If you currently have a VA loan and wish to lower the interest rate, the VA Streamline can get you that lower payment with little to no verification required. Veterans that were eligible for a VA loan in the first place typically qualify for the refinance, giving them the opportunity to lower their interest rate and save money every month.

Applying for the VA Streamline

Applying for the VA Streamline loan is very simple as there are very few requirements for the program. The entire process typically takes less than one month to complete. All that you need to apply is as follows:

• Timely mortgage payments over the last 12 months with no more than one late payment (30-days late) during that time
• The new payment must be lower than the original VA loan’s payment; the exception to the rule is if you refinance from an adjustable rate to a fixed rate loan
• You must be able prove owner occupancy prior to the application for the VA Streamline Loan

You will not be required to provide any income or asset documentation. In addition, the lender is not required to pull your credit as the VA does not care about your credit score for this program. Some lenders do decide to pull credit anyway since they are the ones funding the loan – the VA simply guarantees the loan.

Closing Costs can be Included in the VA Streamline Loan

The VA Streamline Loan is strictly to help make your payments more affordable; you cannot take cash out of the home with this program. The idea behind it is to give you more disposable income every month in order to make your daily living expenses less of a stress on you. Because of this, you cannot include another loan or debt to pay off, but you can include the closing costs for the new loan.  This means your new loan amount can be equal to the amount of outstanding principal on your current VA loan along with the closing costs charged by the lender.

One closing cost that any borrower will pay on the VA IRRRL program is the funding fee. This fee, which you paid with your original VA loan, is what helps the VA continue to do what they do. The money they collect from each new loan gets placed into an account that helps them guarantee defaulted loans. When you originally took out your VA loan, chances are you paid 2.15% of the loan amount if it was your first time using your entitlement. With the VA Streamline Loan, you will still pay a funding fee, but a lesser amount – this time around it is 0.5% of the loan amount.

Not Every Lender Offers the VA Streamline

It is important to know that not every lender offers the VA Streamline Loan. Some lenders do not want to take the risk of taking on a new loan that does not have any credit or income verification with it. There are some lenders, however, that do allow the loans but require that your credit gets pulled or requires that you verify your income; every lender is different. Since the VA is not the entity funding the loan, they do not have the final say in what the lender requires – the lender decides what types of risk they want to take. That being said, however, there are many VA approved lenders that do provide the streamline loans as they are a low-risk loan for our veterans.

Does not Require New Entitlement

The good news is that when you refinance your existing VA loan with the IRRRL program, you are reusing your existing entitlement; you do not have to make sure you have enough entitlement left to refinance. In fact, you do not even have to verify your entitlement as the lender can do that on his own with the original loan. All that you have to worry yourself with is whether or not the new interest rate is lower and that your housing payments are on time for the last year.

The VA Streamline Loan is very easy to qualify for, but it is recommended that you shop around with a few different lenders to see the different interest rates and costs available. Just like any other loan program there are different lenders that require and provide different things. When you know you are getting the best deal available you can refinance your loan and start saving money every month!

The post How Does a VA Streamline Work? appeared first on Arizona Mortgage Team.

One of the largest aspects of dealing with a divorce is figuring out the housing situation. If you owned a home together with your spouse, chances are that one of you wants out of the residence. Just getting divorced is not enough for the lender that holds your mortgage to release your obligation to the mortgage, though. Typically, you need to refinance the loan into the other person’s name in order to get yourself off of the loan. In some cases, however, you can use a mortgage assumption after a divorce.

What is a Mortgage Assumption?

First, let’s start with what a mortgage assumption is and how it works. As the name suggests, you can take on a mortgage without applying for a new mortgage. When you assume a mortgage, you take over the terms and the remaining balance of the mortgage. This means you basically take up where the original owner left off while keeping the same interest rate and loan balance.

Who Qualifies for a Mortgage Assumption?

Just because you can assume a mortgage does not mean that everyone qualifies. Just as you would have to qualify for a new mortgage, the same is true for a mortgage assumption. The lender has to evaluate your risk level and your ability to repay the loan before they will allow the assumption. For example, if you have a 600 credit score and a 45% debt ratio, chances are you will not get approved to take over the mortgage. If on the other hand, you had a 700 credit score and a 28% debt ratio, you might have a better chance of qualifying for the assumption.

Not Every Loan Allows Mortgage Assumption

Something you have to understand, however, is that not every mortgage program allows for a mortgage assumption. Generally, FHA and VA loans are among the top programs that allow it. Conventional loans typically do not allow assumptions to take place. Even within the FHA and VA program, however, you have to receive lender approval in order to make the process go through.

