Tax Season Savings

As tax season approaches, we wanted to remind you that you can access a copy of your 1098 mortgage interest statement by logging into your mortgage

servicer portal. Additionally, don't forget to share your property tax bill with your CPA, which you can obtain from the county website.

We have some exciting news to share with you! There are new tax credit and utility savings programs available for California homeowners, which were

passed a few months ago. We're eager to inform you about these programs, as they can help you save money on your electric bill.

There are three programs available for homeowners in California that don't have solar. You could qualify for:

1. CARE Utility Savings Program: This program offers a 15% reduction on your electric bill, without installing solar on

your home. It's offered by Edison, San Diego Gas & Electric & PG&E.

2. Free Solar Panel Program: you can get free solar panels installed, and then buy power at 30% to 50% off your current

rates. On average, our clients save $2,000/yr on their bill without purchasing anything!

3. Federal & State Tax Credits: If you want to purchase solar, the state/federal government will pay for 30% of your

solar system cost and finance 100% of the remaining balance.

To see if you qualify for any of these programs, all you need to do is send over a copy of your most recent utility bill.

We'll run it through the Federal Utility Savings Program and then call the utility company to determine what programs you

qualify for.

The best part? This service is 100% free for our past clients. In the last 90 days alone, we've helped over 291 of our past

clients save money on their electric bills.

If your electric company is Edison, San Diego Gas & Electric. LADWP or PG&E, which are the highest electric rate areas in the

country, your chances of qualifying are high (80%) as compared to other areas in the U.S at only 10%.

To take advantage of this opportunity, simply email us a copy of your most recent electric bill.

Plus, as a special thank you, we're offering a $100 Amazon gift card to anyone who sends over their bill - even if

you don't qualify or decide not to move forward.

Electric rates in California have increased by 130% over the last seven years and are expected to go up another 20% next year

on average. So, take advantage of this opportunity to save money while you can.

We look forward to hearing from you soon!

I can help get you into your dream home without settling for anything less!

UWL offers One-Time Close New Construction for conventional loans.

Benefits

UWL is arming our partners to help more borrowers and first-time homebuyers make their first home or next home their dream home.

Builders don’t have to pay for the construction upfront, then sell the home to a borrower. They can create the borrower’s dream home and get a loan before construction even begins. Helping save time and money by only having to close once and covering one set of closing costs!

UWL’s process has a contractor approval component. Meaning we vet the contractor and obtain references to make sure they are credible. This helps give peace of mind to your borrower, that they have gone with a good option.

Other lenders require intense documentation, high-interest rates, and large down payments. UWL helps reduce the headaches, keep the project moving, create transparency and peace of mind for all parties involved, and offer the same great service on these loans, as we always do.

What is a One-Time Close New Construction loan?

A One-Time Close New Construction loan is a single-closing construction loan. The construction portion is short-term financing that is modified into permanent financing upon completion of the project. A single-closing construction mortgage can be closed as a purchase or a refinance.

What is a single closing?

A single closing construction loan is the combination of financing of the construction and the permanent mortgage. There is a single closing transaction that occurs prior to construction beginning.

Closing costs/fees that the borrower is responsible for are collected at closing. Funds are accessed through draws and there will be an initial draw at closing for proceeds to the contractor to begin the construction project.  

Call me with any questions, we’re here to help! Scott Rojo, Rojo Mortgage Team, 916-548-3942.

Mortgage Rates Fell Across the Board

The numbers: A dip in mortgage rates prompted mortgage demand to rise a seasonally adjusted 27.9%
As mortgage rates dropped across the board, demand for both purchases and refinancing increased. That pushed the market composite index up, a measure of mortgage application volume, the Mortgage Bankers Association (MBA) said on Wednesday. 
The market index rose to 238.7 for the week ending Jan. 13, up 27.9% from a week earlier. A year ago, the index stood at 593.7.
Key details: The refinance index jumped 34.2% in the past week, but was down 81% compared to a year ago. 
The purchase index — which measures mortgage applications for the purchase of a home — rose by 24.7% from last week. 
Mortgage rates fell across the board.
The average contract rate for the 30-year mortgage for homes sold for $726,200 or less was 6.23% for the week ending January 13. That’s down from 6.42% the week before, the MBA said. 
For homes sold for over $726,200, the average rate for the 30-year was 6.08%.  

