Questions to Expect From Mortgage LendersData Provided By Know what to expect before you apply.

Your mortgage lender will want to know a lot about you before approving your loan application, and justifiably so; they and their underwriters want to be assured that you meet their minimum level of creditworthiness before lending you money.
Areas of questioning.

Here are the general areas of questioning you can expect from a lender: 
1. Employment and income 
2. Outstanding debts 
3. Cash reserves and assets 
4. Down payment 
5. Loan purpose 
6. Property use 
7. Property type
 
Employment and income
Where do you work?
How much do you make?
How long have you been at your job?
How is your income derived — steady salary or irregular income? If it’s the latter, you may need to provide more details to obtain a favorable interest rate.
Outstanding debts
What recurring debts do you have?
How much do you pay a month for auto loans?
Credit cards? How much of your monthly pretax income do these debts consume?
Cash reserves and assets
How much money do you have in the bank?
How much will be left after you pay your down payment and closing costs?
Down payment
How much money are you putting down?
Is this your own money?
If not, is it a gift from your parents?
A nonprofit agency grant?
Loan purpose
Is this San Diego ca mortgage for a home buy or refinance?
If it’s a refinance, do you want to take cash out at closing to pay off other debts? If so, how much?
Property use
Do you plan to live in the house?
Is it investment property?
Property type
A condominium?
A duplex?
The following responses tend to work in your favor:
Steady employment (two or more years) with the same employer or in same line of work.
Low debt: no recent major buys (such as automobiles) and a debt-to-income ratio of 36 percent or less.
Loan is for straight home purchase (or rate-and-term refinance).
Property is detached single-family home to be used as primary residence.
Down payment of at least 5 percent of sales price with your own money.
You’ll have at least two months’ worth of mortgage payments in the bank after closing.
These responses tend to work against you:
Self-employed or contract worker.
High debt: credit cards maxed out, total debt-to-income ratio more than 36 percent.
Property is a duplex or condominium, to be used as a vacation home or rental.
No cash left after home buy and closing costs.
Down payment is 3 percent or less of buy price and money is borrowed.
Source: Move.com

Fixed vs Adjustable Rates

A typical fixed rate example has a fifteen or thirty year term and a fixed rate. This is a popular choice for a San Diego Ca Mortgage option because the consumer knows that his interest rate will not change during the life of the loan. The fifteen-year term is a comfortable timeframe for many customers as well, although a thirty year term can also be the better choice for some. Many San Diego homeowners are more attracted to an adjustable rate San Diego mortgage loan. This option can actually cost less in the long run. However, it is a bit of a gamble. If interest rates increase, so does your home mortgage loan rate. If you can afford it if rates increase, and weigh the possibility of higher rates, then to refinance home loans with an adjustable rate can save money. And if the rates are in your favor, this option can really help with your monthly expenses over the course of time.

Costs To refinance your home mortgage loan

Remember, there are charges for a San Diego Ca mortgage home loan refinance. At times the costs outweigh the benefits. However, in many cases the homeowner can save a significant amount of money throughout the term of the loan. When consumers refinance home loans, they are not simply reducing your payments or changing your interest rates. This process consists of paying off the original loan in full. The refinanced loan is completely new in spite of the fact that you have been making payments for the same property. Since the mortgage loan is brand new according to the lender, it is subject to the same fees, points and other fees you paid for your initial mortgage loan agreement.

There is another significant fee that many homeowners do not consider when they try to get a San Diego home mortgage refinancing loan. Pre-payment penalties can be pretty costly, and you should not get a loan that includes them. You can check with your lender and with the regulations in your state to see if the pre-payment penalties apply to your specific loan or not.

The process of finding the right home mortgage refinancing package does require some preparation and homework. However, you can find a great deal that will pay off over time.

Source sportyhealth.com

The governmenst main objective is to assit borrowers of Freddie Mac guaranteed, insured home loans, to keep their homes affordable and reduce foreclosures by keeping payments affordable. Under Freddie Mac’s Home Affordable Refinance program, known as the Relief Refinance Mortgage, the program may be used to reduce the borrower’s loan interest rate, shorten the loan term repayment period or replace an adjustable-rate mortgage, interest-only mortgage or balloon/reset mortgage with a fixed-rate loan.

How to qualify for the new refinance program, first the borrower must have an existing mortgage that is owned or guaranteed by Freddie Mac. To find out whether Freddie Mac owns or guarantees your loan, call (800) 373-3343, call your San Diego loan mortgage servicer, San Diego Mortgage Broker or search for your loan on Freddie Mac’s Web site at Freddiemac.org.

