Nevada Real Estate >> Las Vegas Real Estate Specialist: California

This is probably one of the biggest misconceptions that a lot of consumers have about getting approved for a loan and ultimately the biggest reason why so many potential buyers remain on the fence about jumping off and doing what they need to do in order to buy a home.

I talk to people every week who want very much to quit renting and buy their own home but they are so afraid of taking that first step – contacting a lender to see what they qualify for!  They have heard from so many – their friends and family and even the media about how only those with perfect credit can qualify for a loan.  They know that their credit isn’t perfect because of some issues they have had in the past with some of their creditors.

The odd thing about so many of these folks is that they have never actually seen and/or pulled their own credit report so they really have no idea what their credit scores are or what is actually being reported on them.  Professionally, I have found that many of these folks actually fear the worst when the reality isn’t the worst and in some cases, nowhere near as bad as they suspected.

Simply pulling a credit report for many of these folks and explaining to them that they indeed have some loan options available to them has more times than not relieved the person of so much anxiety and fear associated with that whole process.  One such prospect even recently told me that when I told them they were a good candidate for a particular kind of loan program, they said it was like when they got hired for their job that they really wanted and had interviewed for three times before they got it.

I love it when clients tell me things like that, it’s such a constant reminder of why I continue to do what I do and why I love working with my little low-medium income buyers who are mostly first time buyers.  These folks generally know little to nothing about buying a home and getting pre-approved and so many are actually afraid to start the process for fear of not being able to qualify for a loan and having past mistakes being rubbed in their face.

Even in spite of all the info available to them on the internet and in spite of all the research these folks do, so many of them are scared out of their mind of taking that first step of talking to a lender and finding out what their options are. 

For me, getting these folks through that first step is all about educating them on the realities of getting pre-approved as well as the loan process.  This is when I have the opportunity to dispel a lot of crap they hear from other people like their friends and family and especially the media.

In regards to my most recent client, while they did have some derogatory issues with school loans a few years ago, they did eventually resolve them and have been in good standing for a couple of years now.  While their scores were not the best scores I’ve ever seen, they most certainly weren’t the worst scores either; quite frankly, they’re actually pretty average.     

I did ask them to provide me with a letter of explanation (LOE) about why they became delinquent with their school loans for a period of time.  They will also have to pay off a recent collection account from a previous creditor that they have been refusing to pay because of “principle”.  I simply informed them of how an underwriter would be reviewing their “principles” and explained to them that in some cases we (mature, responsible adults who want to buy a home) have to swallow our pride in order to achieve a greater goal.  In this case, suck it up, pay the bleeping bill so you can buy a house.

Buying a home is one of the most important decisions someone can make. Today's lending environment can be really scary, which is why it's important to get as much information as possible before starting the process. The pre-approval process is not a simple process and it's because it can get really complicated and convoluted, that borrowers today need affordable loan options that are best suited for their own needs.

For more info on how you can qualify for a mortgage loan, contact me, Donne Knudsen of C2 Financial Corp, at 805.2069123 or donne4loans@earthlink.net.

What Kind of First Time Buyer Programs are Available in Los Angeles & Ventura Counties? FAQ - #1

What kind of property can I buy? FAQ - #2

What Kind of Paperwork Do You Need to Pre-Approve Me? FAQ - #3

Why Do I Have to Get Pre-Approved with Other Lenders I Don't Want to Use Before I Can Make an Offer on a Property? FAQ - #4

What Kinds of Things Can Go Wrong in the Loan Process? FAQ - #5

What are Impound Accounts & Why Do I Need to Have Them in Order to Close My Loan? FAQ - #6

Can You Help Me Get My Kid Get Out of My House? FAQ - #7

I'm Supposed to be Closing Next Week Can You Help Me? FAQ - #8

If I Buy a Duplex, Can I Apply the Tenants Rent Towards My Mortgage? FAQ #9

What Happens if My Appraisal Comes in Low? - FAQ #10

What is a HomePath Property and How Can I Buy One? - FAQ #11

Are There Still Loan Programs Where I Don't Have to Put Anything Down? - FAQ #13

Photos courtesy of flickr:   icy66   mikezenero   milkham   lindes   jpersons   giacomomacis

First and foremost, I feel compelled to state that this post is strictly my personal opinions based on my own professional experiences with my own borrowers here in Los Angeles & Ventura counties.  As an NMLS licensed Mortgage Loan Originator (MLO) as well as a CA DRE licensed agent, it's important that anyone from outside of CA reading this understands that in their area or state, the rules, regulations and codes may differ from the ones here in Los Angeles & Ventura counties.

