Blanket Mortgage Loans – Definition, Pros & Cons of Using for Real Estate

For real estate investors, juggling multiple property deals and loans can get complicated.

Blanket loans often help simplify matters. Borrowers take out a single loan to cover multiple properties.

Even so, blanket loans come with their own quirks and have their pros and cons. Before entering into a blanket loan as an investor, make sure you understand exactly what you’re getting yourself into.

What Is a Blanket Loan?

A blanket loan is simply one loan that attaches to several real estate investment properties.

For example, if you buy a portfolio of five properties, a blanket loan allows you to take out one mortgage that covers all five buildings. The lender attaches a lien against each property, so if you default on your loan, the lender can foreclose on all five properties to recover their money.

Lenders do typically include a release clause, allowing the borrower to sell individual properties held as collateral as part of a blanket loan. However, they require the borrower to either repay a portion of the loan at the time of sale or put the money toward another investment. The lender then attaches a lien to the new investment property as a replacement for the sold collateral property.

That keeps their collateral — your remaining properties secured by the blanket loan — sufficient to cover their loan risk.

Who Takes Out Blanket Loans?

Blanket mortgages are exclusively for real estate investors and developers, not homeowners.

Investors can use blanket loans in many ways to invest in real estate. Landlords can take out a blanket mortgage to buy a portfolio of turnkey rental properties, as outlined above. Flippers could do likewise, to buy several fixer-uppers to renovate and flip, all with one loan. As they sell off properties, they typically repay a proportion of their loan.

Real estate developers use blanket loans to buy large swaths of land that they plan to subdivide into many units. As they build and sell off those units, they can either repay portions of the loan or put the money toward adding more properties to the portfolio.

Businesses with multiple locations and commercial properties can also use blanket loans. That could mean refinancing multiple existing loans into one blanket loan, or using a blanket loan to buy several new locations in one sweep.

When You Should Use a Blanket Mortgage

As touched on above, you can either use a blanket loan at the time of purchase or you can refinance to consolidate multiple mortgages into one loan.

It makes sense to use a blanket loan at the time of purchase if you plan to buy multiple properties simultaneously. You may also be able to negotiate staggered funding if you buy multiple properties in rapid succession but not quite simultaneously.

Another possibility with blanket mortgages includes buying only one new property, but securing the loan against other properties you own for additional collateral. Real estate investors sometimes do this in lieu of making a down payment on the new property.

For example, say you own a property worth $100,000, but you only owe $50,000 on it. You want to buy another property for $100,000, and the lender demands a $20,000 down payment.

Rather than cough up the $20,000 in cash, you offer your existing property as additional collateral for the new mortgage loan. The lender agrees to fund the full $100,000 for you to buy your new property, but puts liens on both properties. They now hold the first (and only) lien against your new property, and they have a second lien against your old property.

Advantages of Blanket Loans

Blanket mortgages come with several upsides for real estate investors.

To begin with, they can save on lender fees and settlement costs by holding one combined closing rather than having to pay separately for several. Lenders charge flat fees in addition to points, and those flat fees add up quickly. Title companies also charge many flat fees for each closing. With blanket loans, borrowers can pay those flat fees once, rather than at each settlement.

Aside from saving money, combining financing for several properties into one loan can also keep your finances and cash flow simpler. Rather than keeping track of 20 mortgage payments and loans, you need only track one or two.

When buying new properties, blanket mortgages can potentially reduce or eliminate your down payment if you use equity from an existing property for a cross-collateralized loan. Consider it one more way to pull equity out of your properties — and one that doesn’t require a totally separate settlement with its attendant costs.

Larger loans often mean more negotiating room for you as the borrower as well. Lenders don’t need to charge as many points on a $1 million loan to make it worth their while, compared to five $200,000 loans. Similarly, borrowers can often negotiate lower interest rates as well.

Downsides of Blanket Loans

Blanket mortgages come with their share of risks and disadvantages.

To begin with, it can be hard to find lenders that offer these loans. Up to this point in your real estate investing career, you may have established relationships with two or three lenders — none of whom might offer blanket loans. That forces you to go out and build new relationships with lenders who do.

Expect more intensive scrutiny by the lender for these larger, more complex loans. Rather than using a garden variety underwriter, bank managers might underwrite these larger loans themselves. Lenders might ask more probing questions and require more extensive documentation and paperwork from you. They may require higher credit scores than their typical loan products.

