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Tired of Paying Rent? Need Help With a Down Payment?

July 3, 2016

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CA & WA residents can apply for a 3% or 5% Sapphire Grant to go towards their down payment, closing costs, pre-paid fees and even the earnest deposit.  A borrower may not need to use their own funds or have very little out of pocket to become a homeowner.  The grant is not a lien, it does not require repayment or have a recapture as long as 6 months of mortgage payments have been made.  How is this possible?  The rate for the program is higher to account for the cost that the lender to absorb for the grant.  No buy downs are permitted.

The Sapphire program is designed to increase homeownership for low-to-moderate income individuals and families. Co-Borrowers are allowed, but non-occupant co-borrowers are not permitted.  You can contact Platinum Mortgage Company to see if you qualify.

The grant may be used towards a FHA 3.5% down, VA 0% down or USDA 0% down loans. The grant may only be use for owner occupied properties.  The borrower(s) must have a 620+ mid FICO score and 680+ for manufactured home purchases.  The maximum loan amount cannot exceed $417,000 (not including MIP) or the maximum loan amount permitted by HUD.  The program can be combined with the Mortgage Credit Certificate program and other . The borrower’s income cannot exceed them county limits in which the property is located

Washington:

County Program Income Limits
Adams $84,295
Asotin $84,295
Benton $84,295
Chelan $84,295
Clallam $84,295
Clark $84,295
Columbia $84,295
Cowlitz $84,295
Douglas $84,295
Ferry $84,295
Franklin $84,295
Garfield $84,295
Grant $84,295
Grays Harbor $84,295
Island $84,295
Jefferson $84,295
King $103,845
Kitsap $89,815
Kittitas $84,295
Klickitat $84,295
Lewis $84,295
Lincoln $84,295
Mason $84,295
Okanogan $84,295
Pacific $84,295
Pend Oreille $84,295
Pierce $84,295
San Juan $84,295
Skagit $84,295
Skamania $84,295
Snohomish $103,845
Spokane $84,295
Stevens $84,295
Thurston $84,640
Wahkiakum $84,295
Walla Walla $84,295
Whatcom $84,295
Whitman $84,295
Yakima $84,295
Updated 04/12/2016

California:

County Program Income Limits
Alameda $107,640
Alpine $90,505
Amador $80,960
Butte $80,500
Calaveras $80,730
Colusa $80,500
Contra Costa $107,640
Del Norte $80,500
El Dorado $80,500
Fresno $80,500
Glenn $80,500
Humboldt $80,500
Imperial $80,500
Inyo $82,800
Kern $80,500
Kings $80,500
Lake $80,500
Lassen $80,500
Los Angeles $80,500
Madera $80,500
Marin $123,855
Mariposa $80,500
Mendocino $80,500
Merced $80,500
Modoc $80,500
Mono $85,215
Monterey $80,500
Napa $94,875
Nevada $82,455
Orange $97,750
Placer $80,500
Plumas $80,500
Riverside $80,500
Sacramento $80,500
San Benito $84,295
San Bernardino $80,500
San Diego $84,525
San Francisco $123,855
San Joaquin $80,500
San Luis Obispo $87,860
San Mateo $123,855
Santa Barbara $88,665
Santa Clara $123,165
Santa Cruz $97,865
Shasta $80,500
Sierra $80,500
Siskiyou $80,500
Solano $89,240
Sonoma $87,285
Stanislaus $80,500
Sutter $80,500
Tehama $80,500
Trinity $80,500
Tulare $80,500
Tuolumne $80,500
Ventura $101,545
Yolo $85,215
Yuba $80,500
Updated 04/12/2016

 Great news is there is no housing counseling required for this program.  It is also not limited to first time homebuyers.  Borrowers can own a properties, but must meet debt to income guidelines.  To omit the departing home house payment the borrower must complete a drive by appraisal to show 30%+ equity and have a lease with deposit from a proposed tenant.

PMC offers 2 to 24 month bank statement loans (single account – using average monthly deposit averages-100% from personal and 50% from business) and also has other low doc home loans for 500+ FICO borrowers.

Our goal is to find you the best financing available to save the most money.  As the experts.  Email your scenario to info@pmccanhelp.com.

Make sure to visit our website:   www.pmccanhelp.com

FOR A FAST PRE-APPROVAL: Complete a loan application on our website APPLY ONLINE

Job Opportunities? PMC has been a premier CA & WA brokerage for over 27 years.  Visit our Careers website and apply online today! www.pmccareers.com

Follow our Mortgage on:

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Debt Ratio Too High? Add a Non-Occupant Co-Borrower.

May 22, 2016

PMC back 2016

You may not show enough or make enough income to buy the home that you really want, but you don’t want to settle for a smaller home.  There is a solution.  It is possible to add a Non-Occupying Co-Borrower to the mortgage loan in order to qualify due to income and asset requirement in order to qualify for the loan. There are two options through Conventional or Government financing. This would be ideal for a college graduate who has student loan debt that is out of deferment and the debt ratio may be too high. For self-employed borrowers that have filed two or more years of business tax returns (Schedule C, 1120 or 1065) this can help an Occupying Borrower that shows low income due to write offs.

FHA Non-Occupying Co-Borrower

FHA requires 3.5% down if the Non-Occupying Co-Borrower (s) is  related to the borrower(s) by marriage, blood or law which includes parents, siblings, grandparents, uncles, aunts, nieces, nephews, and step-relationships. Interesting enough, cousins are not allowed. There is an option to add a Non-Occupying Co-Borrower that is not related by marriage, blood or law to be on the mortgage loan, but when the Non-Occupying Co-Borrowers are not related to the borrowers the mortgage requires a 25% down-payment to qualify. They must also have some type of document-able long-relationship to the borrowers. For example, a long-time family friend or co-worker, employer of the borrower of the mortgage loan. Be prepared to fully document the relationship in these types of cases as FHA wants to make sure that people are not being used as straw-borrowers for illegitimate or fraudulent purposes.  The down payment can come from family or the non-occupant co-borrower.

One draw back of an FHA loan is that the loan requires an upfront mortgage insurance premium, which  be financed in the loan or paid upfront and there is monthly PMI on the life of the loan.  Saving up to put 10% down will help reduce the term to 11 years.  If 10% down isn’t possible, then putting 5% down will at least help reduce the monthly PMI rate.

FHA allows a college graduate who just began a job qualify with the base salary of a new job with 30 days of check stubs, a verification of employment and an (signed/dated) executed offer of employment letter (on company letterhead). FHA requires the Non-Borrowing Spouse’s debts be added into the ratios. Also, if the Non-Occupying Co-Borrower is married, the debts of the Non-Borrowing Spouse would also be factored into the ratios. It is okay for both to be on the loan if needed.

FHA is easier to qualify with credit requirements; such as having only one FICO score being reported with Transunion, Equifax and Experian due to a lack of credit. FHA requires a minimum of 580 Mid FICO for the 3.5% down requirement or 10% down with 500-579 a Mid FICO. Non-Traditional trade-lines are allowed. An account history for 12 months will be required on the creditors letterhead listing the name of the borrower, address and account number.

Freddie Mac Non-Occupying Co-Borrower

Freddie Mac differs from FHA both in that the Non-Occupant Co-Borrowers must be related to the occupants of the home, and the Freddie Mac program requires a minimum of 5% down. In addition, the Freddie Mac program will not have the up-front Mortgage Insurance Premium that you will find with the FHA mortgage program. Conventional loans can pay for private mortgage insurance in one lump sum outside of loan, it can be absorbed in the rate (lender paid PMI) or it can be paid monthly (borrower paid PMI). The down payment must come from the Occupying Borrower. Conventional only requires the borrowing spouses debt be added into the ratios. Freddie Mac requires a 620 Mid FICO score and most lenders require a minimum of 3 tradelines reporting on a tri-merge credit report with over $1000 limit reported over 12 months.

Down Payment Requirement

The funds to close for the down payment and any closing costs not paid by escrow must be sourced and seasoned for 60 days in a US bank account. The last 60 days of asset statements will be required (all pages and nothing crossed out). Copies of all checks deposited in the accounts shown on the asset statements other than payroll direct deposits will be required along with a letter of explanation for each.   If unable to source the funds will be omitted and not allowed for the purchase transaction. The closing costs/pre-paid fees can be paid with gifted funds.

Sources of Down Payment Funds

  • Checking Account
  • Savings Account
  • Money Market Account
  • Surrendered Life Insurance Accounts
  • Certificates of Deposit
  • Stock and Bond Investments
  • Retirement Account Funds (terms of the withdrawal must be supplied)

Mortgage Credit Certificate (MCC Tax Program)

One last way to lower the debt ratio is to use a MCC program (federal income tax credit), which can be used with a Conventional or Government loan.  There may be an additional lender fee to utilize this program and not all lenders offer this.  You may also be required to take a in-person or an online (First Time Home Buyer) housing counseling course (certificate is required as proof).  The fee for this program is usually about $50 and can take up to 8 hours to complete.  Email PMC for more information: info@pmccanhelp.com.

PMC offers 2 to 24 month bank statement loans (single account – using average monthly deposit averages-100% from personal and 50% from business) and also has other low doc home loans for 500+ FICO borrowers.

Our goal is to find you the best financing available to save the most money.  As the experts.  Email your scenario to info@pmccanhelp.com.

Make sure to visit our website:   www.pmccanhelp.com

FOR A FAST PRE-APPROVAL: Complete a loan application on our website APPLY ONLINE

Job Opportunities? PMC has been a premier CA & WA brokerage for over 27 years.  Visit our Careers website and apply online today! www.pmccareers.com

Follow our Mortgage on:

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Self Employed Lite Doc Home Loan Program

March 23, 2016

PMC Lite Doc Loan 2016_01

PMC Lite Doc Loan 2016_02

PMC Lite Doc Loan 2016_03

PMC Lite Doc Loan 2016_04

Many borrowers cannot qualify with traditional full documented income financing.  Lite doc loans are available again.  There are 6 more in pages to this program.  Email info@pmccanhelp.com for the complete set of guidelines.  There is also a overview available on what  is required for a CPA letter and successful bank statement loan.

PMC offers 2, 12 and 24 month bank statement loans (single account – using average monthly deposit averages-100% from personal and 50% from business) and also has other low doc home loans for 500+ FICO borrowers.

Our goal is to find you the best financing available to save the most money.  As the experts.  Email your scenario to info@pmccanhelp.com.

Make sure to visit our website:   www.pmccanhelp.com

FOR A FAST PRE-APPROVAL: Complete a loan application on our website APPLY ONLINE

Job Opportunities? PMC has been a premier CA & WA brokerage for over 27 years.  Visit our Careers website and apply online today! www.pmccareers.com

Follow our Mortgage on:

www.facebook.com/pmccanhelp

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JUMBO FINANCING: BUYING YOUR DREAM HOME?

February 25, 2016

PMC Jumbo to $2.5M 2016_01

PMC Jumbo to $2.5M 2016_03

PMC Jumbo to $2.5M 2016_02

PMC also has low doc home loans.  Email your scenario to info@pmccanhelp.com.

Make sure to visit our website:   www.pmccanhelp.com

FOR A FAST PRE-APPROVAL: Complete a loan application on our website APPLY ONLINE

Job Opportunities? Now is the time to see how PMC Can Help you earn what you deserve!  Visit our Website and apply online today! www.pmccareers.com

Follow our Mortgage on:

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Did You Know About These FHA Guideline Changes?

January 20, 2016

credit report 101

Earnest Money 

Old Rule – Document source of earnest money if the amount exceeds 2% of the sales price

New Rule – Document source of earnest money if the amount exceeds 1% of the sales price

CAIVRS 

Old Rule – defaulted federal debt makes borrower ineligible

New Rule – VERIFIED defaulted federal debt makes the borrower ineligible

Part-Time Income

Old Rule – Underwriter discretion allowed when received less than 2 years

New Rule – Two years uninterrupted part-time income is required.  Average income over prior 2 years or use 12-month average of hours at the current pay rate if the lender documents an increase in pay rate.

Rental Income on Retained Primary Residence

Old Rule – Rental income may be counted when relocating outside of reasonable commute distance for job and borrower has 25% equity.

New Rule – Rental income may be counted when relocating and the new residence is at least 100 miles from previous residence.  If no history of rental income since the last tax filing, borrower must have 25% equity.

Non-taxable income 

Old Rule – Gross up using tax rate evidenced on last tax return.  If borrower did not file a return, use tax rate of 25%.

New Rule – Gross up using the greater of 15% or actual tax rate.  If borrower did not file a tax return, use tax rate of 15%

Installment Debts Less Than 10 Months

Old Rule – May be excluded from ratios.  If manual underwrite—may be excluded if debt will not affect ability to pay the mortgage.

New Rule – May be excluded ONLY if—they have cumulative payment of less than or equal to 5% of the borrower’s gross monthly income AND the borrower may not pay the debts down to achieve this percentage.

