Bad Credit Mortgage Loans California With No Lender Overlays

Bad Credit Mortgage Loans California With No Lender Overlays

This BLOG On Bad Credit Mortgage Loans California Was Updated On December 21st, 2017

The Gustan Cho Team at USA Mortgage specializes in originating and funding Bad Credit Mortgage Loans California with no lender overlays .

  • California is one of the top states that got affected by the Great Recession of 2008
  • Many California residents lost their jobs, businesses, and homes
  • California is also the largest state in the continental United States and has one of the highest home prices
  • California citizens can qualify for Bad Credit Mortgage Loans California with no lender overlays
  • The Gustan Cho Team specializes in Bad Credit Mortgage Loans California with no overlays on government and conventional loans
  • Plus, NON-QM Loans are a very popular loan program where there are no waiting period after bankruptcy and foreclosure
  • Home buyers can now qualify for home loans after bankruptcy and foreclosure in California without needing to meet mandatory waiting periods

FHA Streamline Refinance In California

Due to the high home prices in California, most counties in the state of California has larger FHA Loan Limits. Homeowners with current FHA Loans can qualify for FHA Streamline Bad Credit Mortgage Loans California.

Here Is The FHA Streamline Refinance With Bad Credit Qualification Requirements

  • No Credit Score Requirement
  • Recent late payments, recent collections, recent charge offs does not matter
  • The only requirement is that the homeowner needs to have been timely on their current FHA Loan for past 12 months
  • No appraisal required
  • No income verification required so debt to income ratios is not an issue
  • No closing costs: Lender credit will pay all borrower’s closing costs

Other California Refinance Loan Programs

California homeowners who are thinking about refinancing their mortgage, there are other options.

Here are some California mortgage refinancing options homeowners may consider:

  • Refinancing 30 year fixed rate mortgage to 15 year fixed rate mortgage
  • 15 year fixed rate mortgages have lower mortgage interest rates than 30 year fixed mortgage rates
  • Refinancing their adjustable rate mortgage (ARM) to a 15 or 30 year fixed rate mortgage
  • Refinancing 15 year mortgage to 30 year fixed rate mortgage to reduce monthly mortgage payment
  • Take out co-borrower with refinance
  • Cash-out refinance
  • Refinance FHA Loan into a Conventional Loan to avoid paying annual FHA MIP

Refinancing Adjustable Mortgage Rates To Fixed Rate Mortgage

There are many homeowners who have adjustable rate mortgage loans, also referred to as ARM , from the sub-prime days with high or no limits on interest rate increases.

  • Homeowners who have such loan programs should seriously consider switching it to a fixed rate mortgage or to an adjustable rate mortgage that limits changes in the rate at each adjustment date as well as over the life of the loan
  • California homeowners can still get competitive mortgage rates with bad credit and low credit scores
  • The mortgage industry went through major changes since the 2008 Real Estate and Mortgage Collapse where Predatory Lending is now illegal and in order for a loan officer to be able to refinance borrowers, the borrower needs to get a net tangible benefit in order for the refinance mortgage process to proceed

What Determines Mortgage Rates

Not every California mortgage borrower gets the same mortgage interest rates. Mortgage rates is determined by several factors.

Here are the factors that determine mortgage interest rates:

  • Borrowers credit scores: Lender view higher credit score borrowers as less risk
  • The higher the credit scores, the lower the mortgage interest rates
  • Property Type: Single Family Homes are considered the less riskiest so it offers the lowest mortgage interest rates
  • Condos, townhomes, and two to four unit properties are considered riskier so mortgage rates are higher
  • Down Payment on Conventional Loans: Conventional Loans are not insured by the federal government so lenders will offer lower rates to home buyers who put larger down payments on Conventional Loans
  • Any Conventional Loans with under 20% down payment require private mortgage insurance 
  • Premiums on private mortgage insurance ( PMI ) depends on borrower’s credit scores and the amount of the loan to value of the property
  • Prior bad credit does not affect mortgage rates. Only credit scores affect mortgage interest rates
  • Prior bankruptcy, deed in lieu of foreclosure, foreclosure, short sales do not affect mortgage rates

California refinance loan borrowers need to consider locking their mortgage rates as soon as possible.

  • After the election of President Donald Trump, mortgage rates are extremely volatile with major daily swings
  • Not locking in the mortgage rate is called letting rates float where in the event mortgage rates skyrocket, the refinance process will be dead
  • Loan officers should pay attention on mortgage interest rates and lock borrower who are refinancing as soon as possible
  • In the event if there is a closing delay, lenders can grant extensions on mortgage locks

FHA Loans With Bad Credit In California

FHA Loans are the most popular loan program in California. The Federal Housing Administration (FHA) is a government agency under the umbrella of the U.S. Housing and Urban Development (HUD).

  • FHA does not originate nor fund FHA Loans. FHA’s function is to promote home ownership in the United States by insuring banks and private lenders on the home loans that they originate and fund that meet HUD Guidelines
  • In the event if the FHA borrower defaults on their FHA insured home loan, HUD will guarantee the loss to the bank or mortgage company that funded the FHA Loan as long as the lender met all FHA Guidelines
  • FHA is the best Bad Credit Mortgage Loans California with only 3.5% down payment required

Here are the basic FHA Guidelines

  • Minimum credit score requirement of 580 FICO for 3.5% down payment home purchase loan
  • Maximum debt to income ratio requirements is 56.9% for borrowers with 620 credit scores or higher
  • Under 620 FICO borrowers, maximum debt to income ratio is capped at 43% DTI
  • Outstanding collections and charge off accounts do not have to be paid 
  • Co-borrowers allowed
  • 100% gifted funds can be used for down payment on home purchase
  • 2 year waiting period after Chapter 7 discharged date
  • Borrowers can qualify for FHA Loan one year into Chapter 13 Bankruptcy repayment plan with trustee approval
  • No waiting period after Chapter 13 discharged date
  • Three year waiting period after foreclosure, deed in lieu of foreclosure, short sale

What Are NON-QM Loans?

NON-QM Loans is a very popular mortgage program where there is no waiting period after bankruptcy and foreclosure to qualify for home loans.

  • The Gustan Cho Team at USA Mortgage now offers bank statement mortgage loans for self employed borrowers
  • No tax returns are required
  • Personal and/or business bank statements are used to derive income
  • 100% of deposits over 24 months is averaged on personal bank statements. 50% of deposits is averaged on business bank statements

Here are the benefits on NON-QM Loans:

  • No waiting period after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale
  • Bank statement loans: Borrowers who are self employed and have a lot of write offs can qualify with our bank statement loan program where write offs on tax returns does not matter
  • Available for both owner occupant and non-owner occupant investment properties

No Doc Fix And Flip Loans For Real Estate Investors

The Gustan Cho Team offers the no doc fix and flip loan program for real estate investors.

Here is how our no doc fix and flip loan program works

  • Borrower’s income does not matter so there is no debt to income ratio requirements
  • Only the property is underwritten and not the borrower
  • 15% down payment on the property purchase and 10% down payment on the rehab costs
  • 2 to 3 week closings
  • Can close on the name of LLC or borrower
  • 9 month interest only term
  • Extensions can be given in the event with delays with construction project
  • Minimum $100,000 loan amount and no maximum loan amount

Borrowers with bad credit or higher debt to income ratios can now qualify for mortgages. Please contact Gustan Cho Associates at 800-900-8569 or text Gustan on his cell at 262-716-8151 for faster response or email us your mortgage inquiries at

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