The Home Buyer's Korner

Information presented should be used for educational purposes only.

June 6th, 2015

Guy looking up in color

GREATER AIEA/WAIMALU HAWAII

The Home Buyer’s Korner

Google+ RE Community

Google+ Mortgage Lender Community

Google+ General Contractor Communities

What is a Portfolio Loan?

imagesHere’s the deal… there is no such thing as a cookie cutter scenario when it comes to home financing, whether it’s FHA, Conventional, Jumbo, VA, or USDA, financing… everyone’s situation is different and so are many properties.

Portfolio loans are designed to get folks approved for a home loan when they are not eligible for any the more commonly available types of financing stated above or the property isn’t eligible for traditional financial, such as many condominium projects.

These types of mortgages are commonly funded by small banks or credit unions, and are kept in their “portfolio”. The reason portfolio loans are typically found at local banks or credit unions is simply because these financial institutions are more often than not home-grown than your large lenders.

Small community banks and credit unions have many reasons to help their local economy grow and know that if they give a home buyer a chance that an institutional lender wouldn’t, they will be a loyal client for life. Simply put, small community banks and credit unions are built more around relationships and willing to take risks because institutional lenders don’t.

Getting a portfolio loan is more of a common sense type of approach to mortgage lending, unlike your traditional financing, which are pretty much in-the-box type loan programs, while with a portfolio loan the story matters.

When is a portfolio loan necessary?

Recent Credit Issues – Many times a portfolio loan is called for when a borrower has damaged credit and prevents them from securing an FHA, VA, USDA or Conventional loan.

Bad things happen to good people. Maybe their credit was ruined because of a nasty divorce or due to an injury. Whatever the case, it’s going to have an impact. Sometimes when bad things happen it forces foreclosure or bankruptcy, but most often than not people get on with their lives and what was earth shaking a couple years ago turns out to only be rough patch, but that doesn’t really mean anything to an institutional lender, but portfolio lenders often look and the now and not so much at the past.

With a traditional mortgage, there is waiting periods you have to meet before being able to buy a house and even if you won the PCH $5000 a week for life sweepstakes you’ll have to wait least three years before you can do get a traditional loan if that rough patch created a foreclosure. But should it really be that way if the situation was truly temporary and you’re back on their feet? The answer more often than not is no if you’re working with a Portfolio lender.

If any of the following issues have created a rough patch for you consider a portfolio lender, should you decide it’s time to purchase a home.

  1. Bankruptcy;
  2. Foreclosure;
  3. Short-sale;
  4. Ex-spouse ruined credit during nasty divorce;
  5. Piled up medical bills;
  6. collections;
  7. Tax lien;
  8. Judgment;
  9. Low credit scores due to high credit card balances;
  10. Late payments in last 24 months.

Unique Property Type – Sometimes the property you’re looking to buy is particularly unique. So unique that it does not meet the necessary guidelines to be eligible for traditional financing. It’s most common with condominiums. Because the homeowners association gets a full review by the lender to determine its financial stability, many condos are deemed “non-warrantable”. Issues that make condominiums non-warrantable by institutional lenders can be:

  1. Homeowners association has a lack of reserves;
  2. Inadequate insurance coverage;
  3. Inadequate flood insurance coverage;
  4. Too many units are tenant occupied (renters);
  5. The complex is under construction or in a phase that calls for more construction;
  6. Too many units are owned by 1 person or entity (investor owns high percentage of units);
  7. The remaining terms of the Leasehold doesn’t meet FNMA, FHLMC, or FHA guidelines; 
  8. A project that has hotel–like characteristics (condohotel).

Other Property Issues for a Traditional Lender can be:

  1. Commercially zoned property that is being used as residential;
  2. Berm home;
  3. Log cabin (if not typical in the market);
  4. Any type of home that an appraiser has a difficult time finding comparable sale data.

Foreign Nationals – When folks move to the US and want to buy a house right away, they’re commonly faced with one major problems:

  • They don’t have credit established in the United States and they do not have documented income acceptable to a traditional lender.