I’ve recently come across a few posts that got me to thinking of my own borrowers here in Los Angeles & Ventura counties and about a couple of the trials and tribulations they have in trying to purchase a home here.  While there are numerous issues for buyers when searching for a home to buy here, one of the most challenging issues are property conditions and how the condition of a property can actually disqualify a property for financing. 

In Permits? We Don't Need No Stinkin' Permits! by Jay Markanich, Jay (a VA state home inspector) outlines the issues with a recent property that he inspected that had some serious construction issues with an unpermitted addition.  Jay discusses not only the building code standards that this homeowner violated in the way that the addition was constructed but he points out the safety hazards as well as the insurance coverage issues that this unpermitted work created. 

For anyone considering the purchase of a home, I simply can’t stress enough, the importance of conducting some absolutely vital due diligence before you proceed with that property that you have just contracted to purchase, starting with a home inspection. 

Having that home inspected by a certified and licensed home inspector is just the first step in conducting the necessary due diligence before buying a home.  For only a few hundred dollars, a good home inspector can ultimately save you thousands of dollars by discovering and assessing any issues with the home that may or may not be a problem now or later. 

I have countless stories of how so many of my borrowers have avoided buying absolute money pits by having the property they wanted to purchase inspected during the inspection period.  Furthermore, a good inspection can also identify any minor issues that a prospective home buyer may want to take care of after the close of escrow. 

Having said this though, I am not proposing that buyers use inspection reports as a means to renegotiate their purchase contract or to create long repair requests demanding the seller repair every minute thing on the report.  That is just silly and not that smart in this market where competition is fierce for halfway decent properties in relatively good condition. 

While I can’t speak for other markets, here in Los Angeles & Ventura counties, halfway decent properties, with no major issues (key word here being major), are in high demand.  If you push a seller to repair minor issues that have no major health and safety issues and/or no building code violations, then you could very well find yourself cancelled out of the game so that the seller can just take one of those other offers that they got during the multiple offer negotiations. 

However, any major issues that were discovered during the inspection period need to be brought to the sellers and their listing agents attention, especially if those property conditions were not previously disclosed on the CA seller’s transfer disclosure statement (TDS) or the CA agents visual inspection disclosure statement (AVID).  Here in CA, these are required disclosures for all property sales and they must be as accurate as possible.

Furthermore, here in CA, inspection reports belong to the property and not the parties so providing a copy of the inspection report both the seller and their listing agent will allow them to honestly and accurately disclose any property conditions that they had not previously disclosed or knew about.

Getting an independent home inspection is only the first step in buyers conducting their own due diligence during the inspection period.  On that note, I hope you stay tuned for my next installment, where I will discuss other due diligence matters that buyers need to be doing on the property they are contracted to purchase, especially here in Los Angeles & Ventura counties.  For some properties, this can actually be a deal breaker in closing escrow. 

Buying a home is one of the most important decisions someone can make.  Today’s real estate market can be really scary, which is why it’s important to get as much information as possible before you start your search.

The home buying process is not a simple process and it's because it can get really complicated and convoluted, that borrowers today need to be working with professionals that will work in your best interests.  If you have any questions and/or concerns, please feel free to contact me, Donne Knudsen at C2 Financial Corp., at donne4loans@earthlink.net or 805.2069123 and I will be happy to assist you in any way I can.

ATTENTION PROSPECTIVE HOME BUYERS: Do Your Due Diligence BEFORE You Close Escrow!!! - Part 2

Photos courtesy of flickr:   vahm54   jledme   mustipher   giacomomacis

What we do, when done right, really matters!  It makes a difference in people's lives and they appreciate it.  See what I mean...

On September 1, 2011, new changes to appraisal reports were implemented called the Uniform Appraisal Dataset (UAD).  UAD was established to enhance appraisal data quality and consistency related to home values. 

These changes are now being applied to all appraisals delivered to both Fannie Mae and Freddie Mac.  It’s been rumored that FHA will adopt UAD on case numbers assigned on or after January 1, 2012.

Being that I am waiting for my first appraisal since the changes went into effect, I thought it best to look into these changes to find out how they are going to affect my borrower's appraisal, especially since I have some grave concerns about the condition of this particular property my borrower is in contract to purchase. 

