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Home for Sale

Buyers: save thousands off federal income tax with Mortgage Credit Certificate

Homebuyers who have not owned a home in the past three years are eligible to claim the Mortgage Credit Certificate and receive a dollar-for-dollar reduction against their federal tax liability for 20% of their yearly mortgage interest payments.

Continue reading “Buyers: save thousands off federal income tax with Mortgage Credit Certificate” »

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Loans for Hobby Farms! Up to $1.5 Million for Hobby Farm Mortgage

Under Central Coast Lending’s unique Hobby Farm Home Loan Program, homebuyers are eligible for up to $1.5 million to finance a purchase of a “Hobby Farm”, which is defined as a primary residence capable of some sustained agricultural production.

Continue reading “Loans for Hobby Farms! Up to $1.5 Million for Hobby Farm Mortgage” »

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Qualify for a Home Loan with Just One Year of Income (CCL Special!)

Central Coast Lending allows borrowers to qualify for a mortgage with income represented by just one year of tax returns.

Continue reading “Qualify for a Home Loan with Just One Year of Income (CCL Special!)” »

Recent Articles

23
Jul

Mortgage Rate Update (July 21 – 25): Delayed

The Mortgage Rate Update for July 21 – 25 will be pushed back until next week (July 28 – August 1). Make sure to check in with our blog on Monday, July 28 for a Market Update.

For a customized financing scenario, rate update, or loan pre qualification, please feel free to call 805.543.LOAN. Our expert loan officers are happy to help!

22
Jul

Proposed FHA HAWK Program Would Help First-Time Buyers Save Thousands

The proposed FHA “HAWK” program would give first-time home buyers the opportunity to take housing counseling classes in exchange for lower mortgage insurance fees on an FHA home loan. Over the life of a 30-year FHA loan for $400,000, the lower fees could result in up to $20,000 savings for borrowers.

The Federal Housing Administration (FHA) has proposed the HAWK program to support the housing market in two key ways: 1) make housing more affordable for first-time buyers, and 2) improve the likelihood that borrowers will repay their loans.

 

FHA Loan: History

The FHA loan provides a mortgage option for prospective home buyers that would marginally qualify under industry standard loans. First-time buyers especially have benefitted from the program, which offers a low down payment option (as low as 3.5%) and flexible credit requirements.

More FHA perks:

  • Co-signers are acceptable for qualification
  • 100% of the down payment and closing costs can be a gift from a relative, non-profit, or government agency

[READ MORE about the FHA Loan]

 

FHA Loan Structure: Mortgage Insurance

Any questions about home loans in California? We are The Mortgage Experts: ask us anything! We have a loan program to fit every need. Call 805.543.LOAN or email us today.

By expanding eligibility to offer the FHA loan, lenders have also agreed to take on more risk. To insure against the greater probability of default, the FHA loan also requires two “mortgage insurance” payments – the Upfront Mortgage Insurance Premium (UFMIP) and the annual Mortgage Insurance Premium (MIP). The UFMIP is charged upon closing of the loan, and the annual MIP is charged as part of the ongoing monthly payment.

The upfront charge is 1.75% of the loan amount (for a base loan of $100,000, the upfront payment would be $1,750), and the monthly charge varies based on loan term, loan amount, and down payment. For the 30-year fixed loan, the monthly MIP charge varies between 1.20% and 1.50% of the loan amount.

[For a full explanation and rundown of MIP scenarios, see our article HERE]

In 2013, the Department of Housing and Urban Development (HUD) – insurer of the FHA loan – announced an increase in MIP requirements.

To insure that “underserved” borrowers maintain access to mortgage finance (even in the face of rising costs), the FHA released its “Blueprint for Access” earlier in 2014. The Blueprint includes a proposal for Homeowners Armed with Knowledge (HAWK).

 

What is HAWK?

The Homeowners Armed with Knowledge program would give FHA borrowers a discount on MIP in exchange for participation in a housing counseling program.

The FHA estimates that delinquency rates for borrowers who have received counseling are 29% lower for first-time buyers (LINK).

By offering counseling in exchange for lower premiums, the FHA hopes to make homeownership more affordable and sustainable (by reducing the risk of loan default).

 

What Would ‘Housing Counseling’ Look Like?

In total, the housing counseling program would last up to eight hours – AT MOST. Counseling would be completed in three stages:

Stage 1 (Pre-Contract: 6 Hours)

Potential borrowers must complete this phase at least 10 days before signing their purchase contract. Counseling must be last at least 6 hours and completed with an approved agency.

