Posts Tagged ‘appraisal’

PIWs are back!

October 10, 2017

Every few months, there are changes made to loan guidelines. Often, the changes are minute and not worth talking about very much. This time, there is something worth discussing.

Property Inspection Waivers (PIW) are back! Technically, they’ve been back for a while, but it was rare to use them. But what are PIWs? Property Inspection Waivers mean a borrower does not need to order an appraisal for the loan if they are satisfied with the value Automated Underwriting (AUS) assigns it. These have been available, but really only used with making a significant down payment (or having lots of equity if the loan is a refinance). How much is significant? Lets say 40% or more in equity.

With this latest change, Fannie Mae/Freddie Mac are saying it will be more widely used and available for clients with smaller down payments/amount in equity – even for purchase transactions.

Currently, I am working with clients on a refinance with just 20% equity and no appraisal needed. How is this of benefit to the borrower? For one, it saves money. Appraisal costs range from $450-$500, and the PIW fee is only $75. It also creates a much quicker turn time for closing. Imagine closing start to finish in under two weeks.

Lenders will not know if a loan will qualify until it gets into Automated Underwriting. That means the borrower will have to apply and be under contract on a home with the final purchase price. That said, it is always great to have the opportunity to save money and close faster! We’ll see how well this rolls out, but it’s good to have PIWs back as an option.

Financing a cash purchase

October 20, 2015

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We are currently in a seller’s market, and you are looking to buy a home. You want to be competitive, but you don’t want to tie up cash for 6+ months. After buying a home, the must be on title for at least 6 months in order to do a cash out refinance OR open home equity line of credit.

If there was only a way to pay for the home in cash now, and then get a loan to recoup the cash immediately. There is now!

Buyers who purchase a home within the past six months in cash are eligible to finance the property today. That way a more competitive cash offer can be presented to the seller, and the home buyer can still get financing after they close on the home.

To qualify for Delayed Financing:

  • The new loan amount can be no more than the actual documented amount of the borrower’s initial investment in purchasing the property plus the financing of closing costs, prepaid fees, and points.
  • The loan is subject to the maximum allowed loan to value ratios for the cash out refinance.
  • The purchase transaction was an arms-length transaction.
  • The transaction is documented by the HUD-1, which confirms that no mortgage financing was used to obtain the subject property. A recorded trustee’s deed (or similar alternative) confirming the amount paid by the grantee to trustee may be substituted for a HUD-1 if a HUD-1 was not provided to the purchaser at time of sale.
  • The sources of funds for the purchase transaction are documented (such as, bank statements, personal loan documents, HELOC on another property).
  • All other cash-out refinance eligibility requirements are met.

Wanting to make a cash offer on a home, but not tie up the cash for the next 6+ months? Buying that home in the state of Georgia? If you’ve answered yes to both, contact me today to get started. I can help guide you through the loan process to get you approved for a cash out refinance without the 6 months seasoning requirement.

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Delayed Financing

February 24, 2015

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Let’s say you found a great deal on a home, but there is a problem. The home isn’t inhabitable… the plumbing was stolen out of the home, so there is no running water… there is major roof damage that needs to be repaired, and the current owner can’t/won’t do anything about it… the home was a foreclosure that now has broken windows, smashed doors, missing light fixtures, etc. In any of these scenarios, a bank would not lend money on the home until the home was repaired and could pass an appraisal inspection.

You are fortunate enough to be able to buy the home in cash, but don’t want to part with the money when the home could be financed at historically low interest rates. Sure, you could buy the home in cash. Then do a cash out refinance after owning the home for six months, but the money is gone for six months. Until now…

With a Delayed Financing loan, a buyer can purchase a home today “as is”, and apply for a loan as soon as the next day. In this scenario, a buyer can make a cash offer, get a quick close, and turn around and get their money right back instead of waiting six months. Here is how you do it:

1. The purchase must have been an arms-length transaction.
2. The cash used for the purchase must be appropriately documented.
3. The new loan amount cannot exceed the cost of buying the home.
4. To prevent fraud, a copy of the HUD-1 from the purchase of the home will be required.
5. A title search must show there is not liens on the property.

If the home meets these criteria, in addition to the normal loan approval process, the buyer can get their money back in weeks instead of months.

Have you purchased a home recently that needed work done before the home would pass an appraisal inspection? Do you want to buy a home like this? If you are able to purchase the home in cash, you can get that money back sooner rater than later. If the home is in Georgia, contact me today, and we can get started!

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“Shadow Inventory of Homes” OOOH!

October 20, 2010

First things first, what are these “Shadow Inventory of Homes”?

The “Shadow Inventory of Homes” is homes that normally would have already been foreclosure properties.  These homes have been delayed from going into foreclosure by loan modifications, moratoriums or otherwise being stuck in never-never land between delinquency and repossession.  Due to efficiency increases of banks and government, these types of homes are moving through the system at a faster rate and will soon hit the market as short sales or foreclosure sales.

What will this do to the value of homes?

From several studies conducted by independent consultant firms such as John Burns Real Estate Consulting, the Bookings Institute and many others and also the reports in the Wall Street Journal, the belief is that values will fall again.  Some feel that the fall will be rapid and hopefully short lived and others feel that the fall will continue on for several years.  No matter what happens the values will more than likely fall or in the best case scenario, remain constant.

The main reason for this value decline is the sheer numbers of homes on the market.  In the majority of the markets across the US the current supply of homes will take over 1 year to be absorbed.  This 1 year absorption does not take into account this new influx of homes.  To top all that off, many lending institutions have already exhibited their lack of tolerance in holding on to a property and selling it for a reasonable price.  Their goal it to get the property off the books rapidly and if that means lowering the price to do so, then that is what they do.

On the bright side, if you are an investor, these homes will probably be sold at a much lower price and this will help the movement of these homes through the market.  The hope is that the investor movement of these homes will be at such a pace (due to the low prices) that the effects of these homes coming on the market will be limited.

We can only hope!

Again, small business to the rescue…..You have to love those entrepreneurs!