How does One Spouse Get off the Hook?

The idea behind the mortgage assumption after a divorce is to get one spouse off of the loan. In order for this to happen, the issuing lender must release that person from liability for the loan. Without this release, both parties are still equally responsible for the loan. The spouse that is leaving the property and giving up his rights to the property must have proper documentation showing that he is no longer responsible so that he can move forward with his financial life.

What are the Benefits of a Mortgage Assumption after a Divorce?

The largest benefit of a mortgage assumption after a divorce is the ability to keep the same interest rate. If rates are higher now than they were when you first bought the home, you can take on that same mortgage and not have to worry about having a higher mortgage payment. This is especially helpful if you are used to paying that payment already; it serves as one less thing to change after you get divorced.

Another benefit is the ability to save on closing costs. If you were to refinance the loan into your loan alone and quit claim your ex-spouse off of the loan, you would have closing costs to pay. These closing costs could get quite significant depending on the amount of work that needs to be done to process and close the loan. A loan assumption usually requires much lower fees and a quicker processing time.

While a mortgage assumption is not the most common thing to hear about today, it is a possibility in the face of divorce with certain programs. If you want to know if your loan is assumable, talk to your lender or read the fine print on your closing documents. If you have a government-backed loan, chances are you can assume the loan. Before you jump in and take advantage of this opportunity, though, you should check and see if it is worth it by comparing today’s rates to the rate on the mortgage. Sometimes there is enough of a savings to gain that it is not worth assuming the loan rather than refinancing it.

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Streamline financing can be a great way to lower your interest rate while staying in the same mortgage program. Each of the government-backed programs offers a streamlined program, but the USDA’s program is the newest. The USDA Streamline guidelines are fairly simple to follow and make it very easy to obtain a lower mortgage payment.

USDA Streamline Guidelines about Housing History

The most important factor you must focus on is your housing history. This is how the USDA and the subsequent lender determine your level of risk. You have to show that you responsibly make your mortgage payments. You can demonstrate this by having a solid housing history. In order to qualify for the USDA Streamline Refinance, you cannot have more than one 30-day late payment in the last 12 months on your mortgage.

The lender can verify your housing history by getting a payment history from the current lender. The new lender does not need to pull your credit in order to get your housing history. Because your credit score does not play a role in your ability to secure a USDA Streamline Refinance, there is no reason for the lender to pull your credit. Some lenders will still check your credit to use it as proof your on-time mortgage payments or to ensure that your credit score is above a certain level, but every lender has to be concerned about your mortgage payment history whether or not they decide to evaluate your credit score.

You Must Live in the Property

The USDA program was designed to help low-income families be able to become homeowners. Because of this, the USDA does not offer mortgages for investors. You must live in the property in order to use the loan. This is also true for the Streamline Refinance. You have to prove that you, the borrower, live in the property. There are a few ways to prove your residence:

• Driver’s license with the current address
• Utility bills in your name and at the appropriate address
• Tax returns with the right address
• Property tax records with your name on them

Lower Interest Rate and Payment

Two of the other major USDA Streamline requirements pertain to the interest rate and your monthly payment. The idea behind the program is that you make your payment more affordable, as is the case with any streamline refinance. In the case of the USDA Streamline loan, they require your interest rate to decrease at least 1 percent. This is the threshold that the USDA has come up with to ensure that there is a serious benefit before you refinance.

In addition to the lower interest rate, the USDA requires that your payment decreases at least $50 per month. This is not that hard to do since your interest rate needs to decrease at least 1%; however, there could be reasons your payment does not decrease as much as you thought it would.

The most common reason payments do not decrease as greatly is the amount of the USDA Guarantee Fee that gets charged upfront. You do not have to pay this amount out of pocket; however, it gets rolled into your loan amount. It is 2% of the loan amount, which can add a significant amount to your loan, depending on the outstanding loan balance. Typically, though, the $50 lower payment and 1% interest rate decrease are not hard to achieve.

You Must Refinance into a USDA Loan

The final requirement is an obvious one for the USDA Streamline Refinance. You must refinance into another USDA loan. This means you cannot refinance from a USDA loan to an FHA or conventional loan and use the streamlined process. Refinancing from USDA to USDA is the only option.

The major USDA Streamline guidelines are much simpler than the guidelines for any other refinance. Even though you have to pay the guarantee fee again, you still have many benefits to reap by using the streamline program. If you want to save more money every month or pay more towards your principal than interest, the USDA Streamline Refinance can help you achieve your goals. Talk to a few lenders to see the various interest rates and closing costs offered and then opt for the lender that offers you the best deal on your refinance!

