Real Estate Financing...

Two tears rolled from my eyes, they touched my chin and moved on.  I hate tears.  While they can make one more impassioned, more alert, more astute, they can also lead one into thinking way too much about the subject at hand.

I got an email just recently, one through Active-Rain, a person I respect so freaking much.  I'd post it here, but can't.  It was private. 

There is a lot going on in the Real Estate Community.  It isn't easy these days, if you did and do it right, it probably was never easy.  That's Real Estate.

People are scared, afraid, economic turmoil has that effect.  I don't want to ease your emotions or substantiate those fears, I'll simply tell it how it is.  You decide... how it is for YOU.

We can play with numbers, shuffle products around and market the hell out of something we are doing that very few are not... but the fact remains, how can Real Estate benefit YOU?  At the end of the day, I'm pretty sure you care more about that than the couple in Philadelphia who were sold a teaser rate and are losing their home because the REAL payment came to fruition.  That's the thing folks don't talk about enough in this biz, there's a REAL in ESTATE.

You should know that rates are still very low.  From a historical standpoint, you're talking about 2% lower than what you could expect.  There's also a large inventory of homes on the market.  What that means for potential buyers is that you can get cheap money to buy a large array of inventory (homes).  The questions are, can you afford it and do you qualify?

Credit scores are crucial these days.  They just are.  Keep track of where your credit and scores are at.  Remember a few things, when you apply for a car loan, they pull their credit.  When you apply for a credit card, they pull their credit.  When you apply for a mortgage... you guessed it, they pull their credit.  Those reports and modules may differ.

Money doesn't hurt either.  Imagine that, needing money to buy a home?   While 100% financing is dead, unless you are a Veteran, you are going to need some money.  With the current state of things, that's not the easiest task to bring to light.  If I was a financial advisor, which I'm not, I'd recommend the following things:

A Loan to bail out this mess... (well, I don't recommend that... but read on;-)

It's painful at times, but there is a smirk involved with every nerve-ending bit of un-comfort being felt.  Everybody, well that's a general term, a lot of people have an inkling that we are living in tough economic times.  Guess what, they are correct!  I'm going to take a stab at the "Financier Advisor Role"  Please note that I have no legitimate educational background to make such recommendations; these are scattered thoughts that may or not turn out quasi-smart.  What I'm saying, in a nutshell, if you take any of this advice and lose your wallet... I ain't responsible.  Conversely, if you read and breathe in these opinions and make a buck or two... I can't participate in that money either.  Let's see if ‘Free Advice' is worth its price:

 *  If you have a pad, extra money, reserves, a ‘worthwhile' bank account... (It's) probably not a bad idea to start buying/chipping away at big companies and potential mergers at low prices.  First, you'll have to have some extra money floating around.  Second, you'll have to have a semblance of faith in the U.S. Stock Market.   Third, buy low.  If you aren't looking to die tomorrow, they just may sell high.

 *  If you are currently poor, barely able to keep up with bills, watch an infomercial and your problems are solved.  Seriously though, practice resolve.  Practice patience.  And knock on those doors and answer those bells and survive.  Thriving seems to be the next, logical, step... work hard and be persitent.  I would love to give you a magic pill but that adage is the damn truth, work hard and be persistent.  Along with that, ethics will keep you doing business for a long time.

 *  The Government bailing out anybody... goes against the natural rule of Man-Made Rules.  Plus, it probably screws up that ‘Capitalism' thing going on.  If economic life becomes a barren desert, I'm quite confident that the folks, who milked from cactus's now, should be around at the end.

 *Pre-payment Penalties... I'm convinced their main purpose was to ensure the return they quoted their investors.  Fair enough, I don't think they should be outlawed.  Let me say this, I believe in Loan Re-Modification.  If a Loan is modificated in any facet, it must present terms better than the original one... unless the loan was defaulted on before the modification process even began. 

*  Sub-Prime Mess - In simple terms, give me a break!  This isn't Sub-Prime's fault, they're just the easy scapegoat since they are pretty much out of business or aren't the loan du jour.  As you swallow the ‘cooked books', follow the money.  (For you Mortgage Professionals out there, you give me a good (70% or less) LTV & a clean Mortgage History, I'm making that Loan.   I'll make sure they are currently working, but won't ask for their most recent pay-stub.  In my mind, that's portfolio. I don't care what their credit score is!)

