Tag Archive for: mortgage lender

Make an All-Cash Offer with Our CashBuys Program

June 1, 2022
mortgage blog, all-cash offer, cashbuys, cash buys program

Homebuyers looking to buy a home in today’s market know that all-cash offers can often win the bidding war. For those buyers who have the cash, that’s great. What about everyone else? The CashBuys program is designed to give you a winning edge.

With the CashBuys program, you can compete for your dream home by offering an all-cash offer without having to pay cash upfront. How? Our CashBuys program helps qualified homebuyers get pre-approved as cash buyers. After the transaction closes, we immediately buy the property and you get a fixed-rate mortgage: fixed monthly payments, homeownership, and no surprises.

A cash offer with the CashBuys mortgage program removes the financing contingency, keeps escrow moving quickly, and leads to a fast close in just 15 days. Right now, mortgage rates are low enough to consider securing a mortgage even if you have enough liquid assets to make an all-cash offer. With the CashBuys program, you can secure a fixed-rate mortgage with favorable loan terms and still make an all-cash offer to win your perfect home.

Related: Find out how a local mortgage advisor can help you win your next offer

All-cash offers give homebuyers a competitive edge.

All-cash offers are often a strategic move when multiple offers are put forward on a new home. Paying cash will help your offer stand out and show the seller you’re serious.

Right from the start, the seller knows that you won’t need to secure financing. Financial contingencies are removed along with other common financial hurdles. In short, you won’t need additional approval in order for the sale to go through.

All-cash offers help new homebuyers exercise freedom and opportunity, especially in areas where the housing market is competitive.




How to Take Advantage of the CashBuys Mortgage

With a CashBuys home loan, you can make an all-cash offer on your dream home (yes, without paying cash). Then, as your mortgage partner, we buy the loan on your behalf and immediately sell it to you once the sale closes. This is a fantastic advantage in today’s market.

This unique CashBuys program allows you to operate as a cash buyer when negotiating with the seller. Then, after the transaction closes, you’ll have a regular fixed mortgage with favorable loan terms. No surprises. No risk.

  • You can make an ALL-CASH OFFER on your dream home
  • Make an offer without contingencies (only the home inspection is required)
  • Close in 15 days (later if you and the seller would like a later date)
  • After the close, enjoy a fixed-rate mortgage with steady mortgage payments
  • Only a 10% down payment required

Related: How to FAST TRACK your mortgage pre-approval

Eligibility for the CashBuys Home Loan Program

Borrower criteria are more strict for the CashBuys program, but the benefits are worth pursuing.

Qualified borrowers will typically meet the following requirements:

  • Conventional home loans only (up to $650k)
  • Primary residence required
  • A minimum credit score of 700+
  • Verified assets and cash reserves
  • 3% Earnest money down
  • 10% Minimum down payment
  • 1.5% Processing fee (+ $995 underwriting fee)
  • Conventional Home Loans only (up to $650k)
  • Verifiable income and employment

Tips to Maximize Verified Income and Assets

Most of us can’t flip a switch to increase our income. However, you’ll qualify for the best home loan when you can verify additional income. Employment is only one aspect of qualified income.

Consider the following revenue streams and be sure to include them if they apply to you:

  • investment gains, interest, and dividends
  • restricted stock units (RSU)
  • employee stock purchase plans (ESPP shares)
  • rental property income
  • business income
  • spousal support and/or child support

Related: Learn the truth about closing costs and zero-cost loans

3 Steps to Apply for the CashBuys Program

Step 1: Connect with a local mortgage advisor.

Touch base with a local mortgage advisor as soon as you start shopping for your dream home. Making an all-cash offer with the CashBuys mortgage program will give a competitive edge and a fast close. A local mortgage advisor will understand the challenges of the housing market in your area and can get your application approved quickly.

Find a qualified mortgage expert in your local area.

Step 2: Gather required documentation and apply early.

The CashBuys mortgage program requires standard documentation like most other home loans. But it’s important to start the process early to make sure everything is approved, so you’re ready to make an all-cash offer when you find your perfect home.

Ask your local mortgage advisor for a quick list to help keep things on track. An experienced mortgage advisor will do the extra work to verify your income and put the documentation in order to help get you approved quickly for the CashBuys home loan.

Here’s the documentation you may need:

  • Identification such as a passport or driver’s license
  • Employment verification
  • Proof of income (e.g., pay stubs, W-2 statements, bonuses, alimony)
  • RSU, ESPP shares, or other stock options
  • Tax returns for the past two years 
  • Recent bank statements
  • Investment account statements

Step 3: Make All-Cash Offers

Shop with confidence, knowing that you’ll stand out as a buyer—no worrying about whether or not your financing will get approved. What’s more, you’ll get the added tax benefits of a regular mortgage after the close. Mortgage interest and property taxes are tax-deductible in most states across the country. Check with your tax accountant to verify the tax laws in your state and confirm your savings.

Enjoy a 15-day close, a fixed monthly mortgage payment and the keys to your dream home.

Summary

Years ago, homeowners dreamed about paying off their mortgage and living debt-free. But using a mortgage to borrow money at a low rate can be a fast path to financial freedom. The CashBuys mortgage can help you shop as a cash buyer, then leverage low-interest rates to secure a fixed-rate mortgage. What’s more, there are financial and tax advantages to having a mortgage on your principal residence.

Taking Action

If you’re considering making an all-cash offer on a new home, now is the time to take action. Our CashBuys program can give you the competitive edge of a cash offer and a low-interest home loan with favorable terms for qualified buyers. Connect with a mortgage advisor to discuss your goals. The CashBuys mortgage program can help you build wealth and establish financial stability. We’d love to help.

5 Strategies to Beat an All-Cash Offer

November 16, 2021
blog, all-cash offer, preferred rate, mortgage blog

You’ve probably heard recent stories of bidding wars and all-cash offers taking place more often. The truth is, getting beat by an all-cash offer is all too common for many new homebuyers today. All-cash offers are attractive to sellers for obvious reasons—they close fast and the money is all but guaranteed. So if you’re frustrated or disappointed, you’re not alone. But you can beat an all-cash offer with these five strategies.