The post What are the Major USDA Streamline Guidelines? appeared first on Arizona Mortgage Team.

The USDA loan charges two fees: the upfront guarantee fee and the USDA monthly guarantee fee. Both fees help keep the USDA funded so they can continue to guarantee loans for low to moderate income buyers. The good news is that the monthly fee is being reduced from 0.5% to 0.35% as of October 1^st of this year. Regardless of the amount of the fee, let’s look at how it is calculated.

The USDA Monthly Guarantee Fee Calculation

The USDA monthly guarantee fee calculation is based on the average unpaid principal balance for the life of the loan. The fee is calculated every twelve months and billed accordingly. It starts off being calculated based on the loan amount on the mortgage note and continues to be charged for the life of the loan or until the loan is paid in full, whichever occurs first.

The average annual unpaid principal balance for each year can be found on your amortization schedule that you receive at the closing to help you figure out what you will have to pay. Typically in the first few years of the loan, your average annual unpaid principal balance will remain fairly stable as you typically pay a lot more interest than principal in the first few years of the loan. Because of that, you will not see a dramatic drop in the amount of the monthly guarantee fee that you must pay. As you make your way further into the loan, however, you will see a drop in the costs, saving you even more money on this loan program.

A Real Life Example

Let’s look at a $100,000 loan as an example. In that first year, you will only pay a small amount of principal, which will bring your average for the year at $99,443. This $99,443 amount is used to calculate your monthly guarantee fee. At 0.50%, you would pay $497 per year or $41.41 per month. As of October 1^st, on the same loan, you would pay $348 per year or $29 per month.

As the years progress, your average outstanding balance will decrease and your payments will go down accordingly with each new billing. You can calculate the amount of your future payments based on your amortization schedule if you want to see how it would play out for your exact loan.

Potential Changes

Of course, things could change throughout the course of your loan. The annual guarantee fee amount could change, as it does often or you could decide to refinance your loan. If you refinance, you are starting back at square one, where your monthly guarantee fees will be high again. They will decrease as you continue to pay the loan down, but just keep in mind that the amounts will increase when you start the loan all over again.

If you are strictly refinancing to lower your interest rate, as is possible with the USDA streamline refinance loan, you will likely not change the monthly guarantee fee by much since you are not taking out any additional principal, with the exception of any closing costs that you roll into the loan to make it more affordable to refinance.

The USDA monthly guarantee fee is not something that can be negotiated or worked around; you must pay it on every USDA loan. It is a fairly affordable charge that is less than any other loan program would charge, which helps to make this loan continually more affordable and attractive for first-time homebuyers as well as homebuyers that are within the low to moderate income categories.

The post How is the USDA Monthly Guarantee Fee Calculated? appeared first on Arizona Mortgage Team.

If you are in the market to purchase a rural home, you have two options: a home that is for sale by owner/realtor or a home that the government owns. USDA foreclosed homes are the homes that the government owns. They are the loans that previous homeowners defaulted on their USDA loans and the government took possession of them. They are also the homes that the government is trying to get rid of so that they can recoup their investment in order to guarantee future USDA loans. Purchasing a foreclosed USDA home works much the same as purchasing a VA or FHA foreclosed home and is a lengthy process.

Locating the Right Property

The first step in purchasing a USDA foreclosed home is to find the one that is right for you. Finding information about the houses that are available can be a little tricky. The best place to start is the USDA website where they list the properties that are in foreclosure. Once you have the list, you can read the housing descriptions available on the website. From there, it is recommended that you contact the local USDA office that is listed on the housing description to get more details, including the sale date for the home. Every office has their own requirements, so contacting the office handling the case is the best option for success.

Bidding on the Home

If you decide you would like to purchase a foreclosure USDA home, you will have to attend the sale for the home. This is an auction type sale that occurs on a specific date. They usually occur in person but are sometimes held online as well. If you attend a live auction, you will be there with other potential buyers wishing to bid on the home as well. Generally, with USDA foreclosed homes, the highest bidder wins the bid. When you attend a sale, you should plan to pay for the home as instructed if you were to win the bid. The regional USDA office handling the sale will be able to tell you the amount of money you need to bring in the form of a cashier’s check or money order to get the bid as it is a percentage of the purchase price of the home.

Every home sale works a little differently, so it is important to get in touch with the Field Office to make sure you know all of the details. Most homes are sold “as is” which means you get them in the condition they are in. Some offices allow a walkthrough of the home a week or two before the auction, so make sure you know the details of the sale to see if this is an option for you.

