AL and FL Mortgage News

In the last 24 hours we have received a fourth call in just as many months from a potential borrower/buyer who states that several local banks and credit unions in their area have denied them mortgage pre-approval on a conventional loan because their non-US residency status was “permanent resident alien” but not because of insufficient credit, income, or assets.  As I assured yesterday’s caller and others before them who were in different states and markets, having a permanent resident alien status is does not bar you from getting a conventional loan.

A few months back a couple who had been refused a loan at 5 different local banks across two cities were very hesitant when I echoed this same information to them.  They were very hesitant at first and with very good reason.  Just like we do many other loans we had them approved in 48 hours and closed iin about 22 days with no issues.  

If this is true, why is the answer from one lender to the next so different for conventional loans?  The short answer is Fannie Mae doesn’t require them to write these loans and you can read their most recent explanation here.  As for us, we attribute our ability to provide loans for permanent resident aliens with open arms based on good partnerships in the business who provide us the most flexibility in all loan products.  This is why Gulf States Financial was created and this is who we are. 

Are you or a family member a permanent resident alien who can’t find financing?  Fill-out our secure online pre-approval application 24 hours a day or call us during business hours at 888-269-8335.

Our guidelines related to this topic and others subject to change at any time without notice.  Gulf States Financial NMLS #835698.  Equal Housing Lender

Posted by Devin Murray on April 24th, 2019 3:25 PM

A Better Way to Lock

All New Custom Rate Locking - Many times a contract closing date calls for locking a loan for longer than what is needed.  This has been the trend in the mortgage industry for many years.  To capture better pricing for our customers we are excited to announce the ability lock the rate only for the time the borrower needs.  If the borrower needs 22 days we can lock for 22 days not 30.  Combined with custom rates and the ability to shop and lock we are really looking forward to tailoring each loan for each customers needs.

Southern Data

The US Median home price in January 2019 was $249,900 and the South was $219,800 according the NAR.  Combined with significantly lower property taxes compared to North and Western regions, the southern states still remain a significant value in terms of affordability in housing.

Nationwide Data

Home Prices: Corelogic notes that the rate of home-price growth as of December 2018 was 4.7% which is the lowest level seen in nearly 7 years.

Inventory: According to NAR Existing homes on the market are up 6.2% as of December 2018 compared to one year ago but shortages still remain in lower-price tiers.  Rising inventory is good when considering new housing starts in the last decade were under 10 million where demand for housing based on population growth is believed to be around 15 million.

Do you want to see how a custom rate quote compares to a standard rate quote?  Email us your questions or have them submit a pre-approval application from any mobile device 24 hours a day.

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Posted by Devin Murray on April 15th, 2019 10:34 AM

Tapping Equity - Buying Second Homes and Investment Properties

We typically get several inquiries a week from people all over the country who want to learn more about what it takes to finance a second home or investment property from Huntsville to Miami.  Most are shocked to learn that they only need 10% down for second homes and 15% down for investment properties (excluding condos).  Among those that inquire we find that most have sufficient credit and income to easily qualify but don’t have enough assets in hand to make the down payment on the “perfect place” they really love or the ideal property that will generate the most rental income so they do not take action.

With several publications announcing home values grew at national average just under 7% year or year as of QE4 2018 (which equates to nearly a $17,000 average increase) the average consumer who has owned for three years or more has much more equity than they realize.  With the Fed’s announcement for 2019 and rates hitting 12 month lows two weeks ago, there hasn’t been a better opportunity for your customers to capture some of this equity and put it to work.

No two customers are ever the same and neither are the solutions on how to access equity.  HELOCs are an excellent answer and will normally allow cash-out up to 90% of the appraised value while fixed rate second mortgages follow close at 85-80%.  If requirements such as credit score or income for HELOCs and second mortgages are too strict, refinancing of a primary mortgage primary may be a feasible solution.  Below is a current summary of what the loan-to-values allowed based upon occupancy.

