Jim & Natalie almost lose their home!

Recently Jim & Natalie came to me for advice. I had helped them get into a house a few years earlier when a large national lender changed the game on them at the last minute and asked for a larger down payment. I won’t name names but….. it was Bank of America, shhhh. I got them an FHA loan with a 3% down payment (currently you need 3.5% down) and we closed the loan fairly quickly and they were able to move into their new home and everyone was happy.

Today they were stressing out because they had been trying to refinance with the lender who currently had their home loan (I guess they misplaced my number) and they had been getting nothing but a lot of grief and running around and ending up with no refinance after months of trying. They were down to one income and they needed to get a lower payment to be able to afford to stay in their home. The lender who shall remain nameless…..ok, it’s Wells Fargo, had been supposedly working on their loan for months and then turned them down because their debt ratios were too high to qualify. First of all, when you take a loan application, you gather information such as let’s say INCOME! These guys should have known that the debt ratio was too high to qualify the moment that they finished taking the loan application and spared these guys months of agony. Jim & Natalie went on to tell me that since they have had less income, some bills had recently been paid late, also I knew that the value of the home had gone down since they bought it and there was not much equity to begin with (not good). I told them that I had the same criteria as the big bad bank but wait a minute….

I had gotten these guys an FHA loan and we can do an FHA streamline refinance with no income qualifying, no appraisal and looser credit guidelines. All we need to do to get someone a better rate on their FHA or VA loan is to make sure that they have paid the mortgage on time for 12 months and make sure they are getting a better rate or better terms. There was still one issue to deal with and that was the fact that we could not raise the loan amount higher than the original loan balance and so they may need to come in with some cash to close the loan. Actually, just as we were getting prepared to do this loan for them, FHA made the rules a little tighter and that meant that these guys would need to come up with even more cash than my original estimate and they just plain did not have it. They told me that they were just going to quit paying and stay until the bank took the house back. They had given it their best shot and they were just done.

I could not figure out what to do for these guys, I had cut my fees as much as I could and still make a profit. I looked at the numbers one more time and realized that if I made absolutely nothing then the numbers worked and so I did it. I am not tooting my own horn or offering free loans, what I want to share is how good it felt knowing that I am the small local lender who can do that sort of thing and truly make a difference. It was a good way to end a hard year and I look forward to a profitable 2010 for everyone.

Please email or call me with any real estate and mortgage related questions. I am happy to answer you and it may become the topic of a future article.

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Ask The Loan Man - Conventional or FHA Home Loan?

I was thinking the other day that the mortgage industry is much like that famous line from the Blues Brothers movie when the band was booked at a bar that did not look quite like the usual places they played and Dan Akroyd asks the bartender what kind of music they usually have there and she replies, “We got both kinds, Country AND Western.”. Right now in the mortgage business, we seem to have conventional AND FHA loans available. With almost everyone getting a 30 year fixed rate mortgage and the line between conventional and FHA pretty clear most of the time, a lot of people wonder exactly what my role as mortgage advisor is today.

Well, let me tell ya cowboy, the line between FHA and conventional is not as clear as you might think. There seems to be even more opportunity for me to give good advice today than any other time.

I recently had a couple come in who were selling their current home and buying a smaller home (empty nesters) and they planned to put all of the money from the one home into the next home and getting a 30 year fixed conventional loan. I am not saying that was a bad idea….. I just wanted to show them what it would like if they put all of their money down, 20% down and a few spots in between. I also projected out 7 years, 15 years and 30 years on all of these loans and what the total costs of the loan over time looked like for them. Next we explored 15, 20, 25 and 30 year fixed rate mortgages and what it would look like to them and I also encouraged them to take these options that we discussed to a financial planner so they could get a really good idea of what to do with any money that they did not put down on their next house. They ended up getting a 30 year fixed rate conventional and they are putting a good chunk of the money down and they are holding back a little for a rainy day. This is a little change that is going to make a huge difference in their lives and a small difference in their payments and they told me that they would not have even been thinking about these things if they had not gotten good advice from me. THAT is what gets me out of bed in the morning, my friends.

