Commercial vs Residential Loans?

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Residential Mortgage

Residential Loan

Commercial Loans

Commercial Loan

Commercial loans:
1. Require a higher down payment, typically 20%.
2. Have shorter terms, typically 5-20 years with a large chunk paid at the end.
3. Have higher interest rates.

So you typically have higher carrying costs(monthly payment) associated with a commercial loan, there’s more risk because you have a balloon payment at the end of the term – or you have to refinance, and you cannot refinance out if the rates go down without a prepayment penalty typically.

Qualifying for a commercial loan is different…it’s based on income potential of the property. While a residential loan is based on your gross income and debt.

Here are a couple articles:
Business Finance Commercial Residential
Commercial VS Residential Loan Terms

Just my thoughts. -Jenn

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What happens first? The preapproval, the search….buying a home for first time homebuyers(loans: FHA/USDA).

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QUESTION:

“We are just starting to look for homes. I’m 100% sure we need to find something FHA approved. What do you think the best approach is, should we find out how much we are approved for first before we begin our search?”

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https://GoNHhousing.gov

USDA-Logofhamakinghomeaffortable

ANSWER I SENT TO THE INQUIRER:

“There are so many programs out there for first time home-buyers.  FHA is great if you don’t have a lot of cash on hand for a down payment.  Rural Housing is similar to FHA and they offer additional help with their no money down option…you still need some money for closing costs.  Many times asking the seller for funds towards closings costs is a great way to help out too. My post on USDA Rural Housing 2012: http://jennifercote.info/usda-no-money-down-programs/

It is certainly a great idea to talk to a lender first, they will look at your credit to see if there are any red flags.  I always say even if you are approved for a higher amount, make sure you will be comfortable with the total monthly cost…mortgage, taxes, utility costs, etc.

If you want to get together to talk, so I can answer any questions, that’s great.   My main office is in the Nashua RE/MAX.  Of course we could take a look at 1 or 2 properties and chat, walking through a home is a good way to get acquainted.

The market under $200,000 is very active right now…multiple offer scenarios going on.  You would get approved for more on a house because there is no condo fee…but there’s isn’t a lot of inventory.  Any town along a major highway…Merrimack, Nashua, Bedford to even Hudson, Litchfield, tend to be the hot ticket towns.  A few clients I just helped looking under $200,000 we started looking in Goffstown, Milford, Wilton and towns west as you can get more for your money typically the more inland and north you go.  Manchester is a good option too, but it is the biggest city in NH….the closer you go to the edge of the city the bigger the lots get and more “rural” feeling.

Sorry for the lengthy email.  Here’s a link to some towns with properties under $200k, remember, condos you want to go lower because the condo fee is figured into what you are pre-approved for: http://www.nnerenmls.com/nne/maildoc/cot6169_1409497891-

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-Just my thoughts-  Jenn

**Rural housing uses FHA standards for their appraisals.  Blog post from 2009 on FHA requirements: http://jennifercote.info/understanding-fha-appraisals/

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Financing Manufactured or Modular Houses.

This is a continuation on my post titled:  “Trailer, Manufactured, or Modular?”

One more point on the differences between a manufactured or modular home is the types of loans you can get.  When trying to mortgage a modular home you would be looking at typical mortgage products because the dwellings are built to local codes and comparable to a stick-built (wood framed) property.  Overall it’s fairly typical.

Financing a manufactured home is different.  Not every lender will finance a manufactured home, and the rates can sometimes be higher.  One of the reasons for this is that manufactured homes tend to depreciate in value, and have shorter life-spans than a traditional property, causing more risk to the lender.

If it was “manufactured” prior to the HUD code established 1976 it is considers a mobile home and not eligible for government backed financing, FHA, etc.  Most of these end up being cash sales due to the lack of financing available.

Depending on how “mobile” the home is will determine if it’s “personal” property or “real” property.   If it’s on wheels, not permanently attached to footings, you would most likely need to get a personal loan, not a mortgage.

Manufactured?

Manufactured?

The manufactured home market is changing.  There is now a larger demand for smaller homes and a new movement coined “The Tiny House Movement” is in full swing making manufactured homes cool.  http://www.thetinylife.com/what-is-the-tiny-house-movement/

For more information you should talk to your lender.  I am only a real estate agent and appraiser, not a mortgage professional.

Just my thoughts. ~Jenn

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USDA No Money Down Programs

The government has a sponsored program that can assist households purchase a home with a low or even no down payment.  One of my favorites is the Rural Development Loan program.

SOME KEY POINTS:

  • Property must be in a USDA designated rural location.
  • 100% mortgage LTV which is based on the APPRAISED value
  • Zero down payment and low interest rates.
  • No limit on seller concessions or gift.
  • 30 year fixed rate
  • USDA approved lenders only.

Rural Development Loans are available in these New Hampshire communities: Atkinson, Hampstead, Amherst, Windham, Pelham, Bedford, Brookline, Hollis, Litchfield, Lyndeborough, Mason, Mont Vernon, New Boston, and Wilton.  For a full list of New Hampshire towns, and income requirements, read the FACT SHEET.

The ineligible area list for NH is far smaller: Concord, Derry, Hudson, Keene, Nashua, Londonderry, Manchester, Merrimack, Portsmouth, Rochester, Salem,parts of Goffstown and Hooksett.

Not all lenders can do Rural Development loans.  Contact me for more information.

More information:

Federal Site: http://www.rurdev.usda.gov/rhs/

Local NH/VT office: http://www.rurdev.usda.gov/vt/

State by State: http://www.topnhhomes.com/FinanceAgencies

 

-Just my thoughts.