Blanket loans often come with shorter loan terms than traditional mortgage loans. Rather than the 25- or 30-year loan terms you’re used to, lenders often limit blanket loans to 10 to 15 years. That could come in the form of a balloon payment, or the loan could be entirely amortized over those 10 to 15 years. In the case of short-term amortization, that means higher monthly payments.

Finally, blanket loans pool your risk for many properties into a single loan. If you default on that loan, you could lose all the properties secured by it to foreclosure, not just one. In contrast, if you hold separate loans for each property, in a crisis you could isolate your losses to one property as long as you can afford to make your other monthly payments.

Where You Can Borrow Blanket Loans

Conventional mortgage lenders don’t typically allow blanket loans. Commercial lenders, portfolio lenders — who keep loans on their own books rather than selling them — and hard money lenders often do allow them.

Make no mistake, these lenders usually charge more than your personal home mortgage lender. But they also allow far more flexibility, and as a real estate investor, that flexibility is often necessary.

Call up your local community banks to ask whether they offer blanket loans for real estate investors. You can also reach out to portfolio lenders such as Lending Home and Rental Home Financing to inquire about them. For commercial loans, make sure you choose a commercial lender, because even many portfolio lenders only handle residential (single-family and 2-4 unit multifamily) properties.

Word to the wise: start building these connections now, before you actually have a time-sensitive deal on the line. Real estate investors need to be able to move fast and close deals quickly, else they risk losing the deal entirely.

Final Word

The average mom-and-pop property owner with a couple units on the side of their full-time job will probably never need to take out large blanket loans. But for real estate developers and full-time real estate investors, blanket loans can help them scale their investment portfolios faster and cheaper.

Start expanding your network of lenders now, before you have a hot deal at risk of falling through. Think in terms of building a financing toolkit of many different options for buying your next investment property — or portfolio of properties.

Source: moneycrashers.com

Housing Inventory Lowest Since 2007, But Median Price Unchanged

Last updated on January 10th, 2018

A while back, I mentioned that it appeared as if we were running out of homes for sale, despite being just years (or days) out of the housing crisis.

I was being somewhat facetious, but it’s true that there are very few homes for sale these days, at least in areas where people want to buy.

A new report from Realtor released today revealed that there were just 1.76 million single-family homes, townhouses, condos, and co-ops listed for sale in October nationwide.

That number is down 2.58% from September and 17.0% from a year ago, displaying just how bad things have become for would-be homebuyers.

Total listings in October were also 40% below the 3.1 million units for sale back in September 2007, when Realtor.com began tracking associated housing markets.

On a year-over-year basis, for-sale inventory declined in 141 of the 146 markets covered by Realtor.com. Good luck finding a house!

Median Price Unchanged

median

Despite this drop in inventory, the median list price in October was $189,900, unchanged from a year ago (it dropped 0.83% month-over-month).

It has fallen for three straight months, and likely won’t see any improvement during the holiday season, so we could be in for a long winter.

So even though there are far fewer homes for sale, demand hasn’t won over supply, though it may prevent further home price declines. Phew.

Still, it doesn’t bode well for a recovery if home prices can’t even steady themselves with record low rates on hand and limited supply.

Recovery Uneven

List prices increased in 71 markets, remained unchanged in 31 markets, and dropped in 44 markets.

Median prices are up in many hard-hit regions, such as Phoenix, Atlanta, Seattle, Las Vegas, and much of California.

The median price in Vegas in October was 12.41% above year-ago levels, thanks to a 24.4% drop in housing inventory.

[Foreclosure resales hit five year low.]

But median prices are down in many areas of the country that didn’t experience a run-up in prices during the boom, namely the Midwestern “rust belt.”

In other words, continued economic uncertainty is killing demand and hurting home prices in areas that aren’t highly sought after.

And with the impending fiscal cliff, you have to wonder if this recovery really has any legs.

Still, investors seem to be scooping up properties and everyone I know wants a house; they just can’t seem to find one for sale.

So at minimum, that should buffer home prices, even if the economy takes another turn for the worse.

Two-Year Window to Buy

While that all sounds pretty grim, Blackstone, the world’s largest private equity firm, has purchased about 10,000 foreclosed properties in the United States this year, according to a Bloomberg report.