You should contact your original lender or loan servicer to apply for this program.

The property may be a vacation/second home if the existing San Diego Ca mortgage was originated as a second-home loan or the borrower now occupies the home as a principal residence.

The new Freddie Mac Refinance mortgage can be a 15-, 20- or 30-year, fixed-rate loan or an adjustable-rate mortgage  with an initial term of five, seven or 10 years. The loan must be fully amortizing (i.e., not an interest-only or payment-option loan).

If you have an existing fixed-rate mortgage loan, than the lender can not refinance with an ” ARM”  Adjustable Rate Mortgage.

The loan, may be a so-called “super-conforming” loan limit within the applicable loan limit for the area.

The property may be an investment property if the existing San Diego Ca mortgage was originated as an investment property or the borrower now occupies the home as a principal residence.
 
If the original loan is covered by mortgage insurance, the insurer must agree to transfer the insurance to the new loan.

The new loan cannot be used to make a payment on or pay off a second loan.

Lenders are encouraged to use Freddie Mac’s automated valuation model, or AVM, to estimate the property’s current market value. Borrowers should ask whether a new appraisal will be required.

The borrower may be able to finance transaction costs of up to $2,500.
Borrowers whose monthly payment increases 20 percent or more must provide income and employment documentation and have an acceptable credit score and debt-to-income ratio to demonstrate they can afford the new higher payment.

If your loan does not meet these qualifications and you can not qualify for a typical refinance program,  You may want to consider modifying your home loan with a home loan mortgage modification.  This will allow you to lower your monthly mortgage payments, lower your current interest rate on youir San Diego California mortgage, or possibly reduce the principal balane of your home loan mortgage.

More information can be obtained at the Freddie Mae web site or at the Home affordable modification webs site.

Discrimination in San Diego Ca mortgage lending is prohibited by the federal Fair Housing Act and HUD’s Office of Fair Housing and Equal Opportunity actively enforces those provisions of the law. The Fair Housing Act makes it unlawful to engage in the following practices based on race, color, national origin, religion, sex, familial status or handicap (disability):

Refuse to make a San Diego mortgage loan
Refuse to provide information regarding loans
Impose different terms or conditions on a loan, such as different interest rates, points, or fees
Discriminate in appraising property
Refuse to purchase a mortgage loan or set different terms or conditions for purchasing a loan
Filing a Complaint

If you have experienced any one of the above actions, you may be the victim of discrimination. Recognizing the signs of lending discrimination is the first step in filing a complaint. HUD investigates your complaints at no cost to you. If you believe you have experienced lending discrimination, visit our housing discrimination complaint website to learn more about the complaint process.
HUD Fair Lending Studies

Pre-application inquiries about mortgage lending financing options represent a critical phase in the homebuying process. If potential homebuyers cannot obtain full and fair access to information about mortgage financing, they may give up on their pursuit of homeownership, their housing search may be restricted, or they may be unable to negotiate the most favorable loan terms. HUD has conducted a number of studies to determine whether minority homebuyers receive the same treatment and information as whites during the mortgage lending process. Read more on San Diego Ca mortgage lending discrimination studies .

Subprime Lending

Sub prime loans play a significant role in today’s mortgage lending market, making home ownership possible for many families who have blemished credit histories or who otherwise fail to qualify for prime, conventional loans. A recent HUD analysis, based on HMDA and related data, shows that the number of home purchase sub prime applications increased from 327,644 in 1997 to 783,921 in 2000.

While the sub prime mortgage market serves a legitimate role, these loans tend to cost more and sometimes have less advantageous terms than prime market loans. Additionally, sub prime lenders are largely unregulated by the federal government. Data shows blacks are much more likely than whites to get a sub prime loan, and many of the borrowers who take out these loans could qualify for loans with better rates and terms. As such, many have expressed fair lending concerns about the subprime market. Read more on Subprime Lending .

Predatory Lending

Some lenders, often referred to as predatory lenders, saddle borrowers with loans that come with outrageous terms and conditions, often through deception. Elderly women and minorities frequently report that they have been targeted, or preyed upon, by these lenders. The typical predatory loan is: (1) in excess of those available to similarly situated borrowers from other lenders elsewhere in the lending market, (2) not justified by the creditworthiness of the borrower or the risk of loss, and (3) secured by the borrower’s home. HUD is working hard to fight against predatory lending .

