Homebuyers! a Dozen Ideas on a Down Payment

downpayment
First of all, check with your Loan Officer to insure that the funds you presently have for your down payment are acceptable based on the loan program you intend to use.

Hopefully you have committed to a specific real-estate agent and they can be a good source to learn about any State or local housing incentives, grants and special loans that local agencies may offer.

Some down-payment ideas are safer than others; a few have toxic consequences to your taxes or retirement savings. Study your options carefully and review your plan with a tax specialist or nonprofit housing counselor approved by the Department of Housing and Urban Development (find one here call 1-800-569-4287).

Here they are! A Dozen Down-Payment Ideas!
1. Pull from savings: The time-honored way to save for a home purchase is to commit to a budget and set aside money each month for this specific purpose. Use an automatic electronic transfer through your bank or credit union. Choose an account that that earns the most interest possible while letting you access the money. Most importantly, commit to this financial plan for a specific extended period of time and do your very best not to deviate!!

2. Liquidate miscellaneous assets: Sell your nice car, buy a beater and apply the difference to your down payment. Sell your boat, motorcycle, collectibles time-share or other assets. Deposit your tax refund. Call in money that people owe you. Do you own any precious metals, gold and silver have never been higher!

3. Liquidate taxable investments: Sell stocks, mutual funds, bonds and other taxable investments before touching money held in tax-deferred retirement accounts, such as 401(k)s and IRAs, which require you to pay significant penalties when you sell. Again check with your tax advisor before making this type of financial move!

4. Cash in a life-insurance policy: So-called permanent life insurance policies (not “term” policies but “universal” or “variable universal life” or “whole life” policies) grow in value as you pay into them. When enough value has accumulated, you can take cash out or borrow against them. Talk with your insurance agent to learn your options and implications in the loss of benefits in cashing out such a policy.

Family and Friends:
5. Use a gift: Some mortgages – loans insured by the Federal Housing Administration, for example – let you apply gifts from immediate family members toward your down payment. You’ll need a “gift letter” from the person who gave you the money, verifying that it doesn’t have to be repaid. Be prepared for the lender to ask for copies of checks or wire transfers to ‘verify the paper-trail.’

6. Try your employer: Some corporations, universities and local and state governments have programs to provide employees with down-payment assistance. Check with your human-resources department. For example, in South Dakota, 19 employers participate in a state-sponsored Employer Mortgage Assistance Program that lets employees take out a 2% interest rate second mortgage for $600 to $6,000 to cover closing costs and down payment. Each year, the city of Baltimore and state of Maryland contribute as much as $6,000 to 100 city employees (PDF) to help them buy homes within the city. These programs are meant to help keep valued employees in their jobs and closer to work.

7. Establish a Financial Partnership: A co-owner can help by sharing costs, including the down payment, and by signing on to be responsible for repaying the loan if you can’t quite qualify for a mortgage. Your loan Officer can explain these details. Only go into a partnership such if all other options are off the table.

8. Negotiate — with everybody. If you can save or even eliminate closing costs — which run roughly 1 – 2.5% of the cost of the home. Although a seller in most cases can’t fund your down payment, the law lets buyers accept help with closing costs. Using an FHA loan, you can accept up to 6% of your home’s purchase price toward your closing costs, although the FHA has explored dropping that to 3%. Conventional loans limit the help you can accept to 3% of the price if your down payment is 10% or less; it’s 6% with a down payment of more than 10%. Your seller, lender or real-estate agent can help with closing costs. These parties occasionally will kick in to help a cash-poor buyer get a deal done.

9. Your seller (including builders): Buyers have a lot of leverage with sellers today!!

  • Ask your real-estate agent to help you search for sellers who are offering to cover closing costs.
  • Propose that the seller help with closing costs when you’re negotiating price and terms, they can be your best source of capital assistance!
  • Sellers sometimes will sweeten the deal by purchasing discount “points” that lower your interest rate, letting you use more of your cash for the down payment. Each point costs 1% of the loan amount and can be used to reduce your rate by 0.125 to 0.25 percentage points. (If your mortgage was for $150,000, the seller might buy one point, for $1,500, potentially lowering your interest rate from 5.25% to 5%.) This would lower your monthly payment from $828 to $805.

Caution: Pushing a seller too hard to lower the price and make other concessions could ruin the deal. Be prepared for the seller to ask for a higher purchase price in exchange. Then the question is: Will the appraiser find the home worth the higher price?

