Archive for July, 2015

Which home renovation product is best for the homeowner? Let us help with that! – By Randy Cullen

July 31st, 2015



Fairway Independent Mortgage Corporation and the Kate Wilson Mortgage Team offer the Full FHA 203K program! Adding this product to our comprehensive list of construction financing options gives our borrowers additional flexibility. Our Bloomington Branch has seasoned professionals, and all of us are well versed in construction lending.

Construction and home improvement financing can take many forms. Many of our clients are building a new home on a vacant lot, tearing down an existing structure to build a new home, or doing a complete remodel of their primary residence. These projects are best done with our conventional Construction to Permanent financing options. Most of these projects would fall outside the scope that the FHA programs allow, limited by the maximum allowable mortgage amount in our area of $322,000. But what about those projects that will work perfectly with the FHA suite of products? Below are some reasons the FHA 203K loan could be the product of choice.

The FHA Streamline 203K product allows for non-structural repairs to a home being purchased. It puts a $35,000 cap on the work that can be done. That amount will be inclusive of a contingency reserve and some minor administrative fees for the program. Normal items that we see under this program are updates to kitchens, bathrooms, flooring, and mechanicals; energy efficiency items such as windows and furnaces; along with deferred maintenance items such as painting, siding, and roofing. The needs list of items must stay within the program guidelines. The work being completed cannot keep the homeowner from occupying the property within 30 days of closing, and the project cannot exceed six months in duration. Normally, these Streamline 203K home improvement projects are all wrapped up in under ninety days. Read the rest of this entry »

Let us help you turn a home that’s almost perfect into your perfect dream home! … by Randy Cullen

July 24th, 2015

Finding the perfect property to fill your family’s needs can be challenging. You are looking for the right location and school district if you have children; and the right fits, finishes, bedroom count and living space to fit your lifestyle. Not every property you view may have all the items on your list. I suggest you take a slightly different approach – zero in on the neighborhood and find the property that may work but needs some tweaking. We have a home improvement product that can turn that property into the perfect home for your family!

Our options for home remodeling can provide you with the resources you need.  Imagine the four bedroom two-story that needs some updating, including finishing the lower level to include a recreation area and that extra bedroom! We can bring in one of our renovation specialists to assess the property and work with you to develop plans and specifications to make the home match your needs and lifestyle. We lend from the “as completed” value of the home, which includes all the renovations you desire to make the home work for you. The Construction-Renovation loan will purchase the property and set up the necessary funds to pay for the costs of remodeling. This process is very similar to our new construction loan, except this time you are purchasing and renovating rather than building a new home from scratch. As work progresses on the home and payments need to be made for material and labor, the contractor will prepare a draw request. We will review the request, match it up to the sworn construction statement provided in the construction exhibits, and prepare the title search and inspections required to complete that process. Every step of the way as money is paid out for work that has been completed, we check to be sure no liens have been filed on the property, collect all invoices and lien waivers, and inspect the property to make sure the work has been completed as requested.

Now, fast forward to the completion of the project – A final inspection of the property will be done to make sure everything has been completed per the plans and specifications you agreed to. We will balance the final numbers against the draws requested during the project and prepare the documents for your permanent end-loan to be put in place. This process determines any remaining amounts that need to be paid out to the contractor, reconciles the construction loan to get the proper payoff statement along with the collection all final invoices and lien waivers. We balance everything so you don’t need to worry that someone may not have been paid for their part of the project. The permanent end loan, or mortgage, we place will be the only lien on the property.

With the final paperwork signed, you are now ready to move into the home you always wanted but could only imagine. You get the neighborhood you desire and the home you will love for years to come, all provided by a home improvement loan from your local construction lending experts. Let us help you turn a home that’s almost perfect into your perfect dream home! – Randy Cullen NMLS #326128

Securing financing for the construction of your new home is as easy as 1-2-3! by Randy Cullen

July 17th, 2015

financing-new-construction-homes-300x248 You have made the decision to build a new home. You go out and tour a few custom builders to get a feel for the floor plan, along with the fits and  finishes that appeal to you. Each builder suggests that you get approved for construction financing to build your new home … and you try not to show  panic or run out the door! The builder representative hands you our card – problem solved!