Jenn

www.TopNHhomes.com www.JACoteAppraisals.com

*Information is from the rural development government websites listed above.  I am not a mortgage professional.  This is for informational purposes only and you should do your own due-diligence.  This is a government funded program that needs to be funded yearly.

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Finding Properties That Can Use Government Assistance Programs

There’s a wonderful new web tool called “Down Payment Resource” that is integrated into New Hampshire’s MLS system.  It helps determine if a buyer is eligible, and if a property is eligible, to use government-funded programs for down payDownPaymentResourceNashuament assistance, affordable fixed-rate mortgages, mortgage credit certificates, and rehab loans.

This tool was voted most Innovative New Techonology in 2011 by Inman News.  Click on the image and it will direct you to the site.

“Opening New Doors to Home Ownership”

Just my thoughts!

 

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Government Sponsored Program Helps Families Buy a Home.

The government has a sponsored program that can assist lower-income households purchase a home with a low or even no down payment.  One of my favorites is the Rural Development Loan program

Rural Development Loans are available in these New Hampshire communities: Amherst, Bedford, Brookline, Hollis, Lyndeborough, Mason, Mont Vernon, New Boston, and Wilton.  For a full list of New Hampshire towns, and income requirements, read the FACT SHEET.

The ineligible area list for NH is far smaller: Concord, Derry, Hudson, Keene, Nashua, Londonderry, Manchester, Merrimack, Portsmouth, Rochester, Salem, parts of Goffstown and Hooksett.

Not all lenders can do Rural Development loans.  Contact me for more information.


More information:

Federal Site: http://www.rurdev.usda.gov/rhs/

Local NH/VT office: http://www.rurdev.usda.gov/vt/

State by State: http://www.topnhhomes.com/FinanceAgencies

-Just my thoughts.

Jenn

www.TopNHhomes.com
www.JACoteAppraisals.com

*Information is from the rural development government websites listed above.  I am not a mortgage professional.  This is for informational purposes only and you should do your own due-diligence.  Contact me and I can guide you to the appropriate resources.

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“HUD TAKES ACTION TO SPEED RESALE OF FORECLOSED PROPERTIES TO NEW OWNERS”

This is great news for investors!  FHA is temporarily removing the restriction for investors.  FHA didn’t allow a new buyer to purchase a home that has been owned less than 3 months by the seller (typically an investor-aka flipper).  The regulation was for curtailing flipping the property.

This change is a smart move for FHA/HUD because many of the homes being purchased by investors are in pretty poor condition and a typical buyer wouldn’t want to, or just couldn’t, purchase the home.  This allows investors to purchase the property, do the necessary improvements, which will usually help the new buyer get a conventional loan on the property.  Many, and I do mean many of these foreclosed properties don’t quality for conventional lending because they are, well, basically a mess!

Doing a quick search for “Flippers” brought up some very negative comments.  They are often looked at as the bad guy, and that is just inaccurate.  There is good and bad in every aspect of life, profession, business…you get the point.  Flippers are ultimately just investors.  Just like any other opportunity they are looking for a profit…is that bad?  They are assuming the risk.  A property might look like it just needs a couple cans of paint and new baths, but underneath all that could be a dragon rearing it’s ugly head.  The investor will do their due-diligence, but things are often missed, and herein lies the risk.

Moving foreclosures off the market is great.  In this market investors will typically price these properties low for a quicker sale and this helps your first-time home-buyer get a house that’s fixed up and a pretty good deal.  Southern New Hampshire has seen it’s fair share of foreclosures, but it has not been the dominant market.  Arms-length transactions have been the norm.

Just my thoughts…

www.TopNHhomes.com

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Understanding FHA Appraisals

Understanding FHA Appraisals

From FHA: “Required repairs are limited to those repairs necessary to preserve the continued marketability of the property and to protect the health and safety of the occupants.”

When you do FHA appraising you constantly have the 3 S’s in your mind:

1. Safety – Any safety issues need to be fixed.

2. Security – I like to refer to this one as “saleability”.  It basically refers to protecting the FHA insured mortgage by keeping the property in marketable condition.

3. Soundness – Are there any structural problems?  Floor joists rotted, or a leaking roof?

Having the appraiser do a FHA appraisal does not constitute a home inspection and it is always recommended you hire a qualified home inspector.

Here are 12 of the many things your FHA appraiser will look for:

  1. ALL the utilities need to be ON at the time of inspection
  2. Missing floor covering, fixtures, outlet covers, and/or exterior siding
  3. Rotted wood or evidence of infestation
  4. Chipping or peeling paint – if built prior to 1978, possible lead paint issues
  5. Windows not opening or closing – need 2 means of egress from bedrooms
  6. Roof with less than 2 years of economic life or with missing or damaged shingles
  7. Garage must have drywall on any wall adjacent to living areas
  8. Crawl space should be at least 18 inches, with no standing water, or debris in the crawl space
  9. Attic must have insulation and access if there is an attic
  10. HVAC, plumbing, and electrical must function properly
  11. Electric garage door must have a reverse stop
  12. Wells must be located 50′ from septic tank, and 100′ from absorption field.

If the property has any of these issues they need to be cured (fixed) before closing.

HUD 4150.2 Handbook for appraisals.  This is the original bible for appraisers and it is constantly updated by issuance of new Mortgagee Letters…

FHA Appraiser Resources -Bottom right of page.  The Mortgagee Letters are constantly updated and the appraiser needs to keep track of this information.

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