Related: Find out why getting pre-approved can help you win your next offer

USE THESE 5 STRATEGIES TO BEAT AN ALL-CASH OFFER

As we head into the holidays, there tends to be less inventory on the market and more stress in the negotiations. So yes, all-cash offers are on the rise in today’s housing market (almost 1 in 4). But these five strategies will help you compete against an all-cash offer.

1. Get pre-approved for your new mortgage

Getting pre-approved for your mortgage means that your lender has fully verified your loan. Your credit report, finances, income verification, employment—every step has been completed and your loan is all but funded. This gives the green light to the seller that your loan is fully approved, not just pre-qualified.

Ultimately, when you get pre-approved for a mortgage, the seller knows your financing will follow through as promised.

Related: How to FAST TRACK your mortgage pre-approval

2. Increase your good faith deposit (earnest money down)

Your good faith deposit, or earnest money down, is the amount you put down to reserve your right to buy the home. A good faith deposit shows the seller that you’re serious about your offer. If you decide to walk away after you’ve made an offer with earnest money down, the seller can keep your deposit.

It’s a strong move to show the seller how much you’re willing to risk losing (if you walk away) and that you’ll do everything you can to win the bid against an all-cash offer.

If you want to stand out in the competition, consider increasing your earnest money down. If the seller rejects your bid, you won’t lose your good faith deposit. But it shows the seller how much you’re willing to risk with real dollars.

3. Make an offer above the asking price

All-cash offers often come in under asking. Even in a bidding war, homebuyers who bring an all-cash offer are betting that the seller will lower the price in exchange for an easy sale. This is your opportunity to raise your offer. Going above asking is another way to stand out and beat an all-cash offer. 

Consider talking to your realtor about including an escalation clause. This allows you to raise your offer automatically (up to a limit) if someone else bids higher.

Related: Learn the truth about closing costs and zero-cost loans

4. Waive a few contingencies

All-cash offers make the transaction easy on the seller. You can make things even easier by waiving some of the standard contingencies. For example, consider waiving the financing contingency—this means you won’t be able to back out of the offer if the mortgage doesn’t fund. But if you get pre-approved for your mortgage, you can be confident that your loan will be funded.

Related: 5 Hidden Costs of a Home Remodel

Talk with your realtor to consider waiving other contingencies as well: the appraisal contingency, sale contingency, and inspections contingency. Discuss each contingency with your real estate agent and decide what kind of risk you’re willing to take. Waiving contingencies is a great strategy to win over a seller and beat an all-cash offer.

5. Write a personal letter

Believe it or not, writing a personal letter to the sellers can really make a difference. Buying and selling a home is an emotional decision for most buyers and sellers. Writing a letter is a reminder that we’re all human here.

After the offers and financials are considered, a personal letter can go a long way to help you stand out and beat an all-cash offer. Many homeowners actually choose buyers who they can imagine living in their home once they’ve packed up and moved on.

You can include specific things you love about the home, why it’s a great fit for your family, or how you see your family growing and building a life here. Don’t be afraid to set yourself apart and bring your emotion to compete against an all-cash offer.

Taking Action

If you’re shopping for your next home, getting pre-approved for a mortgage is the best action you can take. You’ll be able to shop with confidence, especially if you’ve to beat an all-cash offer. We can guide you through the process and help secure your best mortgage so you can know exactly how much you can afford. There are several loan options and benefits available depending on your homeownership goals. Connect with a local mortgage advisor to get started. We’d love to help.

Buying a House in Spring 2022: How to Win the Bidding War

March 8, 2022
mortgage blog, home buying, bidding war

Inflation, economic uncertainty, and fluctuating mortgage rates don’t seem to be slowing down the housing market. Spring is always the strongest season for buying and selling houses, and the housing market for March 2022 is no exception. Unfortunately, all-cash offers are still more common than many homebuyers would like them to be. A bidding war may be likely.

But like a lot of things in life, being prepared has its benefits. If your dream home turns into a bidding war, these top strategies can help you compete. 

Related: Find out why getting pre-approved can help you win your next offer

Top 5 Strategies to Win a Bidding War in Today’s Housing Market

As we head into Spring 2022, housing season is hotter than ever. More than ever, people are relocating to be near family or start a new career. As people move in and out of state, housing inventory increases. But the competition can beat out even the most qualified buyers.

These five strategies will help you win your dream home, even in a bidding war.

1. Get pre-approved for your new mortgage.

This might seem obvious. But getting pre-approved for mortgage financing before you find your perfect home is one of the smartest moves you can make. When you’re pre-approved and make an offer, the seller knows without a doubt that your financing won’t fall through. Your offer just became that much more attractive against other bids.

Getting pre-approved for your mortgage means your lender has verified your loan. Your credit report, financial profile, income verification and employment—every requirement has been met and your home loan is all but funded. 

TIP: In a competitive market, the seller will know that your loan is fully approved when you are pre-approved and not simply pre-qualified.

Ultimately, when you get pre-approved for a mortgage, the seller knows your financing will follow through as promised. 

This means less stress and worry for the seller and a faster close.

Related: How to FAST TRACK your mortgage pre-approval

2. Increase your good faith deposit (earnest money down).

Your good faith deposit, or earnest money down, is the amount you put down to reserve your right to buy the home. A good faith deposit shows the seller that you’re serious about your offer. If you decide to walk away after you’ve made an offer with earnest money down, the seller can keep your full deposit.

It’s a strong move to show the seller how much you’re willing to risk losing (if you walk away) and that you’ll do everything you can to win the bid against an all-cash offer.

TIP: If you want to stand out in the competition, consider increasing your earnest money down. If the seller rejects your bid, you won’t lose your good faith deposit.

(A good faith deposit is only forfeited if a buyer walks away after the seller has already accepted the offer.)

Ultimately, a large good faith deposit shows the seller how much you’re willing to risk with real dollars.

3. Make an offer above the asking price.

Did you know that many all-cash offers are below the asking price? Homebuyers who bring all-cash offers are betting that the seller will accept a lower price in exchange for a fast and easy sale.

