REIMAGINE Transaction Rescue & STEPS Toward Homeownership

REIMAGINE Transaction Rescue & STEPS Towards Homeownership

1 REIMAGINE Transaction Rescue & STEPS Towards Homeownership October 12 th 14 th, 2020 Transaction Rescue California Affiliation of REALTORS

2 FREE Member Profit Web site: Telephone: (213) web page 2

3 Total Market Analysis & Economics By way of the Years

4 California Affiliation of REALTORS By way of the Years (Stats) Indicator Supply Money Out (% of Refinanced $ Quantity) 7.5% 11.5% 21.5% 4.6% 8.7% 21.6% 12.9% Freddie Mac Quarterly Refinance Statistics Money Out Refi/HELOCs ($ billions) $ $ $ $ $ $ $ Freddie Mac Quarterly Refinance Statistics Current SFR 90% + LTV 28.0% 22.0% 16.0% 9.0% 20.0% 24.6% FHFA MIRS ARM % of Purposes 27.4% 24.0% 33.5% 5.0% 7.0% 6.6% 7.1% MBA ARM % of $ Quantity 33.8% 37.6% 47.3% 8.6% 16.2% 14.5% 15.6% MBA 30-12 months FRM % 7.9% 8.1% 5.9% 4.7% 3.9% 4.5% 3.9% Freddie Mac Family Monetary Obligations Ratio (% of disposable ) 16.4% 16.8% 17.3% 16.4% 15.4% 15.1% 15.1% Federal Reserve Board of Governors Family Debt Service Ratio (% of disposable ) 11.1% 11.8% 12.6% 11.3% 9.9% 9.7% 9.7% Federal Reserve Board of Governors Private Saving Charge (% of disposable ) 7.0% 4.8% 3.2% 6.6% 7.6% 7.7% 7.9% U.S. Bureau of Financial Evaluation Median Cost /Median Revenue (Current SFR, Present Charges, 20% down) 37.0% 42.4% 69.2% 33.7% 43.4% 47.6% 44.5% California Affiliation of REALTORS SOURCE: California Affiliation of REALTORS web page 4

5 Market Information

6 Down Cost Help

7 FindDownPayment.automotive.org Throughout the C.A.R Instrument, you will discover: Collaborating Lenders Program Information/Flyer Filters/Tips: Particular Teams (Academics, Protectors, and so on.) Eligible Properties Most Gross sales Worth Eligible Debtors Most Family Revenue Mortgage Phrases Advantages Newest Updates 7

8 California Affiliation of REALTORS – Free Member Profit: Transaction Rescue Help you with Communication & Escalations with Your Lender Property Considerations with Valuations, Title, & Vesting. Present Insights to Lender & Down Cost Help Web site Hotline (213) Webinars Coronavirus Microsite automotive.org/coronavirus CALIFORNIA ASSOCIATION OF REALTORS web page 8

9 CAR Assets: Monetary Webinars

10 California Affiliation of REALTORS Free Member Profit: CALIFORNIA ASSOCIATION OF REALTORS web page 10

11 Mortgage Lending Phrases

12 Normal Lending Phrases /Abbreviations AUS Automated Underwriting System LPA Mortgage Prospect Advisor (beforehand Mortgage Prospector LP) (Freddie) DU Desktop Underwriter (Fannie) GUS Authorities Underwriting System FICO Honest Isaac Firm (Mortgage Scoring Mannequin Used By a Majority of Lenders / Traders) DPA Down Cost Help MI Mortgage Insurance coverage UFMIP – Up-Entrance Mortgage Insurance coverage (FHA Loans) MMI Month-to-month Mortgage Insurance coverage (FHA Loans) PMI Personal Mortgage Insurance coverage (Typical Loans) LPMI Lender Paid Mortgage Insurance coverage OO – Proprietor Occupied Borrower / Co-Borrower NOO Non-Proprietor Occupied Borrower / Co-Borrower FTHB First Time Residence Purchaser CalHFA California Housing Finance Company GSFA Golden State Finance Authority (Platinum) Flipping Promoting inside 3 months, with giant worth improve, might set off Lender RED Flags Calculations DTI Debt to Revenue LTV Mortgage to Worth and Mixed Mortgage to Worth (CLTV) PITIA w/mi Principal, Curiosity, Taxes, (Hazard) Insurance coverage, Affiliation Charges, and Mortgage Insurance coverage SOURCE: California Affiliation of REALTORS web page 12

13 Mortgage Mortgage Packages

14 Normal Tips: Jumbo Program Mortgage Program s – Pre-COVID & Standing Right now 90% LTV Jumbo loan to max loan quantity of $1,500,000 1-unit main residence buy solely 30 12 months fastened fee solely Min loan quantity is $1.00 greater than present conforming/excessive stability restrict set by FHFA Mortgage insurance coverage isn’t required Subordinate financing and reward funds not allowed Escrow/impound account and residual required Reserves necessities: <$1,000, months PITIA; > $1,000, months PITIA First time homebuyer s ineligible SOURCE: California Affiliation of REALTORS web page 14