Folks, that's real.  It may or may not turn out to be correct, but it is damn REAL.  Even when you know what you are talking about, it doesn't mean people will listen.  Nostalgia creates geniuses of many.

*Warning* - This is a long one...

It's later than I expected, but my desire for this has been long coming.  I title my particular blog, "The Insider's Insights on Mortgages" but I have yet to express to folks the workings behind that often foggy door of Lending.  Shame on me, for that.  I may actually spend some time on this post for once, if I do it right... I think it will be important. 

The title of this post is, I admit, a tad misleading.  While I think it could become a hot ratings sell, I don't necessarily foresee a sitcom based on the Lending institution... just yet.  The point I want to drive home is a greater understanding of the money (financing) side of Home Loans and what we do and how we do it.  Actually, I want to identitfy some of the psychology behind the whole deal.  It's my belief that a better understanding by Agents, Consumers, Appraisers, Inspectors, Title Companies, etc will make all of our lives just a tad easier.  While I want to say it poetically, plainly, & eloquently, I'll just say it.  I only hope that the following properly expresses my point.

Before I knew what a mortgage was, I thought you made mad money on every deal you did.  I never majored in business or finance, did the accounting thing for about a year, and eventually graduated with degrees in Psychology & Philosophy.  Frankly, they were the only subjects that held interest for me at the time.  I looked at College for what it was (or what I thought it was) a highway to knowledge ... not an occupation.  In my case, I was right.  Yet, I wasn't right about the Mortgage Process... not at all.

*Skip the next few paragraphs if you want to look into the Inside, rather than hear any inkling of my own story*

So, I entered this business because I wanted to make some coin and have a career.  I wanted to help people and make some money doing it.  I thought, "Who better than me to be a part of an Industry so important to our Country?"  It took awhile to get my foot in the proverbial door, but eventually I went to work with a small firm in Allentown, Pa by the name of First Choice Equity Group Inc.  I've looked back since, I won't lie.

My first year was wonderful, I marketed my posterior off and did rather well.  While I didn't know much about Mortgages, I had a wonderful support TEAM behind me who made sure my mistakes were minimal and cost effective.  Everything was by the book, which I knew ... even then ... may hurt us in the short run.  It pays to be a criminal... just not in the long run.

Then came the second & third year, my head was so far up that same posterior that my forehead was touching my tongue.   I was dealing with demons and doing my clients, my company, & myself a disservice.  I floundered like a fish out of water and was ready to drown before I realized something somewhat profound... "Take your head out of your posterior and look square in the mirror.  Wipe that colored stuff off your face and move on.  Don't let YOU hold back YOU!  And don't let YOU ever hold up or back the very people you were meant to help"

Year four was a bore. I was just trying to make up for lost time and trying to survive.  I was on a mission, but as missions go ... it tends to be a slow and steady process.  I worked that tail that sometimes wags me off to get there.  And I did.  I moved from resident ‘head case' to the top producer... not only in our office, mind you.  There were waves of recruiting efforts aimed at me across the board when my head was on the neck and body that seems to guide it.  The fact that you care about transactions and people isn't mentioned often enough, and despite my faults, I did and I do.  Sure, year four was a bore.  Yet, I was damn sure it wouldn't be any semblance of my legacy.  There's an ego in all of us... wanting to be greater than we actually are.  I don't want to be great, I want to be me... that, in the end, may just fit the bill.  If I don't, at least I won't look in the mirror and cry. 

Years five & six, I'll skip... for now.  They are less tragic in nature, I was doing my job rather well ...

*Ok, back on something you may want read... the insight from the insider*

And soon after came a point where more than dust hit the fan.  Things were starting to turn outrageous.  While at one point it seemed almost anyone could get a mortgage, now it's like taking a limp piss into a full-blown wind.  It's as if everyone is watching their asses at this point ... barely making enough loans to call themselves a lender.  The following will tell more of the story... based upon (and not loosely) an email I got... which showed me where the problem always lies.