This is an opportunity to raise your offer. Going above asking is a strong move to stand out and beat other offers, even an all-cash bid. 

TIP: Consider talking with your realtor about including an escalation clause. This allows you to raise your offer automatically (up to a limit) if another buyer bids higher.

Related: Learn the truth about closing costs and zero-cost loans

4. Choose to waive contingencies.

In a competitive housing market, you want to make the transaction easier on the seller. You can do this by waiving a few common contingencies.

For example, consider waiving the financing contingency—this means you won’t be able to back out of the offer if the mortgage doesn’t fund.

TIP: When you get pre-approved for your mortgage, you can be confident that your loan will be funded.

Talk with your realtor to consider waiving other contingencies as well: the appraisal contingency, sale contingency, and inspections contingency.

Discuss each contingency with your real estate agent and decide what kind of risk you’re willing to take. Waiving contingencies is a great strategy to win over a seller and beat an all-cash offer.

TIP: If you are buying a home that’s less than ten years old, the home is often still covered under warranty by the builder. Talk to your realtor about the details.

Related: 5 Hidden Costs of a Home Remodel

5. Write a personal letter.

Believe it or not, writing a personal letter to the sellers can really make a difference when you’re making an offer in a competitive housing market. Buying and selling a home is an emotional decision for most buyers and sellers. Writing a letter is a reminder that we’re all human here.

After the offers and financials are considered, a personal letter can go a long way to help you stand out when multiple offers are on the table.

TIP: Many homeowners often choose buyers who they can imagine living in their home once they’ve packed up and moved on. Keep the sellers in mind when you write your letter.

You can include specific things you love about the home, why it’s a great fit for your family, or how you see your family growing and building a life here. Don’t be afraid to set yourself apart and bring your emotion to compete against other offers.

Taking Action

If you’re shopping for your next home in Spring 2022, getting pre-approved for a mortgage is the best action you can take. You’ll be able to shop with confidence, especially if you’re looking to buy a home in a competitive area. You can still win the bidding war.

We can guide you through the process and help you get approved for your best mortgage. You’ll know exactly how much you can afford before you make an offer. Connect with a local mortgage advisor to get started. We’d love to help.

Benefits of a Reverse Mortgage When Costs are Rising

May 25, 2022
mortgage blog, reverse mortgage, happy couple, preferred rate

Mortgage rates appear to be increasing ever so slowly while inflation is hitting our cash flow and monthly budgets. The dollar is buying less when it comes to groceries, gas, clothing, and travel. Understandably, homeowners have been asking us about the benefits of a reverse mortgage. Economic uncertainty seems to be standard fare for homeowners across the country right now, and information about reverse mortgages can appear conflicting and confusing.

If you’ve got a substantial amount of equity in your home and you’re over the age of 62, can a reverse mortgage provide financial stability? When is a reverse mortgage a good idea? Are there hidden dangers of a reverse mortgage?

We hear you.

After all, one of the biggest benefits of homeownership is accessing your home equity when you need it most. Keep reading to learn the pros and cons of a reverse mortgage and decide if it’s a good fit.

Related: How to fast-track your loan application and refinance your mortgage while rates are still low

TOP 7 QUESTIONS ABOUT REVERSE MORTGAGES (answered)

1. What is a reverse mortgage and how does it work?

At its core, a reverse mortgage is one way to refinance your mortgage. A reverse mortgage allows homeowners to turn their home equity into cash while deferring mortgage payments. As with every mortgage, your home is the collateral for the new loan.

A reverse mortgage is similar to refinancing with cash-out. But with a reverse mortgage, you can defer your mortgage payments. In fact, with a reverse mortgage, you don’t need to pay back the loan until the homeowner moves out, sells the property, or passes away.

For example, let’s say you own a home and you’ve been making monthly mortgage payments on a 30-year mortgage for several years, and now your mortgage balance is $100k. Your home has also increased in value and is now worth $650k.

A reverse mortgage allows you to borrow against the equity in your home ($550k) and receive the funds in a lump sum or monthly payments over a set term. There are limits to how much a homeowner can borrow.

There are no restrictions on how you use the funds.

Once you’ve qualified for a reverse mortgage, you can defer your mortgage payments until you move or sell the house. Interest will accrue on your new mortgage, but rarely will your mortgage balance surpass the value of your home.

2. When is a reverse mortgage a good idea?

If you’re a homeowner over the age of 62 with substantial equity in your home, a reverse mortgage might be worth considering. You can access your home equity and use the cash any way you like, without restrictions. Funds are disbursed as a lump sum, regular monthly payments, or even a line of credit.

Highlights:

  •  Access to home equity as spendable cash
  •  Option to defer mortgage payments
  •  Option to receive in a lump sum or monthly payments
  •  Use funds to supplement retirement income
  •  No taxes due on the income since they are loan proceeds
  •  Protected if the mortgage surpasses your home’s value

3. Do I need to make monthly mortgage payments on a reverse mortgage?

No. One of the main benefits of a reverse mortgage is that you have options for paying your mortgage. The main benefit is that you can access your equity now and have it disbursed to you monthly, as a lump sum, or even as a line of credit.

You get to decide how you want to pay back your mortgage:

  •  Make monthly payments against your new mortgage balance
  •  Defer payments for a limited amount of time
  •  Defer payments until you decide to move or sell the home

With a reverse mortgage, if you decide to defer mortgage payments, the interest on the loan will continue to accrue. As interest accrues, the balance will increase, but the equity in your home will also increase. Rarely will a reverse mortgage balance surpass the value of the home.

Connect with a mortgage advisor to determine which option works best with your financial goals.

4. Who is eligible for a reverse mortgage?

Homeowners must be at least 62 years old and have substantial home equity. When you apply for a reverse mortgage, it’s similar to applying for a mortgage refinance. The application process will require a home appraisal, financial documentation, a credit report, and general mortgage application information.

Connecting with a local mortgage advisor to discuss your goals can be extremely helpful since there are a few restrictions and requirements.