Obtaining Financing for USDA Foreclosed Homes

Once you win the bid, you have to secure financing for the USDA foreclosed homes. USDA financing is fairly easy to obtain, especially if you already went through the pre-approval process, which is recommended in order to get the process moving along.

Obtaining a USDA loan is simple as long as you meet the income requirements. If you make too much money, USDA financing will not be an option, which is why getting pre-approved is a good idea. Once you know how much you can afford and that the USDA will provide financing, you can confidently bid on the property.

The USDA loan processing works much the same as any other loan. You have to provide income, employment, asset, and credit documentation to the lender. They will then determine if your credit score, debt ratios, and income qualifications meet the USDA requirements. Because the USDA loan is for lower income families, the guidelines are fairly reasonable, making it easy to qualify.

Once the loan goes through underwriting, an entire USDA package gets sent to the field office. This is when the USDA ensures that your income and credit qualifications meet the USDA requirements. Typically speaking, the minimum credit score approved for a USDA loan is 640, but if you have special circumstances, an underwriter can manually underwrite your loan.

Once the loan comes back from the USDA approved, you can close on the loan. At the closing, you will take possession of the title and have access to the property which is now yours!

The post How to Purchase USDA Foreclosed Homes? appeared first on Arizona Mortgage Team.

Investment property cash flow is the oil that keeps the financial engine of rental property running. It should be a top priority whenever you invest your hard earned money in rental property. Cash flow will ultimately determine the level of success you achieve with owning and operating a rental property. So, let’s take a look at why cash flow is “king of the hill” with rental property.

Basically, there are four ways to make money owning rental property:

• Positive Cash Flow
• Market Value Appreciation
• Amortization of the Mortgage, and
• Tax Savings

Positive Cash Flow

At the top of the list is positive cash flow. If the gross effective income of the building (after vacancies and collection losses are factored in) exceeds all of the operating expenses and mortgage payments, then the income that is left over is your positive cash flow. This is the financial foundation that supports your entire investment.

If this number is negative, with expenses and mortgage payments exceeding income, then you will have to take money out of your own pocket each month to support the property. And that my friend, could lead to problems of potential foreclosure on the property. With this threat on the radar screen, it’s easy to see why investment property cash flow is so important!

Appreciation

It’s well known that many rental property investors count heavily on appreciation while placing little emphasis on investment property cash flow. This is really gambling or speculating, on the direction of the real estate market. The fact is that no single person has a crystal ball telling them how much, and how fast, real estate prices will appreciate.

While it is true that history has shown us that real estate appreciates over time, the truth is that no one knows exactly how it will behave in the short term. Appreciation, therefore, should be thought of as “icing on the cake”.

Don’t fall into the trap of investing in rental property by speculating that prices will keep rising. Rarely does it pay to purchase a negative cash flow property with the hopes of selling it quickly at a price high enough that more than compensates for your out of pocket negative cash flow – that’s high stakes gambling my friend!

Amortizing the Mortgage

Amortizing the mortgage simply means paying it down. By lowering the mortgage principal balance, you’ll gain a larger piece of ownership, or equity, in the property. While it is true that the initial years of making regular mortgage payments reduce the principal balance very little, there are ways of speeding up this trend.

Making some additional mortgage payments each year, or taking out a shorter-term or bi-monthly mortgage will amortize the mortgage faster. This principal reduction of the mortgage acts as a nice complement to investment property cash flow.

Tax Savings

It’s a shame that investment real estate does not offer the same tax advantages that it did before the Tax Reform Act of 1986, but it still offers some very powerful ways for you to save money on your income taxes. One of the most significant ways of lowering your income taxes is through “depreciation” of the property. The tax code allows rental property owners to deduct from their income an annual amount of depreciation of their rental property. This accounts for the property “wearing out”.

Depreciation for residential income property can be taken for up to 27.5 years of ownership. The tax savings realized from depreciation can be substantial, and is an added bonus that complements investment property cash flow.

The bottom line is that cash flow is king. It takes time and effort to build it – it’s no different than building a regular business. The surest way to build cash flow is through buying neglected property cheaply, making improvements yourself (sweat equity), and then managing its rental cash flow conservatively.

When buying a neglected property, never offer a price based on any projected rents that either a real estate agent or seller specifies. If you cannot purchase the property based on its existing rents (which should be verified), then it’s best to walk away from the deal.

The post Financial Benefits of Owning Rental Properties appeared first on Arizona Mortgage Team.