I was at a Rockabilly show last weekend. It was a great show at the Hopmonk Tavern (great venue and excellent food). There were 3 rockabilly bands and they were quite different and it got me thinking that rockabilly was a better analogy to the mortgage business today. The Aces played on the bed of one of Falcon Mike’s trucks which was extremely cool. They play a very bluesy and slow sort of rockabilly. Then we had Lee Rocker who held true to his name and rocked heavily but also slowed it down here and there and then came the Blasters which is a more soulful, bluesy rock sound….. Rockabilly is a cross between Rock, Hillbilly and Blues. It is American roots music and it was a great show.

I was just trying to figure out a way to write about the show and keep it mortgage or real estate related. In my humble opinion, it is more important today to work with top notch real estate agents and mortgage professionals. Good advice and being there a year or a decade later are important any time but with changes coming as rapidly as they are today, just getting through the transaction takes a real pro.

Please email or call me with any real estate and mortgage related questions. I am happy to answer you and it may become the topic of a future article.

Hans Bruhner, CMPS is the branch manager for Benchmark Mortgage. If you have a question, please contact Hans at (707) 887-1275 or hans@hansblog.com or stop by www.AskTheLoanMan.com.

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ASK THE LOAN MAN: Buying a House with No Money Down

Can I still buy a house with no money down?

I was kind of stuck on what to write for this month’s article and so I started to look back at what I had written over the years and I saw headlines like these:

Is now a good time to buy a house? – January 2008
Risky Income Documentation? – August 2007
We have hit rock bottom and we are clawing our way back up! – March 2008
Time Travel for better interest rates. – May 2008
Can I still buy a house with no money down? – February 2008

I realized that I could take any one of these topics and write about it today. Yes, I know I said that we had hit bottom in March 2008 and there is a chance I was wrong…… the funny thing is I believed it then and I think I believe it now. What can I say, I’m a positive guy.

A lot has changed in a few short years, I was writing about risky income documentation in August 2007. Stated Income, NO DOC loans and the like were available then and a few short months later they were gone. So what I decided to do was steal my own headline from a year ago and write the article today with the rules and programs of February 2009… so here goes.
Last year I wrote that there were 5 different loan programs that will allow you to get into a home with no money down. Several of those programs are now gone along with DPA’s or Down Payment Assistance Programs but we do have 2 true no money down programs available today and we have a couple low down payment programs available as well.

We have USDA home loans and VA home loans available with no money down. Both of these are government programs and both are available to a very specific group of people. The VA is for veterans or a veteran and their spouse. The USDA loan is available to people who make less than 115% of the median income for their area and want to live in smaller cities and towns (all of west county is OK, Windsor, Sonoma, Agua Caliente fit also). The other commonality of these loans is that they require funding fees but no monthly mortgage insurance (that’s good!).

We have a very special loan just for teachers that is backed by their retirement system. I am talking about a Cal STRS loan with just 3% down payment. Teachers, you will need to have 1% of your own funds and 2% can be a gift from a family member. This loan is unique in that you get a regular 80% 1st mortgage and then we get you a 17% 2nd mortgage from Cal STRS and there are no payments due on that 2nd mortgage for 5 years. I would love to help some teachers with this loan, I want teachers to be a part of the community and own a home here and I do believe now is the time to make that happen.

Lastly we have good old FHA loans which was a huge part of my business in 2008. FHA requires a 3.5% down payment and it can all be a gift from an appropriate source. With this loan, there are no income or geographic restrictions and you don’t have to be a teacher or a first time buyer. FHA is a little more lenient on credit scores and job histories as well. This has proven to be a wonderful tool for many people and it is a good market for FHA loans.

So….. yes Virginia! There are no and low down home loans available today.

I welcome questions about home loans and the real estate market in general. Please let me know what you want to hear about in future articles.