Once you qualify for a reverse mortgage, you can decide how much you want to borrow, up to the approved loan amount.

RELATED: Lower your mortgage payment with the FHA Streamline Refinance

5. How do I access funds with a reverse mortgage?

With a reverse mortgage, you can receive a lump sum, monthly payments, or use a line of credit. Once you qualify, you can decide how much you want to borrow and how you want to receive the funds, up to the loan amount approved by your mortgage lender.

Often, homeowners choose a reverse mortgage to help with monthly expenses, health care needs or as a supplement to retirement income.

RELATED: Home Equity Loan vs. Home Equity Line of Credit

6. Who pays off a reverse mortgage if the property owner moves or passes away?

Reverse mortgages can be paid off at any time. In most cases, a reverse mortgage is paid off when the owner moves or passes away.

With an estate, heirs can pay off the mortgage directly, refinance if the property has sufficient value, or sell the property to pay off the mortgage.

In the few instances where the home’s value falls below the loan balance, heirs can settle the loan by returning the title to the lender. This is called a non-recourse loan, and the heirs will not be liable for the balance.

Most reverse mortgages are insured by the FHA, which guarantees final payment to the mortgage lender.

RELATED: 7 Ways to Increase the Value of Your Home

7. What happens when you sell a home with a reverse mortgage?

When you sell a home with a reverse mortgage, the mortgage balance is paid in full when the sale closes. If there is equity left after you pay off the mortgage balance, that money is disbursed to you (the property owners) or the heirs if part of an estate.

If your home’s current market value is lower than the current mortgage balance and you no longer want to live in the home, the mortgage is settled as a non-recourse loan. 

A non-recourse loan means that the loan can be settled by giving the title back to the lender. Neither the owner nor the heirs will be liable for the balance. Almost all reverse mortgages are insured by the FHA, which guarantees full payment to the mortgage lender.

  • Worth noting— foreclosures can still happen if property taxes or homeowner’s insurance are not paid on time.

Taking Action

Connect with a mortgage advisor to determine whether or not a reverse mortgage is a good fit. Remember, you can access your home equity in many different ways — with a reverse mortgage, cash-out refinancing, a line of credit, or a home equity loan. We can help you decide which path will save you money and provide financial stability. Connect with a local mortgage advisor to get started. We’d love to help.

Reverse Mortgages: All You Need to Know

September 24, 2021
reverse mortgages pros and cons

Lately, we’ve been getting a lot of questions from homeowners about reverse mortgages. It’s understandable. Economic uncertainty seems to be standard fare for homeowners across the country right now, and information about reverse mortgages can appear conflicting and confusing.

If you’ve got a substantial amount of equity in your home and you’re over the age of 62, can a reverse mortgage provide financial stability? When is a reverse mortgage a good idea? Are there hidden dangers of a reverse mortgage?

We hear you.

After all, one of the biggest benefits of homeownership is accessing your home equity when you need it most. Keep reading to learn the pros and cons of a reverse mortgage and decide if it’s a good fit.

Related: How to fast-track your loan application and refinance your mortgage while rates are still low

TOP 7 QUESTIONS ABOUT REVERSE MORTGAGES (answered)

1. What is a reverse mortgage and how does it work?

At its core, a reverse mortgage is one way to refinance your mortgage. A reverse mortgage allows homeowners to turn their home equity into cash while deferring mortgage payments. As with every mortgage, your home is the collateral for the new loan.

A reverse mortgage is similar to refinancing with cash-out. But with a reverse mortgage, you can defer your mortgage payments. In fact, with a reverse mortgage, you don’t need to pay back the loan until the homeowner moves out, sells the property, or passes away.

For example, let’s say you own a home and you’ve been making monthly mortgage payments on a 30-year mortgage for several years, and now your mortgage balance is $100k. Your home has also increased in value and is now worth $650k.

A reverse mortgage allows you to borrow against the equity in your home ($550k) and receive the funds in a lump sum or monthly payments over a set term. There are limits to how much a homeowner can borrow.

There are no restrictions on how you use the funds.

Once you’ve qualified for a reverse mortgage, you can defer your mortgage payments until you move or sell the house. Interest will accrue on your new mortgage, but rarely will your mortgage balance surpass the value of your home.

2. When is a reverse mortgage a good idea?

If you’re a homeowner over the age of 62 with substantial equity in your home, a reverse mortgage might be worth considering. You can access your home equity and use the cash any way you like, without restrictions. Funds are disbursed as a lump sum, regular monthly payments or even a line of credit.

Highlights:

  •  Access to home equity as spendable cash
  •  Option to defer mortgage payments
  •  Option to receive in a lump sum or monthly payments
  •  Use funds to supplement retirement income
  •  No taxes due on the income since they are loan proceeds
  •  Protected if the mortgage surpasses your home’s value

3. Do I need to make monthly mortgage payments on a reverse mortgage?

No. One of the main benefits of a reverse mortgage is that you have options for paying your mortgage. The main benefit is that you can access your equity now and have it disbursed to you monthly, as a lump sum, or even a line of credit.

You get to decide how you want to pay back your mortgage:

  •  Make monthly payments against your new mortgage balance
  •  Defer payments for a limited amount of time
  •  Defer payments until you decide to move or sell the home

With a reverse mortgage, if you decide to defer mortgage payments, the interest on the loan will continue to accrue. As interest accrues, the balance will increase, but the equity in your home will also increase. Rarely will a reverse mortgage balance surpass the value of the home.

Connect with a mortgage advisor to determine which option works best with your financial goals.

4. Who is eligible for a reverse mortgage?

Homeowners must be at least 62 years old and have substantial home equity. When you apply for a reverse mortgage, it’s similar to applying for a mortgage refinance. The application process will require a home appraisal, financial documentation, a credit report, and general mortgage application information.

Connecting with a local mortgage advisor to discuss your goals can be extremely helpful since there are a few restrictions and requirements.

Once you qualify for a reverse mortgage, you can decide how much you want to borrow, up to the approved loan amount.

