Student Loan Debt Solution Found via Fannie Mae's "Student Loan Cash-Out Refinance"


Student Loan Debt Solution Found via 
Fannie Mae's "Student Loan Cash-Out Refinance"


Mounting student loan debt has become a huge concern ...



This is true not only for individuals carrying student loan, but for GSE's (Government Sponsored Enterpriseslike Fannie Mae that oversee and ensure mortgage liquidity and guidelines to Banks, Lenders, and Mortgage Providers.   

In a previous post, I noted that Fannie Mae had revised guidelines as they pertain to treatment of Student Loan Debt when applying for loan.  Those changes were favorable for Home Buyers carrying student loan debt, as they allowed Mortgage Underwriters some flexibility in examining and allocating for student loans. 

This new more relaxed view removed some financing obstacles and made it easier for Mortgage Lenders to reach mortgage approval for Borrowers.  It opened the door for more potential Borrowers with Student Loan Debt to qualify for a Mortgage and buy homes.  A very welcomed outcome.

Now, adding to that earlier positive change, another new financing option offers hope to those that hold student loans. It comes in the form of financing called the "Student Loan Cash-Out Refinance Option".  The refinance option is backed by Fannie Mae and other wholesale lenders.  

A cash-out refinance option has long been an option available for homeowners with home equity.  Those homeowners could use the refinance to pay off debts of any kind.  

But with this new refinance option, when paying off Student Loan debt, certain costs normally charged to a borrower are "forgiven" or "eliminated".  

In turn, these savings result in either a:
  • Lower interest rate offering  
       or ...
  • Additional "cash out" at Closing  

It truly can be a real benefit to Borrowers to finance in this manner.


As with any new program, there will be a learning curve felt by lenders, but for current homeowners with sufficient equity looking to reduce or eliminate higher interest rate Student Loans and higher Student Loan payments ... there can be profound relief found via a "Student Loan Cash-Out Refinance"

Should you want more information, have questions regarding this new Student Loan Cash-Out Refinance (or other mortgage options), or your eligibility for putting this new refinance option to work for your benefit, please contact me.  I'll be happy to answer all your questions and assist you moving forward.



    
* Looking to find what possibilities exist for you?  Are you hoping to Buy, Refinance or purchase an Investment Property New LenoxWill County, or elsewhere in the Chicagoland area? 
Contact me!  I'll put my 40+ years of Mortgage experience and expertise hard to work on your behalf.
I'm easily found at:



Gene Mundt


Mortgage Originator - nmls #216987 - IL Lic. 031.0006220 - WI Licensed

American Portfolio Mortgage Corp.
nmls #175656

Direct: 815.524.2280
Cell/Text: 708.921.6331
eFax: 815.524.2281


 

  Twitter Account of Gene Mundt, Mortgage Lender   LinkedIn Account of Gene Mundt, Mortgage Lender   Facebook Acct. of Gene Mundt, Mortgage Lender   Pinterest Acct. of Gene Mundt, Mortgage Lender   
 Trulia Acct. of Gene Mundt, Mortgage Lender     Gene's Chicagoland Blog/Gene Mundt, Mortgage Lender 


Gene Mundt, Mortgage Originator, an Originator with 40+ years of mortgage experience, will offer you exemplary mortgage service and advice when seeking: 
Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago and the 
greater Chicagoland region, including: 
The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, 
Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, 
Romeoville, Naperville, etc.), DuPage County, the City of Chicago, Cook County, 
and elsewhere within IL & WI.

Condos, Dwelling Parcels, PUDs, and Legal Ownership


Condos, Dwelling Parcels, PUDs, 
and Legal Ownership 



I've "been around" ...

Around the mortgage business, that is.  For over 40 years.

And during those 40 years, besides being a Mortgage Originator, I also held an IL Real Estate Appraiser license for around 2 decades.  Plus I was honored to serve on my local Village Board.  

