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FHA Condo Approval and Its Crucial Role Today FHA Condo Approval and Its Crucial Role TodayComments Off on FHA Condo Approval and Its Crucial Role Today

FHA Condo Approval

Understanding the FHA Condo Approval:
Unlike back in the mid 2000’s when bank didn’t focus on condo project approvals, many consumers are realizing that this factor can dramatically impact their transactions due to the more difficult lending requirements of today. Let me preface this article by saying that this is somewhat of a high level overview and I will have future pieces which go deeper into the nuts and bolts of specific condo project approvals.

How FHA Condo Approval Status Impacts Existing Owners:

Lets say for conversation’s sake that you purchased your condo unit five years ago and at that time the 30yr fixed interest rates were 6.000%. With interest rates at historic lows of 4.000% on a similar 30 year fixed mortgage, many homeowners would love to take advantage and refinance or purchase a new home at a low rate. Now wait just a minute – Before you can become approved for refinancing your existing mortgage, the lender will need to try and “approve” your condominium project, or in other words, check to see if all major aspects of the project adhere to the most current “Agency” guidelines. The agency in question is usually Fannie Mae. This is where things may get tough since many project may no longer qualify for Agency approval. Always check with your lender first to see if the condo project is approved.

How FHA Condo Approval Impacts Sellers:

Wouldn’t you agree that it seems there are more homes going up for sale right now than ever before? Everywhere we look, there seem to be more “For Sale” signs in windows. You may be asking, how do condo project approvals impact those property sellers? The Answer is this: If the original developer and/or the current home owner’s association never bothered with (the now essential) condo project approvals, how are any new potential buyers going to be able to purchase their property? The fact of the matter is that the condo project will need to become “approved” before lenders can provide financing to new buyers. The first question on every home buyer’s list should be whether the condo project is “approved”. If half of all buyers are using FHA(HUD) mortgages now, half of all potential buyers would be ineligible for financing if only the FannieMae approval is in place instead of both Fannie and HUD. As a rule of thumb, if you are considering buying, selling, or even just refinancing, first investigate whether the condo project approvals currently in place. If the subject property’s Home Owner’s Association say they don’t have condo project approvals, or the condo project approvals are expired, then your next call should be to a qualified lender or consultant who can help you get the project approved. There are a select few specialists out there who will even do these for free as long as they get your business in regard to the mortgage. Always have your condo project approvals done before your property is listed for sale and this will really improve your likelihood of selling the home, and will also help set apart your property from the crowd.

FHA Condo Approval and How It Can Negatively Impact Buyers:
Imagine your dream property downtown close to the nightlife, lakefront, and is located in the very best neighborhood. I bet the last thing you’re thinking about is whether those buildings have up to date condo project approvals, right? Once you discover the project is not eligible for financing, you may be very disappointed. Some projects may no longer be eligible for financing since lending guidelines have become so much tougher these days. As recently as 2005, on condo conversions and newly built projects, you didn’t need as much as a single unit sold before regular Fannie/Freddie insured closings could begin. Back in the “good old days”, condo project approvals used to be issued by the banks before so much as a single unit was closed, putting all of the responsibility of the success of the project with the builder. Before the first actual closing can take place these days, at least 51% of the total units in the subject phase must be sold/contracted. How? you might be wondering? This means a highrise must have 101 out of 200 total units under contract to real individual buyers before the actual settlements can begin. Some strategies exist among developers to get around these guidelines, including “phasing” of floors in the building but that is generally only allowed on low-rise projects. Prior to the 51% “pre-sale” threshold being met, a select few local banks may step up and fund private mortgages to help cover the gap between 0% sold and the Fannierequired 51% sold. However, these portfolio loans usually have less favorable terms, are ARM’s (adjustable rate mortgages), and usually have higher interest rates than their Conventional loan counterparts. HUD has recently stepped up and lowered the presale requirement on new construction condos (and condo conversions) form 51% down to just 30% resulting in closings being able to start sooner. Unfortunately, I have not seen a whole lot of positive results from this enhancement. Its best to save yourself a lot of time and headaches by researching the building’s condo project approvals prior to putting an offer on any unit.

