Jumbo Renovation Loans Opening Doors in the High-End Market

Breaking New Ground with Jumbo Renovation Financing renovation loans

I have been a renovation loan specialist for years and have begged every employer that I’ve had for one thing, a jumbo renovation loan. I have finally gotten my wish and the high-end, luxury market has a new financing toy.

There’s always been a huge gaping hole in the renovation loan market. Falling into that abyss were high-end consumers looking to buy or refinance homes that need mortgages outside of FHA or conforming loan limits.  In many higher cost states, like California, mid-range buyers were sucked into the renovation black hole as well.

When the private mortgage market disappeared in 2006 Fannie Mae and FHA stepped up to the plate and provided an outlet for higher cost areas by raising their loan limits from $417,000 an $271,000 respectively. In many areas those are still the loan limits and, per recent developments, they are going to return to pre-2007 levels.

As it stands right now ‘high balance” loan limits in places like California, DC, New York and Hawaii at currently $625,500. If you’ve ever checked out homes in those markets then you know that severely limits your choices unless you have significant assets to invest in the down payment. [rant] A reduction in those loan limits would be high on the the list of moronic housing decisions that FHFA have laid out in the past couple years.[/rant]

In order to protect ourselves and customers against the foolishness of policy makers in Washington, we decided that a new loan product was in order and the JUMBO RENOVATION MORTGAGE  was born. Less than a month old demand is high as buyers earnest seek the home of their dreams in housing market that is utterly devoid of inventory. It’s tough on buyer and tough on agents who are seemingly a day late on the most desirable homes.

With renovation financing you don’t need the perfect home, just a good home in a good location. You do the rest with your own personal touch and you end up with the perfect home, your dream home.

Jumbo Renovation Guidelines

Since this is a one of kind proprietary product we decided that we’d roll the product out conservatively. As we start to see more statistics on default rates and customer trends I expect guidelines to expand. As it stands, here are the current underwriting parameters (some exceptions may apply).

Credit Score – 700+ Mid Scorejumbo renovation

Maximum Loan Size – $1,500,000

Max Renovation Amount – $150,000

Occupancy – Primary Residence ONLY

Max LTV (Loan to Value) – 80% Purchase, 75% Refinance

Reserves – 6 Month PITI (PITI = 1 Mortgage Payment  + Escrows)

Major Derogatory Credit (Foreclosure, Bankruptcy, Deed in Lieu) = 7 Year Waiting Period

Clearly we are looking for a well qualified buyer. If you are buying a million dollar house and hoping to use a mortgage then that is probably not a surprise.

If you’ve had some major derogatory credit or just don’t have the assets then we can always explore other renovation options that will get you into the home (like the 203k or HomeStyle) then use the power of time to build equity and assets to pursue a jumbo renovation refinance. We know the renovation market backwards and forwards, creativity is one of our strong points.

The $150,000 max renovation escrow will be limiting to some customers too, but once again creativity financing is possible. Say you plan to add a 2nd story, fully renovate the main floor and build a pool. The contractor bids you are getting average $300,000 for the full project – $150,000 for the addition, $100,000 to renovate the main floor and $50,000 for the pool.

We could help with either the main floor + pool or the addition. Both would add tons of value which would allow you to come back 12 months down the road and do a renovation refinance (using after repair value) to do phase two OR, in some cases, you just added enough value to get a home equity line (based on current value) to finish out the remainder of the renovation.

Guidelines are guidelines and borrowers fit into them and not vice versa. Square pegs don’t fit in round holes unless you take a buzz saw and some sandpaper to them. That’s actually the fun part for us, making things work through experience an creative knowledge.

Have questions? Ready to move to application? No problem, we are here to help. Simply click on the link below and fill out the contact form OR give us a call and we’ll guide you, answer questions and get the ball rolling.

Click HERE to CONTACT US 

Jonathan Blackwell – Renovation Loan Specialist

 

 

 

Property Condition When Selling A Property

When you plan on selling a property, it’s important to remember that most buyers will have to take out a mortgage to buy your property.  When a mortgage company or bank looks to help finance a property for a buyer, an appraisal will be necessary to show condition of the property.  If there are any condition problems that the lender doesn’t allow, this can delay the closing of your property or kill the deal.

Make sure you understand what major items a lender will look for in the condition of a property, when a buyer is taking out a mortgage.  Here is a good list of items that you should review, if you plan on selling your property anytime soon.

