Who should get an Adjustable Rate Mortgage?

Ready to make an offer? Better get your mortgage product lined up in advance.

Who should get an Adjustable Rate Mortgage, (ARM)?
Most home buyers and borrowers prefer a fixed rate, but there are some who would benefit from an interest rate that starts lower. There are a few instances where a lower interest rate now is financially helpful, and a higher rate later may not matter.  Here are the folks who benefit from an Adjustable Rate Mortgage:


1. Homebuyers who plan to live in a house for only a few years;
2.  Buyers who expect to refinance soon, or:
3.  Borrowers who expect their income to increase significantly in the near future

These individuals may decide that the short-term benefit of an initially low rate is all that matters. #ARMloans

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Communicate with your lender or broker to understand your Loan Options

Some home buyers should pay discount fees and some should not.  Here’s one way to determine if discount fees are a good idea for your home loan:
Buyers who don’t plan to be in a house for a long time probably shouldn’t pay discount points. The lower interest rate isn’t likely to be worth it. 
Buyers need to stay in a house for a long time to recover the money they paid in discount points. #discountfee

Planning to retire from work early, or do you have future plans like starting your own business? Then you may prefer to build equity quickly and pay off the mortgage as soon as possible. You may be happier with a 15-year or 20-year mortgage rather than the usual 30-year loan. The higher payments with a shorter-term loan may mean buying a less expensive house, however.

A common type of buyer is a young couple who don’t have a high income. However, they expect their income to increase and want to buy the largest, most expensive house they can afford.  These buyers might benefit from any program that would increase the loan amount they can qualify for: an adjustable-rate, a high loan-to-value ratio, a 40-year loan term, a downpayment assistance program, or secondary financing.
Some buyers don’t want to borrow as much money as lenders might allow them to borrow. 
They might want to invest more money elsewhere or might not want to get overextended in anticipation of large expenses later, like having children. 
Or they may simply wish to avoid the stress of loan payments that force them to budget.
In short, there is no one-size-fits-all lending solution for all buyers. 
Buyers need to consider how the various financing options fit their circumstances. 
The lender will take some of these factors into consideration, but ultimately it’s the buyer who must decide what type of loan best fits her financial situation.

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Planning ahead for your home purchase means understanding your mortgage options

Copyright © This free information provided courtesy L.A. Loft Blog and LAcondoInfo.com with information provided by Corey Chambers, Realty Source Inc, BRE#01889449 We are not associated with the homeowner’s association or developer. For more information, contact (213) 880-9910 or visit LAcondoInfo.com  Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties subject to prior sale or rental. This is not a solicitation if buyer or seller is already under contract with another broker.

Downtown Los Angeles Unwarrantable Condos and Loft Loans and Lenders

Alta Lofts recently entered into the settlement phase of litigation as the builder developer agreed to reimburse the HOA for construction defects.

Lawsuits and unwarrantable condo loans

Litigation is but one of many issues that can affect a buyer’s ability to get a home loan. Most lofts have issues that buyers want to know about before going to see the property for sale. They often need a loft lender for successful mortgage financing. Sometimes they require an unwarrantable condo lender or litigation specialist lender.  #lawsuits #unwarrantable #lenders

One of the biggest disasters in Downtown Los Angeles real estate that can be prevented has to do with home purchase mortgage financing. More than half of the homes for sale in downtown LA are industrial or commercial loft conversions using the city of Los Angeles Adaptive Reuse Ordinance.  These conversions are still listed in the records as commercial buildings. When buyers use a residential lender, especially a discount home loan company, the lender generally has little knowledge or experience with lofts.  The friendly mortgage broker says “Yeah sure I’ll hook you up no problem”. But, he does this without checking on the building type first. The major problem happens weeks later when the home is in escrow and the underwriter finally checks and sees that the building is listed as an industrial or commercial type, and it has unusual issues such as no floor, and the lender has not given them an HOA questionnaire previously. The buildings are often mixed-use with some units allocated specifically for commercial purposes.  The disaster happens when the lender eventually says, at the end of the escrow period, that they will not finance the building, or there will be a lengthy delay or significant extra expenses such as higher mortgage interest rate, higher fees or per diem fees to reimburse the seller for waiting on the delayed escrow.  The property often falls out of escrow at this point, and the buyer and seller must both start over.  This problem happens all the time unfortunately, especially when both the buyer and seller use out of area agents and out of area lenders who are not familiar with the special needs of loft real estate transactions.  By using a loft specialist lender from the onset, this problem could have been prevented.

Other buildings have many renters or other more serious issues that nearly all lenders will find unacceptable.  These are buildings that home loan companies, banks and even loft lenders will not loan on. They are called unwarrantable condominiums.  Fortunately, there are some lenders that specialize in non-warrantable condos.  These are direct lenders for condos with the most difficult of problems, often HOA litigation and lawsuits involving the home owners association.  A litigation lender or unwarrantable condo lender can do 30-year fixed loans up to $2,000,000 for purchase or refinance with cash out.  They can lend on: projects where one entity owns more than 10% of entire project, such as SB Grand lofts; mixed use complexes with up to 80% commercial/retail; high HOA delinquency rate and/or budget issues; new developments with no minimum pre-sold; complexes with high percentage of renters; condo-tels condominium hotels on a case-by-case basis. Originators of non-warrantable condominium loans have excellent, reliable results, and will usually need to charge a bit more interest and fees to cover the added risk that they incur in dealing with these buildings.

Get a free list of loft and condo buildings with litigation or lawsuits. Fill out the online form:

LOFT & CONDO LISTINGS DOWNTOWN LA [MAP]

  Lofts For Sale     Map Homes For Sale Los Angeles

SEARCH LOFTS FOR SALE Affordable | PopularLuxury
Browse by   Building   |   Neighborhood   |   Size   |   Bedrooms   |   Pets   |   Parking

SB Grand 312 W. 5th St. unwarrantable condo

Copyright © This free information provided courtesy L.A. Loft Blog and LAcondoInfo.com with information provided by Corey Chambers, Realty Source Inc, BRE#01889449 We are not associated with the homeowner’s association or developer. For more information, contact (213) 880-9910 or visit LAcondoInfo.com  Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties subject to prior sale or rental. This is not a solicitation if buyer or seller is already under contract with another broker.