Author “Joe Mortgage” is a condo project approval expert who is owner of hotratequote.com and is committed to bringing readers relevant and important information. Find out more at the following link for a free consultation on how to obtain FHA condo approval.

Chicago Tribune:  30-year Mortgage Rates Dip to 3.62% Chicago Tribune: 30-year Mortgage Rates Dip to 3.62%(1)

Chicago Tribune:
30-year Mortgage Rates Dip to 3.62%

According to Tribune reporter, Mary Ellen Podmolik, 30 year fixed mortgage rates have dipped to new all-time lows at 3.62% on average. It is believed that this additional dip in rates is unfortunately a signal of our further slowing economy. For existing home owners and home buyers, however, this rate drop is great news. In fact, rates have inched downward in 10 of the past 11 weeks (this article was written on 7/10/12). Similarly, the average 15 year fixed rate has fallen to just 2.89% down from 3.75% one year ago.

If you are a Chicago Tribune reader like I am, always scanning ads from lenders claiming to have the absolute lowest rates, here are a few factors to consider when searching for the best mortgage lender:

Broker Vs. Banker:
At this time there are 2 major varieties of lenders to take into consideration. The first are mortgage brokers which from a technical perspective will not fund the transactions with their funds, however they typically provide the widest assortment of bank investors to put the loans with (these big investors being Wells Fargo, Citibank, Chase, and GMAC just to name a few). The side effects of a broker not utilizing their own funds to actually fund your deal is their outsourcing of underwriting. This may occasionally bring about additional issues for borrowers hoping for the smoothest deal possible. As opposed to brokers, mortgage bankers offer a similar experience but in most cases have in-house underwriters whom approve the mortgage to fund and so they ultimately close the mortgages by themselves giving them the last say in accepting closing conditions.

Understanding Price Structures and How These Types of Banks’s Advertising “zero cost” loans in the Chicago Tribune Bring In Revenue is Crucial to Obtaining The Best Rate.

It is important you fully grasp that Broker firms usually have the cheapest cost of doing business that may result in the absolute lowest rates. Even so, quite a few shoppers still frown upon brokers because they also typically use outside agencies for many of the important aspects that go into getting your loan to the closing table and that can result in a few of the head aches pointed out above in Tip Number 1. Conversely, the “Big Investors” including Wells Fargo, Chase, and Citi provide the absolute greatest overhead costs which commonly trickles down to the buyer in the form of unfavorable interest rates. The “Big Banks” have considerable ongoing costs which includes billboards, tv and radio commercials, web banner advertisements, numerous levels of administration, loss mitigation departments, legal departments, and on and on. For this reason, you can usually find the best Chicago mortgage rates within the Chicago Tribune’s Real Estate section by selecting a lender who’s characteristics rest in the middle of the spectrum:  a “mortgage banker”. Mortgage bankers traditionally possess remarkably low overhead costs yet nevertheless have the control of important services in house, specifically their underwriting and closing departments.

Author “Joe Mortgage” is a marketing and advertising innovator who is owner of hotratequote.com and is committed to bringing readers relevant and important information. Find out more at the following link for a free information on how to obtain the lowest mortgage rates like the ones you see every week in the Chicago Tribune.

Chicago Home Loans – How to Compare the Best Lenders? Chicago Home Loans – How to Compare the Best Lenders?(1)

Locating the Best Chicago Home Loans

Because of today?s historically competitive loan rates, countless folks within the Windy City are generally asking ways they can attain the most beneficial Chicago harp refinance rates. Here are a couple of ideas for helping shoppers source the hottest deal.:

Chicago Home Loans – Broker Vs. Banker:
There are usually two primary types of lenders to take into account. The first are brokers who from a technical perspective tend not to fund the transactions utilizing their own funds, but they usually feature the greatest assortment of bank investors to put the loans with (these big investors being Wells Fargo, Citibank, Chase, and GMAC to name a few). The negative effects associated with the broker not using their own funds to actually close your transaction is the outsourcing of underwriting. This may occasionally bring about additional hassles for consumers hoping for the smoothest transaction conceivable. Unlike brokers, mortgage bankers offer a similar experience but almost always have in-house underwriters which clear the mortgage loan to close and they eventually close the loans on their own giving them the final authority in accepting conditions.

