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Over the last decade, typical conventional lenders have been offering 100% financing to home buyers. This usually involves creating an 80% first trust deed and a 20% second trust deed. This further allows home buyers to purchase a home with no money down.

To understand how this works, you will also need to understand two basic types of loans:
Conforming and Jumbo

Conforming interest rates cover loan amounts up to $417,000. Jumbo loans amounts cover loans over $417,000. The differences between conforming and jumbo loans are usually the interest rates and certain conditions required. Conforming interest rates are lower than jumbo interest rates. When you are looking on the internet for current interest rate quotes, the typical rates shown are for conforming rates.

Your first trust deed or the 80% loan is based on conforming or jumbo rates, depending on the purchase price of your property.

The second trust deed or the 20% loan is based on what’s called “piggy back” 2nd financing, wherein the lender gives special rates based on the fact that you are also obtaining a new first trust deed with that lender.

The interest rate for the 2nd trust deed is going to be higher than the first trust deed, sometimes as much as 3% to 5% higher. The lender then gives you what’s called a blended rate, combining the interest on the first trust deed and the interest on the second trust deed.

Typically, this type of 100% financing is fixed for 2 to 7 years and many include prepayment penalties. Some lenders also require an impound or escrow account to pay property taxes and home owner’s insurance in your monthly payment. There will be an initial deposit prior to closing to establish your tax and insurance account so that when these bills are due, there is enough in the impound account to pay these bills.

This loan program will help you purchase a home with no money down.

If your loan comes with a prepayment penalty, when the period is over, you are free to refinance the two loans into one, fixed for 30 years, if you so desire.

A really good aspect of 80/20 type financing; there is no mortgage insurance premium to pay each month, which will keep your monthly payment lower. This premium is typically based on .50% of the loan amount divided by 12. (example; loan amount of $250,000, monthly mortgage insurance premium would be approximately $104.17) There is also an upfront premium to pay in your closing costs. Some lenders will add this to your 1st trust deed loan amount.
In order to have no mortgage insurance the Read more…

The smell of summer is in the air, and all I can think about is how to finance my second home. Of course I have been talking about this beach cottage since George Bush Sr. was running the country. Like clock-work, I leave the hustle and bustle of Los Angeles in search of my dream home on the sand. Once again I find myself driving down the coast to beautiful San Diego. The waves are good, the people are friendly, and the weather is flawless.

Being a mortgage consultant, you would think I would just pull the trigger and finance this dream home. One problem…my dream home is selling for 4 million dollars. It might be chump-change for my Hollywood friends, but 4 million for a vacation home is a lot to pay. Then the little voice inside my head spoke again..He said, “Art-boy..How many times do you live?” I guess the answer is simple. We only live once. This is a good mentality if you can separate your emotional attachment with buying investment properties. If you can afford the mortgage payment, and you are buying a vacation home simply to enhance your life, then its important to have your financing approved prior to making an offer on a home.

There has been a considerable increase in people buying second homes, and its not just in California. People in Florida, Michigan, Georgia, Washington and Virginia are buying second properties at a rapid pace. If you are considering the purchase of a vacation home or investment property, talk to your loan officer and get pre-approved for a specific amount. This way you will know your price range for buying a home.

For financing purposes it is important to determine whether or not this will be an owner occupied second home or a non-owner occupied rental property. The the specific Read more…

What is Credit?

Credit is the backbone and the engine behind the workings of the economy. Credit simply allows individuals and companies to borrow funds in good faith and pay it back over a specified time frame. Lenders base their decisions on who they should lend to by using your credit rating.

Your credit rating is a numerical score that is based on your payment history. From your credit cards and loans right down to your phone bill, you will find a recording of each payment. It reports whether you pay your bills on time or if you are constantly late. And if you are frequently late, it records the amount of time taken to make that particular payment. Your credit report is pulled (viewed) every time you apply for a loan, credit card and even to have a phone line installed.

Good Credit vs. Bad Credit

How important is it to have clean or good credit? It’s very important because the worse off your credit is the harder it will be for you to secure a loan of any sort. It is important to keep on top of your credit finances and make sure that every payment is made on time and always make sure that you pay at least the minimum amount but always try and pay more if you can.

If you currently have bad credit, you shouldn’t worry too much as there are ways to still secure a loan such as having a cosigner. If you choose to go this route, remember that you are both responsible for the loan as it will be taken out in your names. Also, there are many institutions that work with people with bad credit and they will assist you with the repair of your credit file. Here?s a list of Read more…

If you have the desire to own a home, there are thousands of programs available that will help you accomplish the American Dream. Owning a home is one of the best investments that you can make. Home ownership is like having money in the bank. Owning your own home will give you tremendous bargaining power and great net worth. The major fear that most people encounter when trying to purchase a home is financing. Some people believe that home ownership is impossible for them because they have challenged credit.

However, this is not true. You can still become a home owner by using creative financing resources. Creative financing programs offer people with credit issues such as bankruptcies, foreclosures, repossessions, charge-offs, late payments, judgement, liens, medical bills, student loans, and low income achieve home ownership. Read more…

Yes, yes and yes! Get your financing before you start shopping for a home, vehicle or other major purchase. By doing this beforehand you?ll save yourself lots of money! Not only that, you?ll be in a great position to negotiate your purchase with the seller. There are so many ways that you can shop for your financing these days. Here are some tips and information to assist you with finding out where you can start looking for your financing needs:

1) Using the internet is a great way to do research on your financing. The internet provides you with an array of financing options to choose from. You get to check on what company provides you with the best interest rate for your needs. You?ll even find financing options you didn?t even realize are available to you.

