Conventional & Government
FHA Loans Defined
An FHA insured loan is a US Federal Housing Administration mortgage insurance backed mortgage loan which is provided by an FHA-approved lender. FHA insured loans are a type of federal assistance and have historically allowed lower income Americans to borrow money for the purchase of a home that they would not otherwise be able to afford.
To obtain mortgage insurance from the Federal Housing Administration, an upfront mortgage insurance premium (UFMIP) equal to 1.75 percent of the base loan amount at closing is required, and is normally financed into the total loan amount by the lender and paid to FHA on the borrower’s behalf. There is also a monthly mortgage insurance premium (MIP) which varies based on the amortization term and loan-to-value ratio. FHA loan guidelines are currently as follows:
|Credit Score||Minimum 640|
|Max Loan Amount|| |
$294,515 (varies per county)
|Min Down Payment||3.5%|
|Term||15 or 30 Years|
|Income / Debt Ratio||31% HOUSING / 43% TOTAL DEBT|
UP TO 6% OF SALES PRICE
- Mortgage Insurance is required.
- Upfront Fee is 1.75% of the base loan amount and can be added back to mortgage.
- Monthly fee is .85%. times the base loan amount divided by 12.
- Seller must pay Tax Service Fee, Termite Inspection and/or Repairs.
USDA Loans Defined
A USDA Home Loan from the USDA loan program, also known as the USDA Rural Development Guaranteed Housing Loan Program, is a mortgage loan offered to rural property owners by the United States Department of Agriculture. Applicants for home loans may have an income of up to 115% of the median income for the area. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance. In addition, applicants must have reasonable credit histories.
Additionally, the property must be located within the USDA RD Home Loan “footprint.” USDA Loans offer 100% financing to qualified buyers, and allow for all closing costs to be either paid for by the seller or financed into the loan. USDA loan guidelines are currently as follows:
|Credit Score||Min 620|
|Max Loan Amount||No Max, 100% Financing|
|Terms||30 yrs, Owners Occupied|
|Income Debt Ratio||29% Housing / 43% Total Debt|
TO DETERMINE IF A PROPERTY IS LOCATED IN AN ELIGIBLE RURAL AREA, VISIT: https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do
VARY BY STATE AND COUNTY. FOR INCOME LIMITS BY STATE, VISIT:
UP TO 6% OF SALES PRICE
- USDA Funding Fee is 1% of the loan amount, which is financed into the mortgage.
- Monthly mortgage insurance fee is 0.35% times the total loan amount divided by 12.
- Do not have to be a first time home buyer to qualify, but cannot presently own a home.
VA Loans Defined
A VA loan is a mortgage loan in the United States guaranteed by the United States Department of Veterans Affairs (VA). The program is for American veterans, military members currently serving in the U.S. military, reservists and select surviving spouses (provided they do not remarry) and can be used to purchase single-family homes, condominiums, multi-unit properties, manufactured homes and new construction.
The VA does not originate loans, but sets the rules for who may qualify, issues minimum guidelines and requirements under which mortgages may be offered and financially guarantees loans that qualify under the program. The basic intention of the VA home loan program is to supply home financing to eligible veterans and to help veterans purchase properties with no down payment. VA loan guidelines are currently as follows:’
|Credit Score||Min 620|
|Max Loan Amt.||$453,100|
|100% Financing To Qualified Veterans|
|Terms||15, 20, 30 Years|
|Income / Debt Ratio||29% Housing / 41% Debt|
|or higher with underwriting approval|
(or higher with Underwriting approval)
UP TO 6% OF SALES PRICE
- VA Funding Fee may be waived for Veterans who are at least 10% disabled.
- VA Funding Fee is 2.15% for first time use and 3.3% for subsequent use (reservist 2.40% first time use).
- Wood infestation Report is required on VA Loans.
- Jumbo VA loans are available.
Conventional Loans Defined
Mortgages can be defined as either government-backed or conventional. Mortgages not guaranteed (or insured) by Government agencies such as the Federal Housing Administration (FHA), the Department of Veteran Affairs (VA) or the US Department of Agriculture (USDA) are known as conventional home loans.
Conventional loans are guaranteed by private lenders such as banks, credit unions or mortgage companies, or by government-sponsored enterprises (GSEs) such as Freddie Mac and Fannie Mae.
Conventional loans represent approximately two-thirds of the home loans issued in the United States. Conventional loan guidelines are currently as follows:
|Credit Score||Min 620|
|Max Loan Amount||$453,100|
|Min Down Payment||5%|
|Terms||10, 15, 20 or 30 Years|
|Income / Debt Ratio||28% Housing / 36% Total Debt|
2% OF SALES PRICE INVESTMENT PROPERTY
3% OF SALES PRICE LTV 90.01-95%
6% OF SALES PRICE LTV 75.01-90%
9% OF SALES PRICE LTV 75% OR BELOW
- For Loan-to-Values above 80%, there will be PMI. The higher the down payment, the lower the PMI.
- 5% must be from the borrower’s own funds
- Funds to close may come from a secured loan. The terms and monthly payment amount must be verified and included in the total debt ratio.