Multiple FHA Loans

Old Rule – If relocating for employment, borrower may obtain a second FHA loan for a new principal residence if current residence is more than a reasonable commute to new residence.

New Rule – If relocating for employment, the commuting distance between the old residence and new residence must be more than 100 miles.

Get Help From the Experts.  Platinum Mortgage Company also offers Stated, Low Doc, Alt-A, Sub-Prime, Non-Prime and Bank Statement Home Loans.

Credit issues? PMC Can Help….ask your loan officer about credit enhancement to get the best rate possible and save thousands of dollars in interest.

Make sure to visit our website:   www.pmccanhelp.com

FOR A FAST PRE-APPROVAL: Complete a loan application on our website APPLY ONLINE

Job Opportunities? Now is the time to see how PMC Can Help you earn what you deserve!  Visit our Website and apply online today! www.pmccareers.com

Follow our Mortgage on:

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Stay Informed. Download our app:

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Go 203k: Any Home Can Become a Dream Home

January 5, 2016

PMC 26 Years (2)Are you planning on making 2016 the year to become a homeowner?

House hunting can be a tedious task of the whole process.  Some homebuyers can look at as many as 50 homes.  If the home has all of the basic necessities that you are looking for, but is a bit of an eye soar or just needs updating then it may be good idea to look into rehabbing the home.  Look at the home’s  “potential” to become the home of your dreams with upgrades.  Remodeling the kitchen or bathrooms can add value into the home and build equity sooner.  The program allows you to create additions with county permits.

FHA offers rehabilitation home loans.  The 203k Standard program allows up to $35,000 in repairs, which includes the fees for the work to be completed.  There is also a 203k Full program which allows unlimited repairs.  There are specific repairs that the funds can be used for.  Make sure to get pre-approved and check the guidelines before putting in an offer.

Yes, the drawback is that the rate will be higher than a standard FHA loan and it may be an inconvenience to have the work completed.  Lenders and Banks no longer offer equity line of credit over 80% loan to value so the 203k loans are perfect for many buyers.  The end result will be worth all of the trouble.  Don’t forget that you can always refinance into a conventional loan once you have 20% equity to remove the private mortgage insurance and possibly a better interest rate to save money.

The work can be completed post closing with draws made by the licensed contractor.  A final appraisal will be required once the repairs have been completed.  HUD has an approved list online: https://entp.hud.gov/idapp/html/f17cnsltdata.cfm. You can also request to do the repairs yourself if you have experience and tools.

You will have to meet the standard FHA requirements for credit and income.  Make sure to check with the lender to see what their minimum credit score requirement is.  Some lenders require a 580 and others may require a 640.

Download this 203k cheat sheet and training guide:

FHA_203(k)_Rehab_Loan_ProgramPP[1]203K-Overview_of_Renovation[1]

FHA_203(k)_Rehab_Loan_ProgramPP[1]

Read more:

http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/203k

Get Help From the Experts.  Platinum Mortgage Company also offers Stated, Low Doc, Alt-A, Sub-Prime, Non-Prime and Bank Statement Home Loans.

Credit issues? PMC Can Help….ask your loan officer about credit enhancement to get the best rate possible and save thousands of dollars in interest.

Make sure to visit our website:   www.pmccanhelp.com

FOR A FAST PRE-APPROVAL: Complete a loan application on our website APPLY ONLINE

Job Opportunities? Now is the time to see how PMC Can Help you earn what you deserve!  Visit our Website and apply online today! www.pmccareers.com

Follow our Mortgage on:

www.facebook.com/pmccanhelp

http://www.twitter.com/pmccanhelp

http://www.linkedin.com/in/pmccanhelp

Follow our Realty on:

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Stay Informed. Download our app:

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Why Don’t More Buyers Use USDA Financing?

December 6, 2015

 

 

 

usda

USDA Single family Housing Guaranteed Loan Program helps low-to-medium income borrowers qualify for home loan financing to improve the quality of their lives.  The reason why many buyers do not take advantage of USDA financing is plain and simple; many loan officers an real estate agents aren’t familiar with the USDA program.  Therefore, they do not offer the option to their clients.  USDA follows the same guidelines as FHA.  A newer real estate agent may not have been informed that their market area qualifies for USDA financing, but surprisingly many suburbs do qualify.  First time homebuyers are also extremely overwhelmed and may not know that this program is available, but there are many lenders  that offer this program.

Here are some of the differences in loan programs:

  • USDA allows up to 100% financing for purchases and rate and term refinances. FHA is up to 96.5% financing for purchases and 97.75% for refinances. Conventional loans finance up to 95% loan to value and MyCommunity financing will go up to 97%.
  • USDA does not allow cash out refinancing.  FHA and Conventional loans do.
  • USDA financing is capped at 31/43% debt ratio.  With a 660+ FICO lenders may make exceptions to go to 45% back end ratio.  FHA allows debt ratios up to 56.99% backend and Conventional loans are max at 50% purchases/rate and term or cash out at 45%.
  • USDA monthly private mortgage insurance is extremely low at .50 annually (annual premium is divided by 12 to arrive at the premium charge per month). FHA is at .85 annually for 90% loan to value an .80 annually for 89.99% loan to value or lower. Lenders that offer 95-97% loan to value financing offer lower private mortgage insurance for higher credit score borrowers (typically 720+).
  • FHA interest rates tend to be a bit lower than USDA, which helps to offset this.  Both USDA and FHA have lower interest rates than Conventional loans due to their annual private mortgage insurance, which now are required to be paid over the life of the loan.
  • On Conventional loans, private mortgage insurance will automatically discontinue being charged at 78% of the original value (which is computer generated and automatically set at the closing of the loan). On Conventional loans, if values increase sooner and you are 80% loan to value or lower, you can request an appraisal to be completed by your mortgage lender to remove the private mortgage insurance earlier.
  • USDA Upfront Guarantee Fee is 2.75%.  FHA is at 1.75%. Conventional offers lender paid private mortgage insurance with an upfront fee to omit or reduce the annual fee.
  • USDA and FHA purchase loans are only available for owner occupied purchases.  FHA will refinance an owner occupied home that has become a rental after one year of being owner occupied.
  • USDA allows down payment assistance programs to help cover the closing costs and is very beneficial if the seller isn’t offering any seller credit to cover closing costs and pre-paid fees.  USDA comes in handy for those that qualify for a down payment assistant program, which normally require a 620 Mid FICO to qualify.
  • USDA and FHA allow 550+ Mid FICO borrowers and Conventional requires a 620+ Mid FICO.
  • USDA, FHA and Conventional loans have rehab financing for homes that need renovation.  Make sure to ask your loan officer about these programs.

Current Turn Times:

Lenders that offer USDA financing have to approve the loan and send the package, typically by email, to USDA for a final approval.  Current turn times is 3-4 business days for GUS loan submissions and 7-10 business days for manual submissions. Business days exclude weekends (Saturday and Sunday) and all federal holidays.  Rush requests are not be honored. Loans are reviewed in the order they are received.

Check to see if you qualify:

Income Requirements

Property Eligibility

PMC USDA_1

Read more about USDA financing:

Single Family Housing Guaranteed Loan Program

The Best Loan You’ve Never Heard Of—And How You Can Get One

Get Help From the Experts.  Platinum Mortgage Company also offers Stated, Low Doc, Alt-A, Sub-Prime, Non-Prime and Bank Statement Home Loans.

Credit issues? PMC Can Help….ask your loan officer about credit enhancement to get the best rate possible and save thousands of dollars in interest.

Make sure to visit our website:   www.pmccanhelp.com

FOR A FAST PRE-APPROVAL: Complete a loan application on our website APPLY ONLINE

Job Opportunities? Now is the time to see how PMC Can Help you earn what you deserve!  Visit our Website and apply online today! www.pmccareers.com

Follow our Mortgage on:

www.facebook.com/pmccanhelp

http://www.twitter.com/pmccanhelp

http://www.linkedin.com/in/pmccanhelp

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Stay Informed. Download our app:

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What is a CPA Letter?

November 15, 2015

untitled

A CPA Letter can also be referred to as a Comfort LetterThis may be required for low documented loans for self employed borrowers.

CPA Letter for Verification of Self Employment

CPA Letter for Verification of Self Employment is a document issued by the loan applicant’s CPA or Tax Preparer who affirms that they prepared the applicant’s tax returns and that the applicant is self-employed. The primary purpose of the letter is to independently verify the self-employment status of the loan applicant(s).

Contents of the Letter

  1. Content: The letter should contain:
    1. Applicant’s name
    2. Applicant’s business name, address, and phone number
    3. Nature of business
    4. Number of years the applicant has been in this business
    5. Percentage of ownership
    6. Time since when the CPA has prepared the applicant’s tax returns
    7. Fact that the applicant reviewed the tax returns prior to their filing by the CPA
  2. Signature: The letter should be signed by the CPA.
  3. CPA Active License Number Listed (this will be verified by the lender)
  4. Letterhead: The letter should be on the CPA’s letterhead.

Considerations for the Loan Applicant

The applicants should obtain a copy of the letter and ensure that it contains the elements listed above and any additional information required by the lender. Also, ensure the accuracy of the information in the letter.

Considerations for the Lender

Document Review

The review of the letter is generally performed by the processing or the underwriting department of the lender. The lender’s review of the letter may include the following.

  1. Content: The letter contains information listed above and any other information that the lender requires.
  2. Independent Verification: Verify the CPA License for the State in which the CPA is licensed.
  3. Comparison with Tax Returns: The CPA’s information in the letter should be compared to the information in the tax returns that were provided by the loan applicant. Ideally, the CPA’s information on the two documents should match.
  4. Delivery: The letter should be received directly from the CPA. Do not accept letters forwarded by the broker or the loan applicant(s).

Considerations for CPAs and Tax Preparers

Prior to issuing any letters, tax preparers and CPAs must consider the scope of their relationship with the borrower. Only affirm factual information and do not provide any forward looking statements, projections, or opinions. It is advisable to make it clear in the letter that the CPA is not providing any assurance as to the creditworthiness of the borrower. The lender assumes has to perform its own due diligence and the letter does not create any legal relationship or obligation of the CPA.

Tax Preparers and CPAs are recommended to check their professional code of conduct and standards before issuing such letters.

Document Summary

Purpose The letter is issued by the loan applicant’s CPA or Tax Preparer who affirms that he/she prepared the applicant’s tax returns and that the applicant is self-employed.
Use in Mortgages The letter is used as a means of independent verification of self-employment.
Other Names CPA Letter
Type Letter
Provided By Loan applicant’s CPA
Provided To Lender
Notarization Required No
Signed By CPA or tax preparer issuing the letter
Life Cycle Stage Origination, as part of underwriting
Recordkeeping The letter must be maintained in the loan file while the loan is outstanding.
Model Form None
Applicable Laws None

 

Read this article regarding concerns: http://www.journalofaccountancy.com/news/2009/mar/20091528.html

Get Help From the Experts.  Platinum Mortgage Company offers Stated, Low Doc, Alt-A, Sub-Prime, Non-Prime and Bank Statement Home Loans.

Visit Our Website:   http://www.pmccanhelp.com

FOR A FAST PRE-APPROVAL: Complete a loan application on our website APPLY ONLINE

Job Opportunities? Now is the time to see how PMC Can Help you earn what you deserve!  Visit our Website and apply online today! http://www.pmccareers.com

Follow our Mortgage on:

http://www.facebook.com/pmccanhelp

http://www.twitter.com/pmccanhelp

http://www.linkedin.com/in/pmccanhelp

Follow our Realty on:

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Stay Informed. Download our app:

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Ready to Buy a Home? CA & WA Down Payment Grant (No Repayment) Up to 5% is Available For You!

October 23, 2015

HUD-logo-Apply

There are many down payment programs available to Californians and Washingtonians.  One great program is the NHF Sapphire Program and NHF Platinum Program, which is designed to provide down payment assistance in conjunction with the purchase of a primary residence. The down payment assistance is currently in the form of a “Grant” – no repayment needed!

