If you are a real estate agent who is helping homebuyers navigate today’s fast-moving housing market, you could probably use a trusted and reliable lender on your side. And City Lending could be the right preferred lender for you, for a whole host of reasons. Let’s delve into a few of these reasons and look at how they can help you sell more homes.
The Importance of Pre-Approval
As you surely know, we’re in a seller’s market — and a red-hot one at that. Most homes for sale get multiple offers these days and bidding wars are all too common. You’ve been in a few yourself and faced off against a selling agent who has ignited a bidding war. So, you understand the importance of a buyer having a pre-approved mortgage in getting a home deal done. We do too. That’s why we’re dedicated to providing a swift and smooth pre-approval process to make home-buying easier for both you and your clients.
Loan Products for Every Homebuyer
As homebuyers are as unique as the homes they seek, we have a wide-ranging selection of loan products to meet a variety of needs. Here are a few you can suggest to your clients.
FHA Loans. These can be perfect for first-time buyers or for those borrowers who might not qualify for conventional loans. Less money down is a big plus with an FHA loan, often requiring as little as a 3.5% down payment for borrowers with credit scores of 640 and higher. All your client needs to do is to show two years of W-2s and pay stubs going back 20 days. And City Lending doesn’t add overlays; we underwrite using FHA guidelines.
ITIN Loans. Chances are you’ve come across a potential client with worries that their immigration status will prevent them from getting a mortgage. But that’s not necessarily the case. Not if they choose an Individual Tax Identification Number (ITIN) Loan Product. Foreign-born people who lack social security numbers may still quality for home financing if they are legally allowed to work in the U.S. Two years of tax returns and two months of bank statements is all it takes to get the approval process started.
Bank Statement Loans. Your roster of clients almost surely includes some people who work for themselves, from small business owners to workers who are a part of the ever-growing gig economy. So, you know the difficulty they can face trying to meet the financial documentation requirements of conventional mortgages. Enter Bank Statement Loans, which use a potential borrower’s bank deposits in determining their eligibility for a loan. With lenient requirements — people with credit scores as low as 620 and debt-to-income ratios as high as 50% can qualify.
VA Loans. If you’re showing listings to veterans or active members of the armed services, they’re likely to be interested in VA loans. These government-backed products have some serious selling points: the possibility of putting no money down, no need for mortgage insurance, eligibility for those with credit scores as low as 600, and more. All with a reasonable interest rate and possible for amounts up to 1 million dollars.
FHA 203k. Whether you have a client who is looking for a fixer-upper or one who just wants to make their new dream home a little dreamier, the FHA 203k Rehabilitation Loan Product might be right. This loan, insured by the Federal Housing Administration, allows homebuyers to finance their renovations — perfect for first-time homebuyers who may go the more economical route of buying a home that needs some work.
Rely on the Support of City Lending
You might not have heard of City Lending in 2014 when we were getting started with a small, but dedicated team. We’ve since grown to have over 200 employees, a success story that’s founded on our dedication to our clients, our investor relationships, and the ever-growing City Lending in-house team. Should you choose to work with us, you’ll be able to take advantage of our considerable resources.
With a dedicated staff of loan processors and assistants, our loan originators are never bogged down with paperwork, leaving those important but often cumbersome details to a team of pros. Who do it quickly. Our compliance team reviews content for turnarounds in 48 hours or less. For you, that means you can count on some of the fastest loan processing times in the lending business. We move so swiftly because we don’t outsource our work, handling everything from processing and underwriting to managing an appraisal roster in-house.
There may be no real estate agent on earth who hasn’t fielded calls from impatient homebuyers, fretting while they wait for the underwriting process to complete. While we can’t make underwriting time go away, we do have the high-tech tools to make it as expedient as possible. These include Optimal Blue, LoanBeam software, the ability to track the mortgage process with SimpleNexus, and access to fast financial verification through Birchwood services.
Fast Closings and Communication
What does all this tech and support staff mean for you? Fast closings, for one. We don’t want financing to linger in limbo any more than you or your clients do. So, we’ve assembled a team of highly skilled professionals and created an unrivaled system to streamline the process. As you probably know, there are lots of things that can spoil a real estate deal. We strive to make sure that financing isn’t one of them.
As with most relationships, communication is fundamental to maintaining a good lender-agent relationship. It’s why we put considerable attention and resources toward promptly answering every call, email, and text from agents. We know that in today’s market, homes sell fast. You need answers fast, to sell that current home and to move on to selling the next one.
We’re always on the lookout for talented loan officers to join the City Lending family. But why might you want to come aboard? One look at City Lending’s diverse suite of loan products says it all, with financing options to meet the unique needs of every kind of borrower imaginable. Let’s look at a few of City Lending’s offerings.
