Some of my clients called, asking if I could lower their interest rates. Many of them said that they heard Federal reserve had lower interest rate to zero, therefore, they should be able to refinance to a rate such as 2% fixed rate etc.
When federal reserve lowers its interest rate, it simply means that banks overnight borrowing rate from Fed is zero. How do the lenders decide their interest rates? It is all driven by the market: if the market is demanding the mortgage back security, lenders will lower their interest rate to attract more borrowers. On the other hand, if fewer investors were buying these securities. Lenders cannot get their money back; they would have to raise the interest to make their loans more attractive to the investors. That is why when Federal reserve raised interest rates early last year, but the mortgage instead dipped.
This is what is happening now: there are very few investors are on the market buying these mortgages backed security right now. Why? Investors anticipate that mortgage default rate may go higher over the next few months as more and more people lost their jobs
In fact, the private money market, the rates have already risen substantially: just 3 to 4 weeks ago, I had seen rates were as low as high 7s. Now, they start at 10s and could be as high as 15.
Going forward, even as we contain the Covid-19 from spreading and flatten the curve, I still do not see investors would rush back the market to purchase the notes, since it would take a while for unemployment to be recovered. We will probably see high interest rates for the rest of the year.
We offer commercial loans,
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25 YR Fixed Rates %5.25 with 1-point:
(owner user or investment only)
(acquisition & refinance)
(from 5 units & up)
(lots, raw & subdivision)
Churches, temples, synagogues
(manufacture, distribution center)
(hospitals, rehabilitation center, clinics, assisted living)
Mixed use properties
Mobile/manufactured home parks
Retail (malls, strip malls, shops)
(spec homes, investment properties)
Are you interested in purchasing your very own building?
If you are a business owner, who’s looking to purchase your own building. Great news! You can purchase your own property with only 10% down. On top of that, I might be able to provide a great interest rate in the high 4% to low 5%s. Better yet, you can even choose a fixed rate (fixed for 25 years); never having to worry about refinancing it after 3 or 5 years.
In fact, I recently used this program to purchase my own office.
Please call me with your scenario
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 06.12.17
Many people who live in the Bay Area are tired of the
traffic congestion and a long daily commute which seems to be getting worse every
single day. Their homes are not much of a
sanctuary either, the developers have built homes that are so close to each other,
they can literally open a window and shake their neighbor’s hands.
To avoid such stressful living, many people have chosen to
move away from the Bay Area and live on the outskirt of the big city so they
can have their peace and tranquility back.
Recently, a client of mine visited a home with 40 acres of
land, and he fell in love with the home immediately! He decided he can see himself hiking on his
own property without running into anyone. He said he can picture himself
sitting under the mature giant oak tree, reading a book, and enjoying the
gentle breeze during the hot summer months.
There is just one challenge, his bank won’t lend him money
for the purchase, because nearly all loan programs will only allow for maximum
lot size of 5 acres. Over that amount it becomes an agriculture loan which
would have entirely different qualification criteria. However, my client has no
intention of doing any agriculture business beside planting few grape trees and
setting up a vegetable garden.
Lucky, I found him a “hobby farm loan” which tailors
exactly to his situation. He was able to
finish his purchase and move in right before the summer.
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
Many home owners have had dilemmas when selling their homes and downsizing to smaller homes:
They will need to get the proceeds from the sale to put down as the down payment for the new purchase. However, this will leave them with no place to live for that period of time. Worse, should they find a house they really like before their own house is sold, they will have to put contingencies on the offers subject to the completion of their house being sold. In today’s seller’s market, with such contingencies in place, their offers are often not even going to be looked at, much less considered.
A client of mine ran into exactly this situation: She was downsizing and selling her home. Somehow, she found a new dream home before her house was sold. She came to me through a referral, I helped her to get a bridge loan which takes out equity from her current home as down payment, then lend her money to purchase that dream home she fell in love with. The loan she received covered 100% of the new purchase price, she ended up only paying a few thousand dollars for closing cost.
After a while, she sold her home, she immediately paid off large portion of the bridge loan, and refinanced the remaining balance of the loan into a 30 years fix low cost loan.
By taking the bridge loan, not only did she purchased her dream home, but also avoided moving twice, which would have been huge headache for her.
A few months
ago, Mrs. Smith and her new husband came to my office to refinance their loan. (Mrs. Smith was happily married for the second
time.) In speaking with the Smiths, it
was brought to my attention, that the interest rate they had on their current
mortgage was already quite low, for me to get it any lower (in this
rate-raising market) was not going to be easy.
In fact, it was going to be quite a challenge! Nevertheless, I agreed to try my best to
look for a lower rate for the Smiths.
I started my
search right away, however, during the time my office was processing the loan,
I realized that somebody had put a lien against the Smiths’ property. I immediately contacted Mrs. Smith and she
recognized the name to be that of her ex-husband! He had put a lien on the house- yet she was
not even on the title! Mrs. Smith did
not know what to do. I assured her that I would work with the title company to
get this resolved.
short, after a month of paperwork, I successfully helped her get the lien
removed from the deed. The title of her
house was again clear!