Hans Bruhner, CMPS is licensed in CA & HI. If you have a question, please contact Hans at (707) 887-1275 or hans@hansblog.com or stop by www.AskTheLoanMan.com. First Priority Financial, Inc. is licensed by the CA DRE #00654852.

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ASK THE LOAN MAN: Your Loan…Refinance or Modify?

Your Loan…Refinance or Modify?

OK, let’s start with my area of expertise – refinancing. With almost 2 decades in the real estate and mortgage business, I have helped thousands of people get into a home or refinance the home they are in. I have traveled the country and spent thousands of dollars to further my education and I am most definitely an expert and I am going to give you the exact same advice that I give to every one of my clients when they ask – Should I refinance?......

My answer is I DON’T KNOW!

Well there you go, you now have free expert advice. Here is the deal, I honestly don’t know until I run the numbers. If the answer is yes then I don’t know exactly what loan program or features you should get until we compare options on a spreadsheet. These days, most people are getting a 30 year fixed rate because they are so low (Yes, rates are 4.5% to 5.5% right now). There are a lot of choices when getting a 30 year fixed rate mortgage: Points or no points? - Pay the costs out of pocket or roll them in? – Should I pay off debts? – Should I take some cash? etc. etc.

The hardest part about refinancing today is that we have much different questions that we have to ask and some of the answers are making it impossible for people to refinance. Some people who would have qualified 2 years ago won’t qualify today. The house that I live in and the duplex I rent out have both lost equity to the point that I simply don’t have enough equity to refinance and so I can’t even get a loan for myself.

So, what happens when you can’t refinance? Well, in my case, I wait. I can’t get a better interest rate and selling doesn’t make sense so I wait. Luckily for me, that was my plan anyway. Some people will want to take a look at a loan modification and this is a completely different animal from a refinance.

A loan modification is when you contact your current mortgage holder and you ask them to modify the terms of your mortgage. The bank can lower the interest rate, take past due amounts and tack them on to the back of the loan, lower the principal balance, let you skip a couple of payments… Why would the bank do this you say? That is a good question and you need a really good answer or they won’t. If you are behind on payments and your mortgage has just adjusted from a low rate to a higher rate then you may be a good candidate for a loan modification. If you just don’t have enough equity to fit into a refinance and you want a better rate then you are not a good candidate for a modification.

You entered into a contract for a mortgage and the bank wants to get paid. If they feel you are in danger of losing the house to foreclosure then they will want to work with you to keep you in the home and save their loan. The bottom line is that you need to prove to the bank that you can’t continue on the path that you are on and then you need to show them what you can do and strike a bargain. A couple of things to consider….. Getting them to lower your principal is almost out of the question and getting them to even speak with you if you are current with your payments probably won’t happen either. I am not a loan modification expert and I do not do them for my clients. There are a lot of new companies out there and many of them are predatory companies looking to make a quick buck. I have been offering advice to clients and referrals to reputable companies and helping clients prepare to tackle these on their own.

I welcome questions about home loans and the real estate market in general. Please let me know what you want to hear about in future articles.


Hans Bruhner, CMPS is licensed in CA & HI. If you have a question, please contact Hans at (707) 887-1275 or hans@hansblog.com . First Priority Financial, Inc. is licensed by the CA DRE #00654852. www.asktheloanman.com

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2009 Home Loan Limits - New Rules!

2009 Loan Limits - Sexy!

So……. Loan limits eh? Pretty exciting stuff Hans! Yeah well it may not be that exciting but if you are thinking about buying a home it is very important. So here’s the scoop, our loan limits in Sonoma County have gone up.

Our basic conventional loan limit for 2008 was $417,000 but Congress voted in higher loan limits for conforming and FHA loans (as high as $729,750). It was a bit of a mess. We had one set of rules for loans up to $417,000 and an entirely different set of rules (and higher rates) for loans above $417,000. The bottom line is that Congress told my industry what to do but did not tell us how to do it and so it didn’t help as many people as it could have or should have.

