Posted on: 11th Jul, 2007 03:26 am
Hi everyone, this is Andrew smith from First of all, let me say, I am not that aware of the mortgage loans that the industry talks about, so I'm sorry if I am wrong with the terminologies. Well, if I should say this, my situation is worse, my house has been on fire and needs restoration. I've talked to several lender and all of them saying that the only loan option that I can opt for in order to add a 2nd story is a rehab loan. Apart from the construction, the insurance company will restore the house to the original condition. I'm getting options like 5 year ARM or a 3 year ARM with yearly interest loan after that. The fees are ranging in between $2500 to 3000 but this seems to be too high for me considering that my Equifax score is in the 650 range. After the construction, I can refinance into 30 year fixed rate loan with a few of 1300. What I want to know is, can I refinance the rehab loan prior to the 2nd story construction is finished. I'm worried that the construction ill take a couple of years and I'm thinking as to whether I shall be able to refinance with the 30 year fixed and say if I don't get good rates. Also, do you think there are any other alternatives to this rehab loan for building the 2nd story. I don't have much equity as the house is burnt, so I know I won't be able to go for loans such as home equity loans or the like. Any advice will be appreciated. Also, would like to know if anyone here is willing to offer us the financing in this situation?
It appears that you have been reviewing what is called CTP or construction to perm loans.
If you are able to fully document your income & assets, another alternative you might want to investigate is the FHA 203k program---it's a 30 year fixed loan program with rates that are fixed for the period of the loan---no need for two loans---allows you to roll the mortgage payments into the loan for the first 6 months, etc.
Regards,
Scott Miller
If you are able to fully document your income & assets, another alternative you might want to investigate is the FHA 203k program---it's a 30 year fixed loan program with rates that are fixed for the period of the loan---no need for two loans---allows you to roll the mortgage payments into the loan for the first 6 months, etc.
Regards,
Scott Miller
Scott, I am not clear with this: You mean the payments are added to the loan or the first 6 months - can u pls explain this?
Hi Scott,
Can you please explain me this FHA 203K programme that you had talked about?
Can you please explain me this FHA 203K programme that you had talked about?
Hi Roger,
You have an alternative option to go for the Construction-to-permanent loans. The basic advantage of this type of loan is that there is only one loan application and one loan closing. The lender initially finances for the construction of your home, and when you are ready to occupy it, the loan is converted from a construction loan to a mortgage. You can decide about the loan term and interest rates at the time of closing prior to construction.
You have an alternative option to go for the Construction-to-permanent loans. The basic advantage of this type of loan is that there is only one loan application and one loan closing. The lender initially finances for the construction of your home, and when you are ready to occupy it, the loan is converted from a construction loan to a mortgage. You can decide about the loan term and interest rates at the time of closing prior to construction.
Hi all,
Thanks for your replies, i was just laid back as i had severe fever for the past few days and then I was going through problems at work, so just couldn't make it to getting the loan. But i did call up two lenders and they did not show any willingness to offer us the loan. So, anyone of you can help us with this?
Thanks for your replies, i was just laid back as i had severe fever for the past few days and then I was going through problems at work, so just couldn't make it to getting the loan. But i did call up two lenders and they did not show any willingness to offer us the loan. So, anyone of you can help us with this?
Hi roger,
I would be happy to offer you a loan but you need to give me some of the details:
I would be happy to offer you a loan but you need to give me some of the details:
- What was your home value prior to the fire and what is your loan balance?
- How much do you wish to borrow for your rehab loan?
- What's your credit like?
- Is the 2nd story an additional part of your house?
hi mortgagelender,
The original price 5 years ago was $115K. I refinanced 2 years before and at that time, the value came out to $157K. My loan balance is $100K. And, no the 2nd story wasn't there. My credit score isn't that good, around 600. I had pulled out the report earlier but now I'll have to pull it out again. isn't it? and if you ask me how much i need, that could be around $200K
The original price 5 years ago was $115K. I refinanced 2 years before and at that time, the value came out to $157K. My loan balance is $100K. And, no the 2nd story wasn't there. My credit score isn't that good, around 600. I had pulled out the report earlier but now I'll have to pull it out again. isn't it? and if you ask me how much i need, that could be around $200K
Hi Roger,
Welcome back.
I also feel you should go for 203K program insured by the FHA. This type of loan program is somewhat different from others. Usually a homeowner has to go after construction loans in case he wishes to do repair work in his home and then he has to refinance the loan with a permanent loan.
The construction loans often require one to pay interest at a high rate and these usually have short repayment periods. This is where the 203K loans vary. These loans are such that the borrower can get a long term single loan at fixed or adjustable rate. This loan can be used to construct as well as purchase the property. So, one need not shop around again or pay closing costs again to take out a new loan after the construction loan payment period is over.
Hope this helps..
God bless you.
Samantha
Welcome back.
I also feel you should go for 203K program insured by the FHA. This type of loan program is somewhat different from others. Usually a homeowner has to go after construction loans in case he wishes to do repair work in his home and then he has to refinance the loan with a permanent loan.
The construction loans often require one to pay interest at a high rate and these usually have short repayment periods. This is where the 203K loans vary. These loans are such that the borrower can get a long term single loan at fixed or adjustable rate. This loan can be used to construct as well as purchase the property. So, one need not shop around again or pay closing costs again to take out a new loan after the construction loan payment period is over.
Hope this helps..
God bless you.
Samantha
Hi guys,
As i was telling u that i am looking for a rehab loan? how's a bridge loan? is that ok for the construction? i'm just looking at all opions in case i don't qualify for the fha loan.
