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What Every Homebuyer Needs to Know About Home Sale Contingencies
A contingent offer is an offer that has been accepted with the final sale depending on meeting specific criteria. What sort of criteria? That's what this article will explain. Bookmark this reference if you're currently shopping for a home. And remember to send it to your friends, too! All prospective homebuyers can benefit from this information.
Types of Home Sale Contingencies
There are three main home sale contingencies: home inspection, appraisals, and mortgage approval.
These contingencies are meant to protect you, the buyer. They allow a legal way to back out of the sale should something go wrong during the closing process.
Let's take a closer look at the types of contingencies and how they usually work.
Home Inspection Contingency
A home inspection contingency, sometimes called a due diligence contingency, is part of every home sale unless you waive it. We encourage you never to waive it under any circumstances.
Its primary purpose is for a professional home inspector to reveal any flaws in the home so that you can re-negotiate or cancel the contract based on the findings.
Here's a few examples of what that might look like:
- You can request more time for additional inspections if you think something needs another look.
- You can terminate the sale and get your earnest money refunded.
- You can ask the seller to complete the repairs.
- You can request the price to be lowered, taking into account the cost of making those repairs.
Appraisal Contingency
The appraisal contingency ensures that you can terminate the contract if the home does not appraise at that minimum amount. In most cases, your earnest money will be refunded if that occurs.
This type of contingency can also include terms that allow you to buy the home at the original price despite the low appraisal. Alternatively, you can request a lower selling price.
However, keep in mind that if you are financing the purchase with a mortgage, your lender might only cover the appraised cost.
Just like a home inspection contingency, the appraisal contingency shouldn't be waived.
Mortgage Contingency
A mortgage contingency states that the offer is dependent on you securing financing to purchase the home. It's beneficial in that it gives you a legal way out of the contract should you be unable to get approved for a loan.
However, sellers are often wary of accepting these types of offers as it lacks the assurance of financial backing.
Note that this contingency has a time limit for getting a home loan. If you cannot get approved on time and haven't terminated the contract before time runs out, you'd still be financially obligated to purchase the home.
So while this contingency is beneficial, you'd be better off getting approved for a home loan before making an offer.
Home Sale Contingency
A home sale contingency is when your offer is dependent on the sale of your current home. There are two types of home sale contingencies. We'll explain them below.
Sale & Settlement Contingency
A sale and settlement contingency happens when you, the buyer, haven't yet received or accepted an offer on your current home. In this situation, the seller of the new home will be able to market their home to other buyers despite accepting your contingent offer.
Should another buyer make an offer, you'll have about 24 – 48 hours to remove the contingency and move forward with the purchase. If you're unable to remove the contingency, your sale contract is terminated, and you'll get your earnest money back.
Settlement Contingency
A settlement contingency is when you, the buyer, have accepted an offer on the home you're currently selling, and you have a closing date on the calendar. This type of contingency typically doesn't allow the seller to keep marketing the home.
As long as your home closes on the date listed in the offer, the sale contract remains valid. But if the property doesn't close on time, the contract can be terminated, and you lose the home.
Did you find this article helpful? Please share it! And please contact us for more mortgage advice and pre-approval answers.
What Are Originating Fees and Can They Be Avoided?
An origination fee is part of the multi-step process of getting a loan and includes the cost of processing the application, underwriting, and financing the loan. The lender may combine the fees into one charge or may list each one individually.
Either way, origination fees are separate from your mortgage down payment and are often paid as part of your closing costs.
What Do Origination Fees Cover?
- Loan processing, such as reviewing your application and preparing documents.
- Underwriting, such as gathering and verifying your information, including your credit score.
- Loan Funding, such as "points" that lower your interest rate
How To Determine the Cost of Your Mortgage Origination Fee
The typical origination fee is between 0.5% and 1% of the total loan amount. Several factors affect your exact fees. Unfortunately, we cannot give you the formula to figure out your costs as each lender uses slightly different criteria to determine them.
