Real Estate Mortgage Programs

What Kind of Loan Do You Need?

Mortgage Loan Information

This section features mortgage program information for home buyers interested in real estate in Long Beach and Los Angeles County areas.

In today's loan market, which has been changeable and volatile, buyers are strongly recommended to obtain their loan information and pre-approval when they first begin thinking about their home search. Although the types of loans listed below may be available, the circumstances vary according to the buyer's income history, credit score (FICO score), and employment or other income status.  Once pre-approval is obtained, a buyer should continue to check

Note:  New loan rules which took effect in 2015 may affect the timing of your real estate transaction due to new nationwide lender rules established by the Consumer Financial Protection Bureau. These rules mandate new disclosure forms which begin with the buyer's loan application.  Simply put, certain changes during the transaction will trigger new disclosure forms, sent to the buyer, which will require a mandated review time, thus using more time to close a transaction.  New shared technology between lenders and escrow officers (now called "settlement agents") will be a part of the new system.  The entire set of rules is called the TILA-RESPA Integrated Disclosure Rule which applies to all residential purchases and refinances. Utilizing electronic disclosures delivered online will speed the timeline for buyers, so this should be done if at all possible! 

The most common types of loan in the Southern California market and in this area are either a conventional loan (conforming or jumbo loan amounts), or an FHA loan

 

FHA Loans

FHA loans have been in existence since the 1930's, are insured by the Federal Housing Administration, and are ideal for first-time buyers because of only requiring 3.5% down payment, as well as other advantages. Some benefits to FHA loans include: a better loan modification program; ability to easily and often less expensively refinance; low rates; and acceptance of borrowers with credit scores as low as 580 in 2017.  FHA loans are targeted to low- and moderate-income borrowers, but there are no income restrictions. In Los Angeles County the 2017 maximum amount that a mortgage applicant can borrower is $636,150 for a single unit property. FHA has higher loan limits for duplexes, triplexes, and four-plexes, from $814,500, $984,525 and $1,223,475 for 2017 for Orange and Los Angeles Counties.

Additionally, FHA borrowers must pay an up-front insurance premium, added to your loan balance, which goes into FHA’s fund for repaying lenders if borrowers default.  This is in addition to other usual closing costs.

A buyer also needs to know that the prospective property must qualify for an FHA loan according to FHA's list of conditions. These conditions are specific but are not usually a problem when a house is in reasonable condition. Whether a condo, single family, duplex, triplex or four unit property, all FHA loans require owner occupancy.

 

Conventional Loans

Conventional loans are also more specific, particularly when a homeowner association is involved, and generally require at least 10% down, and some loans may require a 20% down, even if for an owner-occupied property. For instance, in homeowner associations, owner occupancy requirements must be met:  some lenders require 51% owner occupants, some require at least 70% owner occupancy.

 

Conforming loan limits for both conventional and VA loan limits are currently up to the $625,500 for the Los Angeles metropolitan area.  

Jumbo loan limits are conventional loans over $625,500 and typically require a little higher interest rate. 

In order to help you with your next home purchase, I have put together a simple review of some of the major mortgage programs.

Variable or Adjustable-Rate Real Estate Mortgage
With an adjustable rate mortgage, the rate of the loan can change throughout the term of the loan. Many ARMs have a short fixed period and then become truly adjustable. The rate of the loan is based on adding points to a fixed base.

Fixed-Rate Real Estate Mortgage
With this type of loan, the interest rate remains consistent throughout the term of the loan, usually 30 years.

Balloon Real Estate Loan
A balloon loan is a real estate loan where there is a lump sum due at the end of the loan. This normally encourages an individual to refinance prior to the end of the term of the loan.

Jumbo Real Estate Loans
A jumbo loan is any residential or commercial loan exceeding the guidelines of Fannie Mae and Freddie Mac.

VA Real Estate Loans
A VA loan is a loan in the United States guaranteed by the Veterans Administration. The loan may be issued by qualified lenders. The VA was designed to offer long-term financing to American Veterans or to their surviving spouses.

What are Reserves?

Reserves are the funds the lender requires the borrower to show after paying the down payment, the monthly mortgage and any impounds, and other monthly debt and living expense payments. This amount may differ from lender to lender, so a borrower should always ask that question (and it's information that will be disclosed when required anyway).  FNMA (Fannie Mae) specifies reserve funds must come from: 

Retirement funds, checking or savings accounts, mutual funds, CDs, money market, stocks, bonds, trust accounts, retirement savings, cash value of a vested life insurance policy.
 
For purchases, the reserve amount required will depend on several factors, such as occupancy status, number of units in acquired property, number of other properties the buyer owns.
        
     

The Quick Long Beach, Belmont Shore, Naples, Bluff Park, Seal Beach, Cerritos Real Estate Mortgage Form

Do you need additional information regarding getting home financing and real estate mortgage services in Long Beach, Belmont Shore, Naples, Bluff Park, Seal Beach, Cerritos or in any other surrounding Los Angeles or Orange County area? Please fill out the following short real estate mortgage information request form. All inquiries will be responded to in a timely fashion and your information will be kept strictly confidential.