The big picture: All those buyers and homeowners waiting on the sidelines found their moment this past week, as a dip in rates provided an opportunity.
With rates expected to come down further, this trend of mortgage demand running hot may continue in the meantime. 
What are they saying? “Mortgage rates are now at their lowest level since September 2022, and about a percentage point below the peak mortgage rate last fall,” Mike Fratantoni, senior vice president and chief economist at the MBA, said.
“As we enter the beginning of the spring buying season, lower mortgage rates and more homes on the market will help affordability for first-time homebuyers,” he added.

Gloomy Economy Ahead

Top economists' outlook on the global economy for 2023 is "gloomy," with expectations of weak growth and a likely recession, according to a World Economic Forum report published on the opening day of Davos.
The World Economic Forum summarized the thoughts of some top economists in its January 2023 Chief Economists Outlook, released to coincide with the group's annual meeting in Davos, Switzerland, which kicked off on Monday.
"Although there are some grounds for optimism, such as easing inflationary pressures, many aspects of the outlook remain gloomy," the report said, citing "continuing economic uncertainty and policy challenges of historic proportions."
Close to two-thirds of the 22 chief economists surveyed by the WEF said they thought that a global recession was likely in 2023, with 18% of them considering it "extremely likely."
"Global growth prospects remain anemic, and global recession risk high," the report said.
But the respondents — who came from a pool of experts at finance and business giants like UBS, Google, Microsoft, and Bank of America — expect to see huge regional variations in economic growth over the next year.
All of the economists said that they expected weak or very weak growth in Europe and 91% said they expected it in the US, while this figure was less than half for the Middle East, North Africa, South Asia, China, and East Asia and the Pacific. More than half of respondents said that they expected high inflation in Europe, compared to just 5% expecting to see it in China.
The WEF said that this likely reflected Europe's high energy prices, increases in interest rates, and "sluggish demand." In contrast, the gradual reversal of China's zero-COVID policies could boost the country's economy, though it may stint production if more people get infected with the virus.
Companies including Amazon, Goldman Sachs, and Salesforce have already announced layoffs this year, and the chief economists expect job cuts like these to continue. 86% percent of the survey respondents said they expect multinational businesses to cut operational expenses, with 78% expecting workers to be laid off. Most economists said they expected companies to pass higher costs onto customers, too.
But despite the largely pessimistic outlook, the report highlighted how some of the dominant concerns in the global economy currently could weaken over the course of the year.
Two-thirds of the respondents said they expected the cost-of-living crisis to become less severe by the end of 2023, while close to two-thirds said they were optimistic that the energy crisis will have begun to improve by the end of the year. JPMorgan CEO Jamie Dimon, however, forecast in December that Europe's energy crisis would worsen and likely last for years.

FHA 203k Loans: What Are They? What Are the Benefits?

FHA 203k loans are designed to help borrowers finance an older home that needs significant repairs.
To get an FHA 203k loan, you must work with an FHA-approved lender, which The Rojo Mortgage Team at UWL is approved!
You will also have to provide a detailed proposal of the work you want to do.
 
Getting a Mortgage Loan for a Fixer-Upper: A Primer on FHA 203k Loans
The idea of buying a fixer-upper and turning it into your dream abode can seem so perfect — every nook and cranny just to your specifications! The reality, however, can be harsh. When you realize how much it will cost to remodel, you often also realize that you can’t afford it. Or you find out that a lender won’t give you a loan because the home is considered “uninhabitable” as it is. That’s where an FHA 203k loan comes in.
 
An FHA 203k loan is a loan backed by the federal government and given to buyers who want to buy a damaged or older home and do repairs on it. Here’s how it works: Let’s say you want to buy a home that needs a brand-new bathroom and kitchen. An FHA 203k lender would then give you the money to buy (or refinance) the house plus the money to do the necessary renovations to the kitchen and bathroom.
 
