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April 13, 2017

Demolition or Renovation – Which Should You Pick?

low cost home renovationsIf you buy a prebuilt home that doesn’t have a tremendous value as it stands, you might find yourself wondering whether to rebuild it from the ground up or try to repair and remodel it as it stands. The question is one worth considering seriously because there can be major variations in the cost difference between the two options. There are many factors involved in the final decision according to sites like thepattisallgroup.com, each of which can influence it in a certain way.

Historical Value Must be Checked

People commonly want to demolish and rebuild if the home they bought is a timeworn one. In cases like this, you have to think about the significance of the house in history. Some homes are protected by the city for their historical value. These are commonly referred to as heritage homes, and you can’t just take a wrecking ball to them. You must talk to the state and federal government and get permits to break them down before doing so. In times like this, it might be more convenient just to renovate the home instead.

Consider Local Building Limitations

Some parts of a town, state or country have certain restrictions placed on how you can rebuild the home after demolishing it. These are usually regions of architectural importance, which are visited by tourists often for a look at the homes which are of a certain basic design. Demolishing an old home might not be the best idea if you are required to rebuild it in almost the exact same way that it looked before.

Saving Money on Renovation Isn’t Easy

Most legitimate home improvements are quite costly. You may be tempted to save money by cutting corners on certain aspects of the renovation. However, if you ever try to sell the house in the future and the quality of even the tiniest aspect isn’t up to par, you will have to pay a pretty hefty fine to repair the house before selling it. Because of this, your long-term costs can still be far higher than when demolishing and rebuilding the house.

You Can’t Live in the House While Renovating

Many people choose renovation because they want to move in as quickly as possible. They think that staying in the home while it is being renovated is a good idea and one that will save on rent money. The truth is, this can be quite harmful to the health of the people in your home. Renovation releases toxic chemicals, dust, and worse. All of these can be harmful, especially to pets, kids, and people with allergic conditions.

You should also consider how good you are at planning things. There are people who are great planners and others who are terrible at it. If you’re a terrible planner, renovation might not be the best idea since you won’t be able to determine how well the project goes. Hiring an architect and demolishing the old house might be the best course of action in a situation like this.

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October 25, 2013

All You Need To Know About Tenant Loans

Tenant loan detailsAnyone who currently rents a home or flat, or lives with their parents, may need to search for alternative forms of credit if they wish to take out a new loan. Fairly or unfairly, anyone who is unable to display a good credit history to a potential lender will struggle greatly to successfully apply for a loan due to strict lending policies. Fortunately tenant loans and guarantor loans have filled this gap in the market and are ideal for any tenant who has adverse credit, arrears, filed for bankruptcy, County Court Judgements (CCJs), debt issues or anyone who is self employed and has no proof of income.

Many high street lenders simply refuse to issue loans to people with a bad credit rating, regardless of the reason, and therefore turning to specialist loans to help counter this problem is the only realistic option for many people.

What Exactly is a Tenant Loan?

Tenant Loans have been created specifically for council tenants, private tenants, housing association tenants and anyone who still lives with their parents/relatives and hasn’t had a chance to build up a suitable credit history.

Whatever your circumstances as a tenant, even if you have a bad credit history, CCJ’s, defaults or payment arrears, tenant loans may be a viable option for you.

Who are Tenant Loans designed for?

Tenant loans should be viewed as the primary option for any council tenants, housing association tenants, most private renters, and for people living with their parents or relatives. Because this type of loan is unsecured, it guarantees that you will not need to secure your property against the outstanding balance of the loan.

Can Anyone Apply For a Tenant Loan?

In short, anyone who doesn’t own their own property is eligible for a tenant loan.

What Are The Alternative Options?

Similar to a tenant loan, in the fact that they have been designed to offer a way to successfully apply for credit even if you would struggle with a High Street lender, guarantor loans are becoming increasingly popular. Although this type of loan has been in existence for many years, confusion still reigns regarding how they actually work and who they will benefit the most.

