federal reserve

Federal Reserve increased interest rates

Federal Reserve increased interest rates – first time in nearly a decade

The Federal Reserve increased interest rates Wednesday afternoon for the first time in nearly a decade.

As expected, the Fed announced that it would increase its benchmark rate by one quarter of a percentage point. Investors and economists have been speculating about the moment, which could have huge implications for the economy and for consumers, for years.

The effects of the rate increase won’t be felt overnight. “This one change will, in the larger scheme of things, be unlikely to make a dramatic impact on what consumers will feel,” said Doug Duncan, chief economist at the mortgage giant Fannie Mae. But because the short-term rates controlled by the central bank can ultimately affect the rates charged on credit cards, loans, savings accounts and other financial products, it’s likely that the move will eventually hit your wallet.

The central bank has kept its benchmark interest rate near zero since December 2008 in an effort to stimulate the economy and restore confidence in financial markets. By keeping rates low, the Fed made it cheaper for consumers to borrow money, encouraging them to spend more and increasing demand for goods. And driving down interest rates on low-risk products like bonds and savings accounts was supposed to encourage people to invest their money in stocks and other markets.

Investors and economists will now watch to see how quickly the Fed follows up with other rate increases. (Expectations are that officials will move slowly and increase rates by about one percentage point by the end of next year.)

How much you’ll feel the change will vary based on the types of loans you have and where you store your money. Here’s what you should keep an eye out for now.

Mortgages

This increase in the short-term rates controlled by the Fed could push up yields on the long-term bonds used to set mortgage rates. That could lead to higher borrowing costs for home buyers, but it’s not guaranteed. The 10-year Treasury bonds that directly affect mortgage rates are influenced by multiple factors, including inflation expectations and the global economic outlook. That means mortgage rates could actually come down even as the Fed is increasing short-term rates.  Indeed, when the central bank began increasing rates in 2004, mortgage rates actually dropped over the next several months.

But when it comes to financing a house, even small interest rate changes can add up. Say you’re buying a $200,000 house, and you have a 30-year mortgage. At 4 percent, your monthly payment will be $955. Bump it up to 4.25 percent, and your payments will jump almost $30 a month, to $984, said Michael Fratantoni, chief economist at the Mortgage Bankers Association. Over the life of the loan, that could add another $11,000.

By increasing the total cost of buying a home, higher mortgage rates could also reduce the number of people who qualify for loans. Lenders are required to compare a person’s potential debt load to their income and some people who qualify for loans under today’s rates may not be eligible if rates go higher. For instance, an analysis by Realtor.com found that if 30-year mortgage rates rose by half a percentage point, as many as 7 percent of people who applied for a home loan would not get approved because of the rate increase.

Auto loans

Auto loans are more directly affected by the benchmark rate controlled by the Fed.   People who already have cars and are making payments on fixed rate loans shouldn’t be affected by the rate hike. But those still shopping for cars may face higher borrowing costs on new loans.

The higher rates may increase borrowing costs and make it more difficult for them to afford a car loan, which could hurt sales. For instance, if interest rates suddenly increased by one percentage point, the higher borrowing costs could cause annual auto sales to drop by 3.25 percent, according to a report by Adam Copeland, a research officer for the Federal Reserve Bank of New York, George Hall, an economics professor at Brandeis University and Louis Maccini of Johns Hopkins University. (Federal Reserve Chair Janet Yellen has hinted that any rate increase would be gradual, about one percentage point each year.)

It’s not clear though how the rate increase will affect car prices. The higher interest rates could make it more expensive for dealers to hold inventory of unsold cars on their lots, write Copeland and the other researchers. Some dealers may roll out more discounts and promotions to lower prices and encourage sales. But others may reduce their supply, which could increase prices, they say.

Credit cards

Interest rates charged by credit cards and other lines of credit may increase “virtually in lockstep” with the rate hike from the Federal Reserve, said Greg McBride, chief financial analyst for Bankrate.com. Loans with variable rates, such as credit cards and home equity lines of credit, are directly tied to the benchmark interest rate that is set by the Fed.

