The 203k loan has been around for a while but it seems to be gaining more exposure. I think this is because more people are researching options in which they can fund a repair and/or rehab work into their homes or those who are wanting to purchase a home that needs repairs and/or updating.
When do you consider getting a 203k loan?
It is a good option for getting the home you love that is just in need of a little (or a lot) of TLC or your existing home that needs a little updating, without using a credit card (which would have a much higher interest rate) or a HELOC (Home Equity Line of Credit), which you may not have enough equity or other qualifications to be accepted for one.
Certain investors will require a minimum $5,000 of improvements made to the house. From there, the FHA loan limits dictate how much you can put into the house. So in essence you can get creative and really do some major improvements. Make sure to ask your lender about your specific situation.
My main point is that there is a loan option out there if you find a home that needs some paint, carpet, furnace, etc. Or if you love your existing home but need to add an addition, a room, pop the top, upgrade your kitchen, bathroom, garage, etc. and don't have the funds to do it. In essence you become the designer of your home.
Give us a call and/or contact us if you have any questions. Click here to find out more on the FHA 203k loan.
Recently my team came across a very complicated . Our client is self-employed with a new business that they started two years ago. The keyword "difficult", not impossible. The client had numerous layers to his business surrounding his pay structure and tax filings. We had many discussions and cooperation with the client's CPA. Lets just say we had our work cut out for us. Most lenders would look at this file and dismiss and/or decline. If you are self-employed and have only had your business for a couple of years or have complex business filings for tax purposes, can make it feel almost impossible to get approved for a mortgage.
But even with all these factors up against us we were still able to get our client approved! He was able to refinance his home and save money on his monthly mortgage payment.
All too many times you hear horror stories about people not being able to get a mortgage, if you are self-employed and/or at your job for less than two years. I feel you should always ask, check your options, meet with a strong lender and don't always walk away if a lender says they can't help you. There might be one who can. Now this is not always true and it does vary on each individual's situation but don't you think its worth asking? Never assume you are not eligible for a loan without taking the time to find out more information and calling around to other lenders.
Make sure to fully disclose your complete situation, your lender needs to know if you have had a foreclosure, bankruptcy, defaults on any student loans, etc. Especially when you are self-employed because the income used to qualify you is based off lending guidelines, not IRS guidelines, so give your lender the tax returns and let them do their thing. These are very important circumstances that will eventually come up later in the loan process if you choose not to disclose upfront. And they can prevent you from qualifying for a loan. So it is best to put everything out on the table so your lender knows how they can help you.
The point of sharing this story is so you can take this information and use it for yourself or pass it along to someone you know that this would be helpful for. If you are unfamiliar with what a VA Loan is and if it is right for you, take some time to research this amazing loan program for eligible Veterans. And as always, if you have any questions please contact us, we are always here to help.
Until next time~
What is CHFA and how can CHFA help you? Well, if you live in Colorado, tomorrow is your chance to find out all you want to know about CHFA!
For the first time ever, CHFA is having a Resource Fair at their office located at 1981 Blake Street, Denver, CO from 9 am- 11 am. This event is going to include 10 CHFA approved lenders (we are one of them), as well as, their Home Buyer Education providers to educate and provide information about CHFA's remarkable loan programs, including the MCC!
You will be able to ask questions, gather information (and some breakfast & swag) and educate yourself for your future home purchase or refinance on how CHFA could be of assistance to you.
Make sure to come visit us there!
With the government shutting down there are many of us uncertain and with many questions and concerns of how it will affect us. Especially if you are in the process of getting a mortgage (refinance or purchase). How does this affect your loan process and loan approval?
The best answer I can give is that you will need to expect delays. The main services that will be affected by this shut down will be the ordering of IRS tax transcripts. The reason this is important, is you will be unable to close on your loan without the IRS tax transcripts having been received. Other delays could occur with social security verifications, flood certificates, FHA case numbers and a few more services required for loan processing and final approvals.
This doesn't give you a definitive answer except for the fact you will just need to know that there will be delays and if you are under contract you should discuss with your lender if any part of your loan process will be delayed due to the shut down. This way they can communicate with your Realtor if any adjustments need to be made to your purchase contract, such as Loan Conditions deadline, appraisal deadline, etc. Communication is key!
