What Renovation Loan Should You Get for Your Fixer-upper?

Couple applying for a renovation loan

If you watch house flipping TV shows, you might have considered buying and working on a fixer-upper. They’re more affordable than “move-in ready” homes, and there’s room to design them according to your desires. They’re also great for first-time buyers because house prices are finally going down. The universal message of house flipping shows is that the homeowners have better control over the renovation work and can attain the look they want.

The same goes with the financing behind it. Homeowners have better control over renovation expenses. Academy Mortgage Arizona says that getting a renovation loan is a great way to manage costs by having one payment each month for both mortgage and renovation.

There are many renovation loans available to aspiring home flippers, but the best for fixer-uppers, in terms of the amount of loan, are the government-insured FHA 203(k) loan, also known as the FHA Construction Loan, and the government-sponsored Fannie Mae Homestyle® Renovation loan. Both mortgage products base the loan amount on your home’s complete value after renovation. These loans differ from Home Equity Loans and Home Equity Line of Credit (HELOC), which lend according to the current value of your property.

Here are details about the two mortgage loans.

FHA 203(k) Loan

FHA loan paper with pen, glasses and money

This loan covers the purchase and renovation of a home for people with credit scores of at least 580. You also need to qualify for standard FHA loan requirements and pay a minimum down payment of 3.5%.  This loan has two types.

The first is the Limited 203(k) mortgage (also known as 203k Streamline), which has these features and scope of work:

  • It can finance work that costs up to $35,000.
  • There is no minimum loan balance required.
  • Due to its low cost, this mortgage is best for minor projects such as bathroom and kitchen remodels.
  • You must complete work within six months.

The second is the Standard 203(k) mortgage, which has the following features and scope of work:

  • It can finance almost any kind of renovation as you can borrow up to 110% of the estimated completed value of your house.
  • There is a minimum loan balance of $5,000
  • Since it allows you to create major alterations, the FHA requires you to hire a 203(k) consultant to look at the work you plan to do. This is to make sure that work will be completed within 12 months.
  • The mortgage is great if you’re going to make structural alterations to your home.
  • You can reconstruct a demolished home using this loan as long as the original foundation is still there.

Apart from the requirements above, you need to pay the standard FHA mortgage insurance of 1.75% of your full loan upfront and 0.85% per year. This loan discourages DIY work as it requires you to hire licensed contractors to do the renovation.

Fannie Mae HomeStyle® Renovation Loan

This loan allows you to borrow for the purchase and remodeling work of your property, up to 75% of the total value after renovation.

  • The loan amount may cover the architect, contractor, and inspection costs, the contingency reserve of 10% for extra expenses during construction, and the minimum down payment of 5%.
  • This mortgage allows you to make any kind of renovation to your home.
  • This is also great if you want to DIY. HomeStyle® Renovation allows borrowers to help with the refurbishment at the lender’s discretion.
  • The work must not exceed 10% of the value of the completed property.

The type of renovation loan that’s right for your fixer-upper relies on the amount of work that needs to be done. If you find one that requires only minor upgrades, such as adding a room or a bathroom, the Limited 203(k) mortgage is your best choice. This is because you require a low budget for flipping the house and your loan may get approved faster.

For bigger projects such as structural alterations and reconstruction, consider getting the Standard 203(k) or the Fannie Mae HomeStyle® Renovation. They provide higher loan amounts than what you’d get from a Limited 203(k).

Once you’ve decided on the type of loan, take your time to plan and prepare for the renovation proper. Work with your contractor and consultants to achieve your dream design. The best thing about a fixer-upper is that you can truly make it your own.

When Deep in Debt, Consider Applying for Loan Consolidation

Dollar sign

Problems with personal finances can be complex and need the expertise of legal professionals. When a person is overwhelmed with debt from many sources, it becomes difficult to climb out of the hole. This results in late payments as well as penalties or late charges.

People who need help with debt consolidation can approach professional firms like the Law Office of Davis & Jones, P.C. for advice and assistance. Legal experts recommend debt consolidation to simplify loan payments.

