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Construction loan appraisals getting a second review

Well it had to happen, construction loan appraisals are getting a second review. Building a home is the true American way to own a new home. Families have always dreamed of building their own home and building a new home will always be the American dream. Building a new home is the safest home loan project request available because of the land equity that is brought to the closing table. The lending industry seems to be taking out the sub prime problems on the mortgage industry as a whole. Lenders are now requiring appraisal reviews on construction loan projects due to the lower appraised home values in key areas throughout California. Even with land free and clear and excellent credit scores customers are finding the loan process a little more difficult which if not corrected may have a major economic down turn for the worse.

Tags: construction loans, new home construction loan,

Construction loan lenders are resorting to very conservative underwriting.

Construction loan lenders are resorting to very conservative underwriting guidelines.The underwriting guidelines for stated income has officially changed. First Horizon for example has gone overboard with particular formula for all stated income loans. The formula is so conservative that if the client has a high 700 credit score, land free and clear, own’s their own business and average liquid assets they will kill the deal. Our office had recently sent a 1.6 million dollar construction loan request for a client with the above criteria with plenty of assets and was turned down due to the client owning his auto dealership (Mitsubishi) for less than 2 years. The client has been in the same line of work for many years. When banks like First Horizon become this conservative or this paranoid there definitely is problems in the lending and mortgage industry.

So what is going on, well you heard about all the sub prime lending that is currently backfiring due to stated income, poor credit loans that should have never been approved. It looks like the good loans are going to pay for those bad loans through typical American incompetence. First Horizon has a sub prime department that went belly up so some genius in upper management (once he or she pulled their head out of their you know what) has probably decided to protect their job by providing the ultimate business killer super conservatism. Super conservatism is accomplished by taking regular conservatism and taking out any rationality or by adding incompetence. Then you take a little fear of loss of job and add a bit of cover your ass and there you have it, super conservatism.

Construction loans are the safest loans in the entire industry for many reasons, one being most people that build their home have excellent credit. Most people that build bring a large down payment to the table called land equity (unlike sub prime loans). Most people that build are building their dream home on their dream land. Most people that build own another home to be sold which usually brings even more equity to the deal once the new home is completed. All of these benefits are the complete opposite of sub prime lending. So lenders and banks everywhere do not take out your underwriting incompetence on the best loans in the industry, construction loans.

If your interested in obtaining a great construction loan with a rational bank, give me a call or come to my web site and I will help you.

Sincerely,

Rick Gomez

http://www.californiaconstructionloans.com

http://www.nationwideconstructionloans.com

Tags: new home construction loans, Tags: California construction loans, Tags: construction loan

Construction loans are changing once again

Construction loans lenders have started off the year changing the game once again. Some banks are simply getting out of the construction loan business while others are making the move to be the next best lender. Washington Mutual for instance have shut their doors once again to providing construction loans through their wholesale channels. This simply means that Wamu is cutting back on lending money or maybe that they were too aggressive in their lending habits. Regardless of what this big bank is doing they are in some kind of cut backs from some sort of mismanagement.

While Wamu is shutting some of its door’s I personally think its a mistake no matter what the excuse is. Regardless stay tuned for a nationwide bank that is currently starting a new construction loan division that should overtake Wamu’s mistakes. Who knows maybe they will buy out Wamu. In my next blog report I will let you know who is coming out with what I think is going to provide a great new construction loan to build your new home.

Tags: construction loans Tags: remodeling loans Tags: land loans

Construction loan and new home building market is changing for the best

Yes, I said what you thought I said, the construction loan market, home building market has changed for the better.

OK I maybe I’m a bit overly positive but the real estate market needed to change and the construction loan, home building

market is slowing eliminating all of the overly priced land, building costs, building labor and construction loan loan officers

that had no business being in the business in first place. Wow, I said something controversial again. I can’t seem to help

myself but maybe it’s true. The real estate market is changing so fast that the word controversial shouldn’t really bother

anyone but it will. The next word that comes to mind is reality or wake up call or honesty. Construction loans that are needed to

build new homes are a lot of work, so many details that it would put most people to sleep. We have grown accustomed

to refinancing and purchasing homes to such a common level over the last 10 years that construction loans have been thrown

into the lending mix like candy.

