Ask the "Mortgage Man": COULD THIS BE THE TURNING POINT IN CREDIT SCORING...

Ask the "Mortgage Man": COULD THIS BE THE TURNING POINT IN CREDIT SCORING...: FICO scores will be rescored as of the fall of 2014.  For a long time, unpaid collection accounts have been the thorn in the sides of many b...

Rehab Loan Made Easy

Is there an easy way to finance the repairs into a home purchase?  I can't find a home for a good price that doesn't need tons of renovations! Due to the high volume of foreclosed homes being sold on the market, anything in my price range is usually a foreclosure.  These are common responses I hear from potential home buyers in their search for a home.  I have a program that makes it easy and financially attractive for the buyer to finance the repairs with their home purchase.  It is called a Rehab Loan. 

The Rehab Loan is where a buyer adds the cost of needed repairs to the selling price of the home they wish to purchase.  For as little as 5% down, they can finance all the repairs into their loan.  Here is how it works. 
The buyer makes an offer on a house, they get estimates from a contractor, builder, Lowe's, Home Depot, etc. and adds it to the sale price of the home.  This combined total is what we call the Acquisition Cost.  We can finance up to 95% of the acquisition cost.  The buyer settles and takes possession of the house and that is when the work begins.  We will hold the money for repairs in escrow after closing and during the construction/ rehab period.  This means that we will release the monies to the person doing the work in stages or Draws, which are no more than 3 during the construction period.  As each stage of the work is completed, the bank will release the money to the builder/ contractor paying them as they go.  It is that simple!

These types of loans are now available with FHA under the 203K program.  Some banks offer the Fannie Mae Homepath renovation mortgages, too.  But for many, these two programs have distinct disadvantages that this loan doesn't have.  For instance, both the Homepath  and the FHA 203K programs offer higher than market rates (as much as 1% ) on these loans costing the buyer many tens of thousands over the life of the loan.  The FHA 203K charges a much higher Mortgage Insurance Premium ( both up front and throughout the life of the loan )- this is 50% higher than our program.  You have to choose an approved builder/ contractor, which takes away the ability to shop around for the lowest bid.  Our program offers the most competitive rates, most often at below national averages for current conventional fixed rates. 

To qualify for this loan, you must have a credit score of at least 680, and be purchasing a property located in the following counties: Lehigh, Northampton, Carbon, Pike, Wayne and Luzerne, PA.  The next time you are looking for yourself or to refer clients for renovation mortgages, please give them my name and number. 

Andy Williams
President
Abacus Regional Mortgage
NMLS # 118317
484 695 5972

Aren't interest rates supposed to increase at the beginning of the year?

As long as I've been doing mortgages ( 21 years and counting ), I have witnessed interest rates climbing after the new year. There is always a rush of new business after the holidays with many new buyers calling to get prequalified to purchase a home. The powers that be from Wall street and Washington DC have come back from their two week vacations, and they are ready to get back down to the business of controlling the housing industry. As the market improves, the interest rates start to rise. This year is a little bit unusual in that the activity has increased, but the interest rates have had an inverse effect. They have dropped further from their already historic lows of 2011. Hopefully they will stay low for the short term so we can see some increase in real estate activity throughout 2012.

Andy Williams
President
Abacus Regional Mortgage
484 695 5972

CLASSIC HOMES DOES IT AGAIN

Why is it that a builder can sell inflated new homes to unsuspecting buyers and get away with it? This has been going on with builders in the Poconos for many years, but after many law suits and criminal charges, it continues to go on today. Classic Homes of Pocono Summit purchases lots at tax sales in A Pocono Country Place for up to $ 500 and builds homes on them. Doesn't seem like anything is wrong, does it? Well, when a buyer goes to get financing for them the lenders require an appraisal on the new home. Even though a newly constructed home costs more to build, you still have to compare the price of the new home with comparable sales within the same community. These sales must be within 6 miles and 6 months of the current property, and the comparable properties used MUST be Resale Homes and NOT newly constructed ones! Since the average sales price of homes in A Pocono Country Place over the past 6 months hovers under $ 60,000, it seems hard to believe that the average New Home with Classic Homes costs $190,000. They have closed over a dozen homes this year! How?

Andy Williams
President
Abacus Regional Mortgage
484 695 5972