Simplifying Debt Payments

When faced with delayed payments for many loans, debt consolidation is one of the best solutions. Loan payments would be simplified because there is only one loan to repay.

Here, the debtor gets to lump all his or her outstanding loans into a single payment. When separate debts are consolidated into one, it usually means a lower interest rate and lower monthly payment. Most creditors consent to this since it increases their likelihood of receiving payments from the debtor. You can also choose to combine all your credit card debts into one new credit card that has a lower interest rate. Or, you can go for a home equity line with your property as collateral.

However, the whole process of debt consolidation may be complicated and require some sacrifice. Consolidating loans entails finding a financing firm that is willing to provide a loan to repay all the other loans. The new loan also needs to have a lower interest rate and a longer payment period. Paying a single financing firm simplifies the payment process.

It is important to note though that there would be upfront costs and other closing expenses. The total balance payable may be higher, but the monthly payment would be smaller.

Avoiding Additional Fees and Charges

Money being counted

One advantage of debt consolidation is the lower interest rate for the new debt. Loans, credit card debts, and other obligations have varying interest rates. The interest rates also change according to the terms of the loan. A person is fined with a higher interest rate after missing a monthly credit card payment.

If a borrower is not able to pay his debts or is unable to continue paying the monthly payments, the only recourse is to file for bankruptcy. Bankruptcy is a chance to start over. It also prevents or delays any foreclosure proceedings over the property like a house or the repossession of a car.

The major setback is that it goes on a person’s permanent credit record. This makes it difficult, if not impossible, to secure a loan from any financial institution in the future.

Debt consolidation is a process that can remedy high monthly payments. It also ensures that creditors get paid. When a person is deep in debt, there are various remedies to ease their situation. One of these is debt consolidation. The aim of consolidating all debt is to simplify the repayment process. This can also help prevent the person from filing for bankruptcy and suffering the painful repercussions in the years to come.

What Are Your Options When Filing for Bankruptcy?

a man working

a man working

Are you having financial difficulties and thinking about filing bankruptcy? If so, it is best to identify all your possible options first and understand the advantages and disadvantages of each. When you learn about your alternatives, you can then make an informed choice. A debt consolidation attorney from Salt Lake City cites the following options you can consider.

Repayment Plan

This is a viable option for debtors and creditors because instead of defaulting on the loan, both sides can agree on an amount and the payment terms. A creditor is amenable to taking this route when a debtor has no choice but to declare bankruptcy. For creditors, a debtor requesting for a repayment plan is a much better option than a debtor filing for Chapter 7 bankruptcy since this means that the debt will be discharged.

Here, the debtor and creditor negotiate and agree on a reduced monthly due, lower interest rate or a longer and staggered payment term. Creditors consent to this when there is no other option for the debtor.

money and a calculator

Debt Consolidation

This alternative consolidates what you owe into one payment to one creditor. This route makes it easier for a debtor to pay since you only need to take care of one payment to just one creditor. If you choose this option, you have a couple of choices on how you can go about it.

For one, you can opt for a home equity line to consolidate debt into one with lower interest or possibly a tax-deductible one. However, if you end up defaulting on your equity line, a creditor can take your house as collateral and therefore, take possession of your property.

Another option is to transfer the loan to a credit card that has a lower interest rate. You can negotiate a reduced rate until you pay the debt in full. Here, you will end up paying lower interest over the term of the payment.

Your third choice is to negotiate a consolidation of all your separate debts into one. This option means you only pay one creditor at a reduced interest rate. You still owe the same amount, but you get to enjoy a lower interest rate and monthly due compared to having to handle separate payments to different creditors.

Debt Management Plan

If you fail to find a compromise with your creditors, you can hire a credit counseling agency to offer you some relief and negotiate a debt management plan on your behalf. In such an arrangement, you pay the agency an agreed upon amount, and they will pay your creditors until full repayment of your debt. The agency will create a realistic debt repayment plan based on the amount of your income and debts.