So for 2009 the new loan limits are..... insert drum roll here……… $417,000! HUH!?! Here comes my favorite part ……. There are provisions for higher loan limits in high cost areas. We’ve always had these in Hawaii and Guam but never anywhere else. Now we have them in any area that is determined to be a high cost area. Of course there are all kinds of rules and formulas but I will make it easy for you, here is the chart:

* The limit may be lower for a specific high-cost area; use the resources below to see limits by location.

In Sonoma County, our limit is $520,950 for 1 unit. In Marin and most of the bay area, the loan limit is the new maximum of $625,500. The limits are even higher in Hawaii and Guam.
The real news here is that there is only one set of rules and one set of rates. These new loan limits apply to FHA loans as well and that is a good thing. Normally if we had the kind of market that we have had this past year, our loan limits would have gone down. So we are actually making progress and on our way to actually helping the consumer.

As I write this, rates have just come way down and are currently hovering around 5% to 5.5% for a 30 year fixed rate loan. There is talk about the treasury investing in low priced mortgage backed securities. The goal is to drive mortgage interest rates lower. The plan is not fully cooked yet and they’re not sure if they will include refinances in this new offering or not. Read between the lines people - it’s just talk at this point.

So basically it is just another normal day in my crazy business. There’s a lot of speculation, there’s a lot of movement and volatility, and no one really knows what’s going to happen from day to day because we don’t have that crystal ball. If I did, I would be on white sand beach sipping a drink with an umbrella in it (virgin because I don’t drink).

Now remember, we can get FHA loans with 3.5% down up to a $520,950 loan amount. FHA has even revived an old program called FHA Access which will allow 100% financing. So not only is it a great time to buy but it could be a great time to refinance as well.

I welcome questions about home loans and the real estate market in general. Please let me know what you want to hear about in future articles.


Hans Bruhner, CMPS is licensed in CA & HI. If you have a question, please contact Hans at (707) 887-1275 or hans@hansblog.com . First Priority Financial, Inc. is licensed by the CA DRE #00654852. www.AskTheLoanMan.com

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Hope for Home Buyer!

Hope for Home Buyers!

I know that I am always trying to write about the positive aspects of the real estate market and how you might take advantage of it and I have to admit that I was having trouble maintaining a positive attitude in the last few weeks of the presidential election.

I went out to dinner last nigh,t which was the Friday immediately following the election and the restaurant was completely packed. The owners of the restaurant said they did not expect this type of crowd but they figured that with the outcome of the election people were feeling relieved and excited and apparently willing to spend money on eating out again because they hadn’t seen these type of crowds in a long time. That is the kind of hope I am talking about. You can read between the lines and see that I am a Democrat, but I spoke with some Republican friends who were disappointed they lost but still excited about the change that they felt was upon us both in the economy and the world at large.

OK, OK so what about your positive spin for home buyers Hans? So, we all know that there are a bunch of foreclosures available for sale at good prices but we have been reading the paper and we see that we need to have 50% down payment, perfect credit and at least a 20 year sterling credit history to get a home loan…….

That is simply not the case my friends. I am closing 4-8 loans per month right now. These are not the kind of numbers that I am used to closing and I am working a lot harder to achieve this feat than I had to in the past. The majority of the loans I am closing right now are purchase loans on foreclosed properties with 97% FHA fixed rate mortgages. That is correct, I said that these first time buyers are putting 3% down and getting into homes in this market. If you want to buy a home as an investment, you need to put 20-25% down. The funny thing is that this is the way it was when I got into this business in the early 90’s……

Here is what I am really excited about. There is a loan called an FHA 203k loan and it allows a person to buy a home that needs work and then finance that work into the purchase of the home. Let’s say that you find a home that needs some work but it is a decent home at a great price. You do a little homework and get some bids on what it will take to fix up the house and we lend you a piece of the fix up money as well. There is a streamline 203k loan up to $35,000 in repairs that is pretty easy to do and then there is the regular 203k loan that requires quite a bit more time and effort to make happen but if you need that much work on the home, it is probably worth it in the end. The FHA loan is designed for people who plan on living in the home only. Did I mention that we can do this loan to 97% as well?