Understanding Price Structures and How These Institution’s Bring In Revenue is Significant to Getting You the Best Chicago Home Loans:

It is essential to realize that Broker businesses commonly have the lowest overhead costs which will result in the absolute lowest rates. Even so, countless consumers still frown upon them because they also generally use outside agencies for many of the necessary services that involve getting your loan to the closing table which might bring about a few of the headaches described above in Tip Number 1. Conversely, the
“Big Banks” such as Wells Fargo, Chase, and Citi have the absolute greatest expenses which sometimes end up charged to to the buyer in undesirable rates. The Big Banks have large on-going carrying costs such as billboards, tv and radio commercials, web banner advertisements, countless levels of operations, loss mitigation departments, legal departments, and on and on. Due to this, you can typically find the best Chicago mortgage rates by choosing a lender in the center of the spectrum: the mortgage bankers. Mortgage bankers traditionally have relatively low cost to do business however still have the control of critical services in-house, specifically underwriting and closing departments.

Lenders Closing Costs and Finding the Best Chicago Home Loans:

You may have seen several lenders advertising and marketing “no costs”, primarily for refi transactions. Use caution though because quite often they already have rolled those costs in to the rate in one way or another. For example, it should be up to you the shopper whether you’d like the closing fees paid at closing with cash, rolled into the new transaction, or, paid for by the mortgage lender but in exchange for a marginally greater rate. Traditionally with mortgage bankers including Bridgeview Bank, they’re now able to pay for the majority of or all of your closing expenses and also still get you a rate that is lower compared to any of the “big banks”.

Blogger “Joe Mortgage” is a sales innovator who is owner of hotratequote.com and is rather committed to delivering readers with pertinent and also helpful advice. Find out more about the following hyperlink for a 100 % free refinance consultation and professional counsel on how to obtain the best chicago home loans.

What Are Closing Costs Made Up of and Who Are We Paying? What Are Closing Costs Made Up of and Who Are We Paying?(1)

What Are Closing Costs?

Closing costs are fees associated with settling any real estate and mortgage transaction.  It is critical to know how much your closing costs can be prior to entering into a real estate transaction or you may end up not even having enough to settle.   Whether you are purchasing or refinancing a home, you will usually get hit with costs from the lender, the title company, the appraiser, your attorney (on purchase transactions), among other parties.

Lender Related Fees:
These are fees directly and indirectly related to your obtaining a mortgage for your real estate transaction.  These can include but are not limited to the:  processing fee, underwriting fee, document preparation fee, closing fee, and a wire transfer fee.  Here is an explanation of each type of fee that is usually included in closing costs:

Third Party Fees:

Appraisal Fee:
Having your house appraised is essential, especially if you need a mortgage to purchase or refinance the property.  The appraised value is based on recent, comparable home sales in the area around the subject property and provides the lender with assurance that their collateral (the property) has sufficient value to support the loan they are giving you.  In the event of default, the lender would take over the property and try to sell it so its imperative that they know exactly what the market value is.  Generally the cost for a conventional appraisal in today’s market is about $400.

Credit Report:
When applying for any mortgage, the lender pulls a tri-merge credit report which shows your entire credit history from the three major credit rating agencies:  Trans Union, Equifax, and Experian.  Most lenders will use the middle score of the three for qualification purposes.  The cost for this credit report can range from $12 – $35 depending on the lender.  They usually determine their cost by the average total cost of credit reports vs the total amount of actual funded loans.

Title Company Fees:
Title fees usually represent the largest cost in any real estate transaction, especially on purchase transactions.  Title company fees are usually made up of title insurance, closing/settlement fees, wire transfer fees, and recording charges.  The title company may also charge a fee for a survey to be done if there is not one on public record, as well as expensive “transfer taxes” and/or mortgage taxes, depending on your local market.  Total title charges can be as cheap as $500 on a conventional refinancing, all the way up to $2000-$4000 for title insurance alone depending on your loan amount and what area you are buying the property in.