Purchase Products for a Multitude of Borrowers
Bank Statement Loans for Non-Traditional Earners
An emerging trend even before COVID-19 shifted the world into a more online direction, gig workers and other self-employed folks are a rising demographic you should be targeting. These non-traditional earners often don’t have the pay stubs, tax returns, and work histories that conventional loans generally require for approval. But these would-be borrowers are creditworthy and can benefit from Bank Statement Loans that gauge earnings by looking at bank account deposits.
VA Loans Are Available for Millions
While veterans and active-duty members of the military don’t have to get VA loans when seeking a mortgage, they would be wise to consider one. Thanks to backing by the U.S. Department of Veterans Affairs, VA Loans have highly attractive features, such as up to 100% financing of the value of a home, with no maximum loan limit. Plus, there’s no mortgage insurance required and borrowers with credit scores as low as 600 can often qualify.
How many of these potential borrowers are out there? According to the most-recent V.A. data, there are about 19 million veterans in the United States today. Add that to the 1.3 million active-duty members of the armed services and you’ve got north of 20 million people who might benefit from a VA Loan.
Real Estate Investors Spend Billions
Often when we think of people who are applying for mortgage loans, the mind conjures up an individual, couple, or family looking for a single-family home. And they are common borrowers. But loan officers know that these folks make up only a part of the lending landscape; property investors compose a huge portion of homebuyers in today’s market. In the third quarter of 2021, about 18% of all home sales went to real estate investors, who collectively spent around $64 billion. If nearly one in five homebuyers is a property investor, that’s a group you can’t overlook.
So which loan products best serve these investors? City Lending’s Investor Cash Flow Program is tailored to the needs of real estate investors. With no requirement of personal income verification and loan amounts up to $1 million, Cash Flow loans look at the potential income that a property will generate in evaluating qualification. And not just for purchases — this program can also be used to refinance investment properties.
FHA Loans for First-Time Homebuyers
While first-time homebuyers don’t necessarily need to get FHA mortgages, it is a popular option for many. People who are buying their first home often have less money for a down payment, and FHA guidelines allow for as little as 3.5% down. Given that first-time homebuyers tend to be younger than those who have owned homes before, their credit histories are often shorter, and perhaps with a few issues, making the moderate credit score requirements for FHA loans a good potential fit.
And the pool of first-time homebuyers is a group you certainly would not want to ignore. While the percentage of people who are buying homes for the first time fluctuates from year to year — falling from 33% in 2021 to 27% in January 2022 — the number of first timers who might be right for FHA loans is comfortably in the millions.
ITIN for Foreign-Born Borrowers
A considerable number of people who are allowed to work in the United States lack social security numbers or the documentation needed to qualify for conventional loans. This represents many would be home buyers who fall into this segment of the market.
Many of these people may benefit from City Lending’s ITIN Number Loan Product. Even if a potential borrower is undocumented, or doesn’t have a valid residence permit, they may still be able to qualify for a mortgage loan. They just need two years of tax returns, and two months of bank statements among the requirements, and they can own a piece of the American dream even if they aren’t American citizens.
Refinancing to Fit the Needs of Many
RefiNow offers an excellent way for low-income homeowners to refinance and take advantage of today’s attractive interest rates to save money each month. How much money? At least $50 a month, though that number is often higher. RefiNow is perfect for those who may not qualify for a conventional loan, as this refinance program has more-relaxed application requirements, a debt-to-income ratio of up to 65%, and credit score requirements as low as 620.
Do you know a borrower with a fixer-upper in need of serious work? Or maybe one who just wants a simple renovation, such as a bathroom makeover or an upgraded kitchen. Then they’re ripe for an FHA 203k Rehabilitation Loan Product, versatile loans backed by the Federal Housing Administration that allow borrowers to make home improvements on either a new home or one that they already own.
You’re unlikely to find a borrower who doesn’t like getting cash that they can use for anything they want. From paying off a credit card to buying a new car, covering tuition costs, and more, FHA Cash-out refinancing can be an ideal way to use one’s home equity to put cash in their pocket. How does it work? The borrower simply replaces the mortgage they currently have with another mortgage, quite possibly at a lower rate given today’s interest rates.
Do you have a home that could use some serious updates? And maybe you don’t have the cash on hand to pay for these renovations out of pocket. If so, FHA 203k refinancing may be the solution you seek.
How does 203k refinancing work?
Even if the mortgage you currently have isn’t an FHA loan, you can still take advantage of refinancing that’s backed by the Federal Housing Administration. With an FHA 203k loan, you can borrow money to cover renovation costs and roll that sum into the monthly payments of your existing mortgage. A move may makes sense given today’s low interest rates. These 203k refinance loans often have low down payments (3.5% is the minimum) and low credit score requirements. Add in competitive interest rates compared to many other types of loans and you’ve got a great option to give your home a much-needed upgrade.
