An Interest Rate Reduction Refinancing Loan, IRRRL, may be the ideal solution for veterans to lower their monthly outgo on their home mortgage loan. With no qualifying on credit or income, (please note exceptions below), this loan should lower the veteran’s interest rate and payment from one VA guaranteed mortgage loan to another. The new loan must be at a lower interest rate than the existing loan unless the loan being refinanced is a VA Adjustable Rate Mortgage.

Generally, no credit, income or underwriting is required to close the loan automatically. As stated above, there are exceptions that will be covered at the end. The IRRRL must have a lower principal and interest (P&I) than the current loan, unless an ARM is being refinanced, the new loan is a shorter term or energy efficiency improvements are included in the IRRRL.

The closing costs may be financed in an IRRRL but no appraisal is required. If the payment increases by 20% or more due to any of the reasons above, the income and debts must be underwritten. A statement showing how long it will take to recoup all closing costs (both included in the new loan and any paid outside of closing) must be signed by the veteran, acknowledging the effect of refinancing the loan.

NOTE: If the current loan is delinquent, it is still possible to refinance under this program but will require pre-approval from the VA. In the case of a delinquent loan refinance, late payments and late charges, plus reasonable costs if legal action has commenced may be added to the loan. The program is not one that can be done without income verification.

It is possible to do an IRRRL for a veteran and new spouse, the widowed spouse of the veteran, the veteran and a different spouse, the divorced veteran alone but not for the divorced spouse alone or the widowed spouse if she/he was not on the original loan. There could be income requirements on these exceptions.

IRRRL are available for properties that are not currently occupied by the veteran or spouse of an active service member if he or she previously occupied the property as his or her home.

It is possible that an IRRRL would create significant savings for a veteran, in today’s falling rate environment,. The only way to find out is to check with a mortgage professional such as me. I would be happy to run the numbers and see if this is something that will save you money on your mortgage. Just because it might lower your payment, is not necessarily the right thing to do. It is always better to see what the cost of the loan will be and how long it will take to recoup those costs. That is where I come in; I will work those costs out for you and give you insight as to what should work for you.

If you’ve been passing up buying homes that require cosmetic repairs for lack of funds to fix them up, FHA has a program for you. Not to be confused with FHA’s much more complicated 203K program, a Streamlined 203K loan eliminates much of the paperwork and simplifies the process to obtain rehab funds.  Buying a home in Temecula, Murrieta and the surrounding cities can be a competition.  Homes that are ready to move in typically have up to a dozen offers the day after it hits the market.

A Streamlined 203K loan might be the answer on a fixer.

How Does a Streamlined 203K Loan Work?

Watch this video to find out.

It used to be that you bought a home and then applied for a home equity loan to fix it up, resulting in two loans. But many lenders won’t make rehab loans. Some won’t fund equity loans at closing, especially if there is no equity.

• A Streamlined 203K loan is figured into the original loan balance, resulting in one loan.
• It can be an adjustable-rate or fixed-rate mortgage .
• The mortgage balance can exceed the purchase price of the property.
• Borrowers are not required to hire professional consultants, licensed engineers or architects.
• The appraiser or home inspector can put together a list of recommended repairs / improvements.

Eligible Repairs & Improvements

The Streamlined 203K loan allows for simple repairs that can be easily estimated and completed. Many are considered light cosmetic repairs, but some will require hiring a licensed contractor if it falls out of the borrower’s area of expertise. Here is an approved list of repairs / improvements from HUD:

• Roofs, gutters and downspouts
• HVAC systems (heating, venting and air conditioning)
• Plumbing and electrical
• Minor kitchen and bath remodels
• Flooring: carpet, tile, wood, etc.
• Interior and exterior painting
• New windows and doors
• Weather stripping & insulation
• Improvements for persons with disabilities
• Energy efficient improvements
• Stabilizing or removing lead-based paint
• Decks, patios, porches
• Basement completion and waterproofing
• Septic or well systems
• Purchase of new kitchen appliances or washer / dryer

Special Conditions & Terms

• No minimum loan balance required.
• Borrowers must occupy the property.
• Property cannot be vacant for more than 30 days.
• Work must be completed within 90 days.
• Work must be professional.
• If job requires a permit, borrowers must get a permit and a sign-off.
• Work must commence within 30 days from closing.

Repairs Not Permitted

• Landscaping or yard work
• Major remodeling
• Moving a load-bearing wall
• Room additions or add-ons to the home
• Fixing structural damage

Requirements to Perform the Work

• Borrowers can select among licensed contractors.
• The lender will review the contractor’s experience, background and referrals.
• The lender will want a copy of the contractor’s estimate and the agreement between the contractor and borrower.
• Borrowers can also arrange to do some or all of the work under a “self help” arrangement.
• Do-it-yourself projects require providing the lender with documentation supporting the borrower’s knowledge, experience and ability to perform the necessary work.

Disbursement of Payments

• Maximum of two payments to each contractor, including the borrower, providing the borrower works under a “self help” plan.
• No more than a 50% advance is allowed.
• Do-it-yourself allowances do not include labor; only materials costs are allowed.
• Final payment is paid after submission of evidence of payment to sub-contractors / suppliers or other possible lien claimants.

Jonas Kruckeberg Loan Consultant Watermark Capital 27537 Commerce Ctr Dr #209 Temecula, CA, 92590	Work: 951-801-2542 jonas@mywatermarkloan.com www.quickloanplan.com
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Bob Briscoe, Eugene Planning and Development Department, announced at our Town Hall meeting last week that Eugene had recently received over $600,000 and Springfield over $300,000 through HUD’s new Neighborhood Stabilization program. The money is a grant to be used to purchase foreclosed properties for owner occupied purchases and very low income housing, probably though non profit organizations.

Both cities are currently working on program guidelines that will help in the use of this money, possibly in conjunction with existing programs like the FHA 203k Streamline. Preliminary thoughts about the use of the funds will be for owner occupied purchases in targeted areas in both cities. 25% of the funds must be used for very low income housing and will probably be done through some of the non-profit organizations such as NEDCO or Saint Vincent DePaul, both of whom have been very active in the local area. This program is for owner occupied properties only!

The other 75% could be used a in similar form to the current HAP and SHOP programs as no interest, no payment seconds for the purchase of homes. The HAP and SHOP programs are currently capped at $10,000 and the new programs could have higher amounts available and also have a higher income qualifying threshold.  Details are still being worked out as I post this.

The Neighborhood Stabilization Program (NSP) is authorized under Title II of the Housing and Recovery Act of 2008. A total of $3.92 billion was allocated to all states, particularly hard-hit areas trying to respond to high foreclosures.

Be ready for when these funds become available. This will be an exceptional program for anyone that is limited on down payment and closing costs and willing to purchase in one of the targeted areas. Bank foreclosures are often in need of repair so using the program in conjunction with the FHA 203k Streamline that allows repairs after closing is an excellent way to take advantage of this market. Call me today to make an appointment and get pre-qualified for the FHA program. 541-342-7576.