HGTV has made buying homes to fix and flip super popular.
But unless you have oodles of cash or you're on the TV show, where do you get the money to fund all of this? There are lenders out there that provide Fix and Flip financing for investment properties. If you're looking to reno your own home, that's something totally different.
By using money from non QM lenders and private investors, they aren't bound by rigid banking guidelines and can offer you some of the most flexible loan terms in the industry depending on the deal, your investor profile, background, and experience.
Other lenders take a one size fits all approach to making loans, while we carefully evaluate each and every deal and offer competitive terms when the deal makes sense. From Residential Fix and Flip, Rental, Line of Credit, Refinance or construction, it's our job to get you the money to do the deal.
Terms will vary but if you have a good deal and a decent landlord background we can help your deal closed. Let's be clear, if you are new to fix and flip rates and terms are higher and these are short term deals with high rates. It is not meant to fix and hold.
Here are a few things that you should know about our Fix and Flip Loans:
If your deal is good enough, the lender will cover up to 90% of the purchase price, rehab, and closing costs, points & interest.
The max loan amount is based on the after-repair value, not the current value or purchase price. If the numbers line up, the lender will fund it.
They lend up to 75% of the ARV. The lender will fund everything but earnest money as long as it fits within 75% of the ARV.
Here is an overview of some of the types of Fix and Flip or Hard Money deals that can be done:
75% Purchase, 100% Rehab
Up to 75% ARV
Nationwide Rental Loans
Investor Portfolio Loan
Investor Line of Credit
Purchase or Refinance (Blanket Loans)
Bridge Loans
1-4 Units Non-Owner
Stated Income and No Doc
No Appraisal Loans
We wish we could approve all deals, but not all deals are approved.
Call us today at 702-326-7866 to talk about your deal!
If you think you are going to have trouble making mortgage payments due to job loss or job reduction because of COVID-19, PLEASE make sure that you reach out to your loan servicer as soon as possible.
Don't wait until it's too late and your credit scores take a hit.
There are new policies in place... read below:
Fannie Mae and Freddie Mac are invoking the same types of measures to protect homeowners in the face of the COVID-19 pandemic as it has previously taken in other natural disasters such as hurricanes.
They announced Thursday morning that it is suspending all foreclosure sales of properties securing its mortgages and evictions of borrowers living in homes owned by the company. That suspension is effective immediately and will extend to May 17, 2020. Freddie Mac said that period could be extended if the Federal Housing Finance Agency directs it.
It is also offering a package of relief options for borrowers having trouble making their mortgage payments because of the financial disruptions caused by the virus.
Among some of the provisions:
Up to 12 months of forbearance.
Waiving of penalties and/or late fees.
Suspending the reporting to credit bureaus of information about delinquencies, forbearance, or trial and repayment plans.
Authorizing servicers to extend additional loss mitigation options including loan modifications.
These measures are effective immediately and apply to borrowers who are unable to make their mortgage payments due to a decline in income resulting from the impact of COVID-19, regardless of whether they have contracted the virus. Borrowers are eligible for forbearance regardless of whether their property is owner occupied, a second home or an investment property.
"We are doing all we can to help those adversely impacted by the coronavirus, including by immediately suspending foreclosure sales and evictions during this challenging time," said Donna Corley, executive vice president and head of Freddie Mac's Single-Family business. "These eviction and foreclosure stoppages are just one part of the comprehensive assistance we're providing borrowers to help protect our communities. We are also expanding relief available through our well-known forbearance programs, allowing us to reach the majority of affected borrowers as expeditiously as possible."
Borrowers who may be experiencing financial challenges due to COVID-19 are strongly encouraged to contact their mortgage servicer - the company to which they send their monthly mortgage payments.
Fannie/Freddie said it is instructing its servicers to work with borrower to make sure they are evaluated for appropriate assistance.
Today (3/15/2020) the federal reserve announced another rate cut and here’s what that means to YOU...
• Fed cutting rates is a short term overnight bank to bank lending rate which DOES NOT have a direct impact on mortgages.