15 Normal Tips: FHA Mortgage Packages Mortgage Program s – Pre-COVID & Standing Right now Designed for Buy or Refinance and Renovation of Older, Distressed or Houses in Want of Beauty Repairs. Buy or Refinance Max LTV 96.5% Worth FICO Minimal 580 (< 600 requires 10% down) (Nonetheless many overlays starting from as minimal) DTI Most 56.9% or per AUS / DU Findings (lenders might decrease the DTI to 43% when the vary is (is decrease than 640) Revenue: W-2 or Self-Employed, No Lower than 2 Years Down Cost Sources: Financial savings, Items from Household Member, Non-Revenue or Employer Max Mortgage Restrict: Varies by Every County Restrict Property Situation: Beneath Common or in Poor (No Structural Injury) Proprietor Occupied Solely (Non-Proprietor Occupied Co-Borrower) Normal Notes No Minimal Restore Funds with a 35k Most Together with Mushy Prices Mortgage based mostly on LTV of Worth at Completion 6 months Max Renovation Interval Property Sorts 1-4 items, FHA Authorised Condos, Combined Use, Manufactured No Money-Out Doable SOURCE: California Affiliation of REALTORS web page 15

16 Normal Tips: USDA Loans Mortgage Program s – Pre-COVID & Standing Right now 100% financing, debtors with out financial savings or who want to retain their financial savings qualify Beneficiant limits based mostly on 115% AMI and deductions can be found for dependents, daycare, aged households, and so on. to assist qualify Minimal credit score rating 680 and max DTI 41% No max loan quantity or buy value No money contribution or money reserves required Main residence solely and never restricted to first-time homebuyers Properties are sometimes in rural areas Should be property eligible: Revenue limits search: SOURCE: California Affiliation of REALTORS web page 16

17 Normal Tips: VA Loans Mortgage Program s – Pre-COVID & Standing Right now Buy or Refinance Max LTV 100% FICO Minimal 620 (Nonetheless, Overlays to 640 might exist) DTI Most 41% or per AUS / DU with Acceptable Reserves Revenue: W-2 or Self-Employed, No Lower than 2 Years Down Cost Sources: Financial savings, Items from Household Member, Non-Revenue or Employer Max Mortgage Restrict: Conforming $1,500,000 Max; 25% DP Over Conforming limits Property Situation: Any Situation Proprietor Occupied Solely Normal Notes Property Sorts 1-4 items, PUDs, VA Authorised Condos No Money-Out Doable SOURCE: California Affiliation of REALTORS web page 17

18 Normal Tips: GSE Conforming & Excessive Stability Mortgage Program s – Pre-COVID & Standing Right now Buy or Refinance GSE’s Authorities Sponsored Enterprises Present a Secondary Market in Residence Mortgage, The GSEs Buy Mortgages from the Lender that Originates Them with Balances Over the Conforming Mortgage Limits Max LTV 95% Worth FICO Minimal 620 DTI Most 48% or per AUS / DU or LPA Findings Revenue: W-2 or Self-Employed, No Lower than 2 Years (Full Documentation, Pay Stubs, and so on.) Down Cost Sources: Financial savings, Items from Household Member, Non-Revenue or Employer 2018 Max Mortgage Restrict: Conforming $453,100 & Excessive Stability $689,350, Varies by Every County Restrict 2019 Max Mortgage Restrict: Conforming $484,350 & Excessive Stability $726,525, Varies by Every County Restrict Property Situation: C4 Appraiser Situation Score or Higher (C1-C4) Occupancy may be as Main Residence, 2nd Residence, and Funding Property Normal Notes Fannie Mae (FNMA) & Freddie Mac (FHLMC) are the GSE s that make up our (Conforming & Excessive Stability) Secondary Market. Comply with-up with Lender for Extra Particular Particulars web page SOURCE: California Affiliation of REALTORS 18

19 Normal Tips: Freddie Mac Residence Doable Program Mortgage Program s – Pre-COVID & Standing Right now Freddie Mac s Residence Doable mortgage supply excellent flexibility and choices to fulfill number of borrower s wants in low & average debtors in search of low down funds and versatile supply of funds Main Residence only one unit 97% LTV and 2-4 items 95% LTV with lowered protection on Mortgage Insurance coverage Buy and no money out refinance transactions Tremendous conforming Max LTV 1-unit 95% LTV, 2-unit, 3-4 unit 80percentLTV Non-occupying co-borrowers are permitted at 95% LTV The borrower(s) should meet limits. Mortgage Product Advisor (LPA) will decide the eligibility of the Mortgage and can point out the eligibility in its findings. To find out whether or not the Borrower s exceeds the limits, HBFS should depend on the used to qualify the borrower and submitted to LPA. There isn’t a restrict if the Mortgaged Premises is positioned in an underserved space or properties positioned in federally declared catastrophe areas. NOTE: Efficient for Mortgages with Utility Obtained Dates on and after 7/28/2019, the restrict necessities for ALL Residence Doable loans might not exceed 80% AMI for the property s location (together with these in low-income census tracts). SOURCE: California Affiliation of REALTORS web page 19