The price tag so far is a mere $1.5 billion, with about $100 million in weekly home purchases.

The company has been scooping up properties on the cheap, with an average purchase price of $150,000, many of which were valued at $300,000 during the boom.

Blackstone plans to renovate the homes and rent them out via property management companies.

But Blackstone Global Head of Real Estate Jonathan Gray believes there are only another two to three years of buying opportunities before the market becomes less attractive from an investment standpoint.

Clearly this presents a bit of a quandary, seeing that everyday buyers can’t even find a suitable property, thanks in part to these vulture investors coming in and paying with cash.

Read more: Should you buy a house now or wait?

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.

Source: thetruthaboutmortgage.com

Five Reasons Home Prices Are Rising Like Crazy

Last updated on February 2nd, 2018

If you’ve listened to the news lately, you’ve probably heard that home prices are on the mend, big time.

The latest piece of good news comes courtesy of S&P Dow Jones Indices, which released its S&P/Case-Shiller Home Price Indices report yesterday.

It revealed that average home prices increased 8.6% and 9.3% for the 10- and 20-City Composite during the past 12 months ending in February.

Both Composites recorded their highest annual gains since May 2006, back when home prices were reaching their peak during the previous boom.

Phoenix, San Francisco, Vegas and Atlanta saw the largest year-over-year price increases, while Atlanta and Dallas exhibited the highest annual growth rates in the history of the indices, which date back to 1992 (10-City Composite) and 2001 (20-City Composite).

There were a handful of metros that saw month-to-month declines in prices, but 10 metros continued to report double-digit year-over-year gains, including Phoenix (+23%), San Francisco (18.9%), and Las Vegas (17.6%).

And the Composites are now back to their late-2003 levels. So why are home prices surging?

S&P

Fewer Distressed Sales

Perhaps the biggest driver of higher home prices is the lack of distressed sales, or the shift from distressed to traditional sales.

It seemed 2012 was the year of the short sale, and before short sales were all the rage, it was all about foreclosures.

Now you’d be hard pressed to find either of those on the market. Because home prices have recovered tremendously over the past year or so, many would-be short sales are now conventional sales.

And foreclosure sales have plummeted as more homeowners have managed to hold onto their homes thanks to a loan mod or refinance, or simply because inventory hasn’t been unloaded by banks (waiting for higher prices).

Regardless, with traditional sales making up a greater share of overall home sales, prices are inevitably higher.

No Inventory

In this same vein, there is not enough inventory to satisfy the growing demand of fanatical would-be home buyers.

If we could go back in time, chances are 90% of the individuals looking to buy a home today likely had little interest to do so a year ago. They were probably still worried about home prices slipping lower.

But the floodgates have opened, and now everyone wants in, with serious fear of missing out on the greatest opportunity of all time…

Unfortunately, this is a bubble mentality, and often leads to negative outcomes.

At the same time, existing homeowners have caught on and realize that if they hold on a little bit longer, they too can take advantage of this rise in prices.  Some may even be able to snag enough home equity to get back above water.

Bidding Wars

That brings us to bidding wars, what with supply and demand so out of whack at the moment. You just can’t make a reasonable offer on a house anymore.

Nowadays, your offer will be rivaled by a dozen others, all within a week of the home being listed on the market.

[See: Why it’s a bad time to buy a house for more on that.]

This frenzied mentality has pushed home prices higher and higher, beyond rational levels.

Of course, there’s a reason home prices have been allowed to climb higher without shutting too many people out.

[Tips for a seller’s market.]

Record Low Rates

I’m talking about the ridiculously low mortgage rates on offer at the moment. From a mortgage payment standpoint, it makes a lot of sense to buy a home today.

After all, you’ll pay next to nothing to finance your home purchase if you lock in a fixed-rate mortgage at today’s rates.

You see, Americans are spending a lot less of their monthly income on mortgage payments, but many U.S. metros now have home price-to-income ratios above historic norms.

So if you remove the low mortgage rates from the equation, the affordability picture changes considerably.

[Mortgage vs. income]

Wall St. Investors

Still, that hasn’t stopped Wall Street investors from scooping up oodles and oodles of properties on the cheap.

These cash buyers, including private equity firm Blackstone, have been squeezing everyday buyers and first-time home buyers, making it extremely difficult for the latter to land an accepted offer.

Their determination to get their hands on these properties in a certain timeframe at seemingly any cost is naturally causing home prices to rise.

