Opportunities in Home Finance

Opportunities in Home Finance

Renovation & Construction Loans, Among Options from
Finance of America Mortgage

While the majority of mortgage loans today are standard 30-year fixed-rate loans, there are still plenty of financing choices that buyers and homeowners can make to custom-design a mortgage for their specific needs.

YourHome1Source recently talked with Steven Reich, senior vice president of production and branch support at Finance of America Mortgage, to find out what this fast-growing lender is seeing in the loan landscape, particularly for first-time buyers.

"One of the biggest misconceptions that consumers have is that they need to come up with a down payment of 20 percent before they can become homeowners," says Reich. "Some consumers just give up on applying for a loan without trying because even on an average $250,000 house, you would need a down payment of $50,000 if you are following that 20 percent rule."

Mortgage loans are available with zero percent down payment for veterans who qualify for VA loans, and for borrowers seeking homes in areas eligible for USDA Rural Development Loans. Loans insured by the Federal Housing Administration (FHA) are available with down payments as low as 3.5 percent and conventional loan programs are available with down payments of three, five and 10 percent. In addition, numerous programs are available through local and state government programs that offer down payment assistance.

Reich points out that FHA loans allow the entire down payment to come from a gift, a big benefit for first-time buyers.

Finance of America Mortgage, which is licensed in all 50 states, has 390 physical offices with more than 1,700 mortgage advisors available to consult with homebuyers, or people seeking to finance a new home renovation or construction project.

"Although we’re a national company we have local advisors in brick-and-mortar offices who are knowledgeable about local programs that provide down payment assistance," says Reich. "Many of those programs are not well-publicized, so having these local resources in place is a big benefit to borrowers."

Student loans and homebuying

Many lenders and financial experts are looking for ways to resolve the conundrum of how consumers with student loan debt can become homeowners.

"One way we work with consumers tackling student loan debt while saving for homeownership is to talk to them about approaching student loan servicers about consolidating their loans to reduce the size of their payments. We’ve been educating our mortgage advisors about this, too, as a potential benefit to discuss with their borrowers."

Renovation and construction financing

After the damage inflicted by recent hurricanes, Reich says it’s more important than ever for borrowers to realize they can finance home renovation projects and build a home with the help of several loan programs. Finance of America Mortgage offers construction loans in nearly every state, a loan product that not every lender provides to borrowers.

"The best loan program for people who have damaged homes or want to buy a home that needs repairs is the FHA 203(k) loan, which allows you to wrap renovation and remodeling costs into your 30-year fixed-rate mortgage," says Reich.

The FHA 203(k) program offers low down payment options for purchasers and can be used to refinance and renovate your existing home.

Investor financing

Whether you’re a fan of HGTV shows about home flipping or just want to tackle a fixer-upper for profit, the right mortgage loan can help realize your investment strategy. During the second quarter of 2017, nearly six percent of all home sales were flips – meaning they had been purchased and sold within a year, according to ATTOM Data Solutions.

"Despite rising home prices, home flipping remains a popular real estate investment strategy and our Commercial channel’s fix-and-flip product has been very popular among investors," says Reich. "We require the home flipper to have experience, having renovated at least one house and have some down payment money. They may qualify for a larger line of credit if they have more experience and a higher net worth."

Whether you’re a first-time buyer, a homeowner who needs to renovate a property, or someone with a strategy of real estate investing, consult a FAM mortgage advisor to discuss your options. You may be surprised at the number of financial solutions that match your needs.

©2017 Finance of America Mortgage LLC is licensed nationwide | Equal Housing Lender | NMLS ID # 1071 (www.nmlsconsumeraccess.org) | 300 Welsh Road, Building 5, Horsham, PA 19044 | (800) 355-5626 | AZ Mortgage Banker License #0910184 | Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act | Georgia Residential Mortgage Licensee #15499 | Illinois Residential Mortgage Licensee | Kansas Licensed Mortgage Company | Licensed by the N.J. Department of Banking and Insurance | Licensed Mortgage Banker — NYS Banking Department | Rhode Island Licensed Lender. This is not a commitment to lend. Prices and guidelines are subject to change without notice. Some products may not be available in all states. Subject to review of credit and/or collateral; not all applicants will qualify for financing. It is important to make an informed decision when selecting and using a loan product; make sure to compare loan types when making a financing decision.