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New loans give buyers more options

By JEFF LAZERSON / CONTRIBUTING COLUMNIST

Who says Disneyland is the happiest place on earth?

I’m just back from the Mortgage Bankers Secondary Market Conference in New York. Now, that was the happiest place on earth.

And these folks were as happy as I’ve ever seen lenders in my 25-plus years of attending these mortgage meetings because they’re pleased about their year-to-date business.

Now, let’s talk about some exciting new loans that I came across at the conference.

How about a loan for single-family and duplex property investors, foreign or domestic, that requires just two months of bank statements to verify your down payment and your payment reserves?

Qualifying is similar to how commercial loans are qualified, based upon the strength of the subject property rents to cover debt service. If you are loaded with debt or have little or no documented income, as conventional Fannie Mae qualifying goes, you might still be good to go.

Domestic borrowers or their designated limited liability corporations require at least 25 percent down, a 700 minimum FICO score and four months of payment reserves.

Foreign investors (no LLC’s) require just a passport (not a visa), an approved country of origin (per the U.S. State Department), a minimum 35 percent down and six months of payment reserves.

For the many Orange County non-warrantable condominiums (not acceptable to Fannie Mae) that are hard to place, how about owner-occupied or second home, putting at least a 20 percent down payment and a minimum 680 FICO score?

While not exactly new, I haven’t heard about the old Federal Housing Administration Title 1 home improvement loan in nearly 10 years. But it’s back in town!

You get a loan amount up to $25,000. A 620 middle FICO score is required. No equity, no problem! It’s either a second mortgage or in some cases, a third mortgage.

The funds must be used for home improvement. No luxury improvements are allowed. Rates run high: from 4.95 to 8.95 percent with almost 5 origination points and terms up to 20 years.

And lastly, there is a piggy-back fixed-rate second mortgage available to avoid mortgage insurance when putting less than 20 percent down. You can get a maximum combined loan-to-value of 95 percent with a 680 middle FICO score for up to $250,000. This is ideal for those Fannie Mae high-balance loans ($417,000 to $625,500) and true jumbos (above $625,500).

More next week from the Mortgage Bankers Secondary Market Conference. Specifically, I’m going to explain a new tool used to see if the appraiser was really low-balling you or if the property just isn’t worth what the seller is asking.

If you have questions or comments, please contact Jeff Lazerson by clicking here.

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