600 Billion Reasons We’re Headed for Great Things!

•December 6, 2008 • 3 Comments

spotlight

We’ve received some of the biggest news to hit newsstands in quite some time and it barely made the spotlight! News that the Treasury Dept has plans to purchase roughly $600 Billion in mortgage-backed securities should be posted on the front page of every news giant across the nation, but instead we see Somali Pirates & OJ’s sentencing… Granted, pirates & OJ do have a knack for capturing our attention on a celebrity level BUT…the Treasury news is news that truly has the potential to start a boom like no other!  Let’s decipher the $600 Billion…

 

Under this proposal, the Treasury buys mortgage-backed securities…why?  Because by purchasing the securities, it pushes rates down.  Right now, interest rates on a 30-year fixed rate mortgage are hovering around 6% and the goal is to drive them down to 4.5%!! 

 

If enacted, such a plan would create an unprecedented opportunity for anyone with stable income and decent credit score to refinance at a rate unseen since the early 1960’s…essentially creating the “mother of all refi-booms!!! 

 

Refinance boom aside, there are 2 major benefits to our economy:

 

1. Places IMMEDIATE cash in the pockets of our homeowners able to refinance to lower monthly payments

 

2. Lower interest rates = more Buyers flooding the market = halt of housing value decline

 

The goal is to drive mortgage rates so low that housing prices stop falling & actually start to rebound…all the while giving much needed cash flow to current homeowners able to refinance.  The trick, then, becomes truly being ready when the opportunity arrives.  It’s no secret that we’re currently in one of the most volatile markets ever, and it’s not uncommon to see a .75% swing in rates within a 24 hour period.  By preparing now, you absolutely set yourself up for success by being able to call your mortgage professional and say LOCK, LOCK, LOCK that rate, when they start falling!

 

In the midst of a recession…and, yes – it’s official, we’re in a recession…this is some of the greatest news we could have received! This has the potential to dwarf the boom of 2003 and give our economy the much needed shot of adrenaline we’re all hoping for and although we may be “officially” in a recession…you don’t have to participate! There is good news all around us, it just may not be on the front page…

 

For more information or to help prepare for the coming plunge in rates…email me & let’s get started.

 

Cheers!

 

 

Josh Perrington

1st Metropolitan Mortgage

 

Josh@1st-Metropolitan.com | www.1st-Metropolitan.com | 540.904.0842

 

2762 Electric Rd, Suite Roanoke, VA 24018

 

 

 

 

 

 

Renovation Loans 101 – Your Complete Guide to Understanding FHA 203k Loans

•November 29, 2008 • 2 Comments

If you’re reading this, your probably in one of the following stages in your life: Either you currently own a home & want to renovate, you’re thinking of buying a “fixer upper” as your home, you want to sell your house & buy a home that needs a little work, or your home is on the market, but it just won’t sell!

1st things 1st, we can help with all of the above, but let’s start by asking:

“What makes a Renovation Loan (FHA 203k) different from a Traditional mortgage?”   

A “Traditional Mortgage” is one that the lender only approves based on the current value & condition of the property.  If you find a home (foreclosure) that might truly be worth $300,000, but have arcommon-sense-scream2ranged for a purchase at $210,000 (great deal btw!) the traditional lender will only lend up to the $210,000 your contract price).  Now, say it’s not a necessary fix, but you want  to upgrade the kitchen & add new windows.  Even though there is already equity in the property, with a Traditional mortgage you would have to pay for the upgrades with your own money.  Common sense may scream “There’s $90,000 worth of equity in the property, why can’t I just include it in the loan?!?!”  The traditional lender doesn’t care…your contract price = the max loan amount.