RELATED: Lower your mortgage payment with the FHA Streamline Refinance

5. How do I access funds with a reverse mortgage?

With a reverse mortgage, you can receive a lump sum, monthly payments, or use a line of credit. Once you qualify, you can decide how much you want to borrow and how you want to receive the funds, up to the loan amount approved by your mortgage lender.

Often, homeowners choose a reverse mortgage to help with monthly expenses, health care needs or as a supplement to retirement income.

RELATED: Home Equity Loan vs. Home Equity Line of Credit

6. Who pays off a reverse mortgage if the property owner moves or passes away?

Reverse mortgages can be paid off at any time. In most cases, a reverse mortgage is paid off when the owner moves or passes away.

With an estate, heirs can pay off the mortgage directly, refinance if the property has sufficient value, or sell the property to pay off the mortgage.

In the few instances where the home’s value falls below the loan balance, heirs can settle the loan by returning the title to the lender. This is called a non-recourse loan, and the heirs will not be liable for the balance.

Most reverse mortgages are insured by the FHA, which guarantees final payment to the mortgage lender.

RELATED: 7 Ways to Increase the Value of Your Home

7. What happens when you sell a home with a reverse mortgage?

When you sell a home with a reverse mortgage, the mortgage balance is paid in full when the sale closes. If there is equity left after you pay off the mortgage balance, that money is disbursed to you (the property owners) or the heirs if part of an estate.

If your home’s current market value is lower than the current mortgage balance and you no longer want to live in the home, the mortgage is settled as a non-recourse loan. 

A non-recourse loan means that the loan can be settled by giving the title back to the lender. Neither the owner nor the heirs will be liable for the balance. Almost all reverse mortgages are insured by the FHA, which guarantees full payment to the mortgage lender.

  • Worth noting— foreclosures can still happen if property taxes or homeowner’s insurance are not paid on time.

Taking Action

Connect with a mortgage advisor to determine whether or not a reverse mortgage is a good fit. Remember, you can access your home equity in many different ways — with a reverse mortgage, cash-out refinancing, a line of credit, or a home equity loan. We can help you decide which path will save you money and provide financial stability. Connect with a local mortgage advisor to get started. We’d love to help.

How to Buy a Duplex with FHA Financing

November 9, 2021
mortgage blog, buy a duplex, preferred rate

Deciding to buy a duplex or multi-family property can put you on a path toward financial freedom. Whether you’re a first-time homebuyer or you already own property, buying a multi-family property can generate passive income, extra cash flow, and build home equity. You can buy a duplex with FHA financing or conventional financing. Each option comes with a different set of requirements and benefits.

In short, a duplex is a residential property with two units. A multi-family property is a residential property with up to four units. To get approved with FHA financing, you’ll need to be the owner-occupant in one of the units. This holds true for duplexes, triplexes, and multi-family properties up to four units.

Note: If you’re looking to buy a multi-family property with five units or more, it’s considered commercial property. Getting financing for commercial property is a different process with a number of requirements.

Connect with a mortgage advisor if you’re ready to take action and discuss the advantages.

Top 3 Mortgage Options to Buy a Duplex or Multi-Family Property

FHA Loans

FHA loans are government-backed home loans. To get approved when you buy a duplex, you’ll need to live in one of the units. By living in one of the units, the property is considered your primary residence, and you can also use rental income to help you qualify. FHA financing is often the best choice for first-time homebuyers and buyers who want a small down payment. FHA loans have fewer requirements, lower closing costs and down payments as small as 3.5%.

Conventional Home Loans

Conventional loans are the best option if you have excellent credit and plan to make a large down payment. Getting approved for a conventional mortgage offers more flexibility since they’re offered through private lenders (mortgage lenders, credit unions, and banks). You can buy a duplex or multi-unit property with a conventional mortgage. In general, a conventional mortgage may be the best option if you have strong credit and plan to make a large down payment.

VA Loans

If you qualify, VA loans offer several advantages — no minimum credit score, no down payment requirement, and no private mortgage insurance (PMI). To be eligible for a VA loan with 100% financing when you buy a duplex, you must be one of the following:

  • An active-duty service member
  • Military veteran
  • Surviving spouse of qualifying service members
  • Eligible members of the National Guard and Reserves

Do I need to occupy the property if I buy a duplex or multi-family property?

When you apply for a mortgage, you’ll need to declare the property type: principal residence, a second home, or investment property. So when you buy a duplex as an investment property, declaring it as your principal residence will give you the best mortgage options and the lowest mortgage rates.

You can declare yourself the owner-occupant by living in one of the units then get the benefits of a principal residence mortgage.

If you decide on a conventional mortgage, you don’t need to live at the property. However, it’s a requirement to live in one of the units if you want FHA financing. What’s more, there are a number of discounts, low down-payment options, and other advantages when you declare your property as a primary residence, which we blogged about here.

RELATED: How to declare your property as a primary residence (and why it matters)

Can I use the FHA 203K loan to buy a duplex that needs work?

With the FHA 203k loan, you can buy a duplex that needs a lot of work and make the repairs manageable with one mortgage. The 203k combines the price of the property with all renovation costs and finances the total with one mortgage. With an FHA 203k, the mortgage includes the purchase price plus all the renovations, so you’re able to spread the renovation cost over the life of the loan. One mortgage, one monthly payment. There are great benefits and a few restrictions, which we blogged about here. 

RELATED: When is it smart to use a home equity loan or home equity line of credit for home renovations?

What credit score do I need to buy a duplex?

Buying a duplex or fourplex as an investment property can be a lot less stressful when you know what to expect. Mortgage lenders look at your credit report and your debt-to-income ratio to evaluate risk, which affects the terms of your loan offer. 

Conventional mortgages typically require a credit score above 700, though mortgage lenders have flexibility. FHA financing requires a credit score above 580. Find out your credit score by downloading your free credit report. You can fix any errors, dispute negative marks, and take action to boost your credit score in less than 60 days, which we blogged about here.

A good credit score will help you secure the lowest mortgage rate. What’s more, there are specialty loan programs available for homebuyers who want to buy a duplex or multi-unit property.

