Credit Tip from National Credit Care

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"Types of Credit - 10%

This 10% of your score is made up of criteria where almost nobody has
a correct idea of what to do. If you have ever heard those incorrect
statements such as: 'You should have at least three credit cards,' 'American
Express is a great revolving account,' or my favorite, 'You should have a 1
to 1 ratio between revolving and installment accounts' (this would mean
my sister, who at one point had every store card known to mankind and
would need to buy up half the real-estate in town to keep her
calculation requirements), this section is for you.

The best score is certainly not about quantity but rather quality. Ideally,
you want to have one account in every category. I'm not just talking
about Revolving, Installment and Other either. Installment accounts can
be broken down further than that. A close to perfect mix is going to be: a
credit card (R), an automobile loan (Auto), a mortgage loan (Mtg), a
student loan (I), and an "other loan" like American Express (O). American
Express that has no limit and is considered an "Other" account, not
revolving as one might assume, as it has no limit to calculate its
utilization.

The reasoning behind all this is to show you can carry a variety of loans
(shows responsibility) but not too much of any one kind (too much risk).
This doesn't mean you should start opening and closing your loans left
and right to try to get this mixture correct. If you do, all of the other
sections are going to be impacted just as much, which could be good or
very bad. However, to receive guidance, you certainly may send your
referrals our way by using your URL PORTAL."

Devil Norcross

Regional Director and Manager

National Credit Care

Cel: (303)500-7697

Office: (866)595-6313 Ext 403

Fax: (877)754-5724

Email: devin@nationalaecftcare.com

http://www.nationalaecftcare.coni/

The 5 Core Steps of a Renovation Loan

Whether a seasoned investor using a HomePath Renovation or HomeStyle loan, or a first time homebuyer purchasing your first home that needs some TLC, and using an FHA 203K or HomePath, please know that the steps for obtaining and securing a renovation mortage are always the same.

I call these "The 5 Core Steps of a Renovation Loan".  These steps begin once you have a ratified contract in hand.

1. Application and approval - Applying for a renovation mortgage is no different than applying for a regular, non-renovation mortgage.  All required documents are pretty much the same.  W-2's, paystubs, bank statements, etc...are fairly run of the mill from loan to loan.  Once submitted, the underwriter rendors a decision on the loan, usually an approval. 

2. Work write up or bid - Both of these documents do the same thing; they tell underwriters and appraisers what will be done to the home during renovation, and what that work will cost. 

3. Appraisal - All renovation appraisals are completed "subject-to" or as if the work was already done.  Important: The appraisal cannot be ordered without Step 2 (above). 

4. Project management - This is documenting who is doing the work and validating thier credentials.  We as lenders can't tell a borrower which contractor to use, but we can tell them that they must use a contractor.  Some exceptions apply.

5. Close and renovate - Once the first 4 steps are completed, then a closing date can be set.  When the loan closes, the seller is paid, the realtor is paid, and the money for the renovation is put into an escrow account that our draw department manages.  On some loans an advance draw is made right after closing, and on others the draws are issues based on work completed to date.

So those are the 5 steps.  However, remember, if you remove steps 2 & 4, you are looking at a regular loan.   So there are really only 2 additional steps on a renovation loan.  They are not easy, but they don't have to be hard. 

Call me anytime to learn all you wish to know about renovation loans.