In speaking with some of my fave lenders last week about the new changes and asking them about any problems they’ve seen so far, I’m hearing reports that “so far, so good” and that “it’s too soon to tell”.

For the most part, UAD will not be changing the way that appraisal forms look but there will be some new fields that appraiser will need to complete and lenders will be looking for additional info than they’re currently getting.  Supposedly, the UAD will allow for consistent appraisal reviews by using standard definitions and responses.  That will remain to be seen.

The biggest change in the data that appraisers will be required to provide is more extensive descriptions on property condition and construction quality.  This actually could be a good or bad thing depending on how it’s rated and reviewed.

Currently, I am seeing little to no value adjustments for property conditions and/or upgrades.  I have seen well maintained, upgraded, move-in ready properties compared to run-down, dilapidated, dumpy model matches with little to no adjustments in value for property conditions and/or feature upgrades.  Quite frankly, this is wreaking havoc on my market here in Los Angeles & Ventura counties.  The new ratings for property conditions that will be required are listed as follows:

C-1  The entire structure is new, has never been occupied and has no physical depreciation.

C-2  Existing home with no deferred maintenance and requires no repairs. This rating is given if the property is “almost” new or has been totally renovated. 

C-3  Existing home, well maintained but displays evidence of normal wear and tear. 

C-4  Existing home, minor deferred maintenance and requires only minimal repairs. 

C-5  Existing home, with major deferred maintenance and is in need of significant repairs but the home is still livable as a residence. 

C-6  Existing home, with severe defects that affect safety, soundness and livability. If property receives this rating, it’s not eligible for a conventional loan.

It will be interesting to see how different appraisers will interpret these definitions, especially those between “normal wear & tear” and “deferred maintenance”.  Furthermore, I’m certain there will be some differences in what some may define as “livable” and “not livable”.

The appraiser will also be required to indicate if there has been any material and/or structural work done to the kitchen or bathrooms in the prior 15 years.  Appraisers will also be required to use one of three ratings a) not updated, b) updated and c) remodeled and they will need to provide additional info on the updates and remodeled features. 

There will also be changes in how appraisers will be required to rate the quality of construction on newly built homes as well as recently renovated and remodeled properties.  The new ratings for the quality of construction are as follows:

Q1  Unique home individually designed by an architect for a specific user and details are exceptionally high quality.

Q2  Custom designed home built on individual property owner’s land or high-quality tract lots. Workmanship and materials are high quality. 

Q3  Higher Quality homes built from readily available blue prints in above-standard tract lots or individual’s land. Materials in home are up-graded from standard materials and workmanship exceeds standards. 

Q4  Meets or exceed building codes: Standard or modified blue prints. Materials, workmanship, finish work are stock builder grade and may have some upgrades. 

Q5  Basic, standard quality, economy homes with limited interior design. Meets minimum building codes and inexpensive construction, stock materials and limited upgrades. 

Q6  Low cost construction used and may not be suitable to year-round use. Low quality and could be built by non-qualified builder with or without plans.

As can be expected with any new changes that affect the loan process, I'm sure there will be some initial hiccups until things seem to work themselves out.  I'm hoping that these new changes will bring in better appraisals with more accurate value assessments based on property conditions.

I guess time will tell if these changes will have not only a positive effect on my market as well as my own borrower’s appraisals and transactions.

Photos courtesy of flickr:   fanniemae   freddiemac   koyume     

New idea by the Fed to allow everyone to refinance regardless of how underwater they are on their home. This was first suggested in 2008 but quickly put on the back burner as mortgage note holders complained it would affect their return on investment. With the housing market not showing much improvement this idea is back on the table to help stabilize property values and reduce foreclosures.

Ever wonder how some people can consistently and accurately predict what rates will do? There are only a few of them and they all use this type of technology. You'll find this information here in this short video of The Epic Perspective.

Housing crisis headlines. Give me a break. Doom and gloom written by people who have never helped someone save their home or helped a young couple avoid disaster by advising them to not buy a home they can't afford. Our housing is actually stable in some metropolitan areas and even growing in others. Citing balance sheets and skewed statistics in news cast is a diss service to everyone. Find out more in today;s edition of The Epic Perspective.

We've been taught that cash is best and to avoid credit.  This advice is outdated.  If you use cash instead of credit you are losing a lot of money.  See how to make money on everyday purchases, protect yourself from fraudulent charges and receive many other benefits all for free!

