Daily Mortgage Rates LIVE - 10/02/2024 - Renovation Loans

In this episode of Daily Mortgage Rates LIVE!, we’re exploring the transformative power of renovation loans. If you’ve got your eye on a fixer-upper or want to enhance your current property, this episode is a must-listen. Join us as we discuss the various types of renovation loans available, from FHA 203(k) loans to Fannie Mae HomeStyle options, and how each can help you fund your dream renovation.

We’ll delve into the benefits of using renovation loans, including how they allow you to roll the cost of renovations into your mortgage, making it easier to manage your finances. 

Whether you’re a first-time homebuyer or an experienced investor looking to increase property value, this episode offers valuable insights and strategies to help you make your renovation dreams a reality. Don’t miss out on the chance to learn how to unlock the potential of your property through renovation loans!


For more episodes visit: https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast 

About The Mortgage Calculator:

The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as over 5,000 Non-QM mortgage loan programs using alternative income documentation! 

Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes!

Our team of over 350 licensed Mortgage Loan Originators can assist our customers with Conventional, FHA, VA and USDA mortgages as well as access thousands of mortgage programs using Alternative Income Documentation such as Bank Statement Mortgages, P&L Mortgages, Asset Based Mortgage Programs, No Ratio CDFI Loan Pr

Catch all the episodes of Daily Mortgage Rates LIVE at https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

Check out all episodes of Daily Mortgage Rates LIVE at https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as thousands of Non-QM mortgage loan program variations using alternative income documentation!

Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes!

Our team of licensed Mortgage Loan Originators can assist our customers with Conventional, FHA, VA and USDA mortgages as well as access thousands of mortgage programs using Alternative Income Documentation such as Bank Statement Mortgages...

