February 10, 2022

I hope you are having a wonderful week, and I can't wait until Sunday!

I get the question all of the time about when you can release Loan and Appraisal contingencies.

Can we do it when we make the offer on the house? Should we do it at the start or shorten the timelines, and what's the backup plan if the appraisal comes in short.

It is hard to say what the final price will be when a house is listed as the demand is crazy high and the supply is crazy low. For argument's sake, let's say we have a client buying a property that will eventually sell at $1,000,000.00, and the home will appraise at $950,000.00 based on all of the comparable sales. We have to leave a little wiggle room for appraiser opinion, but in a perfect world, we all feel we will support a $950,000.00 appraisal, and we will go with that.

A Client putting down 5% on that $1,000,000.00 property would generally put down $50,000.00, but if that property appraises at $950,000.00, they would have to come in with an additional $47,500.00. So to waive an appraisal, we would want that client to have $110K saved with closing costs…

If a client has 10% down, they should be just fine with the lower appraisal on the contract as long as we feel the house will appraise around $950,000.00 for the $1,000,000.00 purchase. The PMI will change by about $50.00 per month, but they get the house at the end of the day!

If a buyer is putting down 15%, they will be fine with a lower appraisal on the purchase. If the appraisal comes in $50,000.00 short, then the PMI payment will go up by about $45.00 per month, and everything else will stay the same.

The 20% down buyer can also waive their appraisal, and they would have PMI (About $85.00 per month), or they can get a rate that is .125% higher than their original loan.

The 25% or more down buyer will not be affected, but their interest rate could change slightly with a lower appraisal. The same goes for loans with larger down payments.

My team has had 0 loans fall out of escrow due to Loan Officer error, with over 1000 purchases closed over the past 3+ years. It is safe to say that we can usually waive loan contingencies if we have the buyer fully pre-approved, and we would want to speak with you about that before doing so. Some are a bit harrier than others, and we like to keep contingencies in place, but I think we would be able to waive loan contingencies about 90% of the time.

Rates are struggling again today. Inflation last month was the worst since 1982 when we had 16% Mortgage rates. We should bless our stars that we started at such a low point, but let's hope this stops before too long! Rates are still good, but I can't say fantastic anymore!
30-year Government Loans (FHA / VA) are in the mid to high 3's
Conventional Loans up to $647,200.00 - high 3's
High Balance Loans $647,201.00-$ 970,800.00 are in the high 3's and low 4's.
Jumbo loans above $970,801 are in the high 3's and low 4's. We can do mid 4's with as little as 10% down. We can do 1-year findings on these too!
5/1, 7/1, 10/1 Arms are in the high 2's and low 3's!
Bank statement loans - They are available with 10% down again! 4's to low 5's depending on down and credit score.
Stated income loans - I have one bank with 30% down, but everything else has to be perfect! Interest rates are in the high 4's.
0 down loans are in the 4's - 620 credit score min right now! Mid 3's for the most part up to $670,000.00 Price.
0 down Jumbo to 1.2 Mil - 700 credit score - call for a quote
Private Money lenders - hard Money Loans - 35% down!
No Ratio Loans 30% down
Debt Service Coverage loans with as little as 25% down
Bridge Loans - are typically 4.99 - 5.99% with limited fees - But they get you where you need to go!
Interest rates are subject to change without notice! Above are LA County Loan Limits.

I will be around all weekend, but I will probably be busy watching a football game Sunday at 3:30 or so. My cell is (661) 714-6258, and my office line is (661) 260-2970 xt. 2222. Please text me at (661) 714-6258 or email me at Mike@AugustaFinancial.com. Have a great day and a better tomorrow! Please call me when you have a client that needs to borrow!