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Information from Broker in Question,

My husband 's  a using broker recommended by our retired broker. We want to purchase  a home  asking  $560,000.   My zestimite is  $500,000 to $530,000.  Needs renovation and addition as well. Architect estimates $150,000 to complete.  New value of home would be $ 710,000 which qualifies for a 203k mortgage from my research. 

 

My husband spoke with broker last week.  Husband's criteria :  Smallest amont down as possible, 30 yr fixed, 60 day lock.  Thought that    The  150 k  for construction would   would  have to come from our savings (  He is pretty

 

With the above criteria broker told husband that jumbo 30 yr fixed was our only option.   He said that banks are no longer doing piggyback loans.  Had no thoughts about  us paying for the renovations out of pocket.   

 

We have 800 and 770 credit scores.    Husband' salary more than qualifies.  We're financially secure,  money is invested,  sold home last year , and relocated.     Had a 30 yr fixed for four years , refinanced to 15 yr fixed which we paid in fuller sale.  

 

   Is he correct about the piggyback loan?    Why didn't the 150 k in cash addressed ?  Why not use it to has lower loan below 410 k?   

 

Is there a legitimate explanation ?

  • June 08 2008 - US
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Answers (4)

Piggy backs are pretty much gone or at least useful ones.

If it qualifies for a K loan and the broker is not approved by countrywide to do K loans he will be trying to convince you to go another route.

With Reno I would suggest either the K loan or a construction to perm loan.
  • June 08 2008
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Profile picture for ELender

These answers could end up all over the place but I'll give them a shot.  Like AA stated I believe the piggyback would not be a viable option unless you had the money set aside.  Most repair escrow agreements only last 30 days which wouldn't be long enough to cover that extensive a project.  What about just purchasing the home and then doing a recast once your money comes free dropping your payments?  Another option might be a bank talking to you about collateralizing your assets if you aren't very liquid?  You didn't say how the money is tied up.

 

You could do the 203K loan but you would have to understand the rates are much higher. 

  • June 09 2008
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Profile picture for Wayne.T_ .....Colo.

MrsG,

 

How extensive is the renovation?  Will the current condition & appraisal meet normal purchase guidelines?

 

The situation may allow you to purchase 1st then use remaining invested assets to secure funding for the addition.  Doing the work in sages may be your soluton.

  • June 09 2008
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MrsG - I have many clients that have been or are in your situation. What I recommend is checking into a construction loan for the renovation (because the renovation sounds pretty intense). I have done many of the 203k loans but don't recommend them that much because I have found them to be quite a hassle sometimes and I can get a quicker better loan elsewhere. The construction loan would cover the costs of renovation and payoff the current lien on the home. When the renovations are done you can refinance the construction loan with long term permanent financing based on the new appraised value. This should eliminate the need for any piggy back financing and keep the costs very minimal. Good luck on your project. Let me know if I can be of ny assistance.

  • June 09 2008
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