Transcript

Restream recording Oct 02, 2024 • 03:04:29 PM: 0:09

So welcome everyone. My name is Kyle Hiersche. I'm the COO of the Mortgage Calculator joined here by Our president, Nick Hiersche and our CSO, Jose Gonzalez. We are a lender that specializes in non QM loans. And what we do every weekday at 11 a. m. Eastern on this show is go through our actual live mortgage rates for a few of the standard programs. And then we do a deep dive into a different loan type. And today's loan type is going to be all the different types of renovation loans. So Jose probably has some cool stuff for us to check out there. But first, we'll look at the rates. So, Nick, if you're ready, let's go ahead and pull up today's rates so we can see what they look like. Right. So the rates are just a touch lower than yesterday, which is always good. And, uh, we'll pull them all up and compare the APR across all of the programs. It is October 2nd, just after 11 a. m. Eastern, so all of our standard programs have their initial rate sheets for the day. And if you'd like a full breakdown on itemized load estimate that breakdowns all the itemized fees that go into the APR, please get with our team members. They'd be happy to send that over. We will set up a basic scenario, a standard single family home, 500, 000 purchase, 400, 000 loan amount corresponds to 80 percent on the value, 20 percent down payment. And we'll set an estimated 760 credit score and an estimated 40 percent debt to income ratio. So with all those settings, let's check out the rates for today. So first up our 30 year fixed conventional option for a primary home, typically the most common option people think of when they think of a mortgage, rates as low as 5. 75 today, final APR 6. 067, still just a touch above 6, uh, but definitely lower than yesterday, which is great. Now, if for any reason our customer doesn't qualify for a conventional option, we typically want to quote an FHA option to compare. FHA allows more leniency on credit issues and a higher overall debt to income ratio, but does require upfront and yearly mortgage insurance. rates for FHA today, 4. 99. Final APR with the mortgage insurance and all the fees, 5. 901. So when we're comparing across the programs here, our customer qualifies for both. FHA could be a touch cheaper if our customer is willing to do the mortgage insurance. And our customers that need to use FHA, definitely a great option, almost identical to conventional there overall. And our VA options are only for eligible vets and active service members. If you are eligible for these loans, these are amazing rates as low as 5. 125 today. Final APR 5. 402 with a standard funding fee. And notice this is going to be the best option when we compare it to FHA or conventional, a lower overall APR, definitely a good option for eligible borrowers. And the final standard option that every banker lender has is USDA. USDA is only for properties in rural areas of the country. If the property is eligible and the borrower is eligible, these are great options to compare. USDA comes in 4. 99. Finally, pair with all the fees 5. 705. So notice if our customers shopping in those areas and comparing to an FHA, USDA is going to be a touch cheaper and a touch cheaper than conventional. So, that's typical, the best option for a rural area. Now that rounds out the standard options that any bank or lender has, and if our customer doesn't qualify, unfortunately, most banks or lenders have to deny them, but we have 5, 000 additional options, starting here with our non QM alt doc option for a primary home. So, if our borrower doesn't qualify with tax returns and standard documentation needed for a conventional or FHA, needs to switch to alternative docs. We can use bank statements, 10 90 nines, asset related p and Ls, all kinds of different options. Rates today coming in at 6.125. Final A PR 6.425 for a standard bank statement option. And notice we're within a half a point within about 0.4 of the conventional options to switch to non qm, which is amazing for our borrowers to still get that home. They really want. And we have all kinds of options for investment properties. So first up are non QM Alt Docs, so bank statements are similar again. Rates coming in today, 6. 625, final APR, 6. 951, and we'll compare that to our other investment options. There are no government options, so no FHA, VA, or USDA, but we do have conventional investment property options. Rates coming in today, 6. 375, final APR, 6. 710, so it's a touch cheaper than our Alt Doc option, which is typical. But not cheaper than our favorite options. Our DSCR absolutely amazing DSCR, no income needed, no employment needed. Simply use the estimated rents from the appraisal to determine a DSCR ratio. The estimated rents could cover the estimated expenses. Okay. The property will cashflow. That is a DSCR ratio over one, which is preferred. So DSCR with a three year prepayment penalty, which is standard comes in today. At 6. 25 rate, final APR 6. 5, six, six beating conventional by a touch. Okay. And we can even add a five year prepayment penalty to sweeten the rate, uh, the rates a little better. 5. 875 final APR, 6. 193 beating conventional by quite a bit there. So great option. And we do have an option with no prepayment penalty that comes in today at 6. 625 final APR, 6. 951. Which is typically a little more expensive than conventional, but still, I would say 100 percent of investors would prefer a DSCR loan when it is very comparable cost to conventional there. And the final two options we always go over. These are new programs for our customers that may have lower rates than what we're looking at here, but still want to access their equity. They want to keep their first mortgage and get a second mortgage to get some cash out. Typically the most common option is a HELOC, but we now have our 30 year fixed second mortgages to get cash out of a primary home. Rates as low as 8. 125, so much lower than a HELOC, and final APR 8. 542. And these are fixed rate instead of adjustable like a HELOC, so great options for our customers that want to get that cash out and keep that first mortgage in place. And we can do the same for investment properties, rates as low as 9. 25, final APR 9. 