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Real Estate Agents: How the government shut down will affect your business

With: John Meussner, Loan Officer & Mortgage Coach @ Mason-McDuffie Mortgage

So it’s been a day and the government is still shut down.  What exactly does that mean?  I’ll spare the humor and all the things I’d like to say – basically it means that some services are available, and others aren’t.

     While many vital services are still in action and exempt from shutdown, many others have been frozen, and could inadvertently have a pretty poor effect on the housing market, especially if this shutdown lasts for more than a couple days.

Please note: Not all lenders will have the same processes during a shutdown, just like in 2013. Your experience may vary. For example we are good to proceed on USDA Loans as-is during the shutdown.

USDA loans – the USDA loan program is frozen.  Since files are approved by USDA offices directly, there will be no more guarantees or housing loans issued by the USDA offices until the shutdown is over.  This could have a pretty terrible effect for those who live in rural areas or need 100% financing.

VA loans – VA loans should be in full swing, as the program is run based mostly on fees.  Where there might be an issue is when someone needs a VA certificate.  When the government shut down in the 90’s, there was a delay in obtaining certificates, and this will likely be the case again.  New applications will be taken, and files will be underwritten and funded, though.

FHA loans – FHA loans aren’t expected to feel a real impact from the government shutdown so long as the shutdown doesn’t last for a long period of time.  HUD is running at a significantly reduced staff, though, so getting information and paperwork to & from HUD could take a lot longer than usual.  The good news is, loans will still be insured & they will still have staff delegated to underwriting.

Conventional loans – while many are stating the shutdown is ‘no big deal’ for conventional financing, this is simply not the case.  Yes, conventional loans will be applied for, underwritten, approved, and funded.  BUT, over the past few years, as we all know, lenders have taken extra steps to fight fraud, and 2 of these steps are social security verifications and IRS 4506-t transcripts.  These services will be unavailable, and therefore loan files may be put on hold until the shutdown is over.

     Some borrowers will be in more trouble than others – for self-employed borrowers, they may be at the mercy of the shutdown as a work around for 4506 transcripts isn’t currently available.  Also, for any government employees that are in the midst of the loan process it will be extremely difficult to get any verifications of employment done.

   I’d strongly recommend being proactive in making sure none of your clients are surprised by any potential delays – sellers should understand that the shutdown can cause delays at no fault of buyers.  Anyone buying or refinancing should be aware of what type of loan they are getting, and if the potential is there for delays, they should plan accordingly.

     Hopefully in a day or 2 this blog post won’t matter & things will be running smoothly once again between our elected officials, but as a preemptive stragegy, it would be a good idea to know this information.  And for an added benefit you’ll already know what to be ready for if this happens in the future.

–  John Meussner

Phone
(949) 247-7530
Email
jmeussner@masonmac.com

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203(h) – the FHA Disaster Relief Mortgage

FHA Disaster Relief Mortgage (203h)

Hurricanes, more hurricanes, and wildfires.  Unfortunately, 2017 has given us a few events that have led to Presidentially declared disaster areas.  All of these events have unfortunately resulted in loss of life, and loss of property.  In events designated as federal disaster areas, HUD has a little-known program to help those who have lost their primary residence due to disaster – the FHA 203(h) mortgage loan.  This mortgage program is intended to offer those effected by a disaster an opportunity to purchase a new primary residence with $0 down payment required.

FHA disaster relief mortgage
Mason Mac has a product to help those effected by disasters buy a new home with $0 down

Who Can Benefit?

Renters AND home owners who lost their primary residence due to disaster can apply and obtain financing for a new primary residence with $0 down.  Evidence must be provided that the destroyed property is damaged to the point where reconstruction is required, and that it was used as a primary residence.

Those home owners who lost their home and are opting to rebuild can also use the FHA 203(h) mortgage to purchase a residence to live in as their primary residence while they go through what can be a long process of insurance claims, permitting, planning, and reconstruction of their prior residence.

There is no geographic restriction on the FHA 203(h) loan, so for those effected, a new property may be purchased anywhere.  After a disaster, many people opt to move elsewhere to avoid the likelihood of future disasters (for example, moving away from fire prone areas or coastal areas prone to hurricanes).  In these cases, a new home may be purchased anywhere with $0 down if the former primary residence was destroyed.

 

The Details

The process of obtaining an FHA 203(h) mortgage is largely the same as obtaining a standard FHA loan.  Credit guidelines are more lenient for 203(h) users when credit issues can be shown to have been caused by disaster, and the only additional paperwork is evidence that the former primary residence has been destroyed in a federally declared disaster area (when disaster strikes, these areas are listed at FEMA.gov).