Minority Homeownership

HUD is committed to increasing homeownership opportunities for all Americans. HUD is engaged in a special effort to boost the minority homeownership rate since the rate for black and Hispanic Americans lags behind that of others. Read more about HUD’s efforts to Increase Minority Homeownership .

These rules should be refered to if you feel that you may have been treated unfairly in the Real estate mortgage loan process.

Source Hud . Gov

A San Diego, Ca home loan often involves many fees,
such as loan origination or underwriting
fees, broker fees, and transaction,
settlement, and closing
costs. Every lender or broker should
be able to give you an estimate of its
fees. Many of these fees are negotiable.
Some fees are paid when you
apply for a loan (such as application
and appraisal fees), and others are
paid at closing. In some cases, you
can borrow the money needed to pay
these fees, but doing so will increase
your loan amount and total costs. “No
cost” loans are sometimes available,
include the rate that you have agreed
upon, the period the lock-in lasts, and
the number of points to be paid. A fee
may be charged for locking in the San Diego Ca mortgage loan rate.

This fee may be refundable at
closing. Lock-ins can protect you from
loan rate increases while your loan is being
processed; if rates fall, however, you
could end up with a less favorable
rate. Should that happen, try to
negotiate a compromise with the
lender or broker.

Remember:
Shop, Compare,
Negotiate
When buying a San Diego home, remember to
shop around, to compare costs and
terms, and to negotiate for the best
deal. Your local newspaper and the
Internet are good places to start
shopping for a mortgage loan. You can usually
find information both on interest rates
and on points for several mortgage lenders.
Since rates and points can change
daily, you’ll want to check your newspaper
often when shopping for a San Diego Ca mortgage loan.

But the newspaper does not list the fees, so be sure to ask the San Diego lenders
about them.
The San Diego Mortgage Shopping Worksheet
that follows may also help you. Take it
with you when you speak to each
San diego lender or San Diego Mortgage broker and write down the
information you obtain. Don’t be afraid
to make lenders and brokers compete
with each other for your business by
letting them know that you are shopping
for the best deal.
Fair Lending Is
Required by Law
The Equal Credit Opportunity Act
prohibits lenders from discriminating
against credit applicants in any aspect
of a credit transaction on the basis of
race, color, religion, national origin,
sex, marital status, age, whether all or
part of the applicant’s income comes
from a public assistance program, or
whether the applicant has in good faith
exercised a right under the Consumer
Credit Protection Act.

The Fair Housing Act prohibits discrimination
in residential real estate
transactions on the basis of race,
color, religion, sex, handicap, familial
status, or national origin.
Under these laws, a consumer cannot
be refused a loan based on these
characteristics nor be charged more
for a San Diego Ca mortgage loan or offered less favorable
terms based on such characteristics.
Credit Problems?
Still Shop, Compare,
and Negotiate
Don’t assume that minor credit problems
or difficulties stemming from
unique circumstances, such as illness
or temporary loss of income, will limit
your loan choices to only high-cost
lenders.

Source Hud . Gov

Home loans are available from several
types of lenders—thrift institutions*,
commercial banks, mortgage companies,
and credit unions. Different
lenders may quote you different
prices, so you should contact several
lenders to make sure you’re getting
the best price. You can also get a
home loan through a San Diego Ca mortgage broker.
Brokers arrange transactions rather
than lending money directly; in other
words, they find a lender for you. A
broker’s access to several lenders can
mean a wider selection of loan products
and terms from which you can
choose. Brokers will generally contact
several lenders regarding your application,
but they are not obligated to
find the best deal for you unless they
have contracted with you to act as
your agent. Consequently, you should
consider contacting more than one
broker, just as you should with banks
or thrift institutions.
Whether you are dealing with a lender
or a broker may not always be clear.
Some financial institutions operate as
both lenders and brokers. And most
brokers’ advertisements do not use the
word “broker.” Therefore, be sure to
ask whether a broker is involved. This
information is important because
brokers are usually paid a fee for their
services that may be separate from
and in addition to the lender’s origination
or other fees. A broker’s compensation
may be in the form of “points”
paid at closing or as an add-on to your
interest rate, or both. You should ask
each broker you work with how he or
she will be compensated so that you
can compare the different fees. Be
prepared to negotiate with the brokers
as well as the lenders.

