San Diego Mortgage Podcast with Abel Tejeda

How will increasing interest rates impact the mortgage market? Most of you have heard that the Federal Reserve has increased interest rates and will continue to do so throughout the year. But what does it mean when the Fed raises rates? Today I'll discuss what impacts we've observed. When interest rates increase, it doesn't necessarily mean that there will be a direct impact on mortgage rates, which is a concern that many have in today's market. It just means that the rate at which banks lend money to each other has increased. In this particular case, the Fed has been raising rates to slow down the economy. That trickles down into the mortgage industry. “Though rates aren't in the twos and threes anymore, they're still historically low.” Part of people's shock comes from the fact that we've been used to rates being so slow. Though rates aren't in the twos and threes anymore, they're still historically low. Our rates are currently in the fours; the average mortgage interest rate is 6.5%. Back when I started working with loans in 1999, people were refinancing from 10% down to 6.5%. So what does this mean for you? Well, if you're looking to lower your rate back down to 2% or 3%, it's not going to happen in this market. Those times are long gone. Even still, you could use this time to refinance your loan to get rid of your mortgage insurance. Just because rates keep going up, that doesn't mean your ship has sailed when it comes to homeownership—it is still a good time to buy a house. The alternative is to continue renting, and rent prices have been through the roof. Why pay someone else's mortgage when you could be building your own equity and enjoying the tax deductions that come with homeownership? If you have any questions about buying a home in our current market, give me a call or send me an email. I'd love to speak with you.

Let's find out if right now is a good time for you to refinance. Today I'll give you a quick update on what's going on in the real estate market. Thankfully, COVID now seems to be somewhat tamed for the near future. This has caused a resurgence of pre-COVID market conditions like pricing and interest rates. With that said, rates have gone up, but because of the Russian invasion of Ukraine, rates dropped again by 0.5%. This drop has created a short window of opportunity to refinance for those with a mortgage in the 4% range. I don't think this rate drop will last long because it was artificially created by macroeconomic factors like the war and the sanctions imposed on Russia. Let's talk through your situation and see if it makes sense for you to refinance. Just because rates went up, it doesn't mean that you lost your opportunity. Give me a call at (619) 948-2996. I look forward to hearing from you.

Here are a few ways you can take control of your credit score. If you're thinking of buying a house or refinancing, the first thing you need to do is take a hold of your credit score. The higher your score, the better your rate and the more favorable your terms. I'm not an expert, but I have a good grasp of what will affect your interest rates. So today I want to share a few tips to help strengthen your credit: 1. Never pay off your collections. A lot of people think that paying off their collections will improve their credit when it's usually the opposite. Those collections are usually dormant, and when you pay them off, they reactivate that account. Instead of helping your score, it ends up hurting it. If you're going to pay off a collection, make sure whoever holds that account promises to give you a deletion letter. That way, not only will it show as paid off, but it will also completely disappear from your report. 2. Don't max out your credit cards. A lot of people max out their credit cards to get the funds towards a down payment. That's a huge mistake. As you max out those cards, your score will go down, which will hurt your mortgage rate. “We're not like traditional banks; we don't just say yes or no.” 3. Don't close your credit cards. A lot of people think closing their credit card accounts will improve their scores. It usually won't because there are three main factors within these accounts that determine your credit: how long the account has been open, the payment history, and the balance versus the limit. As a general rule of thumb, try to keep your balance under 30% of the limit; however, every card is different. We use a credit simulator to tell us what will happen to a client's score depending on what they do. When you're thinking of buying a house or refinancing, it's always good to sit down and run your situation using our credit simulator. That way, you can know what you need to do to increase your score as much as possible. Conventional loans are extremely credit-driven, so whether you're refinancing or purchasing, you can get a killer deal if you have a 700 credit score. If you're not quite there, we can advise you on how to improve your score. If there's a problem that's above our pay grade, we have a few different collection companies we can refer you to. We're not like traditional banks; we don't just say yes or no. If you don't qualify with us, we will set up a roadmap to help you qualify in the future. If you have any questions or need help with your credit, give us a call at (619) 948-2996 or send us an email. We'd love to talk with you.

Three refinancing mistakes that you should try your best to avoid. Today I want to talk about the three biggest mistakes to avoid when you refinance. Everybody is talking about rates right now; they're all over the place. That's why I wanted to talk about what you should avoid if you plan on refinancing: Mistake No. 1: Not optimizing your credit score. Most refinances are credit-driven, so optimize your credit any way you can. If you have a little bit of cash, pay down some of your cards to increase your FICO score and get a better rate. It's really easy to do. “The money is yours, but you'll be paying the debt for a long time.” Mistake No. 2: Using equity for the wrong reasons. I see people do this all the time. They come to me and ask to refinance so they can go to Hawaii and buy a Mercedes. The money is yours to do with what you want, but be aware that you will be paying that debt for a long time to come. I advise you to use that equity to pay off high-interest debt, like credit cards. Whatever you do with your equity, be careful and smart. Mistake No. 3: Refinancing too often. Most of the time, this isn't the borrower's fault. It happens because they don't have someone advising them correctly. Don't plan on refinancing again two years later because you don't know what interest rates will be like then. Remember that every time you refinance, you have to pay fees. If you refinance too often, you're just adding to the cost. Really, everything you can do with a refinance can be done at the same time—you can switch from FHA to conventional and get equity out with a single refinance. Make sure you think about why you want to refinance before you do. If you want help or advice, I'd be happy to strategize with you. Just give me a call at 619-948-2996 or email me. I look forward to talking with you soon.