Attorney Fee:
Finally, most home buyers hire a real estate attorney to help them ensure an accurate purchase transaction takes place and that there are no critical errors in the documentation.  Real estate attorneys typically charge $500-$700 in most markets for overseeing a residential real estate purchase transaction.

In conclusion, its very important to consider all closing costs involved in any real estate transaction and to always review the Good Faith Estimate closely before ultimately choosing the lender.

Author “Joe Mortgage” is a marketing and advertising leader who is owner of hotratequote.com and is focused to bringing readers with relevant as well as valuable advice. Find out more about the following weblink for a 100 % FREE refinance consultation and skilled counsel on how to correctly calculator your closing costs.

First Time Homebuyers Guide to Foreclosures First Time Homebuyers Guide to Foreclosures(2)

Title: First Time Buyers Guide to Foreclosures in Bothell, WA

Author: Nick Bert jr

Article: I’m a Licensed Real Estate Broker, and the president of Washington Realty Source. I specialize in selling foreclosed properties. I’ve helped hundreds of people save money on these types of homes, and I’ve become familiar with some of the most common questions that people have about them. I’ll begin by going over some of the things that surprise most buyers, and then I’ll wrap up by quickly going over each type of foreclosure that you’re likely to find in Bothell Washington.

First, the things that most people don’t expect:

Unfortunately, 3-7 day response times are normal, whereas an offer written to a private seller will likely be answered tomorrow. When you wright an offer on a foreclosure, get comfortable. Its not uncommon in Bothell to wait a week before you hear back from Fannie Mae or Freddie Mac on some of their homes.

Foreclosures are sold as-is. Many people like to do a home inspection and then negotiate a lower purchase price based on the inspection findings. If this is what you’re planning, prepare to be let down. In most cases foreclosure sellers are not likely to repair a home unless they’re required to do so by your lender, and even then they may choose not to. If your lender requires repairs it could cost you the home if you don’t have cash available to make the required repairs.

No, there is not a garage door opener or keys to the mail box. Unfortunately, when a home is lost in a foreclosure, the last thing on the minds of the current homeowner is “where should I leave my key?”

Foreclosures in Bothell Washington come in four different varieties for the most part, and they are:

Fannie Mae properties usually have their own financing options available allowing for as little as 3% down in some cases.

Freddie Mac foreclosures are usually sold with a 2 year home warranty paid for by the Seller.

R.E.O.’s or Real Estate Owned (by a bank) include homes listed by Chase, Wells Fargo, Bank of America and many others. They’re usually sold as-is, and are frequently categorized with foreclosures because technically they are “foreclosed homes.” R.E.O.’s or Bank Owned Properties are frequently priced competitively with the other types of foreclosures as well.

HUD Homes are not government owned or foreclosures. Even though technically they are owned by the government and they were acquired through foreclosure. HUD is worried that referring to their properties as being foreclosures, government owned, or affordable would show their properties in a negative light. Despite this silkiness I happen like HUD homes because some of them come “insured with escrow.” This means that you do not have to worry about a home being rejected by a lenders appraisal because HUD has already had an appraisal completed.

Despite the additional hurtles to dealing with these types of properties, they still represent an average savings of $20,000 verses buying a privately owned home. In Bothell Washington, these are the best deals to be had.

Article author “Joe Mortgage” is a marketing and advertising leader who is owner of hotratequote.com and is focused to bringing readers with relevant as well as valuable advice. Find out more about the following weblink for a 100 % free refinance consultation and skilled counsel on how to obtain the best best chicago mortgage rates.

