Loan Modifications in Arizona: Are They Happening?

Loan Modifications in Arizona: Are They Happening?

Many people I talk with are in a situation where they owe significantly more on their home than it is worth.  Somehow, the idea of “loan modifications” have become mainstream – but what exactly is possible hasn’t been all that well covered in the media. If you really want to know what is going on with getting a loan modification done, who better to talk to than the legal experts who are helping clients with them every day?

Kevin Hardin is the local expert I like to refer people to when it comes to answering questions about getting a loan modification done and what to expect.  In fact, I happen to know that there are at least 7 secrets about loan modifications that most people don’t know about.  Here is just an idea of one thing that I know many people I talk with have no idea about: your lender most likely doesn’t own your loan.

#1: Who really “owns” your loan?

Here is just a little more information about some of the things Hardin covers when talking about loan modifications and what to expect as you attempt to get your lender to modify your loan.

Arizona Loan Modifications: 7 Things To Know

  • Who really “owns” your loan? It may not be who you think
  • Your permanent loan modification isn’t permanent?
  • A forbearance is not the same as a principal reduction
  • Once you are underwater in your mortgage, it is virtually impossible to no longer be underwater
  • Are loan modification payments current payments?
  • Does a loan modification save your home?
  • How long before you can become a homeowner again?

Have more questions about what is possible when it comes to loan modification here in Arizona? Be sure to contact Kevin by clicking on the banner below and learn what your options are.

FHA 203k Loan or HomePath Loan?

FHA 203k Loan or HomePath Loan

Here in Arizona, if you are shopping for a home, there is a good chance that you have seen at least a few bank owned properties.
In my experience, properties that are currently owned by the bank are in need of a few repairs before anyone can live in them. Which is why I get quite a few questions about two of the most popular loan programs designed to help homeowners finance needed repairs on a new home: the Arizona FHA 203k loan program and Fannie Maes HomePath mortgage program. One of the more common quick questions I hear when people are learning about these loan programs is:Which is better, the HomePath momortgager the FHA 203k loan? The simple answer to this question is it depends and before I give you a simple formula that might help you choose between the two programs, here is a quick review of each loan program.

    • The FHA 203k and FHA Streamline 203k Loans
    • Fannie Mae HomePath Renovation Loan
    • Which Loan Program Is Better?

The FHA 203k and FHA Streamline 203k Loans

The FHA 203k loan program can be grouped into two different types of loans: the FHA Streamline 203k loan program and the FHA 203k loan. The FHA 203k streamline is designed to be a limited repair program and has simpler processes and no HUD consultant required like on the full FHA 203k loan. In my experience, the FHA 203k streamline is a more popular option since many of the needed repairs for bank-owned homes can be considered cosmetic.

Highlights of the FHA 203k streamline loan include:

      • It works very similar to a construction loan it allows you to purchase a home that wouldnt qualify for FHA financing due to repair work being needed
      • The loan amount is equal to the purchase price of the home plus the amount needed for repairs
      • FHA 203k streamline program allows for repairs ranging from $5,000 and $35,000
      • Qualifying for FHA 203k loans are the same as regular FHA loans
      • Repair work cannot begin until loan closes and the money to pay contractors comes from an escrow account set up when the loan closed
      • FHA 203k loans require UFMIP and MIP just like regular FHA loans
      • Appraisal required
      • Currently available for owner-occupied properties only although I have heard rumors of an Investor 203k loan coming soon.

Fannie Mae HomePath Renovation Loan

When the housing downturn began and Fannie Mae started owning more homes than ever before, one of the things Fannie Mae did to help move the homes to new owners was to design the HomePath mortgage program.

The HomePath mortgage program has two different programs within it the HomePath loan and the HomePath Renovation loan.

For homes that are in need of repairs, the HomePath Renovation loan is the loan program that is often compared to the FHA 203k loan when weighing options.

HomePath Renovation loan highlights include:

      • The property must be currently owned by Fannie Mae
      • The loan amount is for both the home and the repairs required for the home
      • Repairs can be up to 35% of the as-completed value, but not to exceed $35,000.
      • Down payment requirements can be as low as 3%
      • Fixed or adjustable rates are available
      • No mortgage insurance required
      • Investment properties or 2nd homes and investment properties are allowed
      • No appraisal required
      • Lenders can be difficult to find, not every lender is HomePath approved and many HomePath approved lenders do not offer the HomePath Renovation loans
      • HomePath Renovation Loan or FHA 203k Loan?

When deciding on financing for a home that is in need of repairs, the Fannie Mae HomePath Renovation loan program and the FHA 203k loan program are what most people are going to select.

Is there an easy way to select the right loan between the two?


Which Loan Program Is Better?

Here is a simple way to choose the right loan program between the two if you are buying the home as your primary residence:

      • Is the home owned by Fannie Mae? If yes, it probably makes the most sense to get a HomePath Renovation loan.
      • Is the home owned by someone other than Fannie Mae? If so, then your best option is the FHA 203k loan.
      • While both the FHA 203k loan and the Fannie Mae HomePath Renovation loan programs are similar, I have found that for houses owned by Fannie Mae it usually makes more sense to go with the HomePath Renovation loan.

What’s Next?

Which means the first question you may want to ask is:

Is this house owned by Fannie Mae?

And then you will have your answer.

Arizona First Time Home Buyer Mortgage Tips

Arizona First Time Home Buyer Mortgage Tips

You might have heard that getting a first mortgage can be a painful and time-consuming process. Well, except for constant changes in mortgage underwriting, your first mortgage doesn’t have to be as difficult as you think. Keeping in mind these few tips could make it an easy process.

  • Know What You Need
  • Down Payment
  • Ratios & Closing Costs

Know What You Need

Know how much you can borrow versus how much you want to borrow. You need to take this into consideration whether you’re using a VA loan, an FHA loan, or a conventional home loan. Your financial outlook, among other factors, determines the amount for which lenders will approve your home loan. Always remember, however, that you don’t have to borrow the entire amount, even if you qualify. In fact, a good tip to remember is to tell your real estate agent what your house price range is, if it is lower than the loan amount you have been approved for, so you can find a home that meets your needs and also has a price below your loan qualification amount.

Down Payment

Make your down payment as large as possible. Even if you are buying home with a no-down-payment VA home loan or a 3.5% FHA mortgage, don’t forget that the larger your down payment, the less you will have to borrow. The less you borrow, the more money you save. Not only that, but if you can put 20% or more down, you will not be required to buy mortgage insurance.

Ratios & Closing Costs

Know your ratios, the formulas that lenders use to qualify you for a loan. These formulas are called “debt-to-income ratios,” and there are two that are generally used. The “front-end” ratio is met when your mortgage payment is less than about 28% of your monthly income. When your mortgage payment plus the minimum payments of your other debts is not more than 36% of your monthly income, the “back-end” ratio is met. You may be able to exceed the front-end ratio if the back-end ratio is low, so looking for ways to reduce debt before trying to qualify for a mortgage is always beneficial. You need to know what your closing costs will be. Besides the monthly payment, buying a home involves other expenses such as an appraisal of the home, an inspection, title insurance, and maybe prepaid interest. That’s just a start. Not having enough money set aside for these expenses could cause a delay in closing on your new home. Ask your loan officer for help in determining your closing costs and other expenses.


Remembering these tips could make getting your first mortgage a painless, easy experience.

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