Renovation Mortgage

Why a Renovation Mortgage Could be Perfect for Your Purchase

Numbers you should remember: $110k, $50k and $220k

In this 2017, inventory challenged market, a renovation mortgage is becoming more and more of an option for you to turn an ordinary house into the home of your dreams.

What is a Renovation Mortgage?

Simply (as possible) put, a renovation mortgage is a transaction where you finance in the improvements. However, in order for the lender to take on the risk, the funds are held in escrow and disbursed in progress payments as the work is completed, phase by phase.

The name of the products are either a 203k (FHA) or Homestyle (Conventional)

 

So, how does a Renovation Mortgage work?

In the case of a purchase, you can buy a beaten down home, usually a foreclosure or a home that is dated or otherwise in some state of disrepair.

Purchase Price $110,000

You can get a bid from a contractor for say $50,000 to improve the home to your specifications.

This means you’re financing $160,000.

After the home is complete, the home then becomes worth say $220,000.

Why might this be the perfect option for you in today’s housing market?

In every corner of the real estate market, all we are hearing is “inventory shortage, inventory shortage”! This option can help you turn the house that no one wants, into the home you love!

I Didn’t get the Cash Out I Wanted on My Mortgage Refinance

I Didn’t get the Cash Out I Wanted on My Mortgage Refinance, What can I do?

I Didn’t get the Cash Out I Wanted on My Mortgage RefinanceSo those borrowers who would like to refinance and pull “Cash Out” of your home but were turned down or told the home didn’t appraise for enough, there are some options which you can do fairly quickly to change your outcome.

1. Increase your credit score.

Often, lenders have a limitation on how much cash they can lend, many times, it may be due to credit score. For example, you may be able to borrower up 70% of your home’s value at a 640 score on a conventional loan, but if you have above a 700+ score, you may be able to go up to 85%

2. Apply for a renovation loan.

Many borrowers just want the cash for home improvement, unaware that a renovation loan is what they need. In some cases a renovation loan appraisal can yield a much higher value because it can value the home, “subject to” the improvements being done which is rare. Due to the their technical nature, a renovation loan isn’t common. However, they can be well worth it, with the right circumstances.

3. Apply for a HELOC

A HELOC is a Home Equity Line Of Credit. This is technically a 2nd mortgage but has a lot more flexibility to pull cash out and repay. They also can go to a higher Loan-To-Value than most other products.

So, what do you do if this is you? Like anything when you are dealing with professional services…get a second opinion and ask them about any of the above options.

How to Prequalify for a Mortgage

Buying a home is the all-American dream. It starts with an idea, then saving for the down payment, and finally shopping for the perfect place to call home.

When you prequalify for a mortgage, your house shopping will run smoother, giving you—the future homeowner—some guidelines in regard to how much you can spend. There’s no point in falling in love with a house that you can’t afford. Prequalifying will keep your shopping in the reality zone and eliminate getting in over your head. Continue reading

Credit Qualifying for a Mortgage after Divorce: 3 Tips

Very frequently, we get borrowers who have gone through a divorce and due to lack of awareness of the items still on their credit report, are unable to qualify for the refinance or purchase mortgage they were hoping to obtain. You can still get a mortgage after divorce. Here are some tips to make sure this isolated event doesn’t affect your credit score, causing you to miss out.
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The Basics of Mortgage Underwriting

Underwriting a mortgage loan is as much an art as it is a science. Whether you’re in the market for a mortgage on a new home or refinancing, it helps to know what mortgage underwriters look for so you can meet the lender’s parameters for loan approval. Here are some things to keep in mind.

Mortgage underwriting is the analysis process an underwriter performs when trying to determine whether to approve or decline a mortgage loan. Mortgage lenders create mortgage programs with guidelines for acceptable risk factors to underwriters. When your loan reaches underwriting, an underwriter is ensuring your loan meets the mortgage lender’s parameters. Every financial situation is different which makes every loan unique.Continue reading

4 Tips for Using Child Support to Qualify for a Mortgage

Mortgages for single momQuite often we see mortgage applicants, generally single mothers applying for financing that have income from a job and child support. Sometimes, the child support is the make or break item that is the difference in qualifying the applicant for a home loan. However, due to the inconsistent nature inherent in some child support relationships, there are a number of rules that apply to getting the child support payments to qualify as income for a mortgage applicant. Here are 4 tips to use in advance of your mortgage application to make sure child support income can be included by your mortgage lender. Continue reading

What to Avoid When Shopping for a Mortgage

Everyone wants the best rate possible, we all do, we want the best for us and for our family to free up as much money for the important things in life. Yet, when you are shopping for a mortgage, before application, make sure to keep these things in mind that are some of the mistake we’ve seen many borrowers make. Continue reading

Bank vs Mortgage Lender: What’s the Difference?

The Bank vs Mortgage Lender Difference

Homeowners seeking financing often ask what the difference between a bank and a mortgage lender is when it comes to doing a home loan. Whether it is a refinance home loan or a purchase home loan, there are distinct differences. A bank, as most people are very familiar with, primarily service checking accounts, savings accounts, CD’s, car loans, and sometimes “Home Equity Line of Credit” second mortgage loans. Some may even do first mortgage position loans, though not all. A Home Equity Line of Credit, also known as a HELOC is a secured home loan that is in second lien position to the primary first mortgage loan. This is referred to as a 2nd mortgage. A HELOC is usually a variable rate loan based on “Prime Rate”, which is an index based loan. Continue reading