Time to renovate and turn those lemons into lemonade

I have noticed the rise renovation loans in today’s economic market. Homeowners are either staying in their current house longer waiting for the market to change or scared of their employment status. The others are allowing their homes to go into foreclosure allowing for more purchases that require improvements.

Renovation loans can be used for Purchases and Non Cash out Refinances. This allows you to purchase a property or refinance a property using the additional money for renovations, repairs and/ or additions. Just like antiques need polishing to sparkle so do those older homes. If you are considering purchasing a foreclosed home that needs work done then this loan is for you. Many of the foreclosures are lemons after the buyers have let them go for so long. They need your help turning them into lemonade.

There are many benefits regardless of the type of renovation loan you select but it does require some work from you and certified individuals. Renovation loans use the value after the improvements allowing you to borrow more money. It allows you to borrower up to 110% of the value where construction to perm loans are based on the completed value. These types of loans are based on a 30 year fixed rate mortgage so it is suitable for long term unlike a Home Equity Line of Credit.

I thought I would give you some basic information of a Renovation loan so you can see if it fits your needs. I would recommend contacting a lender for additional information.

There are two types of 203k loans and both have eligible and ineligible items. Which means your first step would be to figure out what you want done to the house. This will help the lender to figure out what type of loan and make it easier for you to find the right contractor and/or consultant.

203k Streamline- requires no consultant up and total costs cannot exceed $35k (including associated fees), intended for quicker, easier rehabilitation costs, borrower cannot complete there own work, You can typically occupy the property after close or live there during renovations and a single payment is paid to the contractor upon completion.

Consultant K- requires more extensive work such as items to the structure, major installs and requires more supervision. A minimum of $5k worth of work, up to 6 months of the Principal and interest payments can be financed to assist borrower who would otherwise be paying 2 house payments.

All repairs have to start 30 days after closing and are to be completed within 6 months. The funds are put into an escrow account and will be paid to contractors depending on the guidelines of your 203k loan.

If you are ready to head down that path then contact a lender today.

Time to renovate and turn those lemons into lemonade

"People often say that motivation doesn't last. Well, neither does bathing - that's why we recommend it daily."
- Zig Ziglar

Remember NOT to recycling pizza boxes. Go to earth911.com for what to recycling and how.

Short Sale: The Basics

A short sale is when a home is sold for less than the amount owed on the mortgage for the home. This occurs when the bank agrees to take less than the full amount due on the mortgage.

A seller does not have to be behind on a home loan to seek a short sale. If sellers wish to pursue a short sale, they must owe more than what the home is worth, demonstrate the house cannot be sold for the amount owed, and suffer from a legitimate financial hardship that makes the mortgage unaffordable.

The next step in the short sale process is to assemble a short sale package. This package will include such things as a financial statement showing monthly expenses, income documentation, bank statements, tax returns, a listing agreement, purchase agreement, an estimated HUD statement and a financial hardship letter.

If the home is sold as part of a short sale, there will be a difference between the amount owed and what the bank collects. This is called the shortage or the deficiency. Sometimes this deficiency may be negotiable. Some banks will seek a promissory note for the deficiency, meaning that the seller may be responsible to pay the difference between what the home sold for and what is owed to the lender. Some lenders might choose to file a collection or a judgment for the amount owed. The seller should be certain that any amount of debt, or release from debt, is received in writing. If the deficiency is forgiven, the lender can write off the shortage with the IRS, which means the seller may be responsible for paying taxes on the amount of the deficiency. However, the Mortgage Debt Relief Act of 2007 generally allows taxpayers the potential for relief from tax on mortgage debt forgiveness.

A short sale will affect the seller’s credit score. To minimize the effect on a credit score, sellers should avoid making late payments on their mortgage and work with the bank to report the sale in the best possible manner.

We are not a law firm, nor an accounting firm, nor a credit repair organization. For advice regarding potential tax liability or credit scores, please consult a tax attorney or an accountant.

Brian Morris

Senior Loan Officer

Prospect Mortgage

Cell: (919) 627-7077

Email: brian.morris@prospectmtg.com

Short Sale: The Basics

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Mortgage Manafesto http://ping.fm/SmDfm

Knowing the differences between a Broker, Banker and Correspondent Lender…

You will hear the following terms when shopping for a mortgage. I have been asked about these terms a thousand times since I transferred companies recently. Those terms are broker, mortgage banker, and correspondent lender. Knowing the differences gives you a variety of options in the marketplace. I mentioned in a previous blog that choosing your lender comes down to the relationship that you build with the loan consultant. Just because I believe this to be true doesn’t mean that your need is the same.

Broker is an individual in the business of assisting in arranging funding or negotiating contracts for the client but who doesn’t loan the money himself.


Brokers to me are a lot like a basketball scout. They are either charged a fee or receive commissions for matching the team to the player. These fees are required to be disclosed. They have plenty of flexibility to shop around for the lowest rate but the fees might be higher. They are freelance agents and not employees of the companies. Many of services you see advertised online are brokers. Which is one of the reasons that this industry makes up around 50% of the lending world today.

Mortgage Banker is an organization that makes real estate loans that are then resold to investors. The mortgage banker's income derives from the fees it charges to originate and service the mortgages. Sale of the mortgages gives the mortgage banker more funds to use in making additional loans

These Banks are state licensed, have lines of credit to fund loans and their own employees. These employees are given rates sheets each day to show the cost of loans. Employees have little room to negotiate since they have to have money to keep the doors open. They still offer competitive rates and a wide variety of products. The difference is that all of those products come from the same institution. The perk is that you know the institution that is making the decision and can offer you outstanding customer service after closing.