Owner Occupied:
VA  = 100% (minus any funding fee)
FHA = 85%
Conventional  = 85% (Freddie requires 740+)
Non-conforming = 85% (porfolio and Non-QM)
Conventional = 80%
Jumbo = 80%

Second Homes:
Conventional = 80%
Jumbo  = 65%

Investment Property
Conventional = 75%
Jumbo = 60%

We work with a range of customers from first time buyers of second homes and investment properties to those with large portfolio holdings.  If you have a customer who might be in the market who wants to discuss their scenario with one of our licensed loan officers please feel free to have them call, email, or apply online 24 hours a day. 

 

*High Balance loan limits for both AL and FL are conforming loans between $484,351 to $749,525

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Posted by Devin Murray on April 8th, 2019 1:25 PM

Interest Rates:

Federal Reserve – announces on March 20th, 2019 no rate increases through the rest of 2019 – great for purchases and refinances

Interest rates across the board hit 12 month lows early last week and are trending back upward as of late last week.  Rates spent the majority of 2018 climbing so this is great news not just for purchases.

Refinances:

The power of a refinances is big and can help realtors too – borrowing money for second homes and investment purchases against a primary residence is the cheapest money out there.  In combination with good rates and higher loan to value maximums, there has not been a better time in over a year to refinance.  We will talk maximum LTVs for on cash-out refinances next week.

Condo Financing:

 If you missed out last week key conventional  guidelines are freeing up much needed money for both condo buyers and existing owners.  The details of the full article are here.

Do you have a financing scenario you are helping a customer with? Send us your questions or have them submit a pre-approval application to us directly from any mobile device 24 hours a day.

Posted by Devin Murray on April 2nd, 2019 8:32 AM

 




If you are in the market to buy or sell a condo and need financing, there is good news in 2019 that is getting very little marketplace attention.  As we mentioned in a few previous posts, strict lending requirements imposed for a decade have made more than 90% of an estimated 8 million condo units nationwide ineligible for conventional and FHA financing.  In the face of increasing popularity of condos as a great housing solution, Fannie Mae has been the first to see the devastation, smell the roses, and take action and it appears HUD is following suit.

 

In the last three years the most successful way to finance a condo anywhere in the country was to find a unit that was in an eligible project (less than 1 in 10 chance) or put anywhere from 10% to 30% down and hope that whatever made that condo project ineligible would be avoided in a limited review.  This situation and the host of problems it created have forced the masses to seek portfolio or private financing with 20-30% down payment requirements thereby barring most from ever owning a condo.

As we have mentioned before regardless of limited review or full review status, Fannie Mae knows the number one killer of conventional condo financing is high investor concentration, high single entity ownership, and an associations involvement in litigation.  Realizing how damaging this has been to existing owners and potential buyers here is summary of what has changed:

Conventional – more updates coming in June 2019

  1. Investment Concentration – probably the single biggest condo deal killer since 2009
    • Primary and Second Homes – previously set a 50% of the total number of units in the project, now 99% investment ownership is allowed.
    • Investment Property – 99% investment allowed as long as buyer puts 25% down in AL, 30% down in Florida otherwise it still needs to be below 50%

       

  2. Single Entity Ownership – likely the second biggest condo deal killer
    • Previously marked at 10% now expanded to 25%. Fannie Mae allows exceptions as high as 49% if the builder/developer is that single entity and shows a sales and marketing plan to sell those units. Units owned by the developer that are on the market and vacant are not counted/tallied.

       

  3. Limited Reviews vs Full Reviews
    • Recap on Primary and Secondary: Limited reviews in Alabama are still 90% LTV for owner occupied and 80%LTV for second homes. This drops to 75%LTV and 70%LTV respectively in Florida. No change here. The importance of this in light of the changes above can not be over-stated and is probably where the biggest impact will occur.
    • Investment Property Limited Reviews – are now allowed with 30% down. Previously if you were an investor, an automatic full review was required. Most investors were forced to portfolio or private money solutions.