Talk to a mortgage advisor (for free) to discuss options that can save you money.

Take Action

If you’re ready to buy a duplex or multi-family property, we can guide you through the process and help secure the best financing. There are several loan options and different advantages available depending on your homeownership goals. Connect with a local mortgage advisor to get started. We’d love to help.

FHA 203(k) Home Loan is Perfect for Fixer-Uppers

June 29, 2022
mortgage blog, fha 203(k) home loan, preferred rate

As mortgage rates increase and inflation continues to rise, buying a fixer-upper can be a strong option for new homebuyers. Buying a fixer-upper with the FHA 203(k) home loan can be a fast way to get into a great location below market value. What’s more, you can build home equity fast in today’s housing market. That said, buying a home that needs a lot of repairs and remodeling isn’t for everyone. A fixer-upper can quickly become a money pit with endless surprises and a non-stop list of expensive repairs for homebuyers who rush in too quickly. Not to mention extra stress and tackling what it looks like to bring an old home up to code with current city standards.

So here’s the good news: if you’re ready to dive into a home renovation project or buy a fixer-upper, then the FHA 203(k) home loan can help you save money, plan ahead, and build equity fast. Without losing money along the way.

RELATED: Top 7 Ways to Increase the Value of Your Home in 2022

FHA 203(k) Home Loan Explained

The FHA 203(k) home loan is a government-backed loan by the FHA (Federal Housing Administration) created specifically for new homeowners who are ready and eager to take on a fixer-upper or remodel a home that needs substantial work. It has a few different names, but they are all the same home loan and work the same: FHA 203(k) Home Loan, Mortgage Rehab Loan, Section 203(k) Home Loan.

In short, the FHA 203(k) mortgage finances the home’s purchase price and the cost of repairs into a single home loan. One mortgage payment covers everything.

For many who buy a fixer-upper, there turns out to be a lot of extra work once the project gets underway. The FHA 203(k) eliminates that stress. However, there is a fair amount of preparation and planning that goes into an FHA 203(k) home loan. This article lays out the process so you know what to expect.

Related: How to Finance a Renovation with the Fannie Mae Homestyle Loan

 

When the FHA 203(k) Home Loan is a Smart Move

An FHA 203(k) home loan takes the initial purchase price of your new home and combines it with the total estimated costs of repairs and renovation. The result is one home loan that covers your new home and all pending repairs and puts everything into one mortgage payment.

This means you can buy a fixer-upper and you’ll have one mortgage—instead of multiple loans or lines of credit to finance the renovation. With all the costs rolled into one home loan, homeowners are less likely to get stuck in a money pit or a surprise property with endless unexpected repairs. 

 

RELATED: Refinance your mortgage and pay off your debt in 2022

How it Works

The FHA 203k loan combines the purchase price of your home with the total cost of repairs into one mortgage, including labor and materials.

With the FHA 203(k) home loan, the entire cost of the remodel must be estimated and accepted before the home loan is approved. To qualify for the FHA 203(k) home loan, all estimated repairs, including labor and materials, have to be approved upfront which can protect the homeowner from unexpected costs down the road.

Once your loan is approved, you can rest easy and know that you’ve got the financing needed to finish the work on your new home.

The FHA 203(k) loan has a built-in safety net that can help buyers build equity fast without over-extending their finances, especially if this is your first fixer-upper.

How to Apply: FHA 203(k) Home Loan Mortgage Options

The Section 203(k) home loan is typically offered as a 15-year fixed or 30-year fixed-rate loan, but you can also apply for an adjustable-rate mortgage (ARM). The rates might run a little higher than conventional home loans, but once the repair work is finished, refinance options may be available. 

If you’re looking to stay in the home long-term, a fixed-rate mortgage will give you greater financial security and a mortgage payment that won’t change no matter how the market is moving.

On the other hand, if you’re planning to own the home for less than 5 years, then an ARM might give you a lower rate and the flexibility you want.

 

RELATED: How to find the best mortgage lender in your area

 

Can I refinance a home renovation with the FHA 203(k) loan?

The FHA 203(k) mortgage has refinance options available for current homeowners who want to do a big remodel. It’s an especially good option if you don’t want to open a line of credit or take out a second loan against your home equity.

Are there any restrictions with an FHA fixer-upper loan?

A few rules and regulations to get approved for a 203(k) mortgage:

  • The property must be your primary residence
  • Renovations can cost no more than $5k
  • You must work with a HUD consultant
  • A licensed contractor must complete all repairs
  • All renovations must be finished within six months
  • FHA 203k loan requires mortgage insurance
  • An FHA appraiser approves final estimates

The 203k loan isn’t available for investment properties (or secondary properties) or homes priced above current conforming limits ($822,275 in high-cost areas, $510,400 in lower-cost areas). 

What kinds of repairs are covered with the FHA 203k?

Homebuyers can use a standard FHA 203(k) mortgage to do almost any type of renovation except for luxury amenities (e.g., a swimming pool or backyard kitchen). Also, all updates and repairs must be considered “permanent” for the home. A few popular renovations that are covered:

  • Upgrades to remove health and safety hazards
  • Improve accessibility for a disabled person
  • Update plumbing and sewer systems
  • Structural changes such as adding bedrooms
  • Remodel bathrooms and kitchens
  • Install or replace flooring, windows, roofing
  • Major landscaping projects

It’s a good idea to meet with contractors early to make sure your project can begin as soon as the loan closes. Make sure to find a contractor with experience working on projects financed with an FHA 203k loan. 

How much do you have to put down on a 203k loan?

  • Down payment is typically 3.5% of the purchase price plus the cost of repairs
  • The maximum loan amount is 110% of the formal appraisal
  • Mortgage insurance is required
  • A minimum credit score of 580 (most lenders may require 620+)

For homebuyers with a credit score between 500-580, the typical down payment required is 10%. Gifted funds are allowed from friends and family, and down payment assistance programs might also be available. Connect with a local mortgage advisor to decide which mortgage program will save you the most money.

Compare: Should I use a Home Equity Loan or HELOC for a home remodel?