While the advantages of Reverse Mortgage are well known, prospective borrowers are often unaware of its disadvantages. The following article should help you get a clear view of this unconventional home loan:

Reverse Mortgages are Home Equity Loans and they will reduce the amount of equity you have in your home.

If you are in the market for a Reverse Mortgage, you probably are not trying to preserve long-term equity, so this may not be a specific concern.

Reverse Mortgages are currently insured by the Federal Housing Authority (FHA) so the collateral for the loan, your home, must meet the HUD minimum property guidelines.

This is particularly difficult in some instances such as with mobile homes and condominiums.

Reverse Mortgages are difficult to obtain if your loan closes with your property in a trust.

In most cases, trusts will need to be revised to reflect specific language allowing the reverse mortgage and all of the beneficiaries must be age 62 or older. Trust revisions are usually done by estate planning firms and can be costly.

Reverse Mortgages can only be refinanced under special circumstances, showing a specific net benefit to the borrower.

Once you have a reverse mortgage, you may have difficulty refinancing it until your property value increases at a higher rate than your loan interest rate.

Reverse Mortgages are difficult to obtain on newly purchased homes.

Most lenders want to see a 6-month chain of title in order to make certain there is no straw-buyer or loan fraud involved.

Reverse Mortgage counseling can be misleading.

Although counselors today are much better trained than ever before, there is still the occasional slip of the tongue and misinformation regarding program benefits and illegal lender recommendations.

Reverse Mortgages are very different than traditional mortgages and mortgage professionals are usually not the best reverse mortgage consultants.

Reverse mortgage consultants with a background in financial planning do the best job in the reverse mortgage business.

Once you have a reverse mortgage, you cannot get a second mortgage or equity loan

Reverse mortgages are required to be the only mortgage on the title at any given time. If your home equity increases after the reverse mortgage, your only option to access more cash is to refinance the reverse mortgage.

Today’s fixed rate Reverse Mortgages usually require a lump sum payment at closing.

Managing a large, six-figure sum of cash can be a daunting task for some of us. The risk of theft, fraud or mismanagement is always greater with large sums of cash.

Reverse mortgages require the borrower(s) to live in the home as a primary residence.

In some cases, there may be a decision made to buy another home or move into other living arrangements. Under the terms of the Reverse Mortgage agreement, the borrower(s) must pay back the loan in full (usually by selling the home) if they no longer plan to live in the home as a primary residence. Additionally, Reverse Mortgages currently cannot be done on second homes and other property that is not deemed a primary residence.

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The post What are the disadvantages of a Reverse Mortgage? appeared first on Arizona Mortgage Team.

If you’ve talked with several banks and credit unions and still can’t find a lender, you may be almost ready to give up on the idea of financing you real estate investment. These days, mortgage loans can be hard to find, and they tend to go to the borrowers with the best credit ratings.

Before you relinquish your real estate dreams, you may want to consider another type of financing.

Hard Money Financing Can Help with Real Estate Investments

Hard money loans are significantly different from traditional mortgage loans. First, hard money loans are entirely based on the value of the asset you’re purchasing. Your credit score doesn’t matter, because if you walk away from your mortgage, the lender will simply foreclose upon the property to get his or her money back.

Hard money loans are a risky proposition for a lender in today’s rapidly shifting real estate market. Banks and credit unions avoid these types of investment. Only private lenders provide hard money loans. To offset some of the risks they are taking, they charge high interest rates for the loan, usually anywhere from 12% to 20%. They also generally request a down payment of 30% to 40% of the property’s value.

Finally, hard money loans are short term loans, designed to get borrowers through a period of cash crisis or a period of transition.

Great Times to Use Hard Money Mortgage Loans

There are a few situations when hard money loans seem tailor-made to address your problems.

If you are in the business of flipping houses, for instance, most lenders will agree to loan you a percentage of what they anticipate the property value will be after renovation rather than what the property value actually is at the moment. This can help you avoid the high down payment mentioned earlier and sometimes even start you off with some of the money you need for repairs. Since you plan to renovate the property, sell it, and repay the loan before it comes due, you and the lender will both benefit from your investment.

Another excellent time to look into hard money loans is when you need a “bridge” loan. We live in a highly mobile society, and your job may require you to transfer from one location to another with very little warning. Ideally, you will sell your old house and use the proceeds to obtain a new one, but it doesn’t always work out that way. Sometimes, you find the new house of your dreams before the sale of the old house goes through. A hard money loan will enable you to acquire the new house and pay the mortgage off when the old house does sell.

