loan – Purchase, refinance, renovation, reverse, Downpayment assistance, VA, FHA

Dreaming of a Second Home

April 26, 2019April 26, 2019 loansbyjoanna

You work hard during the week! Maybe you need a nice relaxation spot to spend your weekends or holidays. Maybe retirement is just over the horizon and you want to start enjoying the perks of owning a second home. Maybe you’ve already retired and are looking for an oasis to visit often. Whatever the case, a second home may be within your reach!

Many of us dream of a beachfront home. California, with its perfect weather, endless activities, and unbelievable seafood, is a frontrunner. Popular So Cal spots include La Jolla, Encinitas, Redondo Beach, and Dana Point. Second homes, however, don’t have to be near a beach. Imagine vacationing in historic areas such as Riverside, Avalon, and Julian. Whatever the case, many choose to live in So Cal full time because of the quality of life, weather, things to do, and is a dream for so many of us.

I hear all types of questions when it comes to owning a second home. Common questions include:

What is the minimum down payment on a second home?
Can I buy a second home that will eventually be my retirement home?
Is flood insurance required?
What are the second home mortgage options?

Okay, let’s break this down.

1.) What is the Down Payment Requirement on a Second Home Purchase?

Many people believe that buying a second home (or even a primary home) requires 20% down. Although buying a principal residence has more low to no down payment options such as VA, FHA, and USDA, lower down payments for second homes are still available if you know where to look.

For example, as little as 10% of the purchase price could be allowed as a down payment. An additional way of keeping the out of pocket funds low would be to include seller paid costs for the buyer. When buying a second home and financing between 75.01% – 90% of the price, the seller is allowed to pay 6% of the sales towards the buyer’s closing costs and pre-paids. If the loan amount is 75% or less of the price, then the seller may pay 9% toward costs.

Low down payment requirements make owning a second home more obtainable, and luckily, there are plenty of sources. Down payment sources (for funds to close) include bank accounts, retirement account withdrawal, retirement account loan, investment accounts, home equity loan/line on the primary, sale of another home or asset, and gift funds (after the minimum requirements are met).

Discuss these possible sources with your mortgage loan officer to find out if there are any other requirements and to discuss whether one option may have advantages over another for your situation.

2.) Can I Buy a Second Home That Will Eventually Be My Retirement Home?

This is an excellent question, and a very popular request these days. Enjoying a home while you can, before possibly moving into the home permanently may be ideal. Occasionally, the question, “Is it okay to buy a property as a second home and then convert it to a primary residence down the road?” The answer is, yes! That is perfectly fine, as long as the intention was to buy as secondary, it was used as secondary, and eventually converted to primary down the road.

As long as you can afford the two homes, this would be a great way to prepare for the enjoyment of a vacation property, learn about the area, maybe vacation there, and then eventually use it a lot!

3.) Is Flood Insurance Required?

A lot of times, buying a second home means living close to a body of water, whether it be a lake, pond, waterway, or ocean. If this is the case, the structure may be in a flood hazard area, and flood insurance is required. If you are considering a home with flood insurance, ask the seller for a copy of existing flood policy, elevation certificate, and survey. These help the buyer’s lender and insurance company determine whether or not the property requires flood insurance.

If flood insurance is required, these could help get the quote, and prove that the home is not in the flood hazard area. If flood insurance is not required, it may still be a good idea to obtain flood insurance, and because the structure is not in a hazard area, the flood insurance premium would be much cheaper. As always, consult with a knowledgeable agent about your best options.

4.) What Are My Second Home Mortgage Options?

This is an excellent question, and a very popular request these days. Enjoying a home While government loans such as FHA, VA, and USDA may be for primary residences, Fannie Mae and Freddie Mac conventional loans, as well as jumbo loans allow for second home financing. Plus, there are advantages to using conventional loans, such as flexible guidelines with student loan debt, low mortgage insurance rates for high scores, up to 50% debt ratio, condo financing, and second home renovation loans. Conventional loans are limited to the county conforming loan limits, but that’s where a jumbo loan comes in handy. Jumbo loans provide financing for luxury homes exceeding these limits.

If you’re looking to find your dream vacation getaway, retirement oasis, or just a second home, contact me and I can help you with the process!

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A Simple Guide to Home Possible Mortgage Loans

February 26, 2019February 26, 2019 loansbyjoanna

What is a Home Possible Mortgage?

Home Possible is a Freddie Mac mortgage program which allows first-time homebuyers with moderate incomes low down payment mortgage options. These programs only require 3-5% as the minimum down payment and features private mortgage insurance (PMI) that can be canceled once your home equity reaches 20%.

How can Home Possible help me?