The Two Flavors of 203K Refinancing
There are two options with FHA 203k refinancing: Limited 203k loans and Standard 203k loans. Overall, they’re similar but do have key differences.
- A Limited 203k has no minimum dollar amount and is capped at $35,000, while a Standard loan has no upper limit, but a minimum loan amount of $5,000.
- Limited 203k loans are for smaller projects and can’t be used for major structural upgrades; Standard 203k loans are meant for major renovations.
- Limited loans have more flexibility in choosing contractors, while Standard 203k loans require licensed contractors.
- Projects under $15,000 don’t require inspections with Limited loans, while all work with Standard 203k refinancing, no matter the cost, requires inspections.
Home Improvements With FHA 203Ks
Cash-out isn’t the only option for home improvements; FHA 203K Rehabilitation Loans are designed specifically for this purpose, from upgrades, such as bathroom and kitchen makeovers, to significant reconstruction. And your initial mortgage doesn’t have to be an FHA Loan — anybody can do refinancing using an FHA 203K. There are two types of 203K refinancing: limited and standard.
- Limited 203K refinancing goes as high as $35,000. If projects come in under $15,000, inspections aren’t required. But you can’t do most major structural work with a Limited 203K. For those, you need a Standard 203K.
- Standard 203K refinancing starts with projects that cost $5,000 and is usually for big stuff like replacing plumbing systems or adding on extra rooms.
Are there any requirements that I should know about?
A few. The list of eligible home-improvement projects with 203k loans is long, ranging from plumbing, roofing, and flooring to landscaping, a host of energy-efficient improvements, and more. But luxury upgrades aren’t allowed. So no swimming pools, tennis courts, hot tubs, barbecue pits, and the like. While home offices are fine, you can’t use 203k loans to turn part of your home into a commercial business. 203k loans require FHA mortgage insurance. And there are closing costs with FHA 203k loans, which are about the same amount as one would pay with other refinancing methods.
Most Popular Home Improvements
So you know that your home could use some major upgrades. And have the means to pay for them with 203k refinancing. You’re probably considering big structural stuff such as roofs and plumbing and heating systems, which often top the upgrade lists of many homeowners. Where else might you want to put your refinancing dollars? Here are some top home improvement projects to consider:
- Windows. Replacing old windows with new energy-efficient ones makes financial sense; the U.S. Department of Energy estimates that windows often account for 25% to 30% of heat loss and gain in homes. Beyond upgrades, adding more windows is a popular trend, with homeowners installing skylights, floor-to-ceiling windows, and even replacing entire walls with glass.
- Home offices. Millions of office workers shifted to telecommuting with the onset of the coronavirus pandemic. And many will stay that way, making home offices more important than ever. From converting an existing space, such as a bedroom, to add-on construction, creating a dedicated at-home workspace is a practical idea.
- Flooring. Replacing old worn-out carpets with new ones is a popular home upgrade. And while carpeting remains a top choice for many, other flooring trends are on the rise. Today’s luxury vinyl isn’t like the flimsy stuff from the old days, with modern high-quality vinyl flooring that is nearly indistinguishable from wood, stone, and ceramic. And traditional wood flooring is always a great way to go.
- Disaster preparedness. As weather events related to climate change are increasingly bearing down on homeowners, fortifying homes against Mother Nature has become more common. These upgrades include flood-mitigation measures such as increased drainage and installing flood-proof windows and sea-wall barriers, as well as backup power systems, storm shutters, and more.
Using 203K Loans for Investing
While 203k rehabilitation loans are designed for primary residences, there are some ways they can be used for investment properties. One way is to refinance the mortgage on the home you live in, using the loan to make renovations on that residence. Then, one year after the loan closes, you may move out and rent the home to someone else. With some stipulations. The FHA requires that your move has to be for a legitimate reason, such as the need to relocate for a new job or the very real need for more space with a growing family. In essence, it’s possible if you planned to stay in the home for more than a year, but factors beyond your control changed that plan.
It’s also possible to use 203k loans for purchasing investment properties. Savvy investors may wish to use 203k loans to purchase fixer-uppers with the intention of flipping the properties for profits. However, that’s not feasible; 203k mortgages, whether they are for purchases or for upgrades on existing properties, are restricted for use with primary residences — the borrower must reside at the property. But it is possible, and common, for the owner of a property to live there and utilize the rest of the property as an investment with rental units.
According to FHA rules, a borrower can purchase a multi-family building with two to four units, or a structure that they’ll convert into a similar multi-unit property, using a 203k. On the condition that the borrower lives in one of the units for at least 12 months. After that? Then the borrower is free to move out (again, conditionally) and rent the unit that they once lived in. It’s worth noting that one can’t accumulate investment properties this way, by merely living in each newly acquired multi-family building for a year and moving on. A few exceptions aside, FHA 203k loans are one-at-a-time deals.