 

Major Items to Check on Your Property

  • Roof – Lenders are looking for leaks and major damage or major deterioration.
  • Windows/Doors – Make sure they are not broken and are working properly.
  • Basement – Make sure there are no signs of major cracks or movement in the walls.  Foundation issues can really cause problems when it comes time to sell your property.
  • Walls – Make sure the walls don’t have large holes, signs of water damage or unfinished.
  • Repairs – Any repairs or improvement projects must be complete.  You don’t necessarily have to have the trim installed, but all fixtures need to be installed.
  • Heating – This must be in working condition.  It doesn’t have to be new, but it must work.
  • Water – This must be working and flow through the house, without any leaks.
  • Hazardous Conditions – Make sure some items like, methane gas, lead paint, radon gas, radioactive material, landfill, toxic materials, etc. are not in or on the property.  This can cause big concerns with the lender.

It’s always recommended that you have your home inspected by a licensed home inspector.  This way, you will have peace of mind that there will be little to no problems with the condition of your property when the buyer uses a lender to buy it.

FHA Mortgage Program: Popular Among First Time Home Buyers

The FHA mortgage program has become a very popular mortgage program with first time home buyers.  Home buyers do have many options with mortgage programs when looking to get pre-approved, but the FHA program has become the most popular.

There are many reasons why the FHA program has become very popular among first time home buyers.  Here are some of the great benefits why the FHA mortgage program is great for home buyers.

Credit Score

The minimum credit score allowed with most lenders is a middle score of 640.  It’s very common that home buyers don’t realize they have a good enough credit score to qualify for the FHA mortgage program.  The lower credit score that is allowed opens up the opportunity for many first time home buyers to qualify for a mortgage.

Down Payment

The minimum down payment is only 3.5% of the purchase price.  The down payment can even be gifted funds from a family member.  Many home buyers didn’t know the down payment can be gifted.  Home buyers can even use the funds from a 401k retirement account.

Interest Rates

The interest rates for the FHA mortgage program are very low.  We have been seeing the FHA interest rates lower than most conventional mortgage rates, when comparing 30 year fixed rates.  These lower interest rates keeps the total payment lower for home buyers, which allows them to afford more of a home.

Debt to Income Ratio

The debt to income ratio allowed is higher with the FHA program versus a conventional program.  The debt to income ratio is the total monthly payments, including the new mortgage payment, divided over the total gross monthly income.

Example:  The new mortgage payment total is $1500, plus an auto loan payment of $300, plus a credit card payment of $50, gives you a total monthly debt of $1850.  The total monthly income, before taxes, is $5000.  1850/500 (total debt/total income) = 37%.

The FHA program lenders allow up to 55% debt to income ratio percentage, where a conventional mortgage only allows up to 45%.

These benefits have made the FHA mortgage program the most popular program among first time home buyers.

HARP 2.0 Program – Underwater Homeoweners In Wisconisn

This updated refinance program, HARP 2.0, has been helping many underwater homeowners in Wisconsin.  Many homeowners are reading different guidelines from different lenders with this program.  This will happen, because each lender may create their own guidelines for HARP 2.0.

Here are some basic guidelines to help you understand what is allowed with HARP 2.0.  You always want to check with the lender you plan on working with first, in order to make sure your situation will qualify.

Guidelines To Follow

  • Fannie or Freddie Backed - Your mortgage needs to be backed by Fannie Mae or Freddie Mac in order to qualify.  Also, your mortgage had to be received by Fannie Mae or Freddie Mac before June 1, 2009.  Here are the website’s to look up your mortgage with Fannie and Freddie:
  • No LTV Limit - You can have little to no equity or be completely underwater on your mortgage.  There is no cap to how far underwater you are.  Some big banks have a cap to their LTV (loan to value), so you should check with a local mortgage company to find those that do not have a cap.  A Wisconsin lender that has no cap to the LTV for HARP 2.0 is Joshua Bucio.  Read more at http://www.milwaukeeharprefinance.com
  • No Appraisal - Just about all of the HARP approvals are receiving a waiver on the appraisal report.  This means you will not be required to appraise the home.  This will help reduce your costs and streamline the process of your refinance.
  • Eligible Properties - Your primary residence, second homes and investment properties all qualify for the HARP 2.0 program.  Your property can even be a multi-unit, up to 4 units total.
  • Second Mortgage - If you have a second mortgage or home equity line of credit, you can still refinance with the HARP program.  You cannot payoff the second mortgage with the refinance, so you have to keep it open.  This program is only for first mortgages.
  • Mortgage Insurance - If you currently have a mortgage insurance (aka PMI) payment, as part of your total payment, that’s ok.  The mortgage insurance on your current mortgage will be transferred to your new mortgage loan.  This will not hold you back from qualifying for HARP 2.0.

Please keep in mind many of the big banks have many more strict guidelines than most local mortgage companies.  It may not be your best choice to use a big bank.  Take the time to contact a local mortgage company that helps with the HARP refinance program.

VA Loans Still Safest Product on the Market

The Department of Veterans Affairs issued a news release this week trumpeting the continued growth of the VA Loan Guaranty program. The agency backed just under 360,000 loans last year, a 14-percent increase from FY10 and a whopping 168-percent increase since FY07.