Often the loan will also include: 1) an up to 20 percent “contingency reserve” so that you will have the funds to complete the remodel in the event it ends up costing more than the estimates suggested and/or 2) a provision that gives you up to about six months of mortgage payments so you can live elsewhere while you’re remodeling, but still pay the mortgage payments on the new home.
 
Which Repairs Qualify?
There are two main types of FHA 203k mortgage loans. The first is the regular or standard 203k, which is given for properties that need things like structural repairs, remodeling, a new garage, or landscaping; the second is the streamlined or limited 203k, which is given for energy conservation improvements, new roofing, new appliances, or non-structural repairs such as painting.
 
Among the other repairs that an FHA 203k will cover:
decks
patios
bathroom and kitchen remodels
flooring
plumbing
new siding
additions to the home such as a second story
heating and air conditioning systems
And more
The program will not cover so-called “luxury” improvements such as adding a tennis court or pool to the property. It also does not cover any improvement that does not become a permanent part of the property.
 
How Much Money Can You Get?
The maximum amount of money a lender will give you under an FHA 203k depends on the type of loan you get (regular vs. streamlined and purchase vs. refinance loan).
 
With a regular FHA 203k, the minimum amount you can borrow is  $5,000.
 
With a regular FHA 203k  loan, the maximum amount you can get  on a purchase loan is the lesser of these two amounts:
 
The Nationwide FHA Mortgage Limits
OR
The appropriate Loan-to-Value (LTV) ratio from the Purchase Loan-to-Value Limits, multiplied by the lesser of:
110 percent of the After Improved Value (100 percent for condominiums), or
the Adjusted As-Is Value, plus the following:
Financeable Repair and Improvement Costs, for Standard 203(k) or Limited 203(k);
Financeable Mortgage Fees, for Standard 203(k) or Limited 203(k);
Financeable Contingency Reserves, for Standard 203(k) or Limited 203(k); and
Financeable Mortgage Payment Reserves, for Standard 203(k) only.
Refinance limits are similar but also take into account the amount of the existing debt and fees of the existing loan.
 
With a streamlined loan, you can get a loan for the purchase price of the home plus up to $35,000 with no minimum repair cost plus the cost for energy improvements. To determine the as-is value of the property or the estimated value of the property post-repair, you may need to have an appraisal done. You will be required to put down 3.5 percent, but the money can come from a family member, employer or charitable organization.
 
What Kinds of Properties Qualify?
Qualifying homes for a FHA 203k loan include:
 
A one- to four-family home that has been completed for a least a year
A home that has been torn down, provided that some of the existing foundation is still in place
A home that you want to move to a new location
The home cannot be a co-op, but some condos are eligible
Your property will also have to qualify under the usual FHA requirements. For example, its value cannot exceed a certain maximum amount, which depends on where you live.
 
What Are the Pros and Cons of These Loans?
The main benefit of these loans is that they give you the ability to buy a home in need of repairs that you might not otherwise have been able to afford to buy. Plus, the down payment requirements are minimal, and often you get decent interest rates (note that the interest rates and discount points will vary by 203k lender, so it’s important to make sure that you’re getting a good deal on the loan).
 
The downsides are that not all properties qualify, there are limits on the funding you can get and applying for the loan isn’t easy. For example, to apply for the loan you may need to hire an independent consultant to prepare the exhibits required (to get the loan, you have to provide a detailed proposal of the work you want to do and cost estimates for each item). Get more information on 203k loan by calling the Rojo Mortgage Team.

Top 12 Benefits of an FHA Loan

One of the primary purposes of a Federal Housing Administration (FHA) loan is to help make homeownership more possible for those buyers who may not qualify for a conventional mortgage. FHA loan benefits are numerous, from low down payment requirements to competitive FHA rates.
 
Though there are certainly pros and cons of an FHA loan, in this article we’ll focus on the reasons these mortgages are an important tool for millions of homeowners throughout our country. Following are our top 12 benefits of an FHA loan.
 
1.   Easier credit qualifications
FHA loan requirements are less strict than they are for a conventional loan. It's one of the easiest loans to qualify for, especially if you have less than perfect credit.
 