The goal is to own clusters of single-family homes in neighborhoods throughout the nation, which they plan to renovate and rent out, and eventually flip once home prices move even higher.

This type of speculation is worrisome, and reminiscent of the previous housing boom that quickly went bust.

It also explains why the rate of homeownership has dropped to the lowest level since the mid-1990s.

These hedge funds and investor groups are reducing the housing stock by converting former homes into rental properties.

So now entire neighborhoods are really just sprawling apartment complexes, at least in the eyes of the investors.

The bad news is they’ll eventually unload them to everyday Joes at a premium, seeing that they’ll be able to control prices with all that inventory at their fingertips.

Source: thetruthaboutmortgage.com

Pros & Cons to Buying a Home vs Renting

Buying a home or renting is a decision each of us has to make at some point in our lives. In your 20s, renting can be the obvious option. This is a time when you are probably still weighing options on where to stay or have not yet settled into your career. Your lifestyle is best suited to renting an apartment or having a roommate to split the cost with.

Once you clock 30, your priorities change. Your career is probably on course. This is when housing needs become more important. You might even be building a family or are considering starting one. You have to make a decision on whether to continue renting or decide to buy a home. To aid you in this, let’s look at the pros & cons to buying a home vs renting.

Pros of Buying a Home

Security and freedom

Unlike a rental property, owning a home eliminates the threat of being evicted by a landlord. You get the freedom to renovate, decorate or change any aspect of your home whenever you like.

Building equity

Your home equity increases with every mortgage payment. Couple this with property appreciation and buying a home becomes a worthy investment. You can earn a profit upon selling your house. Mortgage refinancing can be of great help when making major purchases.

Income generation

As a homeowner, you can rent part of your property for some much-needed income boost. Running a home-based business is also easier when you own a house.

Improving your Credit Score

Timely mortgage payments factor positively on your credit reports. This sets you up for better rates on other lines of credit that you may require in the future.

Cost Effective

Tax deductions on mortgage interests will save you money. Same goes for tax deductions on income generated within your property.

Cons of Buying a Home

Ownership Costs

Owning a home comes with added costs. These include homeowner’s association payments, property taxes and rates, and maintenance costs.

Less Mobility

Moving from one state or location to another becomes difficult when you are a homeowner; especially if the move is dependent on selling your property. Selling can also be time-consuming.

High Interest

Factors such as location and the state of the economy can drive up interest rates on mortgages. This will increase the overall cost of ownership. At the same time, if yours is an adjustable rate mortgage (ARM), expect upward fluctuations on the monthly payments.

Possible Loss on Resale

One of the driving ideas for buying a home is that it’s an investment. However, making a profit upon selling is not a guarantee. Property value can drop drastically due to factors like recession that are beyond your control. Resale also comes with additional costs such as government and agent fees that will cut down on expected profits.

Pros of Renting

Flexibility

Staying in one place can be restrictive. This may be due to frequent job relocations. As a tenant, all you need to vacate is mostly a month notice to the landlord or lease expiry. This makes renting more flexible compared to owning a home which may require a lengthy process to offload the property.

Low Housing Costs

Apart from rent, a tenant bears no other financial obligation to the property. Utility bills are usually covered by the rent as well as maintenance costs. While one may have to insure their belongings, the cost pales in comparison to a homeowner’s insurance.

Investment Diversity

Renting leaves most of your current earnings available for investments. This is in contrast to buying a home which means most of your income goes towards one investment.

Cons of Renting

Less Freedom

The tenancy comes with rules that can be restrictive. Your ability to renovate or even decorate can be subject to disapproval by the building management. Some landlords may not even allow pets in their property.

Slow Maintenance

Not having to carry out maintenance is a plus on renting but it comes with its challenges. Issues to do with your ‘house’ have to go through building managers or rental agents who are never in a hurry to solve them.  In some cases, a leaking faucet can take months to be fixed.

Lease Limitations     

Most lease agreements have an annual increase clause of 5-10% on monthly payments. You also have little or no say when it comes to lease renewal. These can leave you looking for an apartment at the end of every lease term or year.

Not Owning

There is prestige that comes with owning anything of value; renting denies you this. Your monthly payments go towards the landlord’s loans and savings as opposed to paying for your own home with a mortgage.