My time served on that Board included working on a Comprehensive Plan for the Village and on the Building and Zoning Commission.  Each capacity fulfilled provided me with amazing opportunities to learn and expand my knowledge.  Most importantly for me was what I learned regarding real estate and the financing of it.  The experience complemented my work immensely.

But even with all these varied opportunities and experiences that have come my way over the years, I still run into "firsts" as a Mortgage Originator.  Things I've just never heard of or encountered anywhere before.

And yep, as you've probably guessed, such was the case with one of my Borrowers last month ...

I was working on their application for mortgage and the property they were buying was described as an "attached dwelling in a Planned Unit Development".  The Planned Unit Development (commonly referred to as a PUD) was described as such in the legal description of the parcel, within the subdivision that the parcel was platted in.

Now it's important to note at this time:  The term "condominium" appeared nowhere within the legal description provided.  The first I saw the term used was on the appraisal which had been completed on a condominium form (known as the Fannie Mae 1073 for a conventional loan).

The questions that immediately popped into my mind were:  

  • Why was the appraisal for a PUD property being completed on a condominium form ... and appraised as such?
  • Why did the appraiser compare this PUD property to condos?
  • Why was the appraiser insisting this property was a condo after we had ordered the appraisal as a Single-Family Attached Planned Unit Development (PUD)?

As the Rules, Forms, and Approaches
for each property type valuation are different ... different lending guidelines are required for each property type too.  Clearing this up was important.


After reading the submitted appraisal, I asked that the Condominium Declarations be provided to me.  We had not been provided any previously.  

Now I'll admit, there are always exceptions to the rule, but in the majority of instances, an Illinois property cannot be declared a legal condominium unit unless a Declaration of Condominium is recorded as part of the Illinois  Condominium Property Act.  So my next call was to the title company.  

That call confirmed that there was no Declaration of Condominium for the property or the immediate development.  The property was, in fact, a "dwelling parcel" and defined as such by the legal description and the original platting of the phase of the development it resided in.

So next, I asked for the survey of the property parcel be provided, since the defined lot lines and dimensions were unclear on the recorded Plat of Subdivision I found online.  Gaining knowledge of the defined lines and dimensions of the property site were important, as a PUD property differentiates itself from a Condo ownership by its very definition.

  • A PUD features an individually-owned parcel/site
  • Condo Ownership features a shared or common site 

Calls to the Management Company for the property association and the Township Assessor provided me little or no assistance.  The Management Company said they couldn't make a definitive determination regarding ownership status. The Township Assessor said that they treated the value and assessment of the property the same regardless of the property's legal ownership rights.

Notably, in my world, condominiums have no "land value", as no site or lot is individually defined or owned.  Yet, our subject property had a breakdown of land and building assessments.

My search for answers was becoming daunting, but as the LO and lender, we had to determine and document:

  • The true Property Rights (Ownership Type) of the Subject Property
  • The correct Appraisal.  We had to make sure the Appraisal Report was on the appropriate form for the financing program being utilized by the Borrower.  (And should the appraisal need to be corrected, make sure no additional fee is charged to the Borrower or to us for the correction performed.
  • That a Closing with correct documentation take place.

The Appraiser and the Appraisal Management Company finally came to agree with me that this property was NOT a condo.  They eventually identified the property for what it was ... a "dwelling parcel"- within a Planned Unit Development (PUD).

And even after all the questions, searches, and corrections ... the loan closed on time.  The post-closing process was completed.  

Now there is no doubt that this subject property was unique in some aspects.  How upon first look, it might appear much like a condo.

But it's vitally important that the legal ownership of property be determined and defined for the Borrower/Buyer of the property's sake (and the Lender's).  Those determinations and definitions go way beyond appearances or physical aesthetics of the property.  It took my scratching way below the surface to reveal the truth of this property.

There were many lessons to be learned from this property and its transacting.  But perhaps most notably it pointed out the importance of working with an experienced knowledgeable Loan Officer (and real estate agents) ... a professional willing to be dogged in their search for answers and facts.

