When Should You Consider A Renovation Loan?

You Love Where You Live

We’ve heard this many times but few phrases speak louder to us than Location, Location, Location. Whether you love your neighborhood, the school your children go to or you simply adore your neighbors, these are all considerations you need to factor into your decision when deciding to make a move or stay put. Often, people will decide they would like to move because they are looking for a home with updated energy efficiency features or the design style trends that you can get in a newer home. So why not consider staying put and updating your own home to make it more in line with today’s style and the design elements that appeal to your current tastes?

Change Things You Can

You can’t change the location of your home so if that is not a concern for you, then focus on the things you can change. Is your outdated kitchen in need of a makeover? Get new cabinets and counter tops. Does that bathroom still have that dreaded avocado sink and toilet from the 60s? Change it!  Are you in need of a second bathroom and have the space for it? Then add it. There are so many things that you can change about your existing home and as long as it increases the overall value of your property chances are it will be considered. Want to ditch that old ugly dirty carpet that has seen better days? Then replace it with new wood flooring if that is your style.

However, keep in mind that certain items such as most pools, jetted tubs, and most landscaping will probably not go into the loan. And be realistic, your lender isn’t going to approve a $250,000 loan if your home is only worth $200,000.

Types of Renovation Loans

When it comes to renovation loans, there are two types, either a Fannie Mae Homestyle Renovation Loan or an FHA 203(k) mortgage.  It is good to know that either loan can be used on the purchase of a home or a refinance of an existing home. The first thing you will want to do is decide on the scope of work to be completed for your renovation.

The FHA renovation loans fall into two categories of either the standard 203(k) mortgage or a limited 203(k) mortgage and each have their own approval requirements and a minimum down payment of 3.5%. Loans that allow more money to be taken out will also have more requirements such as hiring a licensed general contractor or a HUD consultant and can get pretty in depth in terms of having a plan put together with a detailed description of the work to be performed. The standard 203(k) loan is for almost any kind of repair or improvement and has minimum cost requirements while the limited 203(k) loan is for minor remodeling jobs that don’t require structural modifications such as adding rooms. Kitchen remodels and finishing a basement although limited in their scope could fall into the standard 203(k) loan category because doing both would likely require two different contractors.

Fannie Mae Homestyle Renovation mortgages only require a down payment of just 5% if you are purchasing a single-family home with a fixed-rate mortgage. You will have 12 months to complete the work and the money must be used for repairs, remodeling, renovations or energy improvements. The changes must be permanent and add value to the property. You can chose your own licensed and bonded contractor, but the lender will oversee the renovations to make sure they get completed. So the lender will need copies of your plans and the renovation contract.

Advantages of Renovation Loan

Renovation loans achieve the same goal which is to provide homeowners with a mortgage and access to money to make necessary home improvements.

Fannie Mae and FHA allows borrowers to borrow up to the post renovation value. In other words, they consider what the expected value of the home will be worth after the work has been completed to help make a determination of how much money you will be able to qualify for with a renovation loan.

Some homeowners will use a home equity loan to remodel their home; however, if there is no equity in the home this will not be an option but a renovation loan can be. A renovation loan can also help make needed repairs prior to moving into the home. And these types of loans allow you to skip up to six monthly payments if you can’t occupy the home during renovations, with the interest for those months added to the principal of the loan.

Other homeowners with no money for improvements may turn to costly credit card debt or hard money loans which both have double-digit interest rates. In that case, a renovation loan can be a more attractive alternative even with its higher fees and interest rates due to the more complex nature and risk of these types of mortgages. Also, having an all-in-one loan can be attractive because this will allow you to roll all your costs for the purchase plus the renovations into one loan payment.

I Can Help

Are you wondering if you could qualify for a renovation loan to stay put in your home? Before you decide to put your house on the market especially if you love your current location, talk to me about what you would like to do to your home to make it more in line with your dream home expectations. Many mortgage lenders will not be able to answer your questions regarding renovation loans because they don’t specialize in them. However, we here at Nova Home Loans have an entire department devoted to helping you successfully navigate through the complex renovation loan process. With my experience as a loan officer, along with the backing of my renovation department, I can help you navigate the nitty gritty details of all the requirements necessary to get you through the renovation loan process that will help you get the money you need to make those changes you’ve been thinking about.  If you are in the Broomfield, Colorado area, please give me a call today at (720) 279-5982 to see if I can help get you the money you need for your renovation projects.