Everyone what’s zero points loans as if its free. Most families are clueless as to how loans work to a point that if you

advertise no points, no fees people actually think they are free. America has become a bury your head in the sand kind of country.

Well remember the old saying "there is no such thing as a free lunch" well with that said you can now pull your head out of the sand. I just want

to continue this rant with the reality that real estate market is currently in a big adjustment period and instant expert loan officers are history.

The loan and real estate market will once again be dominated with the real experts and business is booming.

Tags: construction loans, Tags: new home building construction, Tags: real estate, Tags: mortgage, Tags: loans

Construction loan and new home building market is changing for the best

Yes, I said what you thought I said, the construction loan market, home building market has changed for the better.

OK I maybe I’m a bit overly positive but the real estate market needed to change and the construction loan, home building

market is slowing eliminating all of the overly priced land, building costs, building labor and construction loan loan officers

that had no business being in the business in first place. Wow, I said something controversial again. I can’t seem to help

myself but maybe it’s true. The real estate market is changing so fast that the word controversial shouldn’t really bother

anyone but it will. The next word that comes to mind is reality or wake up call or honesty. Construction loans that are needed to

build new homes are a lot of work, so many details that it would put most people to sleep. We have grown accustomed

to refinancing and purchasing homes to such a common level over the last 10 years that construction loans have been thrown

into the lending mix like candy.

Everyone what’s zero points loans as if its free. Most families are clueless as to how loans work to a point that if you

advertise no points, no fees people actually think they are free. America has become a bury your head in the sand kind of country.

Well remember the old saying "there is no such thing as a free lunch" well with that said you can now pull your head out of the sand. I just want

to continue this rant with the reality that real estate market is currently in a big adjustment period and instant expert loan officers are history.

The loan and real estate market will once again be dominated with the real experts and business is booming.

Tags: construction loans, Tags: new home building construction, Tags: real estate, Tags: mortgage, Tags: loans

What is a construction loan

Before becoming a construction loan expert, it is important to have a basic understanding of what they are and who they serve. In simplest terms, a construction loan is a loan product with a fixed term (usually 12, 15 or 18 months) that allow the borrower to build their home. Individuals must qualify for the loan with their FICO score, liquid assets, and other lender-related criteria.

From this point on, a construction loan can go into a variety of directions. For example, some borrowers may choose a General Contractor to build their home. If this is the case, the lender may require a resume from the builder – along with a credit check. Or, the borrower may want to hire a project manager to control the process. A third, and growing sector, involves borrowers acting as the builder of their dream homes. This is referred to as being an “owner-builder.” It is ultimately up to your borrower how they plan on building their home. However, the direction they choose will affect their choice of loan programs, qualification, time to build, and overall cost to build.

Regardless of which option the borrower chooses, it is important to ask questions. The biggest mistake made in construction loans is not understanding the goals of the borrower. For example, if your borrower is building this home to sell (referred to as a “spec” home) qualifying them for a loan with a prepayment penalty will not serve their needs. Or, if the borrower is building in an area with a lengthy permit process (2-4 months), setting them up on a six month construction term will guarantee angry call backs! Some borrowers are motivated by rate, others by term, cash to close, etc. By understanding your borrower’s motivations, you can offer them the best loan product to meet their needs.

Borrowers must also understand construction loans are risky. Not everyone who embarks on building their home is successful – and the last thing the bank wants is to take back a half finished home! Because of this, interest rates on construction loans are higher than traditional purchase or refinance loans. In addition, many construction loans are referred to as “construction-to-permanent” loans. This means that when the home is finished, the borrowers simply modify to the permanent financing of their choice with no additional closing costs. Most borrowers prefer this type of loan because it saves money in regards to closing costs.

To become a successful construction loan expert, you have to engage the borrower and discover their motivations. At the same time, you also have to explain (and sometimes re-explain) facets of the loan. Most borrowers you will encounter have never built a home before and are accustomed to standard purchase loans. The moment they look at the Good Faith Estimate (GFE), and see $12,000 in closing costs, they may go into a panic. Why? Because they do not understand the $12,000 includes the closing costs for the construction loan AND permanent mortgage. This is just one example, but many construction loan deals can be lost by not explaining the details of the loan to your borrowers.

