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What is the maximum sales price I can purchase with no down payment?

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Questions about VA Financing?

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FHA Borrowers Get Help Funding Solar Panels

FHA Borrowers Get Help Funding Solar Panels

A growing number of lending programs are helping homeowners pay the upfront costs of solar panels. One lender, Guild Mortgage, an independent lender, recently announced a program that allows home buyers to lump the costs of solar panels into an FHA loan. California residents will be the first to have access to the program.

Guild Mortgage’s FHA Solar program follows Federal Housing Administration loan requirements and offers down payment options as low as 3.5 percent. The down payment is based on the purchase of the home before the panels are added into the cost of the mortgage. “This program will give more options to home buyers looking for solar because it gives them the flexibility to purchase panels and add them to any home they choose,” says Guild Mortgage President and CEO Mary Ann McGarry. “FHA Solar is ideal for individuals who are looking to buy a home that they plan to live in for several years and realize the return on their investment. It will also be attractive to customers who want to lower their monthly utility bill and have a greener footprint.”

David Battany, Guild Mortgage’s executive vice president of capital markets, says the data shows that an increasing number of people are searching for homes with solar installed and that the trend will likely continue. “Few lenders currently offer programs for the purchase of solar panels with a new home,” he says. “We see this as a great opportunity to serve the next generation of home buyers.”

Other programs are also available for financing solar, such as PACE loans. Also, some homeowners fund the purchase of solar panels through a second trust deed.

Source: Guild Mortgage

How to Prevent a Low Appraisal

How to Prevent a Low Appraisal

Many buyers are offering more than the asking price on properties undergoing bidding wars, but when the appraisal reveals the true market value of the home, they may find they’ve agreed to pay too much. Home sales commonly fall through when a property appraises for less than the price the buyer offers; the seller may be unwilling to accept a lower offer, and the buyer may decide the deal isn’t worth it.

Appraisal issues are still one of the most common causes of delayed settlements, according to March data from the REALTORS® Confidence Index. Real estate professionals report that appraisal issues delayed 19 percent of closings in March, which was the second most reported problem behind “issues related to obtaining financing.” Bankrate.com recently offered some tips for protecting your transactions from low appraisals.

Buyers likely will want to ask their lender to find an appraiser who works regularly in the county where they’re purchasing. Appraisers who know the area are less likely to evaluate properties based on flawed data. Buyer’s agents should be present during an appraisal appointment in order to provide the appraiser appropriate comps and explain any information that could be skewing the comps.

In some cases, sellers are being preemptive—getting an appraisal before listing their home and using that appraisal to set a realistic list price. If they’ve done this, they’ll want to give a copy of their prelisting appraisal to the buyer’s appraiser.

Also, remember that your clients can contest a low appraisal. The appraiser or a supervisor may consider taking into account any new or overlooked information when an appraisal has been questioned.

Source: “How to Avoid a Low Home Appraisal,” Bankrate.com (May 2, 2018)

Why Pre-approval Isn’t a Reliable Stop Gap

Why Pre-approval Isn’t a Reliable Stop Gap

It’s common advice for buyers to obtain a mortgage preapproval letter from a lender before going out with a real estate agent to look at homes. The rationale is that preapproval puts in writing the loan amount a buyer is qualified to receive, all but guaranteeing the price range the buyer can afford. Agents can then be reassured they are not wasting time on a client whose financing is likely to fall through.

Well, that’s flawed thinking.

A preapproval letter is not a loan commitment, which most real estate professionals understand. But equally important is that preapproval does not identify potential issues or “red flags” that may prevent a loan from closing. At best, a preapproval letter indicates that the lender is interested in providing financing to your client. At worst, it provides a false sense of security; it’s analogous to a purchase offer that contains a “Hubbard clause,” a condition that a buyer’s purchase is dependent upon their ability to sell another property. How many people would consider that type of scenario advantageous?

Preapproval does not take into account potential changes to a buyer’s financial situation, which could affect their loan offer. While a buyer may think their budget can easily support a down payment and monthly mortgage bills, a lender’s guidelines may show otherwise. If certain income or assets are not stable and continuous, then they are not considered verifiable. And if they are not verifiable, the lender removes the income or assets from the loan application—which frequently results in a loan denial.

