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 Search for: CALIFORNIA HIGH COST???.
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paul57763

67 Posts

Posted - 08/18/2008 :  3:21:46 PM
I understand CA is a high cost state...basically what I want to do is I have a client who wants a rate in the low 5's that would take like 8 points or something like that to buy it down that low. Would I have a problem closing this loan in CA???

Please advise! Thanks!
Hustler12

1334 Posts

Posted - 08/18/2008 :  3:23:28 PM
LOL. Yes. CA is 8% for Section 32. Hope that helps.
TimmyZ1

908 Posts

Posted - 08/18/2008 :  3:51:48 PM
I hate telling anyone how to structure a loan but there's several good chart sout there about when buying points is a good idea and when its not. My suggestion is chat with your customer for a bit and see how long they will stay in the property.
mandysmom

338 Posts

Posted - 08/18/2008 :  4:36:39 PM
Although you don't specify the loan amount, how is this loan beneficial to your client? How long will it take them staying in the home to break even on that 8 points
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kevinloans

590 Posts

Posted - 08/20/2008 :  9:27:03 PM
since when did it change, i thought CA has always been 5.99%
ownerop

418 Posts

Posted - 08/20/2008 :  9:58:48 PM
quote:
Originally posted by kevinloans

since when did it change, i thought CA has always been 5.99%



California has 2 different thresholds, One is California High Cost the other is Section 32(federal law), Section 32 is 8% and high cost is 6% so all lenders keep you at 5.99 or below. Not all the same fees are used in the 2 different calculation so lenders run a high cost and seciton 32 test before docs are drawn to make sure you are not exceeding either one. I don't have the formula for either one at my disposal but I do have it at the office and can post it tomorrow.
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BigFire

2963 Posts

Posted - 08/20/2008 :  10:11:06 PM
5.99%

you borrower wants it, let them pay to get it, but I have not seen the rate that low in a long time. Check off sheet pricing.
Jack Straw

1335 Posts

Posted - 08/20/2008 :  10:25:09 PM
It is 6% up to the conforming loan limit where is falls under CA AB489 also known as Cal 32. Anything over conforming falls under Section 32.
ownerop

418 Posts

Posted - 08/20/2008 :  10:36:58 PM
NO, your client cannot pay that much to get the rate he wants. I doesn't make sense to me why the government has to legislate stupidity and prevent someone from paying so much to buy down a rate that they will never recoup the cost in the savings on the payment, but they do. I also don't understand why lenders publish rates that cannot be obtained, even with fee adjustments your client can never get the rate sheet pricing, I have seen some rates posted on rate sheets with a 10 point cost; basically the lender is saying we don't want to sell this product by pricing it like that, but why even publish it on the rate sheet; it makes no sense.
paul57763

67 Posts

Posted - 08/20/2008 :  10:44:02 PM
They told me they wanted that. I explained that it wouldn't make sense and wasn't worth it...but hey, the guy adamantly wants a blue suit, you sell him a blue suit...right?
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