If this sounds like you it’s a perfect reason to pursue a portfolio loan. There are some main things you want to be prepared to provide if you’re looking for a portfolio loan and new to the United States.

  1. Type of VISA, and all VISA applicable documentation;
  2. Previous 2 year income history in previous country (pay-stubs/tax returns);
  3. Asset statements;
  4. Letter explaining intent to stay in the US;
  5. Proof of income established in United States (employment letter, pay-stub);

Unique Income Circumstances – We often see borrowers that are financially stable, have great credit, solid assets, but don’t qualify for a mortgage due to a simple technicality regarding their income situation. This is another great opportunity to explore the possibility of getting a portfolio loan.

Keep in mind, portfolio loans are not necessarily “stated income” loans, where the borrower tells the lender how much they make, and all is well (like the old days before the housing meltdown). Portfolio loans are still full documentation loans, but are looked at from a common sense standpoint.

For example, let’s look at 1099 employee. These are folks that typically are considered “private contractors” and are given a 1099 at the end of the year to show earnings (instead of a W-2 like most employees). In this case, lenders need a 2 year history receiving that type of income. The reason for that is 1099 employees will sometimes have some unique write-offs on their tax returns that could possibly have an impact on what their actual net earnings are.

The problem with this is that many times 1099 employees are paid on a salary or set amount of income for a set amount of time. So basically, the borrower is guaranteed $X for the next X number of months, but can’t use that income to qualify because they don’t have a two year history of being a 1099 employee. Does that make sense? Heck no! Especially if that individual has worked in that same line of work in the past and has a degree in that field, but life isn’t always fair, so don’t try to get something you can’t get and focus on what you can get.

The reality is that all of the above scenarios are fairly common and people think they are stuck until they get a breath of fresh air learning about portfolio loans.

VISIT OUR GREATER AIEA/WAIMALU AREA

HOMES FOR SALE LISTINGS

Livingston Homes for Sale

FIND HOMES THROUGHOUT AIEA/WAIMULA HAWAII

HUD FORECLOSED HOMES IN & AROUND THE GREATER AIEA/WAIMULA HI AREA

USDA FORECLOSED HOMES IN & AROUND THE GREATER AIEA/WAIMULA HI AREA

FNMA HOMEPATH FORECLOSED HOMES IN & AROUND AIEA/WAIMULA HI

FIND MORE FORECLOSURES IN & AROUND WAIMULA HI

HAWAII HOME OWNERSHIP TOOLS

Your Home Purchasing or Refinancing & Renovation Tools,

Home Improvements, Home Renovations,

Mortgage Loan Officers, Real Estate Agents & General Contractors

are ready to assist you with your home purchase.

Here are just a few of the home improvements

you might consider with any Home Renovation loan

Repair or replace a roof

Install, replace or repair gutters and downspouts

Replace, repair or upgrade your HVAC system

Repair or replace plumbing

Install, repair or replace electrical systems

Kitchen remodeling (including the purchase and installation of appliances)

Bathroom remodeling, Full interior painting, Total exterior painting

Repair or replace a septic system and/or well

Disability access (wheelchair ramp, elevator, widen doorways)

Build, repair or replace deck, patio or porch

Basement waterproofing and finishing

Abatement/Stabilization of lead-based paint hazards

Replace old windows, Room additions, Finish an attic

Add a second story to your home

Replace a termite damaged sill plate (a water-damaged sill plate also)

Possible landscaping items such as correction of grading & drainage problems,

tree removal, repair a driveway and sidewalks

FHA 203K

Your Home Purchasing or Refinancing & Renovation Tool

Mortgage Loan Officers, Real Estate Agents & General Contractors

are ready to assist you with your home purchase

FANNIE MAE HOMESTYLE

The Conventional Alternative to FHA 203K

Great for Real Estate Investors and Second Home Renovations

Mortgage Loan Officers, Real Estate Agents & General Contractors

are ready to assist you with your home purchase

USDA RURAL DEVELOPMENT

Up to $10K for Home Improvements, Renovations or a Simple Remodel

Mortgage Loan Officers, Real Estate Agents & General Contractors are ready to assist you

A SIMPLE HOME SHOPPING INSPECTION TOOL

Organizing your home shopping experience affords a wise decision-making process.