Here's how homeowners in forbearance can purchase or refinance again. If you were enrolled in a forbearance plan, can you buy or refinance now that you're out of it? You can, but there are some rules you need to know. Every lender has slightly different standards. If you're still in forbearance, you cannot buy or refinance. A forbearance is a financial hardship, so why would they give you another loan if you can't pay your first one? If you were in forbearance and now owe back payments, you have a couple of different options. First, you can pay it back in full. If you can't, they can put the balance on the end of your loan. It's like a “second” mortgage that sits at the end of your current mortgage. When you refinance or sell, you'll have to pay it back in full. You also have the option to set up a repayment plan with your lender that slightly increases your payment each month. “Mortgage brokers can help you shop around for different lenders.” After you've figured that step out, you'll be able to refinance again. Most lenders have a three-month rule, meaning you have to have made three consecutive monthly payments to qualify for another purchase or refinance. FHA, VA, and conventional loans each have different requirements and so do mortgage lenders. Mortgage brokers can help you shop around for different lenders with different products and rules. If you have any questions about your situation, forbearance, or mortgages in general, don't hesitate to reach out via phone or email. I look forward to hearing from you soon.

Here's what you need to know about bank statement loans. I keep getting calls from people asking me about bank statement loans. Are they stated loans? Can anybody get them? The answer is no. Bank statement loans are loans for self-employed people. As we all know, if you're self-employed and need to show your taxes, that's a way to show your income. The alternative is getting a bank statement loan. You show 12 months of your deposits (i.e., bank statements), and we take those deposits and figure out how much you get to keep. This is accomplished through your CPA. Rates for bank statement loans tend to be a little higher than prime for conventional or FHA loans, but they're a great alternative if you're self-employed. In many cases, they allow you to go up to $3 million, and everything is based on your deposits instead of your taxes.  If you're self-employed and in need of financing, give me a call or send me an email. I'd love to help you.

Here are the two ways you can buy an investment property in today's market. With everything that's going on with real estate, many people want to know how they can buy an investment property right now. There are two mains ways to do it: The traditional way. You use your tax documents or W2s to show your income can satisfy the debt-to-income requirements for both your personal property and the investment property. You cannot use future rent for this unless you're buying a duplex that already has tenants. Non-qualified mortgage loan. This is the easiest way to buy an investment property. It becomes a standalone property, and whatever income it's producing is what you use to qualify. It doesn't matter how much money you make— if the property can be rented out for $2,000, that's the number we use to get you qualified. For this option, you'll need at least 30% for the down payment. “Property values are through the roof.” Many people are cashing out their investment properties right now to buy other properties because property values are through the roof. So yes, you can buy an investment property in our present market if you have the down payment, which will be between 10% and 30% down. Just remember that you can't use FHA or VA financing. If you have questions about buying investment properties or any other matter, you can reach me via phone or email. I hope to hear from you soon.

Here’s why you should work with a mortgage broker instead of a big bank. Today we’re looking at the major differences between working with a mortgage broker and working with a direct lender or bank. When I say “bank,” I’m referring to banks like Wells Fargo, Chase, etc. The main advantage of working with a broker is that their hands aren’t tied like the bigger banks’ are. If you walk to your local bank branch and try to refinance with them, the answer is black and white. They can either help you or they can’t. “The big banks give us better rates and terms, and we pass those savings to you.” When working with a broker, it’s not like that. If we can’t qualify you now, we can help give you guidance and show you the concrete steps to take to get your financial health to where it needs to be to qualify in the future.  Another benefit of working with a broker is that we make the banks compete for your business. They give us better rates and better terms, and we pass those savings along to you. If you have any questions for me about working with a broker or anything else related to refinancing, interest rates, or mortgage in general, don’t hesitate to reach out via phone or email. I look forward to hearing from you soon.

Here’s what’s happening with interest rates and why you should act soon. What’s happening with interest rates? That seems to be the hot topic of conversation everywhere I go these days. Rates did increase recently; they’re no longer in the low twos, but they’re still in the high twos and low threes, which are still excellent rates! If you’ve been on the fence about refinancing or buying a home, now is the time to do so.  Rates will only rise from here, but you haven’t missed the boat yet. If you have debt, it may help to pay some of it off first. If you have an interest rate in the 4% range, you can still refinance to a lower rate. If you bought a house or refinanced with a VA loan and your rate is 3.8% or higher, do something about it. If you already received an interest rate from another lender, reach out to us so we can help you compare that to other options. “If you’ve been on the fence about refinancing or buying a home, now is the time to do so.” Now that the pandemic is beginning to ease, the economy is recovering, which will cause inflation. Talk to your lender or reach out to us for a strategy call to see if it makes sense for you to refinance.  Shoot me a text or give me a call to see if refinancing is a smart move for you or if you have any questions. I would love to help with all your mortgage needs.

Here are some important points to know about a reverse mortgage. Lately, I’ve been receiving a lot of phone calls and emails from clients who have questions regarding reverse mortgages: Are they safe? Should I get one? Do I even qualify? Due to all the intricacies of this topic, I’ve asked our team’s reverse mortgage specialist, Tim Baudis, to help provide an informative overview: Q: What’s needed to get a reverse mortgage? Can anybody get one?  A: No; presently, you need to be over the age of 62 and have a certain equity position in your home to be eligible for the loan.  Q: What’s the benefit of a reverse mortgage?  A: There’s a bunch of different benefits, but a few of the main ones include the fact that there’s no income or credit requirement. You can take cash out of the home and choose whether or not to make a payment. Here’s another huge perk: Interest rates are in the 2s right now, which is record-breaking.  Q: Can I still qualify if I have bad credit?  A: Absolutely; even if you’re facing a foreclosure situation, you can still qualify.  Q: It can’t be perfect, right? What are some of the drawbacks?  A: Truthfully, there aren’t many drawbacks, and that’s because today’s updated reverse mortgage is a far cry from the troublesome old version (e.g., investors taking the title of your home while you get charged exorbitant rates). This loan product has been taken over by the Federal Housing Administration, which, along with the Department of Housing and Urban Development, now guarantees and insures it. We’ve heard plenty of horror stories in the past, but the fundamental flaws of the loan have been fixed.  Hopefully, this information has been helpful if you’re someone who’s been contemplating a reverse mortgage. If you have further questions about this or any other topic, don’t hesitate to give me a call or send an email. I’d love to hear from you and have a more in-depth, one-on-one conversation.