Here’s the great part…using the same purchase scenario as above, a Renovation Loan (FHA 203k) WILL allow you to make all of the upgrades AND include them in your loan. A FHA 203k Renovation loan lends based on the AFTER-IMPROVED market value of your upgrades/renovation…not the current value.  This changes the game completely!!!  Instead of having to bring an extra $40,000 to closing (assuming that’s what the kitchen & windows cost), now it’s included in the loan and you keep your money in the bank!  Let’s talk about a few more real world examples…

I own a home, but want to renovate…  

Maybe you’ve been watching a lot of ABC’s “Home Extreme Makeover” and want to turn that old 70’s kitchen into the new bright, shining, stunning kitchen of 2008.  You want to knock a few walls down, replace the fextreme-makeover-home-edition-season-1looring with hardwood, new appliances, granite countertops, etc… You have primarily two options.  If you already have enough equity in the home, you can simply do what’s called a “Cash Out refinance” – which means we refinance the current mortgage and pull enough cash out to pay for the projected renovation…that simple.  But, what if you don’t have enough equity in the property to pay for the renovation? That’s where the FHA 203k comes in…  Say your home is currently worth $200,000 and you owe $190,000.  You only have $10,000 worth of equity ($200k – $190k) which is not nearly enough to cover the projected $50,000 (example) cost of renovating.  But, say the improvements will cause your home’s value to skyrocket to $270,000 once they’re complete, versus the current value of $200,000.  We would lend on the AFTER-IMPROVED value and simply include the cost of renovation with your current mortgage balance for a total loan amount of $240,000 (original balance of $190k + $50k improvements)…and now instead of having $10,000 of equity…you have $30,000 (new value of $270k – new mortgage of $240k)!! 

My home’s on the market, but it just won’t sell…photo-sold

Often times, when prospective buyers are walking through “Open Houses” or visiting potential new homes they are stalled by the blemishes or older characteristics…even though the property may be wonderful for them.  It’s difficult for them to maybe see the true potential simply because the windows need to be replaced, or the HVAC system is old, maybe the plumbing needs updated, or even the roof needs replaced – but the current seller may not have the funds needed to make those improvement prior to selling. 

Think about your home through the eyes of a new buyer… Are there traits that may need to be updated?  If so, have your Realtor partner with an FHA 203k Renovation expert to draft a glimpse of what the property could be like AFTER the improvements, that a prospective buyer may want, are complete.  Show them the pot of gold at the end of the rainbow!  Educate the buyers that their improvements CAN be included now in their purchase!  YOU WOULD BE AMAZED AT HOW MANY REALTORS DO NOT KNOW THIS OPTION EXISTS!!! 

I’m thinking of buying a “fixer-upper”…

housefront1_150pxJust as we talked about above, this is a great option!  With a traditional mortgage, you would have to pay for any of the improvements with cash out-of-pocket in order to buy a property that needed some TLC. 

 

 afterhousefront1_150px

Now, instead of using out-of-pocket cash to make the improvements, use the Renovation Loan to purchase & allow the equity to work for you!

        

What can the FHA 203k Renovation Loan be used for?

There is a LONG list of eligible improvements allowed for the 203k.  Pretty much, the only things that wouldn’t be allowed are luxury items that can’t be included as a permanent piece of the property (i.e. 60” Plasma TV’s, etc…).  But, here are a few that can be included:

  • Bathroom remodels
  • New Siding
  • Attic build-outs
  • Adding a 2nd floor
  • Granite countertops
  • Bedroom Remodels
  • Upgrading HVAC
  • Going GREEN! (Solar panels, energy efficient appliances, etc…)
  • Many, Many, Many MORE!!!!

Now, What’s the Loan Process Like?

chuck-norris-approvedApply for Pre-Approval!!!! I honestly can not stress this step enough.  I’ve seen it many times…couples get excited about renovating, they’ve designed the kitchen, picked out the appliances, selected the contractor…only to then find out they can not be approved.  Granted, the requirements are less stringent than a conventional mortgage…but that does not mean everyone will be approved.  So please, do yourself a favor & talk with a Mortgage Planner first…plus…I like joining in on the fun of watching you go through the designing process… J

Here’s what needs to happen (preferably in this order):

  • Call Josh Perrington @ 540.904.0842 or email Josh@1st-Metropolitan.com to Apply for Pre-Approval
  • On-site consultation with Appraiser, Contractor, & Mortgage Planner
  • Receive bids & Architectural designs (if needed)
  • Property Appraised
  • Loan submitted, underwritten, & conditions cleared
  • Loan closed & repairs begin
  • Total Loan Time: 30 – 45 Days!!!!

