New Home Construction Loans – Where Do I Start?(1)
New Construction Loans – Where Do I Start?
For many folks wanting to design and build their new dream home, this may seem to be a daunting undertaking which is why many ultimately end up turning to one of the big “track builders” such as Toll Brothers, Pulte, and the like. What makes many folks nervous is that they simply don’t know where to begin in the construction process and specifically the sourcing of new home construction loans. When in search of the best construction loan program for your particular project, its important to consider the following:
New Construction Loans – Method of Building:
The first aspect of choosing new construction loans should be what your method of construction will be. “Method?” you may ask? Yes, there are two primary methods of construction these days and they each have pro’s and con’s. Traditional “stick-built” construction is what most are familiar with. This method of construction allows for the greatest amount of customization however traditional 100% site-built projects are at the mercy of the weather and in some cases cost over-run concerns. The second option which is becoming increasingly popular is off-site home construction, also known as “modular home construction”. There is often a misconception that modular homes are built to lesser quality simply because they are built in blocks at a factory and then delivered and assembled at the construction site. The reality is quite opposite. In fact, both homes are built to the same local building code and due to the modular homes being built mostly indoors, they usually end up being built tighter and straighter than their site-built counterpart. The only downside of modular built homes is that they are somewhat limited in regard to extensive customization, however there are usually more floor plan options within modular homes and technology continues to further this initiative. Regardless of square footage or desired elevation of your dream home, you should consult both types of builders with your plans/specs to compare their offerings and prices.
New Home Construction – What’s Your Timeframe?
When considering lenders for new construction loans, its important to first consider how long your builder expects it to take to finish your home. Because of current restrictions on lending guidelines, many banks will frown upon the construction phase taking more than 6-7 months. This is primarily due to Fannie Mae’s unwillingness to allow for construction terms longer than 9 months. Also, a bank’s greatest exposure for things to go wrong is during construction therefore many try to mitigate their risk by putting a cap on the number of months any home can be under construction. A general rule of thumb for this aspect is: the longer you expect your home to be under construction, you better be that much more well-qualified in regard to income, assets, credit scores, and down payment. Its important to keep in mind that the average 2400 square foot two story home would take about 6 months to complete, where as its modular-construction counterpart would only take half the amount of time to construct.
New Construction Loans: Construction-to-Perm vs. Construction + End Loan:
There are two main types of construction loans. The first is a single-close transaction known as a “construction-to-perm” loan because both the construction loan and permanent fixed loan are wrapped into the same mortgage application and closing. Other banks prefer the other type of new construction loans which is a construction line of credit followed by a refinance of that into the permanent fixed end loan once the home is finished. A risk of using a two-time close is that you must re-qualify for the end loan once the home is complete and there also needs to be a 2nd appraisal which often may come in short due to today’s turbulent real estate market.
The only true single-close construction loan is the FHA construction loan. This type of government insured construction-to-perm loan is rare but very powerful as there is absolutely no re-qualifying upon home completion nor is there a second appraisal.
In conclusion, it is important to take the time and carefully consider the many aspects of choosing new construction loans as well as the experience of the construction lenders who offer them.
Author Joe Karns of Bridgeview Bank is a seasoned mortgage professional dedicated to bringing his subscribers relevant and useful information on how to compare construction lenders. Want a free construction loan consultation? Check out Joe Karns at the following link for some FREE expert advice on helping you source the best new construction loans.
VA Streamline Refinance Rates – How to Get the Best Deal(1)
VA Streamline Refinance Rates – How to Make Sure You Are Getting the Best Deal
You’ve served your country with honor, now let the VA loan program honor your service as you search for the lowest VA streamline refinance rates. The VA loan program rewards service men and women by being more aggressive that conventional loans in the area of loan-to-value and credit related qualifications. Below are some primary factors to consider when comparing VA streamline mortgage rates:
VA Streamline Refinance Rates – Banks or Brokers?
One important factor to consider is whether its better to work with one of the big banks for your refinance(Wells Fargo, Chase, US Bank, etc) or whether its advantageous to work with a smaller local mortgage broker or banker such as Bridgeview Bank. The “big banks” may have a lot of flashy advertising and tv commercials promoting their VA refinance capabilities but remember, those ads are expensive and often times they are forced to pass along some of that expense to the end customer in the form of slightly higher interest rates and fees. Since smaller banks and brokers have much lower overhead cost, you may find an overall cheaper deal. Also, remember that the VA Streamline Refinance program is virtually identical no matter who you do business with, so be careful not to fall for a big bank using a flashy name to give the impression that their version of the VA program is unique. Banks both large and small can quote you VA Streamline Refinance Rates so get a quote from a variety and go with which ever you feel most confident with.
