Buying a Fixer-Upper?
Problem: How to make use of a mortgage to make improvements, repairs, or renovations to a “fixer-upper” with limited savings.
Solution: A customer wanted to purchase a home in need of updates. She offered a price to the seller taking these updates into consideration. The customer paid $540,000 as compared to others in the same neighborhood that were selling for $600,000+. She needed $40,000 for the work to be completed. I set her up with one of our renovation loans so that the $40,000 could be rolled into the mortgage amount.
Results: We closed the loan within 22 days of ratifying the contract. The contractor was hired and the renovation work began immediately without the need of the customer’s own funds.
New House After Divorce?
Problem: When dealing with a separation and/or divorce, obtaining the proper documentation is key to the timing of another home purchase or when refinancing the marital home.
A customer came to me, anxious to purchase a home for her and the children. She was still living in the marital home that was being paid for by her ex-husband and she had been receiving spousal support and child support for two months. Her family law attorney suggested the customer reach out to me to obtain the proper guidance before the Property Settlement Agreement (PSA) was formally negotiated.
Solution: I let the customer and her attorney know that she would be unable to close on a home until the Property Settlement Agreement had been signed by her and her husband, but in the meantime we could work on getting her in position to write a contract on a home. The timeframe would be especially important because most loan programs require the receipt of six months of consistent spousal support and/or child support be documented before it will be allowed as qualifying income. The customer would need the support payments to count in order for her to be pre-approved for a mortgage loan.
Results: The customer received a ratified sales contract on February 27th and closed on her new home on March 31st. I helped her document her income to meet loan guidelines, understand the right time to write a contract offer, and close on a loan quickly and easily. Working alongside the customer’s divorce attorney ensured the terms of the PSA agreement would work in her favor.
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Problem: One of my past military clients was getting married and wanted to purchase a larger home for him and his fiancée. He was planning on using a VA loan and a $0 down payment, which is a very attractive feature of the VA loan program. The sales price on the home was $679,650. The seller had originally agreed to a seller credit of $6,500, but after receiving the results of the home inspection, the contract was re-negotiated and the seller agreed to a higher credit of $23,500. The closing costs, prepaids, and escrows totaled $13,500 leaving $10,000 that needed to be applied “somewhere”.
Solution: We worked to creatively use the full seller credit of $23,500, keeping in mind the credits could only be applied towards actual closing costs. First, we bought down the interest rate using points ($5,100), allowing the borrower to get a lower rate than he had originally locked, with $4,900 leftover. The VA loan program allows seller credits to be applied toward paying off debt, I applied the additional $4,900 to the buyer’s credit card balance.
Results: At the time of closing the buyer was able to receive his earnest money deposit back in full, pay down his debt, and purchase a home with $0 out of pocket.