10. Seller financing: Infrequently, a seller may be willing to act as your banker. It might be possible to strike a no- or low-down-payment deal with a seller who owns the home free and clear. But if the seller has a mortgage, you’ll need to qualify for a loan just as you would with a bank, including a down payment.

11. Your new employer: Your leverage with an employer is never better than when you are first signing on. Depending on the company and how badly your skills are needed, you might be able to negotiate a contribution toward your down payment as part of your benefits package, as a signing bonus or in place of a relocation allowance.

12. Borrow from your 401(k) or IRA: Most companies let employees borrow from the balance of their 401(k) accounts. Rules vary but, generally, you can extract as much as half of the vested amount in the account, up to $50,000. As you repay it, the money, including the interest, goes back into your 401(k). The plan administrator at your workplace can outline the specifics, including how long you’re given to repay the loan. There’s an exception to penalties on withdrawals from retirement accounts that lets first-time homebuyers withdraw up to $10,000 from an IRA to use as a down payment on a home purchase

Caution, Be Careful Here:

  • As long as you repay the loan, you won’t be taxed on the money until you withdraw it in retirement; unlike a mortgage loan, the interest you pay on this loan is not tax-deductible.
  • As with the IRA withdrawal, this is considered a bad idea because it sets back your retirement progress.
  • If you leave the employer for any reason before repaying the loan, you’ll have to repay the entire thing at once. Don’t say we didn’t warn you.
    In Conclusion: While creativity can offer unique ideas or possibilities, there can be offsetting risks that may not be worth any possible reward. For this age old classic challenge, “where will we get the down payment money for our first home”, nothing beats the 2 most well established standards for this capital predicament: Committing to a budget, saving your money over time … and/or… getting a well established, well wishing relative to help you out.

Kevin Brown Loan Officer Pacific Funding Group, NMLS # 282200

How to Remove Mortgage Insurance

Mortgage-InsuranceHow Can We Remove Our Private Mortgage Insurance?
Private Mortgage Insurance (or PMI, or MI) is an additional monthly fee required by most lenders when your down payment on a home or refinanced equity position is less than 20 percent. This money pays an insurance premium which protects the bank in the event the borrower defaults.

Equity can be increased a few different ways, such as paying the principal down, market appreciation and significant home improvement.

Is it time you asked yourself, “We have plenty of equity let’s stop making unnecessary monthly MI payments and start putting all of that money back into our pockets???”

Here are some ways to get rid of PMI on your existing home loan…

First off, read the MI provisions within your existing loan documents. A loan with PMI will include all pertinent information regarding the mortgage insurance and the conditions for canceling it.
You must have maintained a good repayment history on your loan. If not, the lender may take the position that you are still a risk in spite of a reasonable equity position.

In most instances you must request cancellation of MI in writing, when you can prove with an independent appraisal that you have equity of 20 percent or more.

There may be a minimum period of time which must have elapsed since the loan closed. This may vary from as little as 6 months up to as much as 5 years, depending on the investor.

What if you have an FHA insured mortgage? You must have maintained a good payment history for a minimum of 5 years and have a 78% loan to value ratio and Poof, away goes the MI.
However, in many cases the removal of MI may be “at the desecration of the finance agency (Bank)” and in the end it is a judgment made by your lender…. So let’s see, cover the banks back side or keep your money in your pocket???

How can you avoid this predicament??

SNAP! Let’s Make This Easy!!
Do you have a higher that market interest rate and the necessary income and credit to refinance? In most cases this is the easiest and fasted to cast off that dead weight of Monthly Mortgage Insurance is to simply refinance! For more information on this click on this link and fill out this short survey… this might be easier than you think!!

$450,000 – 789 Any Street, Oakley CA 94500

home 1

Listing Price: $450,000
Address: 789 Any Street
City: Oakley
State: California
ZIP: 94500
MLS # (if any): 12345678
Square Feet: 3000 sq ft
Bedrooms: 3
Bathrooms: 2
Basement (full, 1/2, finished, unfinished): full

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Interested in this property?
Professional Woman

Contact Melissa Crawford Today!