The process for qualification, approval, and fund disbursement is really quite easy on your part.  If you look at the process through the eyes of the lender, it becomes more of a common sense approach than anything else.  If you were the lender and planning to give money to a family, you would want to know that someone in that family has a stable job, has shown their ability to pay loans in the past, and has enough resources currently to stay on time with their payments.  That’s it! Obviously, there are a few other small items that would need to be addressed, but leave that to us…

Wrapping up…

This loan absolutely has the potential to create personal wealth and a huge amount of equity from day one.  Even more significant, it gives a sense of hope & renewal to families in an economic environment that does not foster such characteristics at the moment.  I’m passionate about helping others turn the house they have…into the home they want!

Feel free to call or email us anytime with questions…we’re here to help, and remember, a pre-approval is always free!

Cheers!

Josh Perrington – FHA 203k Renovation Sr. Mortgage Planner

Josh@1st-Metropolitan.com | www.1st-Metropolitan.com | 540.904.0842 | Roanoke, VA

Ensemble Revealed!

•November 22, 2008 • Leave a Comment

en·sem·ble [ahn-sahm-buhl] “all the parts of a thing considered together”

When you think of the word ensemble, what comes to mind?  How wonderful it sounds when all the elements of an orchestra come together? The Cello, Piano, Violin, Flute all blending together…  Or, would it be how amazing it sounds when three completely different voices come together to form one harmonious chord?

What if…when you hear the word ensemble something new & refreshing comes to mind…  Something that gives life back to your slumbering mortgage and gives you a freedom never dreamed possible.  Ensemble embodies the beauty of pulling together resources today, to help accomplish your goals for tomorrow.     

Your tomorrow…begins today…

          

Ensemble East West image

The concept is surprisingly simple.  Ensemble combines all your checking, home loan and home equity line accounts into one master “loan sweep account” that allows deposited cash to be placed against the loan balance each day in order to save mortgage interest.  That’s it!  This simple change allows you to better leverage your cash flow, potentially saving you thousands in interest over the next decade.  And, your funds remain available 24/7, just like with your old checking account today. 

– Your income lowers your monthly balance.
– The lower balance saves you interest.
– The saved interest becomes extra principal payment.
– This further lowers your balance, saving more interest.
– This frees up even more money to reduce principal.
– This cycle repeats itself each month, compounding your interest savings
  and accelerating the reduction of your debt. 

Traditional mortgages make it easy to get into debt; Ensemble gives you – the borrower – the power to reduce your debt more aggressively.  Ensemble is able to help reduce debt more quickly, simply by putting all of your personal income to better use.

Mortgage interest typically consumes about half of the average American’s net income, for decades at a time. With Ensemble, paying less interest will allow you to reach your financial goals faster. Whether you want to use those interest savings to pay your home loan off sooner, or keep your equity leveraged and reinvest those savings in higher-yielding investments…saving interest…is always in your BEST interest.

Combining your main personal cash management tools into one master account relieves you of the need to track money transfers manually. Once the account in setup, transfers from your loan account happen automatically.  So does your interest savings from your positive cash flow.  And when you need cash for investments or expenses, it is quickly available via check, electronic transfer, ATM withdrawal, or debit card. Nothing could be simpler! 

Discover how the power of your own cash flow could significantly accelerate your home loan’s pay down, saving you thousands in interest and getting you free-and-clear of mortgage payments years ahead of schedule, without demanding any change in your current spending habits.

Click here – for your FREE assessment & to learn how Ensemble may benefit you personally. I would love to hear from you!

All the best!

Josh Perrington – 1st Metropolitan Mortgage – Roanoke, VA – 540.904.0842

“Wake your mortgage up…it’s time to get to work!”

www.1st-Metropolitan.com | Josh@1st-Metropolitan.com

$8,000 New Homebuyer Tax Credit – Cliff Notes version…

•March 11, 2009 • Leave a Comment

There has been much speculation surrounding the topic of the $8,000 Tax Credit for 1st Time Homebuyers. Let’s set the record straight:
 

2009 American Recovery and Reinvestment Actpresident-obama-signs-the-american-recovery-and-reinvestment-act
$8000 Tax Credit

A refundable first-time homebuyer tax credit of up to $8,000 is the centerpiece of housing incentives found in the 2009 American Recovery and Reinvestment Act.

The new credit is designed to boost sales in the nation’s sagging housing market by offering a strong incentive to first-time homebuyers. Lawrence Yun, chief economist for the National Association of Realtors, predicts 300,000 home purchases will be made in 2009 as a result of the tax credit.