       

  4. Pending Litigation
    • Does not now automatically kill the deal. Single unit damage litigations ok, non-monetary, HOA is seeking is the plaintiff seeking funds, slip and falls ok


Conventional LTV Updates

  • Max LTV for primary increases from 95% to 97%*
  • Max LTV for second homes remains at 90%*
  • Max LTV for investment increases from 80% to 85%*
  • *Please note these max LTVs will require a full project review versus a limited


FHA Condos

Like Fannie Mae It is noteworthy to echo that “Spot approvals” from HUD are now re-branded as “Single Unit Approvals” are rumored to be released in May 2019.  Not seen since 2010 these allow a lender to approve loans on units that don’t have project approval subject to minor limitations.  Once this change is released this will open up FHA financing for condos in all markets across the country. 

At the time of this post there are 124 Approved in FL and 21 in AL but FHA condos projects but the update here is not non-Florida condos can be approved in as little as 48 hours.  Existing HUD approved condos can still be found here


VA Condos
In closing it is important to mention that VA condos never expire.  In Florida there are 1612 with “Accepted” status and in Alabama there are 166.  If you want to know if certain projects in your area are approved, please email us and we can generate and send you a printout.

If you would like to learn more about condo financing in Florida or Alabama, you can apply online 24 hours a day or contact a licensed originator by phone during normal business hours at 888-269-8335.

This information is subject to change at any time.  The information herein does not constitute a commitment to lend.

Photo Credit: Jeremy Kierez @jeremykierez

Disclaimer

Posted by Devin Murray on March 28th, 2019 9:02 AM


USDA loans are truly awesome mortgages.  They are widely known for allowing you to finance 100% of the price of a home but that is not their single biggest offering.  Among other benefits when compared to other loan products, USDA loans typically offer better rates, cheaper monthly mortgage insurance, and lower up-front costs especially when compared to FHA.  They are not as complicated to understand and qualify for as many sources tout so this is a quick rundown that might help understand if one is right for you.

 

Unlike any other loan, the property you want to buy (or refinance) needs to be USDA eligible.  There is a huge misconception about what USDA defines as rural and most people are shocked to learn that millions of properties close to major cities are eligible.   You can check a property’s eligibility yourself by clicking here (click “accept”, Single Family from the top menu, and input the address).  If the property is eligible, you need to know if your income is below the limit for the state and county where you are buying (or refinancing) in.  You can check to see if you are beneath the household income limit here.

If your income is within the limit and the property is eligible, you are ready to see if your credit and income qualifies.  There is no way to lay out all the guidelines, but it is important for all to know that USDA sets the floor for credit scores at 580 and they like to see a 680 score or better.  If your scores are acceptable USDA also prefers a few (say 3) established credit accounts as well as 12 months of prior rent or mortgage payment history.   Many lenders will say we are incorrect but alternative tradelines such as utility, insurance, and cell phone account history can be used.  Underwriting a USDA loan manually is something many lenders avoid but we welcome with open arms.

It is true that USDA has tighter debt to income requirements (43% back end debt ratio) compared to FHA (45% and more) and conventional loans (up to 45%), however this one disadvantage is in many cases offset because of better interest rates and monthly mortgage insurance premiums as previously mentioned.

We do not pretend as if two scenarios are ever the same but having this background can help shape your decision making.  If you want a free, no obligation USDA rate quote without applying click here.  If you would like to get pre-approved, you can visit us online 24 hours a day or give us a call at 888-269-8335 during normal business hours 8-5pm M-F.

