San Diego Real Estate Podcast with Andre Kwan

Here’s what to consider if you’re thinking of buying an investment property in 2020. If you’re thinking of buying an investment property in 2020, moving forward with the purchase mostly depends on your long-term objectives.  If you’re able, Michael Radi, our branch manager, always recommends buying a two-, three-, or even four-unit property. One of the most important factors to consider in San Diego County is home prices.  If you want to buy a multi-unit property, you’ll have to put more money down based on the loan program you use. There are also restrictions to contend with in terms of the size of your loan. Reserve requirements are another factor to consider with these properties—you need several months’ worth of payments in reserve to qualify.  “Consult with an experienced loan officer so they can outline all available opportunities.” One of the primary reasons buying a multi-unit property is a great investment is because you have multiple renters helping to pay down your mortgage. If you’re a first-time buyer, this will allow you to buy a larger property as a future investment nest egg. Technically, you only have to live in the home a year before you’re free to buy another investment property or long-term primary residence.  Before you do anything, though, consult with an experienced loan officer so they can outline all available opportunities.  If you have questions about this or any other lending topic or would like to schedule a consultation, don’t hesitate to reach out to me. I’d love to help you.

How will you be using that additional home you’re buying? Here’s why underwriters want to know the answer. Today we’re exploring the difference between buying a second home and buying an investment property. Typically, there are different rules at play for each scenario.  One clear example is the down payment: You can buy a second home with as little as 10% down. However, underwriters use a set of guidelines to make sure that your property will be used as a residence and not as an investment.  They’ll ask you questions to confirm you’re not going to rent out the property. They’ll even go so far as to double-check your tax returns to make sure that’s the case.  They’ll also want to know why you’re buying a second home. Perhaps you’re buying in a resort community, or your job demands that you work in a certain area for a certain amount of time each year. Is the home at least 100 miles away from your primary residence? Have you been a landlord in the past? These are all common questions. “Second homes generally have a better interest rate than investment properties.” Underwriters get particular because, when you buy an investment property, they ask for a minimum of 15% down (some increase it to 20% down because not all mortgage insurance companies will cover that purchase when you also buy an investment property).  What is the condition of the home? How much are the rents going for in that area? If it is currently rented, typically most mortgage companies let you use 75% of the rental income to help offset that mortgage. For instance, if that home is rented for $1,000, most mortgage companies will let you use $750 to apply to offset the mortgage on that particular home.  Second homes generally have a better interest rate than investment properties, but it is a case-by-case system; reach out to a seasoned mortgage professional for the proper guidance in helping you determine what makes the most sense.  We hope to answer more questions like this in the near future, and if you have other questions in the meantime, don’t hesitate to give us a call or send an email. We’re always here to help.

Here’s what you should know about PrimeLending’s exciting new down payment assistance product, Unison. Not a lot of consumers are aware of the product I’m sharing today, especially first-time homebuyers. There are a variety of down payment assistance programs(1) available across the country, so exploring them all can be confusing. The specific type that I’m highlighting here acts like shared equity, and here’s what I mean by that:  Let’s say you’re looking for a home and happen to come across one that’s a little bit too expensive; your down payment would naturally have to be greater. Typically, consumers shy away, settle for something more affordable, and adjust to less square footage.  “Unison is one of the most amazing products on the market now.” What if your heart is set on that larger house? Maybe you just can’t pass up its unique layout. Believe it or not, you do have options. PrimeLending currently offers a program called Unison, which matches your down payment. For example, if you come to the table with 10% down (which, by itself, would not be enough for this larger home), Unison will come in and match that 10%. Well, what’s the benefit of this, and how does it work? Here are some points to know:  1. It gives you more purchasing power on the market. Where you once saw upfront costs as barriers blocking you from your perfect home, you now see possibility.  2. Unison wants to be a shared equity partner with you. They match your down payment up to 10%, helping you close on the home. Then, in three years or more, you would only have to pay PrimeLending a percentage (30%) of the amount by which your home has increased in value in order to pay them out.  In other words, you get to enjoy the house, and there’s no interest accumulating or payments necessary in the meantime. Also, you don’t have to pay them out after three years. You can keep the shared equity for the entire life of the loan or until you sell the home, at which point you would pay them out at the required percentage.  This product is on the market for the consumer’s benefit. Do note that there are a lot more details involved, but the bottom line is that Unison is one of the most amazing products out there on the market right now.  For more information on this product, please contact us here at PrimeLending. We’re always happy to get you up to speed on everything we have to offer. Disclaimers (1) Certain restrictions apply. Not available in all areas. Please contact your PrimeLending loan officer for more details. * Unison is an independent investor and is not affiliated with any bank or lender. Unison offers its products with a variety of lender partners, as the lender partner offers programs without Unison deals. Each of the Unison programs and lender programs may be used independently of each other. Unison HomeBuyer Agreements and Unison HomeOwner Agreements are provided exclusively by Unison Agreement Corp., a wholly-owned subsidiary of Real Estate Equity Exchange, Inc., dba Unison. Certain restrictions apply. “Unison” is a trademark of Real Estate Equity Exchange, Inc.  

