August 11, 2022

I hope you are having a great week, and the market is starting to pick up a bit.

As a Loan Officer, your job is to look at a file before the Underwriter does and make sure that you make the package look as clean as possible before you submit the file so you don’t bring up Red Flags. I have to laugh at some of the Loan Officers in the industry as they think their only job is to get a loan and then hope all goes well. Yesterday was a great case where a loan was falling out with another lender, and I was called in to save the day. This was simple as the income was fine, but the bank statements were whacky. The buyers have W-2 jobs and make about 15K monthly with excellent credit scores, etc. They are putting down 20%, so I looked at the two months of bank statements, and I saw six deposits in the past two months over $9000.00 but under $10,000.00. This took their accounts from $100,000.00 to well over $150,000.00. They were putting in cash slowly, and where that cash came from doesn’t matter as they can’t source it, and we can’t use it.

Another thing I noticed was they have a rent payment of $2950.00, and then there is another payment of something going out for $2200 and an additional amount of $600.00 that goes every month. So when I looked at the credit and saw that car payments and student loans were adding up to $1600.00, I started to think that we could have an issue with the debt-to-income ratios. They could not explain the $2200.00 and the $600.00 or where the large deposits came from, so now we have to resort to other options.

If I lose the bank statements, I have no down payment, but I lose the $2200 and $600 debts so they still qualify even with a small down payment. Do they have any other money anywhere? No. Can they get a gift? No. Do they have a relative that has equity in a house? Yes. Great, so we are doing a loan for a relative on their parent’s house to avoid the bank statements that will be detrimental to their file. They have a small Chase account with $8000.00 in it, and we will use that for their bank account, which is super clean there. We will replace the EMD as we can’t document the source of those funds, and we will get the down from Mom and Dad’s house, and they will pay the loan back for Mom and Dad 2 days after we close! I feel that this is the cleanest and easiest way to get these people’s loans. I could have tried an explanation letter, and we would have gone back and forth for weeks with the Underwriter being pissed that they have to look at the file repeatedly and dig up crap over and over again. We could wait until we get the October statements to avoid the large deposits and then pay one of the cars down to 10 payments and get them to qualify, but nobody wants to wait that long, so you do what you have to and get the deal done. If a Loan Officer doesn’t look at a file entirely from the start, there will be hell to pay down the road!

Interest rates have been slightly better this week, but we are still off our August 1 best levels. The morning started strong, but weakness has taken over, so rates may be a tad worse today than yesterday. Let’s hope that the next big step is towards the lower side.

• 30-year Government Loans (FHA / VA) are in the low to mid 4’s or high 3’s if you wanna pay a few points. LOL!
• Conventional Loans up to $647,200.00 - Mid 4 to low 5’s.
• High Balance Loans $647,201.00-$ 970,800.00 are in the high 4’s to low 5’s
• Jumbo loans above $970,801 are in the high 4’s to low 5’s
• 5/1, 7/1, 10/1 Arms are in the low 4’s to low 5’s for over $647,201. Under that, don’t bother right now!
• Bank statement loans - They are available with 10% down again! 6’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 6’s.
• 0 down loans are in the 5’s – 620 credit score min right now! Mid 6’s, for the most part, up to $670,000.00.
• 0 down Jumbo to $975,000.00 – 680 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 6.99% 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 if you have any questions or if someone interested in buying a property! 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!