Exit Strategies

Whenever you are dealing with hard money, it’s important to develop an exit strategy or a way to get clear of the loan when it reaches the end of its life. Most people either plan to sell the property before their loan term is over, or they plan on improving their credit scores enough to qualify for a traditional refinancing loan.

Hard Money Loan Process to Secure the Necessary Funds

A hard money loan is an asset-based loan that takes into account only the collateral offered. In real estate, the collateral is the value of the home you are purchasing. If you decide to seek a hard money loan instead of one of the traditional mortgage loans, take the following steps.

Consider the Amount of the Loan

Traditionally, hard-money loans cover only about 70% of the fair market value of the home. This means that you have to raise a down payment of at least 30%. The one exception is if you are planning to buy a distressed property, fix it up, and then sell it. In this case, you may be able to convince the lender to loan you 70% of the expected value of the home after refurbishment (ARV), which usually means you put no money down.

Find a Reputable Lender

Banks and other public institutions that issue mortgage loans do not supply hard-money loans. These loans usually come from an individual or privately-owned company who are willing to take a considerable financial risk to turn a handsome profit. You can find these private lenders through mortgage brokers, real estate investing clubs, and word of mouth. You can also look on the Internet, but it’s important to remember that many scams co-exist with genuine offers. Proceed with care.

Make Contact with Lender

Approach the lender with your proposal. Be ready to tell them the address of the property you want to buy, why you are seeking a hard-money loan instead of one of the more traditional mortgage loans, and what your plans are for the property. Since hard-money loans are short-term loans, generally lasting no more than a few months to three years, it’s also important to have an exit strategy in mind.

Work with a Local Lender

If you’re working with a national hard-money lender, he or she will probably want to run a credit check on you and look at your income profile, just as a bank would do. A local lender, on the other hand, will be more interested in the property you are buying and its fair market value or after refurbishment value. Some lenders want a home inspection to determine these numbers, but several have the experience and knowledge to take a look at the home themselves and get a feel for the figures. Working with a local lender usually makes the loan process go more quickly.

What to Expect From Your Loan

Your hard-money loan will probably have several features. First, as discussed above, it will be a short-term loan that will come due in a few months or years. Second, you can expect to pay a very high interest rate, usually 12% to 20% per year. Finally, hard-money loans all have very strict terms. If you do not abide by the terms exactly as they are laid out, the lender can foreclose upon your property.

A hard-money loan may seem like an easy way to get credit, especially if your credit score or your income is low. Before seeking a hard money loan, though, make sure you understand and can abide by the terms of the loan. You certainly don’t want to lose your property to foreclosure.

Finding a Reputable Hard Money Lender

Hard money loans are short-term, asset-based loans that take into account only the value of the property being purchased. Unlike traditional mortgage loans, hard money lenders do not care about your credit history, income, or ability to repay the loan from personal funds. These types of loans are often last-resort loans for borrowers in financial trouble who are trying to avoid foreclosure. Because of the high risk hard money lenders face of losing their investments, banks and other public financial institutions do not extend hard money loans. Most lenders are wealthy individuals or privately owned companies looking to make a quick profit. Finding the reputable lenders can be a challenge. These tips will give you a place to start.

Talk to Mortgage Brokers

Mortgage brokers are familiar with the hard money lenders in your area. They know who has been in business for a while, and who has the reputation of being fair and knowledgeable. A mortgage broker is probably your best starting point.

Search Online for Hard Money Mortgage Loans

Many companies that provide hard money loans advertise their services online. Since it is hard to be certain of the quality of such lenders, it’s a good idea to deal with a local individual or company instead of a national company. Ask the lender for references, and before signing any paperwork, check with the Better Business Bureau for complaints.

Check with a Local Real Estate Investing Club

Most cities have real estate investing clubs that attract all kinds of people interested in the real estate market, including lenders who provide hard money loans. Attend a few club meetings and do some networking so you know who the main players are. Again, it’s a good idea to ask for references and to check with the Better Business Bureau before making any final decisions.

Ask People You Know

with the housing market in crisis, you may very well know someone – a friend, family member, or co-worker – who has had to find a hard money loan to rescue his or her home from foreclosure. Ask that person who provided their loan and whether they would recommend the lender. Talking to acquaintances is helpful, because in addition to finding out which lenders to use, you can also learn about which lenders to avoid.

Check the County Recorder’s Office

Look at the public records for the names of individuals who hold mortgages but who are not the seller or obviously related to the seller of the property. If you find an individual who holds several mortgage loans, you’ve probably found a hard money lender. Contact the person for additional information about his or her services.