This doesn’t mean there’s no value in requesting that your buyers obtain preapproval letters from their lenders. But it’s necessary to be aware of the red flags that lurk in the financial landscape of many buyers and to offer guidance on how to correct them. They may surface in credit reports, income documents, or asset account statements. And when they surface, they can be lethal to a real estate deal. The most common red flags include but are not limited to:

Credit Reports

• Disputed accounts
• Collection or judgment accounts
• Deferred student loans
• Late payments on installment loans

Income

• Recent changes in employment or job responsibilities
• Self-employed for less than 2 years
• Tax returns have Schedule E losses
• Tax returns reflect alimony payments
• Inconsistent history of supplemental income
• Base pay fluctuates from one pay period to another
• Gaps in employment

Assets

• Large cash deposits
• Insufficient funds to cover closing costs
• Insufficient funds to cover post-closing reserves

You’re not responsible for knowing when these red flags surface, and you shouldn’t be expected to resolve them for your clients. But you need to communicate to your customer why they are problematic for his or her mortgage application, as well as corrective steps. A key ingredient of your action plan should be to recommend a loan officer to your buyer who is willing and able to provide a “red flag analysis.” This analysis is a detailed, comprehensive disclosure that quantifies a buyer’s creditworthiness and his or her maximum purchase power. It is based on the client’s credit report and verifiable income and assets. Like a preapproval, the analysis is not a loan commitment; its value rests in eliminating the shortcomings of a preapproval letter, creating a positive environment for everyone.

Source: Capstone Mortgage Company

DocuSign Soars After IPO Debut

DocuSign Soars After IPO Debut

DocuSign, the e-signature company that helped usher in the era of digital real estate closings, debuted as an initial public offering on April 27 and is off to a strong start. Shares of DocuSign ended up 37 percent higher by the end of its first day of trading on the Nasdaq. DocuSign is NAR’s official and exclusive eSignature provider under the REALTOR Benefits® Program and an NAR Strategic Investment Company.

DocuSign priced its IPO at $29 a share, which was higher than the company’s target range, MarketWatch reports. DocuSign raised $629 million overall.

“When we got on the road, people knew us from previous rounds as a growth company with heavy losses,” Chief Executive Dan Springer told MarketWatch. “Now we’re doing half a billion in revenue and still growing at high rates, and we’re cash-flow positive.”

CEO Mike Sheridan also vowed that there’s a lot of growth ahead for DocuSign. For example, the company hopes to enhance its management of corporate documents so it becomes a place where firms have access to all of their forms and contracts in one spot.

“If you have it all in one place, you can leverage artificial intelligence to see if you have risk exposure,” Singer says.

DocuSign follows on the heels of other recent cloud software debuts, like Dropbox Inc. and Zscaler Inc., that went public in March.

“The enterprise software industry is in a really good place right now because businesses need to digitalize and their employees expect the absolute latest tools and technology,” Pete Solvik, a lead independent director on DocuSign’s board, told MarketWatch.

DocuSign shares (Nasdaq symbol: DOCU) were trading at $40.23 Wednesday afternoon.

Source: National Association of REALTORS®; “DocuSign Stock Soars After IPO as Cloud Fever Continues,” MarketWatch (April 27, 2018)

Freedom First Program

The freedom first program provides eligible borrowers with the opportunity to finace their own home – even if their credit isn’t perfect.

Requirements for credit scores as low as 500:

Available for FHA nd VA loans

500 – 549 credit scores or borrowers who have NO credit scores

We follow Automated Underwriting (AU) guidelines with an AU approval: Maximum debt to income ration of 45% on manual underwrites

FHA borrowers with collections over $2,000 are subject to payoff or must qualify with payment

FHA and VA borrowers must complete a hoe buyer education course and provide the signed certificate

All other FHA or VA guidelines apply

Freedom First Program

I’d like the opportunity to tell you more about what Freedom Mortgage can offer you.  Call me today about the Freedom First Program