Fed to Increase Interest Rates?

We will soon have a new President… How will the economy respond?

Fed Sends New Signals About a Possible December Rate Increase…

In this recent Wall Street Journal article you can learn about how the Fed is considering an interest rate hike as early as next month

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With a new administration coming into Washington DC in January, it’s hard to predict where mortgage rates are headed.

What I do know is that right now I have rates in the 3s and I can lock in a rate for you for 45 days.  If you’ve been considering refinancing or making a purchase, it’s a good time to talk to me right now..

Reverse Mortgages

reverse mortgage

A reverse mortgage could be a great solution for you!Keith Wenger

Every families circumstances are unique.  I’ve recently been able to help a few of my clients who realized that a reverse mortgage was the very best solution for their situation.

In the past there has been some “bad press” about these mortgages and like any product, if it’s not the right fit, I say you shouldn’t buy it.

However there are some fabulous upsides for people with the right profile.

And the great news is that as a result of my long term relationships with the lenders, I can get you set up with a reverse mortgage where the lenders actually pick up the cost of the borrowers fees leaving more cash for you at the time of closing.

So if you or a family member are 62+, you should take time to connect with me to learn more about the options availble with reverse mortgages. If a reverse mortgage is not right for you there are other mortgages available that could be right, such as a  30 year fixed loan in the mid 3s with no points.

It could be the best call you ever make!

Keith’s Korner

All is well around the Wenger family! Margie and I made it back safely from our wonderful trip to Costa Rica. We spent 7 days on the Oso peninsula which is very close to Panama. We went by horseback into the mountains and jungles to repel down a 110ft water fall. It was amazing but I thought Margie was gonna pass out, but she made it down. We also did a zip line tour where we took 7 zip line rides in the jungle and saw all kinds of animals including monkeys, sloths and lots of birds.

It was an amazing adventure, but as always, we were glad to get home. The house was in one piece when we returned and the kids are all working hard on starting back to school. Stay tuned:)

Construction Loan

What is a Construction Loan?

A construction loan is typically a short-term loan used to pay for the cost of building a home. It may be offered for a set term (usually around a year) to allow you the time to build your home. At the end of the construction process, and the house is completed, your loan converts to a permanent longer term mortgage.  This is called an all in one loan.
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Qualifying for a Construction Loan

Banks and mortgage lenders are often leery of construction loans for many reasons. One major issue is that you need to place a lot of trust in the builder. The bank or lender is lending money for something that is to be constructed, with the assumption that it will have a certain value when it is finished. If things go wrong – for instance, if the builder does a poor job or if property values fall – then it could turn out that the bank has made a bad investment and that the property isn’t worth as much as the loan. To try to protect themselves from this problematic outcome, banks often impose strict qualifying requirements for a construction loan. These usually include the following provisions:1.    A Qualified Builder Must Be Involved. A qualified builder is a licensed general contractor with an established reputation for building quality homes. This means that you may have an especially hard time finding an institution to finance your project if you are intending to act as your own general contractor, or if you are involved in an owner/builder situation.2.    The Lender Needs Detailed Specifications. This includes floor plans, as well as details about the materials that are going to be used in the home. Builders often put together a comprehensive list of all details (sometimes called the “blue book”); details generally include everything from ceiling heights to the type of home insulation to be used.

3.    The Home Value Must Be Estimated by an Appraiser. Although it can seem difficult to appraise something that doesn’t exist, the lender must have an appraiser consider the blue book and specs of the house, as well as the value of the land that the home is being built on. These calculations are then compared to other similar houses with similar locations, similar features, and similar size. These other houses are called “comps,” and an appraised value is determined based on the comps.

4.    You Will Need to Put Down a Large Down Payment. Typically, 20% is the minimum you need to put down for a construction loan – some lenders require as much as 25% down. This ensures that you are invested in the project and won’t just walk away if things go wrong. This also protects the bank or lender in case the house doesn’t turn out to be worth as much as they expected.

