mortgage lenders in sacramento
Covid-19 mortgage tips to save your deal is a fabulous blog written by our team’s Sacramento lender, Dan Tharp. Enjoy. — JaCi Wallace
It’s been almost two months since Governor Newsom’s order that all Californian’s shelter-in-place. It sure feels like more. I feel such empathy for those that live alone, are single parents or have lost their job, It’s simply awful. I am thankful every single day I get up and get ready for work.
Covid-19 has re-ordered virtually every industry in the world to figure out how to adapt,. Not only adapt, but mprovise, and overcome this virus or otherwise fail. In California, mortgage lending and real estate are still thriving; all be it, with a whole new subset of issues to we have never faced before. Below are just a few tricks that might help you during your next purchase:
Did you know that in some cases, your lender will not require you to get an appraisal when buying a home? We have been doing this for years. Now, with Covid-19, and given the fact, sellers don’t want a stranger in their home, the appraisers can be just as uncomfortable entering a home. It’s lovely to know you have this option if you work with the right lender.
Fannie Mae and Freddie Mac traditionally offer an appraisal waiver for low loan-to-value refinance or if you put down at least 20% on a purchase. Also, in conjunction with new Fannie and Freddie Covid-19 updates, our underwriters are permitting exterior only appraisals under certain circumstances.
However, you may still want to get an appraisal done (~$525) to ensure you are not paying too much for the home. But if you and your agent have taken the time to look at comparables and feel the value is there, not needing an appraisal can not only save you money by not having to pay for the report, it can also help in other ways.
For example, I had a client facing multiple offers, and the only reason their offer was accepted is that they came in at asking price AND agreed to remove the appraisal contingency. Meaning, if for some reason, the appraisal came in lower, they would have to come out of pocket to make up the difference. These buyers didn’t have much in reserves after the down payment and closing costs, and what they did have left was their cushion for any future emergencies. With this appraisal waiver in place, they would not pay one extra dollar out of pocket – And not needing an appraisal was just what they needed – peace of mind.
CAN’T GET A JUMBO LOAN?
Jumbo loans have been walloped during this pandemic as mortgage servicers tighten their lending criteria. Many lenders have stopped issuing them altogether. Jumbos are loans that exceed the maximum you can borrow with a Fannie, Freddie, or FHA conforming loan. For example, let’s assume you are buying a home in Sacramento County, where the max Fannie/Freddie loan amount is $569,250. Thus, if your loan amount is higher – you fall in the Jumbo loan category.
Since Fannie and Freddie do not back jumbo loans, they are considered riskier and require higher credit scores, lower debt-to-income ratios, and may require a few months of cash reserves or even up to a year or more worth of mortgage payments. A little trick is to use a piggyback second mortgage to avoid taking out a Jumbo loan. Jumbo rates can be higher than those on conforming loans, so borrowers buying a high-value home may take out a conforming mortgage, then cover the rest with a piggyback loan and down payment.
Qualified For A Loan
Let’s assume you found your dream home for $850,000 in the perfect neighborhood. Now, throw in you were just told by your Jumbo lender that the loan for $680,000 you were qualified for, no longer exists. When the reserves required become higher, your rate just went up too. You could instead go with a conforming loan of $569,250 plus a piggyback loan of $110,750 and save the day.
Every day this pandemic throws new challenges our way. Because of that, we continue to adapt and improvise and overcome. This is why it is essential to work with people you trust. Lenders that have decades of experience will guide you through the steps of homeownership and finance. Be safe, everyone.
— Dan Tharp with Guild Mortgage
Let me go on the record as saying I have nothing against credit union mortgages or credit unions in general, as I am a member of a credit union in Sacramento and also Hawaii. However, as a Sacramento listing agent, I am rarely overjoyed to see a preapproval letter from a credit union. For about the same reason as when an institutional bank prepares a preapproval letter. These preapprovals are generated by a salaried person, not a person earning commission.
Salaried individuals have little incentive to hit benchmarks and some do a poor job communicating. That’s not to say none perform nor exceed expectations because they do. Just as it’s not to say that all commission-based individuals rise to the occasion, either, because half do not. Just generally speaking, the incentive is not really there. It always depends on with whom you’re dealing, and not just for credit union mortgages.
For example, when I was leaving Hawaii, I knew that my baggage exceeded 50 pounds. It weighed more than that leaving SMF. Even with juggling stuff around, shoving heavy items into my laptop rolling luggage, abandoning beauty products at the hotel, I feared my luggage would not pass the maximum weight test. So when I noticed I could print out a baggage tag for my luggage online, supposedly to save time, I pondered this process. Seemed like a no-brainer to attach a pre-printed luggage tag and skip the luggage handling. Except for the fact I would be handing my luggage to a surly mouth-breather, a $10/hr clerk, whose sole job is to grab luggage from stuck up first-class passengers, weigh it, and follow airline policy.
Or, I could engage with the smiling, friendly reservation counter clerk — the woman with the Tahitian flower tucked behind her ear, the person with a manicure who deals strictly with first-class passengers and quite possibly enjoys her elevated status, not to mention is paid more than the luggage handlers — and let her weigh my bag. She will undoubtedly raise an eyebrow when she discovers my bag weighs over the limit. However, she will let me off with a small tsk-tsk, just a warning, mind you, then break into a wide grin and send my baggage on its merry little way down the conveyor belt. Which is precisely what happened.