This is how you can tap into the equity of your investment property. If you have an investment property whose equity you want to tap into, there are several ways to do so. The first is by using traditional financing, where you show your taxes, look at your Schedule E form, and see how much money the property is generating versus how much you’re making. Based on that, you either qualify or don’t. In short, your other options don’t automatically mean using a hard money loan. There are equity-based programs where we look at the income being produced by the property so it becomes a stand-alone entity. We look at your credit and the income being produced by the property to see whether you qualify for refinancing or cashing out. Right now, we’re going all the way up to 70% loan-to-value on these programs. If you want to talk more about your options as an investor, don’t hesitate to give me a call. I’d love to speak with you.

Here’s a look at the options available for today’s self-employed buyers. First, I wanted to give you a little advice if you have an investment property and you want to tap into that equity. You can always do so through traditional financing with a big bank, but there are other options. For example, there are equity-based programs where we look at the income being produced by the property to qualify you for a cash-out refinance. Right now, we’re going all the way up to 70% loan-to-value on those programs. Second, one of the groups that have been hit hardest by COVID is self-employed individuals. If you’re self-employed and need a mortgage, you can get one through traditional financing, bank statement loans, or another option. We can actually work with self-employed investors to take their bank statements, look at the deposits, and come up with an average that we’ll then use as income to qualify them.  If you have any questions for me about buying a home, investing, or refinancing, don’t hesitate to reach out via phone or email. I look forward to hearing from you soon.

Here’s what you need to keep in mind when using various forms of credit. There are three main factors used to determine your credit score. The first and most obvious factor is your payment history; have you been paying what you owe on time? The second factor is the length of time you’ve had lines of credit open—the longer, the better. Lastly, there’s the ratio between the current balance on an account versus the limit of that account; though there are differing opinions on what exactly this ratio needs to be for you to get the optimal credit score, I’ve seen a consensus growing around 20%.  What if your credit is bad? How can you start digging yourself out of that hole?  1. Apply for a secure credit card. Instead of applying for credit all over the place, go for the sure thing; head to your bank and ask for a secure card—not a prepaid card. Refusing to use credit won’t move your credit score anywhere. You need open trade lines to jump-start your credit, but they need to be safe. Having at least three well-managed trade lines of credit open will help you demonstrate that you’re responsible.   2. Check out First Premier Bank. They’ll give you a $300 credit card for $95 up front, and after one full year of making your payments on time, they’ll return your money back. Remember: The size of the account doesn’t matter; you don’t get additional points for having a $10,000 credit card. It’s all about ratios and percentages. Keep your balance as low as possible to maximize your credit points.  If you have any questions about improving your credit score or healthy credit usage, we can help you with some credit counseling. We’re not credit experts ourselves, but we know the basics very well and can help get an extra 10, 15, or 20 points. If not, we can refer you to some reputable credit repair companies. Give us a call or send us an email anytime!

Here’s how we’ve been ahead of the tech curve in the mortgage industry. Like pretty much every industry in this country, the mortgage industry has changed as a result of the COVID-19 pandemic. What will a post-pandemic mortgage industry look like? The first big change is that people aren’t able to walk into a bank or lender’s office and ask for a loan or refinance anymore. You need to make an appointment first. The good thing about our team is that we’ve always been a tech-based brokerage ahead of the digital curve. We’ve been having clients schedule their appointments online for years, so we are specialists in remotely lending. Everything we do is web-based; nothing needs to be printed, and we can communicate directly on the computer. “These changes make the process safer and more convenient.” What happens when you have to sign documents? As long as they’re not the final documents that need a notary, everything can be signed electronically. That makes the process not only safer, but also more convenient.  Throughout the process, basically everything gets done electronically. There’s no need for you to always work with a local lender because that in-person interaction isn’t necessary. However, if you are like me and like talking to a person and being able to look them in the eye, we can hold Zoom meetings where we will break everything down and share our screen to go over the documents one by one.  The bottom line is that lending has never been better, more convenient, or more user-friendly. If you have any mortgage-related questions for me or needs I can assist with, don’t hesitate to reach out via phone or email today. I look forward to hearing from you.

Interest rates have been hard to predict, but here’s the latest news. There has been so much unpredictability with interest rates lately that it’s even hard for us real estate agents to keep track sometimes. However, there’s light at the end of the tunnel. Now that things are starting to return to a more normal state after the initial panic of the pandemic, banks are opening back up. Still, interest rates are the lowest they’ve ever been. To learn more about our current interest rates, watch the short video above.

Is mortgage forbearance the same as mortgage forgiveness? No, and here’s why. It’s clear COVID-19 isn’t going anywhere, and as we head further into the summer months, the nation is struggling with morale. However, I’m confident we will get through this together. My heart goes out to all of the families who have been affected either financially or physically. Today I want to discuss an all-important and timely topic: mortgage forbearance.  You’ve likely heard it mentioned on the news, as more and more homeowners explore options to ease their increasing financial burdens. How does it work? What are the pros and cons? Is it the best strategy for you? These are the questions I want to address for you. My goal is to empower you to make a more educated decision so that your efforts to seek relief don’t end up harming you later.  Cited below for your convenience are timestamps that will direct you to various points in the video. Feel free to watch the full message or use these timestamps to skip to topics that interest you most:  0:45 — Defining a mortgage forbearance  2:00 — Don’t jump on the bandwagon; if you’re still able to make your payments, do so.  3:05 — With forbearance, your property taxes and insurance are not getting paid  4:30 — Your servicer will not report your forbearance to your credit bureau  5:10 — The right way to go about obtaining a mortgage forbearance  7:38 — Wrapping up today’s topic  I can’t stress how important it is to get all the details of your forbearance, should you decide to get one, in writing. If you have questions about what I discussed in this video, or anything else pertaining to lending amid this COVID-19 environment, please reach out to me via phone or email. I’m here to be a resource for you in these uncertain times. I look forward to hearing from you.

