Chico Financing

Are Loans Really Harder to Get Now Than They Were 5 Years Ago?

by Justin Bowman, Summit Funding

When I tell someone what I do for a living I usually get a response like, “Wow isn’t it impossible to get a loan right now?” To that I would say with certainty, “Absolutely not!”

There is a perception that because the market is doing so poorly, that funds are harder to obtain. The truth is, there are a multitude of available programs on the market for all types of borrowers. Such products range from the traditional conventional loans, requiring 3% down to other unique products that require as little as .5% for the entire transaction!

A great effort has been made by the government to subsidize commodities in efforts to stabilize the economy and offer opportunities to potential homebuyers who, on their own, could not afford the luxury of owning a home. They are helping make it possible to live the “American dream” and become home owners.

Additionally, there is a new sensitivity among borrowers that there is an unjustified amount of paperwork needed for loan approval. An environment of full documentation has over taken the once popular, and very detrimental, low and no documentation loans within the last few years. It is hard for people to come to terms with the new way (or really, the old way) of qualifying. What must be understood is that the era of minimal required documentation is over. We can no longer take the risks that led to this financial uncertainty. Even though we are now steering away from the “we will take your word for it” mentality, it makes for a much healthier economy knowing that the house that is being purchased has a much smaller risk of defaulting.

All this said, I am doing more low-down payment loans now than I did before the market fell. With outstanding products available such as conventional loans with 3% down, FHA & CHF programs with less than 1% down , Home Path loans with 3% down and no mortgage insurance. Eligibility is considered even with credit scores as low as 580 and debt to income ratios as high as 55%!

In today’s market, borrowers need a realistic outlook on how much they can actually afford and provide the necessary documentation to prove they actually can. Happy House Hunting!

Justin Bowman
Sales Manager/ Mortgage Advisor
NMLS# 219579
Office 530.267.6264
Fax 530.267.6286
Email [email protected]

Click For Loan Application

Ready to begin searching for that perfect Chico home, but haven’t yet partnered with a Realtor? The Sandi Bauman Team! at Chico Homes would consider it a pleasure and a privilege to assist you with the process. Our dynamic team of buyer specialists will offer you highly personalized and professional service every step of the way. Call Sandi 530-864-5407 or email [email protected] to get started!

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FHA Announces Changes to Lending Guidelines Effective July 14, 2008!!

by Ken Phillips

For the first time in history, FHA will begin using borrowers credit scores to determine risk based pricing and mortgage insurance premiums.

Up until now credit scores were not really a factor used in FHA risked based pricing.
With FHA relaxing some of their strict requirements recently it was easier to qualify buyers with credit scores low enough to prevent them from qualifying for “conventional” financing. As a matter of fact, with 100% financing a thing of the past basically, FHA financing has become very popular among lenders looking for high loan-to-value loans as FHA financing, which can cover up to 97.75% of the purchase price if a buyer is paying their own closing costs on a purchase, still carries low interest rates compared to high loan-to value conventional financing. FHA is a great loan for first time Chico home buyers with little money to put down and/or with low credit scores that prevent them from qualifying for a conventional loan. On July 14, 2008 FHA will begin implementing these changes and it will affect qualifying for many of borrowers.

Here’s a look at the ten major changes to the FHA guidelines:

