American Pacific Mortgage

American Pacific Mortgage

Wednesday, November 28, 2018

New Loan Limits for 2019!

The new conforming loan limits (FNMA and FHLMC) are $484,350 in lower cost areas, and $726,525 in high cost areas, such as Orange and Los Angeles counties.

This is great news for both homeowners and prospective buyers. Fannie and Freddie both offer more lenient guidelines for these loans than are generally available for "jumbo" or non-conforming loans, offering higher debt-to-income ratios, more lenient FICO scores, lower reserve requirements, as well as lower interest rates, particularly for those loans under the $484K limit. Further, there are special programs offering as little as 3% down for first-time homebuyers, making it more affordable for many homebuyers. And, the conforming loans may be coupled with down payment assistance programs to get up to 100% financing.

These limits generally translate for FHA loan limits, as well as VA loans; but they have not announced their new limits yet.

Friday, September 7, 2018

Home Values Still Rising!

The latest figures released from CoreLogic's Home Price Index show that LA County had the highest appreciation, up 7.6% in the last 12 month period, followed by 7.4% for the Inland Empire (they have more to make up for past losses) and 5.9% for Orange County. The increase in Orange County for the first half of 2018 is 6.2% however. Why are prices rising? Lack of inventory is the primary booster. The forecast is for a slowdown in price gains, however.

What does all this mean for homeowners and prospective homebuyers? Don't delay if you are looking to buy a home or investment property, as both rates and prices will continue to rise, at least in the short term. If you have been thinking of a remodel or accessing some of the equity in your home for other major purchases, or debt consolidation, best to move sooner than later. Interest rates are still very low from a historical perspective. It isn't always best to refi your current loan, though. In some cases a HELOC may be a better solution. We always look at all the options, to assist a client in making the right decision.

Wednesday, July 18, 2018

King Tides and Changing Tides!


We’ve been experiencing King Tides here in Southern California. But there also appears to be a sea change in the Real Estate markets.

Sales are slowing, and although home prices have continued to reach new highs in the coastal areas, properties are remaining on the market longer, and selling for less than list price in many cases. Mortgage applications are slowing.

What does all this mean? Interest rates are hovering between the mid-4’s to low 5’s depending on a host of factors. The increase in rates and home prices has caused our affordability index, based on median income levels, to plummet. Personally I think many buyers are just sitting on the fence, waiting for price reductions.

To give a specific example, earlier this year, a home buyer with a jumbo loan (over $453,150) with 20% down could get a 30 year fixed rate at 4.375%, and today that loan is at 5.125%.

If you have put off refinancing your home, don’t delay. Now is the time to lock in a fixed rate for that line of credit; pull out cash for a remodel or pay off high interest credit. Rates aren’t going to drop, but your home value may.


The biggest news is the arrival of my new grandson Edward James, born on June 26th. At 8 lb 9 oz. he is a big boy! EJ or Eddie makes no. five and counting for the tribe of grandchildren, three boys and two girls. WOW! Very exciting, and I can’t wait to get my assistant Katie back into action after maternity leave.

Katie is ready to originate her own loans and is fully licensed. She will be networking in the Tustin area, and in her neighborhood in Rossmoor. We are very excited for #thecardteam!

Steve and I took a quick trip to Cozumel in May for some scuba diving.
We stayed at Scuba Club Cozumel which is walking distance to the town of San Miguel. The dive operation was well-run and we met some interesting new friends. The best thing about our trip, other than great diving, was the plethora of great restaurants in town. There are many more choices than in the past with great seafood and authentic Yucatan dishes. We had some heavy rainstorms that passed through, but they were late afternoon/evening so didn’t affect our diving. One evening the street was entirely under water from curb to curb.

We spent a long weekend in Catalina with friends from our yacht club and had a blast.
Lunch at the Mt. Ada Inn, a dive trip one day, golf the next, cabanas at Descanso, boat parties and a lovely hotel room at the Metropole. The island ran out of water one day (long story) but we happily showered with bottled water. All in all, a great time! A dingy ride down to White’s cove was an adventure—sort of similar to Mr. Toad’s Wilde Ride—with a captain who prefers speed.

Next up:
Family trip to Rock Creek in the High Sierra with the entire tribe; all our kids (6) plus spouse/significant others; and five grandkids. We will have a fabulous time hiking, fishing and playing cards!