The Program is designed to increase homeownership opportunities for low-to-moderate income individuals and families in California. Here is how it works:
  • Receive Up to 5% of the First Mortgage (base) Loan amount;
  • Proceeds may be used for down payment and/or closing costs;
  • Seller can still credit buyer up to 6% of the closing costs, which will allow the buyer to use grant to do a loan at 95% LTV, which reduce the PMI from .85 to .80 and lower the rate on the first mortgage to save even more money
  • There must be no cash back to the borrower from the Grant Fund proceeds; The Down Payment Assistance structure is subject to change during the course of the Program.
  • Lenders upfront the grant at closing to be reimbursed by the Servicer, on behalf of NHF, upon purchase of the Sapphire First Mortgage
  • There is a $350 agency fee.
  • The current 30 yr fixed for 96.5% is 4.5% and 95% is at 4.375%
  • MCC can be used in conjunction with Sapphire to help bring the debt to income ratio down (there is also a $350 agency fee that is due upfront) and many counties are offering MCC
  • Debt to Income ratios are based on the automated DU approval
  • Occupy the residence as their primary residence; non-occupant co-borrowers are not allowed.
  • Qualifying income cannot exceed NHF income limits for the county in which the property is located: 115% Area Median Income (AMI). Refer to 2015 CA Income Limits: NHF Sapphire® Down Payment Assistance Program and 2015 WA income Limits: 2015 Income Limits NHF Platinum® Down Payment Assistance Program
  • Minimum Credit Score of 620.
  • Meet all required FHA, VA, USDA-RHS underwriting criteria
  • Maximum loan amount: The lesser of $417,000 (not including MIP) or maximum loan amounts permitted by HUD.
  • No First Time Home Buyer Certificate Needed!
  • Eligible Properties:  Single Family Residence, Approved Condo, PUD or Manufactured Home
  • Borrower can own other real estate
  • Can be combined with other down payment funding sources.
Fees and Charges:
  • Origination Fee/Discount Points: Up to 1.50% upfront and $900 Processing Fee
  • Sapphire Agency Fee up to $350 (which can be paid at closing with most lenders)
  • Lender may charge customary and reasonable closing  costs and fees with full disclosure in accordance with FHA, VA, USDA and federal, state and local laws and regulations.
If you have a loan scenario email us at info@pmccanhelp.comPMC Can Help!Get Pre-Approved Today!  Apply Online for Fast Pre-Approvals http://www.pmccanhelp.com.

PMC offers free credit enhancement prior to submitting your loan to the bank to ensure you get the best rate possible.  Even 20 points could be .25% better in rate, which equals thousands of dollars on the life of a mortgage loan.

Get Help From the Experts.  Visit Our Website:   http://www.pmccanhelp.com

FOR A FAST PRE-APPROVAL: Complete a loan application on our website APPLY ONLINE

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A New CalHFA Down Payment Assistance Program: MyHome Assistance Program

October 1, 2015

realstate1

CalHFA is pleased to announce its new MyHome Assistance Program starting October 5, 2015.  The MyHome program simplifies the loan process and maximizes affordability for eligible first-time homebuyers throughout California.

Highlights of the MyHome program: 

  • Up to 5% of the sales price or appraised value, whichever is less 
  • May be used for down payment assistance and/or closing costs 
  • Available to eligible first-time homebuyers in California 
  • Maximum CLTV is 105% 
  • 3% simple interest 
  • Payments are deferred for life of the first mortgage 
  • Maximum total DTI of 45.00%
MyHome can only be combined with a CalHFA first mortgage loan that has been reserved on or after October 5, 2015 and must be recorded in 2nd lien position.  The MyHome program can also be combined with other down payment assistance loans or grants to maximize affordability, but may not be combined with the Extra Credit Teacher Program.  Non-first-time homebuyers are not eligible for the MyHome program, but may continue to benefit from CalHFA’s CalPLUS Conventional or CalPLUS FHA loan programs with built-in ZIP assistance.
The MyHome program handbook and new forms will be posted on the CalHFA website October 5th.
See what down payment programs you may qualify for.

Get Pre-Approved Today!  Apply Online for Fast Pre-Approvals http://www.pmccanhelp.com.

PMC offers free credit enhancement prior to submitting your loan to the bank to ensure you get the best rate possible.  Even 20 points could be .25% better in rate, which equals thousands of dollars on the life of a mortgage loan.  If you have a loan scenario email us at info@pmccanhelp.com – PMC Can Help!

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Need More Buying Power? Ask for the Mortgage Credit Certificate (MCC) Program.

September 29, 2015

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Mortgage Credit Certificate

An MCC is a federal income tax credit designed to assist persons of low-to-moderate income to better afford individual ownership of housing and can be used with Conventional/Conforming, FHA, USDA and VA home loans.  With an MCC, the qualified homebuyer is eligible to write off a portion of the annual interest paid on the mortgage as a special tax credit, during each year that they occupy the home as their Principal Residence. The portion or amount of the tax credit is equal to the mortgage credit rate on the MCC multiplied by the annual interest paid (for example a 20% MCC provides a 20% tax credit). This credit reduces the federal income taxes of the buyer, resulting in an increase in the buyer’s net earnings. Increased buyer income results in increased buyer capacity to qualify for the mortgage loan. The MCC has the potential of saving the MCC holder thousands of dollars over the life of the loan.

MCC and the Federal Income Tax Mortgage Interest Deduction 

A taxpayer receiving an MCC reduces the portion of his/her normal deduction taken for interest paid on the mortgage loan by the percent of tax credit taken. However, the homebuyer can deduct the remainder of the annual mortgage interest payment not claimed as a credit. Although the interest deduction is reduced, the holder of the MCC still pays considerably less in taxes.

Example: 

A Borrower with a 6.00% fixed rate 30-year mortgage of $300,000 would make $18,000 in interest payments during the first year of the mortgage. By using a 20% MCC, up to $3,600 (20% of $18,000) of the payments would be allowed to be taken as a “tax credit” toward that buyer’s federal income tax liability. The remaining 80% (in this case, $14,400) still is taken as a “tax deduction” from the homebuyer’s adjusted gross income.  The Borrower in this example has an annual tax liability of $5,000 or more after all other deductions and credits, and the after-MCC credit interest paid on the mortgage is reduced to 4.80%, i.e. annual interest of $14,400 on $300,000 corresponds to a 4.80% loan. This effect, however, is achieved only when the MCC holder-Borrower has sufficient income tax liability to receive the entire benefit from the MCC tax credit.

How to Apply for an MCC 

Not all lenders offer the MCC program.  The homebuyer may obtain an MCC through any of the participating Lenders. A list of the Lenders can be found on the Program Administrator’s website. MCCs are issued on a first-come, first-served basis, irrespective of the Applicant’s race, color, religion, national origin, age, or gender. There will be no restrictions as to the total number of Reservations of Funds issued to any particular Lender except for the Program limits. The homebuyer should apply for the MCC at the same time he or she makes a formal application for a mortgage loan. Lender is responsible for determining eligibility and acquiring an MCC Commitment from Program Administrator. The MCC is issued to the Applicant after the mortgage loan has been closed.

How to Use the MCC 

The homebuyer may receive the complete MCC credit savings annually at the time they file their tax returns or monthly by adjusting his or her federal income tax withholding by filing a revised Form W-4 with his or her employer. By taking the latter action, the number of exemptions will increase, reducing the amount of taxes withheld and increasing the buyer’s disposable net income.

During the first year of the Program, this Applicant would be entitled to a tax credit of $3,600. Based upon such an entitlement, he or she would be able to file in advance a revised Form W-4 withholding form taking into consideration this tax credit and have approximately $300 per month in additional disposable income. ($3,600/12 = $300 MCC Monthly Credit).

Taxpayers who file itemized returns may take a deduction for his or her mortgage interest paid each year, less the amount equal to the tax credit taken. (The interest deduction would be $18,000 less $3,600, or $14,400). In any event, when the homebuyer files his or her taxes each year, they must fill out IRS Form 8396 and attach a copy of their MCC with his or her filed taxes. This is not intended to be a full explanation, nor an assurance that such information will guarantee compliance with the tax laws.

We encourage the homebuyer to contact their tax advisor or their employer to help them with the necessary tax forms and, if they so choose, to properly adjust their tax withholding.

The MCC Recapture Tax  

According to Section 143(m) of the Internal Revenue Code of 1986, homebuyers with loans closing after January 1, 1991, who receive a Mortgage Credit Certificate, may be subject to a “Recapture Tax” if they sell or transfer their home within nine years after the Closing. A number of factors determine the amount of tax, if any, the Applicant must pay.

The tax, if any, will always be the lesser of:

  1. Half the gain from the sale of the home, or
  2. A tax based on a formula which takes into consideration:
  3. the original principal amount of the home mortgage;
  4. the number of complete years that pass before the home is sold;
  5. the median family income for the buyer’s area at the time he/she bought the home; and
  6. The buyer’s adjusted gross income at the time the home is sold.

There are several conditions that can exempt the MCC holder from the Recapture Tax. These include:

  1. No net gain on the sale of the property;
  2. Insufficient increase in the income of the MCC holder between the time of purchase and the time of sale;
  3. Sale of the home after the ninth year; and
  4. A sale due to death or divorce.

The Lender provides homebuyer with information about Recapture both at the time of application

First-Time Homebuyer Requirement 

The Applicant applying for an MCC cannot have had an ownership interest in a Principal Residence at any time during the preceding three (3) years ending on the date the mortgage is executed. This requirement does not apply to acquisitions of homes in Targeted Areas or if an Applicant is a Qualified Veteran. The Applicant and spouse, and any other adult who will be reflected on the title, must meet this First-Time Homebuyer requirement.

Income Limitation 

Qualified Applicants must have an annual gross household income that is within Program limitations. Income is calculated by taking the Applicant’s current gross monthly income, as well as that of anyone else who is expected to live in the Residence and become liable on the Deed of Trust or Mortgage (including a non-purchasing spouse) and multiplying that amount by 12. For the maximum Income limitations, see the current PROGRAM OVERVIEW published by the Program Administrator. Verification of the Applicant’s income is performed by the Lender and the Program Administrator. All persons whose income must be considered in processing the MCC application must also meet all other individual requirements of the Program, including the First-Time Homebuyer requirement, and each such person must execute all applicable Program Affidavits. This generally applies to spouses whether or not such spouse’s Income is used to qualify for credit underwriting purposes.

Read more:  https://en.wikipedia.org/wiki/Mortgage_Credit_Certificate

Get Pre-Approved Today!  Apply Online for Fast Pre-Approvals http://www.pmccanhelp.com.

PMC offers free credit enhancement prior to submitting your loan to the bank to ensure you get the best rate possible.  Even 20 points could be .25% better in rate, which equals thousands of dollars on the life of a mortgage loan.  If you have a loan scenario email us at info@pmccanhelp.com – PMC Can Help!

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Refinancing Your Home Loan? Make Sure to Order a Net Escrow Payoff From Your Current Lender.

September 24, 2015

Mortgage-Refinancing-1

Just in Case You May Not Know: What is An Escrow Account?

An escrow account is an account that was set up with your lender, which holds funds that is used to pay for your property taxes and homeowner’s insurance when they become due. Each month, the lender collects the escrow portion of your payment and deposits it into your assigned escrow account. Most lenders also require that you maintain a cushion in the account, which means that there can be a surplus when you pay off the loan, even if the lender already paid for your taxes for the year.

When you refinance your loan or pay off your mortgage, the lender must close your escrow account. If you request that the balance of your escrow account apply to your mortgage payoff, some lenders will honor your wishes. However, banks typically prefer to return the balance of the account to the borrowers instead.  If the lenders offers to issue a net escrow payoff you should take advantage of it.  It really doesn’t make sense not to; netting your escrow makes the process quicker and easier for both parties involved. When you refinance, you have two options with your old escrow account: you can pay the new escrow amount out of pocket and receive a check for the old escrow account after the payoff, or you can net (or apply) the escrow and use your old account funds to cover the difference for your new escrow. The new escrow in your refinanced mortgage is going to be a part of mortgage costs either way, so if you don’t have the cash at hand to cover it at that moment, netting your escrow is extremely helpful.

Keep in mind when refinancing it always best to seek the shortest term mortgage.  For example, maybe you are currently in your seventh year of your thirty year mortgage.  If you are refinancing into a 30 year mortgage you are starting all over again and paying more interest versus staying in your current loan.  Consider refinancing into a 15, 20 or 25 year term to lower the total interest paid in the new loan to maximize the most savings.  If you should choose to refinance consider only refinancing if you are lowering the payment about 1%, need to refinance out of a balloon payment mortgage, converting from FHA to Conventional, removing private mortgage insurance or taking cash out for financial endeavors (debt consolidation, medical emergencies, home improvements, auto purchases, college tuition, etc).  Remember the ultimate goal is to have your mortgage paid free and clear into retirement.

What Does Net Escrow Mean?

If you are considering refinancing your home loan, you may be able to take the credit in your existing escrow/impound account and apply it as a credit toward the new loan.  Most home loans have impounds accounts set up for the lender to set aside at the start of a mortgage by a third party to cover pop up expenses like property taxes, or insurance premiums. It’s a helpful way to have these expenses covered ahead of time by cash you put aside, so you don’t have to juggle them with your mortgage payment and other bills.  It is most useful when doing a FHA Streamline Refinance to lower the funds needed at closing.  Another reason it helps is the next half of property taxes may be due and the new lender requires the funds be collected upfront if due within the next 90 days.  Homeowner’s insurance policies may be due for their annual premium too.  Netting escrow may not apply to all loan types. The Federal Housing Administration (FHA) allows FHA loans to net escrow when refinancing, but not all mortgage companies do so make sure you check with your mortgage provider to see if you qualify for this. When it comes down to it, you’re going to have to pay for escrow when you refinance, and it’s a better deal to net it.  Mortgage payments are always made in arrears.  If you close by the end of the month you will be able to defer the next month’s payment and your first payment will be due the following month on the 1st.  This may help to offset some of the cash to close.