20 Normal Tips: Freddie Mac Residence One Program Mortgage Program s – Pre-COVID & Standing Right now Residence one provides low down fee choices with NO particular or geographic restrictions not like these wanted for HomePossible 1-unit Main Residences Solely (No Manufactured Houses & No non-occupying co-borrowers allowed) As much as 97% LTV/CLTV (cltv can go as much as 105% with inexpensive second) Buy and no money out refinances out there MI commonplace charges LTV > 95% requires 35% protection (LPMI is suitable) Mounted fee solely LPA settle for solely not handbook UW allowed SOURCE: California Affiliation of REALTORS web page 20

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21 Normal Tips: Fannie Mae HomeReady Program Mortgage Program s – Pre-COVID & Standing Right now FNMA HomeReady is designed for creditworthy, low to average debtors with expanded eligibility in designated low-income communities 1 unit 97% LTV buy and restricted money out refinance Main residence solely Complete annual qualifying might not exceed 100% of the AMI for the property s location 25% MI protection for LTV s % No limits in low census tracts, outlined as these census tracts the place the median tract isn’t any better than 80% AMI» FNMA Revenue Limits: NOTE: Efficient for loan casefiles submitted to DU on or after 7/20/2019, the restrict necessities for ALL HomeReady loans might not exceed 80% AMI for the property s location (together with these in low-income census tracts). SOURCE: California Affiliation of REALTORS web page 21

22 Normal Tips: Excessive Stability GSE Program Mortgage Program s – Pre-COVID & Standing Right now Buy or Refinance GSE’s Authorities Sponsored Enterprises Present a Secondary Market in Residence Mortgage, The GSEs Buy Mortgages from the Lender that Originates Them with Balances Over the Conforming Mortgage Limits Max LTV 95% Worth FICO Minimal 620 DTI Most 48% or per AUS / DU or LPA Findings Revenue: W-2 or Self-Employed, No Lower than 2 Years (Full Documentation, Pay Stubs, and so on.) Down Cost Sources: Financial savings, Items from Household Member, Non-Revenue or Employer 2018 Max Mortgage Restrict: Conforming $453,100 & Excessive Stability $689,350, Varies by Every County Restrict 2019 Max Mortgage Restrict: Conforming $484,350 & Excessive Stability $726,525, Varies by Every County Restrict Property Situation: C4 Appraiser Situation Score or Higher (C1-C4) Occupancy may be as Main Residence, 2nd Residence, and Funding Property Normal Notes Fannie Mae (FNMA) & Freddie Mac (FHLMC) are the GSE s that make up our (Conforming & Excessive Stability) Secondary Market. Comply with-up with Lender for Extra Particular Particulars SOURCE: California Affiliation of REALTORS web page 22

23 Normal Tips: Freddie Mac w/dpa Packages Mortgage Program s – Pre-COVID & Standing Right now Buy or Refinance GSE’s Authorities Sponsored Enterprises Present a Secondary Market in Residence Mortgage, The GSEs Buy Mortgages from the Lender that Originates them. Max LTV 97% Worth FICO Minimal 640 DTI Most 45% Revenue: W-2 or Self-Employed, No Lower than 2 Years (Full Documentation, Pay Stubs, and so on.) Down Cost Sources: Financial savings, Items from Household Member, Non-Revenue or Employer Max Mortgage Restrict: 484,350 max Property Situation: C4 Appraiser Situation Score or Higher (C1-C4) Occupancy may be as Main Residence, 2nd Residence, and Funding Property Normal Notes Fannie Mae (FNMA) & Freddie Mac (FHLMC) are the GSE s that make up our (Conforming & Excessive Stability) Secondary Market. Comply with-up with Lender for Extra Particular Particulars SOURCE: California Affiliation of REALTORS web page 23

24 Normal Tips: FHA Mortgage w/dpa (GSFA) Mortgage Program s – Pre-COVID & Standing Right now Designed for Buy solely on main residence Max LTV 96.5% Worth with CLTV 102% FICO Minimal 640 DTI Most 45% Revenue: W-2 or Self-Employed, No Lower than 2 Years Down Cost Sources: Financial savings, Items from Household Member, Non-Revenue or Employer Max Mortgage Restrict: $726,525 Varies by Every County Restrict Property Situation: Any Situation Proprietor Occupied Solely (Non-Proprietor occupied Co-Borrower not allowed) Normal Notes Property Sorts 1-4 items, FHA Authorised Condos, Combined Use, Manufactured No Money-Out Doable SOURCE: California Affiliation of REALTORS web page 24