VA Streamline Refinance Rates – Closing Costs?
Another factor to consider when in search for the best VA streamline refinance rates is closing costs. Since mortgage rates are so low these days, it should be possible for the lender to pay for 100% of your closing costs. You may not end up with the absolute lowest rate, however by using this strategy you will likely still save a good amount on your monthly payment and also then not need to bring any money to closing. Be sure to ask the lenders you’re considering whether they can cover any or all of the closing costs when they are quoting you VA streamline refinance rates.
Finally, once you have narrowed the best refinance lenders down to your top two or three, and you’ve asked all the right questions, its time to compare their rates, terms, cost, and most of all: their reputation and credibility. If you grade the best refinance lenders on their credibility and experience first, you will have the best chance for a smooth and efficient refinance transaction.
Author Joe Karns of Bridgeview Bank is a seasoned mortgage professional dedicated to bringing his subscribers relevant and useful information on how to compare mortgage rates. Want a free mortgage checkup? Check out Joe Karns at the following link for more a FREE refinance consultation and expert advice on getting you the best VA streamline refinance rates.
Harp 2.0 – Making Home Affordable Refinance Program – Valiant Enough Effort?(2)
Making Home Affordable Refinance Program
Many homeowners have been inquiring about how the new “Making Home Affordable Refinance Program”, also known as “HARP 2.0”, can benefit them. So what can Making Home Affordable do for you? In short, this newer version improves on the initial HARP program by removing the 125% LTV limitation. However, there don’t seem to be any of the “big banks” who are servicing the majority of the country’s existing mortgages stepping up and actually adopting these new capabilities, unless that is, you already have your loan with them.
Making Home Affordable Refinance Program – Who gets access and it enough?
VA Streamline | IRRRL | Mortgage Refinance Loan(22)
VA Streamline – What are the benefits and do I qualify?
Whether you are active military looking to secure a lower interest rate to help the financial well being of your family back home, or even retired military just looking to lower your monthly payments, it is a great time to consider a VA Streamline refinance.
VA Streamline – Tip#1: Understand the benefits of this program.
VA Streamline refinances, also known as “IRRRL” loans (interest rate reduction refinance loans) are very popular among veterans because there are many benefits while the underwriting guidelines are more lenient than your average conventional or FHA loan. First, if you currently have a VA mortgage, many lenders will qualify you based on the original income and assets from when you were originally approved for the mortgage during the purchase and therefore not require updated income and asset documentation during the VA Streamline refinance. Also, on VA Streamline transactions, there is usually no appraisal required as long as you go through the same lender who is currently servicing your mortgage. In today’s tough real estate market, any loan program that doesn’t require an appraisal is very popular and that is definitely the case with a VA Streamline refinance.
VA Streamline – Tip#2: Find out if you meet the general guidelines.
When you compare mortgage rates on a VA Streamline refinance, its important to first determine whether you will qualify based on the general guidelines. VA Streamline refinances’ guidelines are fairly easy to meet. Generally speaking, as long as you are a member of and of the Armed Forced, you currently have a VA loan that you’ve been paying on time, you have at least a 640 middle credit score, and you are still employed, you should qualify. There are other criteria but those are the primary requirements for qualifying for a VA Streamline refinance.
When you compare mortgage rates for a VA Streamline Refinance, many would argue the most important factor is to go with your current lender, or, a different lender that will not require a new appraisal.
VA Streamline – Tip#3: Really try to keep your finances in order.
Since there are few qualifications for becoming approved for a VA Streamline refinance, its essential to focus on those few criteria that exist in an effort to stay eligible. We realize that time are hard right now and especially for military families, but if times get really tough and some bills need to be paid late, its essential to prioritize and try to make your mortgage payment on time. The reason is that when you apply for a VA Streamline Refinance, most lenders will require you have made timely mortgage payments for at least the last 12 consecutive months. Those who don’t make timely payments likely wont qualify for a VA Streamline refinance and would therefore miss out on today’s historically low interest rates that would otherwise be able to provide real financial relief.
Author Joe Karns is sales and marketing leader and master of the VA Streamline dedicated to bringing his subscribers relevant and useful information. Want a free mortgage checkup? Check out Joe Karns at the following link for more a FREE refinance consultation and expert advice on finding the Best Refinance Lenders. Or, click here for a free quote on a Va Streamline.