A hard money loan may be just what you need to save your home and give yourself a little time and space to get back on your feet financially. Ask around before selecting a lender and make sure you choose someone who is ethical and experienced.

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The post Finance Your Property Investments with Hard Money Loans appeared first on Arizona Mortgage Team.

A construction-to-permanent mortgage is a loan that enables you to obtain a mortgage before your home is built. It gives you the funds you need to have the home built and then continue to finance the finished structure. It differs from a standard FHA loan or even conventional loan because the home does not exist, so it will not pass an appraisal or inspection. During the initial construction phase, you pay strictly interest payments. Once the loan converts to a permanent mortgage, you then begin to pay full amortized payments as you would on any other mortgage type. Because of the different type of financing offered with this mortgage program, there are different disclosures required in order to proceed and abide by the mortgage laws.

Special Documents Required for Construction to Permanent Loans

Among the documents necessary for the FHA construction to permanent loan are:

• A rider on the standard mortgage note that states that any terms that are unique to the construction loan are eliminated once the loan converts to a permanent mortgage. Upon completion of construction, the permanent loan terms take over and the standard mortgage documents take precedence. Once this occurs, FHA insurance can be activated.
• A construction loan agreement must also be a part of the closing documents. This document should include all of the details regarding the construction, including the intended start and end dates. The document should also include all of the costs for the construction, including any special costs for the contractor. If you are building the home yourself, the document should detail the actual costs for building the home rather than the contractor costs.
• An FHA mortgage insurance disclosure that shows that the borrower understands that no FHA insurance is applicable until the construction is completely finished. A final inspection is required in order to allow the insurance to kick in, which the lender handles. In addition, if the certificate of occupancy has not been administered by the governing agency yet, insurance cannot kick in until that occurs.
• You must provide proof of ownership or purchase of the land that the home will be built on.

One or Two Loans

The most important thing you must determine before agreeing to a Construction to Permanent mortgage is whether it will be one mortgage or two. If there is just one mortgage, meaning that the construction portion of the mortgage flows directly into a permanent mortgage upon completion of the construction, only one set of disclosures are required at closing. These disclosures cover the entire process from construction to closing. If there will be two loans – one for construction financing and one for permanent financing, there will be separate disclosures and closings that take place for each phase.

What’s the Benefit of a Construction to Permanent Loan?

Because of the added disclosures and requirements for the construction to permanent loan, many people wonder what the benefits of such a loan can be. The following benefits apply to almost every situation where you are building your own home or overseeing the work of a contractor that builds your home:

• Fewer fees – Closing on the same property more than once means more fees. You not only have to pay the closing fees twice, but any other administrative costs as well as loan costs will be incurred twice. When you close one loan for the entire process, you only pay the fees one time because the loan automatically converts once the construction on the home is complete.
• Fewer headaches – You do not have to handle any of the money that exchanges hands as the home is built. The money borrowed for construction is placed in an escrow account which the lender disburses according to the predetermined schedule, which means fewer headaches for you.
• Inspections are done – The lender needs to have inspections completed in order to disburse funds, which means your house is under constant scrutiny, ensuring that it is built according to FHA guidelines so that you have no problems converting the loan to a permanent mortgage and activating the FHA insurance.
• Focus strictly on your home – With fewer financial issues to overcome and legal issues to contend with, you can focus on making choices for your new home, which most new homeowners enjoy much more than dealing with mortgage issues. Once the loan is closed, there is nothing that you have to deal with except choosing colors and options for your home.

There might be more documents required before and at the closing for a construction to permanent loan, but in the end, it provides many more benefits. With one loan to deal with, you have a lower chance of getting confused and messing up your financing options. In addition, the payments for the construction phase of the loan are basically just the interest component, which means they are much lower than your standard mortgage payment. This gives you the freedom to live somewhere else while the home is being built without feeling like you have to make two mortgage payments, putting you under too much stress.

If you close the permanent to construction loan with one closing, the process is done quickly, enabling you to focus on your new home. You do not have to worry about re-qualifying or going through another loan closing. Once it is done, you sit and wait for your home to be completed. If you use the FHA construction to permanent loan, the guidelines to qualify are flexible and the standards easy to meet. Once the FHA insurance kicks in, it means your home has passed all codes and inspections and you are free to live in your new, beautiful home without worry.

It is important to use a lender that is well versed in FHA construction to permanent loans to ensure that the process goes as smoothly as possible. Be sure to shop around with different lenders to see what options are available to you including the financing terms and interest rates. Some lenders only offer two-phase loans, while others are willing to close it all in one transaction.