- Funds may come from a sell of an asset (automobile, boat, etc.). Must document ownership and value of secured item. Require copy of bill of sale and proof of funds received. A gift from a relative may be used as long as the first 5% is the borrowers own documented funds.
*Information as of 02/23/2019. All of the above information is subject to change or may have additional requirements.
What Is Considered As Investment Property
Investment property is real estate purchased with the intention of earning a return on the investment (ROI). This ROI could come as rental income, the resale of the property or sometimes both.
When securing a loan for a primary residence, a borrower typically has access to a wide variety of financing options, including FHA, VA, USDA and Conventional loans; however, it is often more challenging to secure financing for an investment property.
Insurers do not provide mortgage insurance to investment properties. Therefore, investors must have a substantial down payment to secure financing for their investment properties. Lenders typically insist on good credit scores, lower loan-to-value ratios (LTV), and ample savings to cover six months’ worth of reserves.
Investment loan guidelines are currently as follows:
MAXIMUM LOAN AMOUNT
MINIMUM DOWN PAYMENT
15 OR 30 YEARS
2% OF SALES PRICE
MINIMUM OF 6 MONTHS PITI
(PITI – Principal, Interest, Taxes and Insurance)
Borrower may not have more than four (4) financed properties, including principal residence. Having multiple properties may require borrower to furnish additional documentation.
Appraiser may be required to complete an operating income statement with the appraisal.
*Information as of 02/20/2019. All of the above information is subject to change or may have additional requirements*
Where Do You Go For Advice?
Where do you turn when it comes to mortgage and home buying decisions?
When it comes to soliciting or taking advice, it’s only natural to turn to those we know and trust. Most often we turn to our friends and family. Sometimes we go online or take advice we hear in the news. Why wouldn’t we? The problem with taking advice from non-industry sources is that you don’t really know if the advice being given is good advice. Trusting the source of information may be different from trusting the actual information being provided.
The truth is, most people engage in only a few real estate transactions in their lifetimes. The opinions of your family and friends are important and well-intentioned, but they are also limited to the breadth and recentness of their experiences.
There are even bigger issues with taking advice you’ve read on the Internet or recently heard on a news program, if the advice is not coming from an industry professional. The information you find online may not come from a qualified source. Even if the source seems sound, the information may be dated. Unfortunately, members of the media cannot be experts on every topic they cover. Headlines and sound bites may grab your attention; however, they do not tell the whole story.
If you’re seeking advice on a mortgage or home buying decision, look to a mortgage professional who spends their days helping consumers like you. Mortgage professionals are well educated on loan programs and are kept up-to-date on guideline changes. They stay on top of the latest trends and in-depth market analysis. They work every day with other professionals who spend their lives helping others achieve the American Dream of home ownership. This is a mortgage professional’s business every day. There is nothing wrong with leaning on your family and friends for feedback; but, remember that balance is key. No one person, ourselves included, will ever have ALL the answers as they pertain to you.
To Inspect or Not?
Is A Home Inspection Required?
We’re often asked, “Is a home inspection required?” Although your lender may not require a home inspection, doesn’t mean you shouldn’t have one performed. Your home purchase is one of the largest investments you will make in your lifetime, and having a professional home inspector alert you to potential problems can save you money and unwanted surprises in the future.
There are other reasons to have a home inspection, too. If an appraiser finds an apparent deficiency in the condition of the home, an underwriter may ask to see the related section of the home inspection (sometimes called the engineer’s report). In this instance, having secured a home inspection up front can save you valuable time in the loan process. Additionally, identifying problems early in the process may mean the seller will remedy them prior to sale.
Purchasing a home with confidence that it is in good condition, or at the least the knowledge of any potential issues, makes for more accurate cost expectations, and this is clearly to your benefit as a home buyer. Typically, the home inspection is a cost to the home buyer; but, by comparison, the cost of a home inspection is small when compared to unforeseen issues that may arise in the future.
by MIKE HOLMES
Updating your bathroom can put new life into the mundane; however, not everyone has the time, experience or budget to do a full renovation. If your tub and tiles are in good shape, you can refresh your bathroom without too much effort—no need for permits if you don’t move your tub, toilet or sink or change the wiring.
Here are some tips that can help you give your bathroom new life.
Handrails and towel racks. A simple change can make all the difference. Consider updating your towel racks or adding new ones, or check out heated towel racks (you might need to consult with an electrician, especially if you choose a model that is hard-wired, though plug-in models are available too).
Lighting. Updating your lighting can transform the look and feel of your bathroom. If you are using existing electrical you should be OK to change it up yourself, but always check with your municipality for local codes and bylaws. Lots of different styles and lighting options are available, but remember: nothing close to a water source. Electricity and water don’t mix.
Vanity and storage. Pull out that ugly sink and replace it with a new vanity sink and a new set of taps. If you are short on space, a vanity will provide you with more storage. Adding floating shelves or a cabinet above the toilet will also give you some extra storage space.