Disclaimer

Posted by Devin Murray on February 22nd, 2019 4:18 PM


With lot prices and construction costs steadily on the rise for the new year and beyond, many borrowers are finding it difficult to accomplish a new home build within the new conforming loan limits of $484,350.  For those who already own their land we have seen customers curb this problem by sacrificing finishes in kitchens and bathrooms, reducing square footage, or omitting other extras like pools and/or larger garages.  For those who don’t already own their land and are rolling a land purchase into the transaction, it is common to opt for a smaller or less desirable location as well as making similar cuts to the project just to make the numbers work.

 

There are and will continue to be many benefits you need to explore on the topic of borrowing within conventional loan limits regardless of what your plans are but when building a new home the single biggest challenge of exceeding this limit is when borrowers are forced to (or believe they must) use a construction loan versus a construction to permanent loan.  This can be unfortunate because a regular construction loans can cause the following common problems:

  1. A forced refinance out of your construction loan which requires two sets of closing costs
  2. Being subject to changing rate and economic market conditions until your house is complete 9-12+ months down the road
  3. Being required to put more down on a construction versus a jumbo construction-to-perm loan 
  4. Inability to use lot/land equity toward the required down payment even if you are a seasoned owner

The good news is that as of today you might not have to deal with these headaches, make these sacrifices and/or be subject to these potential risks with the help of our New Jumbo Construction-to-Permanent Loan!

While it is impossible to highlight all the ins and outs our Jumbo One Time Close product here, the good news is if you are building your primary residence you might be eligible to borrow up to $1,000,000 with a 760 credit score with just 15% down or 15% total equity, up to $1,500,000 with a 720 score and 20% down/total equity, and up to $3,000,000 with 30% down/total equity. 

Also new for this specific product is the ability to finance a second home with a construction-to-perm loan.  Under this program a second home requires a 720 score across the board and will allow up to $1,000,000 with 25% down/total equity, up to $1,500,000 with 30% down/total equity, and $2,000,000 with 35% down/total equity, and $2,500,000 with 40% down/total equity.

As with conventional construction-to-perm loans, you can lock in your permanent rate up front and have just one set of closing costs.  Likewise Jumbo Construction-to-Permanent interest rates will vary with the construction time period selected in addition to credit score, loan-to-value and other factors.  However the major Jumbo advantage is that build periods have been expanded to 12, 18, or up to 24 months for projects up to $1,000,000 and beyond so this limits completion date stress significantly.

To see if you qualify, to get more information or to discuss your construction-to-permanent scenario with one of our licensed professionals please feel free to email us 24 hours a day or call 866-269-8335 during our regular business hours.

Product guidelines and terms may be subject to change at any point without notice.

Disclaimer

Posted by Devin Murray on December 11th, 2018 11:55 AM

PART I of IV – Can I use my land equity and how much will be counted?

After writing tens of millions of dollars in construction-to-permanent loans for over 15 years we continue to find that a clear majority of consumers do not know if they can use lot or land equity towards a down payment on their construction loan.  This topic is directly associated with down payment requirements for construction-to-perm loans, which we will address in separate article.  For those who even know to ask, many are confused about the rules of using the equity (the “how to”) and most importantly of all why being able to maximize that equity is important even if you have a healthy down payment.   To clear-up these very muddy waters in the mortgage world, we are going to answer to answer the “can I use it” question to see where you fit into this picture and end this post on how we would calculate and apply it to your new loan.  We will follow-up with a second post about why it matters, a third on how to maximize it, and a forth for those who don’t own but are planning long term.    

For ease of discussion, let’s use the word “land” to represent a vacant residential lot or plot of land up to say 10 acres (see here for land size restrictions).  Also, let’s assume that you and/or a co-borrower are the current owner of record with a recorded deed in place.  With all this being said, if you want to know if can use your land equity and want to calculate how to apply that equity to your construction-to-permanent you must know the answers to three simple questions 1) when did you buy or have the lot/land gifted to you? 2) how much did you pay? 3) what is owed on the lot/land? 