The Home Possible and the Home Possible advantage programs are geared toward first-time homebuyers with limited funds available for down payments, but meet the rest of the lending criteria. The purpose of both programs is to finance or refinance the purchases of primary residences, 2-4 unit owner-occupied homes, and eligible manufactured properties. Home Possible programs, with backing from Freddie Mac, are able to offer reduced mortgage insurance rates and premiums, more flexible credit terms, and refinancing options for existing homeowners.

What are its Main Advantages of Each HP Program?

Home Possible

Home Possible Advantage

Income Limits: The borrower’s annual income cannot exceed 100% of the area median income limits (or higher percentage in designated high-cost areas). No income limits apply if the property is in an underserved area.
Eligible Property: A one- to four-unit primary residence or a manufactured home that meets the guidelines.
Eligible Mortgages: First-lien, fully amortizing mortgages; fixed rate and adjustable rate loans are allowed. The maturity must not exceed 30 years.
LTV and DTI Ratios: Max 95% LTV, DTI Determined by Loan Product Advisor or 45% if manually underwritten.

Income Limits: Loan Product Advisor is used to determine whether the borrower’s income exceeds the product advisor limits.
Eligible Property: A 1-unit primary residence. Manufactured Homes not permitted
Eligible Mortgages: First-lien, fully amortizing mortgages; fixed rate loans only. Loan term cannot exceed 30 years.
LTV and DTI Ratios: Max 97% LTV, DTI determined by Loan Product Advisor or 43% if manually underwritten

Table source: http://www.valuepenguin.com

Commonalities:

Borrowers must occupy the property as their primary residence.
Borrowers can not have an ownership interest in other properties.
Mortgage insurance rates and premiums match in both programs.
Mortgage insurance can be canceled after loan balance drops below 80% of the home’s appraised value.
Homeownership education is required for at least one qualifying borrower if all borrowers are first-time homebuyers.

Home Possible Loans Compared to Other loans?

Home Possible vs. FHA Loans

Although each program offers reduced mortgage insurance rates and premiums, which reduces your overall housing expense — with HP loan programs, the mortgage insurance can be canceled once you reach a 78% to 80% loan-to-value ratio. This avoids the expense of refinancing just to eliminate mortgage insurance in the future. In addition, Freddie Mac mortgages aren’t subject to Federal Housing Administation (FHA) county loan limits, which could restrict your purchase options.

Home Possible vs. VA Loans

Unlike loans from the Department of Veterans Affairs (VA), there’s no funding fee on Home Possible loans. Having fewer upfront costs keeps initial loan balances lower, requires lower monthly payments and less interest over the loan term.

Freddie Mac Home Possible vs. Conventional Loans

Home Possible offers more flexible credit terms than most conventional loans and accepts scenarios on a case-by-case basis which increases the chances that your mortgage application will be approved. HP even allows borrowers without credit scores to qualify based on acceptable automated underwriting results and payment references.

**How Do I Qualify for a Freddie Mac Home Possible Mortgage?**

You must meet the debt-to-income ratio requirements for the program. Typically, this means that a maximum of 45% of your gross income goes toward your debts.
Your income must fall within the stated guidelines, based on the location of the home. If you aren’t sure, use the eligibility tool on the Freddie Mac website.
You must also be considered a first-time homebuyer. This doesn’t mean that you’re excluded if you’ve owned a home in the past. There are exceptions for situations like inheriting a stake in a property or acting as a co-signer on a mortgage loan, or if you haven’t been on the title for another property within three years of applying to Home Possible.
You must complete an approved homebuyer education course. Courses are available online and in-person, and provides valuable information.

**How Do I Apply for a Freddie Mac Home Possible Mortgage?**

Select a lender who offers Home Possible mortgage products.
Have the lender calculate your income based on Freddie Mac guidelines by providing the lender with some supporting documentation (like pay stubs, W-2 forms, and bank statements). Going through the preapproval process before home shopping will give you peace of mind.
Once you know how your income will be considered, work with a real estate agent to identify geographic areas you’d be interested in and confirm that you meet the maximum income requirements by using the eligibility tool.
Like conventional mortgages, when you have an offer accepted, your income, assets and credit will be reviewed and confirmed, and the property will be appraised to determine its value.

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7 Steps to a Stress Free Home: Living Mindfully in Your Own Space

January 24, 2019January 24, 2019 loansbyjoanna

Your home should be a place of relaxation and restoration, not a stress-inducing reminder of your troubles or tasks left undone. While it’s true that people are soothed by different things, and what relaxes one person, might not relax another, there are certain universal ways to quickly boost your home’s good vibes, and put you in a more relaxing mood.