Buyers opting to use 203(h) mortgage financing have up until 1 year from the time the disaster event was declared to begin the processing on their 203(h) loan.

The new property purchased can be a single family primary residence OR FHA-approved condo with loan amounts up to the local county limits and $0 down.

If the property effected by disaster had a mortgage on it, that mortgage does not need to be counted against the borrower when qualifying for their new loan if the buyer shows they’re working with that mortgage servicer to resolve the mortgage and insurance funds obtained from a claim on that property are applied toward the previous mortgage.

 

Where to get a 203(h) mortgage?

We’d strongly recommend working with your Mason Mac Loan Officer to get your 203(h) mortgage because a) we’re just a little biased, and more importantly b) our loan officers are all well trained and educated on the program and know how to navigate it from start to finish.

Not every lender offers the 203(h) mortgage loan product, so it’s important to find a lender that not only does the product, but a loan officer that is well versed in the product so they can guide you through an already difficult time with ease.

 

 

If you, friends, or loved ones have been effected by disaster and would like more information on the FHA 203(h) mortgage program, please give us a call or email your Mason Mac loan officer.  We’re here to help and happy to answer any questions you have.

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Mason Mac Supports Veterans in LA County

Mortgage Lender in Southern CA

This past weekend, Wendy Walker, branch manager of Mason Mac’s Newport Beach/Balboa Island branch and her team represented Mason Mac at the Los Angeles VAREP Veterans Housing summit.  VAREP is the Veterans Association of Real Estate Professionals, a HUD-approved non-profit dedicated to increasing sustainable home ownership, financial literacy, VA loan awareness, and economic opportunity for the active-military and veteran communities.

The LA Veterans Housing Summit event focused on education for veterans with a specific focus on the VA loan program and the home buying process.  Included in the summit was

Veterans Mortgage Loans
Mason Mac is here to serve our veterans and guide them through the VA loan process

information on the importance of good credit, available down payment assistance products, and a summary of the local housing market.

Mason Mac proudly offers the VA loan program throughout the greater LA area (and in all of the markets we serve), with a 2017 VA loan limit up to $636,150 (loan limit varies based on county/area) – Veterans may borrow more than the available market loan limit, however the loan limit caps the amount of money that can be borrower with no down payment for most veterans.

At the VAREP Veterans Housing Summit, Wendy’s team spoke with veterans from all branches of the military, and they were the only non-bank lender in attendance.  Being a non-bank lender, Mason Mac specializes in VA loans with no overlays – that means VA guidelines are our guidelines, and our VA loans are underwritten by our in-house staff of underwriters.

Also on site at the VAREP Summit were local real estate agents focused on helping veterans view inventory of homes in the area that were for sale and of interest to the attending veterans.

The VA loan product is one of the most beneficial loan products available in today’s mortgage market.  For many veterans, here is no down payment requirement, and no monthly mortgage insurance.  Perhaps best of all, rates on VA loans are some of the most competitive across the entire spectrum of mortgage products.  Low rates, no monthly PMI, and a streamlined process make the VA loan a premium product for eligible veterans and their families.

 

Mason Mac offers the VA loan product in every state in which we’re licensed, and the Mason Mac team consists of many VA loan experts that know the product inside and out.  Like Wendy and her team at the LA Veterans Housing Summit, your Mason Mac loan officers are there to educate you and guide you through the process of exploring loan programs, finding the best one for you, and using it to get into your dream home – and if you’re a veteran, the whole process can be very easy and not involve a lot of money.

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Buying a Home in a Hurricane

When Disaster Strikes, Know Your Options

 

Unfortunately, Hurricane Harvey has given us a reason to bring up a tough topic.  Disasters are a sad reality of life, and the potential for them is everywhere, whether it be the result of a hurricane, earthquake, tornado, flood, volcano, or something man made.  When disaster strikes, one of the most important things to consider once in a place of safety is what to do for shelter? For those buying a home, is the home under contract still there and in livable condition?  For those with a home destroyed by disaster, where to go?

 

The 203(h) loan can help you rebuild after disaster strikes

First, a note on perspective.  When disaster strikes, people are losing their homes, and sometimes, their lives.  Your lender absolutely, positively knows how important your real estate transaction is, but when something as devastating as a natural disaster takes place, you need to expect delays, as appraisal re-inspections are often required (always in Presidential declared disaster areas), and sometimes needed repairs must be made before you can close on your new home.  While delays and hold ups aren’t ideal, you’re a lucky one if that’s the only problem to come out of a disaster while you’re buying a home.

