All Forum Posts by: Carrianne Mucho

Michael Dunn The homestyle loan is not really designed for do-it-yourselfers. The renovation budget can be up to 50% ARV if you use a contractor. So, the diy could be a portion of that. Works well on a rehab or remodel when you have a contractor do most of the work but maybe you want to save a little by doing the painting and trim work or install fixtures yourself. As a renovation lender, I suspect the main reasoning behind limiting renovation financing to contractor work is that the bank is more comfortable lending on a property that is more likely to have work done to professional standards and because there is a limit on the time you have to complete the project. Contractors are more likely to finish within that timeline so they can get paid. DIY is less motivated and the bank could end up with an unmarketable, partially completed project.

Joe Koppel If you go to the local county tax collector's website, you should be able to pull the current bill by parcel number. That will show the property tax rate and any direct levies. Just be sure to apply the rate to current market value, not the current assessed value.

@Frank S. - if you spent 125K, and they only increased your assessment by 100K, it sounds like they did a conservative appraisal of the construction costs.  They may have just enrolled the value estimated on the permits.  Without solid documentation showing that you spent LESS than 100K AND evidence that the work did NOT add 100K in market value, you will be making a losing argument.  And yes, you are taking a risk that if they look more closely, the reassessment could be higher.  

Kalpesh Patel - see my response in your other post.

I would not recommend a PACE or HERO type loan. The interest rates are typically higher than you can get with traditional financing but the bigger problem will be finding a buyer. PACE financing is a lien rather than a loan. This is an important distinction. Most PACE liens will not subordinate to a first mortgage lender, therefore the vast majority of lenders will not lend on a property which has one of these liens, therefore your buyer pool is limited to cash buyers or those who have at least enough to pay off the tax lien. Or, you need enough equity to pay it off at closing. Also beware that there are commonly steep prepayment penalties on these "loans." Because it is a lien, not a loan, the sellers of these products are not required to play by the same rules (such as disclosure) as regular lenders. Oftentimes owners are unaware that they will have a difficult time selling or refinancing, and just as often the salesperson verbally told them they would have no problem. Read the paperwork, ask even more questions, accept the responses with skepticism. At least some of their websites now state that this is not a good choice for someone who does not intend to keep the property for at least 2-3 years. And I've heard there is legislation being proposed to require more accurate disclosures but that could take time to pass and implement. Buyer beware.

For any owner occupied financing, you will state your intent to occupy the home for at least 12 months. 

I think you are referring to the FNMA HomeStyle Renovation loan @Jeffrey VanGilder.  

It allows for LTVs up to 95% Owner Occupied.  It is available to investors, but just as with other conventional loans, downpayment requirements are higher. 

Either loan will be a bit more paperwork than a standard loan for obvious reasons (you are involving a contractor who must be approved, the bid must be completed prior to appraisal order, and with a 203k there will be a consultant required).  However, if you find a lender who does these frequently, it won't be a big deal.  

Hi Kenny, 

It's great to "meet" you!  I appreciate your honesty about being new, and it sounds like you have a solid backgroud for a promising career.  My office is in Roseville too if you want to grab lunch sometime.

Originally posted by @Account Closed:

Originally posted by @Carrianne Mucho:

@Jay Hinrichs & @Account Closed (or anyone else who cares to chime in) - What is your theory about the effects of employment statistics on the housing market?  We are seeing unemployment numbers decline, hourly wages now increasing at 2-3% and yet the workforce participation rate is only 63%.  If another 15-20% of capable adults decide to re-enter the workforce, do you think this will increase demand for housing in spite of increased ownership costs (interest rates)?  Do you think this would merely be an offset, or does demand continue to outpace supply?  In California, demand is outpacing supply already.  Every day, I speak with Realtors who are begging for more inventory.  

Hi Carrianne,

I am clueless about your market, but employment is peaking for the Bay. Minimum wage going to $15/hr by 2022 for CA and 2019 for San Jose will really help the lower-end markets. Those 2-4 units in working class neighborhoods should pay dividends in the coming years.

Not sure about another 15-20% of capable adults re-enter the workforce. Demand has been outpaced supply due to the lack of new construction during the Great Recession. A lot of new construction has been higher end multifamily. I don't see how this will help realtors selling more homes.

Here in the Bay, the demand has definitely outpaced the supply although supply is catching up, which has put some downward pressure on rental prices. Also, employment is peaking which means hiring has been slowing down. The reason home prices are still going up is due to the lack of inventory IMO. For homeowner wannabes, it still makes sense to buy once you factored in the MID (mortgage interest deduction) and forced savings. Thus, homes below $800k are still flying off the shelves. In fact, it seems like anything below 1.5M is still hot. For higher end markets such as Palo Alto and Los Altos, sub $2M is still red hot.

Thank you for your feedback on the employment market there as Sacramento usually lags the Bay in both hiring and housing.  

We are seeing some of the same things regarding construction supply, although it is finally beginning to pick up.  Too many large mcmansions built and not enough middle class homes.  Building permit process and costs are excessive, limits what builders can construct to make a profit.  At sub 450K, there are multiple offers.  650K+ and there is not as much demand.  Approval process takes so long that by the time new projects are approved, they may not be feasible (market cycle). 

I agree that we have a supply problem in California; I'm trying to project if the current pace of demand will maintain, increase, or if we will see it wane (then we no longer have a supply problem).  crystal ball anyone? ;)  I do believe that interest rates will continue to rise somewhat gradually, but this will be offset by loosening of lending criteria.  

Great research @Wes Blackwell!  Love all the links and pics too.  

I think my biggest concern is the effect all the student loans will have on millennial's ability to obtain financing.