Have you done something unpermitted to your property, like adding a certain unit? Today’s message is for you. As we begin 2020, it’s important for you as a consumer to be aware of all the opportunities out there for you now. There’s a variety of products we offer at PrimeLending, but there is one product in particular in which many people aren’t aware. I’m excited to share it with you today.  Sometimes, a property will have a certain unit installed in it (or contract work done to it) that is unpermitted by the county. After anything unpermitted is done, the owners will find it difficult to refinance.  “Most banks will tell you, ‘We’re not going to touch this.’” For example, if you have a single-family residence, but you built a unit in the back, you’ve likely done something unpermitted that can affect your refinancing options. Most banks will tell you, “We’re not going to touch this.”  However, PrimeLending offers an appraisal that takes into consideration only the permitted items on a lot. We will be able to do the loan without counting that unpermitted unit as part of the value.  If you find yourself in a situation like this and would like to know details on it, feel free to give us a call at PrimeLending. We’re experts on these kinds of financing options and we’d be glad to help you.

Here are three things you can expect a lender to look into if you’re thinking about investing in real estate. On pretty much a weekly basis, we’re either asked, “How do I buy my first investment property?” or “How do I buy the next piece of real estate for my portfolio?” As lenders, we’ll typically look at three factors:  1. We’ll look at your credit to determine how many bills you pay, how much debt you have, and what your liabilities are. 2. We’ll look at your income—both your own income, as well as what income the investment property would generate. Typically, better investment properties (i.e., the ones that have better cash flow) are found in desirable areas that are easy to market to renters. 3. We’ll look at what kind of down payment you can afford. Most investment purchase programs will require a 20% down payment plus closing costs. For example, if you’re looking to buy a $300,000 condo, you can anticipate a $60,000 down payment to be able to begin the purchase process for that property. Sometimes there are other ways around it, such as when the seller wants to do private financing, but for institutional investors, this is a good baseline expectation to have. Some financial institutions might require more than 20% down. If you’re ready to buy your first piece of investment property, we’d love to be the ones to provide you with guidance on how to accomplish your goals. Feel free to reach out to us so we can help you begin the process or answer any questions you have. We hope to hear from you soon!

Knowing the difference between interest rates and annual percentage rates could save you thousands on your mortgage. Here’s what you need to know. What is the difference between annual percentage rates (APR) and interest rates? Both rates measure important, but distinct, costs associated with your home loan, and understanding the difference between the two could save you thousands on your mortgage.  The interest rate is the cost of borrowing the principal loan amount. It can be variable or fixed, but it’s always expressed as a percentage. “The main difference between the two is that the interest rate calculates your actual monthly payment, while the APR calculates the total cost of your loan.” The annual percentage rate is a broader measure of the cost of your mortgage because it reflects the interest rate as well as other costs associated with your loans, such as lender fees, discount points, and some closing costs. The APR is also expressed as a percentage. The main difference between the two is that the interest rate calculates your actual monthly payment, while the APR calculates the total cost of your loan. You can use one or both to make apples-to-apples comparisons when shopping for a loan. If you’re only focused on getting the lowest monthly payment, I’d focus on the interest rate, but if you’re focused on the total cost of your loan, then you can use the APR as a tool to compare the total cost of two loans. I hope you found this information helpful! If you have any questions, don’t hesitate to reach out to me. I’d love to hear from you.

