Wednesday, January 21, 2015

Tips on Using Tips

Moreno Valley, CA asks:
Most of my income comes from tips. Will they count my tips when I apply for a home loan?

Franklin Advantage:
Fannie Mae, Freddie Mac, FHA and VA will all count tip income as long as you have reported it on your tax returns of the past two years. Like any other income it will be averaged over the past two years or twelve months if you made less in the most recent year.

Unlike other income, you may not have to document your year to date tip income. Many people who receive tips paychecks do not show their year to date tips. This is acceptable as long as you have claimed the tips on your tax returns for the past two years.

The obvious problem is that many people don’t claim their tip income. And when they go to apply for a mortgage, there is no way to document this income. They end up forfeiting a large part of their income as far as loan qualification.

Do you have questions on qualifying for a home loan? Call Franklin Advantage at (800) 314-5626, one of our seasoned, professional Loan officers will be happy to help you through the home buying process.

Tuesday, December 2, 2014

A Holiday Job Can Help You Qualify

Eagle Rock asks:
Every year I work for Macy's during the Christmas season. Will the lender count my income from this job?

Franklin Advantage:
Seasonal employment is an acceptable source of income. You need to show a two-year history of consistent time on and off the job.

The good example is a Forest Technician. A Forest Technician will only work a few months a year, they are hired annually through the USDA and when not working, many collect unemployment. Fannie Mae, Freddie Mac, FHA and VA will all use this income and even, use the unemployment income if it has been received over the past two years.

Correctly calculation your income and determining the bast way to get you most home with the smallest payment requires a Loan Officer with experience. Contact or call Franklin Advantage at (800) 314-5626 and let one of our seasoned, professional Loan Officers review your situation and help you get pre-approved for your next home purchase

Wednesday, November 12, 2014

King FHA

Paramount, CA asks: 
I've called several lenders and everyone of them tells me I should get a FHA loan but nobody tells me why. Why should i get a FHA loan?

Franklin Advantage: 
An FHA loan will let you buy a home with only a 3.5% down payment. That’s just $14,000 when buying a $400,000 home. The down payment can be borrowed from a retirement account, a gift or from savings.

The 3.5% down FHA loans underwriting allows for FICO scores at 580 or greater. With 10% down FHA will accept credit scores as low as 550. Collections on a payment plan, foreclosures and bankruptcies only three years old and “no” credit are acceptable through FHA.

Deferred student loans and loans against your retirement account are not counted in your ratios. FHA will also accept co-signers to help a buyer qualify.

FHA offers 30 year fixed rate loans with interest rates that are usually lower than those on conventional home loans.

If you haven’t been pre-approved, call Franklin Advantage at (800) 314-5626. Our seasoned, professional Loan Officers are available to answer your questions and guide you through the home buying process. 

Monday, October 27, 2014

Buying a Haunted House

Hollywood, CA asks:
My partner and I were looking at a home to purchase when the real estate agent told us that the previous owner had died in the house. My partner says that this will affect the value and he would never buy a house someone died in. How does a death affect the home's value? 

Franklin Advantage:
In California the seller of a home must disclose if someone has died in a home in the past three years. It is considered a material fact that can affect the value of the home. Beyond three years, it is not required that it be disclosed.

Does a death in the house truly affect the value? That depends on multiple factors. 

A home that was occupied by a longtime resident that passed peacefully in the home has very little effect. While a home that was the scene of a grisly homicide may have a difficult time finding a buyer.

A death may not be the only factor affecting the value. In a Sacramento area home there was a brutal beating of an 82 year old woman and the ransacking of her home. She lived but did not want to move back into her home and put it up for sale. After months, the home sold for substantially under market. The previous crime and the location of the home (it backed up to railroad tracks that were frequented by the area homeless) greatly deterred buyers.

When looking for a home, the least likely question on most people's mind is whether the seller died in the house. It's much more likely that they are concerned about the sales price and monthly mortgage payment. 

With interest rates below 4%; a new mortgage payment won't be scary. Call Franklin Advantage at (800) 314-5626. One of our seasoned Loan Officers will be happy to help you.

Sunday, September 21, 2014

New Purchse Contract Closes the Appraisal Loophole

Bellflower, CA asks:
We are in escrow to buy a home now. Our real estate agent says that we should sign off on the appraisal even though the appraisal is not in yet. She says that we are still protected because the appraisal is required for the loan. I don't quite understand and we are feeling a lot of pressure to sign. Please help.

Franklin Advantage:
When you make an offer to buy a home in California, your real estate agent will write the offer on a form designed by the California Association of Realtors (CAR) over the past 60 years. The RPA (Residential Purchase Agreement) is an 8 page contract that protects you, the buyer and the seller.

Currently, the RPA allows you to release the appraisal contingency and still keep the appraised value as a condition of the loan approval contingency. A "contingency" is a clause that allows you out if the contract without any harm to you.

In November the RPA is the decoupling of the appraisal and loan contingency. The new update will allow you to release the appraisal contingency and acknowledge that the appraisal will not be a reason that will hinder the release of the loan contingency.

Another change is being updated. There will be several changes including the lengthening of the amount of time allowed to get your loan approved. Currently, the RPA default is 17 days. The new default will be 21 days.

When you are making an offer on a home, your agent should make sure you are fully aware of what you are signing... There is more to the RPA than the offer price. Our seasoned, professional Loan Officers have years of real estate experience. Call Franklin Advantage at (800) 314-5626.

Friday, August 1, 2014

Fannie Mae is Changing the Rules on Short Sales

Stanton, CA asks:
My husband and I had a short sale three years ago. I've been told that the wait time can be as little as two years. I've also heard this is about to change. Can you please tell us what the story Is?

Franklin Advantage:
Fannie Mae is changing the way they underwrite borrowers with a previous short sale. As of August 16th a borrower with a short sale that was delinquent at the time of the sale will have to wait four years before they will be able to get a new Fannie Mae loan. 

Currently Fannie Mae only require two years as long as the borrower is borrowing no more tan 80% of the homes sales price regardless of the loans status at the time of the short sale.

FHA still only requires a three year wait and VA loans only require a two year wait.

A short sale is when a home owner sells their home for less than is owed. The sale requires the lender to accept less than is owed.

Please call us at (800) 314-5626 and one of our seasoned, professional Loan Officers will help you explore your options.

Thursday, June 12, 2014

Having a Baby and Buying a House

La Habra, CA asks:
My husband and I have been pre-approved for a home loan by our credit union. I am expecting my first child in November. Our loan officer told us that if we don't buy our home before I leave on maternity leave, we sill not get our loan. Is this right?

Franklin Advantage:
Fannie Mae and Freddie Mac underwriting guidelines allow the underwriter discretion when considering a borrower's income while she is on maternity leave. 

Most investors choose not count the income of a pregnant borrower. The reasoning was that the disability income could not be documented to continue for at least three more years and there is no guarantee that the borrower will return to work after he child is born.

FHA guidelines allow for a buyer to get a home loan when they are on pregnancy leave. Underwriters are allowed to count the borrowers disability income in lieu of their salary as long as the disability is documented and the borrower provides a letter explaining their desire to return to work once the disability runs its course.

In the past, many investors have not followed this FHA guideline and instead ignored the income of a pregnant borrower. But over the past year, both Bank of America  and Greenlight have been sued by HUD for not following the FHA guideline. The practice of denying a home loan because a woman is pregnant is discriminatory. Both Bank of America and Greenlight have paid hefty fines and the industry standard has now changed.

Many hurdles of the past few years have been removed and more people are finding that they can buy a home. Call Franklin Advantage at (800) 314-5626.