Why Wouldn’t Someone Request for a Net Escrow?

A point of confusion for some clients comes when comparing their existing home loan and the new one, which may have different terms. For example, your refinanced escrow amount could very well be more than the one on your existing loan; if your old escrow account was for $2,000 and the refinanced escrow was $3,500, you’d need to bring $1,500 to closing if you don’t want that added to your refinanced loan. Also, if you decide to net your escrow, the discount will not occur until the payoff is ordered, so it’s usually the last thing to happen when refinancing. This can startle some people because when it’s last to occur, a reimbursement check seems much more appealing in a short-term sense. This chart uses the hypothetical example of having a principal balance of $100,000, a refinanced escrow of $3,500, and an “old” escrow of $2,000.

Other Helpful Information

The Real Estate Settlement Procedures Act requires lenders to abide by certain guidelines when they maintain escrow accounts for borrowers. Under RESPA, lenders cannot maintain a cushion that exceeds two times a monthly escrow payment. When the escrow account’s balance is more than $50 over its limit under RESPA, the lender must return the excess amount to the borrower within 30 days of its discovery.

RESPA’s statutes don’t expressly prohibit lenders from applying escrow balances to mortgage payoffs. However, because applying the balance to the payoff can cause problems, some banks prefer to return it to the borrower instead. For example, if a borrower incorrectly estimates the escrow account’s balance and reduces the amount he pays toward the mortgage balance, the payoff may be incomplete and interest will continue to accrue.

After you pay off your loan, the lender must close your escrow account, regardless of whether the balance is applied to the payoff. If you still own the home that secured the loan but you no longer have a mortgage, remember that you must make your own home insurance and property tax payments during the year. If you refinanced your home, your lender will open a new escrow account and begin making the payments for you.

Get Pre-Approved Today!  Apply Online for Fast Pre-Approvals http://www.pmccanhelp.com.

PMC offers free credit enhancement prior to submitting your loan to the bank to ensure you get the best rate possible.  Even 20 points could be .25% better in rate, which equals thousands of dollars on the life of a mortgage loan.  If you have a loan scenario email us at info@pmccanhelp.com – PMC Can Help!

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Platinum Mortgage Company Has Various Stated, Low Doc and No Income Home Loan Programs

August 3, 2015

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 *  NO 1040 * NO 4506T *  INCOME FROM P&L ONLY * 2 – 12 MOS BANK STATEMENTS *  

* NO BORROWER INCOME OR DEBT TO QUAL*

* $100K – $2.5 MIL* 

 

Prime Portfolio 7/1 ARM 

No 1040, No 4506, Wage-earner ok with VOE only

For self-employed- P&L signed by borrower only for income

2 months bank statement to verify asset only.  $1.5 MIL Cash Out to 50% LTV   

 

Choice Portfolio Reduced Doc

85% LTV Reduced Doc to $2.5 MIL  No MI

No limit on Cash Out 

12 month Bank Statement –  PERSONAL ACCOUNTS ONLY

<600 fico to 70% LTV

 

Select Portfolio 5/1 ARM

 Interest Only available 

12 Months seasoning on BK/Foreclosures/Short Sale

3 Months Bank Statement, 620+ FICO, 55%DTI 70% LTV

Cash Out  to $1 MIL

Non-Owner Cash Out to 50% LTV to $2.5 MIL

<620 FICO Lower LTV

Alt Doc Jumbo  5/1 ARM

 3 Months Bank Statement

70% LTV Purch  

Cash Out  to $1 MIL loan amount  

 Investor Express 30 YR Fixed

** NO  INCOME FROM BORROWER TO QUALIFY **

 Cash Out on Non-Owner, 2-4 units

65% DTI (calculated by PITIA/Rental income)

620+ FICO

Unlimited # of properties owned

3 years seasoning on Foreclosure/BK/Short Sale

  ______________________________________________    

FULL DOC JUMBO PROGRAMS

Choice Portfolio Full doc

90% LTV to Full Doc to $2.5 MIL

 Cash Out Limit: 5% less max LTV 

Non-Owner to 75% LTV Cash Out 

   

Platinum Jumbo & Core Jumbo

Platinum – 85% LTV No MI 

Core Jumbo – 89.9% LTV No MI   

      85% LTV No MI  to 2 Mil. Cash out to 75% LTV  80% LTV R/T $1 MIL  660+ FICO 70% LTV to $1.5 MIL on Purchase

MAX $ Cash Out to $1 MIL TO 50% LTV 

 

Express Jumbo

15 & 30 Fixed & ARM

Non-warrantable Condo Projects 

80% to $1 MIL

Cash Out to $2 MIL to 55% LTV

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PMC offers free credit enhancement prior to submitting your loan to the bank to ensure you get the best rate possible.  Even 20 points could be .25% better in rate, which equals thousands of dollars on the life of a mortgage loan.  If you have a loan scenario email us at info@pmccanhelp.com – PMC Can Help!

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Freddie vs Fannie – Which Way to Go?

July 9, 2015

fannie-freddie

There are many home loan programs available these days.  Every mortgage has a different scenario.  Here are some niches available for conventional financing:

FREDDIE / LP Loans
If the gift is less than 20% of the sales price, borrower must contribute own funds equal to at least 5% of the purchase price
Allows blended ratios on non-occupant co-borrowers
Appraisal over 120 days old – Exterior only 2055 allowed to extend beyond 120 days – max date is 240 days
No PIW – Freddie offers an “HVE” on Open Access HARP only
Condo Streamline review to 90%
Max 4 financed properties when subject is a 2nd home or investment prop
Accept responses w/ disputed accounts don’t require confirmation of the accuracy of the disputed tradelines – already included in LP assessment
Cash out Freddie only requires 6 months before the new Note date
Requires 2 years landlord experience to use rental income
Funds received from a wedding allowed as borrower’s own funds
May require rent loss insurance when using rental income to qualify
Up to 50% DTI in most cases
Employment Contracts; start work within 90 days
Gift letters must list the property address being purchased
95% LTV Max on ARMs
Refinance of a restructured mortgage is not eligible
75% LTV on cash out O/O on Super Conforming up to $625k

FANNIE / DU Loans
Minimum borrower contribution from the borrower’s own funds is not required – all funds needed to complete the transaction can come from a gift (1 unit)
Occupying borrower(s) must qualify for mortgage payment (will not blend ratios)
Appraisal over 120 days old – 1004D allowed to extend the validity period – max date is 240 days
Property Inspection Waiver (PIW) may be offered in DU Findings
Condo Limited Review to 80%
If tradeline disputed and delinquency in last 2 years from credit report date, follow instructions on findings
Cash out requires 6 months seasoning before application date
No landlord experience required to use rental income
Funds received from a wedding are still considered a “gift”
Typically does not require rent loss insurance when using rental income (unless DU requires, which is rare)
Up to 45 % DTI unless major compensating factors; good reserves
Employment Contracts; start work prior to close w/VOE from new employer
Gift letters do not have to list the property address
90% LTV Max on ARMs
Restructured loans can be refinanced (restrictions apply)
Max cash out on Fannie High Balance is 60% LTV

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PMC offers free credit enhancement prior to submitting your loan to the bank to ensure you get the best rate possible.  Even 20 points could be .25% better in rate, which equals thousands of dollars on the life of a mortgage loan.  If you have a loan scenario email us at info@pmccanhelp.comPMC Can Help!

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Platinum Mortgage Company is Your Conventional and Unconventional Home Loan Resource

July 1, 2015

Turned Down by the Big Banks? 

PMC Can Help!

badcreditloans-approved

Platinum Mortgage Company is now also servicing Washington State. 

Conventional

  • 620 FICO to 95% LTV (90% LTV on high balance)
  • LP Accept to 50% Debt to Income Ratio for Purchase/Rate&Term or 45% Cash Out
  • DU up to 50% Purchas/Rate&Term or 45% Cash Out
  • LP – blended ratios, up to 75% LTV C/O on high balance, and 1 year tax returns
  • Transferred appraisals OK (ask about requirements)
  • W2 only transcripts for wage earners
  • Use rental income w/o prior landlord experience
  • LP – can use 100% of balance as reserves (stocks, bonds, and mutual funds)
  • LP – non-occupant co-borrower for purchases allowed
  • 5-10 financed properties
  • Lender Paid Mortgage Insurance
  • Preferred pricing for 740+ mid score borrowers
  • 95% condo financing
  • Cash  Out Refi up to 80% LTV
  • 1-4 Unit, Condo, PUD and manufactured homes

FHA

  • 580 min FICO for conforming and high balance loan amounts
  • 550 min FICO up to 90% LTV
  • DTI up to 56.99% (per DU)
  • No min trade line requirements
  • Gift funds allowed
  • Blended ratios w/ non-occupant co-borrowers
  • No seasoning on short sales w/ no mortgage lates
  • Manual underwrites allowed
  • Recent college grades can use last 30 days base salary to qualify
  • Student loan payments may be omitted or reduced to meet debt ratio requirements
  • Cash Out Refi to 85% LTV
  • Non-Arm Length Transactions up to 85% LTV
  • 1-4 Unit, Condo, PUD and manufactured homes

VA

  • 550 min FICO for conforming and high balance loan amounts up to 100% for purchase or rate and term
  • 620+ FICO for 100% Cash Out / 550-619 FICO up to 90% LTV
  • IRRRLs to 125% (600 FICO conforming and 640 high balance)
  • IRRRLs – no income required and no assets (as long as none are required to close)
  • $1,094,625 max loan amount
  • AVM required for IRRRLs
  • Manual underwrites allowed
  • 1-4 Unit, Condo, PUD and manufactured homes

USDA

  • 100% LTV with low monthly PMI
  • Unlimited CLTV for purchase and refinance transactions
  • 550 min FICO
  • Manual underwrites allowed
  • AUS approval through GUS
  • 1-4 Unit, Condo, PUD and manufactured homes

Jumbo

  • Loans up to $3 mm
  • FULLY DELIGATED UNDERWRITING
  • C/O refi to $3 mm
  • Gift funds allowed
  • Multiple financed properties allowed
  • 85% LTV w/ no MI to $2 mm, 30 year fixed
  • $1 mm C/O
  • 89.9% LTV w/ no MI to $1.5 mm, 5/1 ARM

Some of Our Loan Programs: 

Conventional Loans – Up to 46.99/56.99% DTI, Conventional – Up to 97% & No MI Loans, Jumbo Loans – Up to 90% LTV, Up To $3M & No MI,  Jumbo Loans – Up to 80% LTV, Up to $5M, FHA Loans – Only 0.5% Down w/ 580+ FICO, FHA – As Low As 500 FICO w/ 10% Down, FHA 203K – $35k in Repairs w/ 3.5% down, FHA 203K Full – Unlimited Repairs w/ 3.5% Down, FHA Apartment Financing (Profit & Non-Profit), FHA Streamline Refinance – No Income & No Appraisal Lite Doc – Up to 80% LTV Owner Occupied,  Non Prime Financing – 500+ FICO, 1 day out of Fore/SS/BK,  Bank Statement Program – Personal or Business, Financial Statement Program – Self Employed 2 yrs+, Foreign National Loans – Up to 65% LTV FNMA Refi + (HARP) – Unlimited LTV Owner Occ , Freddie Refi + (HARP) – Unlimited LTV Owner Occ VA Loan – No Money Down & No MI VA Loan – 500+ FICO, No Seasoning to 100% Cash Out, VA IRRRL Refinance – No Income & No Appraisal, USDA – 580+ FICO up to 102% LTV, Portfolio – Up to $5 mill (ARMS), Portfolio – Unlimited Financed Properties, Portfolio – Departing Home Proposed Rent Allowed, Commercial Loans – Up to $50 Million, Manufactured Housing Loans – FHA & Conv Reverse Mortgage – Purchase or Refi, No Income & No FICO, Hard Money Loans – Up to 80% LTV, Construction Financing Construction to Permanent Multifamily Loans – Up to 90% LTV, and More!

What We Offer: 

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Get Pre-Approved Today!  Apply Online for Fast Pre-Approvals www.pmccanhelp.com.

PMC offers free credit enhancement prior to submitting your loan to the bank to ensure you get the best rate possible.  Even 20 points could be .25% better in rate, which equals thousands of dollars on the life of a mortgage loan.  If you have a loan scenario email us at info@pmccanhelp.comPMC Can Help!

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VA Specially Adapted Housing or Special Home Adaptation Grant

May 16, 2015

Special_Adaptive_Housing

There is a great program that many people aren’t aware of for disabled Veteran’s.

http://www.benefits.va.gov/homeloans/adaptedhousing.asp

Housing Grants for Disabled Veterans

VA provides grants to Servicemembers and Veterans with certain permanent and total service-connected disabilities to help purchase or construct an adapted home, or modify an existing home to accommodate a disability. Two grant programs exist: the Specially Adapted Housing (SAH) grant and the Special Housing Adaptation (SHA) grant.

