Simple Guide to the 203k Renovation Loan

If you’re out looking for a home, you’ve probably noticed that inventories are tight: there are not as many homes available as you would like, and the homes in good locations at the right price will go fast, often with multiple offers. Similarly, there are many homes that sit on the market for a long time due to their condition: perhaps due to the home not being updated in many years, or due to a physical problem with the home that needs to be fixed before occupancy. In these cases, a simple fix for this problem is the renovation loan. Buying the Ugly Duckling Sometimes, it makes sense to buy what many would call the ‘ugly duckling’ – a home that needs some updating or several repairs. An updated home in a good location will often be very expensive, and a discounted ‘ugly duckling’ home can be a better financial…

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Renovation Loans: Pre-Approval Process

  Today we will talk about getting pre-approved, or pre-qualified for a renovation loan. Whether you’re consciously deciding whether to buy a home that needs renovation, it makes sense to select a lender that specializes in renovation loans. Buyers often will find a home that is in the right location and looks great but needs some work, or may not be approved without doing some work to the home. In other cases, buyers will often get a home appraisal that reveals work needs to be done to the home, and they will not be approved unless that work is done. Catch 22 Sometimes buyers are not aware of work needing to be done to a home until an appraisal is done, in which case they may need extra cash for repairs and will not be approved for their loan without doing some work being done to the home. If buyers do…

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Renovation Loans: How Long to Close

How long does it take to close on a renovation loan? Many folks have heard horror stories on renovation loans, which often times can take 90 or 120 days to close. Realtors often discourage the use of renovation loans because they never close. However, renovation loans can close quickly when set up appropriately. Two main factors influence the amount of time renovation loans will take to close: making sure the loan officer gives good advice on an appropriate time schedule, and you doing your homework. When doing a renovation loan, you will go and find a property and get a contract on the home, and then determine what work needs to be done to the home. Once under contract, your list of repairs and upgrades needs to be priced out, which involves getting quotes from good contractors that will do the work. Coming up with a list of what work…

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How To Get A VA Loan for 0% Down?

                    We will discuss VA Loans, which are 0% down loans for qualified military veterans. If you are a qualified military veteran, or an active duty Servicemember of the military, the U.S. Department of Veterans Affairs (VA) provides home loans with special benefits to help you become a homeowner. Special Benefits One of the best perks of being an active member or veteran of the military is the VA Loan, which requires you put down as little as 0% down for a down payment, without the requirement of mortgage insurance. Conventional mortgages require minimum down payment, where buyers have to pay a percentage of the home purchase price up front when buying a home. Other programs such as FHA loans reduce the down payment required, often lowering the minimum down payment to a lower percentage than conventional mortgages. Most loans under…

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How Much of A Home Can I Afford?

                    One of the first steps in purchasing a home is considering how much of a home you can afford to buy. Before you start searching for homes on the Internet or with the help of a realtor, you should have a good idea of what kind of mortgage you can qualify for, and what size payment you can comfortably afford. To help figure this out, you can start by talking to a qualified loan officer. Questions to Consider To start the process, we often ask about your goals, and try to assess your financial picture to help determine what you can afford. For example, we may discuss your work history, your employment income, any debt you may have, and your credit score. This conversation will help determine what you may qualify for, and the best options for your unique situation….

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How Much Cash Do I Need to Buy a Home?

                  One of the most frequent questions from home buyers is asking how much cash they need to buy a home. Answering this question can be complex, as buyers need to determine how much they can afford for a monthly payment, based on their finances, as well as how much savings they need for their down payment and closing costs. Down Payment and Closing Costs When purchasing a home, buyers need to factor in the closing costs and the costs to set up the escrows and other things that are required to buy a home. Typically the largest up-front cost is the down payment, which varies depending on the mortgage used to purchase the home. Some mortgages like FHA loans require a smaller down payment, which can often be as low as 3.5% of the price of the home. For example, when…

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How Soon Can I Buy a House After a Foreclosure?

In my last article, we discussed how soon you can buy a home after a bankruptcy or short sale, and the standard time frames in which you must wait before re-applying for a home loan. Today we will go over deed-in-lieu of foreclosure and foreclosures, and your waiting periods in their wake. Buying After Deed in Lieu of Foreclosure A Deed-in-Lieu of Foreclosure may happen when a homeowner realizes they aren’t financially stable enough to keep their house, and subsequently offers to deed their property to the lender. If the lender accepts, they in return forgive the homeowner’s debt and waive the right to pursue them for further payments. This situation is rare, but not unheard of. If you find yourself in this way, and would like to apply for a conventional home loan, you will need to wait four to seven years depending on your specific case. You may find…

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How Soon Can I Buy a House After a Bankruptcy or Short sale?

Since the financial crisis of 2007, it seems like everyone knows at least one person who’s pocketbook was hit hard resulting in the loss of their house, or the need to file for bankruptcy. Maybe that person is you. You’ve been through some tough times lately; You’re not alone. Now that you are getting back on your feet, you may be asking yourself, “When can I buy a house again?” Let’s discuss your options for buying a new home after bankruptcy or short sale. Buying a New Home After a Bankruptcy The definition of filing for bankruptcy is the legal proceeding in which an individual is unable to pay their outstanding debts. There are two types of bankruptcy; Chapter 7 and Chapter 13. Chapter 7 bankruptcy occurs when an individual files a petition, their assets are evaluated and used to pay back some of his or her outstanding debt, and…

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Down Payments and Gifts: Part 2

In my last post, Down Payments and Gifts: Part 1, we discussed what a down payment is, how much you might need for a down payment, and how the type of loan determines how you can use a gift. In this post, we will explore the definition of a gift in the world of mortgages, what paperwork you’ll need to verify a gift, and the overall rules for gifts for all loan types. What is considered a “gift”? Let’s say Aunt Judy gives you $50, and Grandma and Grandpa Smith give you $1,000 for your college graduation. Can you use both as gifts towards a down payment on a house? Absolutely! It’s just that the $1,000 probably requires a little documentation. Look at it from a lender’s point of view. When they examine your accounts, they want to be sure that all of the money in there is yours. If…

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Down Payments and Gifts: Part 1

Whether it’s in a jar labeled “Future Home” or in a special account at the bank, you’ve been saving your pennies for a down payment. Go you! But how much do you have versus how much do you need? Are grandma and grandpa giving you a chunk of change for your graduation towards the down payment too? Before answering these questions, let’s take one small step back in order to define some terms. What is a down payment? The definition of a down payment is the initial payment made when something is bought on credit. For our purposes, that something is a house. The money you use for a down payment is the foundation for the equity you’ll build in your home over time as you make mortgage payments. Equity is the total amount of money you’ve paid towards owning your home. For example, if you made a $15,000 down…

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