So, why is FHA 203K better than a traditional cash-out refinance? That answer is SIMPLE. We use up to 110% of the AFTER REPAIR VALUE to determine your loan amount instead of the traditional AS-IS value you would get on a normal cash-out refinance. Using after repair value gives you way more room to work with. While FHA 203K refinances do have a few caveats (upside down borrowers need not apply) for the most part they will present an opportunity for you do your needed renovations, add more square footage and just do a general gussying up of your house. Want to know more? Contact us today and we’ll discuss all the details of how the loan works!

APPLY NOW for Your FHA Georgia 203K Loan!

We can preach communication, service and education all day long, but it’s our ultimate goal to earn your trust so that you can be confident in our ability to successfully lead you through this complex mortgage process.

Since mortgage rates can change several times a day, the following questions will help determine whether or not your lender truly knows what to look for so that they can provide you with the best rate once you’re in a position of locking in your loan:

Who determines mortgage rates, and what are they tied to?

Mortgage interest rates are determined by the pricing of Mortgage Backed Securities or Mortgage Bonds. The media often implies mortgage rates are based off the 10-year Treasury Note, which is incorrect.

While the 10-year Treasury Note has been known to trend in the same direction as Mortgage Bonds, it is not unusual to see them move in completely opposite directions.

How often do mortgage rates change?

Mortgage rates may change throughout the day, however they only change on days when the Bond markets are trading securities since mortgage rates are based on Mortgage Bond prices.

Think of a Mortgage Bond’s sales price similar to that of a Stock that trades up and down during the course of a day.

For example – let’s assume the FNMA 30-Year 4.50% coupon is selling for $100.50. The price is 50 basis points lower from the previous day’s closing price of $101.00.

In simple terms, the borrower would have to pay an additional .50% of their loan amount to have the same rate today that they could have locked in the previous day.

What causes mortgage rates to change?

Mortgage Bonds are largely affected by various market forces that influence the changing demand for bonds within the market. Some of the key economic factors that have the greatest impact are unemployment percentages, inflationary fears, economic strength and the overall movement of money in and out of the markets.

Like stocks, most fluctuation is caused by consumer and investor emotions.

What do you use to monitor mortgage rates?

There are several great subscription based services available to monitor Mortgage Bond pricing.

The key is to make sure the lender is aware they should be monitoring Mortgage Bond pricing, such as the Fannie Mae 30-Year 4.50% coupon… and not the 10-Year Treasury Note or the news media.

When the Fed changes rates, why do mortgage rates move in the opposite direction?

It is a common misconception that when the Federal Reserve implements a rate cut it is immediately correlated to a reduction in mortgage rates.

The Federal Reserve policy influences short term rates known as the Fed Funds Rate (“FFR”). Lowering the FFR helps to stimulate the economy and increasing the FFR helps to slow the economy down. Effectively, cutting interest rates (FFR specifically) will cause the stock market to rally, driving money out of bonds and creating potential for inflation.

Mortgage Bond holders need to obtain a higher rate of return on their money if inflation is increasing, thus driving up mortgage rates. With the Federal Reserve Board meeting every six weeks, this is an important question to ask. If your lender does not have a firm understanding of this relationship, they may leave your rate unprotected costing you thousands of dollars over the life of your mortgage.

Do different programs have different interest rates?

Conventional, FHA and VA loans can all carry different rates on a 30-Year fixed mortgage. FHA and VA loans are insured by the Federal Government in the event of defaults. Conventional mortgages are insured by private mortgage insurance companies, if insurance is required.

Typically, FHA and VA loans carry a lower rate because the investor views the government backing as less of a risk. While rates are usually different for each program, it may be more important to compare the monthly and overall cost during the life of the loan to determine which program best suits your needs.

Why is an Adjustable Rate Mortgage (ARM) rate lower than a fixed rate mortgage?

An Adjustable Rate Mortgage (ARM) is usually fixed for a specific period of time. The period is typically 6 months, 1 year, 3 years, 5 years or 7 years. The shorter time period the rate is fixed, the lower the interest rate tends to be initially.

