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3 Tips To Sidestep These Common FHA Loan Hang-ups

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3 Tips To Sidestep These Common FHA Loan Hang-upsFHA loans are becoming increasingly popular these days as potential homeowners are not able to qualify for mortgages from traditional lenders. The FHA insures these high-risk loans, in turn allowing borrowers with low down payments and less than perfect credit to purchase homes and bolster the housing market.

However, getting through the loan process with the FHA is more difficult than with a traditional lender, and you may need to cope with some of these common loan hang-ups.

Property Condition

You can’t buy just any property with a FHA loan. The appraiser must deem it to be livable, without any conditions that could jeopardize health or safety. If the home has chipping paint, a leaky roof, or a wobbly banister, the financing could fall through.

Sometimes you can get the seller to make the needed repairs to pass inspection, but in other cases, you may have to go an alternate route. The FHA 203K streamline loan allows you to borrow up to $35,000 over the purchase price of the home for repairs and updates. It’s important to check with your local mortgage lender to determine any specific local FHA 203k loan details.

Low Appraisal

In addition to inspecting the property, appraisers also estimate its market value. These estimates are based on the property’s features and a comparison to similar properties that have sold recently. If the appraisal is low, the FHA loan funding could fall through because the FHA will not let you borrow more than the home’s appraised value.

Rather than trying to scrape together a bigger down payment, just take the information to the seller to renegotiate the purchase price. The seller will likely recognize that other buyers would be in the same boat, leading the seller to agree to a lower purchase price.

High Debt-to-Income Ratio

Your FHA loan may encounter a snag in the underwriting process if your total debt payments, including your new mortgage, would be a high percentage of your income. If you are in this situation, ask your lender to try running you through the automated underwriting program called TOTAL.

The process is quick, and often you can make up for a high debt-to-income ratio with other compensating factors, like a larger down payment or a cash reserve of several months of mortgage payments. For more information on common FHA loan hang-ups feel free to contact your trusted mortgage professional today.

5 Reasons You Might Need To Consider Non-Traditional Financing

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5 Reasons You Might Need To Consider Non-Traditional Financing Private Money financing refers to loans collateralized by real estate, where the source of the funds used to close Real Estate transactions come from private investors.

The decision by the investors to make a loan is based primarily upon plenty of equity in the real property securing the loan thus reducing the risk of loss.

The ability to repay, and the borrower’s character is also considered along with how the borrower will pay the investor back in time.

Private Money loans are needed when a borrower or a property falls outside the standard underwriting rules of conventional lending sources like banks or other lending institutions.

The Primary Decision For Private Money Is Typically Based On The Simple Three–Four C‘s Of Private Money Lending:

  1. Capacity to repay the loan back
  2. Credit/Character of the borrower
  3. Collateral or property type

With risk of loss lessened, a loan may be a sensible deal from the Private Money Lender’s point of view, but it remains discarded to institutional lenders. To meet the continuing financing needs of these borrowers, an ongoing demand for private money has been created.

Mortgage brokers and bankers solicit and process these types of loans but the private investors are the ones that underwrite and close these private money loans.

After a loan request is processed and underwritten, the loan is funded by a loan investment product arranged by a Private Money Specialist. Private investments may come from individuals, entities, or pension funds. Your private money investor or a private servicing company will service each loan until it is paid off or the property is sold.

The Reason Why People Need Private Money:

1. Loss of bank loans, including denial due to:

• Use of cash out

• Not perfect credit

• Needing stabilized income

• No reserves

• Not operating with a bank account

• Debt ratios to high

• Property type or condition

• Borrower type (i.e. trusts)

2. Borrower’s election to avoid the excessive loan conditions of an institutional loan saving time

3. Private Money Lenders ability to arrange loans secured by property types unacceptable to Institutional lenders

4. Borrower’s circumstances make it difficult to obtain institutional loans

5. Property’s characteristics make it difficult to obtain an institutional loan

If any of these scenarios sound familiar to you or you need more information about Private Money Loans contact me directly and I will help answer questions about Private Money loans.

Creative Ways To Recycle Everyday Household Items

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Creative Ways To Recycle Everyday Household ItemsEvery week the trash truck comes to pick up our garbage and unwanted items, which are promptly taken to landfills. Instead of filling landfills and just buying new items to stuff our homes, we can help the earth and recycle everyday household items.

Below are a few fun and creative ideas for recycling things around your home that you might be ready to trash.

Coffee Table Into Bench

If you just purchased a new coffee table, don’t give away the old one — repurpose it. Find a space in your home where you could use some additional seating, like at the end of your bed or in the entryway.

Push it up against the wall so that any drawers and shelves are facing out. Then add some cushions and pillow. Tada; a bench!