1.       Impact of FICO Score?

Many home buyers don’t realize that their FICO score can be one of the most important factors in qualifying for the best rate loan available. There are many different credit scoring models available to consumers, but when applying for a home loan over 90% of lenders will use the Fair ISAAC FICO scoring model. FICO scores are calculated using several different pieces of credit data in your credit report. The FICO scores range from 300-850 and are grouped into five major categories, which are payment history, amounts owed, length of credit history, new credit and types of credit used.  Your FICO score is impacted by both positive and negative information on your credit report.

While late payments will lower your FICO score, it is important to re-establish a good track record of paying on time as this will raise your score. Everything you can do to raise your score will be to your advantage when it comes to getting the best loan you can for your home purchase.  At NOVA Home Loans, we have several loan programs that have different FICO score requirements. Once you have agreed on the type of mortgage loan you will pursue, I can help you navigate the requirements to get you approved. We also have a free program available that can assist you with increasing your credit rating in order to qualify for a mortgage. Just ask me for more details.

2.       Pre-Approval vs Pre-Qualification?

Set yourself up for success by getting pre-approved with a mortgage lender rather than just pre-qualified for a loan. The pre-qualification process is only an initial step and usually doesn’t cost you anything. While it does require a review of income, debt, asset and credit history as well as money available for a down payment, this is only based on the information you provide and is no guarantee that you will actually qualify for that amount. On the other hand, the pre-approval process takes it one step further by requiring you to complete an actual mortgage loan application. This process requires running your credit report and performing an analysis on your financial situation which requires the borrower have more of the documentation in order to allow the lender to give you a specific mortgage amount for which you are approved. Which in turn, will allow you to have a better idea of the interest rates you will be charged and saves you valuable time because you won’t be searching for properties that are beyond your budget.

With pre-approval, you will get a conditional commitment in writing showing the exact loan amount you can qualify for which will put you at an advantage when dealing with a potential seller because they will know you are that much closer to actually obtaining a mortgage. Since the Denver real estate market continues to be tight in terms of the inventory available for sale, this means that competition can be stiff for a buyer and you need to give yourself every advantage available. There are few things more disheartening than finding the property of your dreams only to have the seller’s agent tell your agent that they have decided to go with another buyer because they were able to demonstrate that they were already pre-approved for their loan amount and they didn’t need to make their offer contingent upon obtaining financing. In this type of competitive market it lets the seller know that your offer is serious.

3.       What Home Loan Program Is Good?

Two of the more popular home loan programs that could save you thousands of dollars are the VA and FHA Loans. If you are a veteran you should definitely explore this option because one major advantage to a VA loan is it offers 100% financing on a home up to the low $400,000s with no down payment for qualifying vets. As for the Federal Housing Administration (FHA) loan its major advantage is that it insures the loan, so the lender can offer you a better deal. It also allows for a lower down payment but then requires the borrower to carry mortgage insurance. However, the majority of home loans are conventional which do not require mortgage insurance if the buyer can put 20% down on the home at the time of purchase. Also, a conventional loan can be used for investment property.

There are many programs available to home buyers such as programs that offer low down payments, low closing costs and easy credit qualifying. Rather than try to determine on your own what program is best for you let your mortgage lender give you more details about available programs that will meet your needs.

4.       No Money For A Down Payment?

Sometimes borrowers are able to qualify for a loan but they just aren’t able to stretch their dollars far enough for a large down payment. That may not be a detriment because there are programs available through local and state agencies that can help the borrower procure funds for the down payment.

Depending on your unique financial situation there are several organizations that provide down payment assistance. The only way you will know if you are eligible for these programs is to consult with a mortgage lender who can research the programs for you and see if any of them might be an option for your home purchase.

5.       What Is The Best Way To Get A Home Loan?

Whether you are ready to purchase a home or are just researching your options, we at NOVA Home Loans are here to help you navigate the loan process.   We have a number of home loans available to home buyers and I offer free consultations which will allow you to explore your best lending options for your situation.

It really boils down to you need to keep a good credit score, have proof of income and determine how much money you can afford for a down payment.  Once you have done these things it’s time to get started with your home loan process. Check out the NOVA Home’s video for some helpful tips on the loan process at https://www.novahomeloans.com/Liza-Blackard/loan-info/home-buying-process/ . If you are in the Broomfield, Co area, give me a call today at (720) 279-5982, I offer free consultations and would love to help make your dream of owning your own home a reality.