Now that the state is opening back up, lenders are getting back to work. Now that we’re into phase two of our state’s reopening, what does that mean for the lending world? In case you’re not aware, many lenders suspended their operations once the COVID-19 outbreak hit. Not only that, but they also added a lot of overlays to protect themselves because they didn’t know how long the lockdown would last. With everything slowly reopening, though, these overlays are being removed. To get all the latest news from the lending world, watch the short video above.

If you’re having trouble paying your mortgage during the pandemic, don’t seek out a forbearance before reading this. What is a forbearance? Put simply, a forbearance is an agreement in which your mortgage provider allows you to delay your payments for a certain period—but it’s not the same as mortgage forgiveness. For example, suppose you’re in the restaurant industry with a $1,000-a-month payment, and you’re just not able to make those payments for the next four months. So what happens to the $4,000 you deferred? Well, different things can happen to it: The bank can add it to the back of your loan, meaning your loan period will be extended by four months. You can also get what’s called a ‘silent second’, which means that the deferred $4,000 will be kept on the side, and whenever you sell or refinance the property, you’ll be expected to pay it. Here are some pros and cons of forbearance: Cons: You still owe the deferred amount. This is something that people need to consider, especially those who have FHA or VA loans, where you pay your taxes and insurance together with your mortgage. In those cases, your property taxes and insurance aren’t getting paid, and since there’s no law or regulation that states what will happen to that portion of your payment, the county might demand that you pay your property taxes, and your insurance company might do the same. If the government isn’t stepping in for that portion of your payment, you’re still liable. It’s critical that you speak with your lender to see how forbearance would affect your situation. “A forbearance isn’t a way of saving money—it’s a can of worms.” Pros: Forbearance will help you get through these challenging times. Plus, there won’t be any late payments for the deferral period. Not to mention that your lender won’t be reporting your forbearance to your credit bureau, which means your credit won’t be penalized. Mind you, we’re not talking about every single mortgage out there—only the ones governed by Fannie Mae, Freddie Mac, and other government-backed entities.  If you’ve been affected by the pandemic and need assistance, here are the steps you need to take: Call the number on the bottom on your mortgage statement and request forbearance. They won’t implement this help automatically. Fill them in on your situation and why you cannot make your mortgage payment.  Make sure you get the details of the arrangement in writing. I do want to reemphasize that forbearance is not equal to forgiveness, and that’s why I recommend that if you still have a job and can pay your mortgage, you should. Don’t jump on the bandwagon of forbearance simply because it seems easy in the short term. A forbearance isn’t a way of saving money—it’s a can of worms. That money is non-interest-bearing, so you won’t generate any interest on the money you don’t pay. If you need help or have any questions, don’t hesitate to reach out to us. We’re here to help you.

Here’s a quick rundown of how the COVID-19 pandemic has impacted our market. What’s been happening in our market since the COVID-19 pandemic hit? There are a few key developments to know about. First, as I’m sure you’ve heard, the federal funds rate has been lowered, but this doesn’t necessarily translate into lower mortgage rates for mortgage holders. The federal funds rate is the rate at which banks lend money, not the rate at which you’re able to refinance your loan. In other words, it’s not a direct indicator that rates should be lowered.  This has been the cause of a lot of confusion, because many people are asking for rates as low as 1% or 2%— but that’s not possible. While rates are very low, they’re not quite that low.  Second, many banks and lending institutions are shutting down or suspending lending operations. In the wake of the coronavirus pandemic, they expect many people to default on their loan and ask for help in the form of a forbearance. In this case, you can go anywhere from three to 12 months without making a mortgage payment. Some banks claim they’ll immediately forgive that debt, while others say they’ll add the forbearance amount to the end of the life of your loan. So don’t think of a forbearance as free money; you’ll have to pay back that amount eventually.  “The best thing you can do right now is educate yourself.” The good news is, there are plenty of banks that are still lending, whether it be for FHA, VA, or conventional loans. However, some are tightening their guidelines for self-employed borrowers. This will make bank statement loans harder to secure, and many people who are self-employed won’t be able to refinance or cash out.  The best thing you can do right now is educate yourself. Don’t trust everything you see in the news. If you’d like to know more about your situation, give my team a call. Like everyone else, our resources are limited, but we’re doing the most with what we have, and we’d be happy to explore your options.  Remember, the situation is changing day by day, hour by hour. Rates are fluctuating wildly, so whatever was available last week or even yesterday might not be available today. No matter what your circumstances, we’re here to guide you. If your best course of action is to stay put and revisit your situation once everything passes, I’ll be the first to tell you so. If you want to refinance, though, we’re ready to help you. If you have other financial questions or there’s anything else I can help you with, feel free to reach out to me as well. I look forward to hearing from you.

Homebuyers: there are five big mortgage misconceptions that could lead you astray if you believe them. Today I’ll name them and discuss the actual truth behind them: 1. You’ll get the best rate with your current bank. Some banks offer discounts to their clients, but that’s not usually the case. You’re always better off shopping around and talking to different lenders so you can compare both the best rates and overall cost. 2. You can’t get a mortgage loan for less than 20% down. In reality, there are several mortgage loans you can get for less than 20% down. The FHA first-time homebuyer program, for instance, allows you to secure a loan for just 3.5% down. Additionally, conventional loans allow you to put down any amount less than 20%. Keep in mind, though, that if you put down less than 20%, you’ll have to pay mortgage insurance. 3. You can only refinance your home loan once every 12 months. Actually, you can refinance your home loan whenever you want. As a rule of thumb, though, you should only refinance when you can recover the cost of that refinance within two years or you can lower your rate by 1%. “Credit shouldn’t stop you from buying a house.” 4. You need excellent credit to buy a house. There are programs you can use that allow you to buy a home with a FICO score as low as 580. Remember, the beauty of credit is you can fix it right away. Our team offers free credit counseling, so if your credit score isn’t where you’d like it to be, we’d be happy to sit down with you and talk about what you need to do to raise it. 5. You can’t buy a house if you had a bankruptcy, short sale, or foreclosure. Again, there are several programs that allow you to do just that. An FHA loan, for example, will allow you to buy a home within two years of your bankruptcy discharge, and conventional loans allow you to buy within four years after a foreclosure. No matter what your situation, your best course of action is to talk to a mortgage professional such as myself so we can go over what you need to do to buy a home. As always, if you have any other mortgage questions or there’s anything else I can help you with, don’t hesitate to reach out to me. I’d be glad to help you.  

