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What Percentage of your Income you can afford for your Mortgage?

What Percentage of your Income you can afford for your Mortgage?

In the mortgage, there are few “rules” which state that what percentage of your income you can afford for your mortgage. There are few factors to consider in this scenario like what makes one rule better than the other one? How do you know what is right for you?. We will consider that what are the different options and how to measure up for you.

Step 1: Calculate your Housing Payments

There is one more thing which is more than principal and interest that is understanding a housing payment. Rather than mortgage you also have to pay homeowner’s insurance and real estate taxes.In the conventional loan, if you will don’t put down 20% then you also have to pay Private Mortgage Insurance. Even if you use FHA or USDA loans, you have to pay mortgage insurance. The total housing payment is all made up of these costs.

The second thing you should find out to know that what percentage of your income you can afford for your mortgage is your real estate taxes. Find out the area where you want to live and then look up the property taxes for the area. This will give you an idea of the monthly real estate taxes. You can also inquire from your insurance agent what the standard homeowner’s insurance rates are for the area.

Step 2: Find out the 28 percent of your gross monthly income.

Calculate the 28 percent of your gross monthly income, to figure out the percentage of your income you can afford for your mortgage. This gives you a preservationist amount to work with because you are using pretax dollars. Remember, you still have to pay for your health insurance, taxes, and retirement savings contributions. Taking 28% of the gross amount you bring home leaves enough for other debts and daily living.

For Example-

You earn $35000 per year. This equals $2,916 gross per monthly income. Of that $2,916, you can pay $816 towards your total mortgage payment. Figure in your homeowner’s insurance at $450 per year, so $37 per month. If the real estate taxes in the area you want to live equal $2,500 per year, this equals $208 per month and you have $571 left for principal, interest, and mortgage insurance. In case you did not need mortgage insurance, this means you could afford to borrow around $123,000 for a home. If you add the down payment you can afford to this amount, you have the total amount you can afford to pay for a home.

Step 3: Calculate your other debts

Find out the total of your other debts to know that what percentage of your income you can afford for your mortgage. Other debts like your students loans, car payment, and credit cards it is not related to your house. You have to pay these debts alongside your mortgage. Your total payments should be under 36% of your gross income. If it is more than 36% then it could take away from the amount you can afford on your home.

For Example-

You have your car payment of $200 per month. You also have minimum credit card payments totaling $100 per month. This means $300 per month in other debts. If you add $300 to the $816 (28% mortgage payment from above), you have a total of $1,116. With a $2,916 salary, this equals 38% of your gross income. This is too high. You have two choices to decrease an amount- you can take a smaller mortgage or pay off your credit card debt. If you were able to pay your credit cards off, it would decrease your monthly debts by $100. Now you only have to worry about your car payment and potential mortgage. If you use the $816 payment, you have a total of 35%. Your total debt-to-income ratio can’t exceed 35%, so you either need to pay off existing debts first or borrow less money to buy a home.

Step 4-Closing Costs and Fees

In addition to your down payment, you will also want to account for closing costs and broker fees. You have the option of paying up to 5 percent of the mortgage loan amount in closing costs. Therefore, on a loan of $123,000 that would be $6,150. Remember that your down payment and closing costs are not the only funds you will need. You will also be responsible for prepaid expenses, such as the mortgage interest charged on your loan after closing.

Final Thoughts

There are many lenders in California. However, 3CALoan can help you find a mortgage loan fitting your personal and housing needs. Our competitive rates, efficient services, and talented team can help to find the percentage of your Income you can afford for your Mortgage. We help our customers every step of the way. We prioritize informing and educating our clients about the home buying process. Our client’s happiness and confidence upon closing a deal reflect our excellent quality services. To find out more information about mortgage and how we can help, contact us at (818) 322-5626.

Stated Income Loan Program

Stated Income Loan Program: 3CALoan

In stated income loan program, the lender does not check the borrower’s income by looking at their income tax returns, W-2 forms, pay slip, or other records. The borrower states his or her income. Consequently, the lender trusts this information. It is also known as no doc loans.

 Guidelines of Stated Income Loan Program

Property Type in Stated loan program:

  • Single-family residences
  • Condos
  • PUDs
  • Townhomes
  • 2-4 units.

Restricted Property in Stated loan program:

  • No multi-family (5+ units)
  • Commercial or mixed-use properties.