Does the prospect of getting to choose your perfect floorplan excite you? And what about the thrill of picking out your own appliances, cabinets, countertops and fixtures that will reflect your individual style instead of someone else’s taste? If this describes your home purchasing preference then, by now, you have likely decided that you are going to opt for a newly built home.

There are a number of advantages to purchasing a new home such as all appliances, the roof and water heater are brand new and under warranty.   These components of a new home allow for the latest design and building material available and will not likely need replacing any time soon. Today’s new homes also offer a number of energy efficient features that were not available even five years ago. Most new homes offer double if not triple pane windows which, in turn, can save you some money on your monthly utility bill. Also new home construction offers you the latest in designs, style and comfort.

Is Your Builder’s Preferred Lender and Contract Your Best Bet?

Builders will often entice buyers with “incentives” for those who choose to use their lender. Builders will likely promise to pay for closing costs or offer buyers credits at the design center to use on a wide array of upgrades. But before you start dreaming about those gorgeous bathroom fixtures or that elegant fancy chandelier for the entryway, you owe it to yourself to get your calculator out and make sure you understand that what you are being offered is a good deal.

And if you are in Colorado, an important point for buyers to be aware of is that builders are not required to use Colorado contracts, instead they will probably use their own contract which will likely be biased toward their own interests. So it is important that you read the contract before signing anything and make sure your builder has a license and is insured. Also, make sure you understand the warranty being offered, the default provision and the dispute resolution clause in case a dispute arises. While the hope is that everything goes smoothly with your new build it is always wise to protect yourself from any unforeseen circumstances.

Avoid This Pitfall

Avoid the pitfall of automatically assuming that your builder’s lender will offer you the best possible deal.  And be careful if your builder “requires” that you use their lender.  What unsuspecting home buyers may not be aware of is that these builder incentives that sound so good may indeed come at a price in the form of higher than market interest rates or higher than average closing costs. These costs can escape notice because they get rolled into the purchase price of the home.

When a buyer is looking at new construction, one important thing to consider is the time it takes to build your dream home. This means that you will need to decide whether to lock in your interest rate near the beginning of the building process hoping there are no delivery delays or wait and take your chances on the rates not going up if you lock in at a later date. Either way, the risk rests with, you the buyer.

  Upgrades vs Closing Costs, Is It Really A Good Deal?

What if your builder has just offered you a sum of $10,000 in credit to use in their design center?  Before you get carried away picking out your interior design upgrades ask your builder to show you the calculated closing statement so you can see what they estimate the closing costs will be on your new home. I had a client who was offered a tantalizing $15,000 credit toward closing costs and/or design center upgrades. The best part they were told is that they could customize how to use their “free money” based on their budget and needs to suit their specific situation. In addition, the builder was offering a 4% interest rate on the loan for a longer term lock on the rate so if the rates were to increase from the time the construction started until occupancy was granted my clients would be insulated from the risk of rising interest rates.  It all sounded really good, until they asked me to review the details with them.

After reviewing their documents, we discovered that there were a number of unexplained fees and costs to the tune of $13,000 included in their closing statement.  When you take this into consideration, what the builder’s incentive amounted to was $2,000 left over for possible upgrades. The closing fees were considerably higher than what I was charging for closing fees through my mortgage company which was less than $5,000 in this particular situation. In addition, we opted to not lock in their rate and were able to secure a lower fixed interest rate by a quarter percent at the time of closing. So in the end, while my clients ended up “forfeiting” the $2,000 they had left to pay for upgrades, they ended up saving more than $20,000 over the life of their loan. Now that is being a savvy new home purchaser and not falling into the trap of being lulled into believing that the builder always has your best interests at heart.

Seek Help From Professionals

In reality, it can be quite overwhelming to slog through all the pros and cons of deciding what your best deal is and in some cases it can feel like comparing apples to oranges. But with my experience as a loan officer I am used to reviewing these type of documents.  I can help steer you toward the best possible rate and loan that best fits your needs.

When you work with me, I will get you the best possible deal by looking at exactly what the builder is offering you in terms of credits, interest rates and closing costs and then comparing it to the costs and interest rates I am able to offer you.  This could end up saving you thousands of dollars in the long run.

If you are in the Broomfield or Westminster, Colorado area and are considering purchasing a new home, I would love to sit down with you and help you review all your options so we can discover the truly best deal for your home purchase.  Please give me a call at (720) 279-5982, I look forward to working with you.

Are you looking to buy a home in the near future? There are some things you should do now to prepare yourself for your purchase.