Specially Adapted Housing (SAH) Grant

SAH grants help Veterans with certain service-connected disabilities live independently in a barrier-free environment. SAH grants can be used in one of the following ways:

  • Construct a specially adapted home on land to be acquired
  • Build a home on land already owned if it is suitable for specially adapted housing
  • Remodel an existing home if it can be made suitable for specially adapted housing
  • Apply the grant against the unpaid principal mortgage balance of an adapted home already acquired without the assistance of a VA grant
  • View and share VA’s SHA infographic to help spread the word

Special Housing Adaptation (SHA) Grant

SHA grants help Veterans with certain service-connected disabilities adapt or purchase a home to accommodate the disability. You can use SHA grants in one of the following ways:

  • Adapt an existing home the Veteran or a family member already owns in which the Veteran lives
  • Adapt a home the Veteran or family member intends to purchase in which the Veteran will live
  • Help a Veteran purchase a home already adapted in which the Veteran will live

Eligibility

If you are a Servicemember or Veteran with a permanent and total service-connected disability, you may be entitled to a Specially Adapted Housing (SAH) grant or a Special Housing Adaptation (SHA) grant. The table below provides an overview of VA’s housing grant programs for Veterans with certain service-connected disabilities.

Specially Adapted Housing (SAH) Grant

Eligibility Living Situation Ownership Number of Grants You Can Use
  • Loss of or loss of use of both legs, OR
  • Loss of or loss of use of both arms, OR
  • Blindness in both eyes having only light perception, plus loss of or loss of use of one leg, OR
  • The loss of or loss of use of one lower leg together with residuals of organic disease or injury, OR
  • The loss of or loss of use of one leg together with the loss of or loss of use of one arm, OR
  • Certain severe burns, OR
  • The loss, or loss of use of one or more lower extremeties due to service on or after September 11, 2001, which so affects the functions of balance or propulsion as to preclude ambulating without the aid of braces, crutches, canes, or a wheelchair
Permanent Home is owned by an eligible individual Maximum of 3 grants, up to the maximum dollar amount allowable

Special Housing Adaptation (SHA) Grant

Eligibility Living Situation Ownership Number of Grants You Can Use
  • Blindness in both eyes with 20/200 visual acuity or less, OR
  • Loss of or loss of use of both hands, OR
  • Certain severe burn injuries, OR
  • Certain severe respiratory injuries
Permanent Home is owned by an eligible individual or family member Maximum of 3 grants, up to the maximum dollar amount allowable

Benefit

The SAH and SHA benefit amount is set by law, but may be adjusted upward annually based on a cost-of-construction index. The maximum dollar amount allowable for SAH grants in fiscal year 2014 is $70,465. The maximum dollar amount allowable for SHA grant in fiscal year 2015 is $14,093. No individual may use the grant benefit more than three times up to the maximum dollar amount allowable.

A temporary grant may be available to SAH/SHA eligible Veterans and Servicemembers who are or will be temporarily residing in a home owned by a family member. The maximum amount available to adapt a family member’s home for the SAH grant is $30,934 and for the SHA grant is $5,523.

How to Apply

To apply for a grant, fill out and submit VA Form 26-4555, Application in Acquiring Specially Adapted Housing or Special Home Adaptation Grant. You can access this form by:

  • Applying online via www.ebenefits.va.gov
  • Downloading VA Form 26-4555, Application in Acquiring Specially Adapted Housing or Special Home Adaptation Grant and mailing it to your nearest Regional Loan Center
  • Calling VA toll free at 1-800-827-1000 to have a claim form mailed to you
  • Visiting the nearest VA regional office. Find the office nearest you by visiting VA Regional Office Locations or calling VA toll-free at 1-800-827-1000

Need more information or have questions? Contact a Specially Adapted Housing (SAH) staff member via email at sahinfo.vbaco@va.gov or by phone at (877) 827-3702.  Need to find a SAH Agent in your vicinity?  Please go to our SAH Agent page to find an agent near you.

PMC offers free credit enhancement prior to submitting your loan to the bank to ensure you get the best rate possible.  Even 20 points could be .25% better in rate, which equals thousands of dollars on the life of a mortgage loan.  If you have a loan scenario email us at info@pmccanhelp.com – PMC Can Help!

Visit Our Website:   http://www.pmccanhelp.com/

FOR A FAST PRE-APPROVAL: Complete a loan application on our website APPLY ONLINE

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The Best Information About 1031 Exchanges From Good Old Wikipedia

April 26, 2015

1031%20Exchange

Under Section 1031 of the United States Internal Revenue Code (26 U.S.C. § 1031), the exchange of certain types of property may defer the recognition of capital gains or losses due upon sale, and hence defer any capital gains taxes otherwise due.

To qualify for Section 1031 of the Internal Revenue Code, the properties exchanged must be held for productive use in a trade or business or for investment. Stocks, bonds, and other properties are listed as expressly excluded by Section 1031 of the Internal Revenue Code, though securitized properties are not excluded. The properties exchanged must be of “like kind”, i.e., of the same nature or character, even if they differ in grade or quality. Personal properties of a like class are like-kind properties. Personal property used predominantly in the United States and personal property used predominantly elsewhere are not like-kind properties.[1]

Real properties generally are of like kind, regardless of whether the properties are improved or unimproved. However, a real property within the United States and a real property outside the United States would not be like-kind properties. Generally, “like kind” in terms of real estate, means any property that is classified real estate in any of the 50 US states, and in some cases, the US Virgin Islands.

Taxpayers who hold real estate as inventory, or purchase for re-sell are considered “dealers”. These properties are not eligible for Section 1031 treatment. However, if a taxpayer is a dealer and also an investor, she/he can utilize Section 1031 on qualifying properties. Personal use property will not qualify for Section 1031.

Taxpayers may wonder whether items such as equipment used on a property are included in the lump-sum sale of the property, and if they are able to be deferred. Under Treasury regulation §1.1031(k)-1(c)(5)(i), property that is transferred together with the larger item of value that does not exceed 15% of the fair market value of the larger property does not need to be identified within the 45 day identification period but still needs to be exchanged for like kind property to defer gain.

Cash to equalize a transaction cannot be deferred under Code Section 1031 because it is not of like kind. This cash is called “boot” and is taxed at a normal capital gains rate.

If liabilities assumed by the buyer exceed those of the seller (taxpayer), the realized gain of the seller will not only be realized, but recognized as well. If however, the seller assumes a greater liability than the buyer, the realized loss cannot offset any realized and recognized gain of receiving boot such as cash or other personal property considered boot.

Originally, 1031 cases needed to be simultaneous transfers of ownership. But since Starker vs. U.S. (602 F.2d 1341), a contract to exchange properties in the future is practically the same as a simultaneous transfer. It is under this case, decided in 1979, that the rules for election of a delayed 1031 originated. To elect the 1031 recognition, a taxpayer must identify the property for exchange before closing, identify the replacement property within 45 days of closing, and acquire the replacement property within 180 days of closing. A Qualified Intermediary must also be used to facilitate the transaction, by holding all the profits from the sale, and then disbursing those monies at the closing, or sometimes for fees associated with acquiring the new property.

Section 1031 Like-Kind Exchanges

Section 1031(a) of the Internal Revenue Code (26 U.S.C. § 1031) states the recognition rules for realized gains (or losses) that arise as a result of an exchange of like-kind property held for productive use in trade or business or for investment. It states that none of the realized gain or loss will be recognized at the time of the exchange.

It also states that the property to be exchanged must be identified within 45 days, and received within 180 days.[2]

1031(b) states when like-kind property and boot can be received. The gain is recognized to the extent of boot received.

1031(c) covers cases similar to those in 1031(b), except when the transaction results in a loss. The loss is not recognized at the time of the transaction, but must be carried forward in the form of a higher basis on the property received.

1031(d) defines the basis calculation for property acquired during a like-kind exchange. It states that the basis of the new property is the same as the basis of the property given up, minus any money received by the taxpayer, plus any gain (or minus any loss) recognized on the transaction. If the transaction falls under 1031(b) or (c), the basis shall be allocated between the properties received (other than money) and for purposes of allocation, there shall be assigned to such other property, an amount equivalent to its Fair Market Value at the date of the exchange.

1031(e) stipulates that livestock of different sexes do not qualify for like kind exchange.

1031(h)(1) stipulates that real property outside the United States and real property located in the United States are not of like kind.

The sale of the relinquished property and the acquisition of the replacement property do not have to be simultaneous. A non-simultaneous exchange is sometimes called a Starker Tax Deferred Exchange (named for an investor who challenged and won a case against the IRS). See Starker v. United States, 602 F.2d 1341, 79-2 U.S. Tax Cas. (CCH) paragr. 9541, 44 A.F.T.R.2d 79-5525 (9th Cir. 1979).[3] [4] For a non-simultaneous exchange, the taxpayer must use a Qualified Intermediary, follow guidelines of the Internal Revenue Service, and use the proceeds of the sale to buy more qualifying, like-kind, investment or business property. The replacement property must be “identified” within 45 days after the sale of the old property and the acquisition of the replacement property must be completed within 180 days of the sale of the old property.

Section 1031 is most often used in connection with sales of real property. Some exchanges of personal property can qualify under Section 1031. Exchanges of shares of corporate stock in different companies will not qualify. Also not qualifying are exchanges of partnership interests in different partnerships and exchanges of livestock of different sexes. However, as of 2002 IRS ruling (see Tenants in common 1031 exchange), Tenants in Common (TIC) exchanges are allowed. For real property exchanges under Section 1031, any property that is considered “real property” under the law of the state where the property is located will be considered “like-kind” so long as both the old and the new property are held by the owner for investment, or for active use in a trade or business, or for the production of income.

In order to obtain full benefit, the replacement property must be of equal or greater value, and all of the proceeds from the relinquished property must be used to acquire the replacement property. The taxpayer cannot receive the proceeds of the sale of the old property; doing so will disqualify the exchange for the portion of the sale proceeds that the taxpayer received. For this reason, exchanges (particularly non-simultaneous changes) are typically structured so that the taxpayer’s interest in the relinquished property is assigned to a Qualified Intermediary prior to the close of the sale. In this way, the taxpayer does not have access to or control over the funds when the sale of the old property closes.

At the close of the relinquished property sale, the proceeds are sent by the closing agent (typically a title company, escrow company, or closing attorney) to the Qualified Intermediary, who holds the funds until such time as the transaction for the acquisition of the replacement property is ready to close. Then the proceeds from the sale of the relinquished property are deposited by the Qualified Intermediary to purchase the replacement property. After the acquisition of the replacement property closes, the Qualifying Intermediary delivers the property to the taxpayer, all without the taxpayer ever having “constructive receipt” of the funds.

The prevailing idea behind the 1031 Exchange is that since the taxpayer is merely exchanging one property for another property(ies) of “like-kind” there is nothing received by the taxpayer that can be used to pay taxes. In addition, the taxpayer has a continuity of investment by replacing the old property. All gain is still locked up in the exchanged property and so no gain or loss is “recognized” or claimed for income tax purposes.

Boot

Although it is not used in the Internal Revenue Code, the term “Boot” is commonly used in discussing the tax implications of a 1031 Exchange. Boot is an old English term meaning “Something given in addition to.” “Boot received” is the money or fair market value of “Other Property” received by the taxpayer in an exchange. Money includes all cash equivalents, debts, liabilities or mortgages of the taxpayer assumed by the other party, or liabilities to which the property exchanged by the taxpayer is subject. “Other Property” is property that is non-like-kind, such as personal property, a promissory note from the buyer, a promise to perform work on the property, a business, etc.

There are many ways for a taxpayer to receive “Boot”, even inadvertently. It is important for a taxpayer to understand what can result in boot if taxable income is to be avoided.

The most common sources of boot include the following:

  • Cash boot taken from the exchange. This will usually be in the form of “Net cash received”, or the difference between cash received from the sale of the relinquished property and cash paid to acquire the replacement property(ies). Net cash received can result when a taxpayer is “Trading down” in the exchange (i.e. the sale price of replacement property(ies) is less than that of the relinquished.)
  • Debt reduction boot which occurs when a taxpayer’s debt on replacement property is less than the debt which was on the relinquished property. As is the case with cash boot, debt reduction boot can occur when a taxpayer is “Trading down” in the exchange. Debt reduction can be offset with cash used to purchase the replacement property.
  • Sale proceeds being used to pay non-qualified expenses. For example, service costs at closing which are not closing expenses. If proceeds from the sale are used to service non-transaction costs at closing, the result is the same as if the taxpayer had received cash from the exchange, and then used the cash to pay these costs. Taxpayers are encouraged to bring cash to the closing of the sale of their property to pay for the following: Non-transaction costs: i.e. Rent prorations, Utility escrow charges, Tenant damage deposits transferred to the buyer, and any other charges unrelated to the closing.
  • Excess borrowing to acquire replacement property. Borrowing more money than is necessary to close on replacement property will not result in the taxpayer receiving tax-free money from the closing. The funds from the loan will be the first to be applied toward the purchase. If the addition of exchange funds creates a surplus at the closing, all unused exchange funds will be returned to the Qualified Intermediary, presumably to be used to acquire more replacement property. Loan acquisition costs (origination fees and other fees related to acquiring the loan) with respect to the replacement property should be brought to the closing from the taxpayer’s personal funds. Taxpayers usually take the position that loan acquisition costs are being paid out of the proceeds of the loan. However, the IRS may take the position that these costs are being paid with Exchange Funds. This position is usually the position of the financing institution also. Unfortunately, at the present time there is no guidance from the IRS on this issue which is helpful.
  • Non-like-kind property which is received from the exchange, in addition to like-kind property (real estate).

