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Home Loans and Fixer Uppers

September 24, 2021 / / 0 Comments

There are countless reasons why fixing up old homes has turned into one of the most colossal real estate trends over the past decade. While it seems everyone talks about fixing up an old home one day, not many people are speaking about what it’s like to finance such a project. Fixer upper loans combine the purchase or refinance of a property with the cost of renovating it. This unique mortgage option addresses the challenge buyers often face when figuring out how to finance a fixer upper. Follow along below as we discuss why you should invest in a fixer upper and what loan options may be available to you.

Reasons to Purchase a Fixer Upper

  • You can build the custom home of your dreams
  • You can flip it for a profit
  • It’s typically cheaper than purchasing a newer home
  • There’s less competition when purchasing it
  • You fell in love with the property or neighborhood, but not the home itself

Loan Options

  • FHA 203(k) Loan – This government backed loan will require that you to adhere to FHA guidelines and limitations when completing renovations. In some cases this loan will not allow for much DIY work, as the government will require that licensed contractors complete most major tasks.
  • VA Renovation Loan – Some eligible service members, veterans and qualifying spouses can use this loan to combine a VA purchase loan or VA cash-out refinance with their renovation costs. Other major advantages of this option include not having to pay a down payment or any closing costs on the property at the time of purchase. In some cases the VA accommodates a higher purchase price based on the home’s expected value once renovations are complete
  • HomeStyle Loan – Referred to as a Fannie Mae convention loan, a HomeStyle loan is a fixer upper loan similar to a FHA 203(k) loan, but with increased limits for borrowers. Due to the fact that this is a conventional rehab loan, homebuyers finance their home directly with private banks or mortgage companies that offer this product, and Fannie Mae purchases the loans from lenders.
  • CHOICERenovation loan – Also dubbed the Freddie Mac loan, CHOICERenovation can be used to finance a fixer upper project through traditional means in conjunction with the refinancing of a separate existing property. This option is great for those who plan on purchasing the fixer upper as a second home or as an investment property.

Final Thoughts

Before you commit to spending your free time renovating a fixer upper, make sure you know exactly what to expect throughout the process financially. For free and honest advice from the pros, contact the team at American Mortgage Resource, Inc. in Boston, MA. Visit our website to learn more about the loans we offer or contact our team directly Monday – Saturday at (617) 972-8588.

How to Qualify for a VA Loan

June 17, 2021 / / 0 Comments

The Veteran Administration’s Loan was created to provide veterans with a federally-guaranteed home loan with no down payment. It is granted by the U.S. Department of Veteran Affairs to eligible veterans and current active military members. Eligible borrowers can use it to purchase a home as their primary residence or refinance an existing mortgage. If you currently or formerly serve in the U.S. military, you may qualify. Read on to learn more about eligibility requirements and how to apply for a VA loan.

Benefits of a VA Loan

VA loans are the one of the best mortgage options for veterans and come with many benefits and advantages that allow you to achieve your dream of becoming a homeowner. This includes:

  • No down payment
  • Better terms and interest rates
  • You can apply and receive more than one VA loan
  • No private mortgage (PMI)
  • Fewer closing costs
  • No penalty fee for prepaying the loan

Who is Eligible?

As mentioned above, VA loan eligibility extends to current and former military service members, such as combat veterans and troops who served in peacetime, active-duty personnel and reservists. Spouses and surviving spouses of service members – including those who are disabled, missing in action, or held as a prisoner of war – are also eligible. The list of eligibility requirements is very specific and varies according to the date you served, the type of service, and the length of time. In a nutshell, you are most likely eligible if you were not dishonorably discharged and meet one or more of the following requirements:

  • You have served 90 consecutive days of active service during wartime (WWII, the Korean War, or the Vietnam War).
  • You have served 181 days of active service during peacetime.
  • You have 6 years of service in the National Guard or Reserves.
  • You are currently on active duty with 90 continuous days.
  • You are the spouse of a service member who has a service-related disability, MIA, or is a POW.