1. Borrowers with either no score or at least a 500 score may get an LTV >90%.
2. Borrowers with a score less than 500 get a maximum LTV of 90%.
3. Borrowers without scores will require manual underwriting. What this means is no automated underwriting is available i.e. DU, LP, or DO and will require more time to give the realtors/agents a TRUE pre-approval letter.
4. Upfront Mortgage Insurance Premiums will range from 1.25% to 2.25%, depending on score. These upfront MI premiums will still be allowed to financed into the loan.
5. The Monthly Mortgage Insurance will range from .50% to .55% depending on the borrower’s credit score.
6. The premium is based on the borrower with the lowest score.
7. If one of the borrowers has no score, then the Non-Traditional credit grade is used. Non traditional credit is having trade or credit lines added to the borrowers credit report and obtaining a credit rating. These non-traditional trade/credit lines can be utility bills such as water, cable, electric, gas, phone, etc., cellular phone service, and rental history to name a few.
8. Credit rescoring is allowed to improve a borrower’s credit score. There are fees associated with credit rescoring and each bureau charges fees for each tradeline disputed.
9. All FHA Secure refinances >95% LTV with delinquencies have a 2.25% UFMIP and .55% MMI.
10. Along with purchases, these changes will apply to cash-out, rate & term, and non-delinquent FHA Secure refinances.

Feel free to call Ken 865-769-6420 if you have any questions regarding FHA financing or any of Countrywide’s many loan programs .

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Paperwork you need to get approved for a Chico CA Mortgage

Here is an easy list of paperwork you will need to provide your lender in order to get approved for a loan on a Chico residential property. It’s really not that bad- I promise!

If you are an employee, make copies of:

  • · Pay stubs for the last 30 days
  • W-2s for the past two years
  • · Bank statements for the past two months (all pages!)
  • Current statements for any other assets such as a 401K or mutual fund.

If you own a business, bring:

  • Income tax returns for the past two years
  • A current balance sheet for your business
  • A year-to-date profit and loss statement

If you receive additional income (child support, disability, income property, etc.) bring:

  • Income tax returns for the past two years
  • Copy of current lease(s) for rental property
  • Any other evidence that proves you are receiving income from other sources

Miscellaneous items to bring:

  • A phone number for your employer, so that employment can be verified
  • A copy of the purchase agreement signed by all parties (your Realtor can help here)
  • A copy of your driver’s license

I realize that the thought of compiling this set of documents can seen overwhelming. After all, there are hours to be worked, school to be attended, children to feed, laundry to do, and bills to pay. I know the argument all too well! However, if you dream of purchasing Chico CA Real Estate and becoming a homeowner, it is time well spent!

Also read:

Your Chico CA Loan Application- It’s Not THAT Hard!

What is the Difference between Prequalification and Preapproval?

Why Should I Get Preapproved for a Chico, CA Home?

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Looking to buy or sell Chico CA Real Estate? Need a Top Producing Chico Realtor? Call Sandi Bauman 530-864-5407 or email [email protected] Specializing in REO, residential, relocation, investment & ag property.

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Your Chico CA Loan Application- It’s Not THAT Hard!

I haven’t quite figured out the rationale, but the prospect of getting prequalified or preapproved is often an intimidating process for a Chico Buyer.

Kid with broccoli- getting prequalified for a Chico loan isn’t this bad!

For some reason, folks will often avoid it as long as possible, and build it up in their minds to be some horrible, awful procedure. I find myself listening to every imaginable excuse, and smiling, because I know that a mountain is being made of a molehill. It’s kind of like trying to convince your kids that if they would just put the broccoli in their mouth, they will get it over with, and can then move on to the ice cream!

  • First off, a buyer does not have to go to the hassle of making an appointment. No need to get dressed, leave the house, and make your way to a stuffy, intimidating office with some guy in a 3 piece suit! In this age of convenience, many lenders will accommodate your request for prequalification by phone, fax or email. In the span of a short phone call, the lender can get the basic information he needs from you to start the process.

  • Second, just because you talk to a lender to get prequalified, it doesn’t mean you’re married for life! You may decide, after your initial phone call, that you don’t like the way the lender chews gum in your ear. You might also decide, after talking to your best friend, that the lender isn’t very reputable. Fine. NEXT!

  • Third, finding a great Lender shouldn’t be difficult. It should be fairly easy considering you have an excellent resource for a referral in your Chico Realtor. Consider, for a moment, that you’ve already done the work to find a top producing, highly recommended, ethical Realtor that you can actually talk to. Doesn’t it stand to reason, that the Realtor, given the choice, will choose to recommend another professional that will the get the job done efficiently and effectively, thereby ensuring a happy buyer? (In case you’re wondering, there is no $ passed between the lender and the Realtor. The payoff to a referral, is a job well done for the client).