As i was telling u that i am looking for a rehab loan? how's a bridge loan? is that ok for the construction? i'm just looking at all opions in case i don't qualify for the fha loan.
Hi Roger,
During construction, if you use a home bridge loan, you may get the following advantages:
During construction, if you use a home bridge loan, you may get the following advantages:
- You can use equity from your existing home as down payment for the new home. Thus, you can avoid bridge loan costs.
- You don't have to sell the existing home for12 months after the construction is completed.
- You will have to make payments for the principal and interest only on existing home (taxes and insurance not required).
I differ with Larry as Roger has not asked about a new construction. What he wants is to build a second storey to his already constructed property. If it would have been a new construction, then the question of down payment might have come.
Roger, a bridge loan is not a right option for you. This type of loan is secured on the buyer's current residence to finance his new residence. It actually bridges the gap between new purchased home of the buyer and the sale of his current home.
If you can mention the state in which you are living, I may provide information on some other construction programs applicable in your state.
Roger, a bridge loan is not a right option for you. This type of loan is secured on the buyer's current residence to finance his new residence. It actually bridges the gap between new purchased home of the buyer and the sale of his current home.
If you can mention the state in which you are living, I may provide information on some other construction programs applicable in your state.
I have a question here Samantha. You say I can go for 203k rehab loans. But supposing that the cost of rehabilitation increases during the period of constructing the second story, will the loan amount be increased?
No, the lender will not increase your loan amount even if the cost of rehabilitation increases. The best thing is to select a contractor who can give you an appropriate estimate of the cost of improvements and even try to complete the construction work at or below the estimated costs.
Hope this helps...
God bless you.
Samantha
Hope this helps...
God bless you.
Samantha
Hi Roger,
Once an amount is fixed for a 203k rehab loan during the agreement, it cannot fluctuate with any increase in the cost of rehabilitation in the whole life of the loan.
Once an amount is fixed for a 203k rehab loan during the agreement, it cannot fluctuate with any increase in the cost of rehabilitation in the whole life of the loan.
I'm sorry for returning late to the party---here are some general guidelines for the 203k program:
- The 203K loan allows for the purchase of the property + repairs + 6 months of mortgage payments + allowable closing costs (see below for further details) using just 1 loan(in most cases, this mean 100% financing and no money down).
- Rate doesn't change after rehab is completed; the same rate will apply for the entirety of the loan.
- Property must have a min. of 5,000 in repairs; here is a list of just a few of the allowable repairs:
Changes for improved functions and modernization
Elimination of health/safety hazards
Changes for aesthetic appeal
Plumbing, heating air conditioning, and electrical upgrades
Well and/or septic repairs
Roofing, gutters and downspouts
Flooring, tiling and carpeting
Energy conservation improvements
Major landscape work and site improvement
Access for the disabled
- You can act as your on GC (general contractor) or appoint someone else to do the work.
- Finance up to 6 months of mortgage payments into the loan. Other costs that can financed into the 203(k) loan are:
* Contingency reserve (10%-20%)
* Up to 6 months PITI mortgage payments
* Permit costs
* Consultant fees
* Inspection and title update fees
* Architectural & Engineering fees (if needed)
- The 203K loan requires a FULL DOC submission
- The 203K loan can be used for the purchase/refinance & rehab of 1-4 unit owner occupied properties.
- The 203K loan is offered in 15/30 YR FXD & 1 YR ARM options.
- The 203K loan doesn't come with a prepay---the homeowner can opt to do a FHA "streamline refinance" after rehab/renovation is complete to take advantage of better interest rates/lower monthly payment (A FHA streamline refinance doesn't require the verification of income/assets again nor does it require a new appraisal).
The 203k loan really stands out amoungst other options (namely CTP loans) and a comparison in value/features/benefits favors that of the 203k...
Regards,
Scott Miller
- The 203K loan allows for the purchase of the property + repairs + 6 months of mortgage payments + allowable closing costs (see below for further details) using just 1 loan(in most cases, this mean 100% financing and no money down).
- Rate doesn't change after rehab is completed; the same rate will apply for the entirety of the loan.
- Property must have a min. of 5,000 in repairs; here is a list of just a few of the allowable repairs:
Changes for improved functions and modernization
Elimination of health/safety hazards
Changes for aesthetic appeal
Plumbing, heating air conditioning, and electrical upgrades
Well and/or septic repairs
Roofing, gutters and downspouts
Flooring, tiling and carpeting
Energy conservation improvements
Major landscape work and site improvement
Access for the disabled
- You can act as your on GC (general contractor) or appoint someone else to do the work.
- Finance up to 6 months of mortgage payments into the loan. Other costs that can financed into the 203(k) loan are:
* Contingency reserve (10%-20%)
* Up to 6 months PITI mortgage payments
* Permit costs
* Consultant fees
* Inspection and title update fees
* Architectural & Engineering fees (if needed)
- The 203K loan requires a FULL DOC submission
- The 203K loan can be used for the purchase/refinance & rehab of 1-4 unit owner occupied properties.
- The 203K loan is offered in 15/30 YR FXD & 1 YR ARM options.
- The 203K loan doesn't come with a prepay---the homeowner can opt to do a FHA "streamline refinance" after rehab/renovation is complete to take advantage of better interest rates/lower monthly payment (A FHA streamline refinance doesn't require the verification of income/assets again nor does it require a new appraisal).
The 203k loan really stands out amoungst other options (namely CTP loans) and a comparison in value/features/benefits favors that of the 203k...
Regards,
Scott Miller