Remember we are here to assist with home financing! We do our best to make the process simple and understandable.

Thursday, May 24, 2018

Why Should You Call Us for your Home Loan?

Sometimes when I speak with borrowers, they tell me they heard of a lower interest rate available. Of course there are! What you read in the paper or hear on the radio is always yesterday's news, and oftentimes can be misleading. It might be a "teaser" or mis-communicated rate for a short-term loan vs. a 30 year fixed rate loan. Plus in today’s environment, there are lots of good reasons to use an ARM vs. a longer-term fixed-rate loan. But, they aren't the right fit for everyone. We provide our clients with the best possible counsel and service which go beyond just rate considerations.

So, back to what we do best:

1. We Build Relationships: We like our clients, and they like us, and we strive for mutual trust and respect. It is always optimum to develop a positive bona fide relationship, and it makes working together more fun. We keep in touch after the transaction closes, and follow up to be sure everything is going well. We provide advice about the time to refi, or not…and the time to buy a 2nd home or investment property. Moving up or down? We’ll give the best advice and loan options possible. We care about the kids, the grandkids, and even the family dog. If you have a better option elsewhere, we’ll tell you. And we always advise against using one of the “big banks.” Never better.

2. Knowledge and Expertise: I love to say I did not just fall off the turnip truck. I’ve been in this business well over twenty years, and have worked through many ups and downs, the big meltdown, and survived. There are always new things to learn, with changing programs and guidelines. We stay on top of the changing environment and have many resources to investigate best options for our clients.

3. Gritty stick-to-itivness: I don’t know anyone who works harder to get loans closed for our clients than my team. We don’t give up, even in the face of tough or inflexible underwriting. Yes, it can happen. We fight to the finish to get loans closed and almost always in a timely fashion. Many Loan Officers don’t try as hard, don’t investigate all options, and give up. Not us. Never. It takes determination and experience to know how to structure or re-structure loans for a happy closing for all.

4. Education on Expectations: We’ve developed an introductory video; a list of tips on what to do and not to do; and how the loan process will proceed. An educated client won’t be surprised by some of the crazy things underwriting may require. We explain in detail the loan level pricing adjustments that going into what rate you receive. Not all borrowers are made the same. Your FICO score, your debt-to-income ratio, your loan-to-value and many other factors affect the interest rate you receive. There is no “one size fits all” loan available in the marketplace today. This is why rates quotes are worthless without providing complete information.

5. Pre-Approvals you can Count on: We have never issued a pre-approval letter and not been able to close the loan. We collect all the pertinent information necessary from the client to accurately analyze income, pull credit, run automated underwriting (if applicable) and provide a pre-approval letter. And, we will go a step further with a full underwrite of income and assets for our clients, prior to identifying a property. This is especially useful in a marketplace like we have today, where being able to waive a loan contingency, with a client who is already approved, only an appraisal, contract and title approval is required.

Friday, April 20, 2018

Home Prices Hit 10+ Year High

Orange County home prices officially hit an all-time high at $824,450 for the median sale price. The median in Los Angeles County jumped over 13% to $528,950. But the priciest homes in the State of California are still in the Bay Area, with medians over $1 million. WOW. Much of the increase in prices can be attributed to scarcity of inventory. There just aren't enough homes for sale to meet demand, thus the increase in price. Still, the median for the entire state is $564,830, up almost 9% over the prior year.

What does this mean for you? Well, if you are a home buyer, you'd best be fully pre-approved so you can offer a short escrow/contingency period. Here at Catalyst, we call that our Keys On Time program, guaranteeing close in 20 days.

If you are a current homeowner, your equity just increased quite a bit. This is a great time to consider that remodel or new roof, etc. Or, debt consolidation if you've got a floating Line of Credit on your home...time to lock that rate in.

Tuesday, March 13, 2018

How Do You Hold Title to Your Home?

There are many ways for individuals, married couples, and multiple parties to hold title to their Real Estate.

Recently an escrow advised me that my married clients were taking title as joint tenants, and I instructed them to please change vesting to Community Property with Right of Survivorship.

Why???? This vesting allows the "basis" in the property, for income tax purposes, to be "stepped-up" as of the date of passing of one of the title holders. It is preferable for all married property owners, unless they have a Living Trust.