 What is your competition doing today?  What are you doing today? 

Are you making a difference in the world? 

I found this to be inspirational

Predicting when mortgage rates will drop is not as important as locking your rate before they rise. Rates can change several times a day and within minutes. Loan officers armed with rate tracking technology monitoring rate movement can save you a bundle.

You only want a large bank to service your loan. Most brokers and bankers fund loans through large banks but I wouldn't recommend you have the bank itself originate your loan. In my opinion their loan origination usually costs more and their loan officers are less knowledgeable.

Banks are volume lenders.  They lock rate, usually charge a non refundable fee and close without regard to saving you money because they don't monitor rates, they only quote them.  A smaller loan company, broker or small banker are likely to pay for this technology and more willing to take the time to monitor rates thereby potentially saving you thousands of dollars.

Many agree that small business is the heartbeat of America.  Therefore, before venturing on the Internet to contact the big banks mortgage division consider the thousands you can save by manipulating interest rate "dips".  You'll also be helping build strong communities and provide jobs in your area by using small to medium businesses like brokers and small bankers.

Those who work in the industry set the example.  Real estate agents more often than not recommend brokers and small bankers over large banks. Recommendations are not made to receive anything of value in return. Receiving kick backs or referral fees is a federal offense with stiff penalties so there is no expectation of kick backs or referral fees for using recommended service providers.  They recommend brokers and small bankers because they get accountability and good service which reflects positively on them and provides you the highest level of service. Small business work twice as hard because their survival depends on it.

Big players like Bank of America and Chase employ people to solicit business from brokers by offering wholesales rates which are lower than what one would get from walking into a retail branch, calling or the Internet. Running a mortgage office with low costs normally determines if your loan fees will be less. Most small companies don't spend hundreds of millions of dollars placing their name on the side of sports stadiums.  TV, radio and heavy Internet advertising also gets really expensive.  Guess who pays for it?

Yes it is true!

HUD wants to make it clear that they appreciate the sacrifices and commitment to keeping communities strong throughout the USA. Law enforcement officers, teachers- pre-kindergarten through 12th grade, firefighters & emergency medical technicians can become homeowners through the Good Neighbor Next Door Sales Program sponsored by HUD while contributing to community revitalization.

A nice break for our police officers!

HUD offers a discount of 50% from the list price of the home.

How it works

You can get a 50% discount off the HUD appraised value. For example, if HUD lists a home at $200,000, you can buy it for $100,000 provided, you occupy the home as your personal residence for 36 months. If you qualify for any FHA-insured mortgage program, your down payment is only $100 and you can finance closing costs.

You have to use a real estate broker or agent to buy the home

The purpose of the program is to strengthen communities by encouraging employed, professional law enforcement officers, teachers and firefighters & emergency medical technicians to live in the community. You will have 30, 90 or 180 days to move into the home you purchase, depending on HUD's determination of the condition of the home and the level of repairs that may be required, if any.

A great benefit for our brave fire fighters...

 Our commited teachers

Our life saving EMT's

You must live in the home as your sole residence for a full 36 months

Beware: HUD views the occupancy obligation seriously and vigorously pursues violators to the fullest extent of the law. 

The 30th, 90th or 180th day is the start date for the occupancy period. You are released from all obligations under this program at the end of the 36th month following the start date.

The homes are located in revitalization areas as defined by HUD

Search here for designated areas

Locate an address using HUD's map

You can use FHA, VA, or conventional mortgages, or even cash

HUD requires you to sign a Second Mortgage and Note on the discounted amount (which is $50,000 in the example above). No interest or payments are required on this "silent second" mortgage if you live in the home for the entire 36 month occupancy period. You may be required to pay a pro-rata portion of the discount to HUD should you fail to fulfill the three year occupancy requirement.

 After living in the home for three years you may sell it and keep the profit!

Other questions?

Yep It’s true…If you are looking for a primary residence you could get a loan with no mortgage insurance, no appraisal, seller paid closing costs (up to 3.5% expires October 1st, 2011) and only need 3% as a down payment! You must have a credit score of at least 660.

This is offered by Fannie Mae. Fannie Mae owns properties they are trying to get off of their books so they offer these sweet incentives. See if you can find a property you like on their Home Path website. I am a direct lender with Home Path financing. Call me today to get pre approved! 888-206-5781 x 1017 Or email me

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