Guarantor loans are available to more people than loans offered by some banks and other high street institutions because they utilise the presence of a friend/family member who will act in the role of guarantor for the loan to provide an extra level of security for the lender. For this very reason, guarantor loan lenders are willing to lend to those will a poor credit history due to missed repayments in the past, never having credit before or not having lived in the UK for very long, amongst a wide variety of reasons.

Whilst there are a range of other ‘bad credit loans’ available, nearly all have a very high associated APR and are only available in fairly limited amounts. Payday loans, for example, are designed to be paid back on the borrower’s next pay day. Generally this will leave them short of money for the next month and another loan will be taken out. This can quickly become a vicious cycle which is difficult to extricate themselves from. However, as well as being spread out over a longer period of time, your ability to afford the guarantor loan repayments will be factored into the loan application process, significantly reducing the risk of this happening again.

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August 16, 2013

The Importance of Comparing Equity Release Schemes

Equity release schemesHome owners are able to cash in on the value of their property through an equity release scheme. They can do this without actually having to sell their property and find a new home. Two schemes exist to make this possible:

  • Reversion schemes
  • Lifetime mortgages

When you decide to release the equity of your home, deciding which option to go for is but one of many decisions you will have to make. This is why comparing equity release schemes is so important. You should seek not just financial advice, but legal advice as well. When you take money out of the value of your home, this could have a serious financial consequence and you have to be prepared for that.

Equity Release

Equity is surplus value in your property. A home that is worth £200,000 with a £100,000 mortgage has £100,000 in equity. However, equity release schemes aren’t available for anybody, but usually only to older people (over 55 for a lifetime plan and over 60 for a revision plan), who are unlikely to have a regular income.

Most people choose a lifetime mortgage. Here, you essentially take a loan out on the property, which remains yours. The debt has to be repaid when you die or go into long term care, meaning no monthly payments are needed. However, the interest does accumulate, which means you will owe a lot more than you originally owned. So, a £45,000 loan could turn into £152,387 after 25 years.

The drawdown version is the most popular lifetime mortgage. This is for those who don’t need a huge lump sum straight away. Instead, they can dip into a pot of money as and when needed. No interest is paid on the money that is not released.

The other option is the revision scheme. Only very few people use this. Here, you sell your home or part of it to a company, but you retain the right to live in that home. When you die or go into a home and sell the property, you only receive money on the percentage of the home you still own, which is often nothing. You also generally have to pay rent to the company that has purchased your home or part of your home from you.

Do bear in mind that releasing equity in your home can be costly. Usually, you will have to make at least a £1,500 fee and your financial adviser and solicitor will have fees as well.

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August 8, 2013

6 Reasons an FHA Mortgage May Be The Better Choice

FHA mortgage for allThe Federal Housing Administration, also known as FHA, has been insuring mortgages since the 1930s. From the time of the Great Depression, the agency has assisted low to middle income consumers in their quest to purchase a home that, otherwise, they may not be able to afford. While FHA mortgages have a reputation of being more costly for the consumer, FHA also offers other perks that make these loans attractive. Here are 6 reasons an FHA mortgage may be the better choice:

1. Credit

When using an FHA loan, the borrower is subjected to less stringent credit requirements. For automated underwriting approval, an FHA mortgage requires that a borrower have a minimum credit score of 620 and a maximum debt to income ratio of 43%. However, manual underwriting can take into consideration additional compensating factors that are used to strengthen a loan approval. In addition, FHA will also consider non-traditional sources of credit, such as cell phone and utility bills and payments.

2. Down Payment

FHA offers one of the lowest down payment mortgage programs available to consumers. With a down payment of 3.5%, an individual with a credit middle score of at least 620 and a debt to income ratio of no more than 43% can purchase a home.

3. Gift Funds or other sources

FHA mortgages allow the borrower to use gift funds that meet approval to help fund the loan. Gifts may come from a variety of sources, such as family, friends and employers. Many borrowers will also combine an FHA mortgage with funds from state or local housing initiatives that come in the form of low interest loans or bonds.

