conforming" only apply to so-called "A paper" loans, largely underwritten through Fannie Mae and Freddie Mac standards....
Stand Alone versus Piggyback Second Trust Deeds
Second Trust Deeds are something few real estate loan officers really understand well, mostly because the good ones don't make much money on them. Predatory lending laws in most states, limiting total compensation and total expenses to a given percentage...
Buying Teardown Properties and Condemned Buildings
Dear Mr. Melson: My husband and I are great fans of your Searchlight Crusade essays. Excellent work! In today's mortgage-mess market, will lenders reject loan applications from average buyers (not investors) wanting to purchase acreage with a teardown outside the...
Real Estate: Getting From Where You Are To Where You Want To Be
When I'm driving, and get to busy main streets, I hate turning left onto major streets unless there's a light there. Traffic is coming hard both ways, usually at high speeds, and with only intermittent breaks in each direction. If...
Signing Off Loan Conditions
what is a underwriter final "sign off" on the conditions First off, it needs to be mentioned that a good loan officer gathers information and puts a full package, with all of the information an underwriter should need, before...
Helping Yourself Qualify for a Home Loan
There are a fair number of specific helpful suggestions to make in helping you purchase a home. All of them revolve around the loan. Let's face it, the loan is far and away the most hypothetical and uncertain part about...
How Can I Lower The Down Payment Requirements So I Can Buy Real Estate?
With a few lenders starting to loosen their requirements slightly in San Diego, it's becoming increasingly obvious that the bottom is behind us. However, the issue has now become, "I don't have much of a down payment. How do...
Why Do Purchase Escrows Fall Apart? (And Why Is It Happening More Often?)
There have always been real estate transactions that fall apart. The reasons why they fall apart are as varied as the people who enter into the transaction in the first place. Let's get back to the very basics for...
Fixing The Real Estate Mess - Proposing Some Small Changes That Would Make A Huge Difference Over Time
Yesterday, I published the first half of this article, describing the issues currently preventing a return to a more normal real estate market, and the facts that any proposed solution needs to be built upon. At a quick recap, the...
Fixing The Real Estate Mess - Describing the Situation
Lots of folks have offered lots of different proposals for fixing the real estate markets and the mess we're in. All of the ones I have seen have suffered from one or more of about three problems. First, the...
Protecting My Buyer Clients Good Faith Deposit
The buyer's deposit is always at risk. This is just a fact of real estate transactions. I could pretend it's not so, but that wouldn't keep the deposit from being at risk - it would just make me a...
What Exactly do First Time Home Buyers Need?
That's one of the questions I've been asked, and it deserves an answer. Know that there is some flexibility to the answer, as there are embedded trade offs. You don't need as much of an income, or as high of...
Unsustainable Loans You Should Not Use to Purchase a Property
You've probably heard the horror stories, and I've mentioned the possibility more than once. Some unsuspecting person is looking at properties beyond their price range, and it therefore has all kinds of attractive features that properties which are in their...
Buying Out A Partner - With Complications
First of all I love the information on the site. I've done some research into buying a home and have talked to several people who have bought homes and I can never believe the stories I've heard. My response...
What Happens If I Don't Sign Mortgage Documents?
That was a question that brought someone to the site and the answer is very simple: they don't give you the loan. You haven't agreed to pay them back, so why should they? There are two major cases of this,...
Zillow Post for First Time Buyer Advice
(This is a reprint from December 15, 2006 that still has quite a bit to offer. There have been market changes which I will talk about but the original stands up well) Drew over at zillow.com asked me to do...
How to Tell If You Can Afford This Property
Note: Since this article was originally written, there have been changes in the loan marketplace. The negative amortization loan is no longer available and the damage it did has finally become obvious to everyone with pretense of a functioning brain....
Pre-Qualification
One of the most useless and overworked items in the real estate industry today is the pre-qualification for a loan. Sellers want buyers to be "pre-qualified", and buyers are seeking "pre-qualification" to convince buyers they are serious. The level of...
Time in Line of Work for Mortgage Qualification - What Counts?
Question from an e-mail: Hi, I have a question about mortgages. My boyfriend and I are looking to buy a home, and since I have recently quit my job he would be the primary applicant. He makes $44k and we...
Writing Real Estate Purchase Offers to Beat Higher Competing Offers
This article was inspired by closing one of many transactions where my clients did not make the high bid (or even close), but did get the fully negotiated purchase contract and the property. By building an airtight case that...