Lot/Land Purchases

In the mortgage world we first look the time frame one or more borrowers have been on a recorded deed to land to calculate equity.  The industry jargon is “seasoning” of your ownership.  If you purchased your lot/land inside of four months for conventional loans, six months for FHA, or twelve months for VA we will use the original purchase price of the land as a best-case baseline to determine any equity regardless if it appraises for double or triple what you paid for it.  This seasoning time frame is calculated from the courthouse recording date on your deed to the day you sign your loan application.  The appraised value of the land if any exists is then determined with a construction-to-permanent appraisal. 

For example, if you paid $50,000 one month ago, you owe $40,000 today but it appraises for $60,000 we in the industry would only count $10,000 in equity towards your down payment in lot equity.  If you are going conventional and can wait a few months until you reach the four-month threshold before you sign your loan application the full $20,000 can be counted toward your down payment.  The truth is the construction planning process takes several months to start so if you are going conventional or FHA waiting to reach the time frame required is inherently easy.

Lot/Land Gifts

Meeting these land seasoning requirements to count land equity towards a down payment is most significant for borrowers who have land given to them or potentially acquire land at a substantial discount.  Using the same logic above, if a family member deeds you land, or you buy it for many thousands below what it is actually worth, we (the industry) can only count what the deed reflects it was sold inside the seasoning time frame.  This means that if someone sold you land a deep discount one month ago for $5,000, you owe $0 today, and it appraises for $60,000 we can only count $5,000 in seasoned equity unless you wait 4 months for conventional, 6 months for FHA, or 12 months for VA to apply for your construction-to-permanent loan.  Once you wait the required seasoning times the full $60,000 of equity per the appraisal would be counted towards your down payment.

Probably the most common scenario is where a family member deeds land to another family where the consideration or price is $0 because it was a gift. Just as in the above examples before none ($0) of the equity can be applied until you or a co-borrower are seasoned on title beyond the four, six, or twelve-month windows respectively.

If you want to speak with us about your land equity scenario as it relates to your construction-to-permanent project please feel free to email us or call us at 888-269-8335.


Posted by Devin Murray on October 3rd, 2018 10:46 AM
 

Last Updated August 2018

With real estate markets all over Florida and Alabama recovering (and yes booming in many markets) homeowners are more interested in home values and potential equity options than they have been in over a decade.  Some owners are selling to capture their equity and move on while others are staying put and borrowing against their newfound equity while rates are still relatively low.  While we will save how cash-out loans differ from other options for future discussion, knowing general options available to you in the mortgage credit market today can give you a great starting point in smarter decision making.

As a rule of thumb, the market for fixed rate second mortgages and HELOCs with banks and credit unions will allow you to capture up to 90% of the current market value of your primary home.  Most lenders will want to see a 680 or 700 score as a benchmark to allow the full 90% and even with great to excellent credit most will stop at 85% for second homes and 80% for investment properties.  Currently we do not offer junior lien products for cash-out refinances but either product can be very helpful depending on your scenario and what your purpose is for the equity.  Since there is no blanket answer to all possible scenarios, know that second mortgages and HELOCs traditionally have lower closing costs and can close in a handful of days compared to traditional cash-out refinances especially with small loan amounts say below $50,000.  One negative effect of this speed is borrowers not getting the most accurate valuations because most of the appraisals for seconds and HELOCs are completed via drive by appraisals.  Most lenders for these products will still pay for this service on your behalf even if you don’t close so in most cases you aren’t spending $400 dollars to explore these options, so this is a good starting point even if you never close the loan.

On primary cash-out refinance mortgages there is some greater flexibility compared to doing a second mortgage or HELOC with respect to credit scores and maximums.  If you are VA eligible, right now you can take cash-out up to 100% of the appraised value of your primary residence and 85% FHA loans with credit scores as low as 580.   While conventional loans allow investors and owners of second homes to take just 75% they do allow another 5% on primary residences with the maximum being 80% with a 620 score as a minimum benchmark.  You will likely be required to pay for your appraisal up front but as stated previously the valuation is more thorough which can help you maximize all potential equity.