• This cut will lower rates on short term items like credit cards, home equity loans, auto loans and other consumer loans that are affected by the “prime” rate.
What does this mean for YOU and mortgage rates?
• Could move mortgage rates lower? Yes, but they could also go higher based on this. If the stock market rallies tomorrow on this news, it could actually cause long term rates (mortgages) to increase.
• Mortgage rates are based on the MBS (mortgage backed securities) market,which is independent from the treasury bond as well as the stock markets but typically reacts within certain tolerances of those financial markets.
That being said, you should also know that the FED announced Quantitative Easing 4! Also know as QE4!
This should be good for mortgage rates!
What is QE4? It is a financial stimulus package that will hopefully reverse the negative direction of the Stock, Treasury Bond, and Mortgage-Backed Securities (MBS) markets.
These are the main financial moves the FED will make in QE4:
- Fed Funds Rate now 0-0.25% (matches record low) - $500 Billion in new Treasury Market purchases - $200 Billion in new Mortgage-Backed Securities purchases (This should help mortgage rates)
In summary ... mortgage rates should hopefully go down. This is great for buyers! And of course, for people that already have a mortgage that they want to refinance and missed the first dip!
So, people in a position to refinance could get another opportunity if they were not able to lock in a few weeks ago!
However, they need to be ready to take advantage of it!
BE INFORMED - Know that interest rates may go down quickly but could jump back up just as fast so don't lollygag. Get ready now.
If you, your clients, family, or friends have questions, or would like to see if a refinance might help you or make sense, please feel free to reach out to me. I am happy to help!
You might be able to deduct mortgage interest on your taxes if you itemize and follow a few other guidelines.
Mortgage interest is still deductible, but with a few caveats:
Taxpayers can deduct mortgage interest on up to $750,000 in principal.
The debt must be "qualified personal residence debt," which generally means the mortgage is backed by either a primary residence, second/vacation home, or by home equity debt that was used to substantially improve one of these residences.
Investment property mortgages are not eligible for the mortgage interest deduction, although mortgage interest can be used to reduce taxable rental income.
Home equity debt that was incurred for any other reason than making improvements to your home is not eligible for the deduction.
What is the mortgage interest deduction?
The mortgage interest deduction is a tax deduction that for mortgage interest paid on the first $1 million of mortgage debt. Homeowners who bought houses after Dec. 15, 2017, can deduct interest on the first $750,000 of the mortgage. Claiming the mortgage interest deduction requires itemizing on your tax return.
The mortgage interest deduction is alive and well in 2020. Here’s a look at how it works and how you can save money at tax time.
How the mortgage interest deduction works in 2020
The mortgage interest deduction allows you to reduce your taxable income by the amount of money you’ve paid in mortgage interest during the year. So if you have a mortgage, keep good records — the interest you’re paying on your home loan could help cut your tax bill.
As noted, in general you can deduct the mortgage interest you paid during the tax year on the first $1 million of your mortgage debt for your primary home or a second home. If you bought the house after Dec. 15, 2017, you can deduct the interest you paid during the year on the first $750,000 of the mortgage.
For example, if you got an $800,000 mortgage to buy a house in 2017, and you paid $25,000 in interest on that loan during 2019, you probably can deduct all $25,000 of that mortgage interest on your tax return. However, if you got an $800,000 mortgage in 2019, that deduction might be a little smaller. That’s because the 2017 Tax Cuts and Jobs Act limited the deduction to the interest on the first $750,000 of a mortgage.
There’s an exception to that Dec. 15, 2017, cutoff: If you entered into a written binding contract before that date to close before Jan. 1, 2018, and you closed on the house before April 1, 2018, the IRS considers your mortgage to be obtained prior to Dec. 16, 2017.
The property can be a house, co-op, apartment, condo, mobile home, house trailer or a houseboat.
The home has to be collateral for the loan.
The home must have sleeping, cooking and toilet facilities to count.
If you get a nontaxable housing allowance from the military or through the ministry, you can still deduct your home mortgage interest.
A mortgage that you get in order to “buy out” your ex’s half of the house in a divorce counts.
