USDA mortgage loans are so popular (especially in Georgia Florida and Alabama) because they allow first time or subsequent homebuyers to purchase a primary residence with no money down and with low monthly payments.
The USDA National Office just announced on June 16, 2015 that effective with guaranteed loan obligations on or after October 1, 2015 through September 30, 2016, the up-front USDA guarantee fee is increasing from 2.0% to 2.75%.
This USDA up-front fee is financed on top of the base loan size just as it is done for VA and FHA loans so the change does not require the buyer to bring additional money to closing but it will make their payment a few dollars more per month. The Annual Fee will remain at .50% which is factored into the monthly payment. If you are looking to purchase soon & would use a USDA loan, let’s get the USDA commitment prior to October 1! Learn how the USDA Annual Fee is a little different from traditional PMI here.
The Up-Front USDA guarantee fee increase does also apply to USDA Streamline or Pilot Refinances.
The official USDA Rural Development unnumbered letter dated 6/16/2015 “Upfront Guarantee Fee and Annual Fee Schedule Effective October 1, 2015″ can be read here and is available under “June 2015″ on this page. Keep in mind that a loan is obligated when the mortgage lender has fully underwritten the file, USDA has approved a complete loan package, and USDA has issued form RD 3555-18 which is the “Conditional Commitment for Single Family Housing Loan Guarantee” to the lender.
Veterans can buy distressed real estate using their VA benefit. An exclusive product at imortgage for veterans today is available for VA renovation lending. Veterans can buy a home in almost any condition and deal with repairs after closing with this product. Many agents and customers alike have had the question: ”is there a 203k loan for veterans?”. The answer was no for so long but there is a lender participating in this VA program!
Jacksonville and other areas where we are in Florida have a lot of military bases. This includes active and retired veterans who have a VA benefit to use and want to participate in the distressed property market. This now allows veterans to buy homes that would otherwise be out of reach for VA financing. Similarly to FHA 203k and Fannie mae homestyle they can purchase and renovation the home inside of one purchase loan. Currently imortgage is the only lender participating in a VA renovation loan. This product will allow you to deal with cosmetic issues. Items like roof, AC, wood rot and termite damage that would otherwise prevent VA financing is possible with this product and allow the veteran to look at home to buy and renovate with built in equity. Please call us if you or someone you know could use out help in obtaining this solution.
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We are making waves from Amelia Island in Fernandina Beach Florida today talking to you today about Homepath. Fannie mae has all of their foreclosure homes for sale online at www.homepath.com . The no longer has the Homepath Financing but do have a new buyer incentive program for first time homebuyers to encourage them to buy their homes. They have a online class that once you complete it can enter an offer in conjunction with their completion certificate and negotiate for Fannie mae to pay up to 3% of the purchase price toward buyers closing costs and prepaid expenses. Now a lot of these homes are foreclosures so they may be in need of updating or repair.
You can buy these HomePath properties in tandem with the renovation products we talk about with FHA 203k, Va Renovation and another Fannie Mae product called Homestyle. You can do almost any renovation ranging from AC repairs, wood rot, kitchen or bath remodels and many other upgrades. These renovation programs allow you to include all the purchase price the costs of any repairs or upgrades outlines by a licensed general contractor. There are rare circumstances in which a borrower would be eligible for “self-help” but can give you more guidance on this if you need it.
With the value of the internet, there is also still a lot of misinformation on renovation lending out there so if you need help understanding you options please give us a call. There are several benefits to using a State Licensed General Contractor including a State fund which is for you and the lenders protection. There is also to be no preference given to one particular contractor or a
contractor list “as HUD describes this as a steering practice.
We hope you can use this information to help you on your next Homepath purchase
*HomePath® and Ready Buyer® are registered trademarks of Fannie Mae.
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How are the fees different on renovation loans compared to regular loans? We want to tell you about the different fees associated with renovation loans. Most people’s first concern is usually with rate more than how fees are different than a regular loan. Use a step-by-step approach try to find out which loan program is most beneficial as it may vary from customer to customer and there are more solutions now than there have ever been.
FHA 203(k) is the popular buzz word in renovation but now there are a few renovation loan types you should know about. You’ll want to get a copy of the Maximum Minimum worksheet on any renovation loan to understand the administrative or supplemental origination fees as well as any consultant based cost that may not be disclosed on the initial or even the good faith estimate.
The biggest buzz in renovation lending right now is VA Renovation. VA Renovation lending is a very popular topic right now for veterans looking to buy and renovate a home inside of their VA purchase benefit and mortgage. There are no similar costs for supplemental and admin costs like other renovation loans, but if you do have some costs for permitting in the renovation process it must be disclosed in obtaining the loan not just lumped into the renovation amount like the other renovation products.
The Fannie Mae Conventional Homestyle loan is probably the most comprehensive renovation loan because you can help customers purchase or refinance and renovation primary, second home or investor occupancy property. You can also do must repairs that include luxury items different that the government based renovation solutions. Traditionally, most every lender charges supplemental or administrative fees on this loan product. Currently imortgage does not have these fees associated with Homestyle. This is an opportunity to shop around as some companies also have different requirements on this product for a third-party consultant to review the scope of work. This is a similar consultant used on an FHA 203 K as a consultant. imortgage requires a consultant only when projects exceed 50,000 or if the project has any structural work associated with the repairs. Most competitors have a policy to get a consultant if the project is over 15,000 . This can add another 400-600 dollars in additional expense with a competitor before you even discuss the rate and terms.