Conclusion

In the long run, buying a home is the cheaper option. It’s also a plus on your long-term investments. However, it comes with more obligations. On the other hand, renting is more flexible. It also frees up more of your income which can go to savings. With this info at your fingertips, you are bound to make the choice that best suits you.

Source: creditabsolute.com

How to Negotiate Repairs After a Home Inspection

Most would-be buyers and sellers believe the real estate “deal” is negotiated at the signing of the contract.

Most would-be buyers and sellers believe the real estate “deal” is done at the signing of the contract.

In many cases, the deal-making and negotiations only start at the contract signing. Even in more competitive real estate markets, negotiations still happen once in escrow.

Issues typically arise after the home inspection, and those issues tend to result in another round of negotiations for credits or fixes.

Here are three buyer tips for negotiating repairs after a home inspection.

1. Ask for a credit for the work to be done

The sellers are on their way out. If the property is moving toward closing, they’re likely packing and dreaming of their life post-sale. The last thing they want to do is repair work on their old home. They may not approach the work with the same conscientiousness that you, as the new owner, would. They may not even treat the work as a high priority.

If you take a cash-back credit at close of escrow, you can use that money to complete the project yourself. Chances are you may do a better job than the seller, too.

Finally, if you get the credit, there will be less back-and-forth to confirm that the seller correctly made the repairs.

2. Think ‘big picture’

If you know you want to renovate a bathroom within a few years, then you likely won’t care that a little bit of its floor is damaged, that there’s a leaky faucet, or that the tiles need caulking. These things will get fixed during your future renovation.

However, the repairs are still up for negotiation. Asking the seller for a credit to fix these issues will help offset some of your closing costs.

3. Keep your plans to yourself

A good listing agent will walk the property inspection with you, your agent and the inspector. Revealing your comfort level with the home or your intentions, in the presence of the listing agent, could come back to haunt you in further discussions or negotiations.

If they sense you are uneasy with the inspection, they’ll be more willing to relay that to the seller. Conversely, if you spend two hours measuring the spaces and picking paint colors, you lose negotiation power.

If you mention you’re planning a gut renovation of the kitchen, the sellers will certainly hear about it. And they’re going to be less likely to offer you a credit back to repair some of the kitchen cabinets.

Eyes wide open

A word of caution: You should never complete the original contract assuming that you can and will negotiate the price down more after the inspection. It will come back to bite you, particularly in a competitive market.

If the property inspection comes back flawless, there’s nothing to negotiate. If you attempt to negotiate anyway — to recoup what you lost in the initial contract negotiations — you risk alienating the sellers and possibly giving them an incentive to move on to the next buyer.

You need to go into escrow with your eyes wide open. A real estate transaction is never a done deal until the money changes hands and the deed is transferred. Stay on your toes. Otherwise, you may risk losing out on further viable negotiation opportunities, which could lead to buyer’s remorse.

Shopping for a home? Check out our Home Buyers Guide for tips and resources.

Related:

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

Originally published December 18, 2013.

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Source: zillow.com

San Diego Padres Pitcher Blake Snell Close to Sale of $1.4M Florida Home

San Diego Padres pitcher Blake Snell has tossed his St. Petersburg, FL, home to a new owner.

The All-Star lefty was dealt to the Padres from the Tampa Bay Rays at the tail end of 2020. He’s since departed for the West Coast, and he’s moved on from his splashy, waterfront home as well. Listed for $1.4 million in late January, Snell’s abode quickly went into pending sale status.

He purchased the place in July 2019 for $875,000, while anchoring the Rays’ rotation. According to records and listing details, Snell proceeded to spend $200,000 to renovate much of the home, which was built in 1956.

The home’s highlight is clearly the outdoor space. The new owner will enjoy the brand-new pool deck and pool with custom sun shelf, in-pool lounge chairs, waterfall, multicolor pool lighting, never-used hot tub, and outdoor surround sound.

BS
Updated pool

(realtor.com)

The waterfront home with views of Tampa Bay also boasts an updated interior. You enter into a 12-foot foyer that opens up to the family area, showcasing walls of glass and water views.

The well-appointed kitchen offers a natural gas cooktop, plus ample cabinetry for storage. New carpet has been installed in the home’s four bedrooms.

The 2,952-square-foot floor plan has a master bedroom with bay views, a walk-in closet with custom built-ins, and a master bathroom with dual vanities and a large shower.