Today I want to provide you with a list of documents you’ll be required to have in order to get pre-qualified for a home loan if you’re going FHA, VA, or if you’re self-employed. With both FHA and conventional loans, you’ll need the same documents: The two most recent pay stubs for both the main borrower and the co-borrower if there is one Tax returns for the past two years Two recent bank statements A copy of your driver’s license A copy of your social security card If you’re in the military or are a veteran and you qualify for a VA loan, the documents you’ll need are slightly different: Your latest Leave and Earnings Statement (if you’re active duty) Your certificate of eligibility Your tax returns Your most recent bank statements “Remember that the first step in the home buying process to get pre-qualified—don’t start by looking at homes or going to open houses.” If you’re self-employed, there are two different options: Two years of tax returns, which allows us to base your income on how much you declare as profit at the end of the year Or: Bank statements from the last 24 months, which allows us to determine your income based on the deposits you’ve made in the last two years. Now that you know the documents needed, what do you do with them? Well, we can set up an appointment where we’ll sit down face-to-face, or you can email or fax the documents to me. Remember that the first step in the home buying process to get pre-qualified—don’t start by looking at homes or going to open houses. You first need to determine what is the maximum amount you’d qualify for, what your options are, and how much your monthly payments would be at different price points. You only want to be looking at houses you can afford, and the only way to do that is to get pre-qualified. If you have any questions or would like to set up an appointment with me, please feel free to reach out. I’d love to discuss your situation and see how we can help you move forward.

There are many different ways to tap into the equity of your home. We’re going to break it down for you today, whether you have VA, FHA, or conventional financing. We’ll also tell you how to cash into your equity without having to refinance. First, let’s talk about cashing out with a VA loan. A huge advantage of having a VA loan is that you are able to cash out up to 100% of your equity without having to pay taxes on it. If you’re self-employed, it doesn’t matter what type of loan you had in the past. With the new loans we have available, we can use your bank statements to qualify instead of having to use your tax returns. This lets you tap into that equity. You used to have to wait to cash out on that equity until you sell, but today we can help you cash out up to 90% loan-to-value. “VA homebuyers can cash out up to 100% of their equity.” There are a lot of things you can do with an FHA loan. Once you start to build equity, you can get rid of mortgage insurance by tapping into it. Even though you are increasing your loan amount by cashing out, you are reducing your payment by removing the mortgage insurance. At the end of the day, even though you’re cashing out, you’ll end up saving money on your payment. Finally, our bonus tip. How can you tap into the equity of your home and cash out without refinancing? The answer is simple. Take a home equity line of credit, or HELOC, out on your property. If you have a really good rate, you don’t even have to touch that loan. You can get a HELOC for whatever amount you need while keeping your loan payment. The decision of whether to refinance or get a second mortgage depends on a number of factors, including your rate and your credit, but the best thing for you to do to start the process is message me. If you have any questions for me, don’t hesitate to give me a call or send me an email. I look forward to hearing from you soon.

Today I am going to discuss a couple questions that my clients keep asking me: Are we in a housing bubble? Will there be a downturn in home value prices? The economy is extremely strong in San Diego and Temecula and we are not following the same pattern of oversupply that we did in 2007. In fact, we are two years behind on new home construction and that is actually causing home prices to continue to rise. If you think you can just wait for home prices to drop, you are in for a rude awakening. The only thing that can stop this rise in prices is interest rates. For the past seven quarters, interest rates have been going up. Every 1% increase in rates decreases your purchasing power by 10%. What does this mean if you are a buyer or a seller? Well, first of all, while I am not a real estate agent, I see the patterns since I lived through what happened in 2007. If you are looking to buy, go ahead and buy. If interest rates and home prices both continue to increase, you are going to be priced out of the market. “If you think you that you are just going to wait for home prices to drop, you are in for a rude awakening.” If you are a seller and you are trying to time the market so you sell at the peak, I would advise that you sell now instead. It is a really good time to sell and you never know what is going to happen to property prices. So are Temecula and San Diego in a housing bubble? No— not even close. We are not even close to a housing bubble. Especially since we still have the huge problem of a lack of inventory. If you have any additional questions, please feel free to reach out to me. I look forward to speaking with you soon.