While the first rate hike may not be much of a problem for people trying to paying off credit cards, it could become tougher for them to make progress as those rates continue to creep higher, McBride says. That would increase interest charges, requiring consumers to shell out more money before they can be debt free.

Plus, the interest rate increase may cause some banks to cut back offers for zero-percent credit cards, which can help people lower interest costs while they pay off their balance, McBride says. “Your best defense is a good offense,” McBride said. “Pay down your credit card debt as aggressively as you can. Do it now while rates are low.”

Saving rates

After years of near-zero yields on savings accounts, this rate increase from the Fed could be the first good news that ultra-conservative investors have gotten in years, said Cameron Hinds, a regional chief investment officer at Wells Fargo Private Bank. Such rate hikes typically lead to more attractive yields on savings accounts, such as CDs and money market accounts.

But banks may be slow to raise yields on saving accounts this time around, economists say. Many banks have been swimming in cash since the recession hit, and with rates low, they’re having a hard time earning a profit on those deposits, said Mark Hamrick, senior economic analyst for Bankrate.com. With yields on money market accounts near zero, some banks have had to waive fees to keep account holders from losing money.

As a result, some banks and credit unions may keep interest rates on savings accounts low while they slowly increase rates on mortgages, auto loans and other credit lines — essentially using the higher interest rates as a chance to recover those fees so they can increase their profit margins. In the meantime, savers should keep shopping around with banks, online banks and credit unions to find better rates on saving accounts, McBride said. “Consumers who just sit back and expect higher rates to fall in their lap on their savings account — they’re going to be disappointed,” he said.

Investment markets

Stock markets have been mostly climbing higher for six out of the seven years since the Fed has kept interest rates near zero.  Some investment managers worry the market is higher now than it would have been without the Fed’s help, setting them up for deeper losses should the market collapse.

Stock markets could be volatile in the months as they adjust to the reduced stimulus, but any trouble may be temporary, since Fed officials have been hinting for months that the rate increase would happen soon, said Edward Campbell, a portfolio manager at QMA, a business of Prudential Financial.

Still, stock market gains may be weaker going forward, said Jeff Porter, a financial planner in McLean, Va., predicting that annual stock market gains might average in the low single digits, as opposed to the high single digits seen in recent years.

As with any change in the economy — at home or abroad — financial analysts advise investors to keep their eyes on their long-term goals. Whatever market movement this rate increase or the next causes, it shouldn’t be more than a passing concern in the long run for a well-diversified portfolio. “Don’t let a single decision by the Fed drive your investment portfolio in the short run, irrespective of what the market reaction is,” Hinds said.

Article provided by: https://www.washingtonpost.com

2016 here we come! Let’s make it a great year and if you need any help with your mortgage, we’ll be right here to help you. 

Four reasons why 2016 is a good time to buy a home

2016 is a good time to buy a home – Don’t wait!

With 2016 fast approaching, now is the time for renters to get off the sidelines, start organizing their finances and take on the excitement of homeownership.

But given the recent history of the housing market and Americans’ increasing need to stay mobile, it is understandable that it can be nerve-wracking to invest your hard-earned money in a home.

However, unlike years past, all key economic indicators are ripe and there are two major changes to the mortgage process that help make 2016 a good year to buy a home.

1. Rental rates continue to rise

With the on-going low supply and high demand of rental units, rental rates are continuing to rise. In the last 12 months, 88% of property managers have raised their rent prices. And there is no sign of that stopping given that 68% of property managers predict their rental rates will rise again in 2016.

2. Interest rates are historically low

Freddie Mac’s latest survey of lenders shows little change in the 30-year fixed-rate mortgages, which averaged at 3.89% for the month of September compared to 4.16% a year ago. Low interest rates make home buying more affordable.

 

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3. Clear mortgage terms

The recent TRID announcement has mandated clearer terms at the closing table. For first-time homebuyers, this is a huge benefit because it will ensure there are no surprises at the closing table. These clear terms will help homebuyers better understand both their financial commitment and what is expected of them.

