Mortgage Information

If you're like most buyers, a home is the most expensive purchase you'll ever make, and you'll probably need some form of financing.

There are many lending institutions that offer a variety of mortgage products. Financing options and rates can vary widely, so it is important to do your research and shop around to ensure you get the mortgage that best meets your needs at the best price.

I would be happy to refer you to some very good mortgage contacts I have in Petaluma, or to help you in any other way I can to secure the best possible rate for your home purchase.

Use the mortgage calculators below to assist you in making some decisions around financing your new home.

Mortgage Qualification Calculator

This calculator will help you determine how much money you qualify to borrow. The results are informal. You will be subject to a credit approval from your financial institution taking into consideration existing debt load, amount of down payment, income and other variables.

Mortgage Payment Calculator & Amortization Table

This calculator will help you determine what your mortgage payments will be based on purchase price, interest rate and mortgage term, as well as other factors. The amortization table shows what the interest and principal payments will be over the term of the mortgage.

 

 

Short Sales”

What is a “short sale”?

A “short sale,” which can also be called a “short payoff,” or “pre-foreclosure sale,” occurs when the lender agrees to accept less than the total owed in exchange for reconveyance of the Deed of Trust lien on the property. “Short sales” can be the result of a downturn in the market, wherein the value of the property is less than the existing loan balance(s) or due to other distressed market conditions.

When a seller is short fund to close the escrow, is it automatically deemed a “short sale”?

NO! As stated above, the “short sale” or “short payoff” must be a negotiated agreement between the lender and the seller. There are no guarantees that a lender will negotiate a modified payoff. In addition, you could encounter a “short payoff” where the lender will allow the seller to receive proceeds. Again, the negotiation between the seller and lender is key in these types of transactions.

Why would a lender accept less than what they are owed?

It makes financial sense. It is very expensive for the lender to foreclose, do any needed repairs to the property, offer the home for sale and then carry the financial burden of the home until a buyer is found. Remember, lenders are in the money business NOT the real estate business.

In the situation where the seller is to receive proceeds, you will most likely encounter a real estate transaction that involves a group of investors that may have joint ventured with the lending institution and therefore the security agreement would contain a provision for the seller to negotiate a “short payoff” with the lender in the event the property did not appreciate in value or obtain key tenants as expected. This type of “short payoff” is more prevalent in large commercial projects.

What qualifies a loan to be considered a “short sale”?

On conventional loans (Fannie Mae or Freddie Mac) there are no guidelines for reviewing and approving a request for a “short payoff.” All parties associated with the loan must agree to accept the “short payoff”; this includes the lender, investors and the private mortgage insurer, if applicable. This process can take time – plan on around 60 days.

For FHA loans, here are some of their requirements for a “short sale”:

  1. The loan must be 2 months delinquent
  2. The property must be owner-occupied
  3. The reason for the default must be unavoidable or involuntary

Things to watch for/be aware of when dealing with a transaction involving a “short sale”:

  • It will take longer than normal for escrow to receive a payoff statement, plan accordingly.
  • Figures may be revised during the course of the escrow – as the lender may want to see an estimated statement prior to issuing the final demand to confirm the seller(s) costs of sale and to determine if there is equity in the property or not.
  • There may be additional fees on the demand, such as foreclosure fees, attorney’s fees, late fees, publishing fees – just to name a few.
  • Lenders may have special requests prior to closing, ie: lenders approval of estimated settlements statement, approval of bills to be paid through escrow, approval of credits to buyer and seller through escrow, approval of commissions to be paid and approval of funds to be held in escrow.
  • Many times there are reduced commissions in order to cover the shortage of funds!
  • A seller’s settlement statement can change daily!
  • If there is more than one loan on the property, be prepared for the second lenders requirements.