Need a recommendation for a good Chico Lender? Call me.

Related articles:

What is the Difference between Prequalification and Preapproval?

Why Should I Get Preapproved for a Chico, CA Home?

Lenders beware: How to lose a Chico, CA Realtor (and therefore buyer) in 3 days.

Like what you’re reading?

Subscribe to: Chico CA Real Estate Blog and MLS Listings Search!

Looking to buy or sell Chico CA Real Estate? Need a Top Producing Chico CA Realtor? Call Sandi Bauman 530-864-5407 or email [email protected] Specializing in REO, residential, relocation, investment & ag property.

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First Time Home Buyer Disaster- Don’t Let This Happen to You!

Don’t mess with your credit or change employment until your Chico escrow closes!

While perusing a fellow blogger Janis Gagliardi’s recent post it occured to me that the message bears repeating for potential Chico CA buyers.

Here is the full story, courtesy of PortOrangeJuice.

I myself have had two different buyers in the past year or so that were stopped cold in their path to purchasing a new home. In a nutshell, the escrows had progressed to within a day or two before the closing. In both cases, the lenders re-checked the buyers credit and employment status just minutes prior to funding the loan.

1. The first couple had just charged new appliances to their credit card the day before. In doing so, they knocked their qualifying ratios out of whack just enough to destroy their loan package.

2. My second buyer either quit her job or was fired on Wednesday.When the lender checked with her employer on Monday, all bets were off! No job, no loan.

Apply Janis’ tips to ensure you close escrow on your Chico dream home!

DO NOT increase your credit card balances and or loan balances

  • DO NOT apply for additional or new credit, or put balances on a paid credit card
  • DO NOT ignore late payments and/or collection notices that during the course of your loan
  • DO NOT purchase anything that is “the same as cash” – it will show on your credit report as a debt
  • DO NOT buy furniture, cars, or appliances until after closing. What good is furniture if you don’t have a new home to put them in!
  • DO NOT lend money to family members, friends, etc. if you need it for closing.
  • DO NOT store your money at home. Place it in a bank account so that it can be documented as savings throughout the loan process.
  • DO NOT have overdrafts on your checking account.

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Looking to buy or sell Chico CA Real Estate? Need a Top Producing Chico CA Realtor? Call Sandi Bauman 530-864-5407 or email [email protected] Specializing in REO, residential, relocation, investment & ag property.

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Chico CA Real Estate Mortgage Meltdown

by guest writer Mike Wiegert, broker, Chico Homes


Locally, these terms were once only known to those people that worked in the Chico CA real estate or mortgage business and a small percentage of people that took an actual interest in the workings of national mortgage markets. Today, these words are commonly known to anyone who reads a newspaper or watches a daily news program.

Our newfound familiarity with mortgage terminology is primarily due to the recent crisis surrounding a near collapse of the sub-prime mortgage markets. Why do they call it market? Because, essentially that is what it is, or was. In recent years, Chico homebuyers and those refinancing existing Chico home loans had a huge array of loan programs to choose from. Much like your favorite grocery store, some of these products were sensible and had value in the long run. Other products were just a quick way to get a new homebuyer, often with low or marginal credit scores into a Chico property with little regard for future events.

A commonly used mortgage in the sub-prime market is the 2/28 ARM. This is an adjustable rate mortgage where the rate is fixed for 2 years, and is then reset to equal the value of a rate index at that time, plus a margin. Because sub-prime margins are high, the rate on most 2/28s will rise sharply at the 2-year mark, even if market rates do not change during the period. This means that while the loan is affordable to the borrower at the initial rate, it may not be affordable after two years when the rate is reset. This type of mortgage is really only of value to borrowers who are assured of certain events that involve a significant increase of income, a situation that is unusual to most of us.