4. Down payment protection will be available

Writing a check for a down payment on a home is often one of the largest investments someone will make. Down payment protection is a new option that can give modern homebuyers the flexibility they need to more confidently and securely buy a home. When homebuyers put less than 20% down at closing, this kind of coverage protects their down payment just like private mortgage insurance protects the bank.

Given that the average employee tenure in the U.S. is 4.6 years overall, and 3 years for millennials, it’s understandable that the modern home buyer may be nervous to commit to living in one location for an extended period of time.

However, the current state of the market and these major mortgage changes will help to ensure that when life happens, the home buyer won’t be completely out of luck when it comes to protecting their nest egg.  

Sun American Mortgage Company has some of the lowest rates in town. Give us a call today to see what you can qualify for. Over 31 years in the business, with seasoned staff that have been here for 15 years or greater! 

(480) 832-4343

Article provided by www.housingwire.com

fixer-upper - kitchen

The Next Decade Could Bring Best Housing Climate In History

The Next Decade Could Bring Best Housing Climate In History

Following the worst years for the housing market that most Americans have seen in their lifetimes, the years ahead could actually bring some of the best years for the very same market. 

Based on market cycles, census data and other study factors, the Mortgage Bankers Association (MBA) delved into the housing outlook over the next decade to find that “By 2024, demographic and economic changes will bring what could be one of the largest expansions in the history of the U.S. housing market — 15.9 million additional households.”

The findings were published by the MBA in a white paper this week noting the strong housing projections are driven largely by a shift in age cohorts, and that all sectors of the housing market stand to benefit. 

The precise mix for rental versus purchase demand will depend upon consumer choices, relative costs and government policy, MBA says, but both will be promising. 

“Households will compare the costs and benefits of owning and of renting, while housing developers and investors will respond to price and rent signals — each mechanism providing a release valve when pressure builds in a particular market,” MBA states in its findings. “…regardless of the mix [among rental demand and homeownership],demand for all types of housing will be strong.”

Relative to the aging demographic, in the coming decade, the Census Bureau projects there will be 20 more people who are age 60 or older, driving household decisions for older renters and homeowners.  

 

Check out the full PDF report here: View the full findings from the Mortgage Bankers Association. The report is detailed and very interesting. 

The most important thing to remember is that the market can be very volatile and there are no guarantees. Buy smart, pay close attention, and don’t be easily persuaded by statistical reports. Use them to your advantage, but don’t put all your chips in on them.

Article produced by reverse mortgage daily.

connecting with your community - man

Volatile Week For The Market & Interest Rates

Volatile Week For The Market & Interest Rates

Over the past week, mortgage interest rates were pushed and pulled by unusually large movements in global stock markets. The economic data had little impact. After a volatile week, mortgage rates ended just a little higher.

Concerns about slowing global economic growth, particularly in China, caused the U.S. stock market to decline sharply early in the week. However, with stocks at much lower prices, buyers stepped in later in the week, erasing the week’s earlier losses. While the magnitude of the moves were relatively smaller, a similar pattern was seen in mortgage rates. They dropped early in the week and then gave back their improvement later in the week. This relationship between stocks and mortgage rates is common, as investors shift assets between stocks and bonds. 

The recent revisions to U.S. Gross Domestic Product, the broadest measure of economic activity, revealed an increase in growth during the second quarter to 3.7% from an original estimate of 2.3%. This follows a much smaller gain of 0.6% during the first quarter. One factor behind the improved performance during the second quarter was a significant increase in inventories. This is unlikely to continue next quarter, however, and early forecasts for the third quarter are for growth below 2.0%.

 

 


 

Next week, the important monthly Employment report will be released on Friday. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month. Before that, ISM Manufacturing will be released on Tuesday. The ADP Employment Change will come out on Wednesday. ISM Services will be released on Thursday. In addition, there will be a European Central Bank (ECB) meeting on Thursday at which some investors expect ECB officials to discuss a possible need for additional stimulus.

