Secrets of the CIA

Good credit 
isn’t all you need to buy your valley dream house

Mike Mcdonald Real Estate 0 Comments

Regardless of what group is looking for a home, each has its own set of financial problems and issues created from the aftermath of the financial crisis.
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The housing market in the Coachella Valley is formed from a mix of local, working households, immigrating retirees, and the second-home buyer. The largest of these by far is the second-home buyer, accounting for more than 50 percent of the homes here.

Of the resident home-owners, about half are retiree households and half are younger, working households. Each group has its own set of financing problems and issues created in the aftermath of the financial crisis. To get an idea of what these are for local, working residents, we turned to Walter Neil, President of Franklin Loan Center, with some questions.

Market Watch: What financing issues do valley households face?

Walter Neil: Today it’s all about CIA, that’s the acronym I use. If you can pass CIA, you can get a loan. It stands for credit, income, and assets. You have to have all three pieces to get a loan today.

MW: Tell us about credit.

WN: Credit scores can determine if you qualify or not, [they] can determine your interest rate, [they] can determine how much money you have to put down. But a low score doesn’t mean you can’t buy a home. It just means that your terms won’t be as good. You can still get a loan called FHA financing, down to a FICO score of 580, which is pretty remarkable. For conventional financing, 620 is a requirement. A conventional loan is typically a better loan, because the fees are less than for a government loan, but you have to have a better FICO score to get it.

MW: How about income?

WN: Income is straightforward: tax returns. What are you telling the government? What are you declaring for income? The last piece is assets. One of the biggest struggles first-time home buyers have is not the credit  … or … income. It’s typically they don’t have enough money in the bank . A lot of first-time home buyers get help from their parents. FHA [loans] are at 3.5 percent down payment. Conventional is 3 percent.

MW: So from your experience most households today can still buy a home. It’s just getting all the pieces in place.

WN: That’s correct.

MW: What interest rate comes with these low FICO score, low down payment, FHA and Conventional loans?

WN: The rates are still very similar. The range would be 3.75 percent to  4.375 percent.

MW: Great but aren’t there limits on FHA loans?

WN: Yes. The FHA loan limit for the valley is around $365,350. The conventional loan limit is $417,000.

MW: Those loan limits are near the median price of both La Quinta and Palm Desert. So if buyers have the reportable income, they can buy a home in many of our nicer communities here.

There is no law, civic or natural, that says you have to buy a house. Buying a home is the biggest financial commitment most people will make in their lifetimes and it should be undertaken with caution and common sense. Don’t buy because you’re hoping you can afford the mortgage when you get a raise in a year or two, or because you think you can flip the house and make some quick cash. Buy what you can afford and leave speculation to those who can afford the loss.

Vital Statistics

Taking the measure of Coachella Valley cities


Cathedral City: $222,500
Coachella: $235,500
Desert Hot Springs: $189,000
Indian Wells: $850,000
Indio: $299,066
La Quinta: $310,500
Palm Desert: $1,068,733
Palm Springs: $684, 167
Rancho Mirage: $941,250
*as of second quarter 2014



Cathedral City: 45
Coachella: 25
Desert Hot Springs: 13
Indian Wells:  12
Indio: 95
La Quinta: 54
Palm Desert: 100
Palm Springs: 102
Rancho Mirage: 49



Cathedral City: A
Coachella: AA
Desert Hot Springs: A-
Indian Wells: A+
Indio: AA-
La Quinta: AA-
Palm Desert: none*
Palm Springs: AA
Rancho Mirage: AA1
*per Finance Director Paul Gibson



Cathedral City: 25
Coachella: 13
Desert Hot Springs: 8
Indian Wells: 0
Indio: 24
La Quinta: 22
Palm Desert: 38
Palm Springs: 34
Rancho Mirage: 6



Cathedral City: 3
Coachella: 2
Desert Hot Springs: 3
Indian Wells: 1
Indio: 8
La Quinta: 3
Palm Desert: 5
Palm Springs: 17
Rancho Mirage: 4
*excludes major pro sports events



Cathedral City: 12
Coachella: 8*
Desert Hot Springs: 5*
Indian Wells: 0
Indio: 15*
La Quinta: 6*
Palm Desert: 14
Palm Springs: 10
Rancho Mirage: 2*
*2014; most recent figures from California Energy Commission, Petroleum Industry Information Reporting Act survey



Cathedral City: 3
Coachella: 1
Desert Hot Springs: 3
Indian Wells: 1
Indio: 4
La Quinta: 3
Palm Desert: 4
Palm Springs: 4
Rancho Mirage 2



Cathedral City: 48
Coachella: 33
Desert Hot Springs: 25
Indian Wells: 6
Indio: 64
La Quinta: 59
Palm Desert: 81
Palm Springs: 94
Rancho Mirage: 21



Cathedral City: 0
Coachella: 0
Desert Hot Springs: 0
Indian Wells: 0
Indio: 2
La Quinta: 2
Palm Desert: 7
Palm Springs: 8
Rancho Mirage: 1



Cathedral City: 9
Coachella: 8
Desert Hot Springs: 6
Indian Wells: 0
Indio: 11
La Quinta: 14
Palm Desert: 15
Palm Springs: 10
Rancho Mirage: 6



Cathedral City: 11
Coachella: 15*
Desert Hot Springs: 10
Indian Wells: 1
Indio: 21
La Quinta: 8
Palm Desert: 13
Palm Springs: 9
Rancho Mirage: 3
*includes Thermal



Cathedral City: 6
Coachella: 1
Desert Hot Springs: 1
Indian Wells: 2
Indio: 7
La Quinta: 7
Palm Desert: 11
Palm Springs: 5
Rancho Mirage: 4



Cathedral City: 9
Coachella: 8
Desert Hot Springs: 8
Indian Wells: 0
Indio: 19
La Quinta: 22
Palm Desert: 29
Palm Springs: 33
Rancho Mirage: 4



Cathedral City: 19
Coachella: 3
Desert Hot Springs: 2
Indian Wells: 0
Indio: 12
La Quinta: 3
Palm Desert: 5
Palm Springs: 7
Rancho Mirage: 3

— compiled by Mona De Crinis

Index figures were supplied by government/regulatory agencies or their representatives or were derived from onsite research and multiple web sources. To the best of our knowledge and resources, they were accurate at press time. — The Editors

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