Riverside County, Orange County, Los Angeles County and San Diego County
Cash Rebate Loan Information - FREE Loan with Cash Back Real Estate
Simple Loan Term Definitions

Adjustable-rate loans Known as variable-rate loans, usually offer a lower initial interest rate than fixed-rate loans. The interest rate fluctuates over the life of the loan based on market conditions, but the loan agreement generally sets maximum and minimum rates. When interest rates rise, generally so do your loan payments; and when interest rates fall, your monthly payments may be lowered.

 
Alt-A mortgage Generally, a loan that can be underwritten with lower or alternative documentation than a full documentation mortgage loan but may also include other alternative product features.

Amortization Regularly scheduled installment payments calculated to pay off your debt by a specific date.

Annual percentage rate (APR) is the cost of credit expressed as a yearly rate. The APR includes the interest rate, points, broker fees, and certain other credit charges that the borrower is required to pay.

Appraiser  Real estate appraisers appraise real property to determine its value for purchase, sales, investment, mortgage, or loan purposes.

Approval  Written, conditional loan approval is based on information provided via written application and submittal of basic information.  Certain documents may have to be produced for review.  Once all closing conditions and lender requirements are satisfied, the loan will receive final approval.

Buy Down Points or Discount Points You can pay interest up front and lower your rate, often in a beneficial way.  The buydown can be temporary or permanent.  This will can also reduce the total amount of interest paid over the life of the loan if you do not refinance or sell within 2-5 years for most loans.

Closing costs may include application fees; title examination, abstract of title, title insurance, and property survey fees; fees for preparing deeds, mortgages, and settlement documents; attorneys’ fees; recording fees; and notary, appraisal, and credit report fees. Under the Real Estate Settlement Procedures Act, the borrower receives a good faith estimate of closing costs at the time of application or within three days of application. The good faith estimate lists each expected cost either as an amount or a range.

Combined Loan To Value (ratio) (CLTV) { *See also Loan-To-Value} is the proportion of loans (secured by a property) in relation to its value.  The term "Combined Loan To Value" adds additional specificity to the basic Loan to Value which simply indicates the ratio between one primary loan and the property value. When "Combined" is added, it indicates that additional loans on the property have been considered in the calculation of the percentage ratio.

The aggregate principal balance(s) of all mortgages on a property divided by its appraised value or Purchase Price, whichever is less. Distinguishing CLTV from LTV serves to identify loan scenarios that involve more than one mortgage. For example, a property valued at $100,000 with a single mortgage of $50,000 has an LTV of 50%. A similar property with a value of $100,000 with a first mortgage of $50,000 and a second mortgage of $25,000 has an aggregate mortgage balance of $75,000. The CLTV is 75%.

Combined Loan to Value is an amount in addition to the Loan to Value, which simply represents the first position mortgage or loan as a percentage of the property's value.

Credit Report  A report covering an individual's credit history and current credit standing. This report is a very important measure used in the loan approval process.  For mortgages, all 3 bureaus should be represented.  The mid score is used for purposes of identifying the rate or rate steps.

Credit scoring A process that uses recorded information about individuals and their loan requests to assess - in a quantifiable, objective, and consistent manner - their future performance regarding debt repayment.

Debt to income ratio  Total monthly obligations (debt), divided by your gross monthly income. Your monthly obligations include such items as your mortgage payment, property taxes, insurance premiums, installment loans, and revolving debt (credit cards). Child support, rental income, and interest income can also affect this.  This ratio is used to determine your capacity to repay the mortgage and all other debts. Your debt-to-income ratio is a crucial calculation in determining the loan amount for which you can qualify. In conjunction with your expenses-to-income ratio, it represents your financial capacity to assume and repay your loan.  Typical "DTI" for full doc loans is 35%-45%.  Other full doc loans can go higher.  SISA loans still use this feature, but you can state your income, allowing for flexibility. 

Deed of Trust in California refers to the "mortgage" as a deed of trust. This document allows legal title to a real property to be vested in trustees to secure payment of a note.

Down Payment  Money paid by the borrower that is the difference between the purchase price of the property and the amount of the loan.