There is a conventional loan available as well called Fannie Mae HomeStyle Renovation which has a catchier name and offers similar options. This loan requires 10% down payment on the cost of the home + fix up costs. There is no streamline option on this loan. Fannie Mae does offer an investment option as well but the minimum down payment would be 20% on investment property.

I don’t want to talk politics with you but I welcome questions about these home loans and the real estate market in general. Please let me know what you want to hear about in future articles.

Hans Bruhner, CMPS is licensed in CA & HI. If you have a question, please contact Hans at (707) 887-1275 or hans@hansblog.com . First Priority Financial, Inc. is licensed by the CA DRE #00654852. www.AskTheLoanMan.com

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Ask the Loan Man - Hans Bruhner on the Bailout

Hans Bruhner is a rather remarkable person. Even in this troubled economy he keeps a positive attitude and finds ways to help people get good loans they can afford with their good credit rating. He'll never lie, coerce or distort information and you can count on him to tell you the truth…even if it hurts. This momth - he writes about the Big Bailout.

I have no idea what to write…….. so Bailout it is!

Guys and gals, I am stumped. I need your help. I don’t want to make this a question and answer column but I am looking for some questions that will help me write my article. I may be my own worst critic but I am excited about some columns and not quite as excited about others I write. Talk to me, tell me what is on your mind and I will write about it.

I know that you guys are sick of hearing about the bailout but I am going to give you my spin on it anyway. The name wasn’t very smart to begin with because it just doesn’t have a very good ring to it, I’ll get to that later, here is the part that is really bugging me today: AIG was bailed out to the tune of $85 Billion dollars and some of their top executives went and had a party at the St. Regis Hotel in LA. These guys were living it up on our dime! I just heard that they are having a lush party for their top sales people as well. I am OK with recognizing the sales team but they aren’t having it at the Stockton Ramada folks, they are having their party at the Ritz Carlton Hotel in Half Moon Bay……..smooth! A friend of mine called the St. Regis and wanted to know how you spend $440,000 at their hotel and the answer was amazing. I have posted it on my video blog at www.HansBlog.com just click on the video at the right entitled AIG gets $85B………

Ok, so back to the name. It should not have ever been called a bailout, that just sounds like a handout which it really isn’t. What the recovery plan really does is a lot like welfare. They are offering a leg up to someone who really needs it and when they system works it is a beautiful thing and when the system doesn’t work, well it’s not so nice. The federal government is going to go in and buy up some pretty stale investments that no one else is buying and put some liquidity back into our market place. The idea is to jump start the economy so it can take care of itself again (see the welfare link here?). If this works then not only have we helped the economy but our investment may actually start to gain some value as well. So if the “bailout” works, then we have invested in something that we believe in and in so doing we have moved forward. Since it is a government program set up to simply help the economy then any return on our initial investment is a bonus! Think about it, if someone loses their job and needs some help and goes on welfare or unemployment and they then turn it around and get a job and get back on their feet and go back to being a productive member of society and get off welfare then the program is a success. This bailout program is exactly like that except we are actually holding onto some investments that may turn around as the economy gets better.

So just to bring it back to the real estate market and my area of expertise…… Now is the time to buy a house! Prices are low, rates are low and if the bailout works then rates will go up and slowly but surely home values will start to go up again also. In my nearly 2 decades in the real estate and lending business, I have seen 30 year fixed rates around 10.5% and in the early 80’s, rates were well into the teens (as in 16, 17…) so are you kidding me when you are upset that the rate is around 6.00% and not 5.00%! You guys have been spoiled and you better get on it before you lose this great market that we are in.

Hans Bruhner, CMPS is licensed in CA & HI. If you have a question, please contact Hans at (707) 887-1275 or hans@hansblog.com http://www.hansblog.com. First Priority Financial, Inc. is licensed by the CA DRE #00654852.

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