Correspondent Lender is a lender who delivers loans to another (usually larger) lender against prior price commitments the larger lender has made to the correspondent.

These lenders have the option to hold your loan in their own portfolio or sell it to the secondary market. To me this offers you the best of both worlds. You deal with the actual decision maker for loans within their portfolio. You would deal with the same loan associate no matter the direction your loan needs to go. It is usually sold 2-3 weeks after closing since they typically have a smaller line of credit. They are usually sold to the larger lender (sponsor) in large lumps instead of one by one. The sponsor acts like the mortgage banker.

I am currently employed with Prospect Mortgage who is one of the largest correspondent lenders in the country. They state that the “business model was formed during the challenging market, so know what it takes to survive and meet customer needs during these tough times.” This business model has made them be able to service around 70 percent of the loans. http://www.myprospectmortgage.com/company_profile.asp

Knowing the differences between a Broker, Banker and Correspondent Lender…

Easter bunny http://ping.fm/Oixn7

Moving box meal in 20

If you just closed on your mortgage and the moving van has just left then I am sure the family is hungry. You ask yourself what to eat?…. You think of all the fast food you have eaten over the past week and decide you need something homemade. Then make a quick Szechuan Black Eyed Pea Salad. I have made it several times over the years. I discovered it in my Vegetarian Times Magazine. It is also great wrapped up in a tortilla.

It is the perfect combination of ingredients that requires little preparation and money. It only requires you to find the following items in the kitchen boxes ( I am sure that you have it labeled.)

Kitchen items needed: Cutting board, knife, can opener, bowls, strainer and forks.

Ingredients required:

2 – 14 oz canned black-eyed peas, rinsed and strained

1 medium green pepper (any pepper will work)

½ cup chopped red onion

1 jalapeno Chile seeded and finely minced

1 clove of garlic- minced

1 avocado- cubed ( 1 cup)

2 TBS Lemon Juice

¼ cup olive oil

3 TBS red wine vinegar

1 TBS Szechuan sauce

2 tsp sugar



Toss together black-eyed peas, bell pepper, onion, jalapeño and garlic in a large bowl. Toss avocado with lemon juice in a separate bowl (if you only have one bowl then you should be fine adding it all together). Add avocado mixture to black-eyed pea mixture.

Whisk together oil, vinegar, Szechuan sauce and sugar in bowl used for avocado. Add black-eyed pea mixture and toss to mix.

Last step: flip over that empty box and use as a table.

It is even healthy for you… Per serving (3/4 cup) 223 cal, 5G prot, 14 G total fat, 20 G carb, o MG chol, 438MG salt, 6G fiber, 3 G sugars
http://www.vegetariantimes.com/recipes/11122

Moving box meal in 20

Property Flipping Mortgage Manafesto of 2010

Property flipping is not the actual flipping of a house…. It is by definition a quick sale of a property for profit. These houses are usually ones that need renovations so they are sold for cheaper to the investor. These investors usually can do the renovations needed and then sale to a buyer for a profit. Unfortunately most of these homes are usually the ones in foreclosure.

Foreclosure: A legal process by which the lender forces a sale of a mortgaged property because the borrower has not met the terms of the mortgage.

There were many Investors taking advantage of this situation. They were fixing the minimum repairs needed to make a sale which made the Department of Housing and Urban Development (HUD) step in. In 2001 HUD saw what was happening and created a new guideline. There was now going to be a time limit the investor had to hold onto the property in order for the new borrower to obtain an FHA loan. During those times there were thousand of products out there to choose from, home values were appreciating and credit scores were higher.

The game and rules have changed since 2001. Today there aren’t as many products for consumers; there are more homes in foreclosure, depreciating values and lower credit scores. This in turn has made the FHA product a very popular one.

HUD saw the need for a temporary change so Secretary Shaun Donovan announced that they were suspending the 90 day flipping rule. They were setting a temporary waiver in place that was good for one year. This waiver would allow the quick resale of foreclosed homes where the activity is high. I read thought the guidelines and believe you should too. This waiver will help tons of people but it does have very strict conditions and guidelines to ensure that there are no predatory practices. Take a look at the HUD website for more details of this policy and to view the actual waiver requirements. (http://www.hud.gov/)

http://reitips.com/fha-property-flipping-waiver/ ( check out this great video)

Property Flipping Mortgage Manafesto of 2010

April Fool's Day

Watch out for all your friends and colleagues today. Today is April 1st or April Fools. I began reading some really good pranks online today.  I began wondering  like many of you how this celebration begin?  I mean today is the today that is celebrated by pulling pranks on people. In fact it makes you doubt everything today.

 I just read that pranks started centuries ago. The April Fool's day and name was probably began on April 1st after a poem.  This day is observed and celebrated in many different countries.  To me this just goes to show that we are out to celebrate/ observe anything especially when it had to be translated from the Dutch language.  http://www.museumofhoaxes.com/hoax/af_database/permalink/eduard_de_dene/


 There are funny pranks, mean pranks and just simple pranks. Remember it is named after pranks so be sure not to harm anyone. I remember growing up and my mom doing icecream with carmel sauce as mashed potatoes and gravy.A link for the above photo from Family Fun is listed below. It is another Fool for the kids that is suppose to look like Cashew Chicken Stir Fry. I read that today is a good day to propose to someone. If they say no you can say April Fool's and if they accept then you are ok! I am sure many of you have come out with some great pranks today. I  I would recommend watching out today but if you need a  good laugh or some ideas then just check out the  following website. I would love to hear about some good pranks.

http://www.museumofhoaxes.com/hoax/aprilfool/
http://familyfun.go.com/april-fools-day/april-fools-day-recipes/cashew-chicken-stir-fry-715005/

April Fool's Day