Obtain All Important
Cost Information
Be sure to get information about
mortgages from several lenders or
brokers. Know how much of a down
payment you can afford, and find out
all the costs involved in the loan.
Knowing just the amount of the
monthly payment or the interest rate is
not enough. Ask for information about
the same San Diego Ca mortgage loan amount, loan term, and
type of loan so that you can compare
the information. The following information
is important to get from each
lender and broker:

Ask each lender and broker for a
list of its current mortgage interest
rates and whether the rates being
quoted are the lowest for that day
or week.
• Ask whether the rate is fixed or
adjustable. Keep in mind that when
interest rates for adjustable-rate
loans go up, generally so does the
monthly payment.
• If the rate quoted is for an
adjustable-rate loan, ask how your
rate and loan payment will vary,
including whether your loan payment
will be reduced when rates go
down. 

Rates

Ask about the loan’s annual
percentage rate (APR). The APR
takes into account not only the
interest rate but also points, broker
fees, and certain other credit
charges that you may be required
to pay, expressed as a yearly rate.
Points
Points are fees paid to the lender or
broker for the loan and are often linked
to the interest rate; usually the more
points you pay, the lower the rate.
• Check your local newspaper for
information about rates and points
currently being offered.
• Ask for points to be quoted to you
as a dollar amount—rather than just
as the number of points—so that
you will actually know how much
you will have to pay.
Fees

Streamline Your FHA Mortgage

Refinancing Your Home
   
 
Sometimes, refinancing your San Diego mortgage can really save you money. You may be able to pay less interest, lower your monthly payment, or convert from a 30-year loan to a 15-year loan (and build your equity faster!). But be sure that refinancing is right for you.

 FHA has permitted streamline refinances on insured mortgages since the early 1980’s. The “streamline” refers only to the amount of documentation and underwriting that needs to be performed by the San Diego lender, and does not mean that there are no costs involved in the transaction. The basic requirements of a streamline refinance are:

  The mortgage to be refinanced must already be FHA insured.
 
  The San Diego Ca mortgage to be refinanced should be current (not delinquent).
 
  The refinance is to result in a lowering of the borrower’s monthly principal and interest payments.
 
  No cash may be taken out on mortgages refinanced using the streamline refinance process.
 
Lenders may offer streamline refinances in several ways. Some lenders offer “no cost” refinances (actually, no out-of-pocket expenses to the borrower) by charging a higher rate of interest on the new loan than if the borrower financed or paid the closing costs in cash. From this premium, the lender pays any closing costs that are incurred on the transaction.

San Diego Lenders may offer streamline refinances and include the closing costs into the new mortgage amount. This can only be done if there is sufficient equity in the property, as determined by an appraisal. Streamline FHA refinances can also be done without appraisals, but the new mortgage loan amount cannot exceed the original loan amount. Investment properties (properties in which the borrower does not reside in as his or her principal residence) may only be refinanced without an appraisal.
 Source Hud.Gov

WHY A VA LOAN?

The more you know about our home loan program, the more you will realize how little “red tape” there really is in getting a VA loan. These loans are often made without any downpayment at all. Aside from the veteran’s certificate of eligibility and the fact that the appraiser is assigned by VA, the application process is not much different than any other type of mortgage loan. And if the San Diego Ca lender is approved for automatic processing and the California Lender Appraisal Processing Program (LAPP), as more and more lenders are now, a buyer’s loan can be processed and closed by the lender without waiting for VA’s approval of the credit application or for VA to review the appraisal.

Lenders are also able to use VA recognized automated underwriting systems, such as Loan Prospector and Desktop Underwriter, to facilitate the underwriting process.

FIVE EASY STEPS TO A San Diego, Ca VA LOAN

Apply for a Certificate of Eligibility (COE).

A California veteran can obtain a COE by completing VA Form 26-1880, Request for a Certificate of Eligibility, and mailing it, along with proof of military service, to the eligibility center (see office list at back of pamphlet). Also, veterans who have already begun the loan application process with a lender may request the San Diego Mortgage lender obtain a COE through webLGY, which is accessed through the VA portal. More information about this online system can be found at our website which is: “home loans VA . Gov.”

 Decide on a home to buy and sign a purchase agreement.
 
Order an appraisal from VA. (Usually this is done by the lender.)

Ordering an appraisal can be done via the Internet using TAS (The Appraisal System). This is a centralized system that allows lenders easy and quick access to order an appraisal.
 
Apply to a San Diego Ca mortgage lender for the loan.