The FHA minimum credit score is 500, however, this comes with a required loan-to-value ratio (LTV) of 90%. But lenders are allowed to set their own minimums, called overlays. A common lender overlay is an FHA credit score of 620.
 
Qualifications for an FHA loan are even more accessible because of compensating factors. This means that you can submit proof of additional factors to strengthen your application and prove your creditworthiness.
 
Acceptable compensating factors for an FHA loan include:
 
Verified cash reserves
Minimal housing payment increase
Low debts
Residual income
Substantial non-taxable income
Increased earning potential
2. Shorter time to qualify after negative credit
Still concerned about obtaining an FHA loan with bad credit? It’s true that past bankruptcies and foreclosures can make getting a mortgage more challenging. But with an FHA loan, you don't have to wait as long to get a mortgage after you've had a major credit event.
 
Let's compare the waiting period of the FHA and conventional loans.
 
FHA Loan
 
Conventional Loan
 
Chapter 7 Bankruptcy Waiting Period
 
2 Years Since Discharge
 
4 Years Since Discharge
 
Foreclosure Waiting Period
 
3 Years
 
7 Years
 
This means that borrowers who have had significant credit events have a better chance of getting an FHA loan sooner.
 
3. Low down payment
FHA loans require a down payment, but it’s likely you need less time to save up for your home than you imagined. FHA mortgages are designed to help borrowers who may not have 20 percent to put down, especially in pricier markets where this can represent a barrier to homeownership.
 
FHA loan down payment requirements are based on credit score. Those with a credit score below 580 are required to come up with a higher down payment. Because many lenders require a credit score above 580 to qualify for an FHA loan, 3.5 percent down is very common.
 
Credit Score
FHA Minimum Down Payment
580 and higher
3.5%
500–579
10%
Here are some examples of how much a 3.5 percent down payment would be:
 
$200,000 condo: $7,000 down payment
$250,000 townhome: $8,750 down payment
$300,000 single-family home: $10,500 down payment
4. More lenient on gift funds
If you don't have money for a down payment, it's acceptable to get help. FHA loan down payment requirements allow gift funds to come from family, close friends, an employer, a union, or government down-payment assistance programs. Those rules are not as strict as those of conventional loans, which only accept gift funds from relatives.
 
But it must indeed be a gift. There can't be any expected repayment.
 
Once you have someone or an organization ready to give you down payment money, you'll need to document it in a gift letter. Your loan officer can show you an example.
 
5. Low (or no) closing costs
Here's even more money-saving news: A seller can pay up to 6 percent of the sales price toward some of a buyer’s closing costs. FHA loan closing costs can average 3 to 5 percent of the loan amount. Negotiating to have the seller pay for some of these can help you get into your home with less out of pocket.
 
Closing costs can include:
 
Property taxes
Escrow fees
Homeowners insurance
Title insurance
Lender fees
There are other creative ways to pay less money up front. Some closing costs can be rolled into your loan. Another option is with lender credits: You pay a slightly higher interest rate; in exchange, your lender gives you a credit that helps cover your closing costs.
 
Talk to your real estate agent and loan officer if you'd like to negotiate or finance closing costs. Each will work on your behalf to find the best solution for you.
 
6. More affordable FHA mortgage insurance
Have you heard that mortgage insurance is a drawback of FHA loans? Take heed: FHA mortgage insurance is actually what makes it possible for millions of Americans to become proud homeowners!
 
The FHA doesn't issue loans. Instead, they offer lenders mortgage insurance. This insurance, referred to as an FHA mortgage insurance premium (MIP), protects the lender from default.
 
The length of time you pay your MIP depends on your down payment. For a down payment of less than 10 percent, MIP is paid for the loan's entire life. With a 10 percent down payment or more, the MIP is paid for the first 11 years.
 