Providing that you meet all these criteria and have good credit, you should be able to qualify for a construction loan. Generally, lenders also require information regarding your income (to be sure you can afford the mortgage payments) and your current home, just as they would with any type of standard mortgage loan.

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How Construction Loans Work

Once you have qualified for and been approved for a construction loan, the lender begins paying out the money they agreed to loan to you. However, they are not just going to give the builder the cash all at once. Instead, a schedule of draws is set up.DrawsDraws are designated intervals at which the builder can receive the funds to continue with the project. There may be several draws throughout the duration of the build. For instance, the builder may get the first 10% when the loan closes, and the next 10% after the lot is cleared and the foundation is poured. The next influx of money may come after the house is framed, and then the subsequent payout after the house is under roof and sealed up.

The number of draws and the amount of each is negotiated between the builder, the buyer, and the bank. Typically, the first draw comes from the buyer’s down payment (so it is the buyer’s money most at risk). It is also common for the bank to require an inspection at each stage before releasing the money to the builder. This helps to ensure that everything is on track and that the money is being spent as it should.

The Construction Loan Rate

With a construction loan, as with all other loans, you must pay interest on the money you borrow. Typically, construction loans are variable rate loans, and the rate is set at a “spread” to the prime rate. Essentially, this means that the interest rate is equal to prime plus a certain amount. If the prime rate is 3%, for example, and your rate is prime-plus-one, then you would pay a 4% interest rate (which would adjust as the prime rate changes).

In many cases, construction loans are also set up as interest-only loans. This means you only pay interest on the money you have borrowed instead of paying down any part of the principle loan balance. This makes payment of construction loans more feasible.

You also pay only on the amount that has been paid out already. For instance, if you are borrowing $100,000, and only the first $10,000 has been paid out, you pay interest only on the first $10,000 and not on the full $100,000. You need to make monthly payments for this loan – just as with a conventional loan – so your monthly payments should start low when only a small amount has been borrowed, and gradually increase as more of the money is paid out to your builder.

Disadvantages

Construction loans make it possible to build a home when you might otherwise be unable to do so. Building a home can be a great experience if you want to design something unique or specific to your needs and the needs of your family. However, there is also significantly greater risk when procuring construction loans than just purchasing an existing home.Some of the potential risks include:The Home Will Not Be Completed on Schedule and on Budget. If your house is not completed according to schedule, you may have to pay additional costs for rental accommodations, or pay two mortgages for longer than expected since you won’t be able to move in. In some cases, the final payment on your construction loan will become due and you will have to pay a fee to extend that loan – at least, until the house is finished.

 When Finished, the Home Will Not Be Worth at Least as Much as It Cost to Build. You could encounter this unfortunate situation if the builder does a poor job, or if the overall housing market plummets.

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Final Word

If you are willing to take on the risks of a construction loan, and you have the financial cushion available to help you through the bumps in the road, a construction loan may be the right choice so you can build your dream home.However, if you are just looking for a place to live, if you don’t have the emergency fund to deal with building setbacks, or if you are nervous about the home building process, then you may be better off choosing to simply purchase an existing home using a conventional loan. Carefully weighing the risks and benefits is important so you know that the choice you make is the right one for you.

Private Money Loans

Looking for a private money lender?  We have the resources to assist with creating this type of loan for you.Imperial has a large pool of private investors who loan what is sometimes called “hard money”. This resource enables us to make many loans that other money lenders cannot. Funding can occur quickly with this type of loan (sometimes in as little as 3 days), although typical private money loans take 2 – 4 weeks to fund.

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As experienced private money lenders, we strive to structure a loan that fits the unique needs of our clients.  Guidelines for private money loans are just that, guidelines. We are very creative, and can help you explore and negotiate all of the private money options available. Often times, if your transaction falls outside of the typical guidelines, we can still structure a loan to meet your needs.Private money loan guidelines are pretty straight forward. They focus mainly on the collateral value of the property. Typically they will lend up to 60% and some to 80% of the collateral value. If you meet this guideline, whether looking for a private money commercial loan or private money residential loan, contact us today to go over your scenario.

