Atlanta Mortgage Lender

All-time Low Mortgage Rates

All-time Low Mortgage Rates

I never thought I would see this day, but we are seeing rates in the high 3’s on 15 year fixed loans and in the mid 4’s for a 30 year fixed.  It’s amazing – rates are currently the lowest they have ever been since they began recording them 36 years ago.  You may have heard how difficult it is to refinance in 2010 — qualifying is harder and property values in Atlanta are down a bit.  Add to that the fact that the big banks are now working on 90 day rate locks because they are so backed up with applications, and many people are just choosing to sit this out.  But you owe it to yourself to at least take a look at the options.

If you can answer yes to all of those questions, then you most likely qualify.  If you have an FHA loan, you can refinance WITH NO APPRAISAL REQUIRED, so you can ignore the first item regarding equity.

What if my home has lost value?

There is a government program that could still allow you to refinance.  It’s called HARP – Home Affordable Refinance Program, and it was implemented in 2009 to try to assist more homeowners to be able to refinance.  In short, if your loan is held by Fannie Mae or Freddie Mac, then this program allows you to refinance even if your home has declined in value.

For example, if you purchased with 20% down, but your home has declined in value – the program allows you to refinance anyway, WITHOUT ADDING MORTGAGE INSURANCE.

But how do you know if you are eligible?  It’s easy to check.  Visit the following websites and fill in the form and you will get a message indicating whether Fannie Mae or Freddie Mac own your mortgage.  Keep in mind that while your bill comes from Wells, Chase, Citi, BofA, etc, in most cases those loans are ultimately held by Fannie or Freddie – so do yourself a favor and check.

If you have any questions about your eligibility to refinance or if you want to see what your options look like, please don’t hesitate to contact us to discuss the specifics of your situation.  And take advantage of the lowest rates in history!

100% Financing on Jumbo Mortgages

Many high net worth borrowers are shocked at the lack of availability of low down payment options in the current mortgage lending landscape.  Most lenders are requiring at least a 20% down payment on any jumbo loan with even higher down payment requirements for super jumbos.    That means that many high net worth individuals are faced with the prospect of having to liquidate a large portion of their investment portfolio in order to purchase real estate.

We have a solution to this problem with our high net worth second mortgages.  And unlike the traditional “pledged asset” mortgage, you will be able to keep your securities in your name in a brokerage account.  We can do 80-20 loans at very attractive rates for borrowers who have the portfolio values to allow it – typically, you will need assets that are two times the amount of the second mortgage needed.   Another possibility is to use this 2nd mortgage to keep your first mortgage at the $417k level in order to secure the best rates available today.

You can keep your investment portfolio working for you while obtaining the funds needed to close on your home purchase.  On a refinance, if you have an issue with the appraised value, you can still get the refinance done and take advantage of the low rates available today by utilizing this 2nd mortgage product to pay down some of your first mortgage.

A quick example: Borrower is purchasing a $1M property and wants to bring no money down to the transaction.  The borrower has $400k in various securities.  We can provide a jumbo mortgage for $800k at a very attractive 30 year fixed rate of 5.50% (5.67% APR).  The 2nd mortgage amount of $200k can be made based on the securities held and that rate would be a variable rate that is currently 5.35% (5.49% APR).  This 2nd mortgage is an interest only loan and in most cases, the interest is tax deductible.

Refinance Example: Borrower had a current $500k loan balance and a rate of 6.5%.  The property appraised for only $522k, meaning that the loan to value is 96% on the new refinance – which is not possible on a jumbo mortgage.  The rate that the borrower was quoted on this new jumbo was 5.5%, however, his lender was unable to do the loan.  We stepped in and took over at that point, and broke the loan down into a $417k first mortgage (80% loan to value) and a $83k second.  The rate that we secured on the first was 4.5% (4.68% APR) – a full point lower than the jumbo rate the borrower was trying to get.  The rate on the 2nd was 5.35% (5.49% APR).  In the end, the borrower saved $358 per month over the jumbo refinance option and saved $775 over their old 6.5% loan.

Please contact us to get more details on this program.

The Energy Efficient Mortgage (EEM) – Guest Post by Jason Payne of Structured Energies

What is an Energy Efficient Mortgage (EEM)?