These are your options when you are having problems paying your debts. Consider these and the pros and cons of each alternative before you make a final decision. And soon, you will finally see yourself able to take control of your overwhelming debts and back on the right track.

What Factors Determine the Success of Your Mortgage Underwriting?

Mortgage planner with client

Mortgage planner with clientThere are different steps involved in a successful mortgage application. The most important of these is the underwriting process. The underwriter’s task is scrutiny of your application documents to ensure they comply with various guidelines and requirements.

Most applicants who choose to handle their mortgage application to save on costs generally fail at the underwriting stage. The fee you spend in hiring a mortgage planner from City Creek Mortgage in West Jordan, therefore, will not be an unnecessary expense as the expert will appropriately plan your documents to pass this intense scrutiny. Here are the elements that determine the outcome of your application when it goes through underwriting.

Capacity

This element evaluates your borrowing ability. A borrower’s capacity takes into account his or her employment and income history since lenders prefer borrowers with a steady income source. In evaluating your capacity, the underwriter will also assess your debt-to-income ratio, available assets and the available capital to meet your closing costs.

Collateral

When evaluating the collateral, the underwriter’s primary objective is to ensure the loan amount you’re seeking doesn’t exceed your property’s value. If the property’s value exceeds your mortgage amount, then the lender will be unable to recover the balance should you default on repayment. The most crucial document when evaluating collateral is your intended property’s appraisal report.

Creditworthiness

This is essentially an assessment of your repayment character. The length of your credit history, payment history, and type of credit are some of the elements your underwriter will evaluate. Before submitting your documents, your mortgage planner might recommend several steps to boost your credit rating.

If your mortgage’s underwriter encounters issues with these elements, he or she might give you a list containing conditions you must meet before approval. This is called a conditional approval. There are, unfortunately, times the underwriter might cancel your application altogether.

Don’t Fear a Conditional Mortgage Approval

a mortgage loanSo you received your home loan pre-approval application papers and see that there’s a note on it that says “approved with conditions”. Now you probably think that you’ve been approved for a mortgage. But wait, what about the conditions? Have you been approved or not?

Understanding a Conditional Mortgage Approval

A condition approval on a mortgage application means that the underwriter is more or less satisfied with your application documents, but that you need to resolve some “conditions” to be approved, explains an experienced home loan officer from VIP Mortgage in Tempe. The mortgage underwriter is assigned by your potential lender to review your loan application documents to make certain that it satisfies all the requirements and guidelines of the lender.

If the underwriter decides that everything seems to be in order with your application, but certain things need some clarification, you’d be issued a conditional approval. In most instances, underwriters usually request for clarification on the following issues or a copy of certain documents:

  • A letter of explanation in case you made a recent, sizable deposit or withdrawal
  • Verification of your current income and/or employment
  • Your mortgage insurance documents
  • A copy of your homeowner’s insurance plan
  • Other incomplete or missing paperwork require for loan funding

Take note that the underwriting process would differ significantly from the borrower to another such that you might receive other conditions during the underwriting process, while a friend that’s going through underwriting might get approved by the underwriter without any conditions whatsoever.

So Will My Mortgage Go Through?

Mortgage approval involves various stages, with the last being the final approval, when your mortgage would be funded before or during closing day. That said, it’s vital to understand that things could go awry at any stage during the entire process and the best thing that you could do once you receive your conditional approval is to satisfy the underwriter’s conditions as promptly as possible because your application would essentially be on hold until you could meet the conditions. Be proactive and patient to avoid further delays and get the ball rolling on your final approval.

Quick and Easy: Benefits of Working with Licensed Moneylending Services

Person getting bundles of cash

Person getting bundles of cashWhether due to a hospital bill or an urgent house repair, there are times when you need to find a way to procure huge sums of money to deal with unfavourable emergencies. While approaching banks and borrowing from loved ones are possible options, they present certain drawbacks. Banks can have long processing times, and financial transactions with loved ones can cause unnecessary strain and tension.