While the appraisal is being done, the lender can be gathering credit and income information. If the lender is authorized by VA to process loans on the automatic basis (and approx. 99 percent of all VA loans are processed this way), the mortgage loan can be approved and closed upon receipt of the appraised value determination without waiting for a VA review of the credit application. VA has also approved the use of several automated underwriting systems for lenders to use in connection with VA loans. The two main systems are Loan Prospector and Desktop Underwriter. For loans that must be approved by VA, lenders send the credit package to VA. VA staff will then review it and notify the lender of the decision.
 
Close the loan and move in.

A GOOD DEAL FOR VETERANS

More than 27 million veterans and service personnel are eligible for VA financing. Even though many San Diego veterans have already used their loan benefits, it may be possible for them to buy homes again with VA financing using remaining or restored loan entitlement.

Before arranging for a new San Diego Ca mortgage to finance a home purchase, veterans should consider some of the advantages of VA home loans:

Most important consideration, no downpayment is required in most cases.
Loan maximum may be up to 100 percent of the VA-established reasonable value of the property. Due to secondary market requirements, however, loans generally may not exceed $417,000 ($625,500 for loans in Hawaii, Alaska, Guam and U.S. Virgin Islands). This figure is subject to change each year.
Flexibility of negotiating interest rates with the lender.
No monthly mortgage insurance premium to pay.
Limitation on buyer’s closing costs.
An appraisal, which informs the buyer of estimated property value.
Thirty-year loans with a choice of repayment plans.
Traditional fixed payment: (constant principal and interest: increases or decreases may be expected in property taxes and homeowner’s insurance coverage); Graduated Payment Mortgage-GPM (low initial payments which gradually rise to a level payment starting in the sixth year); and in some areas, Growing Equity Mortgages-GEMs (gradually increasing payments with all of the increase applied to principal, resulting in an early payoff of the loan). Hybrid ARMs: VA is authorized to guarantee hybrid ARM loans where the initial rate remains fixed for at least 3 years. The initial adjustment can be as much as 2 percent if the fixed rate period is 5 or more years. Annual adjustments thereafter are limited to 1 percent if the fixed rate period is less than 5 years, and 2 percent if the fixed rate period is 5 or more years. If the fixed rate period is less than 5 years, the initial adjustment is limited to 1 percent and the annual cap to 5 percentage points. Traditional ARM loans: VA can also guarantee traditional 1-year ARM loans where the rate is adjusted annually. Annual adjustments are limited to 1 percent and the maximum interest rate increase over the life of the mortgage loan is limited to 5 percentage points.
New homes, which are appraised before or during construction, are inspected to help ensure compliance with the plans and specifications used for the appraisal and with VA minimum property requirements. All new houses, regardless of when appraised, are covered by either a 1-year builder’s warranty or a 10-year insured protection plan.
An assumable mortgage, subject to VA approval of the assumer’s credit.
Right to prepay home loan without penalty.
VA performs personal loan servicing and offers financial counseling to help veterans avoid losing their homes during temporary financial difficulties.
WHAT IS A VA-GUARANTEED LOAN?

These loans are made by a lender, such as a San Diego Ca mortgage company, savings and loan, or bank. VA’s guaranty on the loan protects the lender against loss if the payments are not made, and is intended to encourage lenders to offer veterans loans with more favorable terms. The amount of guaranty on the home mortgage loan depends on the loan amount and whether the veteran used some entitlement previously. With the current maximum guaranty, a veteran who hasn’t previously used the benefit may be able to obtain a VA loan up to $417,000 ($625,500 for loans in Hawaii, Alaska, Guam and U.S. Virgin Islands), depending on the borrower’s income level and the appraised value of the property. Your VA Regional Loan Center can provide more details on guaranty and entitlement amounts.

WHAT CAN A VA LOAN BE USED FOR?

To buy a home, a condominium unit in a VA-approved project, or to purchase a unit in a cooperative (co-op).
To build a home.
To simultaneously purchase and improve a home.
To improve a home by installing energy-related features such as solar or heating/cooling systems, water heaters, insulation, weather-stripping/caulking, storm windows/doors, or other energy efficient improvements approved by the lender and VA. These features may be added to the purchase of an existing dwelling or by refinancing a home owned and occupied by the veteran. A loan can be increased up to $3,000 based on documented costs or up to $6,000 if the increase in the mortgage payment is offset by the expected reduction in utility costs. A refinancing loan may not exceed 90 percent of the appraised value plus the costs of the improvements. Check with a lender or VA for details.
To refinance an existing home loan up to 90 percent of the VA-established reasonable value or to refinance an existing VA loan to reduce the interest rate.
To buy a manufactured home and/or lot.
Source VA . Gov