Boot limitations

Exchangers are advised to follow the following guidelines:

Always to trade “across” or up, but never trade down in order to avoid receipt of boot, either as cash, debt reduction or both. The boot received can be off-set by qualified costs paid by the Exchanger.

2. Always to bring cash to the closing of the replacement property to cover loan fees or other charges which are not qualified costs. (See above)

3. Not to receive property which is not like-kind.

4. Not to over-finance the replacement property, since financing should be limited to the amount of money necessary to close on the replacement property in addition to exchange funds which will be brought to the replacement property closing.

Section 1031 & Second Homes

There is and has been much confusion surrounding the use of Section 1031 and second homes. Although most taxpayers purchase second homes with the expectation of appreciation, the Service has ruled that properties that are purchased for personal use are NOT investment properties, and therefore do not qualify for Section 1031 treatment.

Until 2008 many people were exchanging in and out of their second homes as there was little to no guidance surrounding what did and did not constitute property held for investment. Finally, in Revenue Procedure 2008-16 the IRS has clearly defined what is acceptable. This revenue procedure creates a safe harbor for taxpayers wishing to use Section 1031 with properties that follow a simple set of rules:

For a minimum of two years prior to, and after the exchange:

  • The property must be rented for a minimum of 2 weeks to a non-relative.
  • You can rent to a relative if it is their primary residence at fair market value rent.
  • The property must only be used personally for 2 weeks or 10% of the time rented.
  • You can maintain the property for an unlimited amount of time, but documentation must be kept for these activities.
  • The property should be placed on Schedule E of your tax return and reported as income property.

Time limit

The §1031 exchange begins on the earliest of the following:

  1. the date the deed records, or
  2. the date possession is transferred to the buyer,

and ends on the earlier of the following:

  1. 180 days after it begins, or
  2. the date the Exchanger’s tax return is due, including extensions, for the taxable year in which the relinquished property is transferred.

The identification period is the first 45 days of the exchange period. The exchange period is a maximum of 180 days. If the Exchanger has multiple relinquished properties, the deadlines begin on the transfer date of the first property. These deadlines may not be extended for any reason, except for the declaration of a Presidentially declared disaster.

A deadline that falls on any weekend day or holiday does not permit extension. For example, if your tax return is due April 15, but that date falls on a Saturday, then your tax return due date is forwarded to the first business day following April 15, or Monday, April 17. However, if a deadline falls on a Sunday, the requirements for the exchange must be met no later than the last business day prior to the deadline date, i.e. the prior Friday.

Identified replacement property that is destroyed by fire, flood, hurricane, etc. after expiration of the 45 day Identification Period does not entitle the Exchanger to identify a new property. However, the exchange may be terminated by this event so long as it is (a) specified in writing (such as a contingency in the sales contract); (b) is outside the control of the exchanger or any party to the exchange; and (c) is the only or last property that the exchanger is entitled to purchase under the exchange rules.

Mistakenly identifying condominium A, when condominium B was intended, does not permit a change in identification after the 45 day Identification Period expires. Failure to comply with these deadlines may result in a failed exchange.

IRS rules control the length of time that the replacement property must be held before it may either be sold or used to enter into a new tax deferred exchange. In highly appreciating markets, people may take the opportunity of selling their personal residence (where no capital gain is due below $250,000 for a single person or $500,000 for a married couple—see Taxpayer Relief Act of 1997) and moving into a former rental property for a specified time period in order to turn it into their new personal residence. With recent legislation, however, capital gains taxes on such a transaction are no longer completely avoided. The taxpayer will now owe a diminishing amount of capital gains taxes on the conversion of property from rental to personal residence once the final disposition of the property occurs.

In order to qualify for this exchange, certain rules must be followed:

  1. Both the relinquished property and the replacement property must be held either for investment or for productive use in a trade or business. A personal residence cannot be exchanged.
  2. The asset must be of like-kind. Real property must be exchanged for real property, although a broad definition of real estate applies and includes land, commercial property and residential property. Personal property must be exchanged for personal property. (There are some complicated rules surrounding this — for example, livestock of opposite sex are not considered like-kind property for the purpose of a 1031 exchange, and property outside the United States is not considered of “like-kind” with property in the United States.)
  3. The proceeds of the sale must be re-invested in a like kind asset within 180 days of the sale. Restrictions are imposed on the number of properties which can be identified as potential Replacement Properties. More than one potential replacement property can be identified as long as you satisfy one of these rules:
    • The Three-Property Rule – Up to three properties regardless of their market values. All identified properties are not required to be purchased to satisfy the exchange; only the amount needed to satisfy the value requirement.
    • The 200% Rule – Any number of properties as long as the aggregate fair market value of all replacement properties does not exceed 200% of the aggregate Fair Market Value (FMV) of all of the relinquished properties as of the initial transfer date. All identified properties are not required to be purchased to satisfy the exchange; only the amount needed to satisfy the value requirement.
    • The 95% Rule – Any number of replacement properties if the fair market value of the properties actually received by the end of the exchange period is at least 95% of the aggregate FMV of all the potential replacement properties identified. In other words, 95% (or all) of the properties identified must be purchased or the entire exchange is invalid.

Difficulties involved in meeting limits

Frequently, the most difficult component of a 1031 exchange is identifying a replacement property within the first 45 days following the sale of the relinquished property. The IRS is strict in not allowing extensions.

A 1031 exchange is similar to a traditional IRA or 401(k) retirement plan. When someone sells assets in tax-deferred retirement plans, the capital gains that would otherwise be taxable are deferred until the holder begins to cash out of the retirement plan. The same principle holds true for tax-deferred exchanges or real estate investments. As long as the money continues to be re-invested in other real estate, the capital gains taxes can be deferred. Unlike the aforementioned retirement accounts, rental income on real estate investments will continue to be taxed as net income is realized.

An alternative to a 1031 exchange for someone who wants to defer capital gains tax, but who does not want to continue to hold property is a structured sale. This method offers both buyer and seller many benefits and is regarded as an excellent possibility for those looking to retire from or exit from the real estate or business market. However, capital gains tax will be assessed as the payments are received by the seller, unlike a 1031 exchange, whereby the capital gains tax can be deferred indefinitely for the exchanging individual.

How a 1031 exchange is accomplished

The following sequence represents the order of steps in a typical 1031 exchange:

Step 1. Retain the services of tax counsel/CPA. Become advised by same.

Step 2. Sell the property, including the Cooperation Clause in the sales agreement. “Buyer is aware that the seller’s intention is to complete a 1031 Exchange through this transaction and hereby agrees to cooperate with seller to accomplish same, at no additional cost or liability to buyer.” Make sure your escrow officer/closing agent contacts the Qualified Intermediary to order the exchange documents.

Step 3. Enter into a 1031 exchange agreement with your Qualified Intermediary, in which the Qualified Intermediary is named as principal in the sale of your relinquished property and the subsequent purchase of your replacement property. The 1031 Exchange Agreement must meet with IRS Requirements, especially pertaining to the proceeds. Along with said agreement, an amendment to escrow is signed which so names the Qualified Intermediary as seller. Normally the deed is still prepared for recording from the taxpayer to the true buyer. This is called direct deeding. It is not necessary to have the replacement property identified at this time.

Step 4. The relinquished escrow closes, and the closing statement reflects that the Qualified Intermediary was the seller, and the proceeds go to your Qualified Intermediary. The funds should be placed in a separate, completely segregated money market account to insure liquidity and safety. The closing date of the relinquished property escrow is Day 0 of the exchange, and that’s when the exchange clock begins to tick. Written identification of the address of the replacement property must be sent within 45 days and the identified replacement property must be acquired by the taxpayer within 180 days.

Step 5. The taxpayer sends written identification of the address or legal description of the replacement property to the Qualified Intermediary, on or before Day 45 of the exchange. It must be signed by everyone who signed the exchange agreement, and it may be faxed, hand delivered, or mailed either to the Qualified Intermediary, the seller of the replacement property or his agent, or to a totally unrelated attorney. Send it via certified mail, return receipt requested. You will then have proof of receipt from a government agency.

Step 6. Taxpayer enters into an agreement to purchase replacement property, again including the Cooperation Clause. “Seller is aware that the buyer’s intention is to complete a 1031 Exchange through this transaction and hereby agrees to cooperate with buyer to accomplish same, at no additional cost or liability to seller.” An amendment is signed naming the Qualified Intermediary as buyer, but again the deeding is from the true seller to the taxpayer.

Step 7. When conditions are satisfied and escrow is prepared to close and certainly prior to the 180th day, per the 1031 Exchange Agreement, the Qualified Intermediary forwards the exchange funds and gross proceeds to escrow, and the closing statement reflects the Qualified Intermediary as the buyer. A final accounting is sent by the Qualified Intermediary to the taxpayer, showing the funds coming in from one escrow, and going out to the other, all without constructive receipt by the taxpayer.

Step 8. Taxpayer files form 8824 with the IRS when taxes are filed, and whatever similar document your particular state requires.

An alternative to the 1031 exchange

A Structured sale Annuity or “Ensured Installment Sale” is a capital gains tax deferral tool that enables the seller to gain benefits that other sales and capital gains deferral methods do not offer. It is a hybrid of the common installment sale and a structured annuity, and it enables the seller to collect a stream of payments, leverage equity, earn a pre-tax return, and other benefits. This method is a tool for those who want to do a 1031 exchange but cannot find a property within the time frame, and it allows the seller to have a backup plan. However, the capital gains taxes due on the property will still be due once each installment payment is made, thus causing the taxpayer to still pay the tax.

Examples of a 1031 exchange

An investor buys a strip mall (a commercial property) for $200,000 (his cost basis). After six years he could sell the property for $250,000. This would result in a gain of $50,000, on which the investor would typically have to pay three types of taxes: a federal capital gains tax, a state capital gains tax and a depreciation recapture tax based on the depreciation he or she has taken on the property since the investor purchased the property. If the investor invests the proceeds from the $250,000 sale into another property or properties (without touching the proceeds and using a Qualified Intermediary), then he would not have to pay any taxes on the gain at that time.

An owner of a detached house on 3 acres (12,000 m2) is transferred by his employer to another state. Rather than selling the home, which will no longer be his personal residence, he chooses to rent it out for a period of time. After ten years, he decides that he wants to sell it but, at the same time, he has a grown son who will be going to college in yet another state. He decides that he wants to buy an apartment building in the college town for the son and other students to rent while they are in school. His house has appreciated from $200,000 to $300,000. Therefore, he arranges for an IRS Section 1031 exchange, and buys the new property, thus avoiding the capital gain at that time.

Caution—in the aforementioned example, the investor would need to substantiate his or her [investment intent] to the IRS by showing an arm’s length lease to the son and other students, and investor should declare income and take on offsetting depreciation deduction.

In addition to the sale of real estate, selling an interest in real property may also qualify for a 1031 Exchange. An example of this would be the sale of an easement.

Warning: Like-Kind Exchange of Loss Property

While taxpayers generally prefer non-recognition for realized gains (so they do not have to recognize the gain currently and pay the resulting federal income tax currently), they usually prefer to recognize realized losses currently in order to obtain the tax benefit of the resulting deduction sooner. That means a like-kind exchange is unfavorable in the case of a realized loss. None of the loss will be recognized regardless of boot received.

References

  1. Jump up ^ What is a 1031 Exchange 1031 NNN Blog
  2. Jump up ^ IRC §1031(a)(3)
  3. Jump up ^ Starker v. United States, 1979, retrieved 2007-07-04 
  4. Jump up ^ Google Scholar: Starker v. United States, 602 F. 2d 1341 – Court of Appeals, 9th Circuit 1979

http://en.wikipedia.org/wiki/Internal_Revenue_Code_section_1031

PMC offers free credit enhancement prior to submitting your loan to the bank to ensure you get the best rate possible.  Even 20 points could be .25% better in rate, which equals thousands of dollars on the life of a mortgage loan.  If you have a loan scenario email us at info@pmccanhelp.com – PMC Can Help!

Visit Our Website:   http://www.pmccanhelp.com/

FOR A FAST PRE-APPROVAL: Complete a loan application on our website APPLY ONLINE

Job Opportunities? Now is the time to see how PMC Can Help you earn what you deserve!  Visit our Website and apply online today! http://www.pmccareers.com

Follow our Mortgage on: http://www.facebook.com/pmccanhelp http://twitter.com/pmccanhelp http://www.linkedin.com/in/pmccanhelp

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“The Boomerang Buyer” – It’s Time To Buy Again!