If you don’t meet the minimum service requirements because you were discharged, according to the U.S. Department of Veteran Affairs, you may still be able to get a Certificate of Eligibility (COE) if it was due to one of the following reasons:

  • Hardship
  • The convenience of the government (you must have served at least 20 months of a 2-year enlistment)
  • Early out (you must have served 21 months of a 2-year enlistment)
  • Reduction in force
  • Certain medical conditions
  • A service-related disability

However, if you were dishonorably discharged due to bad conduct and other grievous offenses, you may not be eligible for a VA loan. You can try to potentially qualify by applying for a discharge upgrade if you have a strong case that it was due to mental health conditions, PTSD, traumatic brain injury, and more.

Borrowing Requirements

Now that you understand the eligibility criteria, there are three more general requirements that VA loan applicants must meet. The first is obtaining a COE after providing documentation that proves your service in the military. The other two requirements are that you must have a stable source of income and an adequate credit score. There is no minimum income required to get a VA loan but there needs to be evidence of sufficient income to cover the monthly loan payments. As for your credit score, it can vary from lender to lender but most prefer at least good or better, which is at least 670+ on the FICO scale.

Conclusion

When it comes to researching and applying for loans, it can be overwhelming trying to understand all of the eligibility conditions. The process of trying to buy your dream home can be stressful without the help of professionals. If you find yourself in a difficult situation and in need of loan help, American Mortgage Resource, Inc. is here to help you every step of the way. Consult with our experts today at (617) 972-8588 and we’ll help find a solution based on your needs. For more information, visit our website to learn more about our services and loan options. 

Types of Government-Insured Mortgages

September 23, 2019 / / 0 Comments

The U.S. government has made it easier for hundreds of thousands of Americans to buy homes through providing various government-insured mortgages. Many citizens have purchased a house with these mortgages when it wouldn’t have been possible with the other conventional home loans. For more information about these special mortgages, continue reading!

FHA Loans

FHA loans are backed by the Federal Housing Administration. These loans make it possible for you to buy a home, even if you don’t have a perfect credit score or aren’t able to provide a large down payment. This is because they have more lax requirements – borrowers must provide a 3.5% down payment (other loans require a down payment of 20% of the purchase price of the home).

These loans are available for anyone trying to purchase or refinance a primary residence, but are mostly popular with first-time homebuyers. They come with mortgage insurance in case the borrower is unable to repay the loan. FHA loans are usually fixed-rate loans with either 15 or 30-year terms, and 1% of what you pay goes towards the mortgage insurance.

VA Loans

VA loans, granted by the U.S. Department of Veterans Affairs, provide flexible, low-interest mortgages for members of the military (both active duty and veterans) and their families. They don’t require a down payment or private mortgage insurance, and they offer leniency with credit scores. You are expected to pay a funding fee that is added onto your monthly payments, or may be paid upfront at closing. These fees serve to offset the program’s cost to taxpayers.

USDA Loans

USDA Loans are given by the U.S. Department of Agriculture. They assist moderate- to low-income borrowers in buying houses in rural areas. To qualify, you must purchase a house in a specified USDA-eligible area and meet other income limits (for example, the amount of debt you have cannot exceed your income by more than 41%). Most of these loans require no down payment and offer discounted interest rates, but you will have to purchase mortgage insurance.

These loans are perfect for those who struggle financially and are looking to purchase a home in a small, rural town. “Rural” doesn’t necessarily mean “countryside farmhouse.” It simply means that the town is under a certain population count – it can even be a suburban community.

Pros and Cons

Pros: Government-insured loans require lower down payments and have lenient credit requirements. They make homeownership accessible to everyone – since they are secured by the government, sellers are more likely to sell homes to lower-income applicants who are seen as a risk. In addition, buying a home allows you to build equity and credit, which helps you strengthen your finances and progress with your other financial goals.

Cons: The mandatory mortgage insurance premiums can be expensive, and cannot be cancelled on most loans. You will also have higher overall borrowing costs. In addition, you will likely need to provide more documentation to prove your eligibility for the loan.

Conclusion

Government-insured loans have helped countless Americans buy houses. However, you need to find a specialized mortgage company that is registered by the government to provide you with these loans. At American Mortgage Resource, Inc., we are able to help you find the home loan options that will help you the most.

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