PA Mortgage Rates – Where to Get the Lowest Mortgage Rates PA Mortgage Rates – Where to Get the Lowest Mortgage RatesComments Off on PA Mortgage Rates – Where to Get the Lowest Mortgage Rates

PA Mortgage Rates

With today’s historically low mortgage rates, a large amount of home owners in Pennsylvania seem to be inquiring about how they can acquire the absolute best PA mortgage rates. Whether you’re from Pittsburgh, Harrisburg, Reading, Scranton, or Philadelphia, folks are more interested than ever in capitalizing on these low rates. Listed below are a few suggestions to aid borrowrs locate the best rates.:

Broker Vs. Banker:
There are two major models of mortgage providers for consideration. The first are mortgage brokers which from a technical perspective can not fund the transactions using their money, nonetheless they usually provide the largest collection of secondary market investors to position the mortgage loans with (these big investors being Wells Fargo, Citibank, Chase, and GMAC just to name a few). The negative effects associated with a broker not utilizing their own capital to actually fund your transaction is their outsourcing of essential services. This may sometimes result in extra headaches for borrowers hoping for the smoothest dealing conceivable. Unlike brokers, mortgage bankers are similar yet almost always have in-house underwriters whom clear the transaction to close and so they ultimately close the mortgages themselves which gives them the final authority in accepting closing conditions.

Becoming familiar with price structures and How These Banks’s Make Revenue is really essential to getting you the best PA mortgage rates:

It’s fundamental to have an understanding that Broker businesses usually have the least expensive cost of doing business which may result in the lowest rates. Nevertheless, many buyers still frown upon them due to the fact that they also generally delegate many of the fundamental services that involve getting your loan closed which may result in a number of of the hurdles outlined above in Tip #1. Conversely, the “Big Banks” including Wells Fargo, Chase, and Citi provide the absolute greatest overhead costs and that often end up charged to to the buyer in unfavorable mortgage interest rates. The Big Banks have to carry enormous on-going expenses which includes billboards, tv and radio commercials, web banner advertisements, many levels of administration, loss mitigation departments, legal departments, and on and on. Because of this, you can usually obtain the best PA mortgage rates by going with a lender in the center of the spectrum: the mortgage bankers. These guys traditionally possess relatively low expenses yet still have the control of important services in-house, specifically the underwriting and closing departments.

Lenders Closing Costs and Getting the Best best PA Mortgage Rates:

You may see some banks marketing “no costs”, mainly on refinance transactions. Watch out though because usually they’ve already built those fees into the rate in one way or another. For instance, it should be up to you the shopper whether you’d prefer the closing fees paid at closing, built in to the new loan, or, taken care of by the lender but in exchange for a marginally greater rate. Characteristically with mortgage bankers similar to Bridgeview Bank, they could pay for the majority of or all your closing expenses as well as still provide you with a rate that is lower when compared with any of the “big banks”.

Article author “Joe Mortgage” is a marketing and advertising leader who is owner of hotratequote.com and is focused to bringing readers with relevant as well as valuable advice. Find out more about the following weblink for a 100 % free refinance consultation and skilled counsel on how to obtain the best PA mortgage rates.

Finding the Best Modular Builders for Your New Home Finding the Best Modular Builders for Your New HomeComments Off on Finding the Best Modular Builders for Your New Home

Finding the Best Modular Builders – Where Do I Start?

Got that new home you’ve been dreaming of having built? Many folks these days are considering a modular home for their construction project. What is a modular home? you may be asking. Well its not really a type of home at all, its a process of construction. I’ve laid out a few of the primary aspects to consider when looking for the best modular builders:

Best Modular Builders – The Process:

The primary misconception among the general public is that modular homes are the same as manufactured, or mobile homes. This is not true. What is true is that both modular and manufactured homes are both built in factories, usually in sections, then shipped to the construction site for assembly. The primary difference is that modular homes are built to the exact same local building code as a traditional “stick-built” house. In contrast, manufactured homes are built to a more lenient HUD code which is why they are viewed more unfavorably in regard to mortgage lending by the big banks including Bank of America, Wells Fargo, Chase, Citi, and others. During the factory phase of the construction process, nearly all of the core components of the home can be assembled within that temperature-controlled environment. Also, since the sections are essentially built on an assembly line, there is much lower chance for under estimating material and labor expenses. These two primary factors typically yield much greater efficiency and cost over-run protection during the home building process and therefore the cost per square foot of the finished home is often less with modular homes. Finally, there’s the main factor: time. Since the best modular builders are constructing most of the home in the factory, this dramatically reduces the amount of time it will take to complete your home. Most 2000 – 2600 sqft modular homes can be built in just a few months, where as the stick-built version of those same homes would take 6-7 months to complete. The key to remember here is that modular homes are not really a type of home, it is a process of constructing the home, regardless of what the plans/specs/elevation look like.

