Chicago area FHA mortgages

What Can You Do with a Renovation Loan?

What specifically are you allowed to do with a renovation loan? The real question is, “What can’t you do?” because there is a lot of flexibility with this type of loan. There are many different ways to use this program. There are three basic types to look at: FHA 203k renovation loan: a great way to get a government-insured property with as little as 3.5% down, including costs of repairs Homestyle renovation loan: better if you have a bit more of a down payment VA renovation loan: includes special benefits for veterans and disabled veterans The good thing about renovation loans is their flexibility: you can use it for something that just needs a little bit of work or a home that needs a tremendous amount of work. It doesn’t matter what the condition of the property is currently in, but what the condition will be once you finish making…

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How to Find the Right Lender for a FHA 203k Renovation Loan

                  A renovation loan, or FHA 203k renovation loan, is a great tool for buying a home that needs some repairs or improvements to raise the value of the home. Renovation loans allow buyers to incorporate renovation costs into the mortgage in order to improve the home and raise its value immediately, rather than waiting to renovate years down the road. In addition, this can save money in comparison to a second mortgage or use credit cards to make improvements. When shopping for a lender, what questions do you need to ask when considering a renovation loan, or FHA 203k renovation loan? How Experienced Is the Lender? How many renovation loans has the lender done in the past? There are many moving parts to a renovation loan: you have to approve the situation, know the timing of everything, and know what is…

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Big Changes Coming to FHA on April 1st – Mortgage Insurance Premiums are Going Up, Change is Seller Closing Cost Credit

Some big changes will be made to FHA loans starting April 1st, which will increase the cost of FHA financing, and change the way seller closing cost credits are structured. The first change is that FHA will increase the cost of both the monthly and up-front mortgage insurance. The other big change is capping the seller closing cost credit at 3% of the purchase price (currently it is at 6%), or a maximum of $6,000. Regarding the mortgage insurance change, FHA divides their mortgage insurance premium into two parts, an up-front premium that is usually added onto the mortgage balance and financed into the loan, and a monthly premium similar to conventional PMI. Starting on loans registered as of April 1st, the up- front premium will be increased from 1.0% to 1.75%. On a $200,000 loan, this means a change in payment of about $7 based on current interest rates….

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Chicago FHA Mortgages With Fico Credit Scores From 580 to 639 – Affordability is the Key

“How low of a credit score can I have and still be able to get a mortgage?” This is a question I hear almost every day. One of the frustrating things for many people trying to buy their first home, has been dealing with old credit problems. Some people consistently have problems with credit, and if you just don’t pay your bills on time (or at all) and if you don’t take credit seriously, buying a home and qualifying for a mortgage is probably not an option. But for many people their credit has been damaged due to isolated life events. Too many people have run into problems over the last few years, often as a result of losing a job, medical issues or other traumatic events. For these people, the real frustrating part is that once their lives are back on track and they are back to paying their…

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FHA Takes on Risk Based Pricing

Over the last months conventional mortgage guidelines have tightened, and with risk based pricing mortgage financing has gotten more expensive for most borrowers. Conventional mortgage insurance has pulled back on what they will cover, and the cost of mortgage insurance has gone up (more increases are coming in August). This combination has made it harder to qualify for a conventional loan, and more expensive for those who have lower down payments and good but not great credit scores. The one bright spot in the real estate financing market has been FHA. Earlier this year FHA raised their maximum loan limit (up to $410,000 for a single family home here in the Chicago area, lower in other parts of Illinois) making FHA a great option for many borrowers who would have once been conventional borrowers. But FHA is feeling the pinch of the market, too. Effective July 14th FHA is changing…

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