If you’re a real estate agent, an insurance agent, self-employed, or own your own business and haven’t been able to buy a house or refinance your current loan because of how much money you declare, then today’s topic is for you. It seems like there are new programs and guidelines being introduced to the market almost every day, and that’s great news for you. In the past, if you were self-employed, the only way to show your income and be able to qualify for a home purchase (or to be able to refinance your property) was to show your past two years of tax returns. We would then take the average of those 24 months and come up with your income; these are, after all, your expenses. This created a huge problem. For example, say you’re a trucker who makes $200,000 a year, but after depreciating your truck, paying for gas and meals, you would only end up with, say, $40,000. That means we would only use $40,000 to help you qualify for a home purchase. Now, with the way that the real estate market is—especially here in San Diego—there’s not much you can qualify for. That’s why the new self-employed program, which is based on bank statements, was introduced. “We don’t take your expenses or business deductions into account, just a percentage of your deposits.” What’s so special about our self-employed loan? First and foremost, it’s not based on taxes. We base your qualification on your deposits using your bank statements. Say that you get $20,000 a month—we use the average from 24 months, 12 months, or even just one month, depending on the program you qualify for. We don’t take your expenses or business deductions into account, just a percentage of your deposits. Another thing about this loan is that you can come in with only 10% down, and you don’t need perfect credit. The loan can also go up to $2 million, and the debt-to-income ratio is higher than traditional loans. This is just one of our newest home loans that we’ve rolled out, and we’ll have new ones coming out in the the next couple of weeks, to be discussed in future posts. If you or someone you know someone needs a home loan to purchase a property, needs to refinance, or has any questions, you are absolutely encouraged to reach out to us. I’ll be sure to take care of you.

People have approached me with a number of great questions about VA loan eligibility, so today I would like to highlight and address some of the things I’m most frequently asked. “How do you get a VA loan?”  As simple as this question sounds, many people don’t know where to start this process. To get a VA loan, you’ll need to visit a financial institution, like a bank, or a direct lender that is qualified to handle VA loans. We at American Mortgage Group would be happy to assist you in this pursuit. “What determines how much you can borrow from the VA?” Your Certificate of Eligibility (COE) will tell you how much you can borrow from the VA. A COE can be obtained directly from the VA or from your lender. “What qualifies as acceptable proof of military service?” The answer to this question will actually vary depending on whether you are a veteran or are still active duty. Active duty military personnel will need to present a Statement of Service. Veterans, though, will need to present a DD 214. “Can you still obtain a VA loan if you are unable to present a Statement of Service or DD 214?” Actually, yes. Another way to obtain a COE (and a VA loan) is to fill out a VA Form 26-1880. This will allow your lender to gather military records and determine how much you qualify for. “Can you have a cosigner on a home purchase you’re financing with a VA loan? Having a cosigner help you purchase a home when using a VA loan is acceptable, but the cosigner must be your legal spouse. You may have other people on the title of the property, but not on the VA loan. “You can rest assured that when you purchase a home using a VA loan, you will be paying a fair price.” “If someone already has a VA loan, can they get another one?” Yes, but the amount you will qualify for depends on how much entitlement you have left after your previous purchase. Your COE will indicate this amount. Also, eligibility can be restored if the previously purchased home has been sold. A lot of people think they can only have one VA loan at a time, but this is not correct. “Can you get a VA loan if you had a bankruptcy in the past?” Yes. It will need to be determined whether your bankruptcy was a Chapter 7 or a Chapter 13, though, because these will each be handled differently. More than anything, the most significant thing you will need to do is sit down and have a conversation about your current financial standing. And you will want to pay special attention to your FICO score. With these common questions out of the way, there is one more common concern I’d like to touch on. Many people fear that they will overpay for a home when making a purchase with VA loan financing. However, the VA appraisal process won’t allow you to do so. There are certain codes and conditions a property must meet to qualify for VA financing in the first place. You can rest assured that when you purchase a home using a VA loan, you will be paying a fair price. If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.

I often get questions about how VA loans work and what it takes to obtain one. The very first thing I’ll touch on is the VA lending limit. The VA only allows you to borrow up to a certain amount. This amount will vary by county. In San Diego County, for example, you can borrow up to $649,750 for a single-family residence. One important point to be aware of is the fact that there are different lending limits for single-family homes, duplexes, triplexes, and fourplexes. In San Diego County, the VA lending limit is $831,800 for a duplex, $1,005,450 for a triplex, and $1,249,550 for a fourplex. In Riverside, the VA lending limit is $453,100 for a single-family residence, $580,150 for a duplex, $701,250 for a triplex, and $871,450 for a fourplex. So, what happens if you want to purchase a home above the VA lending limit? You actually do still have options in this scenario. You can still purchase a home using a VA loan, even if that home is above the lending limit, so long as you pay 25% of the difference. So if you want to purchase a $700,000 single-family home in San Diego, the $649,750 covered by the VA loan leaves a total difference of $50,250. Of that $50,250, you would only have to come up with $12,562. Moving on, people also often ask me what kind of incomes qualify for VA loans. Well, if you’re active military, we can use every income source on your LES. If you are no longer in the military or are retired, you can still use your current income so long as you have continued to do what you did while in the military. If in the military you were a mechanic and you are still working in that field, you can still use your new income to help you qualify. “Remember that certain lending standards vary depending on county and income.” Unfortunately, you cannot use your GI bill because that income won’t continue for three years. VA disability income, however, does qualify. In fact, you can use 120% of VA disability income toward a loan, and if you’re receiving at least 20% disability, you can have your VA funding fee waived. Some counties even offer property tax exemptions for veterans who are 100% disabled. This varies by county and depends on your income, so consult with your agent and your county recorder’s office for more information. I hope this has answered some of your questions. Still, nothing compares to speaking with a lender about your specific circumstances. And to all veterans and active duty military members: Thank you for your service. If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.  

For the past month, I’ve been meeting with previous clients and doing their yearly loan reviews. When the topic of refinancing comes up, I keep hearing the same things. “Refinancing only means taking money out of your mortgage or your house.” That’s not necessarily true. When refinancing, you have several options. The most common is refinancing an FHA loan into a conventional loan so that you can remove your mortgage insurance. Another reason people refinance is to lower their interest rate. Depending on how much you have on your loan, this could save you thousands and thousands. It’s always good to try to lower your interest rate by at least 1% if you refinance. “There are many reasons to refinance.” When you refinance, you are able to take money out due to appreciation. Last year, properties in San Diego appreciated by close to 10%, which you can tap into as an owner. Equity is imaginary money until you put it to good use. You can refinance take some of that equity out, and use it to remodel your home to increase your equity even more. Refinancing also means changing the terms of your loan. For example, if you own a home with an adjustable-rate mortgage, your payments are going to jump dramatically at some point if they haven’t already. Always switch from an adjustable-rate mortgage to a fixed-rate mortgage if you are able to. Finally, you can refinance to shorten the term on your loan and lower your rate. You can switch from a 30-year loan to a 20- or 15-year loan. If you have any questions for me or you’re considering refinancing anytime soon, I’d love to sit down with you and go over your options. Don’t hesitate to give me a call or send me an email anytime.

