New home in CA

Student Loans Impeding Home Ownership?

New home in CA

One of the most commonly asked questions we get as one of the most successful commission advance companies in California is how student loans can affect potential mortgage requests. Many young people are graduating from college with hopes of becoming homeowners and starting their careers. A number of these same people worry that their student loans will stand in the way of this goal. So, will student loans hold you back from getting a good mortgage? The answer is a solid possibly.

That might sound vague, but there are a few different ways that student loans can be perceived. Many commission advance companies in California have noticed that student loans can harm a mortgage attempt in the following situations:

  • If you did not get a college degree
  • If your college degree is not in a lucrative field
  • If your student loans are far more extensive than a 4 year degree requires
  • If you have late or missing payments on the loans

Those four markers can be a huge turn off to mortgage companies, and could mean that you either get denied for a mortgage request, or the offered interest rates will be far more than the optimum range.

If, however, you got your degree, have started a lucrative career in the field of your degree, and have been faithful in paying your loans down, there is no reason that student loans should keep you from your goal of becoming a homeowner. Most of these loans have reasonable payments, tiny interest rates, and will not greatly affect your debt-to-income ratio.

For those who do fit into one or more of those four markers, there are other options out there to help you get qualified for the housing of your choice. We would be happy to sit down with you and help you figure out which option works best for you until you can get your student loans out of the picture.

Loan documents in CA

Market Conditions Effect on Escrow

Loan documents in CA

We have worked in the world of advanced commission for a long time, which means we have seen things change in a lot of different ways over the years. Every time a major shift happens in the financial market, it immediately follows that things change in the world of escrow accounts as well. We track these shifts pretty closely as it is directly connected to advanced commission. The following is a list of some of the changes we have seen with the current market conditions.

Longer Escrow Wait Times

The financial market is improving, which is a good thing, but many different big institutions are now making it a little harder for people to get the financing they need. This is a good thing, as a little caution now can help prevent another big meltdown like the one that happened back in 2008. That being said, the advanced investigations create a longer escrow time. The money sits longer before being distributed to the deserving parties.

Larger Escrow Accounts

There are fewer loans happening, but we have noticed that these loans are growing in size. The larger loans mean larger down payments and earnest money amounts. All of that is the money that typically sits in escrow accounts. This means that the escrow accounts we deal with are larger in nature due to the growth in the economic market.

More Restrictions on Accounts

This goes back to the tighter restrictions happening with loans. Banking institutions cannot afford to be lax about the security of the accounts under their stewardship. This has affected the world of escrow by making it so fewer people have access to these accounts, and fewer loans are able to utilize an escrow service. This is especially true in the case of new construction loans. We believe that as the market continues to improve, this particular change will not be as stark a difference as it is right now.


Should You Reject an FHA Loan?

FHA loans are a popular type of mortgage for homeowners that either don’t have the capital for a large down payment, have a bankruptcy in their past, or can’t get a mortgage otherwise. Because of the downturn of the housing market in 2008, the mortgage insurance premiums (required by any FHA loan) have almost tripled in expense, which means FHA loans aren’t as great a deal as they used to be. If you are trying to decide whether or not to take an FHA loan, here are a few things to consider.

Expenses and Fees

One of the biggest things you need to consider before deciding on an FHA loan is the expense and fees that come with an FHA loan. Because FHA loans offer such a low down-payment, they come with the requirement that you take out two mortgage insurance premiums, one upfront and one that lasts throughout the entirety of your loan. These typically add a lot to a monthly amount. Though a low down-payment is appealing, it also adds quite a bit of interest over the years than if you had paid the traditional 10 to 20% of the mortgage. So, if you have another loan option, you should definitely take that over the FHA, just to save money in the long run.

Financing Limits

Another problem with FHA loans, because they are known for helping families of more modest means, is that they have a limit to how much you can borrow. The FHA recalculates the loan limits (the “floor” and the “ceiling”) each year based on 115% of the median house price in each area. This means that if you live in an expensive area, like New York City or San Francisco, your loan limits will be a lot different than if you live in Kansas City or Las Vegas. This can be a problem if you need a higher loan amount.

If you are considering an FHA loan, these are just a few things that you’ll want to determine before you decide to go with the loan. Because there are a few things that may add a hiccup to your plan, you’ll want to go over all of your options, especially if you have a loan offer from the private mortgage industry. If you are looking to talk about FHA loans, or commission advances in California, be sure to contact Express Cash Flow for more information.