25 Normal Tips: Excessive Stability FHA Mortgage w/dpa (CalHFA) Mortgage Program s – Pre-COVID & Standing Right now Buy solely, have to be a first-time house purchaser or haven’t owned a property in over 3 years Typical max LTV 96.5% with CLTV 102% FICO minimal 640, DTI max 45% Revenue limits varies by every county Most gross sales value $765, max loan limits: conforming $314,827 & excessive stability $726,525 varies by every county Excessive Stability price on FHA ranges from.628% to.658% SOURCE: California Affiliation of REALTORS web page 25

26 Normal Tips: Area of interest Non-QM (Different Mortgage Choices) Overseas Nationwide Packages to 75% LTV 2nd Likelihood Lending / ALT A Financial institution Assertion Loans for Self Employed Different Property Sort Alternate options – Combined-Use, Land, Builder, Repair & Flip Non-Warrantable Condos Non-FHA or Typical Asset Depletion Accessible Can Use Belongings for Revenue Funding Properties Utilizing Topic Cashflow for Revenue – ICFMP Rental Properties Combined-Use (50% vs. 25%), Multi-Unit Belongings – Jumbo (10%) Jumbo with 2nd TD (Unison Fairness Share Possibility) Not But Accessible Once more Alt Doc Packages SOURCE: California Affiliation of REALTORS web page 26

27 Why Homeownership Issues

28 Do you know? TransUnion evaluation tasks at the very least 8.3 million first-time homebuyers will enter the mortgage market between 2020 and MILLIONS OF FIRST-TIME HOMEBUYERS (ORIGINATIONS) Supply: TransUnion LLC 28

29 Do you know? Many renters overestimate how a lot down fee is required In your estimation, how a lot down fee is required to buy a house? (n=998) Supply: 2019 C.A.R. Client Survey 29

30 Do you know? Many renters, particularly Millennials, overestimate how a lot down fee is required 43% 44% 32% 33% Millennial 37% In your estimation, how a lot down fee is required to buy a house? Boomer Gen X 27% 19% 17% 15% 17% 8% 0-10% 11-20% 21-50% 7% Over 50% (n=947) Supply: 2019 C.A.R. Client Survey 30

31 Do you know? 63% would begin looking in the event that they knew they may qualify for a low-down fee Sure, 63% Should you knew you could possibly qualify for a mortgage with a a lot decrease down fee, would you begin to search for a home? (n=1,008) Supply: 2019 C.A.R. Client Survey 31

32 Do you know? 2 in 5 renters plan to purchase after transferring from present residence 53% Do you propose to hire once more after you progress out of your present residence? 40% 3% I plan to hire I plan to purchase a I plan to maneuver in house with a relative 4% I’ve different plans (n=1,001) Supply: 2019 C.A.R. Client Survey 32

33 How America Views Homeownership % Agree Gen. Pop. Homeownership is an achievement to be happy with. 93% Owing a house is an effective method to purchase fairness/extra belongings 91% Homeownership is a dream come true. 86% Owing a house is important to constructing a household. 57% Homeownership is a big burden. 56% Homeownership isn’t for me, I favor renting. 27% Q. Please point out to what extent you agree or disagree with every of the above statements (n =1,005) SOURCE: Ipsos Public Affairs, Wells Fargo Unlocking the Steps Towards Homeownership 33

34 Monetary Advantages

35 Owners accumulate wealth sooner U.S. Median Web Value 300 $ $ Proprietor Unlocking the Steps Towards Homeownership Renter or different 35 web page 35

36 People, particularly Millennials, imagine proudly owning a house contributes to monetary stability Millennials All 80% 100% 80% 60% 60% 43% 34% 40% 20% 38% 28% Proudly owning a house will increase a I might really feel much less profitable if I individual’s monetary stability by no means owned a house Strongly Agree Considerably Agree 32% 29% 32% Proudly owning a house will increase an individual’s monetary stability I might really feel much less profitable if I by no means owned a house 40% 20% 0% 42% 0% Strongly Agree SOURCE: Neighbor Works America Unlocking the Steps Towards Homeownership 36 Considerably Agree

37 Greater than half of householders suppose actual property is one of the best long-term funding Which of the next do you suppose is one of the best long-term funding? (n=1,005) Actual property 53% Shares/mutual funds 30% Saving accounts/cd Gold/different sorts of commodity Bonds 8% 5% 3% SOURCE: CALIFORNIA ASSOCIATION OF REALTORS Client Survey Unlocking the Steps Towards Homeownership 37 web page 37

38 Social Advantages

39 Homeownership enhances high quality of life in a wide range of methods Spill-over Advantages of Homeownership Homeownership results in higher well being Homeownership lowers crime charges and improves security Homeownership ends in larger instructional achievement Unlocking the Steps Towards Homeownership 39