Don’t assume you can’t afford to buy a home. You can, and here’s how. If you’d like to buy a home but are worried you can’t afford it, I have good news: There are a few ways you can buy a home with 100% financing.  The first is by using a VA loan, which is reserved for veterans and active-duty members of the Armed Forces. The second way you can purchase with 100% financing is by using PrimeLending’s Wealth Builder Program.  This is an ARM product with a 20 or 15 year term - not a fixed product, which will help you reduce the principal on your loan fairly quickly (aka building wealth via equity). Keep in mind that some restrictions apply for this loan, and these restrictions pertain to what state you but in, your occupancy type, and your credit score and income.  “There are a few ways you can buy a home with 100% financing.” If neither of these options fit for you or you can afford to put a little money down, you can take advantage of conventional financing programs, which allow a 97% loan-to-value rate on a 30-year fixed loan. Some FHA loan products allow up a 96.5% loan-to-value rate as well. If you’re curious whether any of these loans are right for you or you have any other real estate questions, don’t hesitate to reach out to me. I’d love to help you.

As your mortgage loan officer, I’ll need to gather some documentation from you to get you the best possible loan and interest rate. Here’s a list of the things that I’ll need. The home-buying journey should be simple and easy, and it’s my job to help you get prepared by providing you the tools and education to make the process smoother. When we meet face to face, make sure you come prepared with your documentation so that I can do my part in providing you with all the different loan options you may be eligible for as a buyer. Here is a list of the documentation you should bring: 1. Your two most recent Federal Tax Returns, including your W-2s, or your K-1s if you’re self-employed. 2. Your two most recent pay stubs. “Having this documentation is essential for all homebuyers.” 3. Your assets. This includes all documentation relating to your savings accounts, checking accounts, 401(k), and other retirement account information. 4. Your driver’s license, passport, and any other official ID. My job is to provide you with all the tools you need to map out a proper gameplan to help you succeed in your home purchase. You’ll end up feeling super confident so that you can start shopping and submitting offers with your real estate agent. If you have any questions for me in the meantime, don’t hesitate to give me a call or send me an email. I look forward to hearing from you soon.

I’m often asked, “What is a doctor mortgage loan? And how does it compare to a conventional loan?” This question holds a lot of relevance as some of us have friends and family who are finishing up graduate school and will potentially become first-time buyers. For that reason, I’d like to spell out some key differences between the two loan types today.  No matter what loan you’re considering, your lender will carefully examine three criteria:  Your credit  Your income  Your collateral (or money available for the down payment or reserves)  Starting with credit, let’s discuss each point of consideration. To qualify for a physician loan, you’ll generally be required to have a credit score of 720 or higher, whereas the standard credit score requirement for conventional and government loan programs tends to be much lower; as a matter of fact, some can go as low as 580.  “No matter what loan you’re considering, your lender will carefully examine three criteria: your credit, your income, and your collateral.” The second criterion on the list is income. For doctor, physician, and preferred medical professional loan programs, your lender will look at one of two things: the income you’re receiving under your current employment contract or if you’ve yet to graduate but have a conditional offer of employment lined up, the starting income you’ll receive upon hire. That’s rarely the case with government or conventional programs; more often than not, they’ll want to see that you’ve been with the same employer for some length of time. That brings us to our final factor: collateral. With a physician loan, you can actually qualify for a $1 million loan amount with as little as 5% down. Plus, you won’t be required to purchase private mortgage insurance. As far as cash reserves go, your lender will check that you have at least six to nine months’ worth of payments at hand.  Conventional and government loans are quite a bit different here too. For example, once you pass the $729,000 threshold amount here in San Diego, your loan will be considered a jumbo loan, at which point the investor(s) will require a 20% down payment. On a $1 million home loan, putting 5% as opposed to 20% down is a massive difference—$50,000 versus $200,000.  Keep in mind that different investors go with different underwriting styles, so it’s best to meet with a service provider or mortgage professional who has ample experience working with physician loans. If you have any questions or would like more information, please let us know. We look forward to serving you!