Loan Purpose:

Occupancy

  • Primary residence only.
  • No second homes or investment properties allowed.

Credit

  • Minimum middle credit score of 700.
  • Within the last two years, there should be no late mortgage payment, lien, collection account and judgment.
  • If you have any notice on your credit report then you will not be eligible for the stated income loan program, no matter how old the notice. Reports like a short sale, bankruptcy, or foreclosure
  • Can close in the name of an LLC or Corp.
  • Conditional Loan Approvals issued within 24 hours

Requirements of Income, Assets, and Reserve:

  • Debt-to-income ratios cannot exceed 40%.
  • As a condition of funding the loan, the borrower must deposit liquid reserves to the lenders FDIC-insured bank account for a period of 6 months. The lender allows the borrower to withdraw this amount after six months.
  • Income is not verified under this loan type. It is only stated on the stated income loan program, which is also known as no doc loans. The income stated must be reasonable in relation to the position of employment as determined by the underwriter.
  • Gift funds are permitted for the remainder of the down payment and the reserve requirements. Consequently, any gift funds must come from an immediate family member, such as mother, father, sister, brother. It must be accompanied by a gift letter and bank account statements sourcing the funds. In addition, you must contribute at least 5% of the purchase price from your own funds.
  • Large deposits must be sourced with supporting documentation. Verification of seasoned liquid assets equal to the down payment. Reserve requirements must be documented by all your pages of last 3 months bank statements.

Employment Verification in Stated loan program:

  • CPA letter, business license, or tax preparer letter for self-employed borrowers with no reference to income.
  • Verbal verification of employment for salaried borrowers required within 10 days of funding with no reference to income.

Stated income refinance

Refinancing gives a homeowner the opportunity to replace an existing mortgage loan for a new one. In addition to less paperwork required, refinancing closes more quickly than a mortgage loan purchase. Through this option, the homeowner can reduce her monthly mortgage payment.

Final thoughts

If you have a higher credit score and more money on the side for a down payment then can apply for stated income loan program or no doc loans. For refinancing you can use stated income refinance. If you still have any question about this program, you can contact us at 818-322-5626 or (818) 3CA-Loan today.

Private money vs Hard money

Major differences between Private money vs Hard money Loans

There’s more to Private money vs Hard money loans than simply the prospect of buying a home with bad credit. It’s a good idea to understand how these two types of mortgage lending differ. This is especially the case when you compare them to more traditional lending options like bank loans. These loans are perfect for people with bad credit scores interested in getting a home loan to take advantage of a fix and flip or other real estate investment opportunities. Private money and hard money lenders don’t care too much about your credit score. They’re more interested in whether or not you have sufficient capital to make a down payment. Lenders generally require a down payment of 25-35% of the purchase price of the property.

Hard money loans

Private investors or companies issue hard money loans. This type of financing is a specific type of asset-based loan. Furthermore, these lenders make it their business to determine whether or not you’re a good candidate for the services they offer.

Private money loans

Private money lenders for real estate investing are non-institutional individuals or a company that gives loans to borrowers. These lenders are just what their name suggests private. They could be a business associate, family member, friend, or maybe just a professional referral.

Similarities 

  • Hard money mortgage lenders and private money lenders for real estate investing are dependent on the value of the real estate pledged as collateral so they are asset-based loans.
  • They both form the bulk of traditional lending sources.
  • The real estate collateral backs the loans more than the financial credentials of the person borrowing.

Differences in Private money vs Hard money loans

  • The differences between hard money lenders and private money lenders for real estate investing lie in how these lenders organize the structures of the loans and the way the loans work.
  • While private money lenders consist of private lenders, hard money lenders form organized businesses and bond in some way.
  • Advertising doesn’t necessarily work for private money lenders. Hard money lenders, however, advertise their services. It also makes sense too. They have to promote what they do. Thus, hard money lenders are easier to find than private money lenders. It makes for good business to market what they are offering to the masses. This way, they also don’t need any negotiation skills to secure a loan.
  • Unlike private money lenders, hard money lenders have an interest rate, an appropriate duration, and points which are made known to the client before the loan is granted. This is the most important part of a loan when a person is selecting hard money lenders to suit their purposes. Interest rates, loan duration, lending limits, are all open to discussion.