As the single largest housing expense after a mortgage payment, utility costs can have a direct impact on how large of a mortgage a homebuyer can afford. Buyers can save money on the cost of utilities by making energy efficient improvements to the home they are purchasing. New homebuyers or current homeowners can use FHA’s Energy Efficient Mortgage (EEM) to finance the cost of these improvements. FHA offers the Energy Efficient Mortgage Program to allow homebuyers to finance the purchase of a home—or refinance a homeowner’s current mortgage—and include the cost of the energy-saving, cost-effective improvements through a single mortgage. FHA’s EEM program recognizes the monthly utility cost savings when homebuyers make energy efficient improvements. Borrowers may use the EEM program to finance the cost of energy efficient improvements into their new mortgages, without the need to qualify for additional financing, because cost-effective energy improvements result in lower utility bills making more funds available for their mortgage payments.

How the Loan Works

Buyers can take out an EEM loan as a 15- or 30-year fixed-rate mortgage or as an Adjustable Rate Mortgage (ARM) from an FHA-approved lender. FHA requires that a 3.5% cash investment be made on the property, based on the sale price. The total amount of the mortgage is based on the value of the home plus the projected cost of energy efficient improvements.

Because the home will be more energy efficient, owners will save on utility costs and, therefore, be able to devote more income to the monthly mortgage payment. The final loan amount can exceed the maximum FHA mortgage limit by the amount of the energy efficient improvements. Buyers may finance into the mortgage the cost of the energy efficient improvements determined to be cost-effective.

A Home Energy Rating System (HERS) provider will complete a measurement of the home’s energy efficiency and provide a report listing recommended cost effective energy improvements, an estimated cost of the energy improvements, and estimated energy savings to the buyers and their lender. Buyers may finance the cost of the energy inspection report as part of the mortgage if the entire package, including these fees, is cost-effective. The amount of the energy efficient improvements is placed in an escrow account and released after an inspection verifies that the improvements are installed and the energy savings will be achieved. Buyers can begin making energy improvements after the loan’s closing, and the work must be completed within 90 days.

Eligibility

Almost anyone who has satisfactory credit, enough cash to close the loan, and sufficient steady income to make monthly mortgage payments can be approved for a FHA-insured EEM loan. There is no upper age limit and no certain income level required. The following types of properties are eligible under the EEM program, including new construction or existing one- to four-unit single-family residences:

• Single Family Detached Homes
• Townhomes
• Condominiums (certain restrictions apply)

Examples of improvements that are made under an EEM loan

• Air sealing
• Duct sealing
• Replacing a heating/cooling system
• Replacing a water heater
• Lighting retro-fits
• Fixing or replacing a chimney
• Insulating an attic, crawl space, exterior walls, and/or pipes and air ducts
• Replacing doors or windows
• Installing active and passive solar technologies
• Installing a programmable thermostat

Combining EEMs with other programs

EEMs can be combined with other FHA products including 203(k) and Streamlined(k) purchase or refinance. The energy efficient improvements completed under an EEM will qualify for the $1,500 Federal Tax Credit. Also, Georgia Power customers can receive up to an additional $1,900 in rebates, including $200 for the initial energy assessment, through the Home Performance with ENERGY STAR® Program that is being offered in the metro Atlanta area. Homeowners across the area who have already taken advantage of this program are seeing documented savings of 20%-50% on their energy bills. Many other state and federal programs also offer up to 65% in rebates and tax incentives for renewable energy installations such as solar and geothermal.

A Recent EEM Case Study

Charles, a new resident of Atlanta, recently purchased a beautiful home in the heart of the city that was built in 1955 and was very inefficient. By using the FHA EEM Program, he added $8,000 for energy efficient improvements to his loan with no additional qualifying. With this money he was able to install a high-efficiency furnace, a new duct system, foam insulation in the floor over the crawlspace, an ENERGY STAR programmable thermostat, and attic air sealing and insulation. His house is now much more comfortable and is $85 per month less expensive to operate. Though his mortgage payment increased by $55 per month, the $85 per month of savings in energy costs have offset that and actually put $30 back in his pocket every month. Charles also took advantage of Georgia Power’s Home Performance with ENERGY STAR Program and received $1,300 in rebates for the initial assessment fees and completed improvement work. In addition, he was able to get the full $1,500 Federal Tax Credit for energy efficient improvements. If that’s not enough, as a first time buyer, Charles will receive the $8,000 tax credit as well. After combining all of the savings, rebates, and tax credits, Charles is now enjoying over $11,000 he received through his EEM. Not to mention, he now owns a more valuable, durable, and comfortable home that is less expensive to own and operate.