A popular myth that circulates among buyers today is that you’ll need to put at least 20% down to qualify for a home purchase. If that were the case, a lot of buyers out there would have no shot at getting into a home and would end up living in a van down by the river. The reality is that mortgages don’t have blanket requirements. There are so many loan programs available that depend on your budget, credit score, where you want to live, etc. In fact, some programs require as little as 3%, and others are zero-down!  Down payment assistance programs also exist for certain buyers(1) . Our role is to set you up with the best possible mortgage on a home you truly love, and we’ll move mountains to make that happen for you. If you have any questions or would like to go over your options, please contact us today by phone at 1-833-760-9979 or send us an email at SoCal@PrimeLending.com. We look forward to serving you! Disclaimers 1. Certain restrictions apply. Not available in all areas. Please contact your PrimeLending loan officer for more details.  

Many people who are self-employed or salaried will have difficulty providing the documentation that is typically necessary when seeking a loan on the purchase of an investment property. Thankfully, Prime Lending offers a product for people in this exact situation.  This product does not require applicants to submit their income tax returns or bank statements to qualify. Instead, an applicant’s ability to qualify depends on the property’s projected gross rental income as it relates to the investor’s monthly payments on it—otherwise known as a service ratio. The investor will also be expected to pay between 20% and 25% of the purchase price as a down payment. This loan product can be used on single-family properties, as well as multi-family properties with between two to four units. The investor will also be expected to pay between 20% and 25% of the purchase price as a down payment.  “This loan product makes it much easier for certain people to invest freely in as many rental properties as they please.” So, outside of the fact that it allows investors to purchase property without providing certain documentation, how is this loan product beneficial to investors?  Well, when operating through channels like Fannie Mae or Freddie Mac, investors are limited to a certain number of properties. When you use this loan product, however, there is no limit to the number of properties you can own.  Ultimately, this loan product makes it much easier for certain people to invest freely in as many rental properties as they please. It’s also a great option for those looking to refinance.  If you have any other questions or would like more information, feel free to give us a call or send us an email. We look forward to hearing from you soon.

When you go to Zillow, you’re able to receive a Zestimate on your home or another property you’re looking at. However, can you trust these Zestimates?  The answer is, unfortunately, no. According to Zillow’s website, a Zestimate is “A starting point in determining home value and not an appraisal.” A Zestimate is based on public and user-submitted data. While public data is typically accurate, the user-submitted data is anything but.  There are some agents out there who help people increase their Zestimates, but that makes the home seem like its worth more than it is. Zestimates can be tweaked and manipulated, but the expert opinion of a real estate agent can not. After all, Zillow has never been to your house and has no idea how it stacks up to others in the area. A professional agent does. “Zillow is kind of like Webmd.” If you live in a cookie-cutter neighborhood with a lot of data, your Zestimate is probably more accurate than most. If you’re in a rural area or in an area with a lot of different home styles, they’re basically just guessing. We never have to guess. Ultimately, Zillow is kind of like Webmd. If you’re curious about a symptom you’re feeling, you might look up some data on it. However, if you’re seriously concerned about your health, you’d go to a doctor. The same logic applies to your home’s value. Why would you trust it to some website when you could have an expert determine the value for you? Agents have real knowledge of the market and can save you a lot of time, money, and frustration. Just like any profession, though, it’s hard to know who to trust because not all agents have the same knowledge and skills.  As a senior loan officer with over a decade of experience, I work with some of the best agents in the area and would be happy to recommend one to you who can help. If you have any other mortgage-related questions for me at all, don’t hesitate to reach out and give me a call or send me an email today. I look forward to hearing from you soon.