If you have any questions or would like to discuss please contact us.
Recently I had a very unsettling conversation with another lender regarding FHA loans. The conversation started with the lender asking if our company/branch does FHA loans. My answer was "yes, of course", then it proceeded with "Don't you feel FHA is not a viable option because of the new life of the loan MI requirement?" and then continued with them exclaiming that they strongly discourage their clients into getting an FHA loan because of this AND because they are more complicated.
My immediate response was "WHAT"? "REALLY"? This took me by surprise and honestly left me flabbergasted, truly unbelievable. This also made me wonder how many other lenders feel this way? Yes, there are a few more documents/disclosures and requirements a lender may need to provide, but for the benefit of a client, it is WELL worth it. Plus, in certain cases FHA may be a clients only option and chance to becoming a homeowner, or refinancing out of a higher interest rate loan.
So why go FHA?
For some it is the only way they are able to qualify for a mortgage. FHA has more flexibility with credit score requirements, debt ratios, time since derogatory incidents (like foreclosure, short sales, bankruptcies), down payment amounts/sources to name a few key differences. Not everyone has A+ credit or has 5%-20% for a down payment. FHA is able to offer the lower down payment because they have a upfront mortgage insurance premium (UFMIP) as well as a monthly mortgage insurance premium (which was recently changed to be for the life of the loan) BUT, look at the benefits. YOU CAN GET A HOME LOAN if you don't qualify for a conventional loan!
Something to consider, IF you have a lender who is discouraging you from getting an FHA loan, the question should be "Why?" is it because of the MI being the life of the loan.... is it because an FHA loan is too hard for them to process? Another thing to ask yourself is if the only reason you are hesitant about getting into an FHA loan because of the monthly MI, my question to you would be "how many homeowners stay in the same mortgage for the full 30 years?". When rates go lower what is the first thing you are going to want to do? Refinance! Or if you know your homes value has increased and you have sufficient equity, what are you going to want to do? Refinance. Which means that mortgage insurance being there for the life of the loan is relative to the time you hold that mortgage. So it is all relative, and cross applicable to Conventional loans with PMI as well.
So don't be discouraged, know your facts. Talk with someone who is highly experienced with FHA loans. Find out if it is right for you.
Contact us if you have any questions or apply now to see if you qualify.
For Immediate Release
Effective August 15th FHA has announced a waiver to policies regarding the waiting periods on obtaining a new FHA mortgage. This could impact millions of Americans positively. However, please understand that with any policy change announcement ALL investors that we lenders work with HAVE to roll out the changes. So this doesn't mean they investors (folks who take your mortgage payments) will participate or immediately change their underwriting guidelines. My advice, take notice, and watch for more information.
So how does this work? Basically right now with an FHA loan if you had a bankruptcy, short sale, foreclosure, deed-in-lieu of foreclosure, you are required to wait until you are eligible to get a new mortgage. Each of which trigger their own waiting period. And if there are more than one situation, you have to clear each events specified waiting period separately.
How this will impact folks?
It will allow you to potentially re-enter the housing market sooner than previously allowed. Mind you even with the changes there is a STILL a waiting period in place of 12 months.
Requirements, how do I know if it applies to me ?
Meaning, there are requirements, and they won't look loosely at the situation when you apply. So be ready to document, document, document your situation. Be ready to provide supporting documentation. Be ready to have a thorough background ready for the lender you choose to work with. Be prepared!
You will be required to participate in Housing Counseling ( at least 30 and no more than 6 months prior to applying for a mortgage).
**A list of agencies can be obtained online at http://www.hud.gov or by calling 1 (800) 569-4287 ****
**A list of agencies can be obtained online at http://www.hud.gov or by calling 1 (800) 569-4287
Now, remember that this policy change was announced, but will still require that the servicers/investors we lenders work with roll it out and accept the change. As with all FHA guides, the servicers ultimately make the final call with what policies FHA rolls out.
If you would like more information , please research the FHA policy: FHA Back to Work. From there, watch our website as we will be announcing as we find the servicers begin to participate in this policy change.
To your success~
Ray Williams | Branch Manager | Summit Mortgage Denver | 303-779-0591 | firstname.lastname@example.org
A Streamline refinance refers only to the amount of documentation your lender will need for underwriting your loan (path of least resistance, better flow, see above definition), it does not mean that there is no costs involved in the transaction.