#1 – Make Your Bed

To some, this might seem like the most tedious chore. Maybe you’re replaying your mother’s voice in your head as we speak, “make your bed before you leave.” Well, sorry you have to hear this from me, but maybe she had a point. Experts say that coming home to a made bed has the ability to make you feel calmer almost immediately, and can actually help you get a better night’s rest. Next time you jump out of bed, take a couple of minutes to straighten up the place where you spend at least 7-8 hours a night.

#2 Let Natural Light Be Your ALarm

Speaking of 7-8 hours, this is how much sleep you should be getting a night. People who can get by on four hours of sleep, sometimes like to brag about their endurance, but recent scientific studies show that a lack of sleep causes you to be a risk of many health concerns. Sleeping 7-8 hours a night can decrease risk for health conditions, manage your hunger levels, maintain your immune system, retain memory, and so much more. Turn off your alarm and get into bed nine hours before you need to get up. If you need help with this, iPhones have a “bedtime timer” that will tell you when to go to bed at night, and will calculate how much sleep you actually get in a week.

#3 – Consider Colors

You might not even notice it, but your mind and body react in different ways when you see certain colors. Blue, violet, and pastels have been proven to reduce stress and calm you down. Brighter colors stimulate your brain, energize you, and can sometimes even make you feel a little anxious. When painting your rooms, or applying wallpaper, think about how you’d like to feel when you’re in each room. If relaxation is your goal, especially in your bedroom while you’re trying to get those 7-8 hours, you’ll want to go with a muted pallet.

#4 – Keep What Sparks Joy; Let Go of What is Left

Marie Kondo is all the rage right now. If you haven’t heard of her, she is the Japanese organizer, author and star of the Netflix series “Tidying up with Marie Kondo” who encourages people to “keep only what sparks joy” when getting rid of clutter. Some people like clutter, and that’s fine. Your intention shouldn’t be to throw away everything you’ve got, but to hold each item in your home in both hands and ask “does this spark joy.” If it does spark joy, keep it, and put it out where you can see it every day (not in storage). If it does not spark joy (or is not conducive to your future), thank the item for serving you in the past and let it go.

#5 – Keep Houseplants or Flowers

Most of us have heard that if you talk to, or pray for, a plant, you will help their growth and well-being. Well, did you know that the reverse is also true? Studies have shown that indoor plants improve concentration and productivity by up to 15%, reduce stress levels, and boost your mood. This, along with their visual beauty, makes them perfect for your home and work space too!

#6 – Start each day with morning meditation

Morning meditation doesn’t have to mean two hours of pretzel-y yoga poses, or even morning-long prayers and fifty hail-marty, though if you’d like to do those things, more power to you! All you need is to carve out 10-30 minutes in the morning as time for yourself. Meditation makes you feel good, emotionally and physically, and enhances activity in the area of your brain that is associated with positive emotions and experience. Some studies even suggest that it helps combat depression, anxiety, and improves pain tolerance when done regularly. Take some time to breathe intentionally and let go of everything in your life that is causing you stress.

#7 – End each day with a completion ritual

Ending each day with a ritual is just as important as beginning your days with one, and maybe more. When you end each day doing the same thing, like writing in your journal or planner, reading, listening to relaxing music, or even something as simple as brushing your teeth or washing the last few dishes in the sink, your brain starts to pick up on the pattern and your body will start to automatically wind down. This means less time tossing and turning before you fall asleep.

Most of all, look after yourself. Your home is your sanctuary, and you’ve earned it, so treat your home (and yourself) accordingly.

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10 Things to Consider When Buying a San Diego Home in 2019

January 11, 2019January 11, 2019 loansbyjoanna

Photo Credit: Evolve Vacation Rental Network

#1 – Which San Diego Neighborhood is Right for You?

From Hipster communities, to Business Districts, San Diego has so many unique neighborhoods to choose from. You should carefully consider these communities based on affordability, availability, and just what fits with your lifestyle. Ocean Beach, La Mesa, Mission Valley, North Park each have their own unique personality. Check out our last blog: Neighborhoods in San Diego for help with making your decision.

#2 – Have You Considered Cost of Living?

Right now, San Diego is the 13th most expensive city in America, according to USA Today. In the world, we’re 40th most expensive city. Not to be a Killjoy, but when it comes to money, too many of us consider salary without considering the cost of living. A high cost of living can drastically reduce the effectiveness of your income, and reduce your long-term wealth. Before purchasing a home in San Diego, make sure that your foreseeable day-to-day expenses are manageable.

#3- Do You Have a Mortgage Approval?

Required by the California Purchase Agreement, buyers need to obtain a mortgage approval. Before you go shopping for that great property, get a preapproval letter from a reputable mortgage company or brank. Contact me if you need help with this. It’s important to verify exactly what you can afford rather than waste your time searching for a home that is over your budget.