Why Now?

If you are considering purchasing a new home or refinancing your current home, now is the time to act. Interest rates are low, and many programs offering rebates and tax incentives have limited funding and will likely be discontinued or replaced by lesser incentives as this funding dwindles. First time buyers and move up buyers have until April 30^th to be approved before the $8,000 and $6,500 tax credits expire. Electric and natural gas rates are also expected to rise in the next few months making this the perfect time to make your home energy efficient through an FHA Energy Efficient Mortgage.

About Jason Payne

Jason Payne is the owner and President of Structured Energies, LLC. Structured Energies, LLC is committed to providing comfort, quality, efficiency, and value for all of our customers throughout the Atlanta, Georgia metropolitan area.  We help facilitate many federal, state, and local energy efficiency programs that offer rebates and tax incentives associated with energy efficient improvements made to new and existing single family and multi-family homes. Programs such as ENERGY STAR® for new homes,  Home Performance with ENERGY STAR for existing homes, Energy Efficient Mortgages, and Energy Improvement Mortgages

FHA 203k Streamline Renovation FAQ

What is a Streamlined (k) loan?

A Streamlined (k) is a limited repair program offered by FHA. Repairs may be no less than $5000 and total funds required, including contingency fund and required fees associated with the program, may not exceed $35,000. The program allows you to finance the cost of repairs into your mortgage before construction begins.

What are the basic features of the 203k streamline?

• FHA guidelines apply
• Opportunity to borrow against the value of the home after improvements
• Flexible credit qualifying (minimum credit score 620)
• Owner occupied 1-4 unit properties, PUDs, condos (with restrictions), and REO properties
• Work can be completed by one contractor, several contractors, or borrower (borrowers may not complete repairs in Texas)
• REO’s, foreclosures, and short sales
• Incomplete renovations
• Out-dated kitchens, bathrooms, etc.
• Improve instead of move using our 203k streamline refinance
• Purchase and replace dated appliances, including free-standing stoves and refrigerators

What type of repairs can I make to my home?

Generally, repairs which are non-structural in nature, such as roofing, HVAC systems, flooring, painting, and window and door replacements may be financed with a Streamlined (k).

How much time do I have to complete repairs?

Repairs must start within 30 days of closing and be completed within 6 months.

What do I have to do to start the process?

Envoy requires that you obtain bids from your preferred contractors using the Contractor’s Estimate form given to you by your loan officer at application. Your contractor, in turn, must complete and sign the estimate and return it to you along with client references and a “resume” of their work experience. Forward these documents to your loan processor.  Your loan processor will review the contractor’s work history and verify references. Assuming that the contractor is acceptable to Envoy, we will obtain a IRS Form W-9 from your contractor and ask you to sign the bid, indicating your acceptance of the amount and the work to be performed.

Can I do the work myself? **

You may complete work for which you can demonstrate expertise and experience. Any work requiring a construction permit requires that you have a license in that field. You must complete a bid estimate, just as a contractor would, and maintain records and receipts to document the progress and cost of the work.

**If you live in Texas, you must use third party contractors for all work.

What happens at closing?

Your closing package will contain several documents related to the rehabilitation work you plan to complete. In addition, if you live in a state where liens are typically filed by contractors against your property, the closing agent will provide you with a package from Envoy that contains the required Release of Lien forms, along with instructions on how to complete those forms and where they must be filed.

How do I obtain funds to start construction?

After closing, Envoy turns these loans over to a lender who specializes in rehabilitation lending.  Once the lender purchases your loan, a process that may take as long as two weeks, you’ll receive a Welcome Package within 7 – 10 days. 50% of the construction funds will be sent separately at that time. This means that you will typically receive funds to begin construction within three to four weeks of loan closing.

How are the funds sent to me?

Funds are sent to you by mail and cannot be transferred into your personal bank account. If you are using an outside contractor, the check will be issued jointly to you and your contractor. If you are completing a portion of the work yourself, the check will be issued directly to you for that portion.

How many times can I request funds during the course of construction?

There are only two payments made during construction. 50% of the funds are sent to you prior to the beginning of construction, and the balance is sent once construction is complete.