But that wasn’t the only good news. The release also noted that VA loans have had the lowest rates of foreclosure and serious delinquency for the past 14 quarters and 11 quarters, respectively, according to the Mortgage Bankers Association National Delinquency Survey.

Those figures are even more surprising considering that about 90 percent of VA loans come with no down payment.

“The continued strong performance and high volume of VA loans are a testament to the importance of VA’s home loan program and a tribute to the skilled VA professionals who help homeowners in financial trouble keep their homes,” Secretary of Veterans Affairs, Eric K. Shinseki said in the release.

The VA works closely with borrowers and their servicers to avoid foreclosure. Veterans in jeopardy should always contact their loan servicer first, but the VA provides services and staff to help borrowers pursue options like modifications, forbearances and repayment plans. Homeowners can call 877-827-3702 to talk with a VA specialist.

“We are committed to making even more veterans and service members aware of this important benefit and delivering the assistance they deserve when financial difficulties arise,” said VA Under Secretary for Benefits Allison A. Hickey.

 

HARP Refinance Program – Underwater Homeowner’s in Atlanta Get RELIEF!

 Atlanta HARP RefinanceUnderwater Homeowner’s in Atlanta Get Refinance Help from Obama Administration

Atlanta, GA (January 2012) – Originally launched in April 2009, the Home Affordable Refinance Program (HARP) was designed to help underwater homeowner’s take advantage of low mortgage rates even if they were low equity or slightly upside down.

By allowing underwater homeowner’s the ability to take advantage of today’s lower interest rates without have to pay down their equity the HARP program was intended to help homeowner’s save money which they would them use to purchase consumer goods or create new jobs.

Sounds like a good idea right?

It was. HARP 1.0 helped a lot of people refinance. It was limited though. There were restrictions, price adjustments and loan to value caps that prevented a lot of Atlanta homeowner’s from benefiting.

One of the biggest issues with HARP 1.0? It was limited to your current mortgage servicer, you had to deal with a big 4 bank. Welcome to your own personal hell.

90+ days turntimes? CHECK. Multiple requests for the same documents? CHECK. Days waiting for you loan officer to return your call? CHECK. Three weeks before an initial decision? CHECK.

Enter HARP 2.0

Limited to a big 4 bank? Not anymore! The new HARP program is opened to all participating mortgage lenders. You can now use the mortgage professional YOU want to use for your HARP refinance. No more 3 month turn times to get your HARP closed. Does 3 weeks sound better than 3 months?

Loan to value restrictions? Gone! No equity, no problem. It does not matter how upside down or underwater you are, HARP 2.0 has no restrictions on loan to value.

Not an Owner Occupant anymore? No problem! HARP 2.0 is available to all homeowners. Second homes, investors, people that have relocated can now take advantage of today’s low rates.

Sounds good right? How do I know if I am eligible for HARP?

HARP 2.0 Eligibility & Guidelines

HARP, sometimes referred to as DU REFI+ or the Obama Refi plan, has some basic eligibility guidelines that potential refinance homeowner’s must meet

In order to be eligible for the HARP refinance program :

  1. Your loan must be backed by Fannie Mae or Freddie Mac.
  2. Your current mortgage must have a securitization date prior to June 1, 2009
  3. You must be current on your mortgage with no late payments in the last 6 months.

If you currently have an FHA, VA, USDA or Jumbo loan you will not be eligible to participate in the HARP 2.0 refinance program. You may have other refinance options, but HARP is not one of them.

No LTV Restrictions for HARP 2.0? Really?

Yes, there are really no loan to value (LTV) restrictions! Even if you are ridiculously underwater, so long as you meet the HARP | DU Refi Plus eligibility requirements outlines above you should be eligible to participate.

Even if you are currently at 200+% LTV you can still benefit from Obama’s Home Affordable Refinance Program. Ready to see if you meet HARP Guidelines? Stop waiting, click below for a HARP 2.0 consultation and we will let you know your refinance options.

Get a HARP Rate Quote Now!

Florida HARP Refinance

Are you one of the 300,000 Atlanta homeowner’s underwater? Keep your house, explore a HARP Refinance, learn how Obama’s Home Affordable Refinance Program can help you!

 

How Do I Choose My FHA 203K Lender?

Choosing a FHA 203K Lender

Why Is 203K Lender Selection Important? What Should Potential FHA 203K Clients Look For?

203k.tv When I started specializing in 203K Renovation Loans there were very few people that offered the product. There was little to no training and you were mostly resigned to using a lender that would end up selling the loan to a certain big 4 bank that, quite frankly, sucked.

Times have changed, there are multiple 203K lender options these days and it seems that every loan officer now offers the product. Competition is good right? It is good, for the most part.

It is fantastic for the foreclosure market that lenders have finally joined the show and made the 203K loan widely available. After all, foreclosure renovation loans, like the 203K, the HomePath Renovation and the HomeStyle, are integral pieces to restoring the housing market.