A Living Trust is probably the best way to hold title. The primary advantage is to avoid the costs of probate, as all assets in the trust, including real estate, pass directly to the successor trustee and/or beneficiaries without lengthy and expensive legal work. I find that today most of my clients here in California having Living Trusts. Uber important for anyone with children!

Joint Tenancy can be held with anyone else. You can be a joint tenant with a spouse, a mother, brother, father, sister or friend. All owners have equal ownership of the property, and the surviving co-owner(s) automatically own the entire property. Probate is avoided with this form of ownership, but it does not automatically step up the basis in the home for the survivor.

Tenants in Common is a form of ownership for two or more property owners, and the percentage of ownership may be split any way they like. This might be used for unmarried friends or business partners; for families who want to be able to leave their portion of the property to the their heirs, and may be titled in a trust. Each owner may pass their interest to whomever he wants. This is popular with spouses in second marriages, so each spouse can leave their share to their own children. The downside is one of the owners may force a sale of the property, which could be problematic if children of a deceased spouse force the sale of the surviving spouse's home.

I personally hold title to one home in a living trust, and to two others as tenant-in-common. These two are held with other family members at differing percentages. I strongly recommend anyone who owns real estate to consider a Living Trust and I am happy to recommend an Estate and Family Planning attorney.

Tuesday, February 27, 2018

Home Financing Updates and Family News!

Rates have continued on a steady upward march this year. We are looking at rates on most programs in the 4's today, and some into the 5's. As always, much depends on loan-level pricing adjusters such as loan-to-value, loan purpose (purchase, cash-out refinance or rate and term refinance), FICO scores and property type. Good news is, many program types are opening up to more flexible underwriting guidelines, such as utilizing bank statements or assets to develop income. Home prices continue to rise with low inventory increasing demand.
There is much debate at to a possible "bubble" but most of the pundits are coming down on the side of strong employment increasing demand in the face of a relatively low affordability index. (below 30%)

We merged with a larger mortgage company at year-end, American Pacific Mortgage. We are now a division of APM and have some exciting new programs to offer: Keys on Time, a guaranteed close in 20 days; Bridge loan financing; Stars program for Teachers and First Responders; Secure Lock offering rate float-down; Jumbo Reverse Programs; and many more. We are a direct seller to Fannie and Freddie, and have many more jumbo loan programs available for loans over $679,650. Very exciting! We remain "Catalyst Lending" though, with our same great team of processors, underwriters and closers. Just part of a bigger machine.

Family news:

We had a great holiday season with family! We've learned as time goes on that in order to catch everyone together, we plan early and around the actual holiday.

Our New Years' was once again a lovely evening at the Dana Point Yacht Club with close friends. Steve has taken up racing at the yacht club, spending much time on weekends out on various sailboats. He tends to be the "muscle." We've also recently taken up golf with mixed results. I prefer not keeping score and just practicing my shots out on the greens. Steve has definitely improved however!

Our biggest news is the arrival of our new grandson Felix (Drew and MaryGrace) in November, and the upcoming birth of another grandson (Katie and Paul) in June. The family is growing!
That will make a total of five far.
Katie, who is working with me, has passed her loan originators license and will be an official Loan Officer sometime this month! Watch out!

We have not traveled far since our big trip last June (Bermuda and the BVI's) and we were somewhat devastated by the hurricanes that demolished much of the BVI's shortly after our visit. We did spend a weekend in Catalina in October, and had a fun scuba dive off Casino Point. I also made the trek with Steve to Dallas just before Christmas to complete my annual license renewal. I find it easier to do when I am out of my office.

Next up: We are planning to visit New Orleans in the next month or so, and are going on a fishing trip combined with scuba diving in Baja in October. With the new baby coming in-between, we'll likely stay close to home mid-summer.

Please call me if I can help with any home financing needs or questions. I love to hear about your updates as well!

Monday, February 5, 2018

Tips Before You File Taxes

Thinking of refinancing or buying a new home this year? Or, possibly a rental property?

It is strongly suggested you review your draft returns with a lender before you file for 2017, to be certain you will qualify for the loan you anticipate. Underwriting guidelines for loans oftentimes calculate income in a different manner than you might think. We don't go by adjusted gross income on the front page of the 1040. There can be many additions and reductions to income, depending on what 1040, 1120, and 1065 returns reflect.