40 Owners are higher off- well being smart Predicted Chance of Good Well being by Race/Ethnicity and Homeownership A research carried out in 2014 discovered that owners have a big well being benefit over renters typically. Primarily based on the evaluation owners are 2.5 % extra more likely to have good well being. n= 71,874 The benefit for owners is even bigger 3.1 %, when adjusting for an array of demographic, socioeconomic, and houserelated traits. SOURCE: Racial and ethnic stratification within the relationship between homeownership and self-rated well being (Social Science & Drugs), NAR Unlocking the Steps Towards Homeownership 40

41 Decrease dropout charges for kids of householders Common Dropout Charges for 17-12 months-Olds ( Panel Survey of Revenue Dynamics) All 17-year-olds Research exhibits that youngsters of householders usually tend to stay at school than youngsters of renters 5.1% Owners Proudly owning produce higher instructional achievement for kids than renting partly as a result of homeowners usually transfer much less regularly 2.8% Renters 11.7% 0% 5% 10% 15% Different analysis counsel that wealth accumulation – one other good thing about homeownership, could possibly be one more reason for kids s success SOURCE: Measuring the Advantages of Homeowning: Results on Youngsters Redux Unlocking the Steps Towards Homeownership 41

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42 Homeownership lowers crime charges Influence of Home Possession on Crime (Regression Evaluation) Property Crime Violent Crime Log of Homeownership Residual Log of the Unemployment Charge Log of Poverty Charge Log of Homeownership Residual Log of the Unemployment Charge Log of Poverty Charge Research exhibits that homeownership has a robust adverse impact on each violent and property crime charges Analysis counsel that the speed of improve in prison exercise is considerably slower in areas with larger homeownership fee SOURCE: College of Nebraska at Omaha Unlocking the Steps Towards Homeownership 42

43 Homeownership on the decline

44 Homeownership isn’t rebounding Homeownership Charge CA Q3-18 Q1-18 Q3-17 Q1-17 Q3-16 Q1-16 Q3-15 Q1-15 Q3-14 Q1-14 Q3-13 Q1-13 Q3-12 Q1-12 Q3-11 Q1-11 Q3-10 Q1-10 Q3-09 Q1-09 Q3-08 Q1-08 Q3-07 Q1-07 Q3-06 Q1-06 Q3-05 Q Q1-19 % of Households 75 U.S. SOURCE: Present Inhabitants Survey U.S. Census Bureau Unlocking the Steps Towards Homeownership 44 web page 44

45 Homeownership charges declined essentially the most for youthful generations California 80% 65 &Above 70% % Total 50% % 30% Beneath 35 20% SOURCE: U.S. Census Bureau, American Neighborhood Survey Unlocking the Steps Towards Homeownership

46 Homeownership by ethnicity (over time) 70% California 66.7% 63.4% 65% 60% 55% 50% 45% 57.2% 59.4% 49.3% 47.6% 46.8% 44.3% 40% 35% 40.0% 34.3% 30% White 25% Asian African American Hispanic Different 20% SOURCE: U.S. Census Bureau, American Neighborhood Survey Unlocking the Steps Towards Homeownership

47 California Affiliation of REALTORS CAR Assets:

48 STEPS Towards Homeownership

49 STEPPIN Towards Monetary Planning

50 An Interactive Funds, Credit score and the Mortgage Utility Course of Evaluate

51 REALTOR Useful resource: A area information to figuring out mortgage-ready patrons Get solutions to those questions out of your patrons: Sure 1 Do you’ve sources that may be documented with present pay checks, financial institution statements, W2s and tax returns? 3 Has it been at the very least two years because you discharged money owed in chapter or three years since a house you owned was foreclosed? 4 Do you’ve entry to down fee cash from sources that may be verified and documented? 5 Do you’ve at the very least two or three open credit score accounts in good standing? 6 Are you a US citizen, everlasting resident or do you’ve a present work authorization card? No If the response to those query is sure, ship your purchaser to your lender associate for pre-approval. If the reply isn’t any, ship them to a trusted housing or credit score counselor referral associate and keep in contact with them as they resolve their points. 51

52 Based on NeighborWorks: 75% of People: Residence Shopping for Course of Difficult Advantages of attending a HUD Authorised course: Attending a homebuyer class will assist decide on the how to buy a mortgage and store for a house. Know the way a lot home to purchase How to buy a mortgage Perceive the mortgage course of What prices are incurred Perceive Down Cost Help Packages Grants Loans Strings connected Pre-purchase counseling optimizing this service from native HUD-Authorised organizations Understanding the significance of being financially wholesome pre and publish house possession Enhancing partnerships with lenders and realtors by pre-purchase counseling and getting ready households, notably working households in the direction of homeownership 52

53 Homebuying Group REALTOR Lender Lawyer Escrow Officer Title Insurance coverage Officer Housing Inspector Appraiser Surveyor Insurance coverage Agent Housing Counselor 53