April 13, 2015

home-builder-north-carolina
There are over 7.3 million potential Boomerang Buyers who may be eligible to buy again.  When the economy crashed it caused a housing crisis for many a couple years back.  Many previous home owners endured huge financial hardships and losses.  Some were over extended and could not make ends meet and even lost their homes or filed for bankruptcy just to keep food on the table and a roof over their head.   Many families have prepared their selves and are ready to buy again and this time around have a better handle on what they can afford.  It is a great time to buy again.  Rates are low and many new homes are being built again which helps to boost the economy once again.

Below are the waiting period timeframes:

Chapter 7 Bankruptcy

  • Period since Bankruptcy: Chapter 7 discharge date
    • FHA & VA = 2 years
      • 1 year with extenuating circumstances
    • USDA = 3 years
      • case by case with extenuating circumstances
    • Conventional
      • Fannie Mae = 4 years
        • 2 years with extenuating circumstances
        • Multiple BKs = 5 years
      • Freddie Mac = 4 years
        • 2 years with extenuating circumstances
        • Multiple BKs = 5 years

Chapter 13 Bankruptcy

  • Time period since foreclosure
    • FHA = 3 years
      • 1 year with extenuating circumstances
    • VA = 2 years
      • 1 year with extenuating circumstances
    • USDA = 3 years
    • Conventional
      • Fannie Mae = 7 years
        • Extenuating circumstances = 3 years (90%) LTV max/purchase principal residence (retail lender only)
      • Freddie Mac = 7 years
        • extenuating circumstances = 3 years (retail lenders only)

Bankruptcy & Foreclosure Combined

  • Many homeowners abandon homes inside BK filing
  • Abandoned home = foreclosure seasoning supersedes BK seasoning
  • Foreclosure 3 yrs old, but BK filed on deficiency balance
  • BK seasoning can be used

Short Sale: Seasoning Rule

  • Time period since short sale: pre-foreclosure sales
    • FHA = 3 years
      • 1 year with extenuating circumstances
      • 1 day if HUD mortgagee letter 09-52 requirements are met
    • VA = 2 years
      • extenuating (same as FHA)
      • addition restrictions if short sale was on VA-loan
    • USDA = 3 years
      • extenuating circumstances case by case
    • Conventional
      • Fannie Mae
        • 2 years = with 20% down
        • 4 years = with 10% down
        • 2 years = with extenuating circumstances and 10% down
      • Freddie Mac = 7 years
        • 2 years = with extenuating circumstances

Extenuating Circumstances

    An extenuating circumstance is a non-recurring or isolated circumstance, or set of circumstances, that was beyond the Borrower’s control and thatsignificantly reduced income and/or increased expenses and rendered the Borrower unable to repay obligations as agreed, resulting in significant adverse or derogatory credit information.

    • Acceptable
      • Employment relocation or deployment.
      • Death of co-wage-earner (or death of close family member with serious expense increase to Borrower)
      • Debilitating illness/sickness with corresponding loss of income
      • Severe & sudden medical expenses
      • Business failure (self employed) if *NO* prior bad credit, failure not caused by Borrower misconduct and Borrower secured permanent job in same field or better
    • Not acceptable
      • Divorce, co-signing for 3rd party, “home upside down”, general financial mismanagement

If proven satisfactorily, lessens FHA seasoning period to 1 year (typical) since derogatory credit event

Rules for Documenting Extenuating Circumstances

  • Detailed written letter from Borrower explaining the events with dates/causes (they were beyond control, are unlikely to occur again & recovery has finished)
  • Supporting 3rd party documentation that can be verified.
  • Evidence of re-established credit.

Extenuating Circumstances Examples

FHA qualifying 1-Day after short sale

Not eligible if:

  • Borrower pursued short sale to exploit declining market & purchase home similar/superior size within reasonable commuting distance (“strategic default”)
  • Late mortgage payments occurred within 12 months preceding short sale date

Eligible if:

  • Short sale due to “extenuating circumstances.”
  • No 30-day mortgage lates during 12 months preceding short sale date.
  • No 30-day lates on installment debts (e.g. auto loan, student loan, etc.)
  • No deficiency balance resulting from short sale.
  • Mortgage involved in short sale was not an FHA loan.

Important Dates

  • Seasoning periods since derogatory events depend on specific dates
  • Foreclosure: date of trustee/foreclosure sale (not dates on credit report)
  • Short sale: date of notarized grant deed *NOT* recording date
  • Bankruptcy: discharge or dismissal date
  • Loan modification: date of loan modification
  • Date of application/credit pull *NOT* date of closing on new purchase loan

4 Essential Facts of “Back to Work” Program

Eligibility for FHA financing 12 months after derogatory credit event if

  • Clearly caused by “economic event”
  • Good credit prior to “economic event”
  • Re-established good credit For 12 months since derogatory credit event
  • Undergone special HUD counseling

“Back to Work” Economic Event

What qualifies as an “economic event” ?

  • An occurrence beyond borrower’s control resulting in loss of income or employment or a combination of both
  • The economic event exists if it lasted 6 months or more and resulted in at least 20% reduction in household income of borrowers

“Back to Work” Burden of Proof

  • Income documentation to verify income prior to economic event
    • W2’s, Paystubs, VOE etc.
  • •Proof Of economic event
    • Employer severance letter, furlough letter, proof of cut in no of hours, receipt of unemployment insurance etc.

“Back to Work” Credit Analysis

  • Analyze any derogatory credit including late installment payments caused by economic event? Or pre-existing pattern of late payments?
  • (i) Sudden economic event/beyond borrower control
  • (ii) General mismanagement/inability to manage debt
  • (III) Disregard for credit/obligations
  • (IV) Re-established credit since completion of derogatory event (12 Months)

Extenuating Circumstances – Example of Supporting Documents Provided to Underwriter

  • Birth certificate
  • MLS listing showing when short-sale Property was listed
  • Final HUD closing statement showing when short sale property was sold
  • Copy of grant deed confirming short sale property sale date
  • Furlough letter from employer (income drop)
  • 3 Years tax returns showing previous (higher) income and gradual decrease
  • Paystubs showing decrease in income over time.
  • Medical Reports – diagnosis, surgery, medical expenses
  • Old bank statements showing depletion of savings to make mortgage payments

“Back to Work”

HUD counseling is required:

  • www.hud.gov/findacounselor
  • Verification of pre-purchase counseling must be documented by a letter of completion on the Housing Counseling Agency letterhead that includes the agency’s Tax Identification Number (TIN). The letter must also include the:
    • Borrower’s name
    • Counselor’s name
    • Date counseling was completed
    • Borrower’s signature
    • Signature of an authorized official of the counseling agency

Miscellaneous Points

  • If previous loan is involved in foreclosure, short sale was it an FHA loan? Then must have been at least 12 months since FHA paid the claim to lender, not 12 months from trustee sale date
  • Files may take longer to process
  • Ideal to get an actual UW approval with PTD conditions prior to going into escrow
  • Don’t be afraid to disqualify buyers – weed out the ones that don’t fit this program rather than try to make them fit
  • IMPORTANT: Loan application CANNOT predate HUD counseling. Counseling must be completed a minimum of thirty (30) days but no more than six (6) months PRIOR to submitting a loan application.

Credit Standards

Fannie Mae

Disputed credit report tradelines

  • If DU does not issue a “disputed tradeline” message there is norequirement to:
    • Further investigate the disputed tradeline on the credit report
    • Obtain an updated credit report

Mortgage delinquencies

  • Borrowers may not bring past-due mortgage accounts current prior to closing in order to circumvent FNMA’s policy on past-due mortgages
  • Borrowers with one or more 60, 90, 120 or 150 day lates within past 12 months will not receive favorable loan dispositions

Past-due, collections, and charge-off Accounts

  • For 1-unit principal residence properties, borrowers are NOT required to payoff outstanding collections or charge-offs – regardless of the amount
  • For two-to-four unit owner occupied and second homes, collections and charge-offs totaling more than $5,000 must be paid in full prior to or at closing
  • For investment properties, individual accounts equal to or greater than $250 and accounts that total more than $1,000 must be paid in full prior to or at closing

Collections

  • The lender mustdetermine if the collection account or judgment was a result of:
    • the borrower’s disregard for financial obligations; the borrower’s inability to manage debt; or extenuating circumstances.
  • The borrower must provide a letter of explanation with supporting documentation for each outstanding collection account and judgment.
  • The explanation and supporting documentation must be consistent with other credit information in the file.

Collections – FHA

  • There are no documentation requirements or letters of explanation required when:
    • The loan is run through TOTAL mortgage scorecard and receive an “Accept/Approve” finding despite the presence of collection accounts or judgments.
  • These accounts have already been considered in factoring the borrower’s credit score.

Collections: Capacity Analysis – New FHA Policy

  • If the total outstanding balance of all collection accounts for all borrowers is equal to or greater than $2,000, the lender must perform a “capacity analysis” which includes any of the following:
  • At the time of or prior to closing, payment in full of the collection account (verification of acceptable source of funds required).
  • The borrower makes payment arrangements with the creditor. If the borrower has entered into a payment arrangement with the creditor, a credit report or letter from the credit or verifying the monthly payment is required. The monthly payment must be included in the borrower’s debt-to-income ratio.
  • If evidence of a payment arrangement is not available, the lender must calculate the monthly payment using 5% of the outstanding balance of each collection, and include the monthly payment in the borrower’s debt-to-income ratio.

Medical Collections

  • All medical collections and charge off accounts are excluded and do not require resolution.

Judgments – New Guidance/Clarification

  • FHA requires judgments to be paid off before the mortgage loan is eligible for FHA insurance.
  • Exception: Borrower has an agreement with the creditor to make regular and timely payments. The borrower must provide a copy of the agreement and evidence that payments were made on time in accordance with the agreement, and a minimum of three months of scheduled payments have been made prior to credit approval.

Judgments: Non-Purchasing Spouse

  • FHA requires judgments of a non-purchasing spouse in a community property state to be paid in full, or meet the exception guidance for judgments (as mentioned in previous slide)

Disputed “Derogatory” Accounts

  • Accounts that appear as disputed on the borrower’s credit report are not
  • considered in the credit score utilized by TOTAL mortgage scorecard in rating the application.
  • Borrower must provide a letter of explanation and documentation supporting the basis of the dispute.
  • Disputed derogatory credit accounts are defined as follows:
    • disputed charge-off accounts, disputed collection accounts, and disputed accounts with late payments in the last 24 months.
  • Disputed derogatory credit accounts of a non-purchasing spouse in a community property state (California) are not included in the cumulative balance for determining if the mortgage application is downgraded to a “Refer”.
  • Non-derogatory disputed accounts are excluded from the $1,000 cumulative total.

Disputed “Derogatory” Accounts Approved By TOTAL Mortgage Scorecard or DU/DO Approval

  • Disputed derogatory credit accounts greater than or equal to $1,000
    • If the cumulative outstanding balance of disputed derogatory credit accounts of all borrowers is equal to or greater than $1,000, the mortgage application must be downgraded to a “Refer” and a direct endorsement underwriter is required to manually underwrite the loan as described above.
  • Disputed Derogatory Credit Accounts less than $1,000
    • If the cumulative outstanding balance of disputed derogatory credit accounts of all borrowers is less than $1,000, a 37 downgrade is not required.
  • Excluded Accounts
    • Disputed medical accounts are excluded from the $1,000 limit and do not require documentation.
    • Disputed derogatory credit accounts resulting from identity theft, credit card theft, or unauthorized use are also excluded from the $1,000 limit. However, the lender must provide in the case binder a credit report, letter from the creditor, or other appropriate documentation to support the dispute, such as a police report documenting the fraudulent charges.

“Non-Derogatory” Disputed Accounts

Non-derogatory disputed accounts include the following types of accounts:

  • Disputed accounts with zero balance, disputed accounts with late payments aged 24 months or greater, and disputed accounts that are current and paid as agreed.
  • If a borrower is disputing “non-derogatory” accounts, or is disputing accounts which are not indicated on the credit report as being disputed, the lender is not required to downgrade the application to a “Refer”-manual underwritten loans have more conditions (such asadditional reserves and lower debt to income ratio requirements)
    • However, the lender must analyze the effect of the disputed accounts on the borrower’s ability to repay the loan. If the dispute results in the borrower’s monthly debt payments utilized in computing the debt-to-income ratio being less than the amount indicated on the credit report, the borrower must provide documentation of the lower payments.

PMC offers our clients free credit enhancement prior to submitting your loan to the bank to ensure you get the best rate possible.  If you have a loan scenario email us at info@pmccanhelp.com – PMC Can Help!