Quick and convenient ways to deal with money matters are preferable, especially when you’re working in a fast-paced country like Singapore. In these cases, licensed moneylenders and loan services provide you with an ideal option for your borrowing needs.

Here are some of the advantages of licensed lenders:

Easy Application Requirements

Moneylenders understand the nature of borrowing money for unforeseen circumstances. They have straightforward application requirements, and they make quick decisions on the approval of loans. Compared with loans from banks and government institutions, you can get your money from moneylending companies faster, allowing you to focus more on the situation at hand.

Trust-worthy and Responsible

Licensed moneylenders in Singapore have approval from the Ministry of Law, which can assure you that you are not being cheated or scammed during a time in your life that is already stressful. These licensed lenders follow government regulations, including complete transparency with contract disclosure and full professional services.

Increased Flexibility with Loan Packages

Different circumstances require loan packages that are ideal for your situation. For example, the terms for repayment for paying off emergencies should be different from the terms when borrowing capital to start a business. Licensed moneylenders have packages that suit any situation, helping you deal with tough times or take advantage of opportunities when they arise.

Borrowing money is always a tricky matter; you want to make sure that you are working with people or institutions you can trust, in terms that are favourable for both parties. Licensed moneylenders offer the opportunity and support you need for these situations, helping you deal with finances in a way that is not only convenient but also reassuring.

Vital Reasons Why You Absolutely Need a Financial Advisor

Financial advisor with client

Financial advisor with clientIn this day and age where almost practically everything is decided by practicality, planning out your finances may seem a better option because you won’t have to hire anyone else and pay extra. However, hiring an advisor provides perks that far outweigh any other supposed practical options. To prove this point, here are some the most noteworthy advantages of asking a financial advisor’s guidance.

Convenience

If you’re leading a very busy life thanks to your career or business, chances are you’ll be having difficulties in trying to manage your investments due to lack of time and focus. Besides, you might prefer to spend all your extra non-working hours on things that matter like family, friends or rest. Financial advisors help out in this aspect by relieving you of having to fully manage your investments, allowing you to maximize the extra time you may be able to spare for yourself.

Managing More Than Just Investments

A common misconception is that financial advisors can only manage your investments when, in fact, they do more than just that. Anything related to handling your finances like overseeing your expenditures, taxation for your current businesses and other similar issues can be entrusted entirely to your financial advisor. Whatever concerns you have regarding your investments, your advisor will be able to provide excellent and expert advice regarding the matter.

Long-Term Financial Planning

Planning for the future is a must for someone in your position. This also applies with your finances because, now more than ever, you should be ensuring that your hard-earned earnings will not go to waste. By hiring reputable financial advisors in Park City, you guarantee yourself that you’ll have more savings available by the time you retire.

It’s only natural that you want to make the most out of your hard earned money and a financial advisor can assist you in doing so. The little extra you spend today will help you save thousands of your earning in the future. Time is of the essence so start looking for the right financial planning company today.

Title, Payday, and Personal: Loan Basics for First-Time Borrowers

Woman asking advice about loan

Woman asking advice about loanLoans, regardless of loan type, have at least one thing in common: the borrower needs money ASAP.

Most American adults live from paycheck to paycheck. As a result, in times of high need for cash, they have no choice but to turn to cash lending institutions. Depending on their need, as well as the capacity to repay their cash loans, Americans can choose from different types of loans.

Car Title Loans

Utah Money Center, a title loans service company in Utah, says a title loan is a more affordable option in comparison with other quick loans.

In auto title loans, the lenders only require the title, not the vehicle itself. Meaning, you can still drive your car while you are repaying your debt. The payment is usually due within 30 days or a few months, depending on the amount borrowed.

Generally, a borrower is required to fill an application form and submit the title and photos of the car, and their photo ID. In some cases, they may need to hand over extra keys or purchase a roadside service plan.

Payday Loans

Payday loans usually have high-interest rates and are provided by small-time credit merchants. Nowadays, some lenders allow for online application.