The basic requirements for an FHA streamline refinance are:
1. The mortgage to be refinanced is an FHA loan (FHA to FHA)
2. The mortgage is NOT delinquent, and previous 12 months payments made on time
3. The refinance will be lowering your monthly principal and interest and mortgage insurance payments by at least 5%.
4. No cash out is allowed when doing a streamline refinance (you may receive up to $500 cash back at closing )
There is always the option of doing a "true no cost" refinance (which means no out-of-pocket expense for you). This is when the lender may put you at a slightly higher rate of interest than the market rate (maybe .25%) on the new loan. From this rate premium the lender pays any closing costs that are incurred on the transaction (meaning they are not rolled into your loan balance). FHA does not allow lenders to include closing costs in the new mortgage amount of a streamline refinance, without you obtaining an appraisal).
Clear as mud? or a thick milk shake?~
For more information, or if you would like to see if you qualify for a streamline refinance please contact us or complete our secure online loan application.
~Until next time,
How long should you wait when reentering the housing market after foreclosure or short sale?
This is a very popular question and one that often gets mixed answers from lenders. I wanted to make it clear and easy for those who just want a straight answer. To make it simple, Click here to download our guide for waiting periods required for significant derogatory credit events. Please print, save and pass it on to anyone else that this may help.
If you have any questions please contact us. If you would like to get pre-approved, please click here for our secure online loan application or give us a call today to discuss.
Until next time,
If you haven't heard about the MCC (Mortgage Credit Certificate) and you are a looking to buy a home, you REALLY need to take the time to find out more and how it can benefit you. The MCC is available to first-time home buyers OR NON first-time home buyers if purchasing in a targeted area!
It is a tax credit that reduces the amount of federal taxes liabilities by letting you claim up to 20-50% (%varies on loan amount) of you annual mortgage interest as a tax credit. You are still able to claim the remaining mortgage interest as a tax deduction. So it is a double bonus!
By adjusting your withholdings, this means more money in your pocket! Who wouldn't want more $$$ in their paycheck? Yes, there are income and purchase price restrictions (click here for guidelines). The purchase price and income limits are higher for targeted areas.
Again my question is, "if you qualify for an MCC, why wouldn't you get an MCC?" What are you waiting for? Contact us to find out more. Or click here to get pre-qualified.
The city of Golden has just recently been added to the Metro Mortgage Assistance Program. This loan program is the only down payment assistance program that offers a 4% grant and you don't need to be a first time home buyer to qualify! Make sure to find out more.
If you would like to see if you pre-qualify, please complete our secure online loan application. And if you are first time home buyer make sure to check out the MCC! If you have any questions please contact us.
If you are interested in putting an offer on a house, you can't afford to be without a lender letter. Right now houses that are on the market are getting multiple offers and an offer without a lender letter could get put on the bottom of the stack.
Why is this? And why is a lender letter important?
A lender letter is a way of letting the seller know that you are serious and that you are ready to purchase this property. You are presenting to them your sincerity about buying the property because it means you have met with a lender and provided the needed financial documents to secure your ability to qualify for this property.
Please understand that this is NOT a guarantee for loan approval, nor a promise that the seller is going to accept your offer, but having a lender letter can increase the chances of your offer being accepted.
A Pre-approval is when you have provided the following items to your lender for them to review:
If you have not provided the required financial documents to your lender but have disclosed your financial information, then you are only Pre-Qualified (pre-approved vs. pre-qualified). not Pre-Approved. You don't want to have any surprises, nor do you want to waste your time and/or money, so I strongly advise getting pre-approved BEFORE looking at homes and putting in an offer.
Your lender letter is important and it should be done correctly, not rushed. Take the time to send in the needed financial documents, allow your lender the time to review and then discuss your loan options and what purchase price you should be looking at.
*Quick note: with rates rising (on average about 1%), this will now decrease your purchase power by 10%. Meaning that the purchase price you have been looking at will need to drop by 10%, unless you are able to qualify for the increase in monthly payment. (be sure to discuss with your lender)
If you're planning to go looking at homes over the weekend make sure to get your lender letter ahead of time!!! Not every lender will have the capability of getting you a lender letter over the weekend! So be prepared, let your lender know and get your lender letter in advance.