Stage 2 (Pre-Closing: 1 Hour)

Must be completed between the date of the loan application and three days prior to closing.

Stage 3 (Post-Closing: 1 Hour)

Must be completed after the loan closes by between 30 days and 1 years time.

The housing counseling process is designed to help buyers better understand their home loan and the home buying process.

In exchange for participating in housing counseling, borrowers would receive a 0.50% reduction on their upfront MIP and a 0.10% reduction in their annual MIP. Responsible borrowers who avoid 90-day delinquency in the first 18 months of loan receive an additional 0.15% off their annual MIP.

For a $400,000, 30-year fixed loan with a 3.5% down payment, we estimate that eight hours would save the borrower $19,600 off UFMIP and MIP payments over the life of the loan.

 

I want to save $20,000! Where do I sign up?

Implementation of the HAWK program is not expected until the fall of 2014. In the meantime, Central Coast Lending offers many affordable loan programs. Call (805.543.LOAN) or email ([email protected]) for more information.

If you cannot wait on your FHA loan for the HAWK program, consider: mortgage rates and prices are extremely low right now, but there are no guarantees that rates will stay this low through 2014. Grabbing a low rate now could save you tens of thousands over the long-term of your loan.

We will give you an honest pre-qualification assessment for any purchase loan proposal. Get in touch and learn about your options!

 


Central Coast Lending is a California mortgage broker and direct lender based on the Central Coast of California in San Luis Obispo County. Call us today at 805.543.LOAN or email [email protected] to set up a free pre qualification. We are The Mortgage Experts: ask us anything!

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21
Jul

Monday Market Update: Housing Strong (Despite a few Troubling Numbers)

In our weekly Mortgage Rate Update last Wednesday (July 16), rates were mostly unchanged from the previous week. Conventional loan rates rose and dipped slightly:

7.16 Conforming Rates

Government-backed programs (FHA, USDA, VA) all increased slightly. You can see the full update here.

Unfortunately, I am out of the office this week, and not able to post the usual full market update. Below, I have included a few notes from the week that was (July 14 – 18):

July 14 – July 18:

  • Housing starts (construction) fell 9.3% in June to an annual rate of 893,000, according to the Commerce Department. But for the good(ish) news, much of the slowdown came in a single region – the South. Construction activity in other regions appeared much more robust.
  • Mortgage applications dropped by 3.6% during the week of July 11.
  • Construction down? Purchase applications down? Are we panicking yet? A Fiscal Times article by Marine Cole goes the other way, and explains “Why There’s Hope for a Stronger Housing Recovery.” In short: foreclosures are down, mortgage rates are very low, the labor market is improving, and builders believe that better times are on the horizon. Read the full article here.
  • Another positive for buyers: the government supports you! The Mortgage Credit Certificate (MCC) offers new/returning buyers a dollar-for-dollar credit to reduce their federal income tax bill based on their mortgage interest payments. The MCC will save you thousands! To qualify, buyers must be “first-time” (haven’t owned a home for three years), and meet income and price specifications. Learn more here!
  • The SLO County real estate market is a challenging one in 2014. Demand is sky-high, but inventory just isn’t as available as it was during the “boom” years of 2012 and 2013. As a lender, we have challenged ourselves to find products for a diverse and exotic array of properties. For example: Hobby Farms and Farm and Ranch programs. We are also pretty excited about this one-year income qualification offer, which is great for the self-employed whose fluctuating income might complicate the loan qualification process.

Please feel free to call us (Central Coast Lending) at 805.543.LOAN or email ([email protected]) with ANY and ALL questions about mortgage rates, mortgage pricing, mortgage pre qualification, mortgage programs… really ANYTHING real estate related, we have you covered!

18
Jul

Mid-Year Market Update: Jobs, Stocks, Bonds, Real Estate, Inflation, and More

After last year’s huge run up in many asset classes, the markets seem to be taking a well-deserved breather. I think it’s a healthy thing that we’re not seeing another huge 20% increase in the markets. That kind of increase would not be in line with the gains in the broader economy. If we did see another huge year in the markets, we could very well be setting ourselves up for a market adjustment. That huge year doesn’t seem to be happening. That’s a good thing in my book.

