YGRENE, PACE AND HERO: Green Efficiency Programs

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Today, we are going to go over the green efficiency programs (YGRENE, PACE and HERO) and see how we may benefit from them, but see as well what risks may be involved.

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Saving water and energy is good for the environment, and you also benefit in the form of lower utility costs. But big upgrades like drought-resistant landscaping solar panels can be costly. If you’re looking to make green improvements, a PACE loan might be an option for funding. PACE financing makes it easy to qualify for relatively affordable long-term loans, but there are pros and cons to using these programs.

What Is PACE?

Property Assessed Clean Energy (PACE) is a way to borrow money for clean energy projects. Property owners get financing for upgrades and repay through property taxes. Getting approved will mainly depend on home’s equity.

Common uses of PACE include solar installations, energy efficient heating and cooling, water-saving landscaping, and numerous other projects for residential and commercial properties.

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However, in Sean La Rue Home Loans we recommend to check the laws related to PACE in your state, as this type of financing is not available in all states.  Some of the most well known programs are Home Energy Renovation (HERO) and Ygrene.

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Advantages of PACE Loans

These programs have certain features that we thought were important to mention:

It’s Easy to Qualify for them: getting approved for these loans seems much easier than with conventional loans. Your FICO credit score won’t be as important with PACE as with conventional loans, but current or recent issues in your credit reports can cause problems. You must also be current on all property taxes.

No down payment needed: PACE allows you to fund the entire cost of a project with no need of a down payment.. As a result, you don’t need to save up money before jumping on a PACE loan, but keep in mind that there will be higher interest costs and higher payments.

Can be transferred to the next owner: If you sell a property after making improvements, you don’t necessarily have to pay off the loan. The loan is attached to the property, so it can be transferred and paid off by the next owner.  However, many federal loan programs will not allow a buyer to get financing with these tax liens assessed on the property and would need to be paid off at closing.

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Time to repay: PACE loans can be paid off over extended periods of time and, as a consequence, payments can be kept relatively small. But, remember that the longer it takes you to pay it off, the bigger the interests will be.

Potential tax credits: PACE funding might make it easier to qualify for environmental tax credits — check with your tax advisor before making any decisions.

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Problems With PACE Loans

Before using PACE funding for your project, get familiar with some of the pitfalls.

Conflicts of interest: PACE financing is often arranged through contractors who might have an incentive to promote expensive upgrades.  Some of them may make misleading statements to get some of those incentives directly from you.

In addition to getting paid for the work they’ll perform, contractors might get additional referral fees from a lender if they arrange funding, and that’s where a potential conflict of interests may come into place.

Payment shock: You may be faced with a surprise expense when it’s time to make those inflated payments. In some cases, the PACE payment will be added to your monthly mortgage payment in smaller chunks.

Interest costs: PACE funding is relatively easy to qualify for. However, interest rates are sometimes higher than you’d pay if you simply use a home equity loan— especially if you have good credit. Don’t be fooled, PACE loans are not necessarily cheap, energy efficient, or the most cost effective.

Costs and benefits: It’s easy to get approved for PACE programs, but is it worth it? These programs make the most sense for individuals who cannot afford less expensive loans (often due to credit problems or limited income). Projects like replacing your windows can add to your home’s value, so you should get some of that money back when you sell. However, you won’t necessarily see a substantial change in utility costs — and you’ll still have to make higher tax payments.

Risk of foreclosure: PACE loans are secured by your home, so it’s possible to lose your home in foreclosure if you don’t make the payments. It is common to see foreclosure even if you make your regular mortgage payments, which is a position that no homeowners should be in.

The risks above do not mean that PACE programs are bad. However, it’s worth knowing the pros and cons of these arrangements before signing up. Unfortunately, the risks are often overlooked because PACE programs are perceived to be “safe.”

 

So that’s all for today, hope you found this article useful so far and don’t hesitate in reaching me out if you have any questions or need a consultation.

 

Stay hungry and stay positive!

Make it a great day,

Sean La Rue

 

Apply for a loan: https://www.SeanLoans.com

Facebook: https://www.facebook.com/SeanLaRueHomeLoans/

Instagram: @seanlaruehomeloans

Linkedin: https://www.linkedin.com/company/sean-la-rue-sr-vice-president-franklin-loan-center/

Why does every Realtor Want Me To Be Pre-approved?

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Today we are going to tell you why getting a loan can be very beneficial for you and how to get the most out of it.

 

Here are the different points that we are going to touch during this post:

 

  • Getting a mortgage can be a great thing for your future
  • Interest deduction( what’s that and why should I know about it?)
  • Fixed payment
  • Increasing equity

 

Getting a mortgage sounds like a scary step for most of us, and rightfully so it can be if it’s not done right. When someone buys a house, it’s very common to see the case of a confident man/woman/couple who think that they can pay a 30 year mortgage quicker than they are supposed to, and this is a frequent mistake that leads to financial crisis in many cases and regretting having taken a mortgage in the first place.