Please contact us if you have any questions and/or would like to get pre-approved. To get started now, click here for our secure online loan application.
Nowadays saving for a 20% down payment is hard, probably even feels impossible to some of us. FHA gives us the opportunity to buy a home with only 3.5% down and you are if needed you can get down payment assistance or gift funds for the 3.5%. FHA also allows a lower credit score, 640 is the magic number for most investors.
How is FHA able to do this?
Remember the previous posts, Part I & II? Upfront Mortgage Insurance Premium (UFMIP) & Monthly Mortgage Insurance (MIP), these premiums help secure the FHA loan incase the mortgage would go into default. This in return allows for a lower down payment.
There are lenders who advise against getting an FHA mortgage, mainly because of the monthly mortgage insurance. This surprises me because yes, it does increase your monthly mortgage payment BUT it is what allows you to purchase the home to begin with. And quite honestly who stays in the same mortgage for the life of the loan (average 30 yrs)? Almost every homeowner will refinance at some point because they are lowering their rate but also will have enough equity which will allow them to do a conventional loan removing their MI.
FHA has brought the dream of home ownership to many Americans and will continue to do so. Learn more about FHA loans here.
If you have any questions please contact us. If you would like to apply for an FHA loan, click here for our secure online loan application to get started.
Well you may not need to love your neighbor but so you like your neighbor? Do you know them? Next question, when you where wanting to buy your home did you even think about what your neighbors would be like?
One of my clients purchased a home 6 months ago and are now wanting to sell their home and purchase another. Why? Because they didn't like their neighbor. This is not the first I've heard of this and probably won't be the last. It raised some concern for me because buying a home is a huge financial decision.
How could this be avoided? I don't think that when we are out looking for a house we put the neighbor high on our list of "make it or break it" when deciding on the home. We are looking more on the actual house (obviously), then the yard, the neighbor"hood", schools, location, etc. We don't necessarily let a neighbor decide if this home is perfect for us. Well, I think we should add "interviewing the neighbors" to our house hunting checklist.
Instead of avoiding contact with neighbors when we are looking at a house, we should engage ourselves, if we see a neighbor, say "hi", try to strike up a brief conversation. Ask them about the neighborhood, the schools, etc. If they are unresponsive, rude or just not approachable, maybe you should take that as a warning. But also make sure to try again if you are serious about buying the house.
I have always suggested that it is smart to visit the home your interested in during different times of the day, drive around the neighborhood, sit out on the street, listen to the surrounding noises. When you're viewing the house, take the time to sit out on the back patio and listen again to the noises around you. Whenever you see a neighbor, again make sure to say "hi" and try to strike up a brief conversation.
Buying a home is a big possibly life long decision. You don't want to be stuck in a neighborhood and/or having a neighbor that will make you miserable and or uncomfortable in your own home.
Something to chew on~
*Make sure to check in with us on our social networks as well as my blog!
Now for the second part...
FHA has a Monthly Insurance Premium (MIP) 1.35% (which was increased this past April 1, 2013), it is calculated annually then divided by 12 for your monthly mortgage insurance, then this amount is added into your monthly mortgage payment.
Starting on JUNE 3, 2013 this MIP will be for the LIFE OF THE LOAN. However, if you make a 10% down payment, this can be removed after 10 years. Currently the monthly MIP could be removed once your property has reached 78% LTV (loan to value). With the new changes the only way you will be able to remove your monthly mortgage insurance premium is if you refinance into a conventional loan.
Example of Monthly Mortgage Insurance:
$100,000 house = $107 per month
$200,000 house = $215 per month
$300,000 = $323 per month
This monthly amount is added into your monthly mortgage payment. Clear as mud?
Why does FHA have mortgage insurance? This is to insure your mortgage with HUD in the event you default on your home loan. It is to help insure the investors (banks/servicers) that if you were to default on your loan this would help cover any losses they incur.
F.H.A helps many of us purchase homes with lower down payments. As I've stated before, it is a great mortgage which has helped many Americans become homeowners.
Make sure to catch the next part on the FHA loan series....
Please contact us if you have any questions or would like to know more about an FHA loan. Click here if you would like to apply now.
Contact Us | Home | Blog