Homes in housing developments that have a homeowner’s association and that are identified as either a Condominium or Planned Unit Development are often covered by a blanket insurance policy. The blanket policy typically covers damage to the structure and common areas, and the pro-rated cost is included in association dues. When approving a home loan, lenders require that the homeowner also provide evidence of an additional separate “walls-in” policy which insures everything inside the dwelling with a minimum coverage of 20% of the appraised value.

It’s common practice for buyers to “shop” rates with a couple of different lending sources when they need a new loan. For best results, recognize that rates and fees vary based on your credit score, your loan-to-value ratio, loan and property type, and (1) Solicit the rate quotes within a short time-frame. Interest rates can change hourly, so the comparison shopping should be completed as soon as possible, (2) Request a written estimate of all fees associated with the loan within 30 minutes of the telephone quote, and find out when the rate and fee estimate expires, and (3) Request assurance that the lender can complete the process within the time-frame given for the rate and fees quoted.

Three major credit reporting agencies create computer generated credit scores based on our credit histories and usage as reported by various sources, including banks, collection agencies and the government. These scores are used by lenders to determine the cost of your borrowing. Knowing how to improve your score and taking action is your best defense against the high cost of borrowing money. Step one is to keep debt payments current. Step two is to access the Federally approved website to get your credit report, which is http://www.annualcreditreport.com. Notice no “free” in the web address.

Step three, work to correct errors. There are businesses that specialize in helping people improve their credit score, and the credit repair process can take a number of months with no guaranteed results. Late payments must have been 30 days late before they should be reported to the credit bureau. It is known that the most recent late payments in the past 24 months drag your score down the most. Contact your home loan professional for more information.

To preserve appraiser independence in residential real estate transactions, “Home Valuation Code of Conduct” (HVCC) rules went into effect in May, 2009. Intended to prevent collusion between lenders, real estate agents and appraisers, HVCC has changed the appraiser selection process. It stipulates that instead of loan originators having the option of selecting the appraiser for a residential financing transaction, lenders must utilize a third party appraisal management company, which in turn uses a random selection process to make appraisal assignments. Although licensed experienced local appraisers are included in the pool from which the appraiser selection is made, the required utilization of an appraisal management company increases the cost and sometimes the time required to have an appraisal completed.

When you apply for a home loan, your credit record is accessed to identify your creditors, the amount owing, your monthly payments, your payment history, and your credit scores. Your credit scores and monthly payments are factored into the loan qualification process, along with your income and the property appraisal. Your employment is verified by pay stubs. W2 forms, and tax returns. Many lenders will access your credit history again during the last week prior to closing to make sure that your debts haven’t increased. Lenders will also place a telephone call to your employer (or to your CPA if you are self-employed) during the last week prior to closing to verify that you are still working. These final two verifications by the lender, your credit and employment, help to ensure timely repayment of your loan.

The California Secretary of State appoints and commissions individuals to verify and affirm the identity of people when they are signing documents, most frequently associated with real estate transactions. Documents which transfer ownership of property (deeds) and which identify loans secured by real estate (trust deeds) must have the signatures notarized in order to be recognized as valid by the County. Prior to granting the appointment as a notary public, the Secretary of State must determine that the candidate has the required honesty, credibility, truthfulness, and integrity to fulfill the responsibilities of the position. Special educational requirements and testing must be completed, along with a criminal background check, the filing of a bond, and subscribing to an oath of loyalty to the Constitution of the US.

When preparing the residential purchase agreement, there is a heading marked ITEMS INCLUDED IN SALE, where any personal property that is not permanently attached to the home that you want to be included in the sales price is listed. Often these are items that have been noted in the property listing or information sheet as being included in the price, such as playground equipment, appliances, or furniture. Lending rules require that these items be considered when underwriting the loan as sales concessions or a valuation reduction unless the items are noted as “given no value.” The best way to address this lender concern is to write in the contract that the personal property items listed as included in the sale are given no value. This will allow the loan underwriter and the appraiser to focus only on the real property when determining the value for lending purposes.

In today’s lending world, there are three different loan size categories. The first of these categories is often referred to as “Conforming.” This category allows for loan amounts up to $417,000 and offers borrowers the best available interest rates. The next loan amount level was temporarily created by the government in hopes of helping to keep interest rates lower for those borrowers who needed a loan size slightly higher than conforming. It is often referred to as “Super Conforming” or “High Balance.” In San Luis Obispo County, the limit for this category is $687,500. Super Conforming loans have a rate just slightly above conforming, perhaps 1/8% to a 1/4% higher. Finally, there are the true “Jumbo Loans” which fall above the $687,500 mark. Jumbo loans can go as high as $2.5 to even $3 million depending on the lending institution. The interest rates for Jumbo loans are the highest of the 3 categories and have more strict qualifying guidelines.

The temporary Super Conforming loan limit of $687,500 in San Luis Obispo County, and as high as $729,750 in high-cost areas, is set to be reduced to the permanent Super Conforming loan limits of $561,200 in San Luis Obispo County and $625,500 in high-cost areas on September 1, 2011.

All FHA loans have an upfront mortgage insurance premium (UFMIP) amount that is added to the loan balance in addition to a monthly mortgage insurance premium which is included in the payment. HUD announced that on April 18, 2011 that UFMIP will be going up and the monthly mortgage insurance premium amounts will be going up as well. If you are a first time buyer or considering refinancing your existing FHA loan, now is the time act, since monthly payments will increase when this change becomes effective.