Final Thoughts

Possibly, from the distinctions above, you will find the best way to get what you want out of your loan. If you still have any doubt about Private money vs Hard money loans, feel free to contact us at (818) 322-5626 or (818) 3CA-Loan today! We will run you through the details of loans and hold your hand throughout the process.

Stated Income Loan Lenders

Stated Income Loan Lenders: 3CALoan

Stated income mortgage loans are synonymous to no doc loans. Under stated income mortgage loans, stated income loan lenders requests you to state your income and accepts this information at face value. In order to get a no doc loan, you need quite a bit of equity in your home, or you need to make a big down payment.

Getting loans from Stated Income Loan Lenders

Stated income mortgage loans are optimal for you if you need to get a loan immediately and are experiencing delays in paperwork. For instance, if you are changing your job and receive delays in processing your paperwork, stated income mortgage loans allow you to get the approval for the mortgage you need. Also, say that you are self-employed. In this instance, your income might be higher in some months while lower in other months. Instead of going through a long drawn out process of getting the correct paperwork available for stated income loan lenders, you can simply state your average income amount and move further with your loan application.

Requirements for No Doc loans

  • Documentation
    • A stated income loan lenders don’t check your income by looking at your income tax returns, W-2 forms, pay slip, or other records. Also, you don’t have to show your income, asset, or credit score information. Ultimately, you don’t have to worry about too much paperwork. Afterall, you don’t have to provide income verification documentation. You do however have to pay a high-interest rate in stated income mortgage loans. This way, stated income loan lenders make up for the risk by charging you more. In addition, you may also have to pay higher fees.  
  • Personal
    • Although lenders permit prior foreclosure or bankruptcy, they consider any recent repossessions on a case-by-case basis. Before you get stated income mortgage loans, you’ll have to make sure that no one has taken any legal action taken against you in the past five years. Also, you’ll want to make sure that you don’t have any pending debt over $5,000.

Types of property: No Doc loans

The following are the different types of properties that fall under the no doc loan program: townhouses, condos, single-family residences, PUDs, and Duplex properties. In order to qualify for no doc loan, the property must be less than ten acres and in a good condition. Condo projects must be warrantable and adhere to standard condo project eligibility requirements too.

Refinancing through Stated Income Loan Lenders

In order to qualify for a refinance, you must own your property for more than six months. Also, there is no option available for a cash-out refinance under stated income mortgage loans. For a no doc loan cash out transaction, the LTV is based on the appraised value. This applies to you if you’ve owned the property for less than a year at the time of closing.

Final Thoughts

For purchasing a house or refinancing a house you can use stated income mortgage loans. These loans are perfect for you if you aren’t interested in showing your assets or income. You will get this loan very easily If you have all positive attributes. If you have questions about this program, you can contact us at 818-322-5626. It is possible to get stated income mortgage loans today. Take the time to contact us right now!

Manufactured Home Lenders in California

Manufactured Home Lenders in California: the 3CALoan Advantage

Manufactured home lenders in California provide manufactured loans that are considered to be lower in cost than site-built home loans. Nevertheless, manufactured homes are still a huge investment. Manufactured home lenders in California make financing for a manufactured home loan much more attainable. As compare to site-built homes there are many advantages of buying a manufactured home. You can get a home with all the amenities you need and which is just as safe and energy efficient for a lower price. You can even choose from a range of mobile home financing options when you will find the one you need. So, for these reasons buying a manufactured home is a good choice.

Types of Mortgage Loans Available

There are two types of loans which can help you to finance manufactured homes. The loans available are based on whether you are buying a previously occupied home or a brand new manufactured home.

FHA Loan

The Federal Housing Administration insures FHA loans for manufactured homes. FHA loan lenders are usually more flexible in determining who qualifies for the loan. Thus, this loan is optimal for first-time home buyers in that it offers attractive interest rates. Manufactured home lenders in California require borrowers to make a down payment of 3.50% and have a minimum credit score of 580. Furthermore, they require borrowers to pay for a mortgage insurance too. Overall, FHA loans offer protection for the lender if the borrower defaults on their mortgage payments. FHA facilitated loans often have attractive interest rates.