Earnest Money Not to be confused with a down payment.  Buyers offer funds with their offer to assure the seller they are serious. The money is applied to the purchase price of the house.  Certain cases allow a partial or full refund at close

Escrow is the holding of money or documents by a neutral third party prior to closing. It can also be an account held by the lender (or servicer) into which a homeowner pays money for taxes and insurance.  Not to be confused with an escrow account.

Escrow Account An account in which a portion of the monthly payment is held by the lender on the borrower's behalf for the payment of future taxes, mortgage and hazard insurance, special assessments insurance, and other on-going payments as they occur. Also called an Impound Account. Impound/escrow accounts allow one to make partial payments for these charges as part of the monthly mortgage payments. The funds are gradually collected in the escrow account, then paid out in full when the charges become due.

Fixed-rate loans generally have repayment terms of 15, 20, 30, 40 or 50 years. Both the interest rate and the monthly payments (for principal and interest) stay the same during the life of the loan.

Interest rate is the cost of borrowing money expressed as a percentage rate. Interest rates can change because of market conditions.

Loan Application Includes information such as the name of the borrower, terms and amount of loan, and details of the property being mortgaged.

Loan origination fees are fees charged by the lender for processing the loan and are often expressed as a percentage of the loan amount.

Loan servicing The tasks a lender performs to protect a mortgage investment, including collecting monthly payments from borrowers and dealing with delinquencies.

Loan-to-value (LTV) ratio The ratio, at any point in time, of the unpaid principal amount of a borrower's mortgage loan to the value of the property that serves as collateral for the loan (expressed as a percentage).

Lock-in refers to a written agreement guaranteeing a home buyer a specific interest rate on a home loan provided that the loan is closed within a certain period of time, such as 60 or 90 days. Often the agreement also specifies the number of points to be paid at closing.

Mortgage is a document signed by a borrower when a home loan is made that gives the lender a right to take possession of the property if the borrower fails to pay off the loan.

Negative Amortization  A feature of some loans that allows for gradual or controlled increases in the mortgage debt caused by unpaid interest that is added to the mortgage principal because the payment is not sufficient to cover the full amount of interest due.


PITI (Principal, Interest, Taxes, and Insurance) Principal, interest, taxes, and insurance - identifies the actual, all inclusive monthly payment with all considerations.

Points are fees paid to the lender for the loan. One point equals 1 percent of the loan amount. Points are usually paid in cash at closing. In some cases, the money needed to pay points can be borrowed, but doing so will increase the loan amount and the total costs.  Points can be either discount points or origination points.

Preapproval  specifies the actual amount a buyer is preapproved by a lender to borrow before a house is purchased.  Preapproval allows the buyer to negotiate like a cash buyer. Even if the buyer is not granted preapproval status, it should be done, as it shows existing problems in securing a loan and possibilities to explore.

Prepaid  Items Items that generally must be paid for at the time of closing and are generally recurring charges. Prepaid items may include taxes for up to six months; premiums for hazard, flood, and mortgage insurance; prorated interest, and special assessments that must be prepaid or rolled into the loan.

Prequalification  Providing information such as credit ratings, employment status and income, and outstanding debts - to a lender in order to calculate a suitable mortgage for the buyer. Prequalification is only for identifying a rate, based on unverified information and is not an approval.  Abusive lenders can bait and switch to lure buyers into higher rate loans, if the prequalification is not done right.

Private mortgage insurance (PMI) protects the lender against a loss if a borrower defaults on the loan. It is usually required for loans in which the down payment is less than 20 percent of the sales price or, in a refinancing, when the amount financed is greater than 80 percent of the appraised value.

SISA  A stated income and stated assets loan

SIVA A stated income loan that does verify assets.

Title A legal document that proves property ownership.

Title Insurance A type of policy that insures a home buyer against any errors made in the title search and defects in the title that may become apparent after a purchase or sale.