If you are looking for a private money loan on an investment property, a residential refinance, a land loan or a commercial transaction you need to speak with us because we can help you immediately!

Refinancing

Refinancing is often used to lower your interest rate. If rates have dropped since you lastarp financed your home, you may want to consider refinancing. Other common reasons to refinance include paying off a balloon payment, converting an adjustable rate loan to a fixed rate loan or to extract cash equity in your home (cash out). A few reasons for cashing out include: home improvement, an education fund, and consolidating debt.

Another way to convert equity in your home to cash is a “home equity” loan. A “home equity” loan is an alternative to refinancing if your home loan has a very low rate compared to current interest rates or if you have a prepayment penalty on your loan.

Just imagine what you could do with an extra $100, $300 or more each and every month. You might decide to apply the savings toward your balance and build equity faster. Or maybe you just might want to put the money in your savings account or portfolio and watch it GROW! The best thing is. you’re in control . You decide what is best for your family!

In order to refinance you will need a current appraisal, analysis and in many cases verification of your income and assets, as well as most of the same paperwork required when you originally financed your home. Adequate property insurance and new title insurance is necessary.

Benefits to Refinancing:

  • Reduce Your Interest Rate
  • Cash Out Equity for Home Improvements
  • Consolidate Debt
  • Lower Monthly Payments

To Refinance, You’ll Need:

  • Current Appraisal and Analysis
  • Verification of Assets and Income

4 Simple Steps

Step #1: Pre-Qualification

First, you, the borrower, will fill out an application and gather up current pay stubs, W2s, 1040 Tax Forms and Bank Statements. At the same time, Imperial will review your credit to determine, along with all of the other paperwork, what is the best rate for your property and financial situation. Since different loan programs can cause different valuations for a borrower, it is good to connect over the phone or in person and find out about your needs. No rules are carved in stone. Each client is handled on a case-by-case basis. So even if you come up a little short in one area, your stronger point could make up for a weak one. It’s about compensating factors that create balance in the eyes of the lender.

Step #2: Picking a Program

Second, Imperial will select a loan program that fits your needs and lifestyle. This depends on how long you plan to keep the loan/property. If you plan to sell the house in a few years, a shorter term loan like a 3/1, 5/1 or 7/1 ARM might be suitable. If this is a home you plan to live in for the next 15-30 years, a more long-term loan like a 15-year or 30-year fixed might more suitable. Shopping for a loan is very difficult without mortgage experience, as there are so many lenders and programs to choose from, each with different rates, points and hidden fees. That’s why an experienced mortgage broker like Imperial can evaluate your situation and recommend the most suitable mortgage.

Step #3: Processing and Closing

Once you submit your paperwork and Imperial has evaluated your needs and financial situation, we get to work and research the different programs and lenders that might be suitable for you. At the same time we order an appraisal and open escrow on your behalf. Once we have an approval, our processing team works on clearing any conditions the lender might have. When conditions are cleared, we make sure documents are sent to the title company and have the escrow officer prepare all the documents for you. When all of the documents have been signed, they go back to the lender for final approval and our team works on any last minute conditions that need to be met. There is a 3-day right of rescission, meaning, if for some reason you choose to not go through with the loan you can do so.

Step #4: Fees

What does it cost? The costs are minimal to the borrower…YOU. To start, there is a credit report fee which usually runs around $17 per borrower (married couples are only $17). There is also an appraisal fee which can run from $250-$900 depending on the size of the property and the type of appraisal needed for the loan. These are the only two costs the borrower will need to pay up front. There are some closing costs, which we account for in escrow, but those are mainly for processing, escrow and title. You can also choose to pay points, or not, but this is something we can discuss in further detail if interested.

