16 • May 2018 • UPBEAT TIMES, INC.


Know your Limits! If you’re looking to make that


SANTA ROSA, CA. ~ Te vineyards are coming back to life. We are graced with their brilliant rows of green rippling along the countryside framing our country roads. Te start of home buying season has be- gun. is when a home shows its best. A landscape filled with plump green plants and col- orful flowers is when a home shows its best. Nothing sells better than curb appeal.


first-time purchase, or ready to become a move up buyer, it is important to be prepared to navigate the financial maze. Getting a loan is easy if you are prepared and qualified. Aſter the finan- cial crisis of 2008, Congress took the steps to strengthen our financial markets, elimi- nating risky lending practices and protect consumers.


Ev-


ery lender must adhere to the standards set by the Consumer Financial Protection Bureau (CFPB) in order the originate a mortgage that is considered a Qualified Mortgage (QM). For a mortgage to be con-


sidered a QM, the lender needs document that the borrower has the ability-to-repay. Tis means calculating all expenses


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against all income, the goal being to keep their debt-to- income (DTI) ratios within reasonable stan- dards. Each investor will want the DTI to be within 43% to just under 50%. Te higher the loan amount


the tighter


the ratios required. Loans are broken into three categories; Conforming, High Balance, and Jum- bo.


Conforming loans


are loan amounts that go up to $453,100 and are sold to Fannie Mae or Freddie Mac. Both Fannie and Freddie rely on Automated Underwriting System (AUS) to insure the loans are approved. AUS is a soſtware system that crunches numbers to assess the risks of the loan. Tey will review: purpose for the loan, Loan-to-Value (LTV), credit


Tere were limited inves-


tors due to the financial deba- cle. To ease the recovery, the Feds started buying Mortgage Backed Securities. To expand the ability for borrowers to re- finance out of risky loans, they created High Balance Loan limits.


For Sonoma Coun-


ty, the High Balance limit is $648,600. Having a High Bal- ance Conforming loan amount will allow you to qualify for a loan with higher DTI.


Loan


amounts greater than the High Balance are considered Jumbo and are subject to whomever


BIG spRing Guide by Barry O'Meara • barryo@stearns.com


score, and debt-to-income. Te findings they spit out will give you an approved loan with a list of what documents the underwriter needs to review. Te next loan group is High


Balance, which varies from County to County. Tis cate- gory was created to help people in the higher cost areas during the recovery pe- riod.


the investor’s guidelines con- dition for. Usually the Jumbo loans will hold the DTI to 43% and have much more stricter guidelines. Te stricter guide- lines can limit what eligible in- come can be counted or what minimum credit score they will accept or the LTV they will lend up to. Some investors may even require two ap- praisals. So, for whatever fi-


nancing you need, keep


in mind to be prepared to doc- ument whatever the under- writer finds. Funds for down payment and closing costs needs to be seasoned and in a banking institution. Seasoned funds mean the funds need to be in the bank for 60 days or at least two statements with- out showing large deposits. No mattress money, lenders don’t like cash. All


large deposits


will need to be sourced. So, if you are planning on


buying a home, make sure your credit is good, your funds are clean and you know what you can afford.


Opportunity is missed by most people because it is dressed in


overalls and looks like work.


Thomas A. Edison Genius is one percent inspiration and ninety-nine percent perspiration. ~ Thomas A. Edison


THE MORTGAGE COACH


Barry ‘O


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