54 Components of Key Lessons Provided by Housing Counseling Providers Benefits/Disadvantages of Homeownership Understanding Contingency Intervals Purchaser inspections Residence, Roof, Chimney, Mildew, Radon and so on. What does a Residence Inspection cowl Mortgage Utility Course of What does a Mortgage embrace Debt to Revenue/Housing Ratios Establishing a funds and why it will be significant Credit score and tips on how to assessment a credit score report Preventive upkeep Residence Enhancements 54

55 Sorts of Housing Training & Counseling Providers Accessible Monetary Literacy Homebuyer Training Reasonably priced Lending Providers Monetary Counseling & Training Pre and Submit Buy Credit score Counseling & Restoration Home-owner Training Landlord Training Default Intervention Counseling Foreclosures Prevention Counseling Generational Wealth Constructing Ship Mortgage-Prepared Purchasers to Lenders and Realtors Debt-to-Revenue Ratio Analysis Down Funds & Closing Prices Revenue and Bills Serves Low-to-Average Revenue Consumers First Time Homebuyer Training & 1:1 Counseling Rental Help Property Rehabilitation Down Cost Help Assets 55

56 When BUYER brings their very own Lender How one can get snug Guidelines : Begin Early earlier than Home Choice Guarantee They Will Present a Conditional Approval Topic to TBD Direct Endorsed or Skilled Escalation Channels Timelines & Expectations Clearly Outlined Flip-Round Occasions Clear You the REALTOR are Included All through the Course of The Solely Charges They Cost Upfront, Appraisal & Credit score (if any?) CALIFORNIA ASSOCIATION OF REALTORS web page 56

57 Credit score Break-Out Elements 1 – Cost Historical past 35% How latest is the newest delinquency, assortment or public report merchandise? How extreme was the worst delinquency 30 days, 90 days? What number of credit score obligations have been delinquent? 2 Debt 30% How a lot does the buyer owe collectors? What proportion of accessible bank card limits is the buyer utilizing? What proportion is excellent on open installment loans? 3 – Credit score Historical past 15% How lengthy have accounts been established common variety of months accounts have been open New accounts variety of months since most up-to-date account opening 4 – Pursuit of New Credit score 10% 5. Credit score Combine 10% 4. Pursuit of New Credit score 10% 1. Cost Historical past 35% 3. Credit score Historical past Size 15% 2. Excellent Debt 30% Inquiries: Variety of latest credit score inquiries (12 months) New accounts variety of commerce strains opened in final 12 months 5 – Credit score Combine 10% What’s the mixture of credit score product varieties? Revolving credit score variety of bankcard commerce strains Installment credit score % of commerce strains which are installment loans CALIFORNIA ASSOCIATION OF REALTORS web page 57

58 On-line Training Alternatives Framework & Credit score Sensible First Time Residence Purchaser (FTHB) required Training Packages for Typical LowDown Loans the place the LTV > 95% Related Training Packages exist for different Authorities (FHA, USDA & VA) loans. 58

59 REALTOR Useful resource: Working with Non-Revenue Housing Businesses 59

60 REALTOR Useful resource: Working with Non-Revenue Housing Businesses 60

61 2020 Conforming & Excessive Stability Mortgage Limits by County for Freddie & Fannie (As of 1/01/2020) The Federal Housing Finance Company s (FHFA) announcement to extend the 2020 conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac to $510,400 on one-unit properties and a cap of $765,600 in high-cost areas. The earlier loan limits have been $484,350 and $726,525, respectively. Greater Mortgage Limits = Extra Properties Accessible to Entry Stage Consumers Mortgage Restrict Counties $765,600 $510,000 > < $510,400 Alameda, Contra Costa, Los Angeles, Marin, Orange San Benito, Santa Clara, Santa Cruz, San Mateo San Diego, Ventura, Santa Barbara, San Luis Obispo, Monterey Napa, Sonoma, Yolo, Sacramento, Placer, El Dorado All Remaining Counties for FHLMC/FNMA, FHA are much less. Hyperlink to Freddie Mac (FHLMC) / Fannie Mae (FNMA) 2020 Mortgage Limits Hyperlink to FHA Mortgage Limits simply modified for 2020 Limits Conforming $510,400 max, much less in lots of areas 61

62 REALTOR Useful resource: Monetary Literacy Instrument 62

63 Getting Began with Lending

64 Mortgage Utility Guidelines / Wants Listing Buying a house generally is a complicated course of. Nonetheless, understanding what you want earlier than you apply for a mortgage loan may also help make the method easy and stress-free. Right here s what you’ll need to have out there when making use of for a mortgage loan: ID Driver s license or passport Residency Full handle for every residence you ve resided previously 24 months Buy contract Gross sales contract (all addendums) with unique signatures, together with copy of the earnest cash test Employment Title, handle and telephone numbers of all employers for the previous two years Relocation: Copy of employer relocation settlement Revenue Final 2 years W-2 or 1099 kinds Final 30 days pay stubs (together with bonus &/or commissions Final 2 years tax returns (all schedules) Belongings Final 2 months financial institution statements (all pages) on all checking, financial savings, funding accts Divorced or Separated Full divorce petition, recorded last decree &/or separation settlement Rental properties Copies of present leases and tax returns VA loans Copy of DD214 and certificates of eligibility Interact within the course of early to insure a easy closing. SOURCE: California Affiliation of REALTORS web page 64