Best Modular Builders – The Players:

Its important to recognize that there are many more modular builders out there than most folks realize. Believe it or not, the largest builder in the country is actually a modular/factory-built builder: Champion Homes. Champion owns major sister companies including Genesis Homes, New Era Homes, Redman Homes, North American Housing, Carolina Building Systems, and others. When searching for the best modular builder, its good to first ask yourself the same questions as you normally would with traditional “stick builders” including, “What is my budget?, How customized do I want to make the home?, and How high-end do I want to go with all the finishes?”. Just like traditional stick builders, the best modular builders vary from companies that offer primarily entry level designs and price points, all the way up to luxury mansions with all the bells and whistles. Some of the best modular builders include but are not limited to: Illinoi-based Contempri Homes, Ritz Craft, Clayton Homes, ModuKraft, Cardinal Homes, and Michigan-based American Living Homes just to name a few.

New Construction Loans:

When looking to finance your new home construction project, be sure to consult a bank that is well versed in construction-to-perm financing such as Bridgeview Bank. This bank offers a unique FHA construction loan where by you can roll both construction and the permanent loan into one transaction, and with just 3.5% down payment.

In conclusion, when you are planning your new home construction project it is important to consider whether you’d like to enjoy the benefits of utilizing modular construction. If so, keep the above pointers in mind when searching for the best modular builders.

Author Joe Karns of Bridgeview Bank is a seasoned mortgage professional dedicated to bringing his subscribers relevant and useful information on how to compare modular builders and construction loans. 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 modular builders

How Do I Get the Best Chicago Mortgage Rates? How Do I Get the Best Chicago Mortgage Rates?(4)

Best Chicago Mortgage Rates

With today’s historically low interest rates, many folks here in the Windy City seem to be asking how they can obtain the very best Chicago mortgage rates. Here are a few pointers to help consumers source the best deal:

Broker Vs. Banker:
There are two main types of lenders to consider.  The first are mortgage brokers who technically do not fund the transactions with their own funds, however they usually have the widest selection of secondary market investors to place the loans with (these investors being Wells Fargo, Citibank, Chase, and GMAC just to name a few). The downside of the broker not using their own funds to actually close your deal is their outsourcing of underwriting. Simply put, brokers typically don’t underwrite the transaction in-house and therefore you may not know of some challenges, hurdles, or additional documentation required until you get close to closing. This can sometimes result in additional headaches for borrowers hoping for the smoothest transaction possible. Unlike brokers, mortgage bankers are similar but almost always have in-house underwriters who clear the loan to close and they ultimately fund the loans themselves which give them the final say in accepting documentation, conditions, etc.

Understanding Cost Structures and How These Banks’s Make Money is Important to Getting You the Best Chicago Mortgage Rates:

It’s important to understand that Broker companies typically have the lowest overhead costs which can often result in the absolute lowest rates. However, many consumers still shy away from them due to the fact that they also usually outsource many of the essential services that go into getting your loan to the closing table and that can lead to some of the headaches mentioned above in Tip#1. On the other side of the spectrum, the “Big Banks” such as Wells Fargo, Chase, and Citi have the absolute highest overhead costs and that often trickles down to the consumer in unfavorable rates. The Big Banks have massive ongoing costs including billboards, tv and radio commercials, web banner advertisements, numerous levels of management, loss mitigation departments, legal departments, and the list goes on. For this reason, you can usually get the best Chicago mortgage rates by going with the lender in the middle of the spectrum: the mortgage bankers. These guys typically have relatively low overhead costs yet still have the control of essential services under their roof, specifically underwriting and closing departments.