All material Copyright © Ress No. 1, LTD (DBA MBSQuoteline) and may not be reproduced without permission.

China Devalues Currency

China Devalues Currency

A surprise move in China helped mortgage rates improve early in the week. Stronger than expected U.S. economic data had the opposite effect later in the week. After the offsetting influences, mortgage rates ended slightly higher.

China has long held its currency, the yuan, at a fixed value versus the dollar. On Tuesday, China unexpectedly implemented a policy change which let the value of the yuan drop versus the dollar.  Mortgage rates improved on the announcement because investors saw the move as an indication that the Chinese economy is slowing more quickly than expected. If this is true, global inflationary pressure will fall. In addition, US exports to China likely will slow as U.S. goods and services will be more costly, further reducing inflationary pressure. Lower inflation is positive for mortgage rates.

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Recent U.S. economic data told a different story about the outlook for inflation. Retail sales account for about two-thirds of U.S. economic activity. The report released Thursday revealed that retail sales rose solidly in July, but this was expected. The surprise was that the disappointing results for June were revised significantly higher. Friday’s report on industrial production, another important indicator of economic activity, also exceeded expectations.


Looking ahead, Housing Starts will come out on Tuesday. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Wednesday. The Minutes from the July 29 Fed meeting also will be released on Wednesday. These detailed Minutes provide additional insight into the debate between Fed officials. Existing Home Sales and the Philly Fed regional manufacturing index will come out on Thursday.

conventional loan - family moving

Is There a Fed Rate Hike in the Near Future?

economicIs There a Fed Rate Hike in the Near Future?

During the past week, comments from a Fed official increased investor expectations for a Fed rate hike this year, causing mortgage rates to move a little higher. The week’s economic data was mostly right on target and had little net effect. 

On Tuesday, Fed member Dennis Lockhart gave investors the impression that the first federal funds rate hike is likely to take place soon. In essence, he said that he believes that a rate hike will be appropriate in September unless the economy significantly underperforms expectations. While other Fed officials may feel differently, investors took this as a warning to be prepared for a rate hike at the next Fed meeting on September 17.

 

The major economic reports released since Lockhart’s comments showed that the economy remains on track to meet his requirements for a rate hike. Wednesday’s ISM Services data revealed an unexpectedly large increase to the highest level since 2005.

Friday’s Employment data, the biggest report of the month, matched the consensus forecast across the board. The economy continued its pace of strong job gains above 200K with the addition of 215K jobs in July. The Unemployment Rate remained at 5.3%. Average Hourly Earnings, an indicator of wage growth, were 2.2% higher than a year ago.


dream home - cardPreview for the Economy

Looking ahead, we will get more labor market data on Tuesday with the JOLTS report, which measures job openings and labor turnover rates. After that, Retail Sales will be released on Thursday. Since retail sales account for roughly 70% of economic activity, this is one of the biggest reports of the month. Industrial Production, another important indicator of economic activity, will come out on Friday. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday. Overall, we’ll have a better idea of how the economy is looking within the next little bit. 

All material Copyright © Ress No. 1, LTD (DBA MBSQuoteline) and may not be reproduced without permission.

Real Estate Professionals: Top Ten List about TRID

Real Estate Professionals: Top Ten List about TRID

QUESTION

We realize the TILA/RESPA rules are complex. How will the new rules affect real estate agents? 

ANSWER

TRID is a new federal consumer disclosure law that goes into effect October 3, 2015. TRID will significantly change the way a mortgage lender discloses to consumers the terms, conditions and closing costs associated with most residential mortgage loans.

To assist real estate professionals in understanding what TRID is and how it will affect the residential closing and mortgage loan process, we have created a “Top Ten List” of things to know about TRID:

1) TRID stands for TILA-RESPA Integrated Disclosure. TILA stands for Truth-in-Lending Act and RESPA stands for the Real Estate Settlement Procedures Act.

