JVM Lending Blog

Rates Worse; FHA Repairs/Concerns; We (JVM) Can Pay For & Do Repairs

30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*

Rates increased today, as personal income, consumer spending, and manufacturing activity all increased. This is interesting b/c our secondary analysts were telling us NOT to lock last week, as “trend lines” pointed to continued rate improvements. Today’s strong economic indicators prove that no matter where “trend lines” point, rates can and will always change unexpectedly depending on economic reports. Predicting interest rates is always a “50/50 crap shoot”.

FHA Appraisers do not care so much if properties are “old or tired” looking. They test appliances for working order; they look for “Health and Safety Concerns” (is water heater strapped down), and they look for major deferred maintenance (dry rot, leaky roof, etc.). FHA appraisers are not significantly worse than conventional appraisers with respect to the issues they illuminate. We have had more “repair” delays on conventional deals than on FHA deals.

Solution for Repairs or Costs Nobody Will Pay For: Let JVM Lending pay for them. We have had numerous transactions where we have used our lender-paid-commissions (“yield premium”) to pay for necessary repairs or closing costs. We have contractors who will quickly do required work and put a demand in escrow. They will then get paid out of our commission at close.

*The above rate quote has the following assumptions: $400,000 Loan Amount; 20% down payment; credit score above 740; property is SFR; borrower has sufficient income to qualify; APR is approximately 0.20% higher than quoted rate for a $400,000 loan. Estimated closing costs affecting the APR include $4,595 for Origination and Processing Fees, $850 for other Lender Fees; $1,400 for Escrow Fees, and $1,000 for Prepaid Interest.

Call Jay Voorhees or Heejin Kim at (925) 855-4491

Real Estate Broker, CA Bureau of Real Estate, BRE# 01524255, NMLS# 335646