However, the largest contributing factors that determine the costs are the loan amount and your credit score --the higher the score, the lower the origination fees.
Can Origination Fees Be Avoided?
Origination fees must be paid — but not necessarily by you. The home seller may be willing to pay your fees if:
- The home's been on the listed for a while
- They haven't received any offers
- The property is rundown
- They're in a hurry to sell and cash out quickly
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Lenders sometimes cover origination fees, too. Note that although this could mean paying less upfront, it might come at the cost of a higher interest rate. Consider what's most important to you before negotiating origination fees.
Also, keep in mind that some loan fees are unavoidable, such as:
- Appraisal
- Credit report
- Tax service
- Flood certification
- Wire transfer
- Courier service
- Title insurance
- Escrow/signing fee
- Recording
-
Summary
Loan origination fees are tricky because each lender calculates differently, and those differences may not always be clear. Transparency and simplicity are foundational to our process, and we welcome all your questions about how we calculate origination fees.
In the market for a mortgage? Pre-qualify online today and get an obligation-free quote of how much you qualify for and how much your monthly payment will be!
2021 Loan Limits
2021 Conforming Loan Limits In California
Fannie Mae and Freddie Mac conforming loan limits in California for 2021 have been increased.
The baseline Conforming loan limit is now $548,250 for most counties in California and in some high-cost counties, it’s as high as $822,375. See below for your specific county limit.
The Federal Housing Finance Agency announced they are raising the Conforming loan limits which is good news for homeowners and homebuyers in California. This allows some mortgage limits that were previously labeled “jumbo” to now be placed in the conforming loan limit category.
California Conforming Loan Limits, 2021:
Here are the 2021 Conforming limits for all 58 counties in California. “One-Unit” refers to a property with one structure (ie a Single Family Residence – SFR), “Two-Unit” is a Duplex, etc. Home values have increased over the last few years and raising the loan limits allows more people to qualify for the best available mortgage rates. The Federal Housing Finance Agency (FHFA) updates their conforming loan limits every year.
County |
State |
One-Unit |
Two-Unit |
Three-Unit |
Four-Unit |
| ALAMEDA | CA | $822,375 | $1,053,000 | $1,272,750 | $1,581,750 |
| ALPINE | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| AMADOR | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| BUTTE | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| CALAVERAS | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| COLUSA | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| CONTRA COSTA | CA | $822,375 | $1,053,000 | $1,272,750 | $1,581,750 |
| DEL NORTE | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| EL DORADO | CA | $598,000 | $765,550 | $925,350 | $1,150,000 |
| FRESNO | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| GLENN | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| HUMBOLDT | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| IMPERIAL | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| INYO | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| KERN | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| KINGS | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| LAKE | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| LASSEN | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| LOS ANGELES | CA | $822,375 | $1,053,000 | $1,272,750 | $1,581,750 |
| MADERA | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| MARIN | CA | $822,375 | $1,053,000 | $1,272,750 | $1,581,750 |
| MARIPOSA | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| MENDOCINO | CA | $548,250 | $702,000 | $1,272,750 | $1054,500 |
| MERCED | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| MODOC | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| MONO | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| MONTEREY | CA | $739,450 | $946,650 | $1,144,250 | $1,422,050 |
| NAPA | CA | $816,500 | $1,045,250 | $1,263,500 | $1,570,200 |
| NEVADA | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| ORANGE | CA | $822,375 | $1,053,000 | $1,272,750 | $1,581,750 |
| PLACER | CA | $598,000 | $765,550 | $925,350 | $1,150,000 |
| PLUMAS | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| RIVERSIDE | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| SACRAMENTO | CA | $598,000 | $765,550 | $925,350 | $1,150,000 |