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65 Key Components in Qualification of your Purchasers 4 C s (Capital, Capability, Credit score, Collateral) and tips on how to ask Credit score / FICO Capital Belongings Funding, IRA, Down Capability Revenue Supply/Documentable, Quantity Debt-To-Revenue Ratios (DTI) Collateral Property – Worth / Worth of Property, Mortgage Limits, First Time Homebuyer, # of Properties Owned, Mortgage Insurance coverage, Occupancy, Property Situation (now for some loans could also be AMI Limits), CALIFORNIA ASSOCIATION OF REALTORS web page 65

66 Mortgage Approval and Closing Steps <<< Pre-contract stages >>> Prequalification – Lender gives an estimate of shopping for energy based mostly on unverified data. Preapproval – Revenue, asset and credit score paperwork have been reviewed, file scored by AUS and if wanted underwriter. <<< Contract stages >>> Conditional approval Underwriter has permitted the file with circumstances to be happy previous to closing Clear to shut Underwriter has signed-off on all closing circumstances previous to launch of loan docs. Funding circumstances – Borrower s credit score, , and belongings are up to date and reviewed previous to funding. Mortgage Closes! Bear in mind, loan approval is a dynamic, ongoing course of that takes place as much as and together with the cut-off date! Assist your purchaser keep mortgage-ready by the complete course of! 66

67 Attending to the Mortgage Estimate (LE) – What Constitutes a Legitimate Mortgage Utility? Title Revenue Social Safety Quantity Property Handle Estimated Worth of Property Mortgage Mortgage Quantity Sought As soon as these 6 objects of knowledge are submitted, Lender MUST provide a Mortgage Estimate (LE) inside 3 enterprise days. 67

68 Financial institution Statements/Tax Returns & Credit score Report Evaluate Establishment Massive Deposits Total Balances Full Pages, No-White-Outs or Blanks All Pages of Statements Latest Months/Years of Returns Company & Private for 1099 Corp 68

69 Widespread Further objects which may be wanted based mostly on the AUS/DU/LP preliminary automated assessment: 4506 & ADDITIONAL DISCLOSURES DIVORCE DECREE PROFIT & LOSS BK DISCHARGE ANY NON-DISCLOSED ITEMS, CALLED OUT FROM AUS OR NOTED ON CREDIT REPORTS ADDITIONAL BANK STATEMENTS EXPLANATIONS OF LARGE DEPOSITS EXPLAINING EMPLOYMENT GAPS EXPLAINING BONUS, COMMISSION, OVERTIME 69

70 Greatest Practices for Communication & Well timed Closings THE FOLLOWING STEPS ARE USED TO ENSURE SMOOTH COMMUNICATION THROUGHOUT THE PROCESS: ENSURE CLIENT RECEIVE AND REVIEWS NEEDS LIST (NOTED EARLIER). THERE MAY BE DIFFERENT CHECKLIST ITEMS FOR: SELF-EMPLOYED BORROWERS OR VA BORROWERS COMMUNICATIONS, ON EXPECTATIONS AND DELIVERY OF MATERIALS: HOW TO E CONSENT, E DISCLOSURES, E SIGNING SET ROUTINE WEEKLY STATUS MEETINGS FOR DOCUMENTS, QUESTIONS, TIMING, AND ADDITIONAL EXPECTATIONS. SET THESE MEETINGS, EVEN IF THERE ARE NO UPDATES OR CHANGES, SHOWS CONSISTENCY AND INCLUSION OF ALL MEMBERS OF THE TEAM. THE KEY LOAN MILESTONES SHARED: LOAN STARTED INITIAL DISCLOSURES WITH LE OUT LOAN SUBMITTED TO PROCESSING LOAN SUBMITTED TO UNDERWRITER LOAN APPROVED UPDATED LE OUT, IF NEEDED CD OUT DOCS ORDERED DOC OUT WIRE REQUESTED LOAN FUNDED 70

71 Uniform Residential Mortgage Utility Type #1003 (Pg.1) 71

72 Client Survey By Technology – Down Cost Wanted? Many renters, particularly Millennials, overestimate how a lot down fee is required 43% 44% 32% 33% Millennial 37% In your estimation, how a lot down fee is required to buy a house? Boomer Gen X 27% 19% 17% 15% 17% 8% 0-10% 11-20% 21-50% 7% Over 50% (n=947) Supply: 2019 C.A.R. Client Survey 72