Underwriting The process of evaluating a loan application to determine the risk involved for the lender. It involves an analysis of the borrower's ability and willingness to repay the debt and the value of the property.
Home Purchase Loan Choices

FHA loan versus conventional loans in the offer process

Conventional or bank loans are typically limited to 90-95% of the purchase price.  As a result, most first time home buyers are sticking with FHA just to qualify.  The FHA loans remain popular with buyers due to the low down payments and mortgage insurance availability at those 3.5% down payments.  FHA also allows closing cost concessions up to 6% of the purchase price in most cases, contingent upon the home being appraised at that value.

Other popular features ofFHA loans include the ability to have a co-signer, non-occupant to lower the debt to income ratio.  This flexibility with the debt to income ratio, is helping a significant number of first time buyers to qualify.  The combined use of gift funds is also allowing those with no or lower down payments to obtain a home purchase loan approval.

Looking through the seller or REO asset manager side of the window, is a long time disdain for FHA loans due to a reputation as being slow and unforgiving.  Although FHA has improved, the need for a 45 day escrow to ensure on time closing, can be a detriment when multiple offers are being submitted.  On the lower price range, It is preferable to obtain a conventional loan approval in addition to the FHA approval.






FHA 203 k - Rehab or Rehabilitation Loans to Buy Foreclosures


The mysterious 203k loan is not know by most agents and loan officers.  The FHA rehab loan has two programs to choose from:   The Standard rehab loan and the Streamline rehab loan.  There are elements of control, timing, and valuation which makes it slightly riskier than a regular FHA loan. 

Primary risk is that valuation becomes an issue in a declining market.  Admittedly, Im not an expert on this loan and wouldn't consider our broker doing this loan for you, but - there is one lender in particular that is skilled and highly trained for this loan, whom I could recommend.  It happens to be one of the larger banks, with a special division in rehabilitation of foreclosure homes.  I can only recommend this lender by providing full details in person to a client.  There are slightly higher reserve requirements to ensure approval.

The positive side of this special tool, is that you can purchase a home which would not be able to be financed normally.  You can see this when a seller is asking for a cash offer only.  The property has been on the market for over 30 days and it's bank owned or an REO....Usually on the lower price spectrum in parts of Southern California.

203 K Standard loan vs. Streamline loan

The Standard FHA Rehab loan allows the buyer to purchase a home in need of complete repair.  The most important distinction of this loan, is that it allows near total renovation.  You can roll the costs of repairs right into the loan and walk away with a fixer upper.   Finance to virtually no cost limit with your repairs.  Common uses include repairs and additions which will be permitted.  You may alter load bearing walls with this program.  You will need to use a General Contractor and obtain architectural plans to meet program requirements.  The FHA requires a 10% margin for additional reserves to rehab loan amount.






The Streamline FHA loan allows you to buy a home in need of un-complicated repairs.  There is a maximum of $35,000 that can be used for repairs or renovations.  Although you can't work on repairs related to load bearing walls, the process is much simpler, with no special inspections for repairs under $15,000..  Although the FHA does not require reserves for this program, lenders may have their own rules.  A general contractor is not needed and since load bearing walls are not being touched, plans are not required either.

Both loans require you to use a professionally licensed contractor for repairs.  An added bonus is that the Streamline Rehab loan and regular 203k do allow you to purchase appliances with the funds.  This falls under the safety and "comforts" requirements of an FHA loan.  Wonderful isn't it ?

A Great Loan - How we get your closing costs covered....

We can negotiate to have your closing costs covered by as much as 3% to 6%, which means your monthly payments will be lower, with a lower rate or buydown, paid for by the seller.

No Money Down, The Lowest Rates, Have The Seller Pay For Your Loan !

Together, we can also have the seller pay the costs of title and escrow, or pay to buy your rate down. All that money you save by not paying us for a loan can go to lower your payments or buy the rate down.  With us, just about every time you can walk into a home with just an earnest money deposit applied to your deposit and have to pay no or little loan costs.  The key is in the offer we write together.  What lender is going to write an offer for you?

Loan availability

We offer residential, commercial, mixed use, and apartment complex purchase loans and refinances.

Selecting the right purchase loan program.