Consult a Loan Officer Before You Make a Purchase Offer
I don't know how many people have told me the story of the Purchase Offer That Was Accepted But Couldn't Be Done. They come to me because they lost their deposit or are about to and they want some way...
The 2010 Good Faith Estimate (Page Three)
This is the conclusion of the series begun in The 2010 Good Faith Estimate (Page One) and continued in The 2010 Good Faith Estimate (Page Two) Page Three is where the most blatant lies of this whole piece take...
The 2010 Good Faith Estimate (Page One)
I had a great rant about the limitations of the Good Faith Estimate all planned out in my head when I when I was in the very first stages of planning this website in my head. It was the first...
My Sixty Second Public Service Announcement about Buying Real Estate
Here was an idea I had: Pack a list of the most important things consumers need to know about buying real estate, as packed into the words I can say in sixty seconds without sounding like an over-clocked squirrel. Here...
Retirement Account Contributions and Mortgage Loan Qualification
I know 401k contributions impact a persons Adjusted Gross Income, thus would it also affect the amount a person could qualify for? If so, I will delay enrollment for a few months... This depends upon what documentation you use to...
Relocation Loans and Developer Issues
From an e-mail: I live in (City 1) and recently signed a work order on a semi-custom new construction house in (City 2). My wife and I make a combined 120K income and still can't afford a decent place in...
Losing Property Value with Highly Leveraged Properties
(This was originally published March 18th, 2006. I've added a couple updates, but otherwise it's as published. It's still very relevant, and if there's anyone that wants to tell me I didn't nail it, please speak up) In this article...
Joint Loans for Unmarried People
We aren't married. How do we buy a house together? Basically, the same way that married people do. The qualifications are exactly the same, provided that you both will be living in the property. If not all of the...
Sourcing and Seasoning of Funds
People sometimes ask, "Why should the lender care where I got the money for the down payment? I earned it, it's mine - cash is cash!" They're right as far as they go. In general, the lender doesn't care...
Joint Loans for Couples: How Does the Qualification Process Work?
First off, let me say that your site has been very informative and helpful. I stumbled across your blog looking for information on ARM vs. 30 year fixed loans and ended up reading every article. One issue I have...
Loan Qualification Standards - "Loanbusters"
This is definitely not a "Who you gonna call?" I've done a couple articles on the two ratios, debt to income and loan to value. Nonetheless, there exist a plethora of reasons why someone can be turned down for a...
Changes In The Mortgage Market And Transparency Since 2005
The overview is simple: The government has made it take slightly more effort to lie to consumers, while adding layers of delays that add a minimum of a week - an average of three weeks - to the time...
The Mortgage Loan Market Controls the Real Estate Market
One of the things I keep telling folks about the real estate market, whatever area you live in, is that it is controlled by the loan market. If you want to understand where real estate in general is headed, look...
Can a Lender Legally Stop Loan Funding After Signing?
That question brought someone to the site. The answer is "Yes, they can". As a matter of fact, just because they have you sign those documents does not in any way obligate that lender to actually fund your loan. There...
First Time Home Buyer Assistance Programs: Locally Based
One of the things people keep asking about is first time buyer programs. They exist, but lenders are not the first place to ask. Why? Because many, if not most lenders, actually charge a quarter of a point or so...
The FHA Secure Program: Not Helping Many But Does Help The People Eligible
This is a temporary program, launched by President Bush and Congress at the beginning of 2008. Its goal is to prevent as many homeowners as is reasonable from losing their homes through foreclosure. It won't help you if you...
FHA Loans: Salvation For First Time Buyers
I want to state that I am in no way shape or form an FHA loan guru. Between my general knowledge of loans and this information from someone who is an FHA guru, I think I can make some...
Loan Qualification: Time In Line of Work
(The original article was from September 2005) From an email: Anyway, my wife and I are about to purchase a place here in the X area and we've been hearing that "a tough loan" line due to the fact that...
From How Much You Make to A Payment and Price You Can Afford
I'm clueless about how home loans work. Is there any way to figure out how much I can afford to spend per month on a home. If I were to get a home for $(figure) how much would that...
The Self-Fulfilling Prophecy of Lender Fear
Most people, particularly first time buyers, want 100% financing or as close as they can get. Actually, most first time buyers don't have a down payment and couldn't put a significant down payment (5% or more) if they had...