First Time Buyers

You Must Start Here

 

Picking the right Mortgage is as important as picking the right house!There are a great number of loan options available and Keith’s expertise will help you select the best one for you.  An example is if you don’t have a large amount of cash for a down payment, you might take advantage of an FHA – low down program.  Or if you are a veteran you may qualify for a zero down VA loan.  USDA Rural Loans can also have a zero down payment, depending on your income. Even conventional loans from the right lender can be as little as 5% down.

 

First Time Home Buyers in the Foothills not only need to work with a buyer’s agent who is an expert on the process but who also has the patience to answer the many questions that first time home buyers have.  Many first time home buyers aren’t clear on many aspects of buying a home such as “pending versus contingent status”, “locking versus floating your interest rate”, or the difference between homeowner’s insurance and a home warranty. Buying a home is much easier the second time around, but there’s a lot of questions that will need to be answered as the first time buyer navigates the home purchase process. At Imperial, we get a great deal of satisfaction working with First Time Buyers.

 

First Time Home Buyers should start the process by asking themselves…couple

 

• What style of home is most beneficial?
• What areas are most convenient for work and play?
• Is the desired community in a realistic price range?

 

And that’s just the beginning…There’s great excitement in buying a first home but there’s also planning that needs to be done to make sure a first time home buyer gets into a home they’ll enjoy for years to come. This includes working to locate the best and most affordable homes for a buyer and also making sure they don’t overextend themselves or rush into making a bad home purchase.

There is nothing like the pride of homeownership. For many individuals, renting is just fine as they don’t like the responsibilities that come with owning a home. But for the majority of us, there’s nothing like coming home from work to your own home. Even in a rare down real estate market, there’s still hope for appreciation in the future. Renters don’t have that hope. If owning is such a bad decision, why does the person who owns the apartment building choose to do so? The reason is that owning real estate has historically been one of the safest investments around. Best of all, you get to choose the color of the home, the quality of the home and when and how upkeep on the home is completed.

There’s also the holy grail of home-ownership and that’s the mortgage interest deduction you get on your taxes. If you compare a $1,000 rent payment versus a $1,000 mortgage payment, here’s what the mortgage interest deduction can mean to a home buyer. In each scenario above we’ll assume the homeowner and the renter are both in the 30% tax bracket. By having the mortgage interest deduction, the person making the mortgage payment gets to write off 30% of the mortgage interest portion of their monthly payments — which is the largest portion of almost all mortgage payments. Assuming 3/4 of the payment is in interest (the rest being principal pay down, taxes and homeowner’s insurance); the homeowner gets to write off 30% of $750, each and every month — that’s a savings of $225 a month each month you own the home versus renting.

Buying/Loan Process

You Must Start Here

Picking the right Mortgage is as important as picking the right house! There are many options out there to work with. From FHA or VA to USDA Rural, Conventional or Private Money.   Your circumstances are unique, but with Keith’s expertise, he can find the one that’s best for you.

10 Basic Steps

1. Select a Buyer’s Agent (Imperial) to guide you through the process.
2. Get Pre-Approved for a home loan by working with Imperial.
3. Separate search parameters into “wants” and “needs”.
4. Start the home search in an organized fashion and preview the homes with Imperial that are good fits.
5. Choose a home and put together a contract offer with Imperials support to purchase the home.
6. Conduct inspections on the home being purchased.
7. Apply for the home loan and authorize appraisal to be completed.
8. Do a Final walk-through prior to closing to ensure everything is in order.
9. Closing documents signed and get your keys to the home.
10. Move into your new home!

Home Loans

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For most families, a home loan is the largest single financial transaction in which they will become involved. Therefore, having an advocate in their corner to guide and protect them through the process of securing a mortgage is incredibly important and valuable.This is why Imperial is not just in the business of buying and selling real estate, but a specialist in the loan and  mortgage industry as well.  A trusted expert in “all things real estate” is what you can count on with us.

Buying/Loan Process • First-Time Buyer • Refinancing • Construction Loans • Private Money Loans