2) Your own bank. Go to your bank and apply for the financing you need. Get pre approved for your loan prior to making your purchase. What better place to secure your financing than your own bank! You?re banking with them so why not consider giving them the opportunity to help you with your major purchase. Just make sure the interest rate their charging you is a good one!

3) Consider credit union financing. Sometimes you?ll find lower interest rates for that major purchase you?re trying to make via a credit union. Credit unions are also competing for your business as well and have become major players in the financial world these days. This is good, because you have another outlet to secure your financing from.

4) Check your local newspaper, phone book Read more…

Buy Before You Sell. Too Risky Right? Wrong!

Myth 14: I can?t buy a ?new? house without first selling my ?old? one.

This is a common myth. That is the way it is supposed work?right? You can?t have a new house without getting rid of the ?old? one.

Not so.

Take for example, the story of one of our clients. They had a house (beautiful house, worth about $600,000) and had no intention of leaving.

However, one day this house in their neighborhood went on the market. You know the house. It is the one where every time you go by, you wish it was yours. Unfortunately, this house would never be for sale.

Out of the blue, the unbelievable happens: the house goes up for sale.

Now most would call this a stroke of luck, then it would dawn on them…

?We can?t have that house. Obviously, something unforeseen as happened, and they?ll want a quick sale. Waiting for us to sell our house first, won?t be acceptable to them. I guess we are out of luck.?

Luckily, this client called us to structure a safe way for him to get his dream home today, buy some time to get his ?old? house sold, make both homes affordable during the marketing period, and leave him the exact same long term financing on the ?new? home he otherwise would have had!

Now that?s a tall order! But we did it. And, so can you!

Here are 2 ways to buy a new house without selling your ?old? one first.

Pull the equity out of your existing house using a Home Equity Line of Credit or a 2nd mortgage. If you could snap your fingers and sell your home, this would be what you?d use the buy the ?new? home anyway. So just get it out now. Now, reserve enough of this money to make your ?old? house payment for 6-12 months. Your house will take this long to market and with the money set aside you won?t be tempted to take a low-ball offer. Use the remainder to as down payment and get your new first mortgage to complete the purchase. When the ?old? house sells, both mortgages are liquidated and you are left with one house and one mortgage?the exact same situation you?d have had you sold your ?old? home before you bought the ?new? one. But you accomplished it without the wait and the missed opportunity!

Another way to achieve the same result minus the ?old? house payment reserve is to use an 80% first mortgage and a 20% 2nd mortgage also called 100% financing, to buy the new house. You won?t have to put any money down and when your ?old? house sells, you use the proceeds to pay off the 2nd. The only difference is you don?t get any ?extra? money to use to offset two house payments during the marketing period. Many of you, have existing lines of credit or other sources, so this may not be necessary.

Both scenarios leave you with great permanent financing on the new house.

The 80/20 or 100% financing scenario costs a little more in discount points than a traditional structure, but it?s only to the costs and not the rate. Refer to our website to learn more about 100% financing in our free report called, ?Buy With Zero Down!?.

The biggest hurdles you?ll need to clear are 1) making two housing payments and 2) getting loan approval with two housing payments.

Here?s how you do both:

When you pull the money from your existing house, reserve enough to cover up to 12 months mortgage payments for the ?old? house while it is on the market. That way you don?t have to come out of pocket for the payment. Gee, that was easy! Hurdle 1 cleared!

Since most loans are approved through a computer these days, you?ll need a mortgage broker who knows Read more…

Today?s real estate market has had a new buyer in the last few years ? the young, single professional. Male or female, it seems as if those who used to live a somewhat transient, short-term renters? lifestyle until marriage, are now no longer waiting. With more people delaying marriage until their careers take off, single professionals are now changing from renters to buyers.

But many renters prefer to remain renters. Although buyers (and agents) will talk your ears off about the advantages of home ownership, renters enjoy the freedom their lifestyles provide. From limited maintenance to the record number of amenities present in new properties, many renters would rather not buy.

The majority of people, whether single or married, will at some point ask themselves, ?Am I ready to buy?? Buying a home is a manor step for anyone. Can there be a perfect time in one?s life to buy a home? Which is better: renting or buying? Each one has its pros and cons.

Renters

-Don?t gain any equity, but they also don?t lose it. It doesn?t matter if renters make improvements to their homes or if property values are appreciating, renters don?t gain any equity.

-Don?t have to put as much money up front. They usually only have to come up with first and last month?s rent and security deposit.

-There are no tax advantages ? they are enjoyed by the landlords.

-Have the assurance of fixed costs. The terms won?t fluctuate during the duration of the lease. The monthly costs remain the same.

-Cannot personalize their homes. This includes painting walls or hanging certain fixtures or d?cor.

-Are able to simply leave for another place upon expiration of their leases. They don?t face the hassle of trying to sale the home.

-Have much less invested in the maintenance of their homes, inside and out. In many properties, the renters enjoy the convenience of a full-time maintenance staff to handle appliance and other minor repairs.

Buyers

-Often gain equity. However, they can Read more…