For the average wage earner, a dramatic increase in housing payment is a formula for disaster. Therein lies the problem: a sharp rise in mortgage defaults and foreclosures of those once euphorically happy homebuyers. So whom do we blame? We could blame the eager and enthusiastic Chico mortgage lenders who promoted the loans, rationalizing the validity with the forecasts of increasing appreciation of the homes. We might take a swing at aggressive Chico CA Realtors, also believing that these products were the only possible way for their customers to realize the great American dream of homeownership. We could hold responsible the Chico homeowners themselves for getting caught up in the buying frenzy with little or no regard for their own future.

How many people out there have ever bought a car that they couldn’t afford, only to have to sell it for a loss and absorb the shortfall? Why blame any particular person at all? We all got into this mess together, and we all are feeling the results as the issue resolves itself. So, how is this glob of knots going to untie itself? I don’t think that anyone has a convincing answer to that monumental question.

Treasury Secretary Henry Paulson discussed a plan at a meeting with top banking regulators and industry representatives last Thursday and is expected to announce details of the proposal this week.

The plan would freeze mortgage rates for stressed borrowers who took out loans with low teaser rates that are due to reset to a much higher level. The obvious benefit of such a plan would be that these borrowers would, for the time being, be able to hold on to their homes. At the same time, the lenders won’t be inundated with foreclosures, thereby forced to open large departments to deal with holding, maintaining and marketing these properties.

Many folks are really angry that the Federal Government would step in and bail out lenders that are experiencing high rates of foreclosures, and help individuals desperately unable to afford the higher payments of their newly reset mortgages.

Ultimately, they feel that these foolish lenders and borrowers will be sponsored by the American taxpayer and in truth, they are right. It’s always the taxpayer dollar that is used to support a national crisis, isn’t it?

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Looking to buy or sell Chico CA Real Estate? Need a Top Producing Chico CA Realtor? Call Sandi Bauman 530-864-5407 or email [email protected] Specializing in REO, residential, relocation, investment & ag property.

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What’s All This Talk About Short Sales on Chico Homes?

By guest author Mike Wiegert, Broker, Chico Homes

For Chico, CA homeowners that can’t afford to pay their mortgage, there is an alternative to bankruptcy or foreclosure proceedings – it is called the short sale.

The short sale really begins when you finally realize that your house just isn’t worth what it was just a few short years ago.

The next realization is that if you sell your house for what it’s really worth, you’re not going to actually get any proceeds back from the sale. That’s a big pill to swallow, but after you do, you might have the final realization that you’re really just starting from scratch like you did a few years ago. Back then, you’re credit was pretty good, you had your health, all your kids were fairly normal and you had a job. So rather than losing your home in foreclosure AND ending up with a terrible credit report, you think “I wish we could just be back to where we were back then.”

It’s at this point that a “short sale” might be the answer.

A short sale occurs when the net proceeds from the sale of a home are not enough to cover the sellers’ mortgage obligations and closing costs such as property taxes, transfer taxes and commission.

In other words, what a buyer might be willing to pay for your home isn’t going to cover what you owe on it and what it’s going to cost you to sell it. Unlike a foreclosure, a short sale can keep the homeowners credit intact. The first step is to do some research a find a Chico, CA Realtor that knows the Chico real estate market and has had experience and success in the short sale process. Your Realtor will need special skills and a persistent attitude in dealing and negotiating with your lender.

Banks are not in the business of owning and marketing homes and many would much rather discount the current amount of their loans than have to go through the process of marketing and holding a property in a slower market. This lender attitude will certainly grow as the number of foreclosures and repossessions increase. Conversely, the popularity of buying in the short sale market appears to be spreading rapidly.

Be advised, before you contract with any Realtor to market your home utilizing a short sale concept, you should consult a real estate attorney for the legal implications of the short sale and an accountant about the tax liabilities involved in the short sale.