 

Summary

Buying a fixer-upper can be a smart financial decision for homeowners looking to enter today’s housing market. Especially in locations with higher prices. In general, the FHA 203k loan is a good fit for any primary residence that needs a substantial amount of work. Loan requirements, such as how much you can borrow and how you can spend the money, are set by the FHA during the loan approval process.

The main benefit is that all the construction work and repairs are estimated at the onset and rolled into one mortgage. So you’ll be protected from over-extending yourself or falling into a money pit after you buy the property.

A few quick reminders: Properties that need less than $5k in repairs won’t qualify for a 203k loan. Also, it’s not a good fit for luxury renovations since the FHA limits how much a homeowner can borrow.

Take Action

If you’re considering buying a fixer-upper, we can help you decide which mortgage is best for your renovation. There is a lot of paperwork and requirements to get approved for an FHA 203k loan, but it’s worth it.  Plan your renovation, save money, and no surprises. We can help you be fully prepared before you make an offer. Connect with a local mortgage advisor to get started. We’d love to help.

Top Home Renovation Loans for 2022

June 8, 2022
blog renovation interior

Financing a home renovation in 2022 can help you update your home, build equity, and finally get that backyard kitchen you’ve been dreaming about.

If you’re like a lot of homeowners, 2022 is looking a lot like 2021 at the moment. This means remote work is still the norm, kids are home for summer, and your home is the main hub for everything you do in life.

Financing your home renovation doesn’t need to break the bank either. You can do a cash-out refinance, apply for a new renovation loan, access your equity through a home equity line of credit and more.

Whether you want to build out your current home or buy a fixer-upper, these mortgage options will help you finance the whole renovation top to bottom.

 

RELATED: Top 7 Ways to Increase the Value of Your Home in 2022

How to Use Your Home Equity for a Home Renovation

Home equity is the financial difference between your mortgage balance and the appraised value of your home. For example, if your current mortgage balance is $475k and the current market value of your home is $720k, then you’ve got $245k in home equity.

The most popular ways to access your home equity for a home renovation are:

  • Cash-out Refinance
  • Home Equity Loan
  • Home Equity Line of Credit

When you want to access the equity in your home, most lenders will only approve up to 80% of your home’s value. This allows for market fluctuations in property value and lowers risk in the eyes of the lender. In the example above, the 80% Loan-to-Value ratio means you could borrow up to $576k, giving you potential access to $100k.

 

Cash-Out Refinancing for a Home Renovation

 

Refinancing your mortgage with a cash-out refinance gives you the most flexibility. You can choose whether to refinance with a fixed-rate, adjustable-rate, 15-year, 30-year, or custom options. 

Once your new mortgage closes, you’ll receive your cash (equity) in a lump sum, and you can spend it however you want. There are no limitations, no requirements, and no accountability. You can also take your time using the funds or even use the funds on things outside your home renovation.

 

RELATED: Refinance your mortgage and pay off your debt in 2022

Home Equity Loan

Home equity loans are almost always fixed-rate loans with set terms, fixed monthly payments, and a fixed payment schedule. You get the full amount in one lump sum once you’re approved. Then you pay off the loan in fixed payments over the life of the loan.

Highlights:

  • A low-interest rate that is locked in for the life of the loan
  • Fixed monthly payments which make it easy to budget and plan
  • Lump-sum disbursement so you can start a big project right away
  • No limitation on the use of funds
  • The interest on your home equity loan may be tax-deductible

Worth noting: higher credit scores mean lower rates. Check for prepayment penalties in case you decide to pay it off sooner than scheduled or if you might want to refinance later.

Home Equity Line of Credit (HELOC)

A home equity line of credit operates like a revolving credit account. Instead of having a set payment schedule and a fixed rate, HELOCs give you access to a line of credit with a maximum limit.

You can use the funds at any time, and you won’t accrue any interest until you draw from the account. HELOC’s have a set draw period (typically 10 years) and a variable APR based on the prime rate and market trends.

Highlights:

  • Access as much or as little money as you want to meet the needs of your projects
  • Interest doesn’t accrue until you access the funds
  • Repayment terms are flexible (pay it off or make minimum monthly payments)
  • Use the funds for whatever you want
  • The interest on your HELOC may be tax-deductible

 

RELATED: How to find the best mortgage lender in your area

 

Fannie Mae HomeStyle Renovation Home Loan

The Fannie Mae HomeStyle Renovation Home Loan is a great opportunity for current homeowners who want to do some big updates, as well as homebuyers looking for a fixer-upper. 

The HomeStyle renovation loan has a lot more flexibility than the FHA 203(k). For example, you could put in permanent landscaping features such as a pool or an outdoor kitchen, build an accessory dwelling unit (ADU), or upgrade your windows. Consider full kitchen and bathroom upgrades for the interior or build an extensive remodel.

The HomeStyle renovation loan estimates the cost of repairs and renovation ahead of time, so you have one mortgage that includes the entire amount (renovation costs + purchase price). Once your approved mortgage closes, you’ll be able to start improvements right away and enjoy the financial security that comes with one mortgage payment.

The Fannie Mae Home Renovation loan is extremely flexible with a full suite of advantages which we blogged about here.

The FHA 203(k) Home Loan

With the FHA 203k loan, you can buy a home that needs a fair amount of work and make the repairs affordable with one mortgage and a single monthly payment. The 203k combines the price of the home with all renovation costs and finances everything with one mortgage at a fixed rate.

Since the home loan covers the purchase price plus all the renovations, you’re able to spread the cost of repairs over the life of the loan with one affordable mortgage payment. 

There are a few restrictions with the FHA 203(k) loan along with great benefits, which we blogged about here. 

VA Renovation Home Loan

The VA home renovation loan is a unique program offered to active members of the military, veterans, and their spouses. The VA renovation loan is government-backed (guaranteed by the government). For this reason, mortgage lenders can offer low mortgage rates and great terms. 

Like other home renovation loans, the VA renovation home loan puts the costs of repairs, upgrades, labor costs, and materials into one loan. This means one mortgage payment and financial stability while the repairs are completed. 