This simple home inspection tool makes your ultimate buying decision a smart one.

To print this document click on “Open in New Window” located at the lower right corner;

click on “File”; then click on “Print”. In the center of the screen you will

have the option to “Create A Printable PDF of the Presentation”.

START YOUR PATH TO HOME OWNERSHIP TODAY

FNMA HomeStyle FNMA My Community Mortgage FHA One-Time Close Construction Portfolio or VA home loan Homes for Sale REO Short Sales FNMA HomePath Properties HUD Homes USDA Homes Condominiums Co-OpsTownhomes Manufactured Homes Modular Homes Mobile Homes Log Homes Second Homes Investment Property 2-4 Family Custom Home Builders Custom Built Homes Luxury Homes General Contractors Home Improvement Experts Kitchen & Bathroom Renovations Real Estate Brokers & Agents Mortgage Lenders Federal Credit Unions Community Bankers Real Estate Listings Jumbo Investor Hard Money HARP HECM Equity Zero 3% 3.5% Portfolio Non-Warrantable Down Payment Assistance 96701 Aiea Heights Halawa Halawa Heights Halawa Valley Koauka Loop Pearl Ridge Waimalu Honohina Pl Honohina St Honohono St KAM HWY Poaha Pl Honomanu St Koauka Loop Kam Hwy KAMEHAMEHA HWY Maohu Pl Moanalua Rd Hoohalawai Pl Haaheo Pl Hoolauae St Pohue Pl Pohue St Pohuli St Moanalua Rd Mikalemi St Papalealii St Kanuku Pl Kanuku St Mikinolia Pl Mikioi Pl Kaokoa Pl Hukaa St Kaonohi Pl Kaonohi St Kapahulani Pl Auhau Pl Aumakiki Loop Aumakiki Pl Kapukapu Pl Aupunimoi Pl Hulumanu St Koauka Loop Uahi Pl Uahi St Ualo St Uao Pl Poko Pl Poko Rd Uhaloa St Ualo St Hapaki St Koauka Loop  Uwau Dr Kiawe St Olena Pl Olena St Koauka Loop Koauka St Olepe Loop Anounou Pl Ulu St Ululaau Pl Ulune Pl Ulune St A Kekoa Pl Alia Pl Hailimanu Pl Hapuku St Hapuu St Eke Pl AIEA STRM Iwaiwa St NAPUAHANI RD Kohomua St MOANALUA RD Koauka Loop Pali Momi St Hakina St Halakea St HALAWA HEIGHTS RD Halawa Dr HALAWA DR Halawa Heights Rd HALAWA HTS Welelau Pl Chester Way Kealaluina Dr Aliipoe Dr KOMO MAI Komo Mai Dr Hale Momi Pl Lipoa Pl Lania Pl LANIA WAY Maki St Moanalua Rd Lanikuakaa St Malae Pl Wilou St Moanalua Rd Leialii St Laelua Pl Moanalua Rd Ewelani St Wiliko St Oliwa St LII IPO ST Leihulu Pl Aiea Hts Dr KAUHALE ST Kaulahao St Kaulainahee Pl Naalii Pl Naalii St KAUPILI PL KAUPILI PL Olopana St Aheahe St Neki St Fernridge Pl Aiea Heights Dr AIEA HTS Aiea Kai Pl Aiea Kai Way Aiealani Pl Pahemo Pl Pahemo St Pahiolo St Nahele Pl Nahele St Nahiolea St Leke Pl Kaahumanu St Kaonohi St Kaonohi St Kaonohi St Inea Pl Iho Pl Ainanui Loop Kaahumanu St Kaonohi St Paihi St Komo Mai Dr Nakui Pl Lulu Pl Lulu St Kiawe