| SAN BENITO | CA | $822,375 | $1,053,000 | $1,272,750 | $1,581,750 |
| SAN BERNARDINO | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| SAN DIEGO | CA | $753,250 | $964,300 | $1,165,600 | $1,448,600 |
| SAN FRANCISCO | CA | $822,375 | $1,053,000 | $1,272,750 | $1,581,750 |
| SAN JOAQUIN | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| SAN LUIS OBISPO | CA | $701,500 | $898,050 | $1,085,550 | $1,349,050 |
| SAN MATEO | CA | $822,375 | $1,053,000 | $1,272,750 | $1,581,750 |
| SANTA BARBARA | CA | $660,100 | $848,050 | $1,021,450 | $1,269,450 |
| SANTA CLARA | CA | $822,375 | $1,053,000 | $1,272,750 | $1,581,750 |
| SANTA CRUZ | CA | $822,375 | $1,053,000 | $1,272,750 | $1,581,750 |
| SHASTA | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| SIERRA | CA | $548,250 | $702,000 | $ 848,500 | $1,054,500 |
| SISKIYOU | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| SOLANO | CA | $550,850 | $705,200 | $852,400 | $1,059,350 |
| SONOMA | CA | $707,250 | $905,400 | $1,094,450 | $1,360,100 |
| STANISLAUS | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| SUTTER | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| TEHAMA | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| TRINITY | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| TULARE | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| TUOLUMNE | CA | $548,250 | $702,000 | $848,500 | $1,054,500 |
| VENTURA | CA | $739,450 | $946,650 | $1,144,250 | $1,422,050 |
| YOLO | CA | $598,000 | $765,550 | $925,350 | $1,150,000 |
| YUBA | CA | $548,250 | $702,000 | $925,350 | $1,150,500 |
Rising Prices Bring Higher Limits in 2021:
At the end of 2020, federal housing officials increased the conforming loan limits for California; and in a November 24th, 2020 press release, the Federal Housing Finance Agency stated:
“Washington, D.C. – The Federal Housing Finance Agency (FHFA) today announced the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2021. In most of the U.S., the 2021 maximum conforming loan limit (CLL) for one-unit properties will be $548,250, an increase from $510,400 in 2020″
Your Guide To Managing Your Credit Score
Your Guide to Managing Your Credit Score
You've likely heard of the term "credit score," but how familiar are you with what it represents? Here is everything you need to become an expert at managing your credit.
What's A Credit Score?
A credit score is a three-digit number. It represents your credit history and tells the lender the likelihood of you repaying your debt. It includes factors like how long your credit has been open, how much credit you have, and how much of it you use.
The score also factors in whether you pay your bills on time. Whenever you apply for credit, such as when applying for a home loan, lenders and banks will use this number to decide if they will approve you for a loan. And if you get approved, this number will influence what the terms will be.
How Are Credit Scores Calculated, and Who Does It?
Your credit score is generated by the three main credit bureaus (Equifax, Experian, and TransUnion®) using a credit-scoring model. The most commonly used credit-scoring model is one developed by FICO®.
It’s based on several factors, like credit usage and available credit, but never on personal information such as race, gender, or ethnicity. Credit scores typically range from 300-850.
What Is A Good Credit Score?
What is considered a "good" credit score can vary from lender to lender, but one thing remains the same --the higher your credit score, the better. A higher credit score tells lenders that you are low risk for defaulting on your loan and means that lenders likely to offer you more credit and better loan terms.
Most lenders consider credit scores over 670 to be good. A credit score above 740 is very good, and any score of 800+ is exceptional.
What Affects My Credit Score?
The FICO® credit-scoring model is considered industry-standard. Here's how it breaks down:
Payment History
Your payment history is the most significant variable in FICO® scoring, making up about 35% of the total score. Payment history includes on-time and late payments.
Amounts Owed
The second most significant influencer is the amount you owe and how much available credit you have. It makes up about 30% of your overall score.
Length Of Credit History
How long you've had credit accounts for 15% of your FICO® score. The older your credit is, the higher your credit score will be.
Credit Mix
Your credit mix, or the diversity of accounts, makes up about 10% of your FICO® score and includes things like car loans, lines of credit, credit cards, and retail accounts. The more variety of well-managed credit types, the higher your score will be.