 

The Disaster Relief Mortgage

 

For those unfortunate ones who have been displaced and had their homes destroyed by a natural disaster, there’s the FHA 203(h) mortgage.  The FHA 203(h) mortgage loan allows those with homes located in an area designated by the President as a disaster area that were destroyed or damaged to finance the purchase or reconstruction of a primary residence.

The biggest perk of the 203(h) program is that it allows a homeowner or renter who lost their home to buy a new one with 0% down payment.  The program also allows up to 6% sellers assistance (closing cost help), so there is no savings or reserve requirement to obtain a loan for a new home.

The 203(h) can be used to borrow up to the local HUD loan limit for FHA loans, and with restrictions, any mortgage obligation on a previously occupied home in the disaster area can be excluded from qualifying, so the 203(h) can be a way for someone affected by disaster to get a truly fresh start.

 

Not every Loan Officer is well versed in the 203(h) loan, and not every lender offers it, but if you have any questions on the program, you can reach out to your Mason Mac loan officer or give us a call and we’ll be happy to answer any and all questions about  the program.

 

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Using a Job Offer to Get a Mortgage

Making a job change is usually an exciting, and somewhat nerve wracking occasion.  The anticipation of a learning curve and training, the annoyance of a change in schedule or winding down work already started.  Add on top of all that a relocation or a move to the mix, and that opportunity starts to look like an awful lot of anxiety.

 

If a home purchase is involved with a job change, it’s important to know what your options are for a relocation mortgage or getting a loan for a job you haven’t started yet.

Mortgages for relocating professionals, teachers, and others with firm job offers
Mason Mac Offers Job Offer Letter Mortgage Loans

The Paystub Myth

Lots of people think they need to have a pay stub in order to get approved for a mortgage.  Why do they think this?  Because a lot of lenders even believe this is true.  And it is partially true.  For delivery of a loan to Fannie Mae (think most conventional loans), a pay stub is required.  But that doesn’t mean a lender can’t close and fund a loan, and deliver it later.  It comes down to a lender’s risk appetite.

Freddie Mac, the other outlet for conventional loans, doesn’t even require a pay stub at all.  Neither does HUD (neither FHA nor USDA loan require a pay stub prior to closing).

Bottom line, if buying a home before you start your new job would make your life easier, you’ve got plenty of options to do just that.

 

The Job Offer Letter Mortgage

With a job offer letter mortgage, you can qualify to buy a home with a non-contingent offer letter from a future employer.  Obviously, the offer has to be accepted before we can move forward with funding a loan.  And what about the phrase “non-contingent”?  Well, that means there can’t be unreasonable barriers to the offer being carried out.  For example, a recent law school grad cannot use a job offer letter that’s contingent on passing the Bar exam.

A job offer letter must clearly outline employment terms – namely salary and start date.  If that info is present and the income isn’t variable or commission-based, a lender can approve and fund a loan with nothing more than the offer letter for income documentation.

 

What types of loans are eligible?

Conventional loans (as little as 3% down) are able to be approved with a job offer letter (per the above – it must be a Freddie Mac loan, and must be on a primary residence).  FHA loans (as little as 3.5% down, and able to use HUD-approved down payment assistance program) can be approved with a job offer letter, too!  For our Veterans, VA will also accept a fully executed, non-contingent job offer letter as evidence of income to qualify.

As you can see, there are many options for someone wanting to buy a home before the start date of a new job.

 

Who Is a Job Offer Letter Mortgage Good For?

Anyone with a firm job offer letter that outlines a start date and base salary can use their letter to get a mortgage closed and funded before their start date.  Generally, the loan must close within 60 days of the employment start date, and lenders may require a borrower to have adequate funds to cover house expenses before the new salary will begin.

The program is especially beneficial for relocating professionals that want to buy and settle into a new area before their new position begins.  It is also a big hit with teachers and others in academia who often don’t see income until the start of a school year.  Any type of seasonal work can benefit tremendously from using a job offer letter mortgage.

 

Important to Remember

 

Not all lenders are created equal – many lenders will have the “we need a pay stub” overlay, but at Mason Mac, we can work with your job offer letter and get your loan approved and closed without a pay stub.

If you have any questions about your job offer letter scenario, or the need for a mortgage while relocating, please give us a call today or get an immediate response by asking an expert here!