T: (925) 555-5555
C: (925) 555-5555
Email: mcrawford@cmail.com

$200,000 – 456 Any Street, Brentwood CA 94513

home 2

Listing Price: $200,000
Address: 456 Any Street
City: Brentwood
State: California
ZIP: 94513
MLS # (if any): 12345-9024
Square Feet: 3400 sq ft
Bedrooms: 3
Bathrooms: 2
Basement (full, 1/2, finished, unfinished):

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Nullam at lacus sit amet nulla vulputate sollicitudin et vel est. Mauris leo magna, viverra ut bibendum id, tempor eget dui. Vivamus imperdiet dignissim pretium. Nam iaculis iaculis aliquet. Nulla volutpat, turpis vel volutpat vehicula, nisi nibh sollicitudin lorem, ut gravida urna magna vel turpis. Nunc non scelerisque mauris. Sed sollicitudin sodales arcu vitae posuere. Pellentesque tristique eleifend nisl ut feugiat. Maecenas leo arcu, consequat quis laoreet at, tristique at mi. Phasellus a elit ante, vitae convallis dui. Etiam molestie velit id purus ultricies quis dapibus lorem tempor. Mauris sed erat enim, quis porta enim. Sed dapibus eleifend ante. Curabitur felis diam, mollis vitae tristique id, vestibulum sed risus. Nullam ullamcorper mattis felis, rutrum congue purus mattis quis. Nulla vestibulum faucibus tellus sed sagittis. Morbi venenatis dapibus nisi, quis dignissim eros auctor vitae. Mauris sit amet tempor orci.

 

$399,999 – 123 Any Street, Antioch CA 94531

home 4

Listing Price: $399,999
Address: 123 Any Street
City: Antioch
State: California
ZIP: 94531
MLS # (if any): 12345-99900
Square Feet: 3000 sq ft
Bedrooms: 4
Bathrooms: 2
Basement (full, 1/2, finished, unfinished):

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Curabitur justo augue, molestie mattis fringilla non, convallis vel lorem. Sed pharetra faucibus neque, non adipiscing neque ultrices id. Pellentesque vitae odio velit. Proin vitae lacus magna. Aliquam nec vehicula mi. Nulla convallis, erat eu accumsan suscipit, velit nisi sollicitudin felis, vel gravida leo eros et dolor. Sed ut nunc eu leo condimentum faucibus. Praesent facilisis, nisl ut tempus luctus, massa felis sollicitudin neque, sit amet pulvinar mi eros eget tellus. Etiam erat ante, ullamcorper sit amet tincidunt eget, eleifend vel tellus. Duis consectetur lacinia nisl. Aenean ornare facilisis enim, sit amet fringilla risus ultrices non. In ac convallis justo. Aliquam convallis ligula eu dui vulputate non rhoncus sapien dignissim. Vestibulum consequat pulvinar enim.

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Our Loan Process

Victory loves preparation and it’s no different when it comes to applying for funding for your dream home.  Here is a great overview that will assist you in ensuring that you have a smooth and effortless loan application process.  Just like building a house, you’ll want to make sure that you are starting and establishing a solid and reliable foundation first.  Remember, CU Lending is here to guide you through the process, so if you have any questions, do not hesitate to contact us immediately at (925) 634-6700.

Step 1. Organize your Documents

A key to avoiding delays and vastly speeding up the loan application process, is to have the required documentation in hand before you meet with your lender. Feel free to call ahead and request a checklist sheet or ask one of our loan officers, exactly what is required. Then take some time and put as much of the required documentation together as you can. Below are some of the documentation that can speed up the process:

  • Copy of Purchase Sales contract or Offer to Purchase and all addenda (signed by buyer and seller)
  • Past 2 years’ tax returns and W-2s
  • Past 2 years’ employment history
  • Last 3 consecutive paycheck stubs (5 if paid weekly)
  • Name, address and phone for past 2 years’ residence(s) and landlord(s). Renters should bring evidence of 12 months’ rent payments.
  • Last 3 months’ statements for savings, checking, CD, money market accounts, etc.
  • Recent statement on retirement accounts (IRA, 401K, 403-B, Annuity, etc.)
  • Monthly payments and balances on all open accounts
  • Divorce decree (if applicable)
  • Bankruptcy schedules/Discharge papers (if applicable)
  • If you are NOT a US citizen, provide a copy of your green card (front & back). If you are NOT a permanent resident provide a copy of your H-1 or L-1 visa.

Step 2. Get Qualified

Find out how much you are qualified to borrow. When buying a home, you may be pre-qualified or pre-approved. You can be pre-qualified over the phone or on the Internet in a few minutes. Pre-qualification is a good start. However, Pre-approval carries more value when it comes to a home purchase. Pre-approval requires a more rigorous process, including verification of your credit, income, assets and liabilities. It is highly recommended that you be pre-approved before you start looking for a home.