The new credit improves on a first-time homebuyer credit passed in 2008. That credit had to be paid back over a period of 15 years, making it more of a loan than a true credit.
The greatest part of this tax credit is that homebuyers can take the credit on their 2008 tax return even when they have purchased the home in 2009. Homebuyers can take advantage of this filing exception in one of three ways:

1. Closing on the home prior to April 15, 2009
2. Getting an extension to file taxes later in the year or
3. Filing an amended return.

Specifics are below:

· The Tax Credit is for up to 10 percent of the purchase price, up to a maximum of $8,000.

· For example, a buyer of a $150,000 home could receive a tax credit of a maximum of $8,000, while a first-time buyer of a $70,000 home would be eligible for a tax credit of $7,000.

· The Tax Credit does NOT have to be repaid unless the home is sold within three years.

· Applies only to first-time homebuyers, defined as those who have not owned a home within the previous three tax years.

· The Tax Credit is available only for homes purchased between Jan. 1, 2009, and Dec. 1, 2009.

· Restricted by income; The Tax Credit phases out for individuals with an adjusted gross income of $75,000 or above and for married couples with a combined adjusted gross income of $150,000 or above.

· The credit can be taken on 2008 taxes even when the purchase is made in 2009.

Until next time…
– Josh

PS: We work with many of the Roanoke area’s most credible Realtors. If you need help finding a Realtor – feel free to let us know & we can help suggest a few we would recommend…

 

Mortgage Rates FALL…and There IS Money to Lend

•December 12, 2008 • Leave a Comment

Fall, is an understatement…plummet might be more appropriate. This week has definitely been one for the books… If you haven’t heard, mortgage rates have taken a serious dive & are now hovering around 4.75% for a 30 yr fixed…how insane is that!?!?  They were just @ 6% a few weeks ago.  And why isn’t this plastered all over the news?  See my post, for a glimpse of things to come: “600 Billion Reasons We’re Headed for Great Things!”

Just this morning we helped one of our Roanoke, VA clients consolidate a few credit cards, personal debts, and her mortgage for a monthly savings of $836! The exciting part isn’t the fact they’re saving money (maybe it is)…it’s the financial plan we’ve help create to get them through retirement & their children to college.

Call or email & let’s grab coffee to talk about how the market affects you.  As always, we’re here to help…

Cheers! – Josh

P.S. – Pass the word…the market’s changing! 😉

Widow Calls Reverse Mortgage a Blessing

•December 1, 2008 • Leave a Comment

WDBJ 7 (Roanoke, VA) posted this story a few month’s ago, which shows one women’s perspective on using her Reverse Mortgage to help pay keep her home & continue to pay for her medical expenses, payoff bills, and make home repairs. Enjoy!  

Widow calls reverse mortgage a blessing

News7’s Hollani Davis caught up with a 75-year-old widow who calls her reverse mortgage a blessing, and wants to clear up the misconception that it’s the government’s way of trying to take your home. 

“After you work so long and so hard,” said Mary Clark. 

For Clark, the thought of losing or selling the home she’s lived in for 44 years was scarier than applying for a reverse mortgage. 

The idea of using home equity to pay off a current mortgage, make home repairs or pay off bills is becoming more popular with older Virginians.  The only major requirement is you have to be at least 62.  The amount you can qualify for depends on your property value and the current interest rate.

Experts say one drawback with the reverse mortgage is that the up front expenses are typically high.  And by drawing out equity, parents aren’t leaving much of a legacy for their children.

In Clark’s case, she was able to set aside the lump sum from her loan to help with medical and other monthly bills.  That’s the peace of mind she’s giving her children and herself.

“It’s a relief.  A big relief to me,” said Clark. 

Whether you decide to take a lump sum or have your money divided out monthly, that’s on you.  The best advice from experts though is to look at your financial situation.

 

 

Over the Age of 62 and Need More Income? A Reverse Mortgage just might be the answer… – Roanoke, VA

•December 1, 2008 • Leave a Comment

A recent report by the Urban Institute titled “How Much Could Reverse Mortgages Contribute to Retirement Incomes?” states that homeowners over the age of 62 could see an 18% increase in median annual income just by using an annuity-type Reverse Mortgage.  Homeowners over the age of 82 could see increases as much as 36% based on 2006 home values.