73 REALTOR Useful resource: A area information to figuring out mortgage-ready patrons Get solutions to those questions out of your patrons: Sure 1 Do you’ve sources that may be documented with present pay checks, financial institution statements, W2s and tax returns? 3 Has it been at the very least two years because you discharged money owed in chapter or three years since a house you owned was foreclosed? 4 Do you’ve entry to down fee cash from sources that may be verified and documented? 5 Do you’ve at the very least two or three open credit score accounts in good standing? 6 Are you a US citizen, everlasting resident or do you’ve a present work authorization card? No If the response to those query is sure, ship your purchaser to your lender associate for pre-approval. If the reply isn’t any, ship them to a trusted housing or credit score counselor referral associate and keep in contact with them as they resolve their points. 73

74 Certified Mortgage (QM) Loans Typical Loans Conforming Loans (Fannie Mae & Freddie Mac) Low Down Cost Loans (3% & 5% Down) Fannie Mae Residence Prepared Freddie Mac Residence Doable & Residence One Down Cost Help 1st TD Loans Backed by State & Native Housing Finance Teams (w/calhfa & GSFA 2nd TD s) Authorities Loans FHA 3.5% down VA 0% down USDA 0% down Excessive Stability & Jumbo Loans 74

75 Non-Certified Mortgage (Non-QM) or Area of interest Loans For self-employed debtors Tax Return Points Timing of Submitting, Write-Offs, Revenue Inconsistencies (banner, up/down, and so on.) Choices for this kind of problem 12-month financial institution assertion packages 24-month financial institution assertion packages (Enterprise Title, Possession curiosity & Expense Ratio) 1 yr. Tax Return (relatively than regular 2 years wanted) Asset Allocation/Depletion/Qualifier Loans (using money belongings) Land, Renovation & Different Portfolio Loans Credit score Occasion Loans Latest Foreclosures, BK, Credit score Derogatory, and so on. 75

76 Credit score Do s & Don ts High 10 Credit score Do s and extra importantly Don ts through the loan course of DON T apply for brand new credit score DON T repay collections or Cost Offs DON T shut bank card accounts DON T max out or over cost bank card accounts DON T consolidate your debt DON T do something that may trigger a crimson flag to be raised by the scoring system DO be a part of a credit score watch program DO keep present on current accounts DO proceed to make use of your credit score as regular DO name your Mortgage Mortgage Originator. A educated, skilled Mortgage Mortgage Originator ought to be capable of give you world-class service you might want to select the loan that s proper in your consumer 76

77 REALTOR Useful resource: A guidelines of great purchaser financing challenges (Purple Flags) Consumers with a number of of those points will discover it very troublesome to qualify for a standard or government-insured loan. Realtors ought to proceed with warning earlier than submitting buy provides for purchaser s with these points: The customer has a number of years of unfiled tax returns The customer is married however the non-buying partner isn’t out there or unwilling to cooperate with the acquisition The entire purchaser s sources are money and haven’t been reported for tax functions The customer is self-employed with minimal internet enterprise reported in latest tax years A number of of the patrons won’t occupy the property as their principal residence The customer s belongings are all money and may t be sourced The customer discharged chapter inside the final 24 months or had a foreclosures lower than three years in the past The customer s Social Safety quantity isn’t legitimate Purchaser is a non-citizen and isn’t a everlasting resident (inexperienced card holder) and they don’t have a sound work authorization card The property the customer desires to buy has critical well being and security issues, sub-standard non-permitted enhancements and can’t be instantly occupied by the patrons 77

78 Key Idea: Debt-to-Revenue Ratios High (Entrance-Finish) Ratio 34.9% = $4,035 (PITIA w/mi) or Home Cost Revenue $ 11, % 57.3% UsingSavings Remaining Taxes, & Revenue for: Different Bills Taxes, Financial savings & Different Bills 34.9% 34.9% PITIA w/mi PITIA w/mi 7.8% Different Revolving (Assumes $200 in Owners Affiliation charges) Backside (Again-Finish) Ratio 34.9% + 7.8% = 42.7% 42.7% = $4,935 Key DTI Ratio is beneath 43% Different Month-to-month Installment & Revolving Funds 7.8% = $900 Consists of : Automobile Funds, Pupil loans, Credit score Card funds Complete Revenue might embrace: W2, 1099, Hourly, Fee, Bonus, Alimony, based mostly on IRS and so on. Instance assumes Qualifying with Typical Mortgage Debt to Revenue Ratios beneath FE 36/ BE 43 78

79 Key Takeaways 01 Homeownership enhances high quality of life Help from homebuyer crew Grasp the end-to-end loan approval course of 06 DPA promotes entry to homeownership In Altering Occasions, Training & Accessible Assets stay the Key Components to SUCCESS! Free member advantages 79

80 Questions

81 California Affiliation of REALTORS