Interest on a mortgage for your second home
You don’t have to use the home during the year.
The house has to be collateral for the loan.
If you rent out the second home, you have to be there for the longer of at least 14 days or more than 10% of the number of days you rented it out.
Points you paid on your mortgage
Points are a form of prepaid interest on your loan. You can deduct points little by little over the life of a mortgage, or you can deduct them all at once if you meet every one of nine requirements.
In general, the nine requirements are that the mortgage has to be for a your main home, paying points is an established practice in your area, the points aren’t unusually high, the points aren’t for closing costs, your down payment is higher than the points, the points are computed as percentage of your loan, the points are on your settlement statement and you use the cash method of accounting when you do your taxes.
Late payment charges on a mortgage payment
Prepayment penalties
Interest on a home equity loan
You have to use the money from the home equity loan to buy, build or “substantially improve” your home.
If you use the money to buy a car, pay down credit card debt, or pay for something else not home-related, the interest isn’t deductible.
Mortgage insurance premiums
This includes the amount paid for private mortgage insurance, FHA mortgage insurance premiums, USDA loan guarantee fees and VA funding fees.
The insurance contract must have been issued after 2006.
You can’t deduct the cost of mortgage insurance if your adjusted gross income is more than $109,000, or $54,500 if married filing separately, on Form 1040 or 1040-SR, line 8b.
The amount you can deduct is reduced if your adjusted gross income is more than $100,000 ($50,000 if married filing separately).
What’s not deductible
Homeowners insurance
Extra principal payments you make on your mortgage
Title insurance
Settlement costs (most of the time)
Deposits, down payments or earnest money that you forfeited
Interest accrued on a reverse mortgage
Note, for more details contact your tax professsional.
Mortgage rates went from ridiculously low to not-so-bad in just over a week.
Everything that the media thinks should have happened to keep it at the ridiculously low levels did happen.
The Fed did an emergency rate cut on 3/3/2020 and cut the Fed Funds rate by half a percent. Treasury's fell to levels never seen before and the stock market crashed to a point where the Dow officially entered the bear market, ending the 11-year run in the bull market territory.
Given all this, mortgage rates should have fallen more. Instead, they climbed 0.25% in the last couple of days.
What happened here? Let’s investigate.
Fed Rate Cut and Mortgage Rates
The general public believe that Fed Rate Cut is somehow directly correlated to mortgage rates going down, the truth is – there is no direct correlation. There have been several instances where the mortgage rates actually went up the day fed cut rates and vice versa.
It happened this time too when the mortgage rates went up the day after the Fed announced the rate cuts.
The federal funds rate is the interest rate at which depository institutions lend reserve balances to other depository institutions overnight on an uncollateralized basis. That ladies and gentlemen has got nothing to do with mortgage rates. Short term loan, credit cards and HELOCs – yes, but not mortgage rates.
In fact, the Fed left the rates unchanged between 2008 and 2016. So if the fed fund rate indeed impacted mortgage rates, they should have remained unchanged for 8 years. During those 8 years, mortgage rates moved in the range of 3.375%-5.125%, a very wild swing.
The 2nd factor widely cited which correlates with mortgage rates is the 10-year Treasury Yields, which usually has an inverse relationship with the stock market.
When the stock market goes down, the fund managers will take their billions and invest in something safe like 10-year US Treasurys (UST). While the 10 Y UST nosedived (at one point reaching under 0.5 – see the chart below), mortgage rates didn’t follow suit.
Stock Markets and Mortgage Rates
There is an old adage in the industry – What is bad for Stocks must be good for Mortgage Rates.
Unless you have been living under a rock, you must have seen stocks have been in a free-fall with both S&P 500 (see chart below) and Dow entering the bear market with more than 20% fall.
All of this has made no impact on mortgage rates.
So what really changes mortgage rates?
The only metric that really drives mortgage rates is the yield on Mortgage-Backed Securities (MBS). The higher the yield, means more the demand and lower the rate for the borrowers. The chart below will show you that MBS actually lost in pricing 6 out of the last 8 days.