Best Refinance Lenders – How to find the pro’s?(2)
Best Refinance Lenders – How do I find the pro’s?
During the past couple years in which the mortgage market has been in turmoil, determining who are the best refinance lenders has become a real challenge. While current interest rates are still at historic lows, the fact remains that the lending guidelines have tightened up to a degree that is unprecedented. So much, in fact, that the average loan officer has trouble keeping up with the constant guideline changes and hoping to provide a high level of customer service. This challenge is resulting in the weaker loan officers leaving the industry and the pro’s within the best lenders now getting the lion’s share of the market.
During your search, its crucial to remember that the same primary hot buttons remain unchanged: 1) Keep in mind that the lenders with the lowest rates may not be the best deal overall. Even the best refinance lenders often forget to properly disclose the fact that their apparently low rate includes “discount points”. This additional fee may be getting you what appears to be a great low rate, but you do not necessarily need to pay any additional fees to get a good rate. Always ask even the best refinance lenders to give you options and proceed carefully.
How to find the best refinance lenders?
You will find numerous lenders trying to attract you with their seemingly lucrative offers. However, you must know that not all of them can offer you the best loan. Some of the best refinance lenders’ reputable brand comes from millions of dollars they spend on expensive advertising. Those TV ads and billboards may help you recognize their brand, but it works against you in regard to their ability to get you the lowest rate. All that overhead costs money, some of which is passed down to you, the customer. The key to remember is that the best refinance lenders are not always the ones with the most well known brand name. Do your research on websites like HotRateQuote to compare mortgage rates and terms so you have all the necessary information to form an education decision.
Here are some points to consider while searching for the best refinance lenders for your your home loan:
1) Start by leveraging the power of the internet. A simple search for the best refinance lenders on online will yield thousands of results, but the key is to start with the more reputable “portal sites” such as BankRate.com, LendingTree.com, and HotRateQuote.com. Try to not be diverted by flashy-looking promotional ad banners and buzz word offers but instead try and focus on the numbers: rates, APR, total fees, etc. These websites have gotten really good and organizing the best refinance lenders’ rates and terms so check to see what the top 3-5 offers appear to be within the name loan type category.
2) Be weary of excessive fees. In most cases, the “lowest rate” offer often comes with some hidden costs, which can quickly add up since they are usually percentage-based figures tied to the loan amount. These extra costs, also known as ” junk fees”, can make your refinance a costly transaction and sometimes not even worth it anymore. These “junk fees” include but are not limited to: “processing fees, application fees, doc prep fees, courier fees for mortgage brokers, etc.” A good rule of thumb to use when considering the total cost, even with the best lenders, is “how long will it take for the proposed monthly savings to exceed the total cost of this transaction?”. Example: Lets say you stand to save $52/month but the total fees are $3572. It would take you a whopping 68 months (over 5 years) to break even! Any break even point longer than 24 months is not a good deal.
3) Think you’ve found the best deal now? Be careful, you might also want to ask what documentation is going to be required. This is a major factory in getting any refinance transaction closed these days. Some bank’s guidelines have got so ridiculous that it seems like the hurdles between you and the closing table can never be overcome. Most banks follow the same set of guidelines nowadays, all requiring the standard two years tax returns with W2’s, last two pay stubs, and last two bank statements. However, I’ve heard of some real world situations recently that you probably wouldn’t even believe. A good friend of mine was trying to get the third round of underwriting conditions satisfied when she was then told that she also needed to produce the original building permit for the apparent renovation work that was done to her kitchen from 9 years ago, when she had only owned that home for the last 5 years! This means that she was forced to take a full day off work and beg City Hall to dig up old building permit records just to satisfy the lender and get her refinance closed. Crazy, huh? But you’d be surprises how often even the “best refinance lenders” come up with these crazy underwriting conditions. The key is to always ask what documentation will be required up front.
Go with the “pros” – Go with the best refinance lenders
Finally, once you have narrowed the best lenders down to your top two or three, and you’ve asked all the right questions, its time to compare their rates, terms, cost, and most of all: their reputation and credibility. If you “go with the pro” and grade the best refinance lenders on their credibility and experience first, you will have the best chance for a smooth and efficient transaction.
Author Joe Karns of Bridgeview Bank is one of the very best best refinance lenders and is a seasoned mortgage professional dedicated to bringing his subscribers relevant and useful information. Want a free mortgage checkup? Check out Joe Karns at the following link for more a FREE refinance consultation and expert advice on finding the Best Refinance Lenders: Compare Mortgage Rates
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