#4- Higher Loan Limits in 2019

As you’ve probably heard, borrowers in San Diego will enjoy higher loan limits this year. Federal housing officials have increased the loan limits for FHA, VA, and conventional mortgage loans. This means San Diego home buyers could have more properties to choose from without venturing into jumbo mortgage territory. As of January 1st, Fannie Mae and Freddie Mac loan limits have increased to $453,100 to $485,350 for a single-family home purchase.

#5 – Transportation

If you don’t own a car, or if you just like to take public transportation to sporting events and giant beach festivals, you might want to consider whether there are bus stops or a trolley station nearby. The San Diego Trolley is a great option for getting around the city quickly and avoiding traffic. You’ll also want to consider traffic near your area, especially during rush hours, and whether an Uber or Lyft driver can get to your area without trouble.

#6 – The San Diego Real Estate Market is Competitive

Although sellers have an advantage, San Diego real estate market is competitive for buyers. In a San Diego seller’s market, it’s important that as a buyer, you are realistic about how assertive and responsive you need to be in order to get the house you want. Sleeping on an offer overnight might not be an option this year.

#7 – Have You Chosen a Buyer’s Agent?

In such a heated seller’s environment, an experienced buyer’s agent, who knows this city, can give you that competitive edge. Hire a BA who’s an expert negotiator. It can make all the difference between getting your offer accepted, or losing out to another buyer and having to start again.

#8 – Demand is Higher at the lower end of the spectrum

In San Diego, the local real estate market is particular active at the lower end of the spectrum. By comparison, pricier properties are taking much longer to sell. If you’re buying a comparatively low-priced home in San Diego in 2019, you should be prepared for competition. This is because there is more demand in the “starter home” price range.

In fact, the fastest homes to sell fall between the $250-$500,000 range. If you’re looking for a property in this price range, jump quickly, and save yourself the frustration of losing out to other buyers.

#9 – Increasing Your Low Credit Rating

When it comes to improving your credit, there really is no time to waste. A low credit score may not seem like a big deal until it’s time to leverage your credit for a mortgage. Increasing your low credit rating will help you qualify for a higher-priced home, at a lower interest rate, making it more likely to purchase your dream home.

#10 – Setting Your Expectations and Formulating Your Plan

To recap, homebuyers interested in the San Diego market, are buying into one of the hottest real estate markets in the country. Therefore, it is important that you become informed prior to your search. Hiring help is always a great idea. Contact me so that I can help you set your expectations, formulate a plan, and ace this process, to make the most of your efforts.

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A Short Review

December 5, 2018December 5, 2018 loansbyjoanna

Hi everyone!

Here is a review of our last brochure. We have a featured city, featured listing, featured loan, and a charity highlight below. Leave a comment and let me know what you think!

Featured City – Sunset Cliffs, CA

Screen Shot 2018-12-05 at 12.57.03 PM.png With its rugged coastline and panoramic views, this area is popular with surfers, ocean-gazers, and folks who like to cruise Sunset Cliffs Boulevard, which runs the length of the cliffs. The drive along Sunset Cliffs Boulevard, which begins at Adair Street and continues south to Ladera Street, offers breathtaking views and the most amazing sunsets that you will ever see.

Featured Listing

710 Cordova St., San Diego, CA 921017 | $2,999,000

Screen Shot 2018-12-05 at 1.32.30 PM.png Instant Equity for the ONLY property along Sunset Cliffs with a PRIVATE outdoor living space capturing views to the Coronado Islands. Recently appraised for $3.2M! This 5BR/5BA ranch-style home, overlooking Sunset Cliffs Natural Park & iconic surf breaks, has panoramic, up-close, ocean views from every room.

Featured Loan- Interest Only Mortgages

Screen Shot 2018-12-05 at 2.49.30 PM.png DESCRIPTION:
The borrower only pays the intrerest on the mortgage through monthly payments for a term that is fixed on an interest only mortgage loan. The term is usually between 5 and 7 years.

After the term is over, many refinance their homes, make a lump sum payment, or they begin paying off the principal of the loan.

PROS:
-Monthly payments are low during the term.

-The borrower can purchase a larger home later by qualifying for a larger loan amount.

-Placing extra money into investments to build net worth.

CONS:
Rising mortgage rates increases risk if it’s an ARM.

-Many people spend extra money instead of investing it.

-The home may not appreciate as fast as the borrower would like.

November Charity Highlight

Family is the main focus of the Nice Guys. The majority of money we raise goes to help families who have somehow “fallen through the cracks.” A medicalbill, a car repair, clothes needed after a house fire, a wheelchair for a young man injured while being a Good Samaritan – this is the type of assistance offered by the Nice Guys. Our goal is always to get people back on their feet and to be, once again, self sufficient. | Donate Here