St Iho Pl Lilia Pl Iho Pl Kaahumanu St Lilikoi Pl NALOPAKA PL Kaonohi St Komo Mai Dr Kaahumanu St Iho Pl Kaahumanu St IWAENA ST Iwaiwa Pl Iwaiwa St IWAIWA WAY Kaonohi St Komo Mai Dr Kaonohi St Iho Pl Kaahumanu St Kaonohi St Komo Mai Dr Kealakaha Dr KEALAKAHA RD KEALALUINA Kealaluina Dr Kaahumanu St Keanae St Kaahumanu St KIHALE PL Keapua Pl PLANTING STRIP Kaahumanu St MOANALUA RD HALAWA HEIGHTS RD NAPUAHANI RD OLOPANA Kilinoe St Kaahumanu St Iho Pl Analio Pl Pakalana St Apala Loop Pakonane Pl WAOALA Waoala Pl Apelekoka St Lupea St Palaialii Pl Kuawa St Piki Pl Piki St Piku Pl Piku Way PALAIALII PL Palaialii Way Heleconia LAKA PL Kuhao Pl Pono St Ponohale St Ponohana Loop Ponohana Pl PONOKAULIKE PL Ponokaulike St Ponokiwila Pl Ponokiwila St Akaaka St Akaaka St Kuini St Malualua Pl Malualua St Paleo Way Nanu Pl Holo Pl Holoai St Kulawai Pl Kulawai St Kulawea Pl Kulawea St Kulea Pl Pilikoa St Holopuni St Kulina St Keanae St KINOOLE PL KUPONO PL Kupukupu Pl Kupukupu St Kupuwao Pl POOHOLUA Pooholua Dr MANAKO Manako Pl Manako St Waiakea Pl Poopaa Pl Napuanani Rd Wailana Pl Onikiniki Pl Onikiniki Way Upapalu Dr UPAPALU ST Keikialii St Kipaepae St Kipikua St Puaalii St Moanalua Rd Moanalua Loop Moanalua Rd WAIPAO WAIPAO PL Leomanu Pl Uao Pl Koauka loop Koauka Loop KEKOA Kekoa Pl Iho Pl Ohaiula Pl Ohapueo Pl Aloalii St Puaalii Pl Puaalii St PUAALII WAY PUAANUHE ST Puaapiki St PUAHAU PL Puahoku Pl PUAILIMA ST PUAILIMA PL Puailima St Puakala St Puakika Pl PUAKUKUI PL Pualaa St Ohekani Loop Ohekani Pl Ohelopapa Pl Ohenana Loop Ohenana Pl PUAOLE PL Puawa Pl Ohiakea St OHIAKU ST Alolua St Ohialomi Pl Heen Way Alania St Kiawe St Oa St Iho Pl Ohiaku Street SALT LAKE BLVD Mahiko Pl Lalani St Lalawai Dr Mahipua St Opukea St Kihale Pl KIHALE ST Ipu Pl Ipuala Loop Ipuala Pl Kihewa Pl Kikala St Hoala St Hoapono Pl Hekaha St Puliki Pl Hele Mauna Pl Mahola Pl Heleconia Pl Meaala St Puluniu Loop Hiliu Pl Popolo Pl Kileka Pl Kilepa Pl Kilihe Way Kilihea Way Kilika Pl KILINOE ST Kiliohu Loop Kilipohe St Huakanu Pl Huakanu St Iho Place Naukewai Pl Lohea Pl Kaahele Pl KAAHELE ST Kaahumanu St Kaakau Pl Kaalo St KAAMILO PL Kaamilo St Kahaea Pl Lokowai Pl LOKOWAI ST Kahapili St Kahema Pl KAHILINAI Kahilinai Pl Kaonohi St IEIE PL Kaholi Pl KAHUA PL Auamo St Nohoalii St Nohoaupuni Pl Nohua Pl Iho Pl Iini Way Kaimakani St Kaimu Loop Palula Way Lauhulu St Laulima St LAUOLE Lauole St ILIEE ST Iliee Pl ILIEE ST Kalaloa St Kalamoho Pl STREAM Kaahumanu St Kalawina Pl Hoio Pl Hoio St Pamoho Pl Hokea St HOKIO PL Kalike Pl Puumakani St Kaonohi St

Join us at Real Estate Social

Comments are closed.