Being pre-approved will:

  • Inform you of your maximum affordable home value, and save you from previewing properties outside your price range.
  • Put you in a stronger negotiating position with the seller, because the seller will know your loan is pre-approved
  • Help you close quickly, since your loan is pre-approved.

Step 3. Shop and Compare Loan Programs

What loan program is best for your situation?

  • Think about how long you plan to keep the loan. If you plan to sell your home in a few years, you may want to consider an adjustable-rate or balloon loan. If you plan to keep your home for a longer time, you may want to consider a fixed-rate loan.
  • Understand the relationship between rates and points. Points are considered prepaid interest and may be tax deductible. Each point is equal to 1 percent of the loan. For example 1 point on a $150,000 loan is $1,500. The more points you pay, the lower your rate.
  • Compare different loan programs. With so many programs to choose from, it’s hard to figure out which program is best for you. Consult an experienced loan originator who can help you find a loan program that best fits your short- and long-term plans.

Step 4. Apply for the Loan

All the research and preparation you’ve done to this point makes this step an easy one.
You can apply online or in person. Complete and sign the residential loan application, Form 1003 and the attached loan info sheet, credit authorization and fair lending notice. Your loan originator may also request additional documents, such as a loan information sheet, credit authorization and fair lending notice.

Step 5. Obtain Loan Approval

Once your loan application has been received, the loan approval process starts immediately. This involves verifying your:

  • Credit history
  • Employment history
  • Assets including your bank accounts, stocks, mutual fund and retirement accounts
  • Property value

Based on your specific situation, additional documents or verifications may be required.

To improve your chances of getting a loan approval:

  • Fill out the loan application completely.
  • Respond promptly to any requests for additional documents. This is especially critical if your rate is locked or if you plan to close by a certain date.
  • Anything that causes your debts to increase might have an adverse affect on your current application.
  • Do not move money into your bank accounts unless it can be traced. If you are receiving money from friends, family or other relatives, please contact us.
  • Do not go out of town around the closing date. If you do plan to be out of town when your loan is expected to close, you may sign a power of attorney, to authorize another individual to sign on your behalf.
  • Notify your loan officer before applying for any other credit, including credit cards, personal loans or even with another mortgage company. Some loan programs have strict guidelines regarding your credit score. Credit inquiries may lower your credit score and may have an adverse affect on your loan approval.

Step 6. Close the Loan

After your loan is approved, you will be required to sign the final loan documents. This will normally take place in the presence of a notary public. Be prepared to:

  • Bring a cashiers check for your down payment and closing costs if required. Personal checks are normally NOT accepted.
  • Review the final loan documents. Make sure that the interest rate and loan terms are what you were promised. Also, verify the accuracy of the name and address on the loan documents.
  • Sign the loan documents. The notary will require that you have your picture ID with you. Some lenders also require seeing your Social Security card.

Your loan will normally close shortly after you have signed the loan documents. On refinance and home equity loan transactions, federal law requires that you have three days to review the documents before your loan transaction can close. Purchase transactions do not have a three-day rescission period.

Why CU Lending

buying-a-homeBuying a home is one of the biggest purchases most of us make. House hunting can be exciting and disappointing at the same time. Some people find the perfect home in three days, for others, it can take months.

We’ve seen it all, we understand how you feel. Once you finally find the perfect home, let us help you quickly find the perfect mortgage.

A review of our Loan Programs appear on this website. Call or e-mail us and we’ll develop a personalized quote.

Are you already living in your dream home? Maybe it can be even dreamier with a lower monthly mortgage payment! Refinancing could be the way to go. Check it out with our Refinance Mortgage Calculator.

Or, try out our Debt Consolidation Mortgage Calculator to see if a home equity loan or second mortgage would work for you.

Buying a home is a big investment. We can be there with you every step of the way. Our company has been in this business for a long time, and we invite you to put our experience and expertise to work for you.

Pacific Funding Group - 70 Eagle Rock Way, Suite A - Brentwood, CA 94513 Office Phone: (925) 634-6700 Fax: (925) 240-6000
Pacific Funding Group - 1320 Willow pass Road, Suite 710 Concord, CA 94520 Phone: (925) 334-5723
Phone: (925) 626-4610 Fax: (925) 626-4677.
Equal Housing Opportunity Lender. Not a commitment to lend. Rates and programs are subject to change. Licensed by the Department of Business Oversight.
Brentwood, CA NMLS #385320 | Concord NMLS #930622