One caveat: borrowers need to use a VA-approved contractor for the work in order for the loan to get approved.

 

Take Action

If you’re ready to start your home renovation in 2022, connect with a mortgage advisor to discuss your goals. There are several custom loan options in addition to home equity loans and cash-out refinancing. Whether you are a homeowner with equity or looking to buy a fixer-upper, starting a home renovation in 2022 is a smart move. Connect with a local mortgage advisor to discuss your loan options and get busy. We’d love to help.

Save Money on Your Home Renovation in 2022

January 18, 2022
mortgage blog, home renovation, 2022, preferred rate

Financing a home renovation in 2022 can give you the extra cash you need to update your home, build equity, and finally get that backyard kitchen you’ve been dreaming about.

If you’re like a lot of homeowners, 2022 is looking a lot like 2021 at the moment. This means remote work, kids home from school and using your home as the main hub for everything you do in life.

Financing your home renovation doesn’t have to break the bank either. You can do a cash-out refinance, apply for a new renovation loan, access your equity through a home equity line of credit and more.

Whether you want to build out your current home or buy a fixer-upper, these mortgage options will help you finance the whole renovation top to bottom.

RELATED: Top 7 Ways to Increase the Value of Your Home in 2022

How to Use Your Home Equity for a Home Renovation

Home equity is the financial difference between your mortgage balance and the appraised value of your home. For example, if your current mortgage balance is $475k and the current market value of your home is $720k, then you’ve got $245k in home equity.

The most popular ways to access your home equity for a home renovation are:

  • Cash-out Refinance
  • Home Equity Loan
  • Home Equity Line of Credit

When you want to access the equity in your home, most lenders will only approve up to 80% of your home’s value. This allows for market fluctuations in property value and lowers risk in the eyes of the lender. In the example above, the 80% Loan-to-Value ratio means you could borrow up to $576k, giving you potential access to $100k.

Cash-Out Refinancing for a Home Renovation

Refinancing your mortgage with a cash-out refinance gives you the most flexibility. You can choose whether to refinance with a fixed-rate, adjustable-rate, 15-year, 30-year, or custom options. 

Once your new mortgage closes, you’ll receive your cash (equity) in a lump sum, and you can spend it however you want. There are no limitations, no requirements, and no accountability. You can also take your time using the funds or even use the funds on things outside your home renovation.

RELATED: Refinance your mortgage and pay off your debt in 2022

Home Equity Loan

Home equity loans are almost always fixed-rate loans with set terms, fixed monthly payments, and a fixed payment schedule. You get the full amount in one lump sum once you’re approved. Then you pay off the loan in fixed payments over the life of the loan.

Highlights:

  • A low-interest rate that is locked in for the life of the loan
  • Fixed monthly payments which make it easy to budget and plan
  • Lump-sum disbursement so you can start a big project right away
  • No limitation on the use of funds
  • The interest on your home equity loan may be tax-deductible

Worth noting: higher credit scores mean lower rates. Check for prepayment penalties in case you decide to pay it off sooner than scheduled or if you might want to refinance later.

Home Equity Line of Credit (HELOC)

Home equity line of credit operates like a revolving credit account. Instead of having a set payment schedule and a fixed rate, HELOCs give you access to a line of credit with a maximum limit.

You can use the funds at any time, and you won’t accrue any interest until you draw from the account. HELOC’s have a set draw period (typically 10 years) and a variable APR based on the prime rate and market trends.

Highlights:

  • Access as much or as little money as you want to meet the needs of your projects
  • Interest doesn’t accrue until you access the funds
  • Repayment terms are flexible (pay it off or make minimum monthly payments)
  • Use the funds for whatever you want
  • The interest on your HELOC may be tax-deductible

RELATED: How to find the best mortgage lender in your area

Fannie Mae HomeStyle Renovation Home Loan

The Fannie Mae HomeStyle Renovation Home Loan is a great opportunity for current homeowners who want to do some big updates, as well as homebuyers looking for a fixer-upper. 

The HomeStyle renovation loan has a lot more flexibility than the FHA 203(k). For example, you could put in permanent landscaping features such as a pool or an outdoor kitchen, build an accessory dwelling unit (ADU), or upgrade your windows. Consider full kitchen and bathroom upgrades for the interior or build an extensive remodel.

The HomeStyle renovation loan estimates the cost of repairs and renovation ahead of time, so you have one mortgage that includes the entire amount (renovation costs + purchase price). Once your approved mortgage closes, you’ll be able to start improvements right away and enjoy the financial security that comes with one mortgage payment.

The Fannie Mae Home Renovation loan is extremely flexible with a full suite of advantages which we blogged about here.

The FHA 203(k) Home Loan

With the FHA 203k loan, you can buy a home that needs a fair amount of work and make the repairs affordable with one mortgage and a single monthly payment . The 203k combines the price of the home with all renovation costs and finances everything with one mortgage at a fixed rate.

Since the home loan covers the purchase price plus all the renovations, you’re able to spread the cost of repairs over the life of the loan with one affordable mortgage payment. 

There are a few restrictions with the FHA 203(k) loan along with great benefits, which we blogged about here. 

VA Renovation Home Loan

The VA home renovation loan is a unique program offered to active members of the military, veterans, and their spouses. The VA renovation loan is government-backed (guaranteed by the government). For this reason, mortgage lenders can offer low mortgage rates and great terms. 

Like other home renovation loans, the VA renovation home loan puts the costs of repairs, upgrades, labor costs, and materials into one loan. This means one mortgage payment and financial stability while the repairs are completed. 

One caveat: borrowers need to use a VA-approved contractor for the work in order for the loan to get approved.

Take Action

If you’re ready to start your home renovation in 2022, connect with a mortgage advisor to discuss your goals. There are several custom loan options in addition to home equity loans and cash-out refinancing. Whether you are a homeowner with equity or looking to buy a fixer-upper, starting a home renovation in 2022 is a smart move. Connect with a local mortgage advisor to discuss your loan options and get busy. We’d love to help.