What should I do when construction is complete?

You will complete a form provided to you by the rehabilitation lender called “Mortgagor’s Assurance of Completion” and fax it, along with receipts and invoices, to document that the work is complete. The lender will conduct a title search to verify that there are no outstanding liens for construction and, if your rehabilitation cost was more than $15,000, will coordinate with you to order a final inspection. Once these items are complete, final funds will be mailed.

If you live in state where the contractor typically files liens against the property, you will also need to file a completed Release of Lien in your county of residence and provide proof of that release to the rehabilitation lender. Envoy will provide you with forms and instructions at closing.

Your Welcome Package will explain, in detail, what you must do to close the rehabilitation period and receive the final check.

What happens if there are not enough funds to complete the construction?

Your contingency fund can be used to cover some or all of the shortage, but any additional funds must be paid by you out of pocket. This is why it’s so important to obtain the most accurate estimates possible during the loan process.

What happens if there are funds left over after construction is complete?

Any remaining funds will be applied to the principal balance of your mortgage.

What should I do if there are delays that require me to exceed the six month construction period?

Notify the rehabilitation lender immediately! At their discretion, they may be able to work with you to extend the construction period.

Specifically, what types of repairs are eligible?

• Repair/replacement of roofs, gutters and downspouts
• Repair/replacement or upgrade of existing HVAC systems
• Repair/replacement or upgrade of plumbing and electrical systems
• Repair/replacement of flooring
• Minor remodeling that does not involve structural repairs
• Painting, both interior and exterior
• Weatherization, including storm windows and doors, insulation, etc.
• Purchase and installation of appliances, including free-standing ranges, refrigerators, washers/dryers, dishwashers, and microwave ovens
• Accessibility improvements for persons with disabilities
• Lead based paint stabilization or abatement
• Repair, replacement, or addition of exterior decks, patios, and porches
• Basement finishing, remodeling, or waterproofing that does not require structural repairs
• Window and door replacements and exterior wall re-siding
• Repair/replacement of septic systems and wells

Specifically, what types of repairs are NOT eligible?

• Major rehabilitation or remodeling, such as relocation of a load-bearing wall
• New construction, including room additions
• Repair of structural damage
• Repairs that require detailed drawings or architectural exhibits
• Landscaping or similar site amenity improvements including pools
• Improvements that require a work schedule of longer than six months
• Improvements that require a payment schedule of more than two payments per contractor
• Improvements that result in work not starting within 30 days of loan closing
• Improvements that require the homeowner to be displaced from the property for more than 30 days  (Generally, the property should be habitable immediately after closing.)

How does “Streamlined (k)” differ from a regular FHA 203(k)?

• Structural improvements, such as room additions, are not allowed under “Streamlined (k)” but are allowed under 203(k)
• There is no limit on the repair amount for a 203(k)
• Draws may take place over several months rather than being limited to only two draws
• A 203(k) consultant is required to work with the borrower and contractor to ensure that improvements meet FHA requirements
• In short, a “Streamlined (k)” is streamlined with respect to the process and the duration and type of repairs made

Do you offer a regular (full) 203k?

Envoy Mortgage does not offer a full 203k product at this time.

Can I do the work myself?

Yes!  However, for all repair work to be completed by the borrower under a Self-Help Agreement, the following is required:

• Evidence that he or she is competent to complete the work
• If permits are required, evidence that borrower is a licensed contractor in the specific field for which repairs will be completed
• A written cost estimate of supplies and equipment
• Copies of bids from licensed contractors to support cost estimates
• Evidence of sufficient cash reserves or credit to fund repairs subsequent to initial disbursement through final disbursement of escrowed funds
• A minimum 10% contingency posted to the escrow account (which may be financed)
• Documentation of actual costs and lien waivers, just as with a general contractor

What is a “contingency reserve”?

The contingency reserve is added to all “Streamlined (k)” loans.  A minimum of 10% of the cost of rehabilitation is financed into the loan amount.  The maximum amount of contingency reserve is 20%.

The reserve is:

• Used to cover health, safety, and unplanned issues that arise during construction
• Is not available to make additional improvements
• Applied to principle once improvements are complete and the final draw is disbursed
• A 20% contingency reserve is always required if the utilities are not turned on for inspection when the property is appraised