Daily Mortgage Rates LIVE - 10/02/2024 - Renovation Loans

In this episode of Daily Mortgage Rates LIVE!, we’re exploring the transformative power of renovation loans. If you’ve got your eye on a fixer-upper or want to enhance your current property, this episode is a must-listen. Join us as we discuss the various types of renovation loans available, from FHA 203(k) loans to Fannie Mae HomeStyle options, and how each can help you fund your dream renovation.

We’ll delve into the benefits of using renovation loans, including how they allow you to roll the cost of renovations into your mortgage, making it easier to manage your finances. 

Whether you’re a first-time homebuyer or an experienced investor looking to increase property value, this episode offers valuable insights and strategies to help you make your renovation dreams a reality. Don’t miss out on the chance to learn how to unlock the potential of your property through renovation loans!


For more episodes visit: https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast 

About The Mortgage Calculator:

The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as over 5,000 Non-QM mortgage loan programs using alternative income documentation! 

Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes!

Our team of over 350 licensed Mortgage Loan Originators can assist our customers with Conventional, FHA, VA and USDA mortgages as well as access thousands of mortgage programs using Alternative Income Documentation such as Bank Statement Mortgages, P&L Mortgages, Asset Based Mortgage Programs, No Ratio CDFI Loan Pr

Catch all the episodes of Daily Mortgage Rates LIVE at https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

Check out all episodes of Daily Mortgage Rates LIVE at https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as thousands of Non-QM mortgage loan program variations using alternative income documentation!

Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes!

Our team of licensed Mortgage Loan Originators can assist our customers with Conventional, FHA, VA and USDA mortgages as well as access thousands of mortgage programs using Alternative Income Documentation such as Bank Statement Mortgages

Episode Transcript

Restream recording Oct 02, 2 (00:00):
So welcome everyone.

(00:00):
My name is Kyle Hiersche.
I'm the COO of the MortgageCalculator joined here by Our
president, Nick Hiersche and ourCSO, Jose Gonzalez.
We are a lender that specializesin non QM loans.
And what we do every weekday at11 a.
m.
Eastern on this show is gothrough our actual live mortgage
rates for a few of the standardprograms.
And then we do a deep dive intoa different loan type.
And today's loan type is goingto be all the different types of

(00:23):
renovation loans.
So Jose probably has some coolstuff for us to check out there.
But first, we'll look at therates.
So, Nick, if you're ready, let'sgo ahead and pull up today's
rates so we can see what theylook like.
Right.
So the rates are just a touchlower than yesterday, which is
always good.
And, uh, we'll pull them all upand compare the APR across all

(00:46):
of the programs.
It is October 2nd, just after 11a.
m.
Eastern, so all of our standardprograms have their initial rate
sheets for the day.
And if you'd like a fullbreakdown on itemized load
estimate that breakdowns all theitemized fees that go into the
APR, please get with our teammembers.
They'd be happy to send thatover.
We will set up a basic scenario,a standard single family home,

(01:07):
500, 000 purchase, 400, 000 loanamount corresponds to 80 percent
on the value, 20 percent downpayment.
And we'll set an estimated 760credit score and an estimated 40
percent debt to income ratio.
So with all those settings,let's check out the rates for
today.
So first up our 30 year fixedconventional option for a

(01:28):
primary home, typically the mostcommon option people think of
when they think of a mortgage,rates as low as 5.
75 today, final APR 6.
067, still just a touch above 6,uh, but definitely lower than
yesterday, which is great.
Now, if for any reason ourcustomer doesn't qualify for a
conventional option, wetypically want to quote an FHA
option to compare.

(01:48):
FHA allows more leniency oncredit issues and a higher
overall debt to income ratio,but does require upfront and
yearly mortgage insurance.
rates for FHA today, 4.
99.
Final APR with the mortgageinsurance and all the fees, 5.
901.
So when we're comparing acrossthe programs here, our customer
qualifies for both.
FHA could be a touch cheaper ifour customer is willing to do

(02:10):
the mortgage insurance.
And our customers that need touse FHA, definitely a great
option, almost identical toconventional there overall.
And our VA options are only foreligible vets and active service
members.
If you are eligible for theseloans, these are amazing rates
as low as 5.
125 today.
Final APR 5.
402 with a standard funding fee.

(02:31):
And notice this is going to bethe best option when we compare
it to FHA or conventional, alower overall APR, definitely a
good option for eligibleborrowers.
And the final standard optionthat every banker lender has is
USDA.
USDA is only for properties inrural areas of the country.
If the property is eligible andthe borrower is eligible, these
are great options to compare.