Tags: construction loan, california construction loans, remodeling loans, land loans

<press release> Loan Expert Tells How To Easily Get Loans For New Home Construction San Diego, CA -- Each year millions of Americans decide their dream home is a newly built residence, often constructed just for them. Maneuvering their way through loans, plans, contractors, government requirements, licenses, and paperwork can often become nothing short of a nightmare. "Armed with a few important tips, prospective home owners can easily find their way through the maze," says Rick Gomez of NationwideConstructionLoans.com who has been in the new construction home loan business for more than 20 years. Gomez says the first step is to buy the land your home will go on. "Most people search for building plans first. That can be a mistake. Things will move much faster and you'll get better loan terms if you go about securing your land first," Gomez said. While most new home owners approach their bank for a home loan, Gomez said a loan broker is a better bet. "Going to your bank for a loan is like going to a Ford dealer to buy a car -- all your choices are going to be Fords. A broker has access to many different types of loans from different sources and can tailor the loan to your needs," Gomez said. These tips and many more are included in Gomez's ebook that explains how new construction loans work. The book has been wildly popular with consumers and is available free for download at http://www.nationwideconstructionloans.com. "Read through my ebook and I guarantee you'll know more than the loan officer when you go in to get your loan," Gomez said. NationwideConstructionLoans.com is designed to help consumers find the best construction loans, regardless of where they chose to get their loan. The site also teaches brokers and loan officers how to provide their clients with the best construction loans. Additionally, the site features numerous helpful links to other resources. Prospective home owners also have the option of working with NationwideConstructionLoans.com's sister company 1st Metropolitan Mortgage. "Building a new home is definitely the best way to own your dream home. We're here to make the process as easy and rewarding as possible," Gomez said. Contact: Rick Gomez 619-222-1059 loanisapproved@yahoo.com

Tags: construction loans Tags: new home construction loans

What comes first the land purchase (egg) or the construction loan (chicken)?

I get calls every single day from people wanting to build a new home but have yet to buy land, obtain house plans, figure out the construction costs and last but not least do not have house plan approval or a building permit.

The phone calls I get are from individuals wanting to combine the land and construction loan into one loan. Obtaining an all in one construction loan with the purchase of the land is possible but rarely works out, here’s why.

1. Rarely will a land seller and realtor wait around a couple of months for you to obtain house plans, find a builder, get costs, submit plans to the county planning department and obtain a building permit. All of the above is required if you want to combine the land purchase and construction in one loan.

The various ways you can combine the land and construction loan together is if you;

1. Currently own land with or without a land balance to pay off. In fact most lenders usually require that the land is paid and combined into the construction loan. The only time the bank will not require the payoff is if you are applying for a equity loan or remodeling 2^nd.

2. If the seller and realtor are both willing to wait a few couple of months or longer for you to obtain house plans, costs and permit.

3. A friend or relative is either gifting or selling you the land and is willing to wait for you to gather all of the above lender requirements.

4. If you are buying the land along with the plans and permits.

So, banks are only willing to combine the construction loan if you are prepared to provide the lenders requirements and are pretty much ready to start building the home.

So what’s the solution?The solution is to buy the land first either by obtaining a land loan, owner financing or paying cash for the land. Once you own the land and everyone’s happy now you can take your time and obtain house plans, find a builder, obtain construction costs, submit your plans to the county building department and obtain plan approval and a building permit. This is the time to apply for the all in one construction loan. This is when you can combine the land loan/balance into the construction loan.

Call me and I will structure a land loan for you with one lender and when you’re ready to build show you how to pay off the land with a better construction loan to save thousands.

Rick Gomez

Http://www.nationwideconstructionloans.com

Tags: construction loans, remodeling loan, land loans, new home construction

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Construction loan interest rates have settled down but this weeks reports could change things.

Construction loan interest rates have settled down again. It’s funny how the simple act of the federal reserve and what they say and do effects how much my phone rings. When Mr. Bernacke speaks people either apply for a construction loan to build a new home or the hold wait and see. In either case when families want a home they build regardless. But and this is a big but, but this coming weeks reports are going to provide clues as to how the ecomomy is really doing. The coming reports are monthly employment report, August Consumer Confidence index from the Conference Board, minutes from the last Federal Reserve policy meeting, revision on gross domestic product growth and many other important reports. No matter how you look at this week is going to be very interesting.

Tags: construction loans, Tags: home construction loan

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