557. And HELOCs are very rare for investment properties, so these are amazing options for our investors out there to get cash out without touching that first mortgage. Now let's go ahead and switch into our topic. Definitely very cool as Kyle mentioned, renovation loans, not something I can quote instantly on the quick demo there. Definitely something that has to be thought about and customized, but we have tons of options. And as Jose will explain, these are great options for markets such as we're facing right now where there is limited supply. So, Jose, let's explain why we would use this first off and exactly what our rate programs are. Good morning, everyone. Thank you for joining us for Daily Mortgage Rates Live with the Mortgage Calculator. Yes, like Nick mentioned, the renovation loan option is an amazing solution to the lack of inventory issues we're having in many markets. Because it opens up a, a, an additional sector of properties that would normally be not at the reach of your typical borrower buying with regular non renovation financing. What I'm referring to would be property with condition related issues that would normally have to be a cash or hard money only purchase because you will not be able to close the transaction. Uh, with, for example, missing kitchen cabinets, dismantled bathrooms, uh, wiring issues, roof, leaky roof, you know, different things that could be brought up, for example, in an appraisal. That, you know, will not allow the property to close. Uh, and also it's a great solution for borrowers just wishing to convert whatever home they're purchasing into their dream home. They may not be able to find the property in the condition that they're looking for, right? The one with the remodeled wind, uh, window remodel, kitchen, bathrooms, new roof. The one that's in the condition that they would like, uh, this, uh, renovation loan allows you to purchase the property and also finance the renovation costs or, um, What some people may not be aware of. It also allows you to refinance your current property in, in this case, you decide you don't want to sell because you really may not be able to find what you're looking for, but you're, you're good with your location. You just need, uh, um, you just want to renovate it. So you can convert your existing home into your dream home as well. So let's get into the options that we have today. We have some great, uh, low down payment options for renovation loan purchases. Uh, first option we have here, which is one of the most common, uh, renovation loans out there, probably the, the most widely, uh, known as far as borrower awareness is the FHA 2 0 3 K renovation loan purchase with only 3.5% down payment. 6.125 is our lowest cost option at par, and you can buy that down. All the way to 5% at a cost of 2.5 points. So this is our FHA option. Then we have a a few conventional options. Here we have our Freddie Mac Choice renovation loan purchase. Now this one is with 5% down payment. And our lowest cost option is 7. 125 at a cost of a quarter point, and you can buy that down all the way to 6%. So you do see a little bit of a difference in the rate between the FHA 203k and the conventional renovation model. Now we have our Fannie Mae home style renovation loan purchase, uh, the, uh, this one 7. 625 is our lowest cost option at par and you can buy that down all the way to actually 5. 99%. At a cost of 2.5 points now for a 3% down, yes, we do have 3% down renovation loan options. This one is Freddie Mac's, uh, home possible renovation loan. Uh, you all are aware the home possible is an affordable loan option that, uh, allows borrowers to attain 97% LTV, even though they may not be a first time home buyer. Right. They can actually even still own another property as long as it makes sense for underwriting and still qualify for this option with only 3 percent down because it is an affordable loan option, which uses the area median income as the deciding factor. However, if the borrower is purchasing a property in a low to moderate income census tract or a minority census tract, then any income limitations of the program are removed because a program usually caps out at 80%. of the area median income. Uh, 7. 125 is the lowest cost option here at PAR and you can buy that down all the way to 6%. Uh, this program does have a better pricing than standard conventional pricing. And I did promise you some, uh, high LTV options. Well, look at this, right? USDA renovation loan purchase 100 percent LTV. Uh, 5.875 is our lowest cost option at par, and you can buy this down all the way to 5.25%. And for another high LTVA hundred percent LTV option is our VA renovation loan purchase. 6.75 is our lowest cost option at par, excuse me, high costing 4.449. Uh, actually, and you can buy that down all the way to 5.5%. At a cost of 2. 449. And our last option here, uh, just sharing one of our, uh, few refinance options that we have now, this is a limited, uh, uh, cash out. In other words, a rate in turn refinance, but just imagine instead of selling your home, you can refinance this option. If using the home possible option up to 97%. LTV and get renovation funds. So 7. 125 is our lowest cost option at a cost of 0. 25 and you can buy that down all the way to six percent at a cost of 2. 375. So look to the mortgage calculator for all of your renovation loans as well as agency and non QI. All right, thank you Jose. It looks like we have some questions coming in here, so A question here. Can someone purchase an as is property which needs renovation with this loan? Is it available for only single family home or in the property? No, that's exactly what the pro, what this loan program is for. There is an as is value. That is determined. And then there's that after repaired value, also known as the ARV, and then we have a renovation budget. So you just have to make sure that your, uh, that your price, if it's a purchase is at least equal to the ARV. Right. Or else you're going to have a reduction in the loan amount. And yes, you are able to purchase a condo with a renovation loan, but obviously you're not going to do any structural renovations to the building with the loan, but you're going to do renovations to the interior walls in of the property. All right. Let's see. Another question. Do we do SBA loans? Uh, yes, we do. You want to touch on that real quick? Yes, we do. We do. Uh, we can originate SBA loans both for purchases, both for refis, and actually SBA does have a type of renovation loan if you want to call it because as part of the SBA loan, you can include capital improvements. Right. It just has to fit into the overall business plan that's being proposed for the use of the funds. So, you can do an SBA purchase where you need to, for example, build out the space, which is going to be renovation. Uh, as long as everything adds up and makes sense in the business plan, uh, the loan would be good to go. And those loans go, uh, as high as 100 percent LTV on the SBA purchase loans. All right, perfect Well, thank you for the questions Uh doesn't look like we have any more So we'll go ahead and wrap it up Remember that we do this show at 11 a. m Eastern every weekday where we go through our live rates and then do a deep dive into a different loan type So we'll have a new loan type for you tomorrow. Thank you Everyone. We'll see you tomorrow at 11 a. m. Eastern for the next episode of daily rates live with the mortgage captain