Those answers and facts resulted in Buyers/Borrowers knowing for sure that the ownership in their property is held in its correct and legal form ... 




* When in need of Mortgage info or service when buying, refinancing, or Investing in a home in New Lenox - elsewhere in Chicagoland - IL & WI, contact me
I'll be happy to put my 40+ years of mortgage experience and expertise hard to work on your behalf.
I'm easily found at:



Gene Mundt

Mortgage Originator - NMLS #216987 - IL Lic. #031.0006220 - WI Licensed

American Portfolio Mortgage Corp.
NMLS #175656


Direct: 815.524.2280
Cell/Text: 708.921.6331
eFax: 815.524.2281

 Get Answers! Get a Quote!

   


Gene Mundt, Mortgage Originator, an Originator with 40+ years of mortgage experience, will offer you exemplary mortgage service and advice when seeking: 
Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago 
and the greater Chicagoland region, including: 
The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, 
Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, 
Romeoville, Naperville, etc.
), DuPage County, the City of Chicago, 
Cook County, and elsewhere within IL & WI.


Referrals are Appreciated and Welcomed






  






Should Sellers be Leery of Accepting Offers from Buyers Approved for FHA Financing


Should Sellers be Leery of Accepting Offers 
from Buyers Approved for FHA Financing?


Years ago and even now, it's not unheard of to hear Sellers express a wariness about accepting offers from FHA Buyers ...  


Typically these Sellers' uneasiness is based on stories they've heard about the difficulty of passing an FHA Appraisal.  They think they'll be required to make their home "right for FHA Financing".   

The prevailing thought is that FHA ... or the Lender ... will require a long list of repairs to be done prior to Closing.  That a Seller needs to get their home in FHA "financeable" shape and the costs of doing those repairs will be all theirs to shoulder. 

I can tell you, having been an FHA-Approved Appraiser (and now as a Mortgage Originator), that I've always felt that those fears were/are often a bit unwarranted by the real estate community and the selling public.  In many cases, the issues raised by an Appraiser can be addressed reasonably easy.  

In my experience, the below are typically the property issues raised most often by FHA Appraisers:
  • Peeling paint:  Was and still is an issue for homes built before 1978.  (Lead was used in paints until the year, 1978.  Lead poisoning is a health concern/issue.
  • Certifications Required:  Certifications for Roofing, Heating, Plumbing, Electrical, Structural Contractors were most often requested. (Functionality of "major components" of real concern as determined by the Appraiser of Record)
  • "Nit-Picky" items:  Items determined by a so-called "nit-picky" Appraiser

But I've always found that the mindset of FHA has always been and remains:  If a homebuyer moves into a home and finds themselves having to deal with health hazards, major repairs, or replacements soon after Closing, it could cause the Borrower great financial stress.  It could  result in a default on their mortgage.  It could preclude a Foreclosure. 

Common sense will tell you ... FHA doesn't want that to happen.  They don't want to be the "cause" of that happening to anyone.

FHA believes a certain level or standard of property "fitness" should be met.  But requests for property repairs are often seen as unreasonable and placing hardships on Sellers.  

As a result, Sellers oftentimes object to FHA Financing on a Contract - even when the requests by FHA Appraisers for repair(s) are justified.  Their rejection of FHA Financing offers can create roadblocks to Contract completion ... or undue hardships on the prospective Buyer.

Recently, I was assisting Borrowers where the Sellers of the property they hoped to buy insisted on Conventional-ONLY Financing.  Due to "credit issues" the Borrowers involved were subject to what in financing is called "a Waiting Period after a Significant Event".  

Their loan application could have been approved with FHA Financing terms, but the waiting period in play created a hard stop for a Conventional Loan with "normal" terms and rates. 


In this particular case, the Sellers were NOT willing to accept the offer made by my Borrowers with FHA Financing.  That decision in turn, kept their property on the market.  

Why did they make that decision?  

The Sellers were unwilling or unable to "expose" themselves to an FHA Appraisal.  They didn't want to face any possible FHA repairs or conditions interjected by an Appraisal for FHA Financing purposes.