‘Hey Jason, hope you are doing well and business is flourishing!  I just wanted to tell you about a wonderful opportunity that many Mortgage Brokers are taking advantage of since things aren't as pretty as they once were.'

My response, while snide, " Pretty, eh?  Some folks call me a ‘Loan Officer' or a ‘Mortgage Consultant' or a ‘Loan Originator' and the beat goes on.  In this state of being, in this industry, I call what I do ‘Chaos Control'."

His retort was simple and spoke volumes, not necessarily about him, but about this Industry. 

"When we were making three digits a year the chaos is easy to deal with."

Hmmmm, I'm sorry but when did you staple a number to people's lives?  You're making handfuls of money and then all of a sudden, when you are not... you bail?  I'm not wearing a Rolex, I'm not sporting a thousand dollar suit and I'm certainly not encaved in a half a million dollar home because of the 'boom'.  A bulk of that is my fault but I never lost sight of why I wanted to do this... to help.  While I understand in the Capitalistic Society we live in, you have to earn money, I will also understand but never agree with those who get in and get out.  Financially speaking, they are probably wise.  Ethically, I wouldn't trust them to feed my cat.  And Baxter is an eater by the way:-)

Some folks have left the Mortgage Industry because it wasn't their thing and they had to do something else to live.  I get that, understand that, & respect that.  I've met a ton of good people who I wish were still in this Industry, but are no longer. 

The main problem with everything can be summed up with one word, five letters, one syllable, Greed.  I've said it before and I'll say it again, that's the downfall of any business, society, economy, & human relationship for that matter.  Greed can be good but not in the way we have and continue to practice it.   Self-Promotion & Self-Gain and that's it.  While I know this world is a great big place, it's really very small.  I firmly believe in the 'survival of the fittest' mentality, but that mentality means helping each other out, that's how we survive.  If we don't, problems will linger like the soft scent of a candle in a once barren corridor.

"When we were making three digits a year the chaos is easy to deal with."  That mentality scares me, not because he or she is opportunistic... but because he or she was into it without others in mind.  Or, so it seems.  This process, Mortgage Lending, is just as much about caring as it is about closing a deal.  Or is it...

Money & Power intrigue us.  The concept or reality, whichever you are living, presents a wealth (pun intended:-) of opportunity.  Don't get me wrong, I would never want to turn our culture or country into a socialistic or communistic operative, but I do want to call a spade a spade.  Our humanity is just a subtle breath of everything else.  That's scary.  That can be changed.  When we start to care, to be selfless, to be inclined to look out for somebody else's best interests ... then, this will truly turn around.  Perhaps I'm waxing philosophical here and I certainly didn't spend nearly as much time on this post as I should have... that just makes me a 'D' student with a loud heart.  Money & Power intrigue me as well.  It intrigues me how it can both screw us up and help us out... opposite ends of a superficial spectrum.  I want to make sure anyone I encounter utililize them in the good way.  I also want to make sure they are ready for it.  That's the thing about Money & Power... you eat well but often times sleep restless.

Some days, I feel like this.  Other days, I feel like this.  Bottom line, Mortgage Lending is like life, like this.  Just hope that Blair isn't your Loan Officer:-)

JMS

Ironically, today was the first time I had the pleasure of speaking with Lenn Harley.   Being the end of the month, it was a hectic day and I really wasn't sure if I could meet the contest deadline.  So, I scrambled to get my entry in last minute.  I hope this will give prospective buyers, wherever they are located, a bit of insight they may not have already had.

I'll get to what I feel is one of the more attractive options I can offer folks from my end.  I would also advise that folks talk to a reputable FHA Approved Lender to see if that might be the better option.

From my end, let's assume the following hypothetical scenario ... based largely on Lenn's illustration in her post.