Read more »

18
Jul

The Dove Creek Development (Atascadero): SOLD OUT

Last week on the Central Coast Construction Report, we profiled Robbins|Reed’s Briar Creek Development in Lompoc as an affordable location to purchase a new home on the Central Coast.

Dove Creek in Atascadero – also developed by Robbins|Reed – took a similar affordable approach in Atascadero. And guess what? The people listened! We are happy (sad?) to report that Dove Creek has sold out.

Robbins|Reed is a relatively new company, but they have done some great stuff around the Central Coast. Like us, they were founded just as the housing bubble began to burst (2007), and it took some real vision and creativity to work through the pieces. Make sure to keep an eye out for their next project!

17
Jul

Mortgage Matters radio on KVEC 920: July 19 (REPEAT)

[EDIT: July 19th's show will air a rerun of July 12th's show]

Miss last week’s episode with Dale Kaiser (July 12)? It will be on repeat this Saturday from 10 a.m. to 12 noon on KVEC 920.

Miss the episode? Check out our Soundcloud page for free episode downloads.

17
Jul

Mortgage Matters Radio: July 12 (NEW)

Guest: Dale Kaiser, Realtor (based in Cayucos)

Central Coast Lending Soundcloud (full episode downloads)

Note: We will keep the episode on our website for 30 days. After 30 days have passed, free downloads of the show will be available on our SoundCloud page.  LINK TO EPISODE.

 

17
Jul
Home for Sale

Buyers: save thousands off federal income tax with Mortgage Credit Certificate

Homebuyers who have not owned a home in the past three years are eligible to claim the Mortgage Credit Certificate and receive a dollar-for-dollar reduction against their federal tax liability for 20% of their yearly mortgage interest payments.

Continue reading “Buyers: save thousands off federal income tax with Mortgage Credit Certificate” »

16
Jul

Mortgage Rate Update (July 14 – July 18) – Rates Nearly Unchanged

Mortgage rates trended slightly upward for government loan programs like FHA, USDA, and VA, and dipped slightly for conforming loans (30-year fixed) and manufactured home loans. Overall, nothing much has changed. To echo what we wrote in last week’s update:

Over the past month, mortgage rates have dipped and jumped a bit based on the major headlines of the day (poor GDP, positive employment), but as the smoke clears, nothing much as changed. Rates are just slightly lower than they were in June, and very close (or at) 2014′s lowest levels.

Conventional Loan Programs

7.16 Conforming Rates

Specialty Loan Programs

7.16 Government Rates

Manufactured Home Loan Programs

7.19 Manufactured Rates

Jumbo Loan Program

7.16 Jumbo

Rates Directly to Your Inbox!

If you would like to receive a more detailed Mortgage Rate report, you can subscribe to our “CCL Rate Tracker.” The CCL Rate Tracker follows 10 loan programs and publishes three rate options closest to 1 point, par, and 1 rebate for each program every two weeks and delivers the results in an email. To sign up, please email [email protected] with the text “Rate Tracker.”

Apply Online Today!

When you register for a Loan Center account, you can submit a loan application online and the sensitive information that you provide will be transmitted securely. Your account also enables you to easily modify your loan application and view the status of your loan. Any questions? Call us at 805.543.LOAN or email [email protected]

NOTE:

  • Mortgage rates assume purchase of a singe-family, detached, owner-occupied, residential property.
  • Mortgage rates assume borrower credit score of 760 and a Debt-to-Income ratio of 35%
  • Loan amount is $417,000 for all programs (appraised value of $522,000), except for the high balance ($561,200 loan and $722,000 value), and Jumbo ($700,000 loan and $1,000,000 value)
  • Mortgage rates and APR subject to change.
14
Jul

Now a Good Time to Buy? Guide to Borrower Debt-to-Income (DTI) Qualifications

Rents continue to rise in the United States…

Through June of 2014, Rents rose 5.5% across the nation’s 25 largest metro areas, according to Trulia.com. Over the past 12 months, Rent growth has outpaced pay growth, and as Rents rise, metro areas are more and more unaffordable.

 

Is now a better time to buy?

CNBC real estate reporter Diana Olick doesn’t think so. She recently wrote a column titled “Housing Still too Expensive Despite Positive Signs.”

Olick poses the question: why have home sales have slowed year-over-year despite favorable mortgage rates, slowing prices gains, and improved employment?

