My Client Loves the House, Except...
/Have you ever had a client almost love a house, but would really want to buy if it just had that one thing that’s missing? Have I got great news for you.
With our new Cornerstone Renovation loan program, your clients can buy a home and renovate it at the same time! It doesn’t matter if the renovation job is big or small. You can add a bedroom or just replace the kitchen counter-tops. Your client can get that repair done that the seller is unwilling to make, or just improve the house in conjunction with the purchase. Either way, this program works.
Another great feature- this is a conventional loan. No mortgage insurance is required if the loan to value is 80% or less. If a larger loan to value is needed (up to 95%), conventional mortgage insurance applies versus FHA. For borrowers with excellent credit, this is a huge advantage. This program works like a 203K, but is a Fannie Mae program – so conventional guidelines apply versus FHA. The loan to value is based on the acquisition cost (sales price plus renovation costs) or appraised value – whichever is less.
Highlights:
- One loan and only one closing
- Loan to value up to 95% on owner occupant properties
- Second homes and investment properties allowed
- Up to 6 months of housing payments can be financed if house is not habitable during construction (if supported by appraisal)
- Good for room additions, foundation work, in-ground pools, decks, and any permanently-affixed interior or exterior renovations that add value to the property
Call me if you have any questions!
If you are ever interested in reading prior weekly emails, please visit my Facebook page. Mike Smalling Mortgage Advisor
The Week Ahead
This week, the focus will remain on the Middle East and Ukraine. Increased tensions in either region likely would cause a larger flight to safety. In the US, the Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Tuesday. CPI looks at the price change for finished goods which are sold to consumers. Existing Home Sales also will come out on Tuesday. New Home Sales will be released on Thursday. Durable Orders, an important indicator of economic growth, will come out on Friday.
The Week That Was
Geopolitical events were the primary influence on mortgage rates again last week, while the economic data had little impact. After a quiet weekend, investors were willing to take on a little more risk early in the week. Shocking news on two fronts caused an abrupt reversal on Thursday, however, and mortgage rates ended the week just slightly higher.
When a conflict breaks out which could affect global markets, investors generally respond with a "flight to safety". Uncertainty created by the threat of escalation causes investors to reduce the level of risk in their portfolios. This typically involves shifting from stocks to relatively safer assets such as gold and bonds, including mortgage-backed securities (MBS).
Heading into the previous weekend, investors were concerned about the possibility of an escalation in the conflict between Israel and Gaza, so they shifted to safer assets. When there was little change in the situation early last week, investors unwound these positions, pushing rates higher. Then on Thursday, Israel announced a ground offensive in Gaza and a Malaysian passenger plane was shot down in Ukraine. These events caused investors to quickly return to safer assets, offsetting much of the earlier rise in rates.
In the US, there was mixed news from the housing sector. The National Association of Home Builders (NAHB) Housing Market Index revealed that builder confidence jumped sharply in July to the highest level since January. Less positive, the Housing Starts data released last week, which covers the month of June, showed a decline of 9% from May. This data can be quite volatile from month to month, though.