Monday, July 18, 2011
Friday, April 29, 2011
The Power of Bona Fide Pre-Approval
While most mortgage lenders offer a form of “pre-approval” for a loan, Princeton Capital is one of the few lenders anywhere that can do an actual fully underwritten loan pre-approval. With our banker and broker business model, pre-approvals for loans are not conditional on multiple minutiae of a transaction.It is difficult to overestimate the power of a real loan pre-approval and its role in a successful real estate transaction. Pre-approvals make the seller of a house more comfortable about the offer, and in a competitive market, this can make all the difference.
According to Bay Area Realtor Larry Miller of Coldwell Banker, standard practice in the area is that a loan pre-approval accompanies any offer on a home. When the pre-approval comes from Princeton Capital, he is able to give the seller complete confidence that buyer is, in fact, qualified and the transaction will be able to close. Not so with many other pre-approvals, which are not fully underwritten and thus are only worth the paper they’re printed on.
“If a seller is looking at two different offers, they can feel much more confident with the Princeton Capital one,” said Miller.
The difference between the loan pre-approvals the real estate agent sees from other loan companies and from Princeton Capital is the reliable commitment of the latter that the buyer does indeed qualify.
Looking over pre-approval letters from three diffferent companies, one of which being Princeton Capital, Miller pointed out the extensive conditions on the other letters – one of which included more than eight conditions under which the”pre-approval” was not guaranteed.
“How much confidence can this give you?” asked Miller, in reference to the extensive conditions and lack of guarantees on one pre-approval letter.
A true pre-approval from Princeton Capital gives homebuyers a huge competitive advantage when making an offer on a home, because sellers can be completely confident that the buyer is indeed able to purchase the home, speeding up the transaction and ensuring its success.
Wednesday, April 13, 2011
Wednesday, April 6, 2011
Lower Loan Limits Expected in October
At the beginning of the mortgage meltdown a couple of years ago, Congress enacted emergency legislation raising the limits on High Balance Conforming Loans.
These loans are designated “conforming,” meaning lower interest rates and typically a slightly easier transaction to get approved and closed when compared to Jumbo (or non-conforming) financing. The High Balance variety is only available in designated high cost areas, like the San Francisco Bay Area.
Currently the “temporary” limit on these loans is $729,750. This means that if you put 20% down on a $900,000 home, you can get a conforming loan in the amount of $720,000. Effective October 1, 2011 the emergency legislation expires and is not expected to be extended. This lowers this High Balance Conforming Loan to $625,500.
So, what does that mean to you? If you buy the same $900,000 home and put 20% down, your loan will now be considered a Jumbo loan. Rates on Jumbo loans are typically 1-1.5% higher, so if today you could get that loan for, say, 5% your payment would be $3865.12. The same loan amount using the Jumbo rates would be 6-6.5%, bringing your payment to $4550.89. Over 30 years, that totals over $246,000! The other option would be to put a larger down payment on the property, to the tune of nearly $100,000.
The important thing to note is that if you are looking for a loan to purchase a home, or refinance the one you already have, now is the time to move forward. The limit will remain at the higher point until the first of October, giving home buyers the spring and summer seasons to purchase a property before the high limits are gone.
To find out what the current loan limit is in your area, you can access the Fannie Mae website to see a county-by-county spreadsheet.
According to Alan Russell, a local mortgage professional, “The higher limits have really helped people get into homes here in the Bay Area. Once those limits reduce, there will be fewer options for those trying to get into the real estate market. I’ve been talking to all my buyers and giving them fair warning that the time to move is definitely now.”
These loans are designated “conforming,” meaning lower interest rates and typically a slightly easier transaction to get approved and closed when compared to Jumbo (or non-conforming) financing. The High Balance variety is only available in designated high cost areas, like the San Francisco Bay Area.
Currently the “temporary” limit on these loans is $729,750. This means that if you put 20% down on a $900,000 home, you can get a conforming loan in the amount of $720,000. Effective October 1, 2011 the emergency legislation expires and is not expected to be extended. This lowers this High Balance Conforming Loan to $625,500.
So, what does that mean to you? If you buy the same $900,000 home and put 20% down, your loan will now be considered a Jumbo loan. Rates on Jumbo loans are typically 1-1.5% higher, so if today you could get that loan for, say, 5% your payment would be $3865.12. The same loan amount using the Jumbo rates would be 6-6.5%, bringing your payment to $4550.89. Over 30 years, that totals over $246,000! The other option would be to put a larger down payment on the property, to the tune of nearly $100,000.
The important thing to note is that if you are looking for a loan to purchase a home, or refinance the one you already have, now is the time to move forward. The limit will remain at the higher point until the first of October, giving home buyers the spring and summer seasons to purchase a property before the high limits are gone.
To find out what the current loan limit is in your area, you can access the Fannie Mae website to see a county-by-county spreadsheet.
According to Alan Russell, a local mortgage professional, “The higher limits have really helped people get into homes here in the Bay Area. Once those limits reduce, there will be fewer options for those trying to get into the real estate market. I’ve been talking to all my buyers and giving them fair warning that the time to move is definitely now.”
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