In Order To Deal With Looming Foreclosure, You Must Get Out of Denial
A while ago, I got a call from a hard money lender, asking what I could to to "rescue" one of his clients by refinancing. He was being about as altruistic as a drowning man. What he really wanted...
First Time Buyer Programs: The Mortgage Credit Certificate (MCC)
This is a nationwide program for first time home buyers that helps them qualify for the loan by saving them even more money on their tax bill. With that said, however, the state of California accounts for more than 50...
How Can Buyers Get the Lowest Possible Price on the Best Possible Property?
The first piece of advice I have for buyers who want to get a fantastic bargain is to find a good buyer's agent (this guy is one of the best in San Diego County). Nothing else will make as...
Conditions After Loan Closing
I love your site and you are very knowledgeable. I have one quick question for you. I bought a home, I made it through closing, I moved my family into the home. During the process I used some closing...
In Real Estate, You're Better Off Doing One Thing At A Time
Hi--I just found your site today. The best I've ever seen/read, etc. Thank You!! I do have a question I didn't see addressed regarding our current situation/dilemma: Our present home, which we've lived in for 8 years, is worth...
Buyer's Markets Are A Great Time For Moving Up
I have said repeatedly that buyer's markets are not the time to be selling a property if you have any choice. There is one exception: People looking to turn around and buy a more expensive property. It's still better if...
Fear and Greed, or How Did The Housing Bubble Get So Big?
(This was originally written February 16, 2006, but more people are interested in it now) One of the occasional questions I get from people has to do with why the housing bubble got so big (or if you're one of...
Issues with Family Transfers of Real Estate
We live in (A California city). In a 2 bedroom 1 bath home on approximately a 20,000 Sq. ft. lot. It is easily worth 500K to 600K with a current mortgage of $116,000. The mortgage/Title is in the name...
What Do You Mean Back To Basics?
For a period of several months when the market started imploding, I got mass messages from basically every lender I do business with, saying it's time to "get back to basics". My favorite A paper lender became the last to...
Getting Another Mortgage Loan After A Short Sale
Our home isn't worth what we owe. So say you were just an average person selling and buying a house, meaning you put your house up for sale, get a contract to purchase on it then go put in offer...
Quitclaiming Property with a Mortgage
I am currently living with my parents and they wish to deed of gift their house to me but they still have a remaining mortgage on it. Is it possible to do this or do they have to pay off...
Manufactured, Modular, and Site-Built Homes: How Lending Practices Drive the Sales Market
Many people are unaware how profoundly lending policies influence the market for residential property and the various kinds of housing and methods of construction. So I am going to go over the various gradations in available loans for various types...
Automated Underwriting In Pre-Qualification or Pre-Approval Letters
It has become a trend for real estate agents who think they're being "smart" to require an automated underwriting approval. These are automated underwriting programs from Fannie Mae and Freddie Mac saying that Fannie or Freddie will buy the...
First Time Buyer Programs and Multi-Family Housing
Can I qualify for first time home buyer financing if I buy a duplex and live in one and rent out the other? I thought if I bought a duplex, lived in one side and rented out the other would...
Mortgage Protection Insurance - The Worst Life Insurance Policy You Can Waste Your Money On
One of a long series of emails about this horrid product: (identifying details redacted) Learn How To Make More Money Per Client ($500-$1000) In This Workshop You Will Learn Why The Most Successful Mortgage & Real Estate Professionals Across The...
What Do I Do If My Loan Falls Through?
"What do I do when the loan falls through" That depends upon when it falls through and what situation you're in. If you're in a refinance situation, you generally keep making payments on your old loan until and unless...
Why All The Fuss Over Real Estate Transactions?
Why doesn't real estate just sell for the asking price instead of having to go thru all the paper work...? Wouldn't it be easier to just put a price on it and sell it for that price? We don't...
How to Avoid A Repeat of the Housing Market Mess
Scapegoating mortgage brokers or anyone else is not the answer, nor is prohibiting yield spread. We've been here before (in the early 1990s), congress did something remarkably similar except a little bit more sane. It didn't work then. Why would...
The Consequences of Not Shopping Multiple Lenders
Minorities get higher rates. They add that the fact minorities are more likely to borrow from institutions specializing in high-priced loans could mean they are being steered to such lenders or that some lenders are unwilling or unable to serve...
Some Offers Are More Equal Than Others (Even If They Are For Less Money)
The phrasing in parallel with Animal Farm is intentional. Sellers need to understand this, and so do buyers, especially in a hot real estate market. Some offers are more equal than others, and knowing how to choose between competing...