For starters, even as price gains “slow”, 97 of the largest 100 metro areas still saw yearly increases. Overall, Trulia estimated that the median price for home sales was up 8.1% in June over the previous year.

Beyond the price increases, Olick points out (with some alarm) that the 2014 implementation of the Qualified Mortgage (QM) rule by the Consumer Financial Protection Bureau might be hurting the very same buyers / consumers it professed to help.

“New mortgage rules, designed to protect borrowers, set strict limits on the amount of loan debt that can be carried as a percentage of a borrowers’ income – 43 percent. This so-called debt-to-income ratio has kept some renters out of home ownership…”

The QM rule regulates loan products that fall outside of conventional guidelines by capping lender fees, restricting “risky features”, and creating qualified borrower limits (the 43% debt-to-income max).

 

So… is the QM rule hurting homebuyers?

Perhaps a bit, but not by much.

Any questions about home loans in California? We are The Mortgage Experts: ask us anything! We have a loan program to fit every need. Call 805.543.LOAN or email us today.

First of all, most home loans do not need to meet the 43% DTI “QM” restriction. Why? Because the QM rule makes an exception for government-backed mortgages like Conventional loans (Fannie- and Freddie- backed), FHA loans, VA loans, and USDA loans.

These loan program make up the vast majority of new originations, and have much more flexible DTI ratios.

Central Coast Lending offers the following DTI qualifications:

  • Conventional (Fannie and Freddie): 50% DTI (LINK)
  • FHA: 57% (47% of which can be for real estate) (LINK)
  • USDA: 43% (29% of which can be for real estate) (LINK)
  • VA: 60% (LINK)
  • Mobile Homes: 45% (34% of which can be for real estate) (LINK)
  • Jumbo: 43% (LINK)

Debt-to-income (DTI) ratio describes the borrower’s total debt, as calculated by adding the minimum payment for everything that shows up on their credit report. Relevant debt includes student loans, installment loans (cars, RVs, boats, etc), and real estate loans. Payments for smaller items like utilities or cell phone bills do not count towards total debt unless they become collections.

The real estate portion of the DTI is calculated by adding the the total monthly payment (Principle Interest Taxes and Insurance – PITI) and comparing it to gross monthly income.

For example, the DTI for a borrower with a $5,000 gross monthly income (pre tax) and a $1,600 monthly mortgage payment would be 32%. Adding in a $300 monthly car payment and a $200 monthly student loan would bring the total monthly debt to $2,100 and the DTI to 42%.

Most borrowers qualify under one of these popular programs. Borrowers (and properties) that do not qualify are able to seek out “non-qualified” mortgage products (non-QM) from lenders who are willing to take on greater risk.

In our non-QM product overview, we wrote:

Lenders take on greater risk by underwriting non-QM loans, so they require very specific qualification standards to asses the borrowers ability (and likelihood) to repay the loan. Specifically, lenders offering non-QM loans must maintain a minimum 5% stake in that loan for the life of the loan rather than selling the loan entirely as is typically the case with QM loans.

Lenders might be more strict in qualifying borrowers for a non-QM loan, but the fact is that these loans do exist to meet demand.

To recap, is it true that the QM rule is slowing the housing market? Perhaps to a small degree, but only for the most borderline borrowers.

Several weeks ago we wrote about “millenials” as a key to the changing housing market. Millenials are going to school longer and delaying household formation. Rampant student debt is also hurting the home loan qualification process (increasing DTI, for one).

“Give it time” is a clear solution here, but luckily for San Luis Obispo County, we are already in a good position to weather the storm. A recent Tribune headline proclaims “SLO County among top 10 areas in U.S. for millennial job growth.”

There is nothing quite like a good job and regional economic development to fortify the housing market.

 

Mortgage Rate Update

Over the past month, mortgage rates have dipped and jumped a bit based on the major headlines of the day (poor GDP, positive employment), but as the smoke clears, nothing much as changed. Rates are just slightly lower than they were in June, and very close (or at) 2014′s lowest levels.

See our latest update of mortgage rates for 10 loan programs here.

This week, housing starts / home construction data will lead housing market headlines.

 


Central Coast Lending is a California mortgage broker and direct lender based on the Central Coast of California in San Luis Obispo County. Call us today at 805.543.LOAN or email [email protected] to set up a free pre qualification. We are The Mortgage Experts: ask us anything!

About   ||   Mortgage FAQ   ||   Market Update Blog   ||   Radio Show   ||   Contact