This is due to the borrower taking the future risk of increasing interest rates. The only instance where this would not be true is when there is an inverted yield curve where short-term rates are higher than long-term rates.

Why are rates higher for different property residence types?

Mortgage interest rates are based on risk-based pricing. Risk-based pricing allows adjustments to par pricing for risk factors such as; FICO scores, Loan-to-Value percentages, property type (SFR, Condo, 2-4 Units), occupancy (Primary, Vacation or Investment) and mortgage type (Interest Only, Adjustable Rate etc).

This allows the investors who lend their money for mortgages to receive additional compensation for taking additional risk.

If the borrower encounters a financial hardship, are they more likely to make the payment on the home they live in or the one they rent out?

All of these factor into your rate for your FHA mortgage and an experienced loan officer like myself can help guide you through the interest rate maze.

The Peters Team out of the Keller Williams office in North Buckhead / Brookhaven are top notch. They know their stuff and if you are buying in that area you’d be well served giving them a call. Here is a recent post of theirs about their last 203K transaction.

http://lesleypeters.com/2010/05/

Just blogged on our new first-time home buyers, Jason and Brooke, who took advantage of this Atlanta real estate market and purchased a home that needed renovation.  Check out the blog by clicking here.  Got my mind to thinking…  We haven’t written a new Atlanta 203k blog post in quite some time.  Here’s the old one:  click here.

So, let’s take a new look at 203k (not much has changed):

Many buyers want a good investment opportunity in this down market and hope to buy a distressed property (foreclosure, short sale, or even an estate owned home) that needs TLC.  Problem is, if a home is in need of a lot of repairs, the bank won’t loan the money unless the home is repaired.  We run into this often.  A home has no appliances or the roof has a major leak…  the buyer can’t get a loan until they spend the money to make the repairs.  And, who in their right mind wants to spend money on a home that they have yet to purchase?  You see the issue!

Now, 203k can come to the rescue!  A 203k loan enables you to purchase a property and include in the home’s loan the cost of renovating, repairing, or improving the property.  The loan is an FHA product and requires approximately 3.5% down on the home + repairs/improvements.

Many people ask us if this is an investor loan.  No, this is not an investor loan.  This FHA 203k product is for hombuyers that are going to occupy the home.

Here’s the process:

1.  Call us and let us help you find a home that would be a good candidate for a 203k loan!  The Peters Company at Keller Williams Realty Peachtree Road 404-419-3619

2.  Find a 203k loan officer – we can help you with this as we’ve had lots of experience.

3.  We’ll then write an offer to purchase the property you’ve found inlcuding verbiage that the financing is FHA 203k and contingent upon financing and repairs required by FHA.

4.  Choose a vendor/contractor that can draw up a proposal of the work done and give an estimate on the project (individualized and in it’s entirety).  Haven REI is an approved FHA 203k vendor and very familiar with the process.

5.  An appraisal is ordered to determine the home’s value post-renovation.

6.  The loan closes to cover the purchase of the home as well as the repair/renovation costs.  The seller receives the payoff for the property and the funds to renovate/repair are placed into an escrow account to pay for repairs/renovations during the rehab process.

7.  The rehab project begins and the contractor/vendor is paid through draws as work is completed.

8.  You own a home that is repaired and renovated to your own desires!  And, most likely, have made an excellent investment decision!

If you’d like to learn more about the Atlanta FHA 203k process and loan, give us a call.  We can help you get started and put you in touch with an FHA 203k loan officer specialist who can answer all of your questions!

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2.) Cotton Fiber Insulation

Treated to resist fire, containing no irritants and can be manufactured from recycled blue jean scraps; this is as green as it gets.

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You can purchase affordable moisture resistant Gypsum wallboard that greatly reduces mold risk and promotes indoor air quality.

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Did you know that metal roofs last two to three times longer than shingles? They also can save 30%+ on cooling costs and are resistant to hail, wind and fire. Energy savings and safety, that is a win win in my opinion.

5.) Energy Efficient Windows

Energy Star windows typically lower energy bills 10% – 25% by reducing heating and cooling loss.  As an additional benefit laminated glass reduces noise and stays in place in broken. Another energy and safety winner!