4. FHA Refinance

FHA mortgages offer an existing borrower an easy way to refinance through its FHA streamline refinance program with no cash out. With the streamline program, a borrower is not required to submit any documentation, a credit history is not required and an appraisal is not needed. FHA relies on the borrower’s current mortgage payment history which must be satisfactory. In addition, there must be a “net tangible benefit” when refinancing with the streamline. This means that the borrower must save a certain amount of money each month through the approved refinance. However, other situations could be considered a benefit, such as moving from an adjustable rate mortgage to a fixed rate mortgage.

5. Assumable

FHA mortgages are assumable, something that is not available with conventional loans. An assumable mortgage is one that a buyer can assume from the seller at the interest rate that the seller currently has. There are some stipulations that must also be met and the borrower must be approved in order for the assumed mortgage to be accepted. However, this is a definite perk for a home seller who holds an FHA mortgage.

6. Multiple Mortgage Programs

There are many different types of FHA mortgage programs available to home buyers. The FHA 203(k) is a type of mortgage that is used when there are repairs or maintenance issues that must be addressed when purchasing a home. FHA also offers sweat equity loans for home buyers who are interested in using their sweat equity towards their down payment. Manufactured housing loans are also available through FHA. Today, FHA’s energy efficient loans are also becoming a popular choice.

The type of loan that a home buyer chooses will always depend upon their needs and their goals. It is an individual decision that requires a home buyer to become educated about what is available to them. By doing so, a home buyer can become a successful homeowner for the long term.

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August 6, 2013

9 Down Payment Options for a Home Purchase

Home buying optionsMany people want to purchase a home, but also have a difficult time coming up with the down payment. While income may be good, everyday and monthly living expenses make it almost impossible to save the amount of funds that are necessary to obtain a mortgage. However, when searching for down payment options for a home purchase, they may find that it is actually possible.

1. Conventional mortgages require a down payment of 20% which can be a large sum of money for the first time home buyer to save. There is a minimum down payment requirement of 5 to 10% which will depend on the individual lender. Any amount below 20% will require that the borrower pay private mortgage insurance along with the monthly mortgage payment. With a conventional loan, putting the most down as possible is important because it will result in a better loan and lower mortgage rate.

2. Government loans offer better options when it comes to down payments. FHA loans require a low 3.5% down payment with a minimum credit score of 620 and maximum debt to income ratio of 43% for automated underwriting. In addition, FHA offers borrowers many other benefits, such as 6% seller concessions. These loans are also assumable which means they can be assumed by the buyer, who must be approved, when the borrower decides to sell the home. FHA loans also have an upfront mortgage insurance premium paid at closing and an annual mortgage insurance premium that must be paid for the life of the loan or until the loan is refinanced with a conventional or other type of loan.

3. VA loans have no minimum down payment requirement. In fact, most VA loan borrowers use this as a means of 100% financing. However, a borrower must be eligible according to VA guidelines. VA loans do have a one time VA funding fee.

4. FHA mortgages offer sweat equity loans which allow a borrower to perform their own work in lieu of a portion of the down payment.

5. FHA mortgages also offer bridal registry loans which allows others to deposit funds to a bridal registry that will be used to fund the down payment of the mortgage.

6. Gifts are an acceptable part of obtaining a mortgage and are often used with FHA loans. However, gifts must meet the program’s guidelines for approval. The gift can be from family, friends and even employers. There are specific rules that must be followed regarding proof, sourcing and transfer of funds.

7. Many states, counties and cities offer housing initiatives to assist with the down payment for first time home buyers. These funds are usually in the form of low interest loans or bonds. Each one has its own guidelines for repayment with some having no repayment as long as the borrower remains in the home.

8. Some employers offer down payment assistance as a benefit after the employee has worked a certain period of time.

9. For second homes or investment properties, some borrowers will use the equity that is available in their primary residence for the down payment.

While saving the down payment funds for a home purchase can take some time, home buyers should keep up to date with what additional avenues of assistance are available to them. Since most down payment assistance programs are refunded on a regular basis, borrowers should keep in touch with the latest updates in their area or state. It is also not unusual for new local programs to crop up unexpectedly. The important thing is to keep saving, keep looking and not give up.

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