2) TRID is a federal law which requires mortgage lenders to provide consumers with certain disclosures during the loan application and closing process. These disclosures summarize the terms of the loan, such as the interest rate, and the costs associated with obtaining the loan.

3) There are two new consumer disclosure forms required by TRID, (i) the Loan Estimate and (ii) the Closing Disclosure.

4) The Loan Estimate, or “LE,” replaces the current disclosure forms known as the Good Faith Estimate and initial Truth-in-Lending disclosure (the “TIL”). The purpose of the LE is to give consumers a better, more clear understanding of the terms of their loan and the costs associated with such loan. With more complete knowledge the consumer can then, in theory, shop for and make an informed decision about the mortgage product that best fits their needs.

5) The regulatory body responsible for implementing and overseeing TRID, the Consumer Finance Protection Bureau (the “CFPB”) refers to the LE as a “Know before you Owe” disclosure.

6) The Closing Disclosure, or “CD,” replaces the current disclosure forms known as the HUD-1 Settlement Statement and the final TIL. The purpose of the CD is to finalize information that appears on the LE, including the mortgage terms and the projected payment amount, as well as to summarize the closing costs incurred by the purchaser and seller.

7) TRID imposes certain dates by which the LE and CD must be delivered to a borrower. The Loan Estimate must be provided to the consumer by the third business day after receipt of a completed loan application and at least seven business days prior to the closing of the loan. The Closing Disclosure must be delivered to and received by the borrower at least three business days prior to “consummation” of the transaction (usually the closing of the transaction). The three business day period can be referred to as the “Waiting Period” and a closing cannot occur until the conclusion of the Waiting Period.

8) There are three events that require a re-disclosure of the CD and a new Waiting Period prior to closing. They are:

-An increase in the annual percentage rate (APR) by more than 1/8 of a percentage point for a fixed rate loan or 1/4 of a percentage point for an irregular transaction, such as a variable rate transaction;

-The addition of a prepayment penalty; and,

-Changes in the loan product, such as from a fixed rate to an adjustable rate loan. 

Although the Waiting Period will not be required to commence again for changes other than these three events, the lender is still responsible for giving the borrower a new CD if there are any changes to the CD after it is presented to the borrower.

9) The CFPB recently announced that it will be issuing a proposed amendment to delay TRID’s effective date from August 1, 2015 to October 3, 2015. TRID will apply to all applicable mortgage applications taken on and after October 3, 2015.

10) Real estate agents are an integral part of the closing process and will play an important role in facilitating the implementation of TRID and its various delivery requirements.  More specifically, real estate professionals should be prepared to do the following things:

-Educate consumers and professionals with respect to TRID and its various elements

-Set reasonable expectations for all relevant parties regarding potential closing delays

-Assist the various professionals associated with the closing process in creating a collaborative work environment so that all closing costs can  be provided to the lender in order to prepare the CD, and

-Understand the situations which require a new Waiting Period as well as situations, such as adjustments necessitated by a pre-closing walk-through that do not require a new Waiting Period.

To rap up, this change in our eyes is a good thing. It makes things easier on the borrower to fully understand the costs involved. It also makes it easier on us as the lender, with simplifying the way the fees are disclosed and laid out. 

Going forward, if you have any questions regarding this new update, please don’t hesitate to reach out to us.

Retail Sales Drop Unexpectedly

Retail Sales Drop Unexpectedly, Mortgage rates end favorably. 

Retail sales were surprisingly sluggish in June, according to a report released Tuesday.

U.S. food and retail sales unexpectedly dipped last month, ticking down 0.3 percent from a strong May in another sign that U.S. economic performance stalled in June.

Retail sales totaled $442 billion in June, up 1.4 percent from a year ago but shy of analysts’ expected 0.2 to 0.3 percent month-over-month growth. May’s originally reported 1.2 percent growth also was revised down to just 1 percent, according to a report released Tuesday by the Census Bureau.

Furniture and home furnishing stores saw a 1.6 percent month-over-month drop, while clothing and accessories stores shed 1.5 percent and building materials and garden equipment and supplies dealers fell 1.3 percent.

