The Most Popular Rehab Loan Only Requires 3.5% Down Payment...

Question: Is it possible to include extra funds for renovations in a loan for a new house?

Yes. The most common loan product for that today is the FHA 203(k) renovation loan. With 203(k), you can get money not only to purchase the home but also to refurbish it. You can use the funds not only to replace and repair things like carpets, roofs, kitchens, and bathrooms but also to add on. You can repair and rehab an existing swimming pool, but can’t dig a new one.

With 203(k) Standard, you’ll work with a consultant approved by HUD. That person will guide you through the process of gathering estimates for the work you plan. Expect to pay $500 to $1,500 for his or her services, depending on how extensive the work you plan to do.

Once you have your estimates, your loan officer will order the appraisal. There will be an “as is” value and an “as completed” value. The loan will be based on the second, higher value. The excess funds will go into a separate escrow account and be disbursed to the contractor as needed. If the property won’t be habitable while the work is being done, you’ll also be able to finance up to 6 months’ interest into the loan—assuming the as completed appraisal has a high enough value. Your down payment will be as low 3.5% of the financed value. The 203K Standard is limited to your county loan limits. Check with me or your lender for specifics.

There is also a “streamline” 203(k), which does not require the services of a consultant. Repairs are limited to $35,000. The paperwork is pretty much the same, and the rate is usually the same as for the full 203(k) loan.

The most important thing to realize is that, while this is an excellent loan program, it is not by any means a “turnkey” purchase; as the buyer, you’ll have to be quite involved in the process, from start to finish. In my experience, few people are willing to be that involved.

Still, if you can find the proverbial diamond in the rough—a trashed-out home in a nice neighborhood—you can build some immediate equity and get a home with a lot of new parts, to your specifications. You want to be sure that both your real estate agent and loan officer are experienced with this loan—there are a LOT of moving parts. BUT I am here to help you along the way. 

I hope this has been insightful.. please let me know if you have any questions. Comments are always welcomed and appreciated. 

Thank you for visiting my blog, please leave a comment or question and come back soon. 

Roxy Redenbaugh, Broker

Sr Mortgage Consultant

Residential and Commercial

www.roxyloans.com

The Greatest Compliment I Can Receive Is A Referral From Friends, Family, and Business Associates,

NMLS#269926 Company NMLS#1930219

How to get Private Mortgage Insurance to STOP

I get this question a lot; When can I stop paying PMI?  

Assuming that by "PMI" you mean Private Mortgage Insurance as opposed to the mortgage insurance required on FHA loans, the process is simple. You simply have to demonstrate to the lender that your loan is 80% of your home's value or less. Lenders have a variety of requirements for this proof. Some accept a computerized value assessment, called an Automated Valuation Model (AVM). Think Zillow on steroids. An AVM typically costs about $20.00. Other lenders require an appraisal with an exterior-only inspection, called a "drive-by" appraisal. This costs about $350.00. Some lenders require a full appraisal, which costs about $500.00.

If you believe your property has appreciated enough—and a quick "Zestimate" from Zillow will give you a rough idea—you should contact your lender. Your monthly statement will give you the customer service number. They will tell you their requirements. You will have to pay for the appraisal ahead of time. It's important to check the value of your home at least annually so you know when you can remove our PMI or refinance to remove it. 

One more very important fact while you are checking the value is to do a mortgage loan analysis on your current loan and check current mortgage rates, maybe it makes more sense to refinance, reduce your rate and remove your PMI. 

Some lenders won't consider removing PMI until you have had the loan for at least 12 months.  Lenders also require that your loan is in good standing, with no late payments for the last 12 months.

Private Mortgage insurance drops off automatically once the loan-to-value ratio (LTV) drops to 78% of the original value. For a 30 year mortgage, this occurs in around 10 years.

FHA mortgage insurance works differently. For loans originated between January 1, 2000, and June 3, 2013, mortgage insurance would drop off once the loan balance fell to 78% of the original purchase price, but no sooner than 5 years. This meant that a borrower with an FHA loan could make a payment after 5 years to reduce the loan balance to 78%. For a starting balance of $300,000, that would mean a principal payment of $37,000 at year 5.

After June 3, 2013, borrowers will have to refinance into a conventional loan to drop the mortgage insurance, since FHA MI now remains with the loan for its entire term. In this case refinancing into a conventional loan once you have 80% loan to value, providing a new loan without any MI required. 

I hope this has been insightful.. please let me know if you have any questions. I welcome your questions and comments.

Thank you for visiting my blog, please leave a comment or question and come back soon. 

Roxy Redenbaugh, Broker

Sr Mortgage Consultant

Residential and Commercial

www.roxyloans.com

The Greatest Compliment I Can Receive Is A Referral From Friends, Family, and Business Associates,

NMLS#269926 Company NMLS#1930219

What Does It Take To Get A VA Home Loan With 100% Financing & ZERO Down Payment

I Get this question a lot; What's the minimum credit score for a VA home loan approval?


Technically, there is no minimum credit score for a VA-guaranteed home loan. A veteran borrower could have no FICO score and get an approval based on "non-traditional" credit. This means providing evidence that he or she meets financial obligations in the form of utility bills, insurance payments and the like.

Although a lender could approve a borrower with a score of, say, 500 by manually underwriting it, I think the odds of that happening are quite remote. Someone with a 500 score would have some combination of currently delinquent obligations, collection accounts and possibly liens and judgments. This would indicate to a lender that the borrower doesn't have adequate control of their finances.

Practically speaking, getting an approval with a 580 score is realistic, although the rate will be higher than for someone with a higher score, and the borrower may have to clear up any currently delinquent obligations before the lender will fund the loan.

The good news is that low credit scores are fixable, although it may take some time and effort. If there are credit cards that are close to the credit limit or over the limit, reducing the balances will improve the scores significantly. If there are collection accounts and judgments, it is worth contacting the creditors to negotiate lower settlement amounts.

Finding a loan officer who's willing to help you through the process of getting qualified—even if you have major craters on your credit report—is worth doing early in the game. It is ALWAYS possible to improve a credit score, but it takes a plan and the determination to follow through and execute it.

VA Home Loan is 100% Zero down payment required, making this the most idea home loan for veteran and their families. Many unfortunately are not aware of the program or don't think they will qualify. I encourage you to look into your eligible if you have ever been in the military. 

You will also need to get your Certificate of Eligibility (COE) you can do this very easy by going through the Web LGY System . You can also obtain your COE by completing VA Form 26-1880 PDF and mailing it in. Click here for the fill in form ... You will need your discharge or separation papers DD214 to complete this form.

How to Apply for a VA Home Loan Certificate Of Eligility (COE)

Thank you for visiting my blog, please leave a comment or question and come back soon. 

Roxy Redenbaugh, Broker

Sr Mortgage Consultant

Residential and Commercial

www.roxyloans.com

The Greatest Compliment I Can Receive Is A Referral From Friends, Family, and Business Associates,

NMLS#269926 Company NMLS#1930219