30 Jul 08 
Buy and Bail Revisited! Home Buying Loan Changes
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So if you plan on looking or are already in the process of buying a new home I strongly suggest you make sure your still qualified.
Now I am going to lay out some guidelines that are commonly used to help people get qualified to buy a home and will detail what to look out for moving forward.
· Buy and Bail Revisited- I have documented several times here about the Buy and Bail Rules so now it is official! The new rules are now out and will go into effect on August 1st so make sure you lock in your loan before then or fall victim to the new rules.
Turning your current home into and investment property while attempting to buy another property, this is now a HUGE concern for lenders and the new rules states:
“If borrower is renting out their current home and purchasing a new primary residence, to use rental income to qualify, the following requirements must be met: 75% of rental income may be used to offset the mortgage payment in qualifying if there is documented equity of at least 30% in the existing property, derived from an appraisal.”
OUCH!
That one is Huge and should have a lasting impact on the Real Estate Markets all over the country. Previously all you needed to do was document with a lease agreement a reasonable rental income and then you could use up to 75% of that rental income to counter the existing mortgage payment regardless of equity position.
SO if you DON’T have the 30% equity you still have options, you will need to qualify to buy your new home using both new mortgage payments and existing mortgage payments against your debt to income ratio. (Qualify with both Mortgage Payments) The same would be true if you kept your current home as your second home.
· Credit Changes- In addition to these changes you will see that FNMA is tightening its’ credit guidelines. This will produce an interesting scenario further limiting new home buyers to those in relatively great financial positions, I guess that is the way it should be really.
Two changes in the credit area you need to be aware of:
First, No longer can you pay down installment loans to under 10 months or less and not have them used against you to qualify.
Second, Credit that shows no monthly payment because balance is due monthly will be held to 5% of balance as payment or proof account is paid in full by the close of escrow.
Also, Conventional financing just got even more credit sensitive so if you haven’t looked into an approval and think your mid-600 credit score is okay you might check again.
As always I am here to help! You can find more articles at www.brentlane.wordpress.com or www.thelanegroup.blogspot.com
Brent Lane
Tags: brent lane, buy and bail, buying a new home, credit, credit changes, equity, financing, home buying guidelines, investment property, mortgage payments, new home, pay down installment loans, real estate market, rental income, second home, the lane group
19 Dec 07 The New Combo Loan
Any home loan over 80% of a homes value requires that the homeowner takes out a mortgage insurance policy. Traditionally, a Combo Loan has been a term used to describe the process when a home buyer takes two loans out on a property to avoid mortgage insurance. The first loan is typically at 80% of the homes value; the second loan makes up the other 20%, or the percentage that is left over after the down payment. This loan is also commonly referred to as an 80 – 20 loan or a 100% financing loan.
More recently, lenders are using the term Combo Loan to describe the process of bundling all or most of the consumer’s dept into one large loan with a low interest rate. This loan would include the home loan(s), car loan(s), and credit card debt; other consumer debt may also be included. The benefit to the consumer is that their debt is consolidated into one or two monthly payments, it becomes preferred debt and they lower their monthly bills. Another benefit of a Combo Loan is that it doesn’t affect the consumer’s credit rating the same as other popular consolidation programs.
There are several Combo Loan programs available. In most cases, the Combo Loan program is setup so that the borrower makes two monthly payments or takes out two different loans. One loan is setup on a 30 year payment plan and the second is setup to be paid over 15 years. There are many more options available so before considering a Combo Loan, be sure to seek advice from a qualified professional. Make sure you weigh the benefits against the costs as these loans are not for everyone. Often, consolidating debt into one loan can free up extra money each month which will allow you to save more or put more money toward your current debt.
Tags: 80 / 20 loan, combo loan, debt to income, eighty twenty loan, financing, home loan, mortgage loan, preferred debt