When buying a home, there are a few questions that you should make sure to ask your lender. 1. What is my interest rate? This is important because the interest rate determines what the principal and interest portion of your mortgage payment will be. Make sure that you discuss interest rates up front so that you know what your payment will be at the end of escrow. If they don’t disclose the rate right away, you may end up with a higher payment than you thought you were going to get. 2. What is my monthly mortgage payment? Your mortgage payment includes the principal, interest rate, taxes, and insurance (PITI). Some lenders may just tell you the principal and interest payment, but you need to know the total payment. In San Diego, property tax rates are around 1.25%, so take that into consideration, as well as insurance payments. 3. Is my interest rate fixed or adjustable? If you have a fixed interest rate, your payment will be the same for the term of the loan. Adjustable rate mortgages got a lot of people in trouble in 2007 because the rates would change and their mortgage payments would go up. In order to have a consistent mortgage payment, get a fixed rate. 4. What fees are involved in the transaction? Whether you are buying a home or refinancing a home, you should ask if the transaction involves any points being charged to you. Some lenders charge 1% of the loan amount. If you are buying a $400,000 home and they charge you 1% up front, then you are paying $4,000 just to do the loan. If you are buying a house, those fees are included in your closing costs. “Adjustable-rate mortgages got a lot of people in trouble in 2007.” 5. Does the loan have a prepayment penalty? You will be stuck with that loan for however long the penalty term is. The prepayment penalty can be between 3% to 5%. If you buy a $300,000 property and your mortgage has a prepayment penalty, that will cost you between $9,000 to $15,000 to get out of that loan. Make sure you don’t have any prepayment penalties. 6. What is the minimum required down payment? The down payment amount is dictated by what type of loan you get. Conventional loans require 5% to 20%. FHA loans have a minimum requirement of 3.5%. It’s important that you go into the transaction knowing how much of a down payment you will need. 7. Does the loan have private mortgage insurance? This is an additional payment on top of PITI. Call me if you have any more questions about private mortgage insurance. It’s a bit complicated, and I’ll be able to go more in-depth about this on the phone. 8. Do you have any other products that offer a lower interest rate? Loans are not one size fits all. There are a number of different options available. See what your options are and if you can get a lower mortgage payment. I hope you found this information helpful. If you have any other questions about buying a home or refinancing, just give me a call or send me an email. I would be happy to help you!

How does the recent interest rate increase affect you? There are a few ways you need to be mindful of. First, you need to know that when the Federal Reserve moves interest rates, what they’re actually doing is moving the federal funds rate. The federal funds rate is the rate at which banks lend money to each other. The first way this affects you is through credit cards. Most credit cards have variable interest rates, so as the Fed moves the federal funds rate (or prime rate), more of your monthly payment goes toward interest instead of your principal. Basically, you’re paying more for interest, and it will take you longer to pay off your credit card. Rising interest rates also affect student loans. If you got your student loans before 1996, then those student loans have a variable interest rate. As the prime rate increases, your student loan payment will increase as well. The only time rising interest rates don’t affect you is when you have fixed interest rates. Rising interest rates make car payments more expensive as well. If you currently own a car and you have an adjustable rate, your payment will be higher this coming month. “The only time rising interest rates don’t affect you is when you have fixed interest rates.” Rising interest rates impact your mortgage payment too. You might say, “Well, I have a fixed interest rate, so I have nothing to worry about.” You have nothing to worry about now during your fixed period, but what happens when you want to refinance, take some cash out to make some improvements, or get a line of credit? Your payment will be higher because you’re subject to that higher interest rate. Even with a fixed rate, you’ll be affected if you decide to refinance or change your terms. The same applies to people with adjustable-rate mortgages, which is why they’re so dangerous. You have a small payment now while interest rates are low, but according to Freddie Mac, rates are expected to rise from 4% to 4.6% at the end of 2018. If you’re in the market to buy a house, rising interest rates means your purchasing power diminishes and your house payments increase. If you want to take advantage of the currently low interest rates to either buy a house or refinance your property, give me a call so we can review your situation and see if it’s conducive for you to do so. If you have any other questions about how rising interest rates might affect you or you have any other real estate needs, don’t hesitate to reach out to me. I’d be happy to help you.

One question I hear frequently is, “Is right now the best time to buy a house?” Well, I’d like to let you be the judge of that. Today I’ll provide you with some facts and figures about our market, so that you can get an idea of what’s really going on. The numbers don’t lie. When it comes to the time of year, though, right now is undoubtedly a great time to buy. First of all, there’s less competition. Most people aren’t buying near the holidays, so you have an advantage on the market. Secondly, sellers are worn out. Sellers who listed their property during the summer but haven’t sold yet will likely lower their price, if they haven’t done so already. Also, because fewer transactions occur at this time of year, you will have the undivided attention of whichever real estate professionals you work with. Finally, this time of year is great to buy because depending on how you buy your property, some closing costs may be tax deductible. “Is right now truly the best time to buy? The answer is yes.” So, now that we’ve established that this time of year is the best time to buy in general, what about right now, specifically? Is this moment in time truly the best time to buy? The answer is yes. Currently, you could get a 30-year mortgage at an interest rate at 3.5% for a monthly payment of approximately $1,475.35. But this won’t last. Interest rates are going to rise. While your interest rate may not impact your monthly payment much, a higher interest rate would absolutely mean a lower loan amount. The difference between a loan you obtain now versus one you get later could be tens of thousands of dollars. So, why wait? If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.