Back to the
original purpose of her visit, which was to lower her interest rate on her
current home loan, which I did not see that as a possibility at this time. You see, the interest rate had continued to
rise during the time it took to clear the title. I proposed that we check into this matter
again in the future.
never made a penny out of this entire process, it was truly a success story. I was happy to help Mrs. Smith resolve an
issue that was negatively impacting her and her husband in the loan process. (Or even worse, if her ex-husband had passed
away, or could not be contacted, the lien on the title would create a delay on
anything Mrs. Smith would want to do with the house and there would be an even
bigger hurdle to overcome in getting the title cleared! It is much better, for the Smiths, that I was
able to take care of the issue at this time.)
Mr. Young was in a hurry to purchase a home.
His wife was about to give birth to their first child, and coincidently, the expiration date on lease to their rental home was also due very soon. He faced a dilemma: If he renewed his lease, he did not think he would move his family in the next few years, as with the new born it would be extremely difficulty to move.
However, he had the down payment saved and his wife was really wishing to settle into a home before the baby was born, so that they can raise their child without having to move again. The problem was, he did not qualify for a loan: He had just started his new job, he had barely been there a few months. Without a job history, no lender was willing to lend him money for a home, and take on that risk.
Mr. young came to see me. After the interview, I provided him with a solution: Take on a Bridge Loan to acquire the home first. Although, the bridge loan carried high interest rate, it nevertheless had no prepaid penalty, and could get him into a house right away without the job history documentation. Once Mr. Young built up his job history, I would help him to refinance out the bridge loan and into a conventional loan.
That is exactly what happened! A few months after taking a bridge loan and buying a home for his family, Mr. Young got out of this high interest rate loan, applied for and received a conventional loan and cut his monthly mortgage payment in half.
Mr. Young is absolutely a happy camper now!
March 27, 2017
Mr. and Mrs. Smith had worked very hard to pay
off the mortgage on their house. However,
by the time they both retried they still owed about $100,000.
As their regular income was gone, they had to
use Social Security benefits to pay for the current monthly mortgage payment on
the remaining $100,000. Which was not
easy, because their combined benefits were only about $4,000 per month. Their monthly mortgage payment was about $1,800,
and with the added expensive of property tax and home owner’s insurance, they
were struggling to make ends meet.
Mr. and Mrs. Smith contacted a realtor to sell
their home. With the precious family memories
and the invested money and energy on upgrades and improvements that they have
put into their home of 20 years, they realized that they really love the place
and were not ready to let it go. So, they
decided not to sell the house, and the realtor referred them to me.
After I had an interview with them, I realized
that a reverse mortgage would really help them!
They met the requirements: Both
were more than 62 years old and they had plenty of equity in their home.
A reverse mortgage would pay off their current
mortgage and set aside enough of reserve to pay property tax and home owner’s
insurance. Best of all, they would have no monthly payments to make until
they decide to sell their home, to possibly down size, or move into an assisted
living type community.
Smiles finally returned to their faces. Now they could really enjoy their lives: They were planning a trip to visit South
America. A trip they had been putting off for so many years that they
were overjoyed to know that it was now going to become a reality!
Mr. Torres has been running a successful auto shop for more than
He has never regretted owning a business, except that he has not
been able to obtain a home
loan because of being self-employment. He has applied for mortgages
through numerous banks and has been turned down every single time.
Finally, Mr. Torres came to me through a referral. I studied
his documents and realized that he had great cash flow each month from his auto
shop. The deposits he has been making through the years have been very strong
and the company has a very good Profit & Loss Statement.
Therefore, I used a Bank Statement Loan Program to qualify him. Today, not only does he have his dream home,
but he has also purchased investment properties using this same loan program.
Another happy customer of mine!
(not her real name to protect the privacy) has been a client of mine for many
years; I helped her to get her purchase loan when she first purchased a house
some 10 years ago.
the years, she got in financial trouble (as most of us have during the great
recession), and she started to pile up debt.
She took out a second loan on her house and charged up her credit
cards. Worse than that, she was not able
to make minimum payments on her credit cards or make payments on time, causing
her credit score to drop significantly.
Thus, the interest rates on her credit cards skyrocketed! She really struggled each and every month
just to get by. She was also never able
to refinance her two loans as her credit score were too low. Pretty much all of her and her husband’s
income was being used to catch up on payments.
She literally could not even afford to go out to have a nice lunch.
called me. At first I concentrated on
helping her to improve her credit score enough to refinance her two loans into
a FHA loan. Was this loan was secured,
her monthly mortgage payment was reduced dramatically, this extra money she
saved allowed her to catch up on the credit card payments. Six month later, her credit score improved
nicely, and I refinanced her FHA loan into a conventional loan with some cash-out
to pay off her credit debts. In the end, her total month payments were cut in
half! Now, she can afford to enjoy that
nice lunch she has been craving for years.
Another client of ours was looking to purchase a warehouse, because his wife wanted to move her business to the US from an overseas location. She was looking to buy the warehouse in the Bay Area so she would not have to rent. (As the amount of rent here would probably be equivalent to mortgage amount she would pay.)
However, the wife ran into a snag, most of the lenders were looking for business history and track record of profit and loss which she did not have in the US. They had shopped at many banks, and had been turned down by all.
She was finally referred to me and hoped that I would find a solution for her. The solution I found: One of our investors was familiar with her online business! So, after he spoke to her and considered her financial documents, our investor decided right on the spot to accept this proposal. She got her financing and has run a very successful business since.