Here are some noteworthy items to consider that are common issues in the loan underwriting process:

1. 2106 expenses (non-reimbursed business expenses noted on p.3 of the 1040) are not typically taken as a reduction of income anymore UNLESS the borrower income is more than 33% commissioned/bonused. A salaried W-2 employee can claim all the 2106 expenses they want and it won’t affect income. But for someone who is 100% commissioned, 2106 expenses would reduce income dollar for dollar.

2. Schedule C losses for 2nd jobs (“hobby” jobs) are ignored, so long as the borrower has full-time employment. Losses for MaryKay, Rodan & Fields, or other "hobbies" whether for borrower or co-borrower, will not reduce income if showing a loss, if borrower has a full-time job. Reasoning is, if they are actually losing money, they can stop anytime.

3. Items on Line 16 of Schedule L (balance sheet) on 1065 and 1120 returns are always deducted from income. I find typically the items shown here do not belong, as they will either renew automatically, be extended, or are already paid. We can disregard them with a CPA letter or other evidence that they are not actually due in full in the next year. Anything on line 17 is ignored. Best to place those short term liabilies on line 17 if at all possible.

Remember refinancing a rental property is typically limited to 75% of value. A cash-out refinance of a rental will be limited further.

I am seeing a lot of FHA borrowers wanted to refinance out of their MI due to higher property values. Even with a higher rate on the new mortgage, oftentimes their monthly payment will be lower without the pesky MI payment. Their future hold time should be taken into account, naturally.

Let me know if you have questions on anything!

Monday, January 29, 2018

Using a Reverse Mortgage to Buy a Home

That’s right! A Reverse loan can be used for a home purchase for buyers over the age of 62. They are perfect for those wanting to move where they want to remain for the rest of their lives. A reverse loan for purchase is beneficial for a number of reasons:

• No future payment is required;
• Borrowers on fixed income who may not qualify for a typical home loan will qualify for a reverse;
• The loan allows you to build equity in your home, and tap into it in the future;
• Flexibility - You can make interest payments if you wish to keep loan balance fixed.

Purchasing a home with a Reverse Loan requires a larger down payment than a conventional loan. The amount of cash down will depend on the age of the borrower, and the home's value. But the down payment can be gift funds! (Want to get mom and dad into their own place?) Once the purchase is completed the buyer will never have to make a loan payment. They are only responsible for paying RE taxes and insurance.

Some people ask “Why not buy all-cash?” Many "senior" buyers on fixed income rely on their retirement/investment accounts to provide additional income. By limiting the cash that is put into a home purchase, they may be able to buy a superior home, and have more cash available to put into investments for the future. Plus, if the buyer wants, he or she can put extra funds towards the down payment to increase the future availability of a line of credit, which grows at a rate equal to the interest rate on the loan plus the mortgage insurance rate.

Reverse mortgages have proven to be safe and powerful financial tools for homeowners that want to access the investment they have in their homes, without having to make monthly mortgage payments. When it is time to move up or down, into a retirement home, it is imperative to consider a Reverse loan as an option.

Here are a few answers to FAQs about Reverse Mortgages:

• You own the home, not the bank;
• You can prepay the loan at any time;
• Your heirs can pay off the loan balance through sale or refinance, which will never be more than 95% of the home value at time they inherit;
• These loans are non-recourse (so you can never owe more than the home is worth);
• Your spouse can remain in the home for their lifetime.

Monday, January 22, 2018

Tips to Get Your Offer Accepted!

Tired of making offers to purchase property, and being passed over? Here are my tips to get your offer accepted:

1. Offer all Cash. This is the top way to be accepted, but obviously it takes a lot of cash! Many clients today are borrowing funds from retirement funds or parents, and refinancing post-close to pull out the funds to repay parents. There are a number of "delayed purchase" type financing options available and some are priced as if they were a purchase. It is important to verify ahead of time with your lender what you will be eligible to refinance the home for post-close. In some cases it might be necessary to wait for six months, but there are other options available within 90 days of closing.

2. Obtain a full-pre-approval from your lender, if using financing for the purchase. We have a program called "Keys on Time" where we actually submit the loan file with all income and asset documentation for a full pre-approval with underwriting. Once completed, we guarantee closing within 12 days of a contract to purchase, assuming all goes well with the property appraisal. This is a powerful negotiating tool.