• Sales Price of $605,000
• 10% Down Payment ($60,500) Loan Amount of $554,500.
• Like Joe Adams before me, I'd opt for Lender Paid Mortgage Insurance as a viable option (as we are borrowing more than 80% of the Sales Price).  This Mortgage Insurance is built into the Interest Rate and translates into a higher rate.
• As of the end of the business day today, my Interest Rate on that product was also 6.875%.  That translates into a principle & interest payment of $3644.52.  Assuming taxes work out to be about $500.00 a month and Homeowner's Insurance is at $100.00 a month, the total monthly payment would be about $4244.52.

Lenn said the average income in that area was about $123,000 a year.  That's $10,000 and change a month coming in as income.  Bear in mind, this is Gross Income ... before Uncle Sam gets his take. 

I want to talk real fast about Debt Ratios.  Hopefully, in terms everyone can understand.  Lenders calculate both your front end and back end debt ratio.  Your front end debt ratio is simply the total mortgage payment (including taxes and insurance) versus the Gross Income coming in the door each month.  In this example, the monthly payment would be $4244.52 vs. a Gross Income of $10,000 a month.  We are over the 40% ratio ... just on the front end!  Yikes!!  The back end debt ratio takes into account your total mortgage payment and all other monthly debt (showing on credit, including things such as child support) but doesn't take into account such things as Utility Bills, Groceries, the beloved cost of Gas, etc.  A car payment here, a student loan there, and all of a sudden we are dangerously close to being at 50% on the back end!

As a general rule, lenders want your back end debt ratio to be under that 50% mark.  There are exceptions to that rule, like lots of money in the bank and/or retirement, a super strong credit file, a very stable job history, low LTV's, and the like.

Consider for a moment that just because the lender works up the numbers on paper and qualifies you, doesn't mean that's going to be a comfortable payment at the end of the day.  There is a term called Mortgage Poor where you are struggling month to month just to pay the mortgage and all your other bills ... with little, if anything, left over.  That's not a good place to be ... part of any competent & ethical Loan Officer's job is to look out for your best interests now and down the road, advising accordingly.

In this hypothetical scenario, there are a few other product options I'd sit down with the client to consider.  They include but aren't necessarily limited to the following:

• Interest Only Loan
• 40 Year Mortgage
• 1st Mortgage & 2nd Mortgage Split, avoiding PMI altogether.

The numbers in this hypothetical are tight and the level of comfort with the payment options for the borrower should be looked and considered very carefully.  At the end of the day, your mortgage payment affords you a roof over your head.  At the end of the day, you fall asleep at night.  You shouldn't be worrying about that very payment or roof.

I'd like to see more down payment in this scenario, if at all possible.  Options could get them in the door but I'd be leery of it hitting them on the posterior after it shuts.  It's doable, but I'd tread cautiously in helping them out.

Speaking with Lenn today, she mentioned that the inventory in her area is massive.  It would also be advisable to take a long gander at that inventory as a buyer ... perhaps there's something even more affordable on the horizon.

Jason Sardi

Mortgage Consultant

First Choice Equity Group Inc.

610-439-2166 ext. 229

jsardi@fcegi.com

Licensed with the Pennsylvania Department of Banking.

This one goes beyond just referrals.  While it's a wonderful thing to have a former client refer somebody to you, it's even better when prospective clients can read or hear experiences from those folks ... and then talk to that person who has already done business with you.  Then, they reach out.  Then, it's a bit more comfortable to know they know a person who can and will look out for their best interests.

At the end of the day, that's what matters to any consumer or person. (Consumers, aren't we all:-)

I've delivered more 'Bad' news than I care to share recently.  That's reality though.  I'm sorry, on paper you can't afford that house or mortgage.  I'm sorry, your Credit Scores don't fall in line with the Lending Parameters.  I'm sorry, your Credit History is such that we have some work to do.  Guess what, you can probably bank on having a phone call from me sporadically until you get to the point where I can help.  You're not on speed dial, but you're on my mind.  I really hate failing you if you came to me during a time when you couldn't qualify for anything.  My mission is to be there when you do.

Back to the title of this particular prose.

It's been said but is worth repeating; we (lending institutions) get our money from the same place.  Banks are the same (that's another conversation).  Many of us have different angles, avenues, and knowledge of how to make things work ... yet it's all conversation until your loan closes.  You can damn sure bet that when it does ... I'll be following up with you to make sure things are OK.  That's just me, I want to ensure there's a human element behind your transaction.  Therein lies, the title of this post.

