Every week, Jeff Lazerson, President of Mortgage Grader, writes a weekly column for the Orange County Register.
This week's column was NOT printed in the Orange County Register. Instead, this column is from "Lazerson's Loan Log."
Homebuyer Homeruns found at the Mortgage Convention
This is part-two about news you might just be able to use from the annual Mortgage Bankers or MBA convention held in Boston two weeks ago.
The MBA’s 2017 prediction is that the U.S. will experience home purchase loan volume breaking $1 trillion for the first time in 10 years, an 11 percent increase over 2016. Shazam!
If you want a down payment boost for next year’s purchase push, let’s learn about an owner-occupied equity share arrangement that boosts your ability to qualify and can help you to avoid mortgage insurance (generally required when putting less than 20 percent down).
Put 10 percent down and get an additional 10 percent down from San Francisco based First Rex www.1rex.com. This 10-year old company has participated with homebuyers hundreds of times according to James Riccitelli, its co-chief executive officer.
First Rex will receive somewhere between 40 and 50 percent of your property appreciation as its return on investment. This will happen when you sell or in 30 years, whichever comes first. Yes, 30 years!
You can also buyout First Rex after three years by reimbursing First Rex its down payment plus their portion of any profit.
What impresses me is that First Rex will equally participate if your property value drops, not just the gain. And, First Rex does not get any piece of principal that you’ll pay down on the first mortgage.
Because it’s an equity investment, not debt, there is no interest accruing and no monthly payments. You alone receive all of the property tax and mortgage interest deductions. You alone are responsible for the maintenance of the property and any sales commissions and settlement charges when you sell. First Rex records a second lien on your home to insure its equity stake.
First Rex’s equity share is approved with Freddie Mac as part of a pilot program.
David Eli who works in the mortgage industry and his wife recently purchased their first home in Los Angeles home for $1,610,000. The Eli’s came up with 10 percent down and First Rex matched it. The Eli’s obtained an 80 percent jumbo first trust deed, above Freddie’s maximum $625,500 loan limit. “I did as much due diligence as possible. My wife (who is an attorney) looked it at it (the contract) with a fine tooth comb.”
Always review the documents on any type of equity share with your legal counsel to be certain that you clearly understand what you are getting into.
Convention honorable mention goes to Troy Michigan based Loan Craft www.loancraft.net that will analyze your 1040 tax returns and up to three business tax returns, providing you with industry underwriting calculations and a summary report of its findings for just $25, according to Ronald George, its president.
That’s a total deal. That’s a lot of power for self-employed borrowers to privately know just how much of your income lenders will recognize.
Jeff Lazerson - Mortgage Columnist since 2011