But in actuality, in today's current market, what do FHA Appraisers typically require?  What repairs do they typically require to be made? 

Unfortunately, there is no one definitive resource that provides an answer.  Even FHA handbooks and publications themselves offer somewhat vague direction.

The stance by FHA in recent years has been to move the responsibility to the Lender's Underwriter and the Lender's assigned Appraiser.  They must determine the repair needs of a given property.  The days of ordering certifications and other costly unwarranted repairs on an FHA Appraisal are pretty much a thing of the past.  

While it must be pointed out that every market varies ... and every Appraiser's stance also varies ... FHA Financing does NOT have to be viewed as a "deal killer".  

For the most part, HOME INSPECTIONS have taken the guesswork out of the FHA Appraiser's "to do list".  The role of the Appraisal should now be viewed as more of a "Value Protection" for both the Buyer and the Lender.

For deals to die on the vine over long-standing old-school mindsets surrounding the negatives of FHA Financing, was/would be unfortunate.  Those of us that must know what an FHA Appraiser will require regarding appraised properties, should keep "safe, sanitary, and sound" in mind as our rule-of-thumb in these instances.  

Below I've included an example of a case where the sellers DID comply with an FHA contract and resulting Appraisal ...  

Here is the verbiage included in the FHA Appraisal and what was required by the FHA-Certified Appraiser involved during that transaction:  

     "The Subject was built prior to 1978 and thus there is a possibility of the existence of lead-based paint in the home."
  • Evidence of cracked and peeling paint was found at the time of the inspection on almost all surfaces of the exterior of the home, garage and the shed
  • Home requires exterior scraping and re-painting on nearly entire exterior siding, trim, and soffits
  • Shed, garage, and house exterior also show minor signs of wood rot
  • Shed was locked at time of inspection.  A re-inspection will be required to view shed interior
  • The patio is dug-out of the original grade and has three perimeter walls surrounding.  All perimeter walls present falling hazards and exceed 36 inches in height.  A full-surround safety railing is recommended to prevent accidental falling

The above showcases the Appraiser's method of reasoning and prevailing mindset regarding the current safety and soundness ... the "fitness" of the property being viewed.  It also provides a prime example of how FHA deals can close when the Seller keeps an open mind.   

As that is just what happened.  The Sellers made the required repairs quickly and relatively easily (and inexpensively) and kept their transaction moving forward to successful completion.  Their desired result ... a SOLD home ... was achieved.

Each Seller must determine their own transaction's path and destiny.  The best outcomes, however, are found when all options are left on the table and considered fully.

I say in appropriate situations, those options should include the consideration of accepting a Buyer making an offer with FHA Financing ... 


* When in need of Mortgage info or service when buying, refinancing, or Investing in a home in New Lenox - elsewhere in Chicagoland - IL & WI, contact me. I'll be happy to put my 40+ years of mortgage experience and expertise hard to work on your behalf.
I'm easily found at:




Gene Mundt
Mortgage Originator - NMLS #216987 - IL Lic. #031.0006220 - WI Licensed

American Portfolio Mortgage Corp.
NMLS #175656


Direct: 815.524.2280
Cell/Text: 708.921.6331
eFax: 815.524.2281

 Get Answers! Get a Quote!

   


Gene Mundt, Mortgage Originator, an Originator with 40+ years of mortgage experience, will offer you exemplary mortgage service and advice when seeking:
Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago
and the greater Chicagoland region, including:
The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena,
Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook,
Romeoville, Naperville, etc.
), DuPage County, the City of Chicago,
Cook County, and elsewhere within IL & WI.



Referrals are Appreciated and Welcomed



Happy Thanksgiving!






Student Loan Debt Solution Found via Fannie Mae's "Student Loan Cash-Out Refinance"

Student Loan Debt Solution Found  via   Fannie Mae's "Student Loan Cash-Out Refinance" Mounting student loan debt has ...