1. Get with a loan officer

The first thing you should do is get with a loan officer because they can guide you through the process in a more organized and efficient way. The more you take the time now to education yourself and then select and work with the best loan professional available will ensure you have a great experience in your home purchasing endeavor.

2. Have your lender run your credit report

Liza can help you look at and interpret your score and get a plan of action in place that can help you improve that score, if needed. She can also make recommendations of obligations you should pay off before you begin your home search to ensure you are eligible for the best possible programs out there for your home purchase.  It is likely that your loan officer will be able to provide you with a number of options on available buyer programs that have never crossed your radar screen.  This in turn will save you thousands of dollars over the life of your loan.  It is always good to know your options because even a small percentage of savings on your interest rate could allow you to increase your home purchase budget and place you in your desired neighborhood. This is why it is so important to work with a loan officer who is here to help you.

3. Determine your budget

Now it is time to determine your budget for your mortgage payment. There are few things more disappointing than finding your perfect dream home only to find out that it is outside your budget. The best approach when looking at affordability is to work backwards into a purchase price for the home you can afford. This will allow you to search with confidence within a price range while you are home shopping. There are many factors that a lender will look at to determine the amount of loan you can qualify for, so please keep in mind that you should track all your expenses and disclose them to your loan officer. This will help her to provide you with valuable guidance about keeping your financial obligations within reasonable levels acceptable to the lender.

4. Determine Your Down Payment

 Determine how much money you will have for a down payment. It is always a good idea to set aside a little extra to cover some of the unexpected things that could come up between the time the seller accepts your offer and when you are at the closing table. Leave yourself some wiggle room for negotiations that could come up as a result of the home inspections and subsequent findings for what might need to be done to the home that were not known at the time you placed the offer. Once you know how much you will have for your down payment, your lender will help you decide which product will work best for your situation.

5. Get Down Payment Together

 Finally, get the down payment money together. If you are getting a gift, when are you expecting the money? Are you waiting on your tax refund? Are you going to get a loan from your 401K? The process is really just beginning now so whatever you do, do NOT open any new accounts, do NOT transfer money around, do NOT have cash deposits and do NOT have any large deposits other than pay checks. And DO keep all documentation to show when and where the money has come from.

Remember there is a lot of things involved in a real estate transaction. It might be easy to feel a bit overwhelmed during the home buying process.   That is why it is important to hire the best professionals in the business.  That way you can be sure that you are able to rely on your loan officer and real estate agent, to steer you in the right direction. They are your representatives and will have your best interests at heart and will work hard to make sure things go smoothly with your home purchase and that you are fully satisfied.

If you are looking to purchase a home and are located in the Broomfield, or Westminster, Colorado area please give me a call at (720) 279-5982.  I would love to assist you and help you learn more about the home buyer programs available to your unique situation.

Are you a first time home buyer and are located in the Westminster, Colorado area? Then you may be searching for a Loan Officer. There are many things you should know about the lending process to make your dream of home ownership a reality. Here, I will cover five important things you need to know as you begin your home search.

Know How Much Down Payment You Need

The first question that might pop into your mind is how much money do I need for a down payment? Traditionally, lenders required that a home buyer put down somewhere between 10 percent and 20 percent of the purchase price. However, since then things have now changed. You should know that there are various programs that allow you to maximize the bang for your buck when purchasing a home. For example, FHA has a 3.5% down payment program, Fannie Mae has a Home Ready Program with a 3% required down payment and Colorado has a CHFA which is a grant between 3% and 4% to cover your down payment and some closing costs.   Another strategy for a buyer to consider is asking the seller to pay for your closing costs and prepaids to bring cash to the table.  Also, and likely contrary to popular belief is that gifts from family members are NOW allowed as a down payment.

Know Your Debt-to-Income Ratio

You should know your debt-to-income ratio. As a rule of thumb, many lenders still prefer that you don’t have a debt-to-income ratio higher than 35% on the front-end.  However, now a days, lenders use both front-end and back-end calculations which essentially means they look at your debt-to-income before they consider your house payment and afterwards to measure your ability to qualify for the loan. So depending on the type of loan you are applying for and the programs you qualify for will definitely play a factor in your approval chances. One strategy that can help is sitting down and carefully reviewing your spending habits and current debts. If you have some old debts that you can pay off, now would be the time to get those out of the way so they aren’t included in your calculation which will better your chances of getting your loan approved.