Whether you are purchasing or refinancing you need to explore FHA 203K & Fannie Mae Homestyle renovation financing. Renovation financing allows for use of up to 110% of the AFTER repair value which provides you with more room to do the green renovations you need to save money, make your home allergen free and save the planet!

APPLY NOW for your FHA 203K or Fannie Mae Homestyle renovation loan!

See the original post on the industry leading MyFHABlog.com

http://www.myfhamortgageblog.com/2010/01/5-more-ways-to-go-green-with-fha-203k/

Eco-Friendly Renovations with FHA 203K Financing — Go Green!

FHA 203K renovation loans have been around for decades, but they have recently found a new use in helping people go green. FHA awards benefits in terms of higher allowable debt to income ratios along with loan amounts that can exceed FHA statutory limits. So, how can you use the FHA 203K to go green?

1.) Green Up Your Appliances – FHA 203K loans will finance new free standing appliances for your home. Why not use that opportunity to buy EPA recommended ENERGY STAR appliances? Imagine beautiful stainless appliances that save you a bundle in monthly energy costs.

2.) Save Water, Save Energy — You can finance brand new low flow toilets as well as tankless water heaters. Low flow toilets use less than half the water that older models do and tankless waters provide unlimited hot water without all the wasted energy of a constantly working water heater.

3.) Want New Hardwoods? — Opt for sustainable bamboo flooring. Bamboo reproduces itself to maturity in 5 years as opposed to the 40-100 years than normal hardwoods take. Make sure and opt for formaldehyde free glues.

4.) Solar Panels — Solar is one of the easiest ways to dramatically cut monthly energy bills. Installing solar panels is so encouraged by HUD that they will allow you to exceed statutory loan limits to do so. In many cases the Federal, State and Utility company tax credits will pay for a good portion of the purchase and installment of solar panels. The rest we can finance.

5.) Insulate! Insulate! Insulate! — An obvious choice for a green home, insulating your home better can help you save thousands on energy bills. This should be a given on any green renovation using FHA 203K financing.

6.) Choosing Green Building Materials — A key aspect of any green FHA 203K renovation is the selection of environmentally friendly building materials. To reduce transport pollution and energy costs go local first. The second thing to look for is recyclable materials such as Glass, Terrazzo, Ceramic and Porcelain.

Now is the time, do you part and save yourself some green by going green!

Click HERE to get started on your FHA 203K renovation financing!

1.) How Many Renovation Loans Have You Closed?

The answer should be at least 20 minimum. As I said above, FHA 203K and Fannie Mae Homestyle renovation loans require experience & expertise. There are caveats, there are gotchas around every corner. I’ve closed 150 renovation loans and I still get surprised by underwriting requests.

2.) Who Services the Loan?

Who is responsible for disbursing the funds? Do they do so in a timely manner? If Bank of America is servicing the answer is no. They take months to disburse. Avoid like the plague any lender relying on them for servicing unless you want to have angry contractors knocking at your door. On streamline 203K loans the first draw should be disbursed within 2 weeks of closing. On full 203K loans and Fannie Mae Homestyle loans funds should be disbursed within one week of the draw request.

3.) Do You Offer Both FHA 203K Loans & the Fannie Mae Homestyle?

Why does this matter? I just need a streamline 203K. It matters because there are numerous items that can flip a streamline 203K to full 203k or flip a FHA 203K to a Fannie Mae Homestyle. I outline a few of the biggies HERE. If your lender only offers the streamline 203K and you need to flip to the full 203K you have an issue. Make sure your 203K lender has access to the full array of renovation financing.

Renovation loans are one of the most useful products on the market right now and we dominate our 203K market. They are not easy loans, your selection of lender is extremely important. If shop solely on rate or go for the cheapest GFE then you will get what you pay for. Choose your renovation lender wisely!

Apply for YOUR FHA 203K of Fannie Mae Homestyle Renovation Loan NOW!

Call 404-551-3845

1.) Unfinshed New Construction — FHA 203K loans require a certificate of occupancy (known as a C.O.). This is a nearly impossible request on unfinished new construction foreclosures. This makes FHA 203K loans virtually impossible on unfinished new construction foreclosures. This is where the Fannie Homestyle comes into play. The Homestyle only requires homes be “substantially complete”.  What does that mean? Well, it is open to interpretation, but anything with the systems in place that is at least 75% complete might be a good candidate for a Homestyle.