(02:52):
USDA comes in 4.
99.
Finally, pair with all the fees5.
705.
So notice if our customersshopping in those areas and
comparing to an FHA, USDA isgoing to be a touch cheaper and
a touch cheaper thanconventional.
So, that's typical, the bestoption for a rural area.
Now that rounds out the standardoptions that any bank or lender
has, and if our customer doesn'tqualify, unfortunately, most

(03:15):
banks or lenders have to denythem, but we have 5, 000
additional options, startinghere with our non QM alt doc
option for a primary home.
So, if our borrower doesn'tqualify with tax returns and
standard documentation neededfor a conventional or FHA, needs
to switch to alternative docs.
We can use bank statements, 1090 nines, asset related p and

(03:36):
Ls, all kinds of differentoptions.
Rates today coming in at 6.125.
Final A PR 6.425 for a standardbank statement option.
And notice we're within a half apoint within about 0.4 of the
conventional options to switchto non qm, which is amazing for
our borrowers to still get thathome.
They really want.
And we have all kinds of optionsfor investment properties.

(03:59):
So first up are non QM Alt Docs,so bank statements are similar
again.
Rates coming in today, 6.
625, final APR, 6.
951, and we'll compare that toour other investment options.
There are no government options,so no FHA, VA, or USDA, but we
do have conventional investmentproperty options.
Rates coming in today, 6.
375, final APR, 6.

(04:21):
710, so it's a touch cheaperthan our Alt Doc option, which
is typical.
But not cheaper than ourfavorite options.
Our DSCR absolutely amazingDSCR, no income needed, no
employment needed.
Simply use the estimated rentsfrom the appraisal to determine
a DSCR ratio.
The estimated rents could coverthe estimated expenses.
Okay.
The property will cashflow.
That is a DSCR ratio over one,which is preferred.

(04:44):
So DSCR with a three yearprepayment penalty, which is
standard comes in today.
At 6.
25 rate, final APR 6.
5, six, six beating conventionalby a touch.
Okay.
And we can even add a five yearprepayment penalty to sweeten
the rate, uh, the rates a littlebetter.
5.
875 final APR, 6.
193 beating conventional byquite a bit there.

(05:06):
So great option.
And we do have an option with noprepayment penalty that comes in
today at 6.
625 final APR, 6.
951.
Which is typically a little moreexpensive than conventional, but
still, I would say 100 percentof investors would prefer a DSCR
loan when it is very comparablecost to conventional there.

(05:27):
And the final two options wealways go over.
These are new programs for ourcustomers that may have lower
rates than what we're looking athere, but still want to access
their equity.
They want to keep their firstmortgage and get a second
mortgage to get some cash out.
Typically the most common optionis a HELOC, but we now have our
30 year fixed second mortgagesto get cash out of a primary
home.
Rates as low as 8.
125, so much lower than a HELOC,and final APR 8.

(05:50):
542.
And these are fixed rate insteadof adjustable like a HELOC, so
great options for our customersthat want to get that cash out
and keep that first mortgage inplace.
And we can do the same forinvestment properties, rates as
low as 9.
25, final APR 9.
557.
And HELOCs are very rare forinvestment properties, so these
are amazing options for ourinvestors out there to get cash

(06:11):
out without touching that firstmortgage.
Now let's go ahead and switchinto our topic.
Definitely very cool as Kylementioned, renovation loans, not
something I can quote instantlyon the quick demo there.
Definitely something that has tobe thought about and customized,
but we have tons of options.

(06:32):
And as Jose will explain, theseare great options for markets
such as we're facing right nowwhere there is limited supply.
So, Jose, let's explain why wewould use this first off and
exactly what our rate programsare.
Good morning, everyone.
Thank you for joining us forDaily Mortgage Rates Live with
the Mortgage Calculator.
Yes, like Nick mentioned, therenovation loan option is an

(06:56):
amazing solution to the lack ofinventory issues we're having in
many markets.
Because it opens up a, a, anadditional sector of properties
that would normally be not atthe reach of your typical
borrower buying with regular nonrenovation financing.

(07:17):
What I'm referring to would beproperty with condition related
issues that would normally haveto be a cash or hard money only
purchase because you will not beable to close the transaction.
Uh, with, for example, missingkitchen cabinets, dismantled
bathrooms, uh, wiring issues,roof, leaky roof, you know,

(07:41):
different things that could bebrought up, for example, in an
appraisal.
That, you know, will not allowthe property to close.
Uh, and also it's a greatsolution for borrowers just
wishing to convert whatever homethey're purchasing into their
dream home.
They may not be able to find theproperty in the condition that
they're looking for, right?
The one with the remodeled wind,uh, window remodel, kitchen,

(08:04):
bathrooms, new roof.
The one that's in the conditionthat they would like, uh, this,
uh, renovation loan allows youto purchase the property and
also finance the renovationcosts or, um, What some people
may not be aware of.
It also allows you to refinanceyour current property in, in

(08:27):
this case, you decide you don'twant to sell because you really
may not be able to find whatyou're looking for, but you're,
you're good with your location.
You just need, uh, um, you justwant to renovate it.
So you can convert your existinghome into your dream home as
well.
So let's get into the optionsthat we have today.
We have some great, uh, low downpayment options for renovation

(08:50):
loan purchases.
Uh, first option we have here,which is one of the most common,
uh, renovation loans out there,probably the, the most widely,
uh, known as far as borrowerawareness is the FHA 2 0 3 K
renovation loan purchase withonly 3.5% down payment.

