Since 2015, National Mortgage Professional Month honors mortgage professionals. They help people finance their dreams of home ownership. Most people would be surprised by the number of people and amount of work it takes from the moment someone decides to buy a home until the day parties sign the final contracts. Loan officers, processors, underwriters, servicers, insurers, and other mortgage professionals work hard to make home loans a reality.
Shopping for a home loan is one of the most arduous journeys one can undertake. So, it helps to work with a professional who knows about real estate as well as finances. This is how Forbes Magazine explains the profession:
“A mortgage broker (simplifies the home loan) process by connecting homebuyers with appropriate loans, preparing application materials, and guiding the borrower through underwriting and closing. Plus, unlike loan officers who work for specific banks, mortgage brokers have access to a wider range of mortgage products—which means borrowers may be able to get more favorable interest rates.”
Types of Loans
A mortgage not backed by a government agency; a conventional mortgage involves private lenders. For example, banks, credit unions and individuals fund these products. Since conventional loans are flexible in purpose, borrowers can use the proceeds to purchase either a primary or secondary residence. The amount people qualify to borrow follows income and down payment guidelines set by Fannie Mae and Freddie Mac. And the Federal Housing Finance Administration (FHFA) sets loan limits.
In most cases, borrowers must meet stricter qualification guidelines for conventional mortgages. Lenders often require a high FICO score and larger down payment. However, according to Experian, you could qualify for a conventional mortgage with a credit score as low as 620. That said, most lenders prefer borrowers with credit scores 660 or higher. Usually, lenders prefer to loan to people whose credit scores 740 or higher. In exchange for a high FICO, they enjoy you’ll lower interest rates.
In addition to strict credit score guidelines, conventional mortgages require a 20 percent down payment. Lenders require borrowers with less than that amount to pay private mortgage insurance. PMI is required until the borrower achieves 20 percent equity. PMI is an insurance policy which protects the lender against defaults. Necessary self-protection, these policies guard against borrowers who have less “skin in the game.”
Conforming Conventional Mortgage Loans
These loans conform to high-end lending limits set forth by Fannie Mae. On November 24, 2020, FHFA increased the loan limits in California. This is good news for prospective buyers. As a result, some loans that would have previously been categorized as “jumbo” now fit into the baseline conforming limits. The current baseline for conforming loan limit in California is now $548,250 for most counties, including San Bernardino and Riverside. In LA County, where So Cal Platinum Properties, Inc. is located, the limit for a new single-unit purchase is $822,375. That limit also applies to Orange County, where we also help clients buy and sell houses.
Jumbo Mortgage Loans
This type of loan exceeds limits set by FHFA. As such, Fannie Mae and Freddie Mac do not guarantee them. Designed to finance luxury properties and homes in highly competitive local real estate markets, jumbo mortgages come with unique underwriting requirements and tax implications. Jumbo loan values vary by state. In most cases, people won’t qualify for this type of product unless their credit scores are 700 or higher. Most jumbo loans require a 20-30 percent down payment.
Jorge Abich is a mortgage broker with SoCal Platinum Properties, Inc. He would love the opportunity to work with you to secure a loan that fits your needs. Schedule a no-obligation appointment to discuss mortgage matters with Jorge. Or, if you are considering putting your house on the market or buying a home, reach out to Ron Johnson, a licensed real estate agent.
About SoCal Platinum Properties, Inc.
If you want to buy or sell property in or around San Dimas, California and the surrounding area, don’t get caught in a Catch 22 — owning two homes, or none at all. We list properties and advertise them to guarantee a swift sale for maximum profit. We also assist home buyers as they hunt for, make competitive offers, and purchase residential property. Realize your dream of homeownership, reduce your house payments to free up funds for whatever purpose you see fit. We offer the following refinance options: FHA Streamline, FHA Cash Out, FHA 203k, VA Streamline, VA Cash Out, Conventional, Commercial and Jumbo loans. Lock in your low rate today (213) 709-5178.