2.) Loans Exceeding FHA Loan Limits — If you are over local FHA loan limits and need to do a renovation loan then your clear choice is the Fannie Mae Homestyle. In most places across the US conforming loan limits exceed those of FHA. For example, in Atlanta FHA loan limits are $346,250 while Fannie Mae Homestyle limits are $417,000.

3.) Borrowers with 20% Down — FHA 203K loans have mortgage insurance for 5 years regardless of the amount you put down (30 Yr fixed rate). It is possible via the Fannie Mae Homestyle to put 20% down and to avoid mortgage insurance entirely.

4.) Non-Owner Occupants — FHA loans require you to occupy the residence as your primary residence. Fannie Mae Homestyle loans will allow your to renovate a residence as a 2nd home OR AN INVESTMENT PROPERTY!

5.) I Already Have a FHA Loan! — Already have a FHA loan? Chances are you won’t be able to get another. Look at the Fannie Mae Homestyle to renovate if this is your situation.

There are certainly more situations where the Homestyle is a more appropriate loan then a FHA 203K.  Consult a knowledgeable Renovation Loan Specialist to determine what is best for your situation. We are here to HELP!

APPLY NOW FOR YOU FHA 203K or FANNIE MAE HOMESTYLE RENOVATION LOAN!!

Good Luck!!

Long answer: Lately, FHA loans are harder to finish and close.  There is a set of FHA rules.  In addition to those rules, “investors,” the entities that buy the “paper” on Wall Street,  can add their own “over-lays” to the rules.  For instance, if an investor decides that anyone below a 620 credit score is too risky for their appetite.  Well, no one can make them buy a loan with a 580 credit score borrower.  Therefore, no lender will tolerate a loan on their books that can’t be sold to provide liquidity (cash) at some point.  They won’t do the loan, even though “the rules” may allow for it.  Seller’s get nervous at the time-frame needed to close because there are lots of little details to pay attention to.

Sellers may feel that an FHA borrower is inherently more risky.  That is not true.  It simply takes a broker with FHA experience and current working knowledge to know whether or not the file is doable from the get-go.  In fact, as mortgage insurance companies increasingly stop insuring conventional loans with less than 20% down payment, by the time a seller can actually find someone with that much cash, you could have already closed your FHA loan!  Simple ignorance, in many cases.

If the property can’t pass the inspection, you can easily do the FHA 203K rehab loan.  Sellers get nervous over the extra length of time these can take…but if the property is in bad condition, by the time they find someone with 20% AND enough cash to fix it…hello, you’ve already closed your FHA loan.  Simple ignorance.

FHA loans are no magic pill…they can take longer to close.  But there is no better medecine for this ailing lending market than only 3.5% down payment, 6% allowable contribution from the seller and an option to finance repairs right into the original loan.

If you’re in Georgia and looking for a FHA Loan or FHA 203K Loan then call me. If you are in California than call my friend and fellow loan officer Brian Wiesner. We know our stuff and he knows his! Here is his original post from the best FHA site on the net, MyFHABlog.com.

http://www.myfhamortgageblog.com/2009/06/why-wont-sellers-accept-my-california-fha-offer/

FHA 203K loans require a little more coordination than a traditional loan would. In order to ensure we have a closing that is as smooth as possible and ON TIME I have created this post to guide Realtors on how you can us assist us AND your clients in getting our FHA 203K loans closed.

1.) Purchase Contract – Needs to indicate FHA 203K financing and needs to provide at least 45 days to close. We need contingencies that are slightly longer than normal so we can get the inspection AND the contractor bids.

FHA 203K renovation loans are the best loan for this market now, but it is no secret they require some additional effort and some additional time from the participating parties. Realtor’s take heed, your first step is to find a loan officer with renovation loan experience. If you do so you’ll make your life and your clients lives a little less stressful!

Want more info on renovation loans? Give us a call! We don’t just write about FHA 203K financing we ACTUALLY CLOSE THEM!

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