The lenders base the loan interest rate on the borrower’s income and credit profile. Payment is taken from the borrower’s next paycheck, pension, or Social Security.

Borrowers are charged up to 400 percent in annual percentage rate (APR), although most states implement limitations on interest charges. The typical payday loan limit is $500.

Personal Loans

Personal loans or signature loans are repaid within 12 to 60 months. Lenders require bank statements, pay stubs, and credit profile reports. In some cases, borrowers need to present tax returns and W-2 forms.

These loans, provided by banks, credit unions, or online lenders, are unsecured as they do not require collateral. As a result, the interest rates are higher than auto or house loans, ranging from seven to 36 percent APR.

Borrowers should determine which type of loan is best for them. For example, borrowers who really need quick cash can go for a title loan. Those who want to settle their loan in a single payment can go for a payday loan. However, they should be responsible when it comes tot repaying their debt because loan defaults and delinquencies have consequences.

Why You Should Take Advantage of the VA Home Loan

Woman holding a small dollhouse Veterans Affairs or VA loans are housing loans offered to eligible VA members, veterans, and surviving spouses. According to 1unitedmortgage.com, this type of loan is more lenient on the application requirements. This allows for a simpler process and faster loan release.

Lending Facility

The U.S. Department of Veterans Affairs guarantees VA loans as part of the veterans’ benefits. It helps qualified members to finance the sale, building, repair, or retention of their home. The borrower does not have to put up a down payment, and mortgage insurance is also not required for VA loans.

The loans can cover up to 100% of the cost of the home. It can be more than the property’s reasonable value due to funding fees, which can be up to 3.3%. The largest loan amount with no down payment depends on the location and is usually up to $453,100. This may go as high as $721,050 in areas specified as “high-cost counties.”

For the Veterans

The history of the VA loan starts at the end of World War II, which allowed veterans to borrow money for homes and farms. Since its start, the VA has insured more than 20 million loans. In 1970, the coverage was expanded with the removal of termination dates for applying for housing loans. The same year saw the introduction of an amendment allowing for the guarantee of mobile homes.

The Veterans Housing Benefits Improvement Act of 1978 added more benefits. In 1992, the program was available only to those who had served on active duty during specific years or periods. Reservists and members of the National Guard who have served honorably for more than six years were also given this benefit.

The VA loan is a big help to veterans, active service members, and qualified spouses. They can take out affordable home loans to buy their own home, or improve their existing home at affordable rates even without a down payment.

Why You Shouldn’t Be Without an Auto Insurance Coverage

a man driving a carWithout insurance coverage, getting into a car accident can ruin your life, says Oxford Auto Insurance, Aurora’s most trusted auto insurance provider. Just think about it. Depending on the severity of the accident, the damage could be extensive. If you cause an accident, you’re responsible for the costs associated with it.

These costs associated with an accident can be massive. There are legal fees, compensation for loss of income, and medical expenses for the injured. Without liability coverage, you would have to meet these costs out of your own pocket.

Other than safeguarding your finances, having an insurance cover is crucial when getting behind the wheel.

Satisfying loan requirement

If you wish to finance your car, you must have a collision cover to be eligible for the loan. Most lenders require it. Collision insurance pays for the repairs if the car incurs damage in an accident with an object such as a light post or another car.

In case the car is totaled after such an accident, the collision cover pays for the replacement. The cover will cater for the repairs or the damages that result in a single car accident such as rolling or falling over.

Peace of mind

A lot could happen when you’re on the road, and having an insurance coverage gives you the peace of mind in case of any misfortune. Aside from an accident, the car could be vandalized, damaged by an animal, or by a natural disaster.

In such instances, repairing the car could set you back thousands of dollars in out-of-pocket expenses. Considering that insurance premiums amount to several hundred dollars spread over an entire year, the savings can be massive.

In the event that someone steals your car, your insurer may replace it for you at no additional costs savings for the deductible.

Having insurance coverage is an essential component of great motoring experience. It is a sure way to ensure that you get back on the road after an incident without ruining your finances.