There are two major changes that will take place in the home lending industry in 2018. The first is an increase in lending limits, both locally and nationwide. Here in San Diego, the lending limit will increase to $679,500. In Riverside, the lending limit is increasing $453,100. This affects conventional conforming loans, FHA loans, and VA loans. This means you’ll be able to buy a bigger, more expensive house in 2018 than you were this year. The second change is the introduction of new lending programs. Today, I’ll list three of those programs. The first is the Bank Statement Program, which is designed for individuals who are self-employed. Instead of having to show two years’ worth of taxes, we take the average of all of your deposits for the past 24 months to calculate your purchasing power. “You’ll be able to buy a bigger, more expensive house in 2018 than you were in 2017.” The second is the 90%, one loan, no mortgage insurance program. This loan is perfect if you bought a house last year or two years ago and are waiting for the property to increase 20% in order to remove the mortgage insurance. With this loan, there’s no need to wait that long. If your property has appreciated as much as 10%, we can refinance your loan, switch it from an FHA loan to a conventional loan, lower your interest rate, and remove your mortgage insurance. You’ll save hundreds of dollars each month! The last program is the Fresh Start Program, which is for those who filed for bankruptcy or had a short or a foreclosure. With this program, you don’t have to wait as long as seven years to buy a house again. If you have any questions about these changes or you’re looking to buy or refinance a home, don’t hesitate to reach out to me. I’m here to help you.

People always ask me why someone should refinance their home. To answer that question, I’ve got a few smart reasons why refinancing your home loan could be a good option for you. To lower the term. You could go from a 30-year mortgage to a 20- or even 15-year mortgage. Refinancing to a shorter term will help lower your interest rate and also the amount you’re paying for your home. To lower your rate. If you had a high interest rate when you purchased your home, now is the time to refinance. Whether it’s going from a 5.5% rate to a 4.5% rate, or even from a 4.5% rate to a 3.5% rate, you’ll be able to shorten your term and save hundreds every month. “Refinancing could lower your rate and help you save money.” To take cash out. If you’ve owned your property for a couple of years and have accumulated equity, you can take some of that equity out and reinvest it into your home. You could also use it to pay off some debt. To move to a conventional loan. This is probably the most common reason people refinance. Changing from an FHA loan to a conventional loan, for example, could allow you to get rid of your mortgage insurance. If you have any other questions, would like more information, or want to know if refinancing is right for you, feel free to give me a call or send me an email. I look forward to hearing from you soon.

What are the steps you must take when buying a home? Whether you’re a first-time homebuyer, you’re buying your second home, or you’re looking for an investment property, the first step is to get pre-qualified. Everybody typically does the fun stuff like look at properties online, but getting pre-qualified is the first step you must take. There are three main factors that can affect your qualification. The first is your credit. Most programs require you to have at least a 580 FICO score to qualify. The second factor is your income. You need to be employed for at least two years in the same industry. Not the same job—the same industry. For example, if you work in construction and switch companies but you continue working in construction, that’s perfectly fine. If you go from working construction to working at a bank, the clock gets set back two years. Your income determines your debt-to-income ratio, and that determines how much you’ll be able to qualify for. “Getting pre-qualified is easier than you think.” The third factor is the down payment. Different programs require different down payment amounts. With the new government down payment assistance programs, you can put as little as 0% down. There are also FHA programs for first-time homebuyers and conventional programs that offer 5%, 10%, or 30% down. Once you complete the pre-qualification step, then you can start looking at properties and interviewing agents. Getting pre-qualified is easier than you think. It can be done either over the phone or in-person. If you need help, give me a call so we can help you know where you stand. If you have any other questions about this topic or you’re thinking of buying or selling a home soon, don’t hesitate to reach out to me. I’d be glad to help you.

As a mortgage lender, people always ask me which factors will most affect their credit. Today, I’d like to share a list of these key factors. 1. Making your payments on time. You may not realize what a dramatic impact missing even just a single payment can make on your credit score. The effect can actually be between 20 to 60 points, so make sure you are always punctual with your payments “Always keep your credit card balance 30% below your limit.” 2. The length of your credit history. The longer you have an account open, the more points you’ll rack up over that time. As a side note, if you want to pay off an account and credit card, never cancel that account. If you do, all of the credit history will disappear and cause your score to go down. 3. Your balance against the limit. As a rule of thumb, you should always keep your credit card balance 30% below your limit. If you have any other questions, would like more information, or are interested in free credit counseling, feel free to give me a call or send me an email. I look forward to hearing from you soon.

For most homebuyers, their mortgage is their biggest monthly expense. However, most owners do little to no preparation, negotiation, or shopping in order to get the best deal possible. Here are three of the biggest mortgage mistakes you can make and how to avoid them: 1. Believing the advertised rates are what you’ll actually pay. Unless you have near-perfect credit, most advertised rates are out of your league. To get boasting rights on a good rate, you have to pay part of a point, or even a full point. A “point” in the mortgage world is roughly 1% of your loan amount. 2. Not comparing lenders. Just like everybody knows a real estate agent, everybody knows a loan officer or mortgage banker. However, they aren’t the same thing. A loan officer works for the bank and can only offer packages the bank puts together. A mortgage broker pre-qualifies you like a loan officer, but can shop around to get the best deals for you. Just like you wouldn’t go to buy a car without visiting a few different dealerships, you shouldn’t get a mortgage after talking to just one lender. “Most advertised rates are not what they appear.” 3. Not paying attention to the terms. The true cost of the loan lies in the APR, which includes various fees from the lender. There are so many ways lenders can inch those up, including with loan origination or processing fees that can vary widely. Make sure you know what you’re going to be paying before you sign on the dotted line. If you have any questions for me or want any more tips about how to get the best possible rate and terms for your mortgage, give me a call or send me an email. I look forward to hearing from you.