Debbie Baum | What Corcoran Agents Need to Know About Financing (July/August 2014)
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What Corcoran Agents Need to Know About Financing (July/August 2014)

What Corcoran Agents Need to Know About Financing (July/August 2014)

Posted by Debbie Baum in Mortgage Broker

RATES

  • We’re getting deep into the third quarter of 2014 and rates are lower than expected.  They have been moving in a range between 3.875% and 4.125% for a 30 year fixed  $1MM condo loan.  (APR of 4.052 and 4.304)  Non-jumbo rates of $625,000 and below can be slightly higher.
  • Economic growth of 4% in the 2nd quarter and the sixth straight month of job gains above 200,000 would have pushed rates higher were it not for the fact that the number of potential trouble spots around the world has increased.  Growth fears in Europe, conflicts in Ukraine and the Middle East, banking troubles in Portugal, and a debt default in Argentina have caused investors to quickly return to safer assets, offsetting what would have been a rise in rates brought on by increased economic growth.

HOT TOPIC FINANCING QUESTIONS

Q.  My client is planning on buying a 2nd home and renting it out right away.  The loan originator she spoke with is telling her she can’t do that.  Why not? 

  1.   The standard loan application requires the applicant to check a box for how she plans to use the property she’s purchasing.  There are 3 choices—the property can either be bought as a  primary residence, a second home, or an investment property.  Each option comes with rules that regulate that property’s use.  Lenders expect purchasers to rent out investment properties, not primary or second homes.  So expect to pay a higher rate and put down a larger down payment to reflect the lender’s increased risk on an investment property loan.  After you close don’t be surprised if the lender checks up on you to see if the electric bill on your second home purchase is actually in your name. They can pull the loan if it’s not.  ( N.B.  Some cond-op and condo boards require a lender’s permission to rent out the unit.)

Q.  I thought banks were now accepting the cash portion of bonuses without reservation. My client, a Wall Streeter with a base-bonus salary structure, recently switched employers.  I’m now hearing that his loan is being turned down because the lender is refusing to credit him with any bonus income. 

A.  Some lenders are still following old Fannie Mae guidelines.  Those rules state that in order to credit a borrower with bonus income the borrower must be able to document receipt of 2 annual bonuses from his current employer.  If borrower received two bonuses from, say, Goldman and then recently moved to Morgan Stanley where he’s only received one bonus, that borrower will not be given credit for any bonus income.  This can present a big problem given that most buyers with base-bonus income structures need their bonus counted in order to qualify for the loan they are seeking.  Happily, Luxury Mortgage deals with over 40 investors, many of which have moved  on to “common sense” underwriting.

Q.  The financial advisor for my client is telling him to buy a co-op in a trust as an estate planning vehicle.  Are loans available if he proceeds in this way? 

A. Yes.  We offer loans for co-ops being bought in a trust but the bigger issue is whether or not the board will permit that structure.  Neil Garfinkle, REBNY’s Residential Counsel, says that given that a trust can’t physically occupy the apartment a board may allow the shares to be owned by a trust if the trustee or the occupant:.  1) executes an Occupancy Agreement defining who has permission to live in the unit, 2) signs a personal guarantee that maintenance will be paid and board rules complied with, and 3) designates an individual for service of process of legal papers on behalf  of the trust.

CLOSE MORE DEALS WITH THE LATEST FINANCING TOOL

Reverse Mortgages.  They are NOT available for co-ops.  They are available to purchase and refinance both single family homes and FHA-approved condominiums that are primary residences in Manhattan and Brooklyn.

To check for FHA approval for buildings in Manhattan and Brooklyn  go to:

https://entp.hud.gov/idapp/html/condlook.cfm.

Many financial planners are now recommending a reverse mortgage line of credit as a safety net for those who are 62 and older.

There really is a sweet spot where a reverse mortgage is an excellent option for many people.

Marc Kunen
Managing Director, MLODirect Phone: (646) 600-7171
Mobile Phone: (347) 992-6846
Email: mkunen@luxurymortgage.comLicensed In: CT, FL, MA, NJ & NY
NMLS ID: 36863
View Biography
Bruce Maasbach
Branch Manager, MLODirect Phone: (212) 324-3000
Email: bmaasbach@luxurymortgage.comLicensed In: CT, FL, NJ, NY
NMLS ID: 48072
View Biography

 

Luxury Mortgage Corp corporate offices: Four Landmark Square, Suite 300, Stamford, CT 06901

NMLS Entity # 2745. Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, Colorado Mortgage Company Registration-203.327.6000-Check the license status of your mortgage loan originator at http://www.dora.state.co.us/real-estate/index.htm, CT Licensed Mortgage Lender, FL Licensed Mortgage Lender, Georgia Residential Mortgage Licensee # 23006-Four Landmark Square, Suite 300, Stamford, CT 06901, Illinois Residential Mortgage Licensee # 6615 by the Illinois Department of Financial and Professional Regulation, Division of Banking, 122 South Michigan Avenue, Suite 1900, Chicago, Illinois 60603, (312) 793-3000, Maryland Mortgage Lender, Licensed by the New Hampshire Banking Department-#10099MB, Massachusetts Licensed Mortgage Lender/Broker, License #MC2745, Licensed Residential Mortgage Lender -New Jersey Department of Banking & Insurance, New Mexico Mortgage Loan Company License No. 03841, Licensed Mortgage Banker- New York State Department of Financial Services-122 East 42nd Street, Suite 4900 New York, NY 10168, North Carolina Mortgage Lender License # L-104218, Rhode Island Licensed Lender #20031560LL/Broker #20092580LB, South Carolina BFI Mortgage Lender/Servicer, Texas Mortgage Banker Registration-Four Landmark Square, Suite 300, Stamford, CT 06901, Washington Consumer License # CL-2745.

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Bruce G. Maasbach

Branch Manager, MLO

Luxury Mortgage Corp
122 E 42nd St. Suite 4900
New York, NY 10168
Direct: 212.324.3000 | Fax: 888-762-3263

www.luxurymortgage.com/maasbach

NMLS # 48072 | Licensed in CT, FL, NJ & NY

 

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Interest rate locks are valid only upon receipt of a Rate Lock Agreement or Rate Lock Confirmation executed by Luxury Mortgage Corp and are not effective via email or telephone requests.

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