A Starbucks drink waits for a customer to pick it up as barista Josh Barrow prepares another at left  in Seattle.

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Electronics stores posted the report’s highest month-over-month growth with a mere 1 percent increase. Only five of the 13 major retail categories profiled saw sales increases month over month, including general merchandise stores, gas stations, health and personal care stores and sporting goods, hobby, book and music stores.

“There was weakness in a number of segments in June. Sales of motor vehicles and parts fell 1.1 percent as unit auto sales dropped, although this followed three straight months of solid gains,” Stu Hoffman, chief economist and senior vice president for The PNC Financial Services Group, wrote in a research note Tuesday, calling the overall sales performance “a disappointment.” “Even restaurant sales, which had risen for four straight months, fell in June.”

But the broader year-over-year picture isn’t nearly as bleak. Electronics and appliance stores, gas stations and building material and garden equipment and supplies dealers are the only store categories that have seen sales fall since June 2014. Auto and other motor vehicle dealers saw sales climb 7.1 percent since this time last year, while sales at food services and drinking establishments ballooned 7.7 percent.

Weak gas station sales can almost be written off on a year-over-year basis, considering the report keeps track of the total cost of gas sold and not necessarily the volume. Lower year-over-year gas prices were a surprise to no one.

People gather at Los Angeles International Airport as United Airlines experienced computer problems in Los Angeles, Wednesday, July 8, 2015. A United spokeswoman said that the glitch was caused by an internal technology issue and not an outside threat or hacker. (Aristomenis Tsirbas via AP)

5 Things to Know About the Economy This Week: 7/10/2015

But June’s relative weakness from May’s stellar report caught more than a few analysts, who were expecting modest gains, off-guard. The soft sales figures serve as another sign that the country’s economic performance has cooled.

The domestic economy created about 223,000 new positions last month, but wage growth was relatively flat and roughly 640,000 people left the labor market altogether. Consumers are unlikely to spend more without receiving more compensation from work, so underwhelming wage gains are unlikely to fuel uncharacteristic shopping sprees anytime soon, which would otherwise bolster sales figures.

And the separate Job Openings and Labor Turnover Survey released last week showed a record number of openings in May but sluggish hiring trends. The so-called JOLTS report also showed relatively weak quits numbers, suggesting workers don’t feel confident enough in the domestic economy to voluntarily leave their jobs and find alternative employment.

U.S. economic confidence in June held steady at a seven-month low, according to a recent Gallup poll. The index had climbed for six straight months in the second half of 2014 before plummeting in 2015. Only 42 percent of respondents said they thought the economy was getting better, while 53 percent said it was getting worse.

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Job Openings Reach Record High in Labor Department’s JOLTS Report

A reported 29 percent of respondents described the U.S. economy as “poor,” while only 25 percent would describe it as “excellent” or even “good.”

Still, Hoffman said a soft month of data is unlikely to derail an economy that for all intents and purposes is performing admirably well, especially considering chaotic international backdrops likeGreece’s uncertainty in the eurozone and China’s turbulent stock market.

The country is continuing to add hundreds of thousands of jobs each month and is, generally speaking, in a better place than it was a year ago.

“Despite the June drop in retail sales, consumer spending growth should lead overall economic growth through the rest of 2015,” he said. “The fundamentals for consumers are solid: job growth of better than 200,000 per month, wages that are finally starting to pick up, the big drop in energy prices that has freed up cash to spend on other items, low interest rates to fund purchases of big-ticket items, and gains in household wealth from rising home values and higher stock prices.” 

Article from www.usnews.com

China and Greece Still Left With A Big Question Mark

China and Greece Still Left With A Big Question Mark!

Over the past week, U.S. financial markets were influenced primarily by events in China and Greece. Concerns about slower growth in China and increased uncertainty about Greece were both favorable for mortgage rates, which ended the week a little lower.

