California has nation’s largest economy by far, its GDP is almost twice as much as the second largest economy in the nation. No wonder, many Californians love to invest in real estate: Most of them would invest in California, however large number of people would invest in the rest part of the United States.
One challenge is find a lender who would lend in other states. Banks are typically the worst places for such lending inquires, bankers simply do not know how to go about it. And most of the private lenders in California would shy away from lending in areas where they are not familiar with.
That was a challenge that I faced recently: A client of mine purchased an investment property in another state through auction, and at the time, he used a high interest rate loan to help him to acquire the property. He thought he could refinance out of it after the purchase. After trying endless times unsuccessfully, only then did he realize that it wasn’t an easy task.
Using my network of lenders, I found a lender in that state and helped him to finally refinance out of the high interest rate loan into a much more reasonable rate loan.
Many small business owners do not have a very keen idea of how to manage their personal credit profile and a lousy credit profile creates a challenge for the business owners when they need to apply for business loans as banks usually scrutinize applicants’ credit history very closely.
A client of mine owns a high-end Italian restaurant in the Bay Area, recently, he needed money to renovate his restaurant. Because of his credit issue, every single one of the banks that he made inquiries to had turned him down.
Through a referral, he came to talk to me. He was asked about doing a cash-out refinance on his home. However, his current mortgage rate was very low, if I refinanced it, I wouldn’t be able to match the rate he has now due to his much lower FICO score. Moreover, he planned to pay the debt off in about 2 to 3 years, a much larger first loan on his home probably wouldn’t make a lot of sense.
I recommended that he take out a second loan: It would allow him to keep his current low first mortgage rate, and let him pay the second off in 2 to 3 years. He finally had the money to renovate his restaurant and now his customers love his newly decorated Tuscany-style dining hall.
Case Study 05.31.17
Often a borrower does not have enough of an income to qualify for a loan amount that they need to purchase a home. Under most of situation: They would have to either put down more of a down payment or purchase a less pricey home.
However, that would be a tall order since home prices in the San Francisco Bay Area seem to be going one way only which is UP!
We recently helped a client of ours with this type of income issue. Incomes, from the husband and wife, were a bit shy of debt ratio which was required to qualify them. However, we realized that he has an aunt who was willing to them help by adding her name as a co-borrower on the loan application.
By adding her income, we successfully qualified the borrowers and they finally, the first time in their lives, they were able to purchase a house that they can call home.
As the Bay Area home values continue to raise, the values of homes in the surrounding areas have risen, as well. For example, home values in San Joaquin area used to be around middle teens and high-end homes would be around $300k to $400k. Some of these homes have even gone up to $500ks.
However, Fannie Mae or Freddie Mac loan limits have not gone up accordingly, which have created hurdles for the potential buyers who need to purchase homes $500k and above yet, cannot put down more money for down payments to make up the difference.
We just helped somebody who tried to purchase a home in Mountain House for about $580,000 yet could not come up additional funds needed on top of the agencies loan limits. We helped him find a portfolio lender who has a program which does not have county limits. Best of all, he only needed to put down just 1% of the purchase loan!
Our client was thrilled.