They Told Me Not To Make My Loan Payment
I've heard this story, in all of its variations, at least hundreds of times. Someone will send me an email and say "They told me not to make my loan payment because I was going to skip one. So...
Bridge Loans
One of the things I'm seeing a lot of these days is blanket advice on bridge loans. A bridge loan is a loan that you take out with the explicit intention of having it be short term. The most common...
Loan Rates for Low Income Families
What is a good interest rate for a house that is for someone with low income? Well, if you make enough to afford the property, your income isn't a factor on the interest rate you get! You either qualify or...
What is the Best Investment Vehicle To Save For A Down Payment?
I just moved into a rental house with an option to buy. I figure I can probably save up around $40-45k for a down payment in three years. how should i save? The Roth IRA tax loophole for first...
There Is No Fairy Godmother for Loans
Really. I know that most people who read that title are replying "no kidding" but you would be amazed at how many people act like there is such a fairy godmother. I got an email yesterday that said, basically, "Help...
Issues with Multiple Mortgages
We have several rental properties that we own (more than 10). When we were younger, before we got married, we both moved around a lot and bought houses, moved, stayed a year or so and did it again. I...
Reserves for Real Estate Loans
Thanks again for the terrific posts. I've learned more about mortgages in the past two months than I ever dreamed I might. I am looking to buy my first home soon, and have myself in a good credit position...
Retroactive Loan Qualification Problems After Recording
What do the mortgage companies mean when they say they can not insure you house loan.? What is the danger to the homeowner? I have been in the new home for over a year now and they just now told...
Economics of Housing in High Density Areas
Here are the facts of the situation, whether you're talking about San Diego or Manhattan, the Bay Area, Los Angeles, or any of the other densely packed, high cost areas where all the employment and career opportunities are. Fact 1:...
When You Should Not Buy Real Estate
Okay, I did an article called Why Renting Really Is For Suckers (And What To Do About It). Fairness demands that I do a companion article on situations where buying is not a good idea. There actually are some. First...
Wanting a More Expensive Property Than You Can Really Afford
This is one of the biggest issues with my local real estate market. Because the San Diego market has very high demand and limited supply of property, prices are high. A reasonable two bedroom condo runs around $200,000. A 1200...
The "We'll Keep You In Your Property" Scam
I've been aware of this scam for some time, but with a larger than normal number of people in foreclosure or otherwise at the end of their rope, it's probably past time to cover this. It is a pure scam...
Full Circle: Back to More Traditional Lending Standards
I've seen more changes in the lending industry in the last few months than the previous five years. But those changes mostly restored us to the place we were a few years ago. There is plenty of money available, rates...
Student Loans and Real Estate Loans: Default, Repayment vs. Nonpayment and Consolidation
This is one of those things that trips up people to buy a house or refinance it: student loans. First off, Form 1003, the Federal Uniform Residential Loan Application has the following relevant questions on page 4, among the...
Restricted Sale Property: Very Difficult to Find A Loan
This is a warning to those who purchase restricted sale property. I've gotten a couple of calls for refinancing these in the past couple months, and I've never covered this subject. A restricted sale property is one where the...
100% Financing or Low Down Payment or Low Equity: PMI May Be The Only Option
One of the casualties of the lending meltdown is the high loan to value second mortgage. With many properties locally having lost twenty percent or more of their value, a second mortgage on a property that ends up in default...
125% Refinancing With No New PMI
Yes, it sounds like a scam to me, too. But it's real. This isn't to say that there are scammers out there promising the same thing. But there is a legitimate program that accomplishes this. Actually, there are no...
Loan Qualification Standards - Loan to Value Ratio
Many folks have no idea how qualified they are as borrowers. There are two ratios that, together with credit score, tell how qualified you are for a loan. The more important of these two ratios is Debt-to-Income ratio, usually abbreviated...
Loan Qualification Standards - Debt to Income Ratio
Many people have no clue how qualified they are as buyers, or borrowers. There are two ratios that, together with the credit score, determine how qualified someone is for a loan. The first, and by far the more important, is...
How Agents Should Respond To An Appraisal Below Purchase Price
It really helps my perspective in a lot of ways to be both a Realtor and a loan officer. Just the other day, I had a loan only client where they were already under contract to buy a property...
Issues with Relocation Loans
Sooner or later, a pretty fair proportion of the population are going to get an offer for a much better job, but the catch is that job is located in another city on the opposite end of the country. What...
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