Jeremy Drobeck ~ (269) 488-9494 ~ Apply Now ~ Contact Us

The National Association of Realtors recently published the 2015 Remodeling Impact Report  its defiantly worth looking at.  The report ranks projects likely to increase value.

  1. Kitchen Renovation
  2. Bathroom Renovation
  3. New Master Suite
  4. New Wood Flooring
  5. Etc (see report)

The report goes into a lot of detail including estimated costs and how much the value is increased.  If you are thinking of renovating your current home or purchasing a home and renovating it this report is a must see! I'm a big do it yourself and have personally renovated quite a few homes; whether you are a DYI or hiring a contractor this is simply some great information to have on hand.  Thinking you would like to hire a pro but wondering how the heck you are going to pay for it?  You aren't alone.  Here at Amerifirst Home Mortgage we have a whole array of renovation loan programs that can help you find a way to fund your home renovation.  Give me a call to discuss your options or check out some more information here. 

 

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Free Money!  Yeah I said it, theres not even much of a catch.  Here's the deal.  AmeriFirst Home Mortgage energy improvement promotion.  The basic idea is that buyers taking out a FHA 203k renovation loan who make at least $3,500 in eligible energy efficient improvements to the home will then receive a lender credit towards closing costs in the amount of $1,000.

Eligible home improvements include:

  • Use of Energy Star Products for heating systems, air conditioning, window & door replacement, water heaters, roofs, etc. . .
  • Duct sealing
  • Approved insulation
  • Energy upgrades like solar panels, wind turbines, & ground source heat pumps

Borrower Benefits:

  • Monthly utility savings
  • Lender Credit towards closing costs for $1,000!
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So how exactly does the repair escrow work? Well that's a great question!  Let's go thru this step by step.  We offer repair escrows with any loan program:  FHA, VA, RD, & Conventional. Repair escrows give the buyer the ability to have the work done after closing. Here’s how it works:

  1. Appraisal is completed and the appraiser provides us with a list of required repairs.  Here is a sample of some things the appraiser might ask for.  The bottom line is that anything the appraiser feels is a health or safety issue will be on the list of repairs.  With that said there is no published list of required repair, its all up to the appraiser.
    • This IS NOT a home inspection which would be much more in depth. 
    • The appraiser required repairs are the only thing we can set up an escrow for. 
    • This IS NOT a renovation loan it is simply a way to complete the repairs that have to be done as part of the transaction.
  2. We send the buyer and real estate agent the list of repairs and contractor packet.
  3. Buyer obtains an itemized bid from a licensed and insured contractor for only the required repairs. Buyers are NOT allowed to complete any repairs themselves.  We need the following back from the contractor:
    • Signed bid
    • Copy of the contractor's license
    • Completed W-9
  4. AmeriFirst reviews and approves repair escrow accordingly. It should be noted that we typically won't approve bids over $10,000 because the work MUST be completed in 2 weeks.  For large projects AmeriFirst offers different renovation loan programs.
  5. Closing on the home occurs and escrow is funded. The key is “where does the money for the repair escrow come from?”
    • Seller could fund the escrow account out of their closing proceeds
    • Buyer could fund the escrow account by bringing additional funds to the closing.
    • Rural Development Only – if the home appraises for more repairs can be financed into the loan up to the appraised value.
  6. Repairs are completed by the contractor.  Once the loan is closed and ownership transferred the clock is ticking and the contractor has 2 weeks to get the repairs completed.
  7. After the work is completed we send the appraiser back out to the property to verify everything is done. 
  8. Checks are cut to the contractor.  Here's what we need before we can cut checks.
    • Final bid from the contractor (if the price has changed from the original)
    • Signed and notarized final lien waiver
    • Buyers authorization to release funds to the contractor (otherwise we have to cut a two party check)

 

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When it comes to renovation financing we have lots of different options for home buyers and home owners. The Renovation Loans, FHA 203k streamline, & the Fannie Mae Homestyle all have different benefits and pitfalls to them.  Not to mention you put the PowerSaver Grant option in there to further complicate things.  The chart below compares some of the differences between the programs.  Mortgage options can be complicated and when you throw repairs into the mix its even more confusing.  Give us a call today and we can help you figure out the best program to meet your needs.

Renovation Loan Comparison Chart

 

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This information is intended to explain to home buyers & Real Estate Agents all the possible solutions for appraisal required repairs.  Every ones situation is different so don't hesitate to call and run the scenario buy us.  Most of the time we can find a way to make it work and get the transaction closed. There shouldn't be any transaction that fall's apart because the lender cant accommodate the repair situation. So, lets address our options on these homes deemed un-financeable by other agents and lenders.