Closing Costs and Getting the Best Chicago Mortgage Rates:

You may see some lenders advertising “not closing costs”, especially on refinance transactions. Be careful though because usually they have built those costs into the interest rate one way or another. For example, it should be up to you the consumer whether you’d like the closing costs paid at closing in cash, rolled into the new loan, or, paid for by the lender but in exchange for a slightly higher interest rate. Typically with mortgage bankers such as Bridgeview Bank, they can cover most or all of your closing costs and still get you a rate that is lower than any of the “big banks”.

Author Joe Karns of Bridgeview Bank is a seasoned mortgage professional dedicated to bringing his subscribers relevant and useful information on how to obtain the most competitive mortgage rates. Want a free mortgage checkup?   Check out the following link for some FREE expert advice on how to source the best Chicago mortgage rates.

New Home Construction Loans – Where Do I Start? 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.

Best Jumbo Lenders – How to Source the Best Mortgage Rates Best Jumbo Lenders – How to Source the Best Mortgage Rates(1)

Best Jumbo Lenders – First, what is a jumbo mortgage?

Jumbo loans and mortgages are similar to traditional mortgages, only they are larger.  Some would argue that the name is somewhat silly seeing that these mortgages are typically a higher-end type borrower but the name has founds its place within the mortgage industry.  Generally speaking in most markets, any mortgage over the $417,000 Conventional limit is considered a non-conforming or jumbo mortgage.  There are some exceptions in “high cost” areas of the country but for this article we will stick to the standard $417K+ realm for finding the best jumbo lenders.

Best Jumbo Lenders – Guidelines to Watch Out For:

Due primarily to the higher loan amount and overall risk of these these mortgages, jumbo loans typically come with more stringent lending guidelines than their Conventional counter parts.  First, the down payment(or equity, on a refinance) requirements are generally more strict, typically 20%-25% down at a minimum.  Next, expect the debt-to-income ratios to be a bit more restrictive than a Conventional loan.  Another aspect that is different will be the cash “reserve” requirement.  Typically lenders will want to see at least 6-12 months worth of mortgage payments in the bank, in liquid form.  This helps ensure that the borrowers can continue making payments if something unexpected were to occur such as a job loss, large home/auto repairs, or any other emergency which may cause money to get tight for a stretch.  Even the best jumbo lenders may also require additional documentation, such as three years worth of tax returns vs just two, additional asset statements, and often times additional documentation pertaining to corporate entities owned by the borrowers.

Best Jumbo Lenders – About Interest Rates?

As you may expect, jumbo loans typically carry a bit higher interest rate.  This is not only due to some added layers of risk, but also because they are generally “portfolio loans” or mortgages retained by the lending institution after closing and not sold in the secondary market.  Because portfolio loans are “shelved” and retained, the loss is much greater if a borrower were ever to go into default.  For this added risk, the interest rates are generally anywhere from .25% – 1.00% higher depending on the loan term and other layers risk factors.  This sometimes can work to a jumbo borrower’s favor, however.  Since the portfolio lender has full control over structuring the loan, they may sometimes grant special ultra-low interest rates to very well-qualified borrowers and/or borrowers who also happen to have large asset accounts with their lending institution.  That being said, you can sometimes put your current bank among the best jumbo lenders by virtue of simply having large asset accounts there and being on their “VIP list” of sorts.

Remember, sometimes your best place to find the best jumbo lenders is your own local bank.  If you have large asset accounts at a local bank, or you can move some money there, it is quite likely that bank may grant you special rate incentives on your mortgage in return.

In conclusion, jumbo loans are just larger mortgages with more strict guidelines and slightly higher interest rates.  Though they are often times “portfolio loans” retained by the lending institution, the process for obtaining a jumbo mortgage is generally the same as that of a Conventional loan.

Author Brad Troendle of PNC Bank is a seasoned mortgage professional dedicated to bringing his subscribers relevant and useful information on how to compare jumbo mortgage rates. Want a free jumbo mortgage quote? Check out the following link for more a FREE consultation and expert advice on helping you identify the best jumbo lenders.

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