Loan to value guidelines: 3CALoan

Everyone loves to buy a new home. While buying a home it’s easy to think about the fun aspects but the most important thing is obtaining a mortgage. From this loan to value guidelines blog, your all doubts will be clear.

How a loan-to-value ratio affects your mortgage payment

In order to obtain a mortgage, the lending process requires a comprehensive review of your finances in order to determine your loan eligibility. The loan-to-value ratio is one the factor that you should be aware of early on in the mortgage process. It has an important role in determining your monthly mortgage payment.

LOAN-TO-VALUE RATIO

The ratio of a loan to the value of an asset purchased is a financial term expressed by lenders and it is known as loan to value ratio. Banks and building societies usually use this term to represent the ratio of first mortgage line as a percentage of the total appraised value of real property. By dividing your loan balance by your home’s appraised value you can calculate your Loan-to-value ratio. The mortgage rate you are able to obtain will depend on your LTV ratio.

If you have a lower LTV that means you have more equity in your home then possibly you will qualify for a lower mortgage rate because you will be considered to be less risky. If you have a higher LTV then you will likely notice your mortgage rate is on the higher end. Since you’re considered more of a risk due to having less equity in your home.

Significance of Equity in your home

As we discussed above, the amount of LTV has a big impact on how low or high your mortgage rate will be and how much your mortgage lender will take a risk on you. The more equity you have in a home means you’re less likely to default on your mortgage and the less equity you have in a home means you’re more likely to default on your mortgage.

Understanding the impact of your down payment

The main factor to determine your ability to obtain a mortgage is LTV ratio. So, if you know less about mortgage loans then be sure you understand the impact of your down payment. Sometimes, people who qualify for a loan can put down as little as 3.5% of the price of a home.

While it may sound good that the smaller the down payment you’re able to put forward, the higher your LTV ratio will be. This may mean you’ll end up with a higher mortgage rate, or in some cases, the inability to qualify for a mortgage. You should also know that in addition to a higher mortgage interest rate. You’ll also likely be required to pay mortgage insurance to mitigate the risk you pose to your lender. You can also opt for VA loan if you don’t want to pay mortgage insurance. Because this loan doesn’t require mortgage insurance, even if you put low down payment.

How to Lower your LOAN-TO-VALUE RATIO

If you have a higher LTV then you don’t need to go for all the additional costs that come along with it. You just need to follow some ways to decrease your Loan-to-value ratio:

• Save up for a Bigger Down Payment.
• Home Appraisal Value
• Paying More Principal

Final Thoughts

We help our customers every step of the way. We prioritize informing and educating our clients about the Loan to value guidelines. Our client’s happiness and confidence upon closing a deal reflect our excellent quality services. To find out more information about manufactured home loans and how we can help, contact us at (818) 322-5626.

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When is it Not a Good Idea to Refinance Your Mortgage? : 3CALoan

Refinance your mortgage is very tempting during rates fall. Home mortgage refinancing can sound quite attractive to homeowners, but it is not always a good idea. We will discuss all the situations when you should not consider refinancing.

Closing Costs are too High

It is necessary to pay a closing cost to the bank because they don’t write loans for free. Whether you pay them in a form of closing cost or you have a ’no closing cost loan,’ you pay them at the higher interest rate. Just because you pay closing costs isn’t a reason to consider refinancing. What is, though, is when the costs are so high that your break-even point is many years down the road. While there isn’t a specific number everyone aims for, typically a break-even point longer than 5 years is too much. You can figure out your break-even period by figuring out your monthly savings with the new loan. Let’s say you’ll save $200 per month by refinancing. You then divide the total closing costs by your monthly savings. Let’s say your closing costs are $4,000. Your break-even period would be 27 months. After 27 months, you would start realizing the savings from the new loan.

The Term Would Extend

When you refinance your mortgage, you often extend the amount of time you’ll repay your loan. For example, if you get a new 30-year loan, payments are calculated to last for the next 30 years. If your old loan only had 10 or 20 years left to go, home mortgage refinancing will result in higher lifetime interest payments. When you get a new loan, most of your payments go towards interest in the early years, and you’ll start from scratch. Plug the numbers into a “loan amortization calculator” to see how your total interest costs will change. If you want the new loan because you can lower your interest rate, that’s one thing, but consider trying to get a lower term. In this case, even a 25-year term would be good.

You Can’t Afford Your Debts

In some states, home loans have special protection from creditors. In the event of foreclosure, they may not be able to sue you if they lose money on the deal. However, home mortgage refinancing changes the nature of your loan: It’s no longer the original loan you used to purchase your home, so you may lose some protection. 

Final Thoughts

Refinancing can be a good thing. It can save you money, lower your interest rate, or lower your term. But, you have to do it right. Think about the big picture. Are you actually saving after you pay your closing costs? Are the savings great enough? If you are trying to get yourself out of debt, but are unsure if you can leave your credit cards alone? These are the questions you must ask yourself to determine if you should leave your mortgage loan or take advantage of the lower rates/terms that are available.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.

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Stated Mortgage Loan: 3CALoan

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

Things to know about Stated Mortgage Loan

Stated mortgage loans went away for quite a while the industry recovered. Earlier they were known as Alternative Documentation loan. Here are some things you need to know about this loan type before you opt any loan program.