Conventional, FHA, VA & Rural Development Repair Options

  1. Seller Completes the repairs – this is the best option, typically costs little to no money, repairs are done prior to closing and the property is re-inspected prior to closing. Simply the best option. For bank owned homes (foreclosures) often the bank will not do any work to the property. It can’t hurt to ask and I would encourage that, however if the bank will not complete the repairs there are other options.
  2. Repair Escrow - with this option repairs are done after closing.  Here’s how it works:  More Details
    1. Obtain a bid from a licensed and insured contractor for only the required repairs (2 bids required for FHA & VA). Buyers are not allowed to complete ANY repairs themselves.
    2. AmeriFirst reviews and approves repair escrow accordingly
    3. Closing on the home occurs and escrow is funded. The key is “where does the money for the repair escrow come from?”
      • Seller could fund the escrow account out of their closing proceeds
      • Buyer could fund the escrow account by bringing additional funds to the closing.
      • Rural Development Only – if the home appraises for more repairs can be financed into the loan up to the appraised value.
    4. Repairs are completed by the contractor. Now that we closed and ownership transferred the clock is ticking and the contractor has 2 weeks to get the repairs completed.
    5. Checks are cut to the contractor.
  3. Switch it to a  Renovation Loan
    1. Typically the most costly option: Higher APR/Interest Rate & Higher Closing Costs
    2. 3.5% + down required
    3. Obtain a bid from a licensed and insured contractor for the required repairs and any other repairs the buyer wishes to complete
    4. AmeriFirst reviews bids & validates the contractors
    5. Closing occurs and repairs are financed into the loan.
    6. Contractor receives half the money upfront
    7. Work completed and property is re-inspected
    8. Check for remaining balance cut to the contractor

 

 

Check out the attachments below for more information or give us a call to discuss!

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Wanted to let everyone know I'll be speaking in front of a group of investors in Kalamazoo, Michigan on August 27th.  If you are thinking about buying a rental property or looking to expand your portfolio this would be a great opportunity to not only learn more about the mortgage guidelines and process, but also network with a group of local landlords.

Here are some highlights of what I will discuss:

  • Preparing for the next purchase - What the lender is looking for
  • Tips and tricks to qualifying
  • Low down payment options on nonowner occupied homes
  • Renovation options for investors
  • The real Fannie Mae guidelines
  • Learn about a low down payment 2 - 4 unit owner occupied renovation government back mortgage program
  • Cashing out equity on a current rental to purchase more properties

A little more about this group.  The organization is called KARHA-IEN and you can find out much more about rental properties on their website www.karha.com

 

Hope to see you at this meeting!

GUEST WELCOMED!
TUESDAY August 27th, 2013 at

Theos and Stacey's Restaurant

5225 Portage Rd

Portage, MI 49002

6 PM DINNER AND 7 PM MEETING START

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With all the foreclosed homes on the market right now required repairs have become very common in the home buying process.  No worries, its just another hurdle and there are a number of ways to get to closing even when the appraisal comes back with required repairs.  All loan programs FHA, VA, Rural Development, & even conventional loans have the possibility of repairs.  When the appraiser visits the home they may see health and safety issues they end up requiring be remedy as part of the transaction.  This video walk you thru some examples off possible repairs.  Below you will also find some down-loadable attachments to help guide you thru the process.

Note:  The first half of the video gives examples, the second half explains how to handle the repairs (starting at 5:47)

 

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I just had to share this But Loan song with you Created by my coworkers here at Amerifirst Home Mortgages. Enjoy! Oh and if you would like more infomation about a But loan check out this page about renovation lending. Its a great loan program we can fianance in all kinds of repairs and remodeling projects from kitchens, bathrooms, additions, the list is virtually endless!

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FHA raises up the cost of home ownership AGAIN! Effective 4/18/2011. Equates to another $40 per mth for a 200,000 loan! Learn more about our repair escrow program, how it works, how to finance the repairs into the loan, etc. . . . Got Repairs????

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203k renovation loans, Santa crashes into a house - - -  SEE VIDEO BELOW!

With our renovation loan program ANY thing is possible. Buyers can make whatever improvements they want to.  Best of all . . . . All the repairs are completed AFTER closing.  Next time you see “as-is” think “NO PROBLEM”.

We’ve Got The Perfect Solution!

  • Buyers can fix up their dream home
  • Low down payment
  • Repairs financed into the loan
  • Repairs completed after closing
  • Appraisal based after improved value
  • Buyer pick’s  the contractor’s
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