You must understand everything upfront before the short sale process begins- look to your Chico CA Realtor for assistance.

1. You must prove to your lender that you are unable to afford to pay your mortgage.

If your lender is aware that you possess certain assets such as stocks or bonds, or you have a high paying job, your lender may require you to sign a note promising to repay at a future time any discount of what you owe that they make in the short sale. If you do not possess these types of assets or your job clearly indicates that you would not be able to repay such a debt, it is possible it may be forgiven.

2. Next the lender will appraise the current market value of your home.

The lender, with the help of your Chico, CA Realtor will calculate the amount of the outstanding debt and the customary costs of selling. If the proposed short sale will bring them more money than they would get during auction, the lender will mostly likely agree to it. End result, you didn’t pull the equity out of your home that you might have thought you had, but your credit is still intact, you’re out of a mortgage payment you can’t afford and the dream of once again owning a little corner of this world still burns brightly!

If you find yourself in a situation where your payments are are becoming too much to handle, please contact us at Chico Homes! We may be able to assist you in selling your home and avoiding a credit-destroying foreclosure.

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Looking to buy or sell Chico CA Real Estate? Need a Top Producing Chico CA Realtor? Call Sandi Bauman 530-864-5407 or email [email protected] Specializing in REO, residential, relocation, investment & ag property.

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Lenders beware: How to lose a Chico, CA Realtor (and therefore buyer) in 3 days.

I would say, as far as Chico CA Realtors go, I’m fairly easy to get along with. I typically play nice with my peers. My end of the work is done in a thorough manner, and on time. If, as a lender, you do your job well and respect my clients, I will happily recommend you to future Chico, CA buyers.

That is, I’m easy to work with UNTIL you tick me off.

If I feel that an unethical action (or lack of an ethical one) on your part has jeopardized my clients in some way, then be prepared to make it right. On the client’s behalf, I will hold you as accountable as I can. You probably won’t like it much…. just so you know. Once we get them taken care of, I won’t be bringing you any new business.

How to lose a buyer in 3 days (or less!)

1. Ignore phone calls and emails.

2. Intentionally leave off or reduce known fees on the good faith estimate.

3. Quote them one rate when you are fully aware that they won’t qualify.

4. Assure me that you can close the loan on time when you won’t be doing so.

5. Tell us that the buyers are prequalified for a specific loan, when in fact, you haven’t done the work.

6. Assure me that you have everything you need to close when you HAVE NOT received all documentation.

7. Bait and switch my buyers at the closing table. That interest rate better be pretty darn close to the quoted one!

8. Abandon us at the closing table. You should be there to explain any and all concerns the buyer has regarding his loan papers.

9. Be incapable of admitting that you don’t know, or have made an error. I’m not perfect, and don’t expect anyone else to be. If you make an error… just say so! Don’t run us around and waste more time.

Whew!!  (I’m glad I got that off my chest).

It frustrates me to no end when a lender does not represent his or her clients with an ounce of honesty, fair dealing, common courtesy or professionalism. That client is supposed to be the one we are both protecting!!

Lenders: If you’re looking to lose a client, a Realtor, and any potential for future business, any of the above actions should get you there in no time at all.

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Buyers: If you need assistance locating a competent, Chico, CA lender to assist you in your home buying experience, feel free to call me for a recommendation! I can be reached at 530–864–5407. It’s wise to choose carefully, in order to avoid the nightmares, and save time later!


Looking to buy or sell Chico CA Real Estate? Need a Top Producing Chico CA Realtor? Call Sandi Bauman 530-864-5407 or email [email protected] Specializing in REO, residential, relocation, investment & ag property.

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What is the Difference between Prequalification and Preapproval?

The difference between a pre qualification and a preapproval, my friend, would be like buying a discount store handbag vs. a Prada or Gucci handbag.