While it is good for our country that we avoid another 2008-2009 real estate meltdown, conventional cash-out maximums will likely never see 2007 levels again.  The positive side for you is that if you bought a house using a conventional loan within the last 10 years or as soon as 12 months ago, chances are you put at least 3-5% down.  Standard down payments and regular monthly balance reduction coupled with faster than normal market appreciation may make a cash-out refi of your first mortgage a sensible option.  To discuss your scenario or a free quote email us, call us at 888-269-8335  or apply online 24 hours a day.

Loan Purpose Disclaimer:  If you are looking to do renovations and are thinking of doing a cash-out refinance, ask about the benefits of renovation loans first.  Renovation loans use future improved value and are not considered cash-out so they allow maximums such as 95% (Conventional) or 96.5% (FHA) with a 640 score on a primary residence.

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Posted by Devin Murray on August 20th, 2018 9:53 AM


In the fall of 2017 we posted major updates regarding jumbo loans which highlighted important factors such as credit score, down payment, and income requirements for owners and buyers of primary, secondary, and investment properties.  We announced this because these improvements are unlike anything we have seen since before 2008 for jumbo borrowers.  Now there is one other major exception in 2018 that is yet again changing the market for buyers and existing owners of primary and second homes with balances above $453,100 which is the maximum conforming limit in most of our markets.

Starting March 2018 anybody in Florida or Alabama with a 680 credit score who needs to borrow between $453,101-$679,650 might be eligible for financing with 20% down and avoid meeting the more stringent requirements in place for jumbo loans.  This exception to jumbo is a conventional product called the High Balance Loan.

High Balance For Buyers
If you are buying a primary or second home priced from say $566,375 to $849,000 this means you can put 20% down but get one loan with conventional rates, closing costs, underwriting guidelines, and turn times as long as your loan amount stays below $679,650.  This conventional loan jumbo exception creates a shelter from jumbo rate and cost adjustment factors most notable for hindering those in the 680-719 score range.  There are also "elite status" benefits for those with scores 720 and above so please ask your loan officer to see if you qualify and compare jumbo vs. High Balance rates and costs. 

Aside from rate and costs improvements, the second biggest High Balance advantage are much lower asset and reserve requirements.  Where jumbo loans can require 3 to 9 months in reserves, this conventional option typically only requires zero to a few months per automated findings.  Lower asset requirements mean easier qualifying and more importantly using your money where it counts the most for you. 

While we did not directly mention it previously, most all jumbo loans are manually underwritten meaning that they can be a little more difficult to obtain and take a little longer in underwriting.  (This is not new or a secret in our industry.)  By comparison high balance loans, like any other conventional loan, are underwritten using an automated system and therefore can be closed in about half the amount of time as jumbo loans.  With respect to time automated underwriting means streamlined loan conditions, less hassle, and a potential competitive edge with faster closings than other competing jumbo offers.  

High Balance for Owners
If you have never attempted it before, refinancing a jumbo loan can prove to be far more difficult than obtaining purchase financing.  There are many additional pitfalls too numerous to describe here.  Aside from requirements described with getting jumbo purchase money, finding a lender than is familiar with various jumbo offerings is an important step towards knowing your options.  Secondly receiving a good valuation with an appraisal that is accurate and using fair market comparables is sometimes challenging for properties above $500,000 due to availability in your area.  So, if you owe from $453,100 to $679,650 on your first mortgage and even if you have a second mortgage with a balance up to $84,956 on your primary residence you owe it to yourself to ask about High Balance Refinance Options.   

To find out about these and other options not mentioned here that a High Balance loan may offer you for your scenario do not hesitate to email us.  To find out what the requirements are or to inquire about qualifying call us 888-269-8835 or apply online 24 hours a day.



Posted by Devin Murray on April 9th, 2018 1:32 PM

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