Awhile back, I closed a transaction for a Teacher in Harrisburg, Pennsylvania.  I followed up with him regularly but didn't think twice about what is going on.  Turns out, he sent an email to fellow staff about his experience with me and the next thing I knew, I was being bombarded with scenarios from that man's sphere of influence.  Some of those scenarios, I could and did close.  Some of those scenarios were a shot in the dark.  The bottom line was simple though, his sphere of influence suddenly became mine.

When I entered this business back in 1984 2001, I was advised to contact my family and friends in the State of Pennsylvania to jumpstart my business.  Afterall, that seems to be the easiest 'target' of trust there is.  There was a slight problemo though, I had little family here and my friends at the time were probably more inclined to pay the bar tab than the closing costs on a home purchase.  I had to do it the old-fashioned way, "Hi, I'm Jason Sardi and this is what I do for a living."

Marketing is an interesting beast, I am a firm believer in Chameleon Marketing.  Adapt, Survive, and roll with the punches.  Yet, sometimes 'Old Rules' are the truest form of navigation.  As I grew, my business grew, my client list grew longer, testimonials started coming in.  Most of which were not solicited by yours truly.  They took a moment of their precious time to write about their experience with little old me.  That means something. 

It reminded me that my next marketing campaign won't be overflowing with charts, graphs, rates, wonders, or niche-product info ... this time, I'll let the client speak for me.

On another note, some folks miss that I include links to songs in my posts.  For that, I apologize.  Here ya go ...

She was one of those clients that was truly a pleasure to work with.  Her peristence, patience, & steadfast pursuit of a dream ... became a magic moment in my Real Estate Career.  Though young, she was not living an unencumbered life.  With great motives and responsibility, she emerged from a struggle ... with a dream realized.

The name has been changed to protect the admirable.

Lucy came to me with a bundle of burdens in her credit history.  Her passion was simple, to sell the home she currently lived in and buy a new one.  She had made leaps and bounds in her career after schooling and the income was coming in.  It was now time to upgrade.  But the demon's of credit past were still lurking ...

In a tougher (somewhat rightfully so) lending environment, I knew we had work to do.  Actually, she had the work to do.  I could only guide her in the right direction.

After reviewing her credit, I let her know exactly what needed to be done to get the financing to buy that new home that she so had her heart set on.  I was fully expecting to call her back in a couple of months and find that little progress had been made.  Perhaps that is just the cynical side of this Mortgage Broker's cruel self ...

About a month later, I got the call.  Lucy was on the other end of the line and exclaimed, "I'm ready!"

"To buy a home?" I cautiously asked.

"Yes Jason, I did what you told me and paid off all the negative debt I had and I'm ready to go!"

I recall a slight birth of silence on my part.  While I believed her, I was a bit taken aback.  After all, I've dealt with folks for years for whom we've put together a game plan and it never reaches the sweet ides of fruitation.  Yet, she had worked her keister off to put herself in a position of qualifying for that which she so desparately wanted ... that home.

Lo and behold, she was right!  I gathered all the documentation that she kept for her records after paying off her creditors and we re-visited her file and got her pre-approved.  She didn't need or desire to go searching for a home though, she already had one in mind.  It was the same one touting the 'For Sale' sign a month earlier.

An agreement of sale was reached and we were off! 

What transpired was a wrestling match commonly known and encountered these days in our Industry.  At times, we were coming up against odds from parties having little to do with the transaction ... other than complicating it.  Every obstacle was hurdled, though a foot got caught now and again.  A Pre-approval turned into a Committment to Lend which turned into scratching for every inch to reach those three magic words from the Lending Side of Things ... Clear To Close!  I called Lucy and heard the satisfaction in her voice, the relief in mine.  She did good, damn good.  I was just a guide in the ride.

