Sonoma County Home Loans Blog: March 2010

April 30, 2010 is the last day USDA Rural Development Home Loans will be committing to funding loans in Sonoma County.  This is a result of temporarily depleting funds.  Temporary halts in funding occur each year until Congress approves new funding for the program.  Expect to see funds again available in Sonoma County in October of 2010.

Some lenders like Wells Fargo and Freedom Mortgage have stopped taking USDA loan applicaitons using the program.  Mountain West Financial is still accepting applicaitons through the beginning of April.

Remember, this is excellent 100% financing for areas of Sonoma County outside metro cities.  Areas served  include Larkfield, Windsor, Cloverdale, Sebastopol, Healdsburg, Russian River, and Sonoma.

For more about the USDA Rural Home Loans 100% financing, go to http://activerain.com/blogsview/1271709/100-usda-rural-home-loans-in-sonoma-county.

Lenders have very specific guidelines and rules for a homebuyer who will be retaining their old home.  In lendspeak “departing property” is the property a home buyer is moving out of, but will retain, as they buy a new home to upgrade, downgrade or relocate.  In this tumultuous market of valuations and “walk aways”, lenders have very particular rules about ‘departing properties’ as a liability for a home buyer.

If the buyer can easily qualify to carry both mortgage PITI payments, and can show they have 2 months reserves after closing the new home purchase, a lender will comfortable financing an additional new home.  But many home buyers may intend to rent out their old home instead of selling in such a down market.  And the home buyer may need to show that rental income in order to qualify for the new mortgage, especially in the environment of more conservation DTIs (debt-to-income-ratios). Lenders set the departing property rules according to what they consider conservative enough to be safe.

To use departing residence income, the lender will require 4 things to be documented in the file.

1. A letter of explanation as to why the home buyer is purchasing the new home if they already have a home.
2. An executed rental agreement on the departing property for the time period soon after close of escrow on the new purchase.
3. A copy of the security deposit check from the new tenant.
4. A bank statement of the home buyer showing the rental security deposit check deposited to their account.

Lender rules allow a departing property to be in the process of short sale as long as the mortgage payments history doesn’t contain more than 1 x 30day late in the last 12 months.

WARNING.  If the departing residence was refinanced in the last 12 months as an owner occupied home, the new lender may not accept the loan as a new owner occupied mortgage since the previous home refi paperwork sometimes states that the home owner intended to live in the property for at least 12 months. I hit that problem recently as Bank of America was the mortgage bank’s investor for the new loan and also the holder of the former home’s refi.  Luckily as a broker, I could change course to a new lender who doesn’t use Bank of America as the investor purchasing the new loan.  

Up to the minute interest rates at  www.sonomacountyhomeloans.com

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0.5% Down Payment in Sonoma County

The CHF Access Program provides a 3% loan to be coupled with an FHA 96.5% loan to be used for buying an owner occupied loan in Sonoma County.  The 0.5% low down payment from the buyer can come from a family gift, a 401k loan or from a downpayment assistance program like the City of Santa Rosa’s ADDI program.  There is an income limit of $96,240 of qualifying income for Sonoma County.  The terms of the second loan are 15 years fully amortizing at 8.25% rate.  On a $300,000 home purchase, the minimum down would be $1,500!  Total payment would be $2,142 including PITIMI&2ndP&I.

Here’s the sizzle and rub.

SIZZLE

The minimum down payment of 0.5.% can come from a relative or 401k loan.

May own other property

High income limit of $96,240

SFR, PUD, FHA approved condos (FHA condo look-up https://entp.hud.gov/idapp/html/condlook.cfm )

RUB

Owner occupied only

FHA rate on first will be higher than normal market rate by about ½%

Single unit homes only

Max DTI 43%

No non-occupant co-borrowers allowed

Have you borrower call to qualify.  48 hour pre-approvals.

Fannie Mae 5% Down in Sonoma County is Back!

95% LTV loans are now insurable in Sonoma County without an income limit.  Mortgage insurance companies are now insuring these for our County, a good sign that values are not expected to decline further.  Minimum FICO 620 and 2 months of reserves are required.

For up-to-the-minute interest rates visit  www.sonomacountyhomeloans.com