The number one consideration in selecting the right loan is the term.  For example, if your home is a lifelong commitment, go with a 30 Year Fixed.  If you intend to stay in the area for only 4-5 years for a job commitment, you would consider a 5 or 7 Year Fixed.  Next consideration is whether your intent on paying the loan balance down.  Select interest only if you want lower payments and don't mind the loan balance staying the same over time.  Choose Amortizing, which means principal and interest are both paid.  Typically you will have a few hundred dollars difference in the amount paid.  Other considerations are next.  Your loan officer / agent can help you determine the best program for you.






Years you plan to stay in the house - Recommended programs

Years
Planned    Loan
To StayTerm or Type

1-3  3/1 ARM, 1 year ARM or 6 month ARM

3-5 5/1 ARM

5-7 7/1 ARM

7-10       10/1 ARM, 30 year fixed or 15 year fixed

10+ 30 year fixed or 15 year fixed

Loan Programs Advantages Disadvantages

Fixed Rate Mortgages - 30 year fixed or 15 year fixed - Monthly payments are fixed over the life of the loan
Interest rate does not change
Protected if rates go up
Can refinance if rates go down
Higher interest rate
Higher mortgage payments
Rate does not drop if interest rates improve

Adjustable Rate Mortgages  - 10/1 ARM - 7/1 ARM - 3/1 ARM - 1 year ARM - 6 month ARM - 1 month ARM
Lower initial monthly payment
Lower payment over a shorter period of time
Rates and payments may go down if rates improve
May qualify for higher loan amounts
More risk
Payments may change over time
Potential for high payments if rates go up


Balloon Mortgages  - 7 year - 5 year - etc.
Lower initial monthly payment
Lower payment over a shorter period of time
Many balloon mortgages offer the option to convert to a new loan after the initial term.
Risk of rates being higher at the end of the initial fixed period
Risk of foreclosure if you cannot make balloon payment or if you cannot refinance or if you cannot exercise the conversion option


First Time Buyer Programs
Lower down payment
Easier to qualify
Sometimes you may get lower rate
May be subject to income and property value limitations
Some programs which have government subsidies may have a recapture tax if you sell the house too early.

Stated Income Programs
Don't need to verify income
Faster Approval
Higher down payment

Stated Assent Programs
Don't need to verify assets
Faster Approval
Higher down payment


No point, No fee Programs, No closing costs
Less money required to close
Higher rates
Higher payments


Imperfect Credit Programs
Potential for reestablishing credit if you pay your mortgage on time.  When used for debt consolidation, you may be able to reduce your monthly debt payment
Higher rates
Terms may not be as favorable
Harder to get long term fixed loans
Loans may have prepayment penalties


Refinance or Cash Out


Home Equity Line of Credit
You only borrow what you need
Pay interest only on what you borrow
Flexible access to funds
Interest may be tax deductible
Rates can change. The maximum interest rate is normally high.
Payments can change
Harder to refinance your first mortgage


Home Equity Fixed Loan
Fixed payments
Interest may be tax deductible
Higher interest rates than on 1st mortgages
Harder to refinance your first mortgage


Reverse Mortgages
For Seniors over Age 62 Borrower’s heirs receive 100% of the remaining equity after the loan payoff.
Must be 62 and older.  Owner of a single family home, 1 to 4 unit complex (owner occupies one), or condo.
Payments not required.  You can make payments if you wish.
Income not necessary to qualify.  Loan is based on your age and home value.
New low 6.48% APR ARM with a 10-year average under 6.00%.
Interest only accrues on the portion of the line of credit used.
Use the money for any purpose:  Credit card debt, repairs, loan payment burden.


Besides our standard loan programs, we also have a large number of unique programs to serve your needs:

Purchase a house with 0 down
Piggyback loans 80-10-10 or 80-15-5. No PMI payments even with 5% or 10% down.
Debt consolidation programs
Home Improvement loans
Qualify even if you may have been turned down before!





Home Purchase and FHA Loan Information
All loans qualify for cash back, rebate, or credit. 
Contact me for details !    FHA programs included.
Do You Know Your 203 K ?