3. Offer a non-refundable deposit, or an offer with no-contingency period for financing or inspections. Risky? Yes...

4. Last, but certainly not least: Write a personal letter to the seller, describing why you love their home, and telling a story about yourself. This may be the most powerful tool you have in the toolkit. Sellers have been known to accept lower offers, or those with contingency periods for financing, for buyers who wrote heartfelt letters about why they love the neighborhood, the home, how important it is to them, and why. We all appreciate the personal touch. Relationships are key to everything.

For your reference, here is an article in the WSJ on this topic: The Strangely Effective (and Easy) Way to Win a Bidding War

Monday, January 15, 2018


You have signed your loan documents. The process is over, right? Not so fast!

There are many last-minutes checks and balances that take place during the closing process that can stall or stop the loan from funding.

Here is a quick list of last-minute obstacles to closing on time, thanks for my friend Jeff Lazerson who writes a column for the Register. Plus I've added one of my own.

1. Funds wired to escrow for closing must come from accounts previously reviewed and approved by underwriting. No last-minute new accounts may be used. All large deposits must have been sourced. If you wire funds from a previously undisclosed account, the process will stop until two months' statements have been reviewed by underwriting.

2. Double check that your insurance policy meets underwriting guidelines for adequate coverage. Your Underwriter should review and approve the amount of coverage prior to closing so we aren't scrambling at the last minute.

3. Make sure you understand the implications of any HERO or PACE liens recorded against the property, as these will have to be paid at closing in most cases.

4. Make sure you are going to be in town and available when the loan is scheduled to close. You can always have someone sign for you with a Specific Power of Attorney, and it had better be the correct type of POA. I can't tell you how many times I've had clients go out of town on vacation, or out of the country, when it is time to close. We can always use mobile notaries country-wide...but it does slow things down. I once had a client sign documents in Italy. She had to go to the US Embassy to get them notarized by a U.S notary.

5. Make sure when you sign 4506T forms, to request transcripts from the IRS, that they match the address on your tax returns. If not, they will be returns "no results." If you have recently filed returns, there will be a lag time waiting for the returns to be processed which could delay closing....for weeks.

6. Solar leases can be problematic. The lease must be re-assigned to the new property owner, and if recorded against the property as a lien, it must subordinate to the new lender.

7. If you are refinancing, make sure you make your loan payment on the current loan in enough time for escrow to get an updated demand for payoff, reflecting that payment. Otherwise, you will have to make that payment twice (again through escrow) and wait to get a refund post-closing. This will mean coming into escrow with more cash than you expected.

8. Don't quit your job before the loan closes. Yes, this happens. I had a client who signed loan documents, quite his job, and when the funding department called to verify employment, they were told he no longer worked there. Lucky for me (and him) he had a new job lined up that started the next week and we were able to verify the new employment and close. Only with a streamline!

Saturday, January 6, 2018

CONDOS - The Pitfalls

Condominium financing has always been a bit more challenging than financing for single family residences. Why?
1. They are considered to be riskier than single family residences, since the HOA has much control over the property, and charges to owner, and therefore the loans carry loan-level pricing adjustments (e.g. higher interest rates)
2. The HOA has to go through a separate approval process. This is more rigorous for investment (rental) condos vs. the review for owner-occupied condos.
3. Master Insurance policies must meet guidelines for coverage and also include a Fidelity Bond (WHAT?) that covers the HOA from losses due to embezzlement or misuse of funds.
4. There are limitations on the number of rental proprieties in the complex that vary depending on the loan type, and whether the property is to be owner occupied or a rental. This can be problematic in coastal or resort areas where rentals are common. (think Mammoth or ski communities)
5. There can be no litigation against, or on the part of the HOA, with certain exceptions. If an attorney opinion letter states that the litigation is essentially a "nuisance" lawsuit, or that damages are easily covered by the insurance for the project, it MAY be acceptable.
6. There are specific reserve requirements that must be met. If there are inadequate reserves, the HOA is not acceptable.
7. A separate "walls-in" insurance policy is usually required for the owner; called an "H06" policy, this insurance covers not only the contents of the home but also interior improvements and upgrades. Most Master policies do not include Walls-in coverage with upgrades.
8. FHA loans, including Reverse loans, require that the project be HUD approved.
9. VA loans require that the project be VA approved.
10. Some conventional lenders also have lists of approved and disapproved condos.

The bottom line is, make sure you do your homework before making an offer to purchase a condo. Please call me to help with questions and/or searches for approved condos.