Other updates include custom built-in closets in every bedroom, fresh paint, new pull-down blackout blinds, and impact glass windows.

BS
Kitchen

(realtor.com)

BS
Walls of glass

(realtor.com)

BS
Master bedroom

(realtor.com)

BS
Walk-in closet

(realtor.com)

BS
Gaming room or office space

(realtor.com)

BS
Outdoor kitchen

(realtor.com)

BS
Private dock

(realtor.com)

The outdoor space is built for entertaining. A covered patio allows for lounging around the gas fire pit and outdoor TV. It’s easy to whip up a feast at the outdoor kitchen, with its bar and gas grill.

Out back, a private boat dock stores a boat or Jet Ski, and comes with a new boatlift. The three-car garage includes an extra room for a work area.

The new owner could potentially add a second story, according to the listing, and the location is convenient to downtown St. Pete and the Tampa International Airport.

Snell was selected in the first round of the 2011 MLB draft by the Tampa Bay Rays, and made his Major League debut in 2016. 2018 was his breakthrough season: He was selected to the MLB All-Star team, won the American League Cy Young Award, and led the league in wins and ERA.

Liane Jamason with Dwell Florida Real Estate has the listing.

Source: realtor.com

Curbio Review: Renovate Today, Pay When You Sell

Last updated on October 23rd, 2019

A startup named Curbio wants to help homeowners sell for more by improving their properties before they go to market.

The twist is that the homeowner doesn’t have to pay for the renovations until settlement, meaning cash on hand isn’t an issue.

The Problem Curbio Wants to Solve

Curbio benefits

Say you want to sell your home, which you’ve lived in for the past 30 years. You think it looks great, but after a real estate agent stops by and chimes in, you get a rude awakening.

Apparently, the abundant doilies, giant draped windows, pink garage door, and outdated bathrooms and kitchen aren’t as fashionable as you thought.

You’re told the home you expected to list for $650,000 is better off being listed for $549,000. Ouch.

So do you chance it and defy the real estate agent’s best intentions and list for more, only for the property to stagnate on the market?

Or do you do as they say, lower the price, and then hope it sells, despite the many improvements needed?

Both scenarios probably don’t sound very appealing to the seller, and even if a buyer comes along, there’s a good chance there will be repair requests to get across the finish line.

This situation is all too common, and perhaps one of the reasons why iBuyers like RedfinNow and Zillow Offers have surged in popularity over the past few years.

The sell “as-is” thing worked when the housing market was on the up and up, but now that price gains have moderated, home buyers are looking for a better product.

And it just so happens that many properties going to market are like the aforementioned, in need of some serious TLC after years of neglect.

While an iBuyer will purchase your home as-is, they won’t do so at a premium. On the contrary, they’ll likely give you a lowball offer AND charge fees for repairs and so on.

Ultimately, none of these options are great solutions for the savvy home seller looking to capture maximum value for their property.

That’s where Curbio comes in, a company that describes itself as a “pre-sale renovation” company.

In a nutshell, they make renovations easier and more accessible for home sellers looking to boost their property’s value before listing it.

Curbio is comprised of licensed and insured general contractors in each of the markets they do business in, who also have connections to a network of vetted subcontractors.

Additionally, their team is stacked with experienced real estate agents, house flippers, and designers who know how to get maximum ROI on renovations.

You often hear that most home renovation projects don’t actually pay for themselves.

Curbio uses its expertise and proprietary technology to take the guesswork out of the equation and make the right improvements buyers in your area seek.

They refer to it as helping home sellers “flip their own home,” instead of accepting a lowball offer, only to see their home flipped months later by a savvy investor.

How Curbio Works

Curbio example

Assuming your home is located in one of their service areas, which currently includes Atlanta, Baltimore, Chicago, Dallas-Ft. Worth, DC, Houston, Miami-Ft. Lauderdale, Orlando, Philadelphia, Phoenix, Tampa, you can request an estimate on their website.

They say they generally operate within a 40-mile radius of those cities, and expect to add Boston, Charlotte, Las Vegas, Los Angeles, Minneapolis, Portland, San Francisco, and Seattle over the next several months.

After submitting your property details, Curbio will provide you with a free estimate of proposed renovations to make your property more marketable, and importantly, more valuable.