New Credit
10% of your overall score is new credit, mainly how many credit accounts you've recently opened. Too many newly opened credit accounts in a short period can lower your score.
Why Do I Have Several Credit Scores?
Since there are different scoring models, it's possible to have more than one credit score.
There may also be times that one credit bureau will have more information than another because a creditor failed to report changes to all three credit bureaus. Thus, each bureau will score you differently.
Your credit score may also differ depending on the type of lender. For example, a mortgage lender will use a different credit-scoring model than an auto lender does.
As long as the scores are similar, there’s typically no reason to be concerned. However, if your scores vary considerably or there has been a notable change in your score, request a full credit report to investigate the discrepancy.
How To Check Your Credit Score
You can get a free copy of your credit report from each of the three major credit bureaus each year. Many financial institutions or credit card companies offer some sort of credit reporting as well.
Also, when you apply for a mortgage or refi with us, we will request a copy of your credit and review it with you.
Your credit score is one of the most powerful tools you have for getting approved for a home loan. But even struggling credit can get approved for a mortgage! Contact us today to see how much home you can buy and learn about government-backed home loans for borrowers with lower credit.
7 First-Time Homebuyer Programs You Need to Know About
Owning a home is one of the surest ways to build personal wealth. But you don't need to have "wealth" to get started. There are many first-time buyer home loan programs available --each with their perks and particular qualifying requirements. In this overview, we'll share the 7 most popular first-time homebuyer programs.
Which of these is best for you? Apply online today to find out fast!
FHA Home Loan
This mortgage is the go-to for many, especially first-time home buyers and those with less than ideal credit history. An FHA loan is guaranteed by the government, which allows lenders to expand their qualifying requirements. With an FHA, borrowers can also put less money down -- as little as 3.5%! Low rates also characterize this mortgage. However, keep in mind that FHA loans have an insurance premium built into the monthly payment, and it will continue through the loan's life.
VA Home Loan
The U.S. Department of Veterans Affairs assists active service members, veterans, and their surviving spouses buy homes with VA Loans. VA loans are extraordinarily generous, often requiring zero down payment or mortgage insurance. Acquiring this loan may take a bit longer (as the VA must verify military status), but it's worth the wait, and VA loans have impressive terms.
USDA Home Loan
The U.S. Department of Agriculture has a homebuyers assistance program, and no, you don't need to buy a farm to qualify. This loan program targets rural areas and provides 100% financing. Note that there are income constraints, and those vary by region.
Fannie Mae and Freddie Mac
Think of Fannie Mae and Freddie Mac as "engines" behind the home loan machine. These federally-sanctioned companies operate with local lenders to offer very attractive mortgage options on conventional loans, including 3% down.
Local Government First-Time Homebuyer Programs
Many state and local governments offer help to first-time homebuyers. The availability of such programs varies, so it's best to contact us for the most recent information.
FHA 203(k) Home Loans
This FHA-backed loan is designed for those who want to tackle a fixer-upper. It considers the home's value after improvements and lets you borrow the funds to complete the project as part of your main mortgage.
Good Neighbor Next Door
Originally called the Teacher Next Door Program, it now includes law enforcement, firefighters, and emergency medical technicians. It's a HUD-sponsored program and features 50% discounts on the list price of homes located in specific revitalization areas. There's the caveat, however, of having to commit to living in the property for at least 3 years, and these homes are often listed for just 7 days.
We recommend being ready with your preapproval if this is the route you plan to go.
Which mortgage option will you take advantage of to buy your first home? Which is your best choice? Find out! Start the application online. It only takes a few minutes, and you'll be one step close to being a homeowner.
Jonathan Caguioa
NMLS# 250609 / DRE# 01137630 Mobile: 949-241-2527
ALLIANZ MORTGAGE NMLS# 346138 / DRE# 01403147
15820 Whittier Blvd, Suite GWhittier, CA 90603