(09:13):
6.125 is our lowest cost optionat par, and you can buy that
down.
All the way to 5% at a cost of2.5 points.
So this is our FHA option.
Then we have a a fewconventional options.
Here we have our Freddie MacChoice renovation loan purchase.

(09:34):
Now this one is with 5% downpayment.
And our lowest cost option is 7.
125 at a cost of a quarterpoint, and you can buy that down
all the way to 6%.
So you do see a little bit of adifference in the rate between
the FHA 203k and theconventional renovation model.
Now we have our Fannie Mae homestyle renovation loan purchase,

(09:59):
uh, the, uh, this one 7.
625 is our lowest cost option atpar and you can buy that down
all the way to actually 5.
99%.
At a cost of 2.5 points now fora 3% down, yes, we do have 3%

(10:20):
down renovation loan options.
This one is Freddie Mac's, uh,home possible renovation loan.
Uh, you all are aware the homepossible is an affordable loan
option that, uh, allowsborrowers to attain 97% LTV,
even though they may not be afirst time home buyer.
Right.

(10:40):
They can actually even still ownanother property as long as it
makes sense for underwriting andstill qualify for this option
with only 3 percent down becauseit is an affordable loan option,
which uses the area medianincome as the deciding factor.
However, if the borrower ispurchasing a property in a low
to moderate income census tractor a minority census tract, then

(11:04):
any income limitations of theprogram are removed because a
program usually caps out at 80%.
of the area median income.
Uh, 7.
125 is the lowest cost optionhere at PAR and you can buy that
down all the way to 6%.
Uh, this program does have abetter pricing than standard

(11:25):
conventional pricing.
And I did promise you some, uh,high LTV options.
Well, look at this, right?
USDA renovation loan purchase100 percent LTV.
Uh, 5.875 is our lowest costoption at par, and you can buy
this down all the way to 5.25%.

(11:49):
And for another high LTVAhundred percent LTV option is
our VA renovation loan purchase.
6.75 is our lowest cost optionat par, excuse me, high costing
4.449.
Uh, actually, and you can buythat down all the way to 5.5%.
At a cost of 2.
449.

(12:09):
And our last option here, uh,just sharing one of our, uh, few
refinance options that we havenow, this is a limited, uh, uh,
cash out.
In other words, a rate in turnrefinance, but just imagine
instead of selling your home,you can refinance this option.
If using the home possibleoption up to 97%.

(12:32):
LTV and get renovation funds.
So 7.
125 is our lowest cost option ata cost of 0.
25 and you can buy that down allthe way to six percent at a cost
of 2.
375.
So look to the mortgagecalculator for all of your
renovation loans as well asagency and non QI.

(12:59):
All right, thank you Jose.
It looks like we have somequestions coming in here, so A
question here.
Can someone purchase an as isproperty which needs renovation
with this loan?
Is it available for only singlefamily home or in the property?
No, that's exactly what the pro,what this loan program is for.

(13:20):
There is an as is value.
That is determined.
And then there's that afterrepaired value, also known as
the ARV, and then we have arenovation budget.
So you just have to make surethat your, uh, that your price,
if it's a purchase is at leastequal to the ARV.
Right.
Or else you're going to have areduction in the loan amount.

(13:43):
And yes, you are able topurchase a condo with a
renovation loan, but obviouslyyou're not going to do any
structural renovations to thebuilding with the loan, but
you're going to do renovationsto the interior walls in of the
property.
All right.
Let's see.
Another question.

(14:03):
Do we do SBA loans?
Uh, yes, we do.
You want to touch on that realquick?
Yes, we do.
We do.
Uh, we can originate SBA loansboth for purchases, both for
refis, and actually SBA doeshave a type of renovation loan
if you want to call it becauseas part of the SBA loan, you can
include capital improvements.

(14:24):
Right.
It just has to fit into theoverall business plan that's
being proposed for the use ofthe funds.
So, you can do an SBA purchasewhere you need to, for example,
build out the space, which isgoing to be renovation.
Uh, as long as everything addsup and makes sense in the
business plan, uh, the loanwould be good to go.
And those loans go, uh, as highas 100 percent LTV on the SBA

(14:48):
purchase loans.
All right, perfect Well, thankyou for the questions Uh doesn't
look like we have any more Sowe'll go ahead and wrap it up
Remember that we do this show at11 a.
m Eastern every weekday where wego through our live rates and
then do a deep dive into adifferent loan type So we'll
have a new loan type for youtomorrow.
Thank you Everyone.
We'll see you tomorrow at 11 a.

(15:09):
m.
Eastern for the next episode ofdaily rates live with the
mortgage captain