However, the growth of the renovation loan market comes with a price. Lost earnest money, useless inspections, ridiculously long escrows, angry sellers and frustrated home-buyers. It doesn’t have to be that way though.

Those of you that have researched the 203K have seen and heard the horror stories. On the message boards, in the forums and from Real Estate Agents and even mortgage lenders. FHA 203K loans are too difficult, too much paperwork, too slow and too expensive.

Guess what, they are right. They are all of those things if you choose the wrong Loan Officer, the wrong HUD Consultant or the wrong Contractor. 203K loans are a specialty mortgage product, they require a SPECIALIST.

It’s Not the 203K Loan Product, It’s the 203K Loan OFFICER

I understand the bad rap that 203K loans get. I get between 5 – 10 calls a week from frustrated home-buyers working with the wrong loan officer, the wrong lender, the wrong consultant or the wrong contractor. For most of them it’s too late, I can give some advice, but I can’t save them or rescue their closing.

They didn’t do their research. They entered blindly into one of the largest transactions of their life. It’s not all the customers fault, many of them trusted their agent to get them to the right loan officer or that their loan officer was qualified.

I’ll probably ruffle some feathers, but 80%+ of agents and loan officers are not qualified to handle even a basic transaction, let alone a renovation loan. So how do you avoid the 80% and choose wisely? Research.

Choosing Your 203K Loan Officer

I think this is obvious, but clearly you start with Google. Educate yourself on the product FIRST. If you haven’t done the research then how will you know if you loan officer is answering your questions correctly?

As you peruse Google, Bing or Yahoo for 203K info you’ll see at a lot of the same folks showing up. These are you experts. They may not be in your area, but they can probably guide you to a 203K expert that is. Of course, the best bet is to find a national 203k lender (like myself) that can help nationwide so you know that you have a loan officer that can execute the renovation mortgage process.

Don’t forget about LinkedIN or Facebook Fan Page search, both will guide you to 203K experts, who is recommending them and their accomplishments.

Finally, you need to interview the candidates. They should, without hesitation, be able to answer some basic questions. Here are a few of the most important.

  1. What’s the Difference Between the 203K Streamline and the Consultant 203K?
  2. How Many Renovation Loans Have You Closed?
  3. How Are the Draws Disbursed?
  4. What Additional Fees Does the 203K Have?
  5. How Long to Close?
  6. Do You Offer ALL the Renovation Mortgage Products (HomeStyle, HomePath, EEM, Jumbo)
If they hesitate on any of those questions then you do not have a 203K specialist. Finally, if they offer up anything longer than 45 days to close then keep looking. There’s NO reason a 203K loan should take longer than 45 days assuming YOU hold up your end of the bargain and get your contractor bids in a timely manner.

 

FHA 203K loans are an amazing product. They will absolutely give you the best value on a home purchase. Don’t assume that anyone can execute one though, do your research.

 

203k.tv

203K Bathroom Renovation

What Is A 203k Loan

An FHA 203k Loan is a government insured mortgage program that allows borrowers to wrap the cost of property upgrades into a new 30 year fixed-rate home loan.Since many homebuyers are finding that most of the foreclosures and short sale listings they are interested in purchasing require a minimal amount of repairs in order to bring them up to personal or bank standards, a 203k loan provides a perfect financing program for borrowers who have a limited budget for downpayment + home improvement repairs.According To HUD’s Website:

When a homebuyer wants to purchase a house in need of repair or modernization, the homebuyer usually has to obtain financing first to purchase the dwelling; additional financing to do the rehabilitation construction; and a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage.

Often the interim financing (the acquisition and construction loans) involves relatively high interest rates and short amortization periods.

The Section 203k program was designed to address this situation. The borrower can get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property. To provide funds for the rehabilitation, the mortgage amount is based on the projected value of the property with the work completed, taking into account the cost of the work. To minimize the risk to the mortgage lender, the mortgage loan (the maximum allowable amount) is eligible for endorsement by HUD as soon as the mortgage proceeds are disbursed and a rehabilitation escrow account is established. At this point the lender has a fully-insured mortgage loan.

The FHA 203k Loan is one of a few popular Rehab Lending programs available that allow buyers to finance minor cosmetic or major structural upgrades at the time of purchase through one 30 year fixed, low interest rate home loan.

Most buyers think that a 203k loan is only for completely rehabilitating a distressed foreclosure or short sale that has been seriously destroyed, is in a bad area or requires a lot of work.

However, a 203k loan can be used to finance any property that fits within standard FHA guidelines, regardless of the amount of home improvement work needed or desired.

Best of all, the approval process for a 203k loan follows the same flexible credit score requirements, income documentation and low downpayment as a basic FHA loan.

203k Resources And Links