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The post What Documents are Required for a Construction to Permanent Mortgage? appeared first on Arizona Mortgage Team.

The unique benefits offered to eligible veterans related to homeownership can be extended towards the purchase of a condo. You can avail all the VA loan benefits you are entitled to, even when buying a condo, provided it is a VA approved condo.

Condos offer a range of facilities that are generally not available in other types of residential properties. Most new and existing condominiums have a number of amenities and perks such as pools, gyms and clubhouses that are hard to find elsewhere. The security afforded by large condo communities is also highly desired by new home buyers.

If you are interested in obtaining financing for your new condo purchase through a VA loan, you need to make sure the condominium is VA approved. The changes introduced in 2010 have brought in significant changes to the process involved in VA condo approval.

VA Approved Condo Lookup

The VA website maintains an up-to-date list of all the approved condos that meet its requirements. You can perform a simple search and confirm the VA condo approval status instantly. There are a number of sites that regularly monitor the newly approved VA condos and present them in an easily accessible manner.

Is a FHA condo approval enough for VA loans?

The process involved in obtaining a VA condo approval is much different from the FHA condo certification process. Until very recently, a separate VA approval for condos was not needed as long as there was FHA approval in place. Condominium projects with FHA approval dated prior to December 7, 2009 can still satisfy the VA requirements for condos without any need for further processing. Even if a project has a FHA condo approval in place on or after December 7, 2009, a VA approval is mandatory. If any additional phases in a project have been annexed into a condo project on or after the stipulated date, the full review of all the documentation is needed to qualify as a VA approved condo. The same rules also apply to USDA and HUD approved condos.

VA Condo Approval Process

The VA condo approval process involves a number of steps and requires the submission of all the documents in proper format as required by VA. The total VA condo approval process can take 60 – 90 days from the submission of the full condo application to VA. While it is not mandatory to submit an attorney letter, it has shown to be effective in speeding up the entire approval process. A great thing about getting your condo VA approved is that it never expires once secured. Therefore, the added effort and costs can be easily justified over the long run.

VA Condo Eligibility Requirements

VA requires that the no less than 50% of the units in condo building or project be owner-occupied. This is a make or break condition when it comes to seeking a VA approval on a condo. VA also evaluates the delinquency rate when it comes to a HOA’s fees. VA requires that the arrears on HOA fees are below 15%.

If the condo you wish to buy is part of a newly constructed building, at least 75% of the units must be sold before VA can allow financing.

Condo Documents required for VA approval

The list of documents needed for VA approval of a condominium community can vary depending on the regional VA office processing your application. The guidelines for VA approval of a condo are not as detailed or structured as those involved in FHA approval process. Therefore, it may not be guaranteed that you obtain the VA approval in a timely manner. The final approval and duration will depend on  each condominium’s merits.

While nothing can guarantee an approval as each evaluation is done on a case by case basis, the following are some of the documents that are commonly required to process VA condo approvals:

• Master Deed (Should contain all declaration related to covenants, conditions and restrictions)
• HOA Articles of Incorporation
• HOA Bylaws
• HOA Budget Plan
• Unless self-managed, the agreement regarding the management is needed
• Income and Balance Sheet
• The official minutes of the previous two HOA meetings

If the condo has never been approved before by any of the other government agencies such as HUD, FHA or USDA, then it is very important that a Attorney Opinion Letter accompanies the approval application. The contents and the format in which this important piece of documentation needs to be drafted are clearly detailed in the Section B of Chapter 16.

Additionally, survey maps and building plans may also be needed. If there are any recorded amendments for annexation exist, then they must be added included too.

The complete list of VA condo approval documents are detailed in Chapter 16 of the VA Lender’s Handbook. (http://www.benefits.va.gov/warms/pam26_7.asp)

Working with your HOA

If the HOA of the condo doesn’t have an approval in place, you may need to initiate the process to be eligible for your VA loan benefits. The above mentioned documents are not as difficult to obtain as they may seem. HOAs are legally bound to provide copies of all the above mentioned documents upon making a formal request. Submit a written request for the required VA condo approval documents in a proper format and pay the appropriate fees.

VA loan financing for approved condos

As VA allows financing only on the approved condos on its roster, it’s important that you work with a knowledgeable lender that specializes in VA mortgages. They can perform the initial review of the condo’s eligibility and guide you in the appropriate direction.

This initial review phase can also be beneficial to you as it involves the assessment of your overall loan eligibility in terms of VA benefits, income, assets and other documentation.

The post Purchasing a Condo with VA Home Loan Benefits appeared first on Arizona Mortgage Team.