China is the second largest economy in the world, and it is growing at a much more rapid pace than the U.S. or Europe. This means that China is responsible for a large portion of global economic growth. Recently, investors have become more concerned that the pace of China’s economic growth may be slowing more quickly than expected. Slower global growth reduces expectations for future inflation, which is positive for mortgage rates.

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The outcome of Sunday’s Greek referendum was not the expected result. The Greeks voted against accepting the reform measures demanded by creditors in return for additional aid. Greece already is unable to repay its debts, and another large payment is due on July 20. Economic conditions in Greece are worsening. Greek officials and creditors are continuing to negotiate, but it is still not certain whether a deal will be reached. Without a bailout, Greece may be forced to exit the European Union. The uncertainty has increased demand for relatively safer assets, including U.S. mortgage-backed securities.

 


 Looking ahead, investors will be watching for progress in the Greek bailout negotiations and for clues about the pace of economic growth in China. In the U.S., the Retail Sales report will be released on Tuesday. Retail sales account for roughly 70% of economic activity, making this one of the most important reports each month. Industrial Production, another indicator of economic activity, will be released on Wednesday. Housing Starts and the Consumer Price Index (CPI) will come out on Friday. CPI looks at the price change for finished goods which are sold to consumers. 

Article provided by MBSQuoteline

Remodel Your Home With Little or No Money Out Of Pocket

Remodel Your Home With Little or No Money Out Of Pocket

If you find yourself wishing you had more of the home of your dreams, but realize it might not be possible….well, now we think it is. This new program just might be your dream come true!

Nothing can be more of a downer than when you come home to an outdated kitchen, carpet that not even the dog will sleep on, and a master bath that looks like something out of the “Brady Bunch.” Most people feel stuck in this situation, as these upgrades or remodeled areas would cost a fortune in out of pocket expenses.  

So you find yourself getting frustrated and depressed because you can’t seem to see your way through a solution that will work or be affordable……until now!

kitchen remodel

 

Get more than a home loan…get a home makeover. Meet the Renovator Loan!

renovator-loan1

One word…AWESOME! No, really…this loan is the answer to all the heartache we just mentioned above.  With just one loan, you can refinance or purchase a new “fixer-upper” and remodel the areas of your home the way you’ve always wanted. Let me explain how this works and then we’ll time you on how long it takes before you pick up the phone and call us….deal?

These unique renovator products really change the game for some. There is a misconception that these loans are only for beat-up old shacks…not so! You can refinance your home that may need a new kitchen, carpet or an extra bedroom, and have the money to accomplish this through one loan. Borrowers can choose between an FHA or conventional loan financing. 

One of the best features of these loans is that the final value of the home is based on all the improvements and renovations completed. 

How It Works

Whether it’s a refinance or a purchase, the Renovator loan works in a similar fashion. For this purpose, let’s use a refinance for example to explain how this works.

Let’s say you want to upgrade your kitchen, master bathroom and get new flooring throughout the house. The total costs for all those renovations/upgrades will be $50,000 (just as an example). And your current mortgage on the home for example is $200,000. 

Now here’s the best part! When applying for the loan, you’ll be able to take the appraised value of your home of what it would appraise at AFTER the renovations are completed. Really?! Yep! So here’s the breakdown of our example scenario and how this plays out.

which-home-renovation-projects-will-give-you-the-biggest-return-on-investment copy

Your Current Mortgage Balance: $200,000

Your New Renovation Costs:         $50,000

New Total Loan Amount:                $250,000

New Home Appraised Value:        $300,000 

Total New Equity In Your Home: $50,000 with a Loan To Value of 83%. 

With this example scenario, you would have the money you need to do all the renovations and come in with little to no money out of pocket. Because the new appraised value in this example was high enough with the renovations, it gave enough equity to easily qualify for the upgrades and left you with even more equity then you may have had before you started. Um…”that’s cooler than the other side of the pillow.” (Stewart Scott ref quote.) 

How do I get this loan?

Simple! Contact us today and we’ll walk you through every step of the process so you fully understand how to take advantage of this great program. We look forward to seeing your new remodeled home pictures after this is all done!