Know Your Credit Score  

Another issue that might be holding you back is your credit score. Far too often, people don’t know what their credit score is or how it is even calculated.  You should know your credit score and how it might be impacting your ability to purchase your home. Certain things can be quite easy to fix while others may take some time.  Here at Nova Home Loans we offer a free credit program to our customers where our credit consultants work with potential buyers to improve their credit scores. This could mean anything from paying off a $300 credit card to working for a year with a client to get their scores higher.  Working with a professional and taking these measures now could save you as a buyer thousands of dollars over the life of your loan.

Know Right from Wrong Information

Start to education yourself on the home purchasing process. You should know that there is a lot of incorrect information on the internet and sometimes it can be hard to decipher right from wrong. For example, if you are dealing with a bankruptcy or foreclosure there is a lot of erroneous information about long waiting periods during which you are not eligible for a loan. In truth, the waiting period varies with the type of loan you want to pursue and what the circumstances were around the event. When you are searching for rate quotes on the internet be sure to pay attention to the closing costs since this affects the amount of money you need to come up with at closing. Keep in mind that a lot of companies will quote low rates but these are coupled with high closing costs because they know people look at the rates of a loan and not the fees. Also, the payment estimates probably do not include homeowner’s or mortgage insurance so be sure to include these costs in any payment calculation you consider.

Know I Am Here To Help

And finally, you should know that as your Loan Officer I am passionate about helping you to own your dream home. I just love to see the look on my clients faces when they are handed the keys to their new home.  I have over 16 years of experience in navigating you through the home lending process.  I am confident that there are strategies that we can review together to come up with the best one to fit your needs and circumstances. I will work for you every step of the way so you can be sure that your money will be there at the closing table. Please give me a call today at (720) 279-5982) so we can get started on making your dream a reality.

With the sharp increase in housing prices and the continued low inventory around the Denver area this is a valid question. However, to fully answer the question we must first understand what is a housing bubble? It is defined as a run-up in housing prices fueled by demand, speculation and exuberance. These types of bubbles usually start with an increase in demand, along with limited supply on the market.

While we do have this situation in Denver, the question becomes what is fueling it? A bubble would dictate that speculators have entered the market to further drive demand and increase prices to an unsustainable level which at the same time provides an incentive for the supply to increase which would result in the bubble bursting. In addition, unlike with a bubble, Denver’s strong real estate market isn’t being driven by speculators or easy credit since those days are long gone. Lower interest rates do help make housing more affordable and while they are still at historically low levels they are starting to creep back up which should spur buyers to want to lock in at these desirable levels. So what is the biggest factor fueling the strong real estate market in Denver?

Denver and the state of Colorado in general have been doing better than most markets. The biggest driver for Denver is the influx of new residents coming to our state. The quality of life in Colorado is so much higher than other parts of the country that once people move here they don’t want to leave. We are so fortunate to have some great recreational options in the state like skiing, hiking, biking, rafting and climbing our famous 14ers. We have a favorable climate and the sun does truly shine here at least 300 days a year. The metro area population rose by over 53,000 people last year and the fact that developers didn’t add enough new homes, condos and apartments to keep up with demand has added to the continued supply lag in our market. Our inventory is lower by 2.5% in 2016 over 2015 so the market continues to be tight.  

Who’s moving to Denver? Well educated people with great incomes are moving here which has helped fuel the increase in prices as these buyers are positioned to pay more for homes and many are moving from other more expensive areas of the country so Denver still is a reasonable value for many buyers.  Another positive thing Denver has going for it is its strong job growth rate of around 3% compared to the US average of 1.8%.  Millennials are also fueling the demand for housing in the Denver market and are attracted to living closer to the downtown Denver corridor and other centrally located neighborhoods which will continue to drive up values in these highly desirable locations.

Additionally, the completion of the light rail system which now accesses the Denver International Airport is a big plus for our continued growth as it now serves a larger part of our population and provides an alternative to driving in congested areas. The projected growth in the Denver area indicates that the population will increase about 3% percent per year for the next three to five years.  I believe this is a strong indication that the local real estate market looks stable for the next several years and it is these factors that will drive our local real estate market, not a housing bubble.

Whether you are looking in the Denver area to buy your first home, move to a new home, refinance, or invest in property, I am here to help you.  I am passionate about my job and excited to help you with your journey.  As a loan officer, I will be there every step of the way to help you find all available lending solutions. I can help you through the complete lending process so you can achieve your dream of home ownership. Give me a call today at (720) 279-5982 so we can discuss your situation and how I can best serve you.