There are two types of MIP:
 
Up Front Mortgage Insurance Premium (UFMIP) – Upon closing on an FHA loan, there is an upfront mortgage insurance premium of 1.75 percent of the loan amount. This can be rolled into the loan or paid as a closing cost.
FHA Monthly Insurance Premium (MIP) – There is also an annual MIP that can range from 0.45 percent to 1.05 percent depending on your loan parameters. This is usually split into monthly installments as part of your mortgage payment.
Mortgage insurance applies to conventional loans, too, if your down payment is less than 20 percent. And if your credit score is less than 680, that mortgage insurance can be pretty expensive. If you’re comparing the two, FHA mortgage insurance is typically the more affordable option. It’s always possible to remove MIP by refinancing to a conventional loan once you reach 20 percent equity, as many FHA borrowers do.
 
7. Lenient FHA debt-to-income ratio
FHA loan income requirements look at your debt-to-income ratio (DTI). This ratio compares your total debt and your gross income (before taxes). The lower, the better. A lower DTI means you have more money to put toward a mortgage payment. Most FHA lenders will require DTI to be 43 percent or lower. Some lenders may accept a 50 percent DTI with compensating factors.
 
DTI includes your housing costs and recurring bills like credit cards and car loans. If your income is $4,500 per month, your monthly debts can’t exceed $1,935. ($4,500 x .43 = $1,935). That amount includes your mortgage payment (principal, interest, taxes, and insurances), credit card minimum payments, auto, and installment loans.
 
To see how the following scenarios lead to an acceptable or unacceptable FHA DTI, divide the total monthly debts by the monthly income. For example: $2,628 ÷ $6,500 = .404
 

8. Non-occupant co-borrowers accepted
With an FHA home loan, a borrower can be on the loan even though they're not going to live in the property. That's called a non-occupant co-borrower. This arrangement works well if you, the primary borrower, can't qualify because you don't have enough income.
 
So, a parent can help their child buy a home even if they live across the country. The underwriter will take the co-borrower's income into account. A child can also help a parent or other sibling.
 
Here's what the FHA says about who can be a co-borrower:
 
Borrowers related by blood, marriage, or law, such as spouses, parents/children, siblings, stepchildren, aunts/uncles, and nieces/nephews
Unrelated individuals who can document evidence of a longstanding, substantial family-type relationship not arising out of the loan transaction

9. Low FHA rates
FHA loan interest rates are some of the lowest in the industry. If you have a credit score of less than 650, the FHA rate will almost always be lower than a conventional interest rate.
 
Interest rates are tied to the perceived risk that lenders anticipate in making a loan. The lender has less risk because they are backed by the Federal Housing Administration and covered by mortgage insurance, resulting in a more favorable interest rate.
 
Some of the best FHA loan rates are available through credit unions. Because credit unions are nonprofit, they may pass their tax savings on to their members in the form of lower interest rates for various loan products, including FHA mortgages.
 
10. Financing available for one- to four-unit properties
Did you know that FHA loans aren't just for one-unit properties? Eligible borrowers can purchase two-unit, three-unit, and four-unit properties.
 
But you must live in one of the units as your primary residence for at least one year. The advantage of this is that you can rent the other units out to help cover the mortgage – making the monthly payment more affordable.
 
One of the main criteria a lender will look at is if you have experience as a landlord. If you don't, this option may not work. Each case is looked at on an individual basis.
 
11. No income limits
Many low down payment options for conventional mortgages also include low income ceilings. Higher-earning borrowers make too much for these programs and, in most cases, need to put down 10 percent or more, which can add up to a significant amount.
 
With an FHA loan, there are no income limits restricting your chance of approval. This allows you to choose the loan that works for your financial needs no matter what neighborhood you’re focusing your home search in.
 
12. FHA lenders
Applying for a home loan can be a high-pressure experience. While you want to be excited about the potential of the home you’re purchasing, your days are filled with gathering and submitting paperwork for mortgage underwriting. Working with a faceless, impersonal lender can make for a nerve-racking and frustrating experience. At UWL we take that pressure off and you will deal directly with me and have your approval in 24 hours
 
When you add it all up, FHA loans are designed to help all kinds of homeowners make their real estate dreams a reality. With lower costs and more availability for borrowers from a wide range of financial backgrounds, the FHA loan benefits reflect a commitment to making homes more affordable.