We get calls every day from clients who have limited experience with mortgage financing in general, let alone new construction financing! With  confidence that comes from experience, we can guide you through the process as we lay out the steps for new home construction financing that are as  simple as 1-2-3.  Twenty minutes on the phone with us can save you time and money!

Today’s custom home builders want you to secure financing for the construction of your new home for several reasons. When you finance the  construction of your home you save money on the interest and carrying costs that a builder financed project would pass on to you. The rate and  fees that  are charged for the builder to finance construction are more than the rate or fees you pay when the loan is in your name. By excluding  the builder’s financing charges, the price of your new home will be less. When you put the new construction loan in your name, with lower  financing charges, you save money.

Construction financing is an interest only line of credit used to build your new home. Your builder will provide us with all the new construction exhibits (plans, specifications, and contract to build), and the project is appraised as if it were complete. The value of the finished product is an important part of establishing how much we lend. Most homes can be built in 90 to 120 days from start to finish, and our standard construction loan is for 6 months. We can go longer if needed (max 12 months), based upon the scope of the project. During the time of construction, money will be disbursed from your line of credit to make progress payments for materials provided and work completed. You approve every draw, our title company will verify that all the paperwork is in order, verify that no mechanic’s liens have been filed by anyone that has provided materials/work for the project, and that all lien waivers have been collected. Lien waivers are written acknowledgement that payment has been made for materials and labor for all work completed. Read the rest of this entry »

Latest Agency News….

July 10th, 2015

changesnextexit When the financial crisis hit us around 2007, investors  were scrambling to find stable ground. Credit markets  tightened and new rules and regulations surfaced  regularly. The mortgage markets and agencies like Fannie  Mae and Freddie Mac were hit hard when the housing  market crashed and foreclosures soared. Stabilization  happened over time, and now many of the guidelines put into place to ensure borrowers had capacity and reserves to successfully manage their real estate portfolios are being relaxed. Whether you agree or disagree with these moves, it will make qualifying for a mortgage somewhat easier.

Fannie Mae has updated its underwriting guidelines effective June 30th of this year. These changes will be reflected in the automated underwriting product we use called Desktop Underwriting on August 15, 2015. Here are some of the highlights of those changes:

  • Reserve requirements are eliminated for borrowers converting their primary residence to an investment property. House prices have been on the rise allowing borrowers to make a move. If their current home is retained as a rental, borrowers no longer need to show additional financial reserves to manage that property.
  • The use of other assets for down payment, closing costs, and reserves has been made easier. Accounts like stocks, bond and mutual funds (including retirement funds) can be used when checking and savings accounts are not sufficient. Documentation requirements, in most cases, will be far less.
  • When a borrower does not have commission income that is 25% or more of their annual employment income, 2106 unreimbursed employee business expenses no longer need to be analyzed or deducted from the borrowers income or added to monthly expenses. The only exception to this relates to an auto allowance, which will still need to be analyzed to determine how it will be treated. This is a big deal for qualifying. We see so many borrowers who have expenses written off on their taxes to reduce their overall tax liability. Previously this was deducted from income or added to monthly liabilities, causing a reduction in the borrower’s purchasing power. This is a WIN for most borrowers.

FHA has issued a new Policy Handbook that will take effect September 14, 2015. At first glance, the item that stood out most to me was the new treatment of student loans. In the past,  we could verify that student loans were deferred (no payment required)  for twelve months or more from our mortgage loan closing and not count the payment in the borrower’s debt to income ratios. That is all changing. All deferred obligations, regardless of the first payment date, will now be included in the qualifying ratios. We must document the actual payment or, if it is not available, calculate it based upon the revised guidelines. For newly employed first time buyers, this alone could cause them hardship in qualifying for a mortgage. There’s no better time than now to get them pre-approved so they beat the deadline for this new rule change!

According to the Greek philosopher Heraclitus, change is the only constant in life. Rules are constantly changing. We do our very best to stay ahead of the changes, keeping you informed of the items that can have an impact on your business. Sell well!      – Randy Cullen, NMLS# 362128

Happy 4th of July!

July 2nd, 2015

Fairway SofL fireworks
As we celebrate our nation’s freedom this Independence Day, we honor the  courageous men and women dedicated to preserving it. Remember, freedom is  not free so  thank a veteran for their service.

             Wishing you and your family a safe and happy 4th of July weekend!

             The Kate Wilson Team at Fairway Independent Mortgage