Some worker-bee employees jump on little power trips when they have no real power in their lives. If I had let a luggage handler weigh my bag, I would have been yanking my bras out right then and there. I also cannot count the number of times I have tried to extract information from credit union employees about pending credit union mortgages and they simply do not respond. If they do respond, it’s generally to say they cannot provide any information and I need to call the buyer’s agent to extract an update.
All my seller and I want to know is whether the appraisal came in fine and the date the file will close. We’re not asking for personal information on the borrower. But they don’t seem to care. On the other hand, at least they are not placing my name on a direct mail list and hounding me to death with spam emails, like so many other mortgage brokers in town. It’s just a very different interaction.
Mortgage brokers keep both sides (listing and selling) informed all the way through the transaction; in some ways they are relentless with their communication efforts. Most of this is in hopes the listing agent will recognize what a truly superior human being is behind this effort and then send all of her buyers in that direction, which is not gonna happen with this Sacramento Realtor. But credit union mortgages are the opposite. It can be like pulling teeth to find out what’s going on. No wait, yanking out teeth is easier.
On top of this, there is no real urgency to close. Mortgage brokers will feel the personal responsibility and sometimes smooth over closings by offering financial incentives to those affected by delays, but generally not credit unions offering credit union mortgages. They work on their own timeframe, and delays are often inevitable.
Out of the 7 closings this Sacramento real estate agent is working on this week, only 2 transactions, according to the mortgage lenders, are closing are time, which makes closing delays pretty much par for the course for this week. Why? Because of the mortgage lenders. A few of the escrows are delayed because the buyers could not qualify for a conventional loan and were informed at inception that they should choose FHA but instead opted for conventional. Or, at least that their mortgage lender’s story and the guys are sticking to it. In others, everybody else thought somebody else was doing a job that nobody else was doing. Total cluster-you-know-what.
It’s also possible that the buyer’s agent felt the buyer didn’t stand a chance in hell of getting an FHA offer accepted upfront so the agent wrote the purchase contract with conventional terms and obtained the preapproval letter showing conventional financing, figuring who gives a rats if the transaction doesn’t close on time. But most buyer’s agents aren’t that devious. I suspect the truth of why some mortgage lenders can’t perform lies somewhere in between.
When a buyer runs past the closing date, the contract has expired. The seller has the option to cancel the transaction. The seller is not obligated to give the buyer more time to close the escrow. A lawyer might argue on behalf of the buyer and say the buyer invested money for the home inspection, paid for a pest inspection, perhaps other reports, and showed a good faith effort to close. She might say it’s not the buyer’s fault that things were delayed in underwriting or the mortgage lender messed up.
But that’s a tough argument if the contingencies haven’t been released, and the seller might believe the buyer is in breach of contract. The seller might give the buyer a Notice to Perform and then cancel. And let’s face it, many first-time home buyers barely have two nickels to rub together, and they can’t afford to hire a lawyer. So, they better choose a mortgage lender who can properly advise them and then follow that advice.
Here is my advice for home buyers today. For crying out loud, mortgage lenders all have access to pretty much the same ol’ bag of money, and you’re not gonna save 1/2 point here nor there, so pick the mortgage lender in Sacramento who can perform. Pick the company that won’t lead you astray. Pick the loan officer who will have your back. Don’t go with the guy who dishes out apologies when you’ve lost the house.
In all of my years of working with and referring business to Dan Tharp, this mortgage lender in Sacramento has never disappointed.
Sellers don’t take kindly to the correct answer when they ask: when will my home in Sacramento close escrow. The correct answer is, of course, when fairies sprinkle pixie dust. If a buyer is lucky enough to be working with one of our preferred mortgage lenders, I can accurately predict a closing date for my sellers, but if it’s some other lender, an exact closing date is difficult to nail.
Oh, sure, there is a closing date specified in the purchase contract on page 1 near the top. It will either indicate an exact date, such as April 30th, or it will give an approximate number of days (usually 30) from the date of the contract to close. The date of the contract is the date the agent (or buyer) received the executed contract, which is usually the date the last buyer signed, not the date the purchase contract was drawn. However, to many mortgage lenders in Sacramento, those closing times are simply estimates and mean little.
If the closing date expires, the mortgage lender will simply expect all parties to extend the purchase contract. That’s because mortgage lenders might not give a crap about whether the loan blows up because the seller refuses to extend. They work in some other financial arena, worlds apart from Sacramento real estate. It happens. Sellers are not obligated to extend the purchase contract upon expiration. Buyers might cry foul under those circumstances but what happens if a seller could sell to another buyer for more?
Big name banks, and you all know who they are, are the most guilty of not closing on time, but so are the itty bitty real estate companies that try to wear two hats and be a mortgage broker plus a real estate agent to some poor fool. The first is because they’re too big to care and often employ salaried employees who don’t give a hoot either. The second is because they’re generally inexperienced and too small to carry any weight.
The fact is we real estate agents can push and shove or be as sweet as sugar all we want to manage escrow closings, but until the underwriter releases the file from underwriting and sends docs to title, we don’t really know for certain when we will close. Once we get the docs, then we can target the date. This is why it’s so important to work with a mortgage lender who can guarantee a closing date. These lenders do exist.