The extent of the work will vary based on your home’s needs, but can range from kitchen and bathroom remodels to roof repairs, flooring and HVAC replacement, mold remediation, and more.

However, it should be noted that Curbio does have a $15,000 minimum project size.

With regard to pricing, Curbio says its uses a proprietary database of pricing data, which consists of national pricing from similar projects, adjusted for local markets. They believe this results in fair pricing.

Once the work begins, you’ll have a full-time general contractor who manages the project, along with an on-the-ground project manager to oversee the renovation work.

They will share real-time photo, text, and video updates to homeowners and their real estate agents via the Curbio app to see how the work is progressing.

Speaking of progress, Curbio aims to complete renovations a lot quicker, with projects about 60% faster than the average contractor thanks to their vast network and technology.

That reduces downtime and keeps agents happy, who may not want to work with a home seller who needs months to get their property to market.

What If My Home Doesn’t Sell After Curbio Makes Improvements?

  • Home must be kept on the market until it sells
  • With a 2% price reduction every 30 days if not sold during that time
  • You can also pay Curbio directly for their work if you want to end the deal
  • May make sense to shop around for other bids to see how Curbio pricing stacks up versus the competition

Now some of the what-ifs one needs to consider if using Curbio to make renovations.

Since they’re doing the work upfront for no charge, on the basis that they’ll get paid at closing, your home eventually needs to sell.

And they state their decision to take on a project is based on the homeowner’s equity in the property.

My assumption is they want you to have a healthy amount of it to allow for a flexible sales price.

Curbio does have an arrangement in place to ensure the properties do sell in a timely manner.

They say they’ll wait as long as it takes to get paid, and won’t charge additional fees or interest charges during that time.

And while there is no time limit, they do require that the list price be reduced by 2% after 30 days on the market, and an additional 2% every 30 days thereafter.

You must also agree to leave the home on the market until it sells, unless you choose to pay Curbio directly for their work.

The obvious downside here is that there’s no guarantee your home will sell for enough to cover the cost of renovations performed by Curbio.

But they seem confident that homes can sell for enough post-renovation to result in a healthy ROI.

I’m also curious if you can reside in the home while the work is being completed, or if you need to vacate the property.

You can always get an estimate from Curbio and then collect multiple bids from other contractors in your area to see how they all stack up pricing wise.

The downside is you’ll need to pay the other contractors upfront, though I’ve created a comprehensive list of the pros and cons of paying for home renovations via many different methods.

One could also argue that you should enjoy your home renovations before selling, so doing them early on may be more beneficial from a happiness standpoint.

The ideal situation is making renovations that benefit the homeowner while they’re in the property, and pay off once it comes time to sell.

(photo: Marco Verch)

Source: thetruthaboutmortgage.com

What Type of Mortgage Is Best for You?

Just as homes come in different styles and price ranges, so do the ways you can finance them. While it may be easy to tell if you prefer a rambler to a split-level or a craftsman to a colonial, figuring out what kind of mortgage works best for you requires a little more research. There are many different loan types to choose from, and a great lender can walk you through all of your options, but you can start by understanding these three main categories.

Fixed-rate loan or adjustable-rate loan

When deciding on a loan type, one of the main factors to consider is the type of interest rate you are comfortable with: fixed or adjustable. Here’s a look at each of these loan types, with pros and cons to consider.

Fixed-rate mortgages

This is the traditional workhorse mortgage. It gets paid off over a set amount of time (10, 15, 20 or 30 years) at a specific interest rate. A 30-year fixed is the most common. Market rates may rise and fall, but your interest rate won’t budge.

Why would you want a fixed-rate loan? One word: security. You won’t have to worry about a rising interest rate. Your monthly payments may fluctuate a bit with property tax and insurance rates, but they’ll be fairly stable. If rates drop significantly, you can always refinance. The shorter the loan term, the lower the interest rate. For example, a 15-year fixed will have a lower interest rate than a 30-year fixed.

Why wouldn’t you want a fixed rate? If you plan on moving in five or even 10 years, you may be better off with a lower adjustable rate. It’s the conservative choice for the long term, which means you will pay for the security it promises.

Adjustable-rate mortgages (ARMs)

You’ll get a lower initial interest rate compared to a fixed-rate mortgage but it won’t necessarily stay there. The interest rate fluctuates with an indexed rate plus a set margin. But don’t worry — you won’t be faced with huge monthly fluctuations. Adjustment intervals are predetermined and there are minimum and maximum rate caps to limit the size of the adjustment.