A prequalification is a very preliminary estimate of how much you can afford to pay for a Chico California home. The lender will base his opinion on the information you provide. However, your credit and employment information typically aren’t validated for prequalification, so the results can only be considered a rough idea of what size payment, and what type of loan you might qualify for. Please be forewarned that prequalification letters are not often highly regarded by people “in the know”. All too often, a lender is unable to get the final loan approved, despite the fact that he or she has issued a prequalification letter to his unsuspecting buyer. The more reputable and educated the lender, the better the chance that the pre qualification letter is a valuable step in the process.

Still, a prequalification letter can be a useful tool until you have the opportunity to substantiate your information. Like the discount handbag, it will get you by for a while!

A preapproval is a written commitment from a lender or mortgage broker to finance your home purchase up to a specific amount. This indicates that the lender has scrutinized your financial history including employment verification, rental history, credit reports, pay stubs, W-2’s, tax returns, etc. Preapproval indicates to sellers that you are a pre-screened, serious home buyer. Once you have obtained a preapproval, you can shop with confidence, knowing that your odds of obtaining your desired loan are good.

**It’s important to note that neither a prequalification or preapproval letter is a guarantee that you will be given the loan. Even with the preapproval, there are certain details like a finalized sales contract, inspections, and appraisals that must come into play prior to the bank’s funding your new loan.

Don’t hesitate to give me a call if you’re ready to take that all important, first step to becoming a homeowner: getting prequalified. You will surprised at how quick and painless it is!! It would be my pleasure to match you to a lender, one that both you and I can trust to provide you with the information you need to get you on your way to buying Chico California real estate! I can be reached at 530-864-5407.

All important, related must reads!

WHY Should I Get Preapproved for a Chico, CA Home?

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Looking to buy or sell Chico CA Real Estate? Need a Top Producing Chico CA Realtor? Call Sandi Bauman 530-864-5407 or email [email protected] Specializing in REO, residential, relocation, investment & ag property.

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Why Should I Get Preapproved for a Chico, CA Home?

It’s important to be preapproved BEFORE you start searching fChico CA home preapprovalor a Chico, CA home

Time is always of the essence. There’s no use fooling around doing things the hard way when you can go straight for the gold. By investing a very minimal amount of time before you start shopping for a house, you will save yourself immeasurable time and grief later. Trust me.

1. If you don’t get preapproved, how do you know what price range you should be shopping in? There is nothing worse than spending months looking for the PERFECT house, only to find out later that you can’t make it work financially. Save yourself the pain- don’t guess!

2. It’s best to try to keep your Realtor happy! Like you, she’s busy. The last thing she wants to do is spend endless hours trying to find you a house that you can’t afford. To get the most attentive, personalized service from your Chico, CA Realtor, make sure that you’re ready to pass “GO”. Provide her a preapproval letter so that she knows what your ideal price range is. You will find that she will be dedicated and expedient in exposing you to all of your options, thereby saving YOUR time.

3. Make yourself more appealing to the seller of your dream home! When you put an offer on a house, one of the first things the seller will want to know is whether or not you can afford it! The seller will be less excited about accepting your offer if there is a question about your loan getting approved. After all, he doesn’t want to pull his home off the market only to find out 30 or 60 days later that your loan won’t go through. He would be jeopardizing his chances of securing another buyer.

Also, consider this: If the seller were to receive 2 identical offers, with one buyer being preapproved and the other NOT, which buyer do you think will ultimately have their offer accepted? Of course! The buyer with the preapproval letter.

Call me today at 530-864-5407 for assistance in getting preapproved for your Chico, CA real estate purchase. I can put you in touch with a lender immediately to get the ball rolling.

Getting preapproved is the best thing you can do to get started on the path to home ownership!

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Looking to buy or sell Chico CA Real Estate?  Need a Top Producing Chico CA Realtor?  Call Sandi Bauman 530-864-5407 or email [email protected]  Specializing in REO, residential, relocation, investment & ag property.

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Sandi Bauman (Chico Homes): Real Estate Agent in Chico, Butte County, California
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