 

The report took a conservative approach and used interest rates in effect March 2008 & did not use the newly instated $417,000 nationwide lending limit.  Using the older limit of $362,790 and accounting for a possible 10% drop in home values they used $124,500 as the median household equity to arrive at roughly a 16% gain in income.

 

What does all of this mean?older-couple-reverse-mortgage

 

Simply put – it means that by using the annuity-type feature that is provided with a Reverse Mortgage, the homeowner is able to receive additional non-taxable “income” monthly.  This option is not for everyone, but could quite possibly provide a much-needed boost to a homeowner’s financial situation that may be above the age of 62…and have seen a recent sharp decline in their retirement assets.

 

I would absolutely suggest consulting a licensed Financial Advisor, prior to making any decisions regarding a Reverse Mortgage.  We work very closely with the area’s leading financial experts and would be happy to arrange a meeting. Simply click here to request an introduction.

 

As always, the consultations are free and tend to provide a wealth of insight into the possibilities that lay ahead.

 

If you would like more information as to how a Reverse Mortgage may benefit you in this market, please feel free to call me directly at (540) 904-0842 or email me at Josh@1st-Metropolitan.com.  We look forward to helping.

 

Cheers!

 

Josh Perrington – Reverse Mortgage Specialist

1st Metropolitan Mortgage – Roanoke, VA

 

www.1st-Metropolitan.com | 540.904.0842 | 2762 Electric Rd, Roanoke, VA 24018

How to Renovate Foreclosed Homes – Roanoke, VA

•December 1, 2008 • Leave a Comment

You probably know how the process usually works when purchasing a home with a traditional loan. Once the buyer finds the home they want, it’s appraised – then inspected. The lender oForeclosed Homenly approves the loan if the property meets the requirements in value AND condition. In the case of foreclosures, usually the appraised value will be much higher than the selling price, mainly because the seller simply needs to get out from under the debt. So…what do you do when the home won’t pass inspection?

Unless you have an endless supply of cash lying around…start looking at the next best thing…a Renovation Loan (FHA 203k)!!

In the current market many foreclosures sit on the market in disrepair due to neglect. Those properties are considered poor collateral that lenders would normally they’d prefer not to lend on.  However, for Renovation loans the loan is based on the after-repair value (not current value) and includes an escrow account to complete the repairs needed in order to bring the house to a condition that lenders prefer. This means that the current condition of the property is not as important as the condition of the property after the renovation is complete. This provides an outlet to purchase dilapidated properties, many of which have spent extended periods on the market due to the lack of availability to traditional financing, and solves the problem that most lenders face when dealing with property in disrepair. What this means to the home buyer is generally a significant discount to “as-is” value and, quite often, a fantastic deal on the house.

Now, there are 2 types of FHA 203k Renovation loans…how do you know which to choose? 

money_treeIf your repairs DO NOT require structural repairs OR they are less than $35,000, then you would want the loan known as a Streamline FHA 203K. With this loan you will have two draws (cash disbursements) after closing. Generally, the lender will release 50% upfront and 50% when the work is completed. On most of these the lender will require a final inspection to make sure the work is complete, but on some of the more simple renovations you can provide receipts showing materials have been purchased and that will be sufficient.

The other type is for those homes needing structural repair OR they are over $35,000. These are known as full FHA 203K and the process entails a little more effort.  Many times, when more extensive repair is involved, it’s wise to involve an architect and get architectural drawings so the contractor bids and appraisal are as accurate as possible.  A HUD approved 203K consultant will also be assigned to help determine repairs and administer draws.postit buy now

Essentially Renovation Loan products can establish equity for the future in the home that is being purchased. While the market is low, BUY these homes at a ‘bargain’ price, renovate it, and then enjoy the financial rewards it will provide when the market comes back.  As the property values recover, your home equity will increase substantially.

 

We take great joy in helping assemble your renovation team and watch you take advantage of the opportunities today’s market has provided.  Feel free to call or email anytime & let’s get to work!

Cheers!

Josh Perrington – FHA 203k Renovation Sr. Mortgage Planner

Josh@1st-Metropolitan.com | www.1st-Metropolitan.com | 540.904.0842 | Roanoke, VA