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PMI versus MIP PMI (private mortgage insurance) is what you pay to a lender to avoid loan failure on a conventional loan. If you put down less than 20% on your home, you will pay PMI until you meet 20% of your conventional loan. MIP (mortgage insurance premium) is the FHA mortgage insurance premium. This premium is paid in two ways: upfront (1.75% of the loan amount) and annually through monthly installments (1.25% of the loan amount). These funds are utilized to insure your loan. If you put down less than 20% on an FHA loan, you will pay MIP [&hellip

Qualified Mortgages The win for Lenders What is the big win for lenders making a Qualified Mortgage (QM)? A lender that fellows the rules of a QM loan have greater protection from law suits. This provision of QM is called “safe harbor”. In theory, under the Consumer Financial Protection Bureau’s final mortgage rules, low-priced loans that meet all the criteria of QM are supposed to be largely immune from consumer lawsuits. Lenders that make Qualified Mortgages get certain legal protections even if the loans default. For QMs that are not “higher-priced,” lenders get a “safe harbor.” This means that the [&hellip

  New Mortgage rules: Debt to Income Ratio The new mortgage rules called Qualified Mortgage or QM impact many parts of the real estate loan process. A major new rule is the maximum Debt to Income Ratio (DTI) or some times called the back end ratio. QM sets the new maximum DTI to 43%. This is lower than current standards. The clear impact of the new rule is less people will qualify for a QM loan. Is this a good thing, or bad thing only time will tell? What is a Debt to Income Ratio? The Debt to Income Ratio [&hellip

New Mortgage rules: Ability to Repay   The eight factors Ability to Repay creates in underwriting a new mortgage.   These eight Ability to Repay factors a lender must consider when reviewing a new mortgage loan application will cause a number of people not to be able to get a mortgage, and therefore not buy a home. Is that a good thing or bad thing only time will tell? Here is the list of the eight elements the new rule Ability to Repay (ATR) creates in mortgage lending. One. The current or reasonably expected income or assets that the consumer [&hellip

Loan Preapproval: Why You Need to be Preapproved Do you feel ready to start looking for your first house?  Well, the first step of any home-buying experience is to get prequalified for a loan. Most people are going to need a loan in order to purchase a house.  If you are one of the many people who fall into this category, then there are some things you need to know. The seller wants to get the best deal they can and they want to get it fast. If you fall in love with a home and put in an offer, [&hellip

  Will the Government Shutdown Impact for Sacramento Home Mortgages?   The impact on personal home mortgages will grow if the shutdown is long. The biggest impact is the IRS. The Internal Revenue Service (IRS) has indicated that they will not process any forms, including issue tax return transcripts (Form 4506 T), should a government shutdown occur. Without tax transcripts, loan processing may be delayed, depending on individual housing agency requirements and aggregator guidelines. The Department of Housing and Urban Development’s (HUD) operations, specifically the Federal Housing Administration (FHA), should not be significantly impacted as long as the shutdown is [&hellip

What are CC&Rs? What are CC&Rs? CC&R stands for Covenants, Conditions, and Restrictions.  While this may sound redundant, there are subtle differences between these types of regulation.  All of these are agreements on the part of the buyer to do or not do certain things.  The buyer automatically agrees to these by purchasing the property. The main difference between them is the punishment that can be doled out when an infraction occurs. If a buyer violates a covenant, they have broken an agreement, and the seller can sue for damages or get an injunction to prevent any future violations. If [&hellip

California Mello-Roos Property Tax Mello-Roos was signed into law in 1982 as a way to gain funding for new communities after Proposition 13 inhibited the raising of property taxes in California.  Though it isn’t technically a property tax, it is an additional tax that is applied to properties in newly developed areas.  The money is used to build the necessary facilities, utilities, roads, and the like for new towns.  This keeps the cost of development for the new town on the shoulders of the persons living there. Because Mello-Roos is independent of the property tax that is protected by Prop [&hellip

First time home buyers: Determine how much debt can you afford Take a realistic look at how much future income you anticipate to have and how many expenses you expect to incur. Remember, the lender will tell you how much you are qualified to borrow, not necessarily how much you can afford. Only you know how much you can comfortably handle, what your other expenses are, how much you need to save and what kind of lifestyle you wish to maintain. Lenders use the monthly payment on a property to determine a borrower’s qualifications. The payment includes principal, interest, property [&hellip

Understanding the credit score system The best-known and most widely used credit score model in the United States is the Fair Isaac Corporation (FICO) score and is calculated statistically with information from a consumer’s credit files. It provides a snapshot of risk that banks and other institutions use to help make lending decisions. Applicants with higher FICO scores may be offered better interest rates on mortgage or automobile loans. Visit annualcreditreport.com. This is the only authorized online source for totally free credit reports. By federal law, you are entitled to a free credit report once every 12 months. This site [&hellip