Lauren’s Local Knowledge: New Construction in Mammoth Lakes
With mortgage interest rates hovering at historic lows — in the mid 3% range — and the Fed’s commitment to keep rates low for the next year or more, nearly everyone is looking for financing when they purchase real estate in Mammoth Lakes.
Lending varies by area and Mammoth has some tough rules wade through in order to obtain financing. I chatted with Mammoth Lakes Lender https://www.wfhm.com/loans/douglas-magit/about.page" target="_blank">Doug Magit</a> from Wells Fargo Home Mortgage about the lending requirements for real estate in Mammoth Lakes. He had a lot to say and I captured some of it below
The Dodd Frank Act has not been fully implemented yet, but it will be by January 2014. This act was implemented by the federal government to prevent future bad lending practices that caused the real estate crash of 2007. The pendulum has completed a “1080” – that’s three full revolutions for those who don’t watch half-pipe events on ESPN2 :). Requirements have swung from lenient to extremely rigid to get a loan processed and funded. Currently? They’re on the more rigid side. Lenders are concerned about how the final implementation of these punitive requirements will affect lending in 2014.
But there is a silver lining to this news: since regulations for lending are so tight we expect an end to foreclosures in the future, except in the event of death or divorce.
There will be a tightening up of the debt-to-income ratio allowed for buyers from 45% to 43% as of January 2014. Lending has returned to full documentation requirements even to get a pre-qualification letter.
If you are thinking about making a real estate purchase in Mammoth Lakes, be sure to get a pre-qualification letter before starting your property search to avoid the pitfall of falling in love with a property you cannot afford to purchase.
<b>The documents required for a pre-qualification letter with Wells Fargo Home Mortgage are:</b>
1.) 30 days of paystubs from your employer
2.) Two months of bank statements
3.) Two years of completed tax returns as well as W-2s and K-1s
4.) Investment statements
5.) Credit report
6.) Explanations of all deposits made into your bank accounts
The process to obtain a pre-qual letter can take up to three weeks because all documents must be sent to the lender’s underwriter for approval.
<b>There are 3 types of loans available at Wells Fargo depending on how much you need to borrow:</b>
1.) Conforming Loans carry a balance up to $417,000
2.) Mono County Conforming High Balance Loans carry a balance up to $529,000
3.) Jumbo Non-conforming Loans are available for sums up to $3M and require a minimum credit score of 700.
<b>First Time Buyer Loans:</b>
If you are a first time buyer and purchasing your primary residence you have a few options:
1.) You can obtain an FHA loan in Mammoth Lakes with as little at 3.5% down. These loans are available on single family residences only in Mammoth, not on condos. These loans have the most lenient requirements overall and do have income limits. They are funded by the Federal Housing Association and are not conventional loans funded by Fannie Mae and Freddie Mac.
2.) If you prefer a conventional 30-year or 15-year loan, you can get one with 5% down with a 740 credit score.
3.) With 10% down you can get a conventional loan with a 720 credit score.
4.) With 20% down you can get a conventional loan with a 680 credit score.
<b>Regarding how lenders determine your credit score:</b>
Everyone has a different credit score from each of the three major credit bureaus: Experian, Equifax and Transunion. Lenders in Mammoth Lakes will use your middle credit score of the three as the basis to determine your financing. If you are married, they will use the lower of the couple’s middle scores to determine financing.
<b>2<sup>nd</sup> Homeowner Loans in Mammoth Lakes:</b>
Second homeowners who are purchasing in Mammoth Lakes will need a minimum credit score of 620. There are a few options as well:
1.) If you are purchasing a condo, there is a 25% down payment requirement in order to obtain a “streamlined review” of the condo project, which means that the lender will not require a Homeowner Certification. These pesky documents have precluded lending in many of the local condo associations for years on end in the past.
2.) If you are purchasing a single family residence, you only need 20% down.
<b>Land and Construction Loans in Mammoth Lakes:</b>
1.) These loans require a credit score of 680. Land loan programs are available with 50% down only to current Wells Fargo customers of at least two years.
2.) Construction loans can be wrapped in with land loans as well with the same requirements.