Why would you want an ARM? Lower rates are an immediate appeal. If you aren’t planning on staying in your home for long, or if you plan to refinance in the near term, an ARM is something you should consider. You can qualify for a higher loan amount with an ARM (due to the lower initial interest rate). Annual ARMs have historically outperformed fixed rate loans.

Why wouldn’t you want an ARM? You have to assume worst-case scenario here. Rates may increase after the adjustment period. If you don’t think you’ll save enough upfront to offset the future rate increase, or if you don’t want to risk having to refinance, think twice.

What should I look for? Look carefully at the frequency of adjustments. You’ll get a lower starting rate with more frequent adjustments but also more uncertainty. Check the payments at the upper limit of your cap and make sure you can afford them. Relying on a refinance to bail you out is a big risk.

Here are the types of ARMs offered:

  • 3/1 ARM: Your interest rate is set for 3 years then adjusts annually for 27 years.
  • 5/1 ARM: Your interest rate is set for 5 years then adjusts annually  for 25 years.
  • 7/1 ARM: Your interest rate is set for 7 years then adjusts annually for 23 years.
  • 10/1 ARM: Your interest rate is set for 10 years then adjusts annually for 20 years.

2. Conventional loan or government-backed loan

You’ll also want to consider whether you want — or qualify for — a government-backed loan. Any loan that’s not backed by the government is called a conventional loan. Here’s a look at the loan types backed by the government.

Federal Housing Administration (FHA) loans

FHA loans are mortgages insured by the Federal Housing Administration. These loans are designed for borrowers who can’t come up with a large down payment or have less-than-perfect credit, which makes it a popular choice for first-time home buyers. FHA loans allow for down payments as low as 3.5 percent and credit scores of 580 or higher. A credit score as low as 500 may be accepted with 10 percent down. You can search for FHA loans on Zillow.

Because of the fees associated with FHA loans, you may be better off with a conventional loan, if you can qualify for it. The FHA requires an upfront mortgage insurance premium (MIP) as well as an annual mortgage insurance premium paid monthly. If you put less than 10 percent down, the MIP must be paid until the loan is paid in full or until you refinance into a non-FHA loan. Conventional loans, on the other hand, do not have the upfront fee, and the private mortgage insurance (PMI) required for loans with less than 20 percent down automatically falls off the loan when your loan-to-value reaches 78 percent.

Veterans Administration (VA) loans

This is a zero-down loan offered to qualifying veterans, active military and military families. The VA guarantees the loan for the lender, and the loan comes with benefits not seen with any other loan type. In most cases, you pay nothing down and you will never have to pay mortgage insurance. If you qualify for a VA loan, this is almost always the best choice. You can learn more about qualifying guidelines for VA loans or look for VA lenders on Zillow.

USDA loans

USDA loans are backed by the United States Department of Agriculture (USDA) and are designed to help low- or moderate-income people buy, repair or renovate a home in rural areas. Some suburban areas qualify, too. If you are eligible for a a USDA loan, you can purchase a home with no down payment and get below-market mortgage rates.

3. Jumbo loan or conforming loan

The last thing to consider is whether you want a jumbo loan or conforming loan. Let’s take a look at the difference between the two.

A conforming loan is any home loan that follows Fannie Mae and Freddie Mac’s conforming  guidelines. These guidelines include credit, income, assets requirements and loan amount. Currently the limit in most parts of the country is $417,000, but in certain designated high-price markets it can be as high as $938,250. Wondering if you’re in a high-cost county? Here is the entire list of conforming loan limits for high-cost counties in certain states.

Loans that exceed this amount are called jumbo loans. They’re also referred to as non-conforming mortgages. Why would you want a jumbo loan? The easiest answer is because it allows you to buy a higher-priced home, if you can afford it. But these loans have flexibility that conforming loans don’t have, such as not always requiring mortgage insurance when the down payment is less than 20 percent. Why wouldn’t you want a jumbo loan? Compared to conforming loans, interest rates will be higher. And they often require higher down payments and excellent credit, which can make them more difficult to qualify for.

You can read more about these and other programs here. It’s also a good idea to talk to a local lender to hear more about their options — get prepared by familiarizing yourself with mortgage-related terms using our handy glossary.

Source: zillow.com