If you’re a homebuyer but the home you want to purchase is in need of some major repair, you can use a renovation loan to finance those repairs instead of pay out of your own pocket.  Where can you find renovation loans, though? What are their qualifications?  In our marketplace, the mortgage products that allow a renovation loan are the FHA 203(k) loan, the conventional Fannie Mae homestyle loan, and Freddie Mac’s CHOICE Renovation loans.  In the case of Freddie Mac’s CHOICE Renovation loans, neither of them have a limit in terms of how many repairs can be done, but any repairs that cost over $35,000 require a HUD consultant. Basically, the consultant makes sure the costs are in line with the overall average and that the work is on time and up to standard. “The great part about renovations loans is they don’t require the home to be owner-occupied.” In most cases, the down payment requirement starts as low as 5%, but if you qualify as a first-time homebuyer, 3% is also available. The down payment is based on the purchase price plus the cost of your repairs. For example, if you buy a $300,000 home and make $100,000 worth of repairs, $400,000 is the number they’ll base your down payment off of. You also need a credit score of at least 620 to qualify.  The great part about renovations loans is they don’t require the home to be owner-occupied—you can use it for an investment property or a second home. Unfortunately, you can’t use them to fix and flip properties.  When using a renovation loan, the value of the home is based on what it would appraise for after the renovations are made. Continuing with the example above, your home’s value could increase above and beyond $400,000 depending on the comparable sales in the surrounding neighborhood. In other words, you’d be walking into equity in a situation where you otherwise wouldn’t be.   If you’d like to know more about the requirements for a renovation loan or you have any other real estate questions for me, don’t hesitate to reach out to me. I’d love to help you.

Today’s message is centered around the Bank Statement program and how having one can work to your advantage if you’re self-employed.   A lot of self-employed, would-be homebuyers are left with very few options when trying to qualify for a mortgage, which is most often attributable to the numerous tax-off writeoffs they enjoy.  The Bank Statement program serves as a solution for these buyers because it gives them the power to use their bank statements dating back to the last 12 or 24 months in order to provide the bank with a record of all the deposits they’ve made in that time.  “This is a great product that provides relief to self-employed buyers who aren’t having much luck getting qualified for a home loan through other channels.” Then, we’ll take the sum total of those deposits from that 12- or 24-month period and find the average. If the bulk of those deposits have gone into your personal account, we’re able to use 100% of them for financing. If they’ve mostly gone into your business account, we’ll use about 50%.    Why is this important for you to know? The Bank Statement program can be used as a vehicle for refinancing your home or finding out how much you qualify for in a purchase without any delay.  This is a great product that provides relief to self-employed buyers who aren’t having much luck getting qualified for a home loan through other channels.  We’d be more than happy to go over your bank deposits over the last 12 or 24 months and to help you figure out the best, quickest way you can qualify. Please reach out to me with any questions you may have now or down the road. I look forward to hearing from you!

Today I’m here to talk about home renovations and the options that you have if you want to make improvements in your home or a home you want to buy. You have three options to pay for your renovations: You can use your own savings, get a home equity line of credit, or obtain a renovation loan. It can take a while to save enough money to do a renovation. A typical bathroom renovation can cost up to $10,000 and a kitchen renovation could cost you $30,000. “It can take a while to save enough money to do a renovation.” A home equity line of credit can be obtained at your local bank, but you will have to qualify for the loan, and they’ll typically only go up to 80% to 90% of the loan-to-value of the home. Interest rates are variable, too, and can alter the cost of your loan. Finally, a renovation home loan allows you to borrow money based on the “as-completed” value of your renovation. You can get bids on your project, have them looked at by an appraiser, and receive a determined value as if they are already completed. This allows you to access more money to accomplish the precise renovations you want to do. If you have any questions for me about home renovations or how you can fund your future projects, don’t hesitate to give me a call or send me an email. I look forward to hearing from you soon.

We’re asked all the time by clients, agents, and referral partners, “Why are your guys the best lenders, and how do we get the best rates and programs possible?”  Each individual case is different, but we truly want you to get some knowledge out of this so we’re going to let you know exactly how to go about finding the answer to this question yourself. I’d always start off by getting a written loan estimate. This allows you to compare apples to apples across individual lenders.  “Start off with a written loan estimate from different lenders.” Secondly, I would also ask your referral partner or Realtor for recommendations. There’s typically a big difference between the different lenders out there because of their experience level, who they may know on the listing agent’s side, and the process through which they go about closing your loan. Lastly, you should try to find some recommendations online. You’ll see a really great marketplace for local and national lenders that you can also use to figure out why they’re good from the consumers who have used them. If you have any questions for us in the meantime, don’t hesitate to give us a call or send us an email. We look forward to hearing from you soon.