Note – Red days are bad for mortgage rates and green days are good. And the longer those red candlesticks, the worse it is for rates.
In the last 2 days, the beating has been severe and the uptick in mortgage rates swift.
And then there’s that issue of too much supply. In the last 12 years, US mortgages have touched the annual $2 Trillion production mark only once. That would mean the industry has a capacity of doing about $200 billion per month, maybe slightly more.
With a sudden rate drop like this, there can be $1 trillion of new rate locks because a majority of borrowers can benefit from refinancing. But since some lenders do not have the capacity to handle the added business, they increased the rates to deter additional loan applications.
Classic demand and supply equation. Since the demand was overwhelming and the capacity to process those loans lacking, increasing the rates was meant to dampen the demand.
There is also a liquidity issue. A lot of lenders use what is called a warehouse line of credit, a short-term borrowing, to fund these loans. If they accept submissions that are way more than the money they can borrow from warehouse lines, then they will have loans that they won’t be able to fund. Another reason for them, to stop taking more loans.
Even then, I have heard some of the lenders are anywhere from 45-90 days (I have even heard the big banks are at 120 days) turn times on these refinances. So, even if you were able to lock that ridiculously low rate, you will not see that on your mortgage statement anytime soon.
Will the rates go down again?
First of all, the rates are still super attractive for most borrowers to refinance into. So, if you are thinking of refinancing and see a benefit from the refinance with the current rates, you should proceed and lock that rate.
If that’s not the case, then waiting may not be a bad idea. Once the lenders clear out some backlog in the next month ot two and the markets stay rattled with CoronaVirus fear, Mortgage-Backed Securities will get a boost and the rates should go back down again. So, stay patient.
As always predicting the future in an unprecedented volatile market is filled with "ifs-and-buts", so it may or may not come true.
And yes, Fed will cut the rates again. But by now, you are wise enough to know that it will not impact the mortgage rates in any way. Be smart and tell that to your friends too and if they don’t believe it, show them this blog.
Hope Brings You Home is a new down payment assistance (DPA) program available to most of Southern Nevada that focuses on areas still considered distressed from the housing crisis. The first come first serves program will provide funds until the $17.9 million of funds is depleted. Nevada Affordable Housing Assistance Corp. (NAHAC) administer of the Nevada Hardest Hit Funds has partnered with Nevada Housing Division (NHD) to administer the Hope Brings You Home program and make the funds available to Nevadans.
HIGHLIGHTS:
•DPA equal to 10% of the purchase price up to
$20,000 for down payment and/or closing costs
•Maximum
purchase price $400,000 (remember to check Agency limits)
•FHA/VA
Income Limit:
$98,500
and CONV Income Limit $54,240 Clark County For
the purpose of this program, a borrower (s) gross income must be used in
determining eligibility. Gross income includes annual wages, commissions,
bonuses, self-employment net income (plus depreciation) dividends, interest,
annuities, pensions, child support alimony and public assistance.
•Minimum
credit score FHA
660 – VA/CONV 640
•Maximum
debt ratio 45%
•Non-Purchasing
Spouse is NOT permitted
under this program. Married individuals must apply jointly.
•Co-signers
and Non-Occupant Co-borrowers are NOT permitted under this program.
•Borrower(s)
cannot own other real property at the time of close.
•Eligible
Properties: Existing single-family properties including townhomes and condos.
Manufactured homes and new construction are NOT eligible
•Homebuyer
Education is required
•DPA
is in the form of a no interest, no payment prorated 3-year forgivable note.
This
information is meant to show program highlights. For underwriting criteria
please see the Home Is Possible Administrative Guidelines.
Hope Brings You Home - Eligible Zip Codes
*Home Brings You Home available only in the following zip codes: 89030,
89048, 89060, 89101, 89102, 89103, 89104, 89106, 89107, 89108, 89109, 89110,
89115, 89119, 89120, 89121, 89122, 89146, 89156, 89169
The first step is to get pre-approved and get out house hunting. The DPA funds are limited and cannot be reserved until you are in contract.