After the ink dried, she was given the keys to her new home.  She clenched them in her hands like a nostalgic piece of jewelry passed on through generations.  Her eyes, welled up, began dripping tears down her cheeks at a rapid and glistening pace.  Lucy then got up of from the closing table and came over to where I was standing.  By this time, her tears were a downfall.  She reached her hand out to shake mine and said words that so simply define the very reason I'm probably even here, "Thank you Jason, thank you so, so, very much."  Her tears persisted and mine were about to follow ... but I held back. 

I knew right then that humanity had surpassed financial gain, one more moment in our time.

Thank YOU Lucy ... and welcome home.

Jason 

Born sullen & weary, the young child rested within his mother's arms ... waiting for the grace that seemed inevitable.

If I was musically talented Mike Sardi, you'd be in trouble:-)

Somehow, someway, I found out at an early age that life is not only not easy ... but an experiment in the making.  We are all on a similiar level, read behind and beyond the words if you think I'm incorrect.  Nobody knows what really happens next, if anything.  Heck, the whole deal is a leap of faith.  That of, believing in God, ourselves, our existence, our importance, etc. 

One thing did change my mind about everything though.  When I was a boy, younger than I am now, I looked at my Father as if he was something greater than human.  Truth is, he isn't.  I love him all the more because of that.  While we all may be sons and daughters of God, I'm the son of Mike Sardi.  That, I know for a fact.  The mailman denied any involvement:-)

Under different circumstances, my Dad would be my best friend.  Yet, he looks out for me, worries for me, wants to take care of me until the day he looks death in the eye.  My Dad isn't my best friend, he just happens to be someone I can't put a loosely utilized label upon.  I love him to death ... and beyond.  He's someone I look up too, even though I'm taller.  He's someone I can talk to about anything, even though my lips are sealed at times.  He cares about me, more than I care to report. 

Once upon a time I watched my Father (with 4 other gentlemen) play the Pittsburgh Steelers in a charity basketball game.   God, I love watching him play basketball.  He's Larry Bird on a 5'10" frame, Pistol Pete ... willing to pass the ball.  There's something I love even more than that though, I love you Mike Sardi.  I really do love you.  When you hit a last second winning shot, they turned back the clock to allow the 'Real Athletes' the opportunity to win.  I saw your face after that shot, my face turned a similiar shade.  Life's like that, not fair ... but you roll with what you got and keep on going.

A tear wept out of my eye the very first time I saw him cry.  A smile smirked upon my face when I saw him succeed time and again.  When he was down, I was out.  I just didn't know it yet, and don't really show it much ... to this day. 

Come to think about it, I take everything back.  You are my best friend Mike Sardi.  I'm damn sorry I don't show it more.  My bad, Dad.  Happy Father's Day, from a son who hasn't shown that I appreciate it or you enough.

Jason

P.S. - And Elaine Sardi, you happen to me my hero on so many levels.  Thank you for being you!  I love you!

Understanding the specifics of Rehab Loans can be tricky.  Especially considering parameters and products often change.  If you get nothing from this post as a Prospective Investor, Seasoned Investor, or Real Estate Agent, I'll sum up the key to any Rehab transaction in my opinion.  Find the worst house in a decent neighborhood, that's probably going to be the ideal transaction for most Rehab Products. 

I have a couple of different outlets for Rehab Loans.  For a more conventional and less pricey product, check out this information on the post I did on REHAB LOANS a little while back.

There's another type of Rehab Financing that is even more aggressive that the one I posted about above.  They will go down to a 620 score and if you find the right type of property at the right price and equity position, you can literally buy it with little to no money out of pocket!

I'll tell you right now, these loans are pricey.  I'll get into that aspect another time, on another post.  For now, I'll lay-out some information on this particular Rehab Loan, some of its parameters, & what it offers. 

About Rehabbing
There are many formulas used for the successful purchase of a rehab project. It's important to use one.  Of course the formula should be formulated around the specific parameters of the financing available.  The best financing outlet is going to be on a case by case basis.  There must always be a comfortable cushion between the purchase price and the selling price of investment property. This cushion price will help you achieve a successful investment, even if you have repair cost over-runs, or hold on to the property longer than you had anticipated. Remember, every day that the property is not sold or rented comes right off your bottom line. The interest, taxes, insurance, and utility bills compound each day. Buying the property at the right price will protect you from Murphy's Law.

