Category Archives for "FHA Mortgage"

FHA Mortgage

5 Reasons Why Buying a Home in 2016 Makes Sense

2016 is almost here and it’s time to think ahead and make big plans for the upcoming

Those who’ve been thinking about purchasing a home should start getting their finances
together and be ready to take the big step.

2016 is a great year to buy a home, and here’s why:

1. Mortgage rates are at historic low points

Interest rates are still lower than ever. In fact, Freddie Mac’s recent survey showed that
September’s 30-year fixed-rate mortgages were .25% lower than last year. The interest
rates cannot stay this low for long. In fact, they are expected to increase quite soon.
Rates are expected to slowly go up, bringing about an increase in the monthly mortgage
payments and borrowing costs. 2016 will possibly be the brief window of opportunity for
getting the best interest rate ever.

2. Home prices will most likely go down

House prices have been going up for a while, but that rise is finally expected to slow
down. Svenja Gudell, Zillow’s chief economists, predicts that overall prices will rise by
3.5%, which is much less than the rate they’ve been going up in the past few years. This
gives buyers a chance to finally get into their home. Unfortunately, the house price
growth is still expected to outpace the wage growth, so you may have to get creative with
how to buy.

3. Rent prices will get even higher

There are a low supply and high demand of rentals, which is why the rent rates are so high
at the moment. Unfortunately, they are expected to go even higher. In fact, 68% of all
property managers predict that the rental rates will go up in 2016, which means that in
most cities, it will be cheaper to buy a home than rent one. According to Ralph
McLaughlin, Trulia’s housing economist, the interest rates will have to go up to 6.5% for
the buying cost to equal the renting cost, and that’s very unlikely.

4. More houses will be put on the market

As home prices stabilize, and/or decrease a bit, there should be more people looking to
list their homes for sale, in hopes of still getting top dollar. It is predicted that the new
home market will grow substantially. With so many homes for sale, buyers should have
many more to choose from, and there should be fewer bidding wars.

5. Clear mortgage terms

First-time buyers can now rest assured that there will be no surprises at the closing
table. There is a new TRID rule, which is designed to help home buyers understand all of
the terms of the transaction. Buyers will be fully aware of their financial commitment
and will be fully prepared for everything, as they have more time for review, before fully
committing to the products that are offered.

To buy or not to buy a home is always a huge decision that involves looking far into the
future and assessing your financial capabilities and wishes. However, if you know you
want to buy a home in the near future, 2016 is the perfect time to do it!

Karen Cimera Mortgage Banker

How Much Do I Have to Save to Buy a Home?

home loan down payment silicon valley

First-time home buyers often have endless questions when it comes to down payment requirements in Silicon Valley, California.

They usually have jumbled information on what is required of them, and how much they should have in hand. While most aspiring home owners have heard about the 3.5%, 5% and 20% down payments, they have no idea how these percentages work. Well, here are some insights into mortgage loans.

The first thing you should know is that the type of loan you apply for determines the amount of down payment required.

Mortgage types include government loans such as VA or FHA, private institution conforming loans, and non conforming loans, which require up to 20% down payment.

FHA or VA Mortgage Loans

These are the most popular since they require you to have the least amount down with 0 – 3.5% of the value of the house you wish to buy.

An FHA and/or VA loan are mortgages that are guaranteed by the government. An FHA loan is easier to qualify for than a conventional mortgage, requires a lower down payment, lower credit scores, and will allow higher “debt to income ratios in qualifying”…..these loans are guaranteed by the Federal Housing Authority.

A VA loan, which is for veterans only, is guaranteed by the Veteran’s Administration.

Conventional Mortgage Loans

These loans are offered if you have 5% to 20% of the appraised value of the house you want. These loans are offered by conventional loan lenders such as banks. However, whether or not you qualify for the loan depends on a several factors.

Down payment requirements Silicon Valley, California, dictate that you must have a good credit score (680 and above) to qualify for a conventional loan.

The credit score will also determine the interest rate at which you will repay the loan; poor credit score attracts high interest rates.

The traditional mortgage loans can only offer 80% of what you need to buy the house, while the high ratio option will offer you up to 95%.

What about Private Mortgage Insurance?

PMI is required if you have less than 20% of the value of the house you want to purchase. The PMI allows you to take a loan with lower down payment requirements since the lender is protected if you default on the loan.

The amount payable as PMI depends on the percentage you wish to borrow. However, the typical PMI charges range from 0.5% to 1% of the loan, according to MBAA (Mortgage Bankers Association of America). Remember that PMI premiums are non-tax deductible.

PMI payments should be discontinued once the loan to value ratio gets to 80%. This is a Homeowners Protection Act of 1998, which has been effective since 1999. The lenders are required to tell the borrowers the exact time when this ratio will be reached, and cancel the PMI once that has been achieved.

The rate and type of loan you want may not be the only determinants of the amount of savings you will require to buy a home. Your credit score will raise the amount of down payment required, as well as the interest rates charged on the loans.

If you are a first time home owner, it is advisable to do an extensive research on the type of loans that are appropriate for you.

To learn more about what you should do before you buy your first home in the Bay Area, contact me today. I would love to help you through each step of the loan approval process.

Contact me today at 408-506-0452, or email to

Loan Star Lending NMLS# 181709 – CA# 603K799

The Difference Between Pre-Qualifying And Pre-Approval

Many first time buyers get pre-qualified for a mortgage and take it to mean that they have been pre-approved for a loan. What they don’t realize is that these are two completely different things, and mistaking one for the other can cause home buyers a lot of trouble. dollars-31085_1280

So, what is the exact difference between pre-qualification and pre-approval?

Pre-qualification is just an estimate. It is an informal way to see how big a mortgage you might qualify, based on “verbal” information given only. It should be free of charge, and usually just involves the buyer giving the banker their overall financial picture, including their income, debts, and how large a down payment they will be able to afford. No credit report is required and the buyer’s overall ability to buy a house is not taken into account. A lender can use the provided information to give the buyer an

A lender can use the provided information to give the buyer an estimation of the approximate mortgage amount they can expect to qualify for. Because the pre-qualification does not take into account everything, and is based solely on the information you verbally submit, there is no guarantee that the pre-qualified amount will be the same as the actual approved amount.

Pre-approval, on the other hand, is a real commitment a lender makes to the buyer. It is a much more complex procedure than pre-qualification but it carries actual value. Pre-approval requires the buyer to give the necessary information to the banker to have credit pulled and supply all the necessary financial documents the lender needs to do an extensive check on the buyer’s financial background. The lender will be able to use this information to determine a specific mortgage amount to approve the buyer on,
and the best program options available for buyer to compare. The pre-approval is a

The pre-approval is a commitment made in writing for an exact loan amount, based on the rates “at that
time”. It shows the buyer where he or she stands financially and shows sellers that the buyer is serious about buying, and able to obtain the necessary financing.

Although pre-qualification is a fast and easy way to get a general idea of what you can expect to get, there is little value to it as it’s not exact. The only result you, as a homebuyer can rely on, is the one that comes from lender pre-approval.

Karen Cimera Mortgage Banker