Visit Our Website:   http://www.pmccanhelp.com/

FOR A FAST PRE-APPROVAL: Complete a loan application on our website APPLY ONLINE

Job Opportunities? Now is the time to see how PMC Can Help you earn what you deserve!  Visit our Website and apply online today! http://www.pmccareers.com

Follow our Mortgage on: http://www.facebook.com/pmccanhelp http://twitter.com/pmccanhelp http://www.linkedin.com/in/pmccanhelp

Follow our Realty on: http://www.facebook.com/pmcrealty https://twitter.com/pmcrealty

Benefits of Refinancing Your Mortgage

February 14, 2015

It is not always a good idea to refinance your home loan. 

redblockhouoseRates are low and home values are going up.  Today many people are considering refinancing their home loan to save money.  In some instances it may not a good idea.  You will want to consider the following factors:

  • How long do you plan to stay in the home before you sell it?
  • How long will it take to re-coop the cost of the fees (loan origination, lender fees, title/escrow, recording fee, credit report and appraisal fees)?
  • How many years are you extending the term of the mortgage?
  • Can you afford to bring in funds to close to cover the closing costs to keep the loan amount the same as the current balance?
  • Can you bring in additional funds to lower the loan balance under 80% to remove PMI?
  • Are you reducing the interest rate by 1% or more to make it more beneficial?

A word of advice – be careful of fast talking loan officers or lenders who sell you just on the monthly savings and not fully disclosing the drawbacks.  Due to unexpected financial hardships, some people are forced into refinancing to get cash out versus missing a mortgage payment, which would negatively effect their credit scores (or lead to possible default – loss of up to 125 points in some cases). The small benefit would be to also have a one month deferral on their next payment.

Great news for some – FHA has recently reduced their PMI by .5%.  If you are changing lenders you may have to set up a new impound account for your property taxes and insurance and the next half may be due soon.  Although you may have a credit in your current impound account, you will not receive that money for about three weeks once the new loan closes.  If that is the case, you will probably have to raise the rate to cover the closing costs and prepaid fees, which will raise the loan amount.  If your current balance is $400,000 and you don’t want to make that months current mortgage payment, you will still have to pay for it in the loan.  Your current lender will charge the unpaid interest through their payoff demand. They normally pad the payoff to ensure they aren’t shorted and you will receive a refund a few weeks later for any overage due back to you.  Also, depending on what day you close in the month you will also have to pay interest per diem for that month’s interest to the new lender.  If possible, bring in that month’s payment at closing and try to pay he closing costs out of pocket to maximize the overall back end savings.  For many it may take up to 4 years to re-coop the cost of a refinance. Use this Bankrate.com calculator: calculating the cost to re-coop to refinance. 

If your current FHA mortgage balance is $400,000 and your interest rate is.4.75% with a home value of $500,000.  Your PMI is about $450 month ($5,400 a year – yikes!), but now you may have enough equity to get rid of that wasted payment.  Let’s say you have a 720 FICO, you either have 20% equity now or you can bring in funds to lower the loan amount to 80% LTV and you can qualify for a Conventional 4.125% today this is what would it look like apples to apples:

Current P&I payment $2,086.59                 Proposed P&I payment $1967.68

Net monthly savings: $121.91 + $450 PMI = $571.91!!

If you have been in that mortgage for 4 years you are starting a 30 year mortgage all over again.  In order to pay off the home sooner make sure to set up bi-weekly payments or when you get your tax refund make an extra payment to shave off over 6 years of interest (or do both to maximize your overall savings).  Download this amazing worksheet to help you plan ahead: Home Mortgage Calculator .

If you are having trouble keeping up with everyday living expenses, credit card payments, personal loans and auto payments you may want to consider consolidating them when refinancing to lower the monthly outgoing payments. Sadly, credit card companies lure us with low introductory rates, but later charge on average 18-24% and maybe even junk fees.  If you things are tight you are probably only making the minimum payment.  The result of doing so will cost you years before you pay the accounts off and it will be harder to ever get ahead.  Use this online credit card calculator on Bankrate.com.  The interest on these types of accounts are not tax deductible unless it is used for business purposes, but you cannot co-mingle your personal and business expenses in the same account.  The second benefit of consolidate your debt it into your mortgage loan the debt now has tax advantages, but will cost you interest still by raising your loan amount on your mortgage.  The goal into retirement is to be mortgage and debt free.  Unfortunately, because of people’s undisciplined spending habits the average home owner refinances three or more times and never pay their mortgage off.

Your home loan is the largest purchase you will make in your lifetime.  It is very important to shop around and compare at least 3-4 offers (compare the Truth-In-Lending Disclosures: APR and total payments made over the life of the loan) before you move forward.  On a $400,000 loan amount a quarter % difference in interest may equal $15,229 over 30 years. Every Dollar Counts!  Do your homework before you start shopping around.  Here are some other links with great information to help you make a sound financial decision to refinance your home loan:

And if you can handle a 15 year fixed mortgage, that would be ideal. The interest rate of course will be lower and you will pay off your home a lot sooner.  Lastly, make sure to review your credit file with Transunion, Equifax and Experian every year.  You can order a free annual report on www.annualcreditreport.com.  If possible, pay down any accounts on your credit report about 90 days before applying for a home loan to raise your score as high as possible and do not close any accounts in good standing (you will lose 20 points for each one – let them creditor close it after non-use and you won’t lose any points).  Even 20 points could be .25% better in rate, which equals thousands of dollars on the life of a mortgage loan.

PMC offers our clients free credit enhancement prior to submitting your loan to the bank to ensure you get the best rate possible.  If you have a loan scenario email us at info@pmccanhelp.com – PMC Can Help!

Visit Our Website:   http://www.pmccanhelp.com/

FOR A FAST PRE-APPROVAL: Complete a loan application on our website APPLY ONLINE

Job Opportunities? Now is the time to see how PMC Can Help you earn what you deserve!  Visit our Website and apply online today! http://www.pmccareers.com

Follow our Mortgage on: http://www.facebook.com/pmccanhelp http://twitter.com/pmccanhelp http://www.linkedin.com/in/pmccanhelp

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Had a Foreclosure, Short Sale, Deed-in-Lieu or a Bankruptcy? Well, It’s Time To Buy Again!

January 19, 2015

mortgage application

Don’t feel bad about the past. Everyone has misfortune at one time or another.  Now it is time to bounce back.  Rates are low, home values are shooting back up,  it is time for you to get your tax credit, this time around you are much more experienced and now you know how to protect yourself.

Here are the waiting periods that are required:

Federal Housing Administration (FHA) Insured Loan

FHA Extenuating Circumstances: “Serious illness or death of a wage earner. Divorce and the inability to sell a property due to a job transfer or relocation does not qualify as an acceptable extenuating circumstance.”

  • Minimum Waiting Period Under The New FHA Back To Work Program – Under the new FHA “Back to Work – Extenuating Circumstances” Program, if you have had a foreclosure, short sale, deed-in-lieu of foreclosure, or have filed bankruptcy you may qualify for a new home loan if you are back to work and can document the extenuating circumstances. You must have a 12 month record of on-time rental housing payments with no delinquencies and not have been 30 days late on more than one non-housing loan payment. If there are still any open collection or judgment accounts, then those will have to factored into your debt calculations for the new loan.
  • Foreclosure – 3 years from the date foreclosure completed and property transferred back to the bank.  Less than 2 years, but not less than 12 months from the date foreclosure completed and property transferred back to the bank may be possible with acceptable “extenuating circumstances”.
  • Deed-in Lieu – Same as Foreclosure.
  • Short Sale – 3 years from the date sale closed and transferred to the new owner.  No waiting period if seller/borrower had no late payments on any mortgages and consumer debts within the 12 month period preceding the short sale AND seller/borrower was not taking advantage of declining market conditions.
  • Bankruptcy (Chapter 7) – 2 years from date of bankruptcy discharge with re-established credit paid as agreed or no new credit obligations incurred.   Less than 2 years, but not less than 12 months from the date of bankruptcy discharge may be possible with acceptable “extenuating circumstances” AND borrower has since exhibited a documented ability to manage financial affairs in a responsible manner.
  • Bankruptcy (Chapter 13) – 1 year from the start date of the bankruptcy re-payment period has elapsed and the borrower’s payment performance has been satisfactory and all required payments made on time.

Veterans Administration (VA) Guaranteed Loan

VA Extenuating Circumstances: “Unemployment, prolonged strikes medical bills not covered by insurance, etc. Divorce is not viewed as beyond the control of the borrower and/or spouse.”

  • Foreclosure – 2 years from the date foreclosure completed and property transferred back to the bank.  Less than 2 years, but not less than 12 months from the date foreclosure completed and property transferred back to the bank may be possible if credit re-established and paid as agreed and with acceptable “extenuating circumstances”.
  • Deed-in Lieu – Same as Foreclosure.
  • Short Sale – 2 years from the date sale closed and transferred to the new owner.  No waiting period if seller/borrower had no late payments on any mortgages and consumer debts within the 12 month period preceding the short sale AND seller/borrower was not taking advantage of declining market conditions.
  • Bankruptcy (Chapter 7) – 2 years from date of bankruptcy discharge.   Less than 2 years, but not less than 12 months from the date of bankruptcy discharge may be possible if credit re-established and paid as agreed and with acceptable “extenuating circumstances”.
  • Bankruptcy (Chapter 13) – 1 year from the start date of the bankruptcy re-payment period has elapsed and the borrower’s payment performance has been satisfactory and all required payments made on time.

United States Department of Agriculture (USDA) Rural Housing Loan

USDA Extenuating Circumstances: “Loss of job; delay or reduction in government benefits or other loss of income; increased expenses due to illness, death, etc. Circumstances surrounding the adverse information must have been temporary in nature,  and beyond the applicant’s control, and have been removed so their re-occurrence is unlikely or the adverse action or delinquency was the result of a refusal to make full payment because of defective goods or services or as a result of some other justifiable dispute relating to the goods or services purchased or contracted for.”

  • Foreclosure – 3 years from the date foreclosure completed and property transferred back to the bank.  Less than 3 years from the date foreclosure completed and property transferred back to the bank may be possible with acceptable “extenuating circumstances”.
  • Deed-in Lieu – Same as Foreclosure.
  • Short Sale – Same as Foreclosure.
  • Bankruptcy (Chapter 7 or 11) – 3 years from date of bankruptcy discharge.   Less than 3 years from the date of bankruptcy discharge may be possible with acceptable “extenuating circumstances”.
  • Bankruptcy (Chapter 13) – 1 year from date repayment was completed and bankruptcy discharge.   Less than 1 year from the date of bankruptcy discharge may be possible with acceptable “extenuating circumstances”.

Conventional Conforming Mortgage Loan (meets Fannie Mae (FNMA) and Freddie Mac (FHLMC) Loan Purchasing Guidelines)

Conventional Extenuating Circumstances: “Nonrecurring events that are beyond the borrower’s control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.”

  • Foreclosure – 7 years from the date foreclosure completed and property transferred back to the bank if there are no acceptable “extenuating circumstances”.  3 years from the date foreclosure completed and property transferred back to the bank with acceptable “extenuating circumstances” AND at least 10% Down Payment.  Primary home purchase and rate/term refinance only (non-owner occupied and second homes not allowed).
  • Deed-in Lieu – NEW = 2 years from completion of a DIL. OLD = 7 years from the date sale closed and transferred to the new owner or foreclosure completed and property transferred back to the bank with less than 10% Down Payment.  4 years from the date sale closed and transferred to the new owner or foreclosure completed and property transferred back to the bank with 10% Down Payment.  2 years from the date sale closed and transferred to the new owner or foreclosure completed and property transferred back to the bank with 20% Down Payment.  2 years from the date sale closed and transferred to the new owner or foreclosure completed and property transferred back to the bank with 10% Down Payment and acceptable “extenuating circumstances”.
  • Short Sale – NEW = 2 years from completion of a short sale.
  • Bankruptcy (Chapter 7 or 11) – NEW = 2 years from date of bankruptcy discharge. OLD = 4 years from date of bankruptcy discharge.   2 years from the date of bankruptcy discharge may be possible with acceptable “extenuating circumstances”.
  • Bankruptcy (Chapter 13) – 2 years from date of bankruptcy discharge.  4 years from date of bankruptcy dismissal.

PMC offers free credit enhancement prior to submitting your loan to the bank to ensure you get the best rate possible.  Even 20 points could be .25% better in rate, which equals thousands of dollars on the life of a mortgage loan.  If you have a loan scenario email us at info@pmccanhelp.com – PMC Can Help!

Visit Our Website:   www.pmccanhelp.com/

FOR A FAST PRE-APPROVAL: Complete a loan application on our website APPLY ONLINE

Job Opportunities? Now is the time to see how PMC Can Help you earn what you deserve!  Visit our Website and apply online today! http://www.pmccareers.com

Follow our Mortgage on: http://www.facebook.com/pmccanhelp http://twitter.com/pmccanhelp http://www.linkedin.com/in/pmccanhelp

Follow our Realty on: http://www.facebook.com/pmcrealty https://twitter.com/pmcrealty

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