Toilet. Replace that old toilet with a new low-flow or dual-flush toilet: You will save on water consumption. If it’s a simple update and none of the plumbing needs altering, a seasoned DIYer should be able to do the job.
Caulking. Scrape, remove and replace old, broken or missing caulking with a new application. Make sure the surface is clean before reapplying, and use mold- and mildew-resistant caulking. It just makes sense.
Add a splash of color or texture. Adding artwork or changing up yourshower curtain, towels and bath rugs can make a big difference.
Do your homework. Remember in all cases to do your homework, watch videos and learn as much as you can before you start on any renovation project. Having a drill, a well-equipped toolbox and the proper safety gear is a must. Always take all the necessary safety precautions when doing any reno. And finally, if you think you are in over your head, call in the professionals. Be safe, have fun and make it right.
Watch Mike Holmes and his son, contractor Mike Jr., in Holmes and Holmes on HGTV.
Don’t Rip Out Your Tired, Old Landscaping Without Reading This
Sometimes landscapes can be improved with a few “surgical” moves such as trimming or transplanting. Other times, though, razing it all to start with a clean slate is a better option.
Maybe you’re not too crazy about how your yard looks. That doesn’t mean your only option is to rip out the whole sordid thing and start over.
Sometimes a measured, partial, “surgical” strike is enough to whip a yard into decent shape. A trim here, a transplant there and a replacement or two might be all you need.
Other times, if enough plantings are overgrown or flat-out ugly, a clean slate might be the way to go.
Either way, give it some thought first — especially if you’ve just moved. You might regret wholesale knee-jerk changes after you realize why those apparent “mistakes” were planted where they are.
10 points to ponder:
1. Get to know the lay of the land.
This is especially important if you’re new to the property.
Those evergreen monstrosities that you want to cut down might hide the neighbor’s chewing-tobacco billboard collection. Or that “messy” maple tree might be shading out the setting sun so the patio is usable after work.
Pay attention to where the sun comes up and goes down. Watch where water pools after a rain. Where is it hot and dry? Are there windy spots? Are there pockets of particularly horrid soil?
Your current plants might not be the prettiest, but they might be there to solve a problem.
2. Take a critical look at existing plants.
Which ones do you like? Which clash with the house, are misshapen or otherwise annoy you? Any that are bug- or disease-riddled? Any that demand more maintenance than you’re willing/able to give them?
The answers to these will help you determine what can stay and what should go.
3. How do you want to use your yard?
This will drive the rest of the landscape planning. It’ll help you determine where beds and trees should go (or not go), what kind of plants to use and what kind of structures go on your wish list (A pool? Patio? Shed? Gazebo?)
Do you need open space for the kids to play? Do you entertain a lot? Do you want a peaceful retreat? Are there plants where you want to walk or paths where you’d rather sit?
Start with practical needs, and carve out a game plan that meets them. Don’t just plan for pretty without regard for making the yard useful.
4. What style of plantings do you like?
Some people like formal, symmetrical gardens that are neatly trimmed. Others prefer a looser look with curved beds and naturalistic plantings or a riot of color. What’s right is what matches your taste.
5. Do the plantings match the character of the house?
A lavender-lined picket fence and clipped boxwoods might be a fitting choice for a Colonial-style house. However, a Victorian-style house might look better with sweeping beds of colorful perennials and annuals.
Consider not only the house but the surrounding environment. That doesn’t dictate what you have to do, but it’s a starting point. Remember, it’s your house. If garden critics don’t like something, let them pay your mortgage.
6. What about the colors?
Do the plant colors match the house trim or clash with it? Removing a few clashers might fix this one.
But again, if you like orange next to pink, fine. If you’re not sure, get a color wheel from the paint or craft store.
Or pick one of the two main color families. “Warm” colors include red, orange, gold, yellow, deep purple and burgundy. “Cool” colors include pink, blue, violet, lavender and most pastels.
7. Are there views that need to be screened out?
Maybe you want privacy around your deck. Maybe you want a tall screen planting along the side property lines. Maybe you want the entire backyard or even parts of the front yard screened off. These are prime real estate for dense evergreens.
8. What views do you want to keep?
If you have a favorite window to look out, somewhere in that line of sight would be a good place for a specimen tree or shrub. If there is a great view of a mountain or lake from the patio, highlight it by planting plants on either side to frame the view. Be careful not to plant big trees or dense evergreens where they’ll screen out good views.
9. Think about the not-so-little details.
Maintenance is very important. There’s no sense in spending a ton of money on a great new landscape when you really don’t like to garden, have no time for it and don’t want to hire out regular maintenance. It’s better to be realistic and plan for plantings you’ll be able to care for.
Also ask yourself: Will any plants block motorists’ views? Are any animal problems lurking? How important is it for the yard to look good in all four seasons? How important is attracting birds and butterflies or being environmentally friendly?
10. Borrow ideas.
Finally, you might get your best inspiration from seeing what others have done. Thumb through a few gardening magazines or books. Visit a public garden or two. Drive around a few neighborhoods. Snap a few pictures. All will help you fine-tune your likes and dislikes.