Here's the Rehab Funding formula:

1.       Establish an after repair value for your property. (Get "area comps" and view each one. Pick out the property that has a street that is most similar to your house's street, and a structure that is closest to your house's structure, then compare the square footage, amount of bedrooms and bathrooms that are all listed on the "comps." This will help establish a real fair market value for your property).

2.       Multiply the ARV x .65 (This will give you 65% of the ARV).

3.       Establish a comprehensive and accurate list of repairs that you plan to do to the property, and estimate the costs for each repair. (This is important. If you are knowledgeable and experienced in doing repair work, you may not need help. If you are not experienced or skilled in this, find someone who is and have them draw up a plan. Even if it costs you a little money to get them out there, this could save you thousands of dollars).

4.       Subtract the cost of repairs from the 65% value of the ARV.

This should be the maximum price that you pay for the property! This is a conservative formula, and it usually works well. Remember, anyone can buy a property at close to fair market value, but with your costs and risks, you must do better!

"Rehabber Friendly" Terms

• Loan will be 100% of the sale price and 100% of the repair funds, not to exceed 65% of the ARV (after repair value).

• Turn around time on the loan: Within (2) weeks.

• Maximum length of the loan: (12) months.

• No pre-payment penalties

• Deferred payment plans available         

• Seller's concessions/assists may be used to finance the closing costs, as long as the loan does not exceed 65% ARV.

• If purchase and repairs costs are below 65% of ARV closing costs can be wrapped into the loan.

• Interest only payments (no principal) until the property is sold or refinanced.

            There is no penalty for early loan pre-payment.

• Repair funds go into an escrow account:  The escrowed repair funds are paid in draws as work is completed.

I'll be posting a Q&A about this particular product relatively soon, to give even more insight into another product available for specific rehabbing needs.  As always, if you have any questions, you can reach me via my contact information in that nifty little box below:-)

Some time back, a bunch of Mortgage Professionals here on Active Rain participated in a contest in which the question posed was, "Which is better, A Fixed Rate or an Adjustable Rate."  I had cited a term I had learned awhile back called the Sleep Principle.  Simply put, whatever program you decide is best for your situation, it's a good idea that you are comfortable enough with that decision to lay your head against the pillow and sleep peacefully each night.

It is vital to understand the features associated with this or any loan program you choose, and that it meets your unique financial needs.  Ask questions, ask a ton of them.  Let a Mortgage Professional guide & educate you as to the pros and cons of any loan program.

Some of the advantages of ARMs are the following:

• Get approved for larger loan amounts (Be certain of a few factors here, including how long you will be in the home, affordability down the road if the rate adjusts, etc)
• Lower Monthly Payments (Again, this makes sense if you purchase a home for you and your family and plan on being there only a short period of time.  It also makes sense many times for Real Estate Investors to increase overall cash flow with reduced monthly payments.  In either case, make sure you have an Exit Strategy (way out) to make sure any adjustment won't cripple you financially in any way.)
• Payment options that adapt to your needs. (Some folks have income that varies throughout the year ... more in some months & seasons than others.  These folks can benefit from a loan tailored to their specific situation and needs.)
• Flexibility for First Time Homebuyers.  (Education passed on from your Mortgage Professional to you is crucial to make sure this is a good fit.)
• This can pose better options for Savvy Real Estate Investors.  (As mentioned above, a lower monthly payment can increase cash flow.  In turn, this money can be utilized to invest in other projects or investments to diversify your Financial Portfolio.)

For all your Pennsylvania Mortgage Needs, I'm a phone call or email away.  Also, below are some other niche products we have available to fit a wide range of Mortgage Needs.

BUYING A HOME IN PENNSYLVANIA

REHAB LOANS

STATED INCOME INVESTOR LOANS

SBA LOANS

MANUFACTURED HOME LOANS

LEASE PURCHASE FINANCING

Jason Sardi
Mortgage Consultant
First Choice Equity Group Inc.
610-439-2166 ext. 229
jsardi@fcegi.com
http://activerain.com/blogs/shears76

Licensed with the Pennsylvania Department of Banking