FHA 203 K probably the most well-known renovation loan by consumers and Realtors. FHA 203 K will be a one size fits all approach to primary resident purchase to include repairs. If you’re looking to renovate and you don’t have the best credit it may be a great option for you especially is you are geared for a low down payment solution. FHA 203k does have and supplemental origination fee calculated based on the amount of renovation you have. Based on your projects size and scope of work you may also have to high a HUD consultant. You will need a HUD consultant if your project amount is over thirty five thousand dollars, adding some square footage or structural repairs. You need to know the hud site for searching for a consultant ( Find a HUD Consultant) as well as the Hud Consultant fee schedule:
The base fee is $400 for the repairs that range between $5,000 to $7,500. For amounts ranging between $7,501 to $15,000 the HUD 203k consultant fee is $500. For renovation work amount between $15,001 to $30,000, it’s $600. For the cost of rehab work that falls in the range of $30,001 to $50,000, the 203k consultant fee is $700. The fee will be $800 for fix-up work that falls between $50,001 to $75,000. If the proposed repair work costs between $75,001 to $100K, the fee would be $900. In those rare cases where the renovation work to be undertaken exceeds $100,000, the fee shall be $1,000. The above mentioned FHA 203k consultant fee amounts are meant for single family residential homes. For multi-family homes, the fee charged may be higher. Typically, it would be an additional $25 for each unit beyond the 1st one.
If you need help on making all these decisions as always the best thing to do is always pick up the phone and reach out to us. We have got all this information down very well. The biggest part of what we do is helping customers understand their options and making sure they have all the resources to make the best decisions.
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Renovation loans are a hot topic! Most borrowers try to figure out how to do as little renovation work in the loan as possible to meet minimal appraisal standards and keep the loan amount down. Some want to save some work for after closing for themselves to do but several renovation loan customers have buyers remorse in that they wish they would have done all of the projects they were thinking about up front so they could have started enjoying them right away or otherwise found later didn’t have the extra cash to do themselves. Use Homestyle, 203k or Va Renovation to build your dream home and to make that dream instantly a reality!
In the new renovation era, most customers are doing more and more preferential work than required repairs. Our advice is to try to get all of the work you are thinking about done up front in one simple transaction. In your bid process, write down all of your “wants” so you can comparison shop an apples-to-apples quote with your contractors.
On average, the consumer will spend between $5,000 and $8,000 in improvements and appliances within the first year of ownership, regardless of loan type. Why take more money out of pocket when you could use this in the entire project and keep more cash on hand and get a tax deduction from your mortgage?
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John and Tu are in North Shore in Jacksonville Florida this week for the renovation minute. They are talking about opportunity for people to be able to find homes with some scratch and dent quality that allows you to win on equity and customization. Most ready to move in homes right now are going quick on the market or highest and best the same week its listed. A renovation property allows you to compete with lower cash offers from investors and has a smaller buyer pool for primary occupants. Besides getting a lower price and perhaps some built in equity on the home the other major benefit to customers is also in making it exactly how they envision it. Call the renovation lending experts to find out how you can transform your ideas into your next home purchase. Buy distressed and save – win on equity and customization.
Va renovation loans? They are here finally! Join John Adams Tu Mullins and John Meadows as they discuss the details of what Va renovation looks like from the only company that is doing it! Veterans can now use their benefit to purchase and get improvements inside of their mortgage for purchase or for refinance.
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On this renovation minute we have three tips this week on how to make your renovation loan a success.
1. Get up close and personal with your contractor. Collect all documents as well as the bid and make sure they have the administrative competency to get you the documents the process demands quickly.
2. Consult your renovation specific loan officer prior to making an offer on any home to make sure that the project and cash to close have been reanalyzed to make sure your offer is what you think it is. There are different closing costs the buyer is responsible for depending on who the seller is i.e. Short Sale, Bank Foreclosure, natural seller …
3. Get a Maximum Mortgage worksheet upfront ( MMW ) these forms spell out all of the costs of a renovation loan that are associated with the renovation escrow account and show all of the true anticipated fees with a Homestyle, FHA 203k or even a VA renovation loan so you know exactly how the process works.
By Presidential order the monthly premiums on FHA loans were reduced for case number after January 26th, 2015. This is great news as it lowers payments and can qualify more borrowers for home. For Renovation loans, especially 203k loans this means you can qualify for more repairs or pocket the savings. Please read the FHA mortgagee notice on the link here and the great news about lower mortgage insurance factors. This is one small step in the right direction and certainly a win for anyone wanted to get a 203k renovation loan or regular 203b loan financing.
Thanks for joining us on the renovation minute. We are bringing you three ways to help keep transactions together with Freddie Mac.
1. For self employed borrowers on Freddie they now only require one year of tax returns to income qualify instead of having to average two full years
2. The schedule most folks use for itemized deduction on their tax forms ( 2106 ) can sometimes be added back to income whereas previously these deductions were deducted from usable income on a transaction.
3. In special circumstance we can use a non-occupant co-borrower with an occupant co-borrower to qualify a loan applicant up to a 75% loan to value.
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