Stated Mortgage loan has a Different Meaning

A stated Mortgage loan is completely different from it was in the past. Years ago, in the stated mortgage loan, you were able to take a loan just by stating your income. You didn’t require to prove your income by providing any paystubs, W-2s or tax returns. Simply, If you had a good enough credit score then the lender would pick up the income that you had stated on your loan application. But today, you still need a good credit score in order to qualify for the program. You still have to verify your income, but in a different way by providing bank statement rather than paystubs, W-2s and tax returns. No matter what loan program you use, lenders must use the bottom line income you claim on your tax returns. If you claim fewer expenses, your bottom line income can be high to qualify. The lender can verify receipt of your income through your bank statement on a regular basis. The lender can average your income with few years of statements, and use it for qualifying purposes without your expenses.

A Large Down Payment is Necessary

In the process of down payment, every bank has different requirements. Most of the lenders require a 30 percent of the sales price as down payment. To reduce the level of risk, lenders require the larger down payment that stated mortgage loans pose. These loans pose a larger risk to the lender, even with the alternative verification of your income. Sometimes, lenders require several months of assets with the large down payment in order to have a backup should your commission or self-employment income decrease. Every bank differs in the amount of reserves they require, but 6 to 12 months is the general consensus with most lenders. You can also use your bank statements which you provide for income verification to verify for the down payment and reserve money. In order to ensure that the money is yours, lenders want to see 12 months of your bank statements. The bank will check every deposit made in the last twelve months in your account to ensure that it is related to your income and is not money from an outside source to make your account better to qualify.

You Need a High Credit Score

Lenders want to see the borrowers with a good bank statement because stated mortgage loans are little risky. For a good bank statement, you have to make your payments on time, you don’t have judgments or collections and are not over-extended on your available credit. Every lender requires a different credit score. Some lenders want credit score one over 700 but some lenders are satisfied with a 680 credit score. If you want to apply for a stated mortgage loan, you should start working on your credit from the 2 years before you apply for a loan. You should pay attention to the utilization of your credit and also to the credit history of your bank account. In two years of preceding the loan application, your all payments should be on time. If you have a late payment, make sure that you get current as soon as possible because Lenders like to see your utilization rate no higher than 20 percent.

Lenders will Verify your Employment

Lenders will still verify your employment in the stated mortgage loan. This is another level of protection, to help the lender to determine you are employed. The type of verification will set according to the type of work you do:

Self-employed borrowers

For self-employed borrowers, the lender will require verification from a third party such as your CPA. As you work for yourself, a letter on your CPA’s letterhead stating the business you had started from which date and verifying that you currently operate the business is enough.

Commission based borrowers

If you receive commission rather than a salary for the work you do for someone else, a standard Verification of Employment suffices. Most lenders will satisfy over the phone verification with the employer or they accept a written VOE form. Sometimes, a lender may allow you to provide your business license as proof of your employment.

Final Thoughts

Stated mortgage loans are still available and can offer a large number of people that are self-employed a mortgage once again. When you shop around for lenders that offer this program, make sure to ask about their requirements. This way you know that you are able to meet them before you settle for a lender. This way you know all of your options and can secure the mortgage you need. 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 or (818) 3CA-Loan today. It is possible to get stated mortgage loans today. Take the time to contact us right now!

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What’s the right borrowing option for you?

There are many money borrowing options out there. It can be confusing for you to choose the best loan type, but it doesn’t have to be. You can do research on the money loans to know the ins and outs of them. You should learn few things about hard money loans or you can contact any hard money lenders in California before you opt them so you can avoid pitfalls and sticky situations.

It’s a Good option

Many people prefer to take hard money loans. Its an ideal option for them. For example, If you want to buy a home which you found at the exact perfect price you need. Maybe you want to buy a new home which is in your price range now that you have a new job, but you don’t want to wait for the bank’s decision. If your home went into foreclosure after losing your job then, in that case, it is difficult to convince a bank to lend you money for anything and they are going to be very hesitant to sign onto anything with you. In all these situations you can take hard money loan, it may be just the thing you need. Then you will have the money and you can choose any loan which you think that will be perfect for you.

It’s Quick

Most people opt hard money loan for this reason because the process of this loan is very fast. In a hard money loan, the hard money lenders in California can lend you the loan in just 4 days. After the final documents have been signed, received, and finalized, the money will be available to you quite quickly. Hard money loan will be best for you if you need the money to purchase your dream home or for a quick sale of an investment property that’s going hot on the market. The entire process can happen much more quickly than a traditional lending and mortgaging process. Bank or other traditional lending company might refuse to give you the time of day. This is not the case with hard money lenders, you can build up your home if you go with a hard money loan.

It’s a short-term loan

A hard money loan is a short-term loan that’s secured by real estate and hard money lenders in California is essentially just a private investor. Hard money lenders in California could be an individual, a group of investors, or even a mortgage broker who uses his own funds or maybe it is a bank using money from its depositors. Hard money loan is only meant for a short period of time.

It’s Less Hassle

Many people opt this loan due to this reason because it is easier to get a loan and can thus be acquired more quickly. Hard money loans tend to be less of a hassle than other mortgage methods. However, this accessibility comes with some drawbacks. In hard money loan, you don’t have a lifetime or several decades to pay it back like other loans. The interest rates are also high than other mortgages.

Final Thought

Hard money lenders in California provide hard money loans that are considered to be quicker and short-term than other home loans. Going with a hard money lender instead can be a good way to avoid traditional financing options. For the down payments and interest rates, hard money loans are completely different from other loans. People like real estate developers, house flippers, builders, and contractors are commonly found opting for this type of loan. Our goal is to provide opportunities for people to meet their financial goals through alternative financing options. We can help and guide you through the process. 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.

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What Percentage of your Income can you 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 student’s 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.

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Stated Income Loan Program: 3CALoan

In the 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:

• Cash-out refinance
• Rate & term refinance
• Purchase

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.

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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.

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Stated Income Loan Lenders: 3CALoan

Stated income mortgage loans are synonymous with 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!

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