Copper Piping Into Bathroom Hardware

Whether you’re going for a modern industrial look or a French country theme, old copper piping can add an attractive and interesting conversation piece to your restroom.

Utilize a U-shaped piece of piping as a toilet paper holder and long pieces of pipe as towel racks. Polish the copper and then seal it with spray lacquer so that it keeps its sheen.

Light Bulbs Into Decorations

Recycle filament light bulbs with a fun little craft project for your children. Grab paint, twine, glitter and glue. You can make flower pots and hang them in the yard as a simple green accent. Use the twine to create loops for hanging.

Pillowcase Into Shopping Bag

Take an old or vintage pillowcase, lay it flat and cut the top corners off of the open end. You’ll want to cut the corners off in a half-C shape so that that there is only about a two-inch strip left in the middle at the top.

Sew that two-inch strip together and you’ve got your handle. This reusable shopping bag rolls up tight and is easy to wash.

Drawer Into Dog Bed

The size of your animal will dictate the size of drawer you should repurpose. A cat might like a kitchen drawer while a bigger dog would use a large dresser drawer. Strip the wood off the drawer and repaint. Remove the hardware.

Maybe stencil your pet’s name on the front of the drawer. Then create a mattress using foam, batting and a soft and durable material.

Before getting rid of that broken side table or trashing those carry-out chopsticks, take a second look and tap into your creative side to see if you might be able to recycle and give them a second life. 

Factors To Consider When Applying For A Home Mortgage

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Factors To Consider When Applying For A Home MortgageOwning a home can be a sign of independence and success. It allows you to build up equity and the mortgage interest and property taxes are tax-deductible. What can you do to make a home affordable for you?

Reputable lenders look at a list of criteria to decide how much they’ll loan you. 

This List Includes:

  • Credit score
  • Existing assets including cash
  • Car leases or loans
  • Credit card balances
  • Debt consolidation loans
  • Home equity loans
  • Installment loans
  • Student loans
  • Other monthly debts
  • Size/source of your down payment

If you’d like to get an idea of what you can afford before talking to a lender, here are a few tools you can use to decide whether a home is within your budget.

Here Are Some Guidelines:

  • As a rule of thumb, your house hunting budget shouldn’t be more than 2.5 times your pre-tax annual income.  If you earn $50,000 a year, your budget for house hunting should be around $125,000.
  • Your Housing Expense Ratio, which is principal, interest, taxes and insurance shouldn’t be more than 25% to 28% of your pre-tax monthly income.
  • Your Debt-to-Income Ratio should be no more than 36% of your pre-tax monthly income.  This is the ratio between how much you owe and how much you earn.
  • Use an online calculator to figure how much home you can afford.

“Qualifying for” and “can afford” are two different things.  Shopping for a home within your budget will save you a lot of heartache now and in the future.

If you’d like help determining how much mortgage you can really afford, call your trusted mortgage professional today.

Are 50 Year Mortgages A Good Financing Option?

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Are 50 Year Mortgages A Good Financing OptionWhen most people are taking out a mortgage on a property, they select either a 15 or 30 year mortgage loan. However, there is a new mortgage option that has been available to home owners since 2006 and that is the 50 year mortgage loan.

Although a half-century might seem like a very long loan term, there can be some advantages to taking out a five-decade mortgage. Here are some of the pros and cons to taking out a mortgage that you repay over 50 years.

Advantages

The main benefit that you will experience with a 50 year mortgage is the ability to take out a larger loan and buy a more expensive house that you might not have otherwise been able to afford. This means that you can enjoy a better standard of living with lower monthly payments.

A 50 year mortgage might also make home ownership easier to qualify for as a first time homebuyer. On a monthly basis, it means that you will have more room in your budget for paying for other expenses.

Disadvantages

Of course, the major disadvantage to a 50 year mortgage is that you will end up paying much more interest over the loan period. Also, you will build equity in the home very slowly and you will not gain back much equity if you sell the home a few years on.

Also, often 50 year mortgages will come with higher interest rates than their 30 year counterparts. You can usually expect to pay an extra 0.25% or more than you would if you took out a 30 year mortgage, which can really add up over time.

It might be advantageous to take a 50 year mortgage with low payments in the beginning, with the aim to refinance and reduce your term in the future when you are earning more money and can make higher mortgage payments.

A 50 year mortgage can sometimes be advantageous, but ask yourself if you really want to wait until you are in your 70s or 80s before owning your home! If a 50 year mortgage is the only way you can afford your mortgage payments, you might be considering a home that is beyond your price range.

To find out more about the right mortgage term for you on your property, call your trusted mortgage professional today.