If the borrower is struggling to make a down payment, he or she can use a family co-signer to make the initial down payment. There are grants available to help people make their down payment too. Like other home loans, FHA facilitated loans allow sellers, builders, and other lenders to help pay some of the closing costs. The loans don’t come directly from the FHA they are a mortgage insurance provider, but they have a list of FHA approved lenders who will assist borrowers approved by the FHA.

Conventional & Chattel Loans

A conventional loan is a lien on the home. For manufactured home buyers, some conventional loans can be difficult to obtain. It matters whether the loan that they intend to use is really for the land or the home.

Chattel loans, on the other hand, refer to a legal term regarding personal property rather than a real property. Hence, a manufactured home in this instance is a personal property. A site built home would fall under a category of a type of real property.

How to Define a Manufactured Home

Manufactured homes are factory-built homes based upon permanent metal chassis. These homes are sent from the factory where they are built to a building site of your choosing. They can deliver the home in one piece or in multiple pieces which they will join together on site. These homes are movable after installation. According to the government, mobile homes or trailers are not same as manufactured homes. In order to qualify for a manufactured home, the property in question must be at least 320 square feet. Meeting these requirements makes the home compliant with the Housing and Urban Development relevant codes.

Advantages of Manufactured Home Ownership

  • Affordability: Manufactured homes are less expensive than site-built homes. It is not because they are somehow inferior in quality. Rather, they are priced lower since it costs less to build them. Professional tradesmen in controlled environments build manufactured homes and purchase the relevant material to build them in large volumes. Furthermore, they are protected from theft and weather damage. Because there is no interference of weather with the construction schedule, manufactured homes are built in one-fifth the time it takes to build a site built home. All of these factors help to get the selling price lower. Therefore, buying a manufactured home becomes affordable.
  • Safe and Energy Efficient: In 1976, Housing and Urban Development set standards which guide the design, construction, and performance of the manufactured homes. Manufactured homes are built in a controlled environment which contributes to the high quality of manufactured homes. Strict standards indicate that today’s manufactured homes are both energy efficient and safe. Additionally, the federal law requires manufactured homes to have features such as smoke detectors and escape windows among other things. Finally, appraisers regularly inspect manufactured homes.
  • Amenities: Manufactured homes vary in size and price. Thus, with a lower purchase price, you may also assume that you will get less amenities in your manufactured home compared to the amenities you can get in a site-built house. However, you should know there are a variety of lifestyle choices and floor plans available to suit your needs. In manufactured homes, you can choose your siding material. You can even build upgrades like awnings, decks, and patios. You have the ability to make modifications in your manufactured homes to create your dream home.

Disadvantages of Manufactured Home Ownership

The following are some of borrowers’ main concerns:

  • Depreciation value of the homes
  • High interest rates
  • Credit score requirements

Final Thoughts

There are many manufactured home lenders in California. However, 3CALoan can help you find a mortgage loan fitting your personal and housing needs. We have developed comprehensive manufactured home loans that require the customer to have a minimum FICO credit score of only 580 and make a down payment of 3.50%. Furthermore, our down payment assistance program can provide assistance to new home buyers with mortgage costs. Our competitive rates, efficient services, and talented team can help ease the process of purchasing a manufactured home. We help our customers every step of the way. We prioritize informing and educating our clients about the home buying process. Our client’s happiness and confidence upon closing a deal reflects our excellent quality services. To find out more information about manufactured home loans and how we can help, contact us at (818) 322-5626.

The Mortgage Lending Process with CALoan

 The Step-by-Step Mortgage Lending Process with CALoan

In this blog post, I will be delineating the step-by-step mortgage lending process. The first steps are to see if you meet pre-approval of course. The next would be to get pre-qualified. In this step, you’d look for an underwriter or a brokerage. When you apply for a mortgage loan, usually you deal with an underwriter. Continue reading “The Mortgage Lending Process with CALoan”

Employment History on a Loan Officer Submission Checklist

 How do jobs impact a loan officer submission checklist?

When it comes to a loan officer submission checklist, there are several factors that are important. They need to see your pay stubs for the past two years, W-2 Forms for the past two years, bank statements for the last few months, and several other documents depending on who you are and what you do. As you can tell, the lender will check how you’ve done when it comes to finances for a set amount of time. An important ingredient in getting a mortgage is consistency. In other words, the lender needs to know that you are a stable person who won’t default on the mortgage. Continue reading “Employment History on a Loan Officer Submission Checklist”