Guest Writers & Contributors THE Mortgage Coach~An Economic Opportunity is Here


by Barry O'Meara


SANTA ROSA, CA. ~ The finan- cial tsunami that


took down


Wall Street and washed out the equity on Main Street has subsid- ed. Recovery is at our door steps. The financial cri- sis that triggered the World into the “Great Recession” has been blamed on everything from subprime mortgages to the greedy Wall Street power brokers. No mat- ter who or what is to blame, the bottom line is


that the


financial markets collapsed, liquidity evaporated, and get- ting a loan became a whole lot tougher.


In the post financial melt-


down there has become too few choices for financing with a low down payment.


Your


choices have been FHA, VA or USDA.


purpose loan allowing gift funds


and


FHA is the all- higher


income ratios. However, it debt-to-


leaves you saddled with a hefty mort- gage insurance pre- mium and requires a 3.5% down pay- ment. VA will do 100% financing without a monthly mortgage


insur-


ance premium. It requires you to have served in the Armed


services, which only accounts for 1% of our population. USDA will do 100% financ- ing, but has its limitations for property location and income. Property must be located in a rural area and eliminates most of your urban settings such as Santa Rosa, Rohnert Park and Petaluma. This program does have a mortgage insur- ance premiums but it is much smaller than FHA program. Well, there is one more low-


down payment opportunity. The Economic Opportunity Mortgage (EOM).


This is


a mortgage that will finance up to 95% without mortgage insurance and will allow gift


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funds. It does require you to show 3% of your own funds but will allow gift funds for the rest.


limited


to get there, gift funds are allowed.


This program is a good


been around for decades but was


The program has to


finance up


to 90% for most Counties. It would go up to 95% for high cost counties. It has been expanded to offer 95% financing to all Counties in California. As is with every- thing that is good, it does have its limitations.


There


is an income limit of $99k for Sonoma County and in Higher cost Counties like San Francisco and Marin, the income limit is $123k.


The


loan limit is $520,950 for Sonoma County.


But don’t


get too excited, they also have a debt-to-income ratio of 38%. This means your total housing expense including mortgage, taxes and insurance and any Home Owner’s Association (HOA) dues cannot exceed 38% of your gross income before taxes.


There is also a


back-end ratio limit of 44% but if you need to pay off debt


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alternative to the FHA option. All loans these days are full doc, so if you cannot show it on your taxes, it cannot be use to qualify you. The pro- gram is intended for owner- occupied. You cannot use this program to buy an investment property.


Considering there


is no mortgage insurance you should be able to qualify for the same purchase price as an FHA loan, only without the mortgage insurance. This program is also avail- able for refinancing as a rate and term. For those peo- ple who did not qualify for a HARP refinance because their loan was not owned by Fannie Mae or Freddie Mac could refinance up to 95% of their appraised value without mort- gage insurance. The program will also allow you to pay off any equity line as long as you can show that you have not drawn any funds from the equity line in the last 12 months. This is not too hard to show since most banks cut your limit to what your bal- ance was when the bottom fell out of the market.


This could be an oppor-


tunity knocking at your door. Whether it is the benefit of consolidating that second that HARP would not allow or helping your children to settle down and establish their own roots.


Knowing all your


option is the first step to mak- ing the right decision.


I welcome and comment or question at


barryo@stearns.com


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wise sayings. Hazrat Ali


UPBEAT TIMES • March 2013 • 8 JOKES & Humor # 4


A thief in Paris planned to steal some paintings from the Louvre. After careful planning, he got past security, stole the paintings, and made it safely to his van. However, he was captured only two blocks away when his van ran out of gas. When asked how he could mastermind such a crime and then make such an obvious error, he replied, 'Monsieur, that is the reason I stole the paintings.' I had no Monet... To buy Degas...To make the Van Gogh... See if you have De Gaulle to share this joke with someone else. We printed it for you because we figured we had nothing Toulouse.


MARCH MADNESS Continued from page 7... 3.


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Social Security’s online ser- vices continue to hold the top spots for customer satisfac-


Continued next page... Life itself is a quotation. ~Jorge Luis Borges


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