 

Don’t be one of those people, and make sure you take your time and evaluate things before jumping off a bridge. If, at the moment, with your current financial situation, you just can afford to go for a 30 year mortgage, wait and save more money. Why? Because you don’t want to become a bank’s slave, pay extra commissions and having that mortgage as the worst of your nightmares. Nearly 100% of the US citizens end up paying extra commissions that benefit the richer and make them poorer in the end.

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Getting a mortgage can be a great thing for your future when you save a down payment of at least 10%, but ideally 25%, to then apply to a 15 year fixed-rate mortgage that will ensure a much brighter and happier future.

 

The interest deduction is another interesting matter to take a look at when buying a property. It can decrease the amount of taxes you’d have to pay for a mortgage, which is certainly something to take into consideration.

 

One of the reasons reason why in Sean La Rue Home Loans we recommend purchasing a property is because of building equity, which represents one of the main financial benefits of homeownership.

Equity means, in a simple way, how much you owe from your actual home. You have negative equity when you take your loan balance from the value of your home and the result is a negative number.

When can we improve our equity?

1- When we get rid of a good amount of our mortgage payment

2- When the market’s price of our place goes up

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*How to reduce loan balance:

  • Apply for short mortgages: on average, people struggle a lot more when having to pay longer term mortgages than shorter ones, so you may want to save some more money and make sure you pay your home in the least amount of time possible!
  • Make big payments when you can: if things are going well for you, why not  taking out some of that mortgage payment? I’m sure it’ll be such a relief.
  • Be consistent with your monthly payments: consistency is everything when paying a mortgage, that’s why as time passes, if you’ve been paying regularly every month, more of each payment goes towards equity, and less of each payment becomes interest charges.

 

People have mixed feelings about mortgages, some think that it’s like you are forced to save money every month, and what many don’t see is that you are building up the value of an asset. With a home, the asset isn’t cash in a savings account—it’s equity in your home.

So that’s all for today, hope you found this article useful so far and don’t hesitate in reaching me out if you have any questions or need a consultation.

Stay hungry and stay positive!

Make it a great day,

Sean La Rue

 

Facebook: https://www.facebook.com/SeanLaRueHomeLoans/

Instagram: @seanlaruehomeloans

Linkedin: https://www.linkedin.com/company/sean-la-rue-sr-vice-president-franklin-loan-center/

What Documentation Do I Need To Get Pre-Approved For A Home Loan?

 

 

Getting pre-approved for a mortgage does always help to put yourself ahead of competition among other buyers when looking to buy a new home, as it proves that you can afford buying the property in the first place.

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What do we need to get pre-approved? We have to verify our income, employment, assets and debts. Depending in different factors, such as if you are self-employed, or if your income is coming from different sources, you may need to give more documents to your lender.

 

Let’s take a look at what documents we need to hand to our lender to get pre-approved for a mortgage:

 

1. Income and employment: You need to show how you make your money, if you’re working under only one contract this process will be much easier.

 

*W-2 wage earners: Copies of W-2 forms and your two most recent payroll stubs. If income includes overtime, bonuses or differential pay, you may need your most recent end-of-year payroll stub.

 

*Self-employed,freelancers and independent contractors: they would need to proportionate a year-to-date profit and loss statement and two years of records, including the Form 1099s

 

*Real state income: if you want to use this to apply for a mortgage, you need to give the documents related to the rental income, address of the property,lease and the property’s current market value.

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2. Tax returns: you will be asked to share the two most recent copies of federal and state returns

 

3. Assets:

 

  • Bank statements: copy 60 days’ worth of statements of all the accounts you’d use as assets to qualify for a mortgage(even the blank pages)
  • Retirement and brokerage accounts: two months’ worth of statements from IRAs,investment accounts and CDs, plus the last quarterly statement from 401(k), which shows the vested balance. Don’t forget to include all the pages!

 

4. Debts

 

  • Monthly debt payments: include all of them,with each creditor’s name and address and your account number, loan balance and minimum payment amount.
  • Real estate debt: If your current property is mortgaged, make sure you have your most recent statement — showing the loan number, monthly payment, loan balance and the lender’s name and address — and the declaration page of the insurance policy.

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5. Other documents you may need(some depending on your situation):

 

  • 30 days of paystubs

 

  • Schedule K-1 (Form 1065) for self-employed borrowers

 

  • asset account statements (retirement savings, stocks, bonds, mutual funds, etc.)

 

  • driver’s license or U.S. passport

 

  • divorce papers (to use alimony or child support as qualifying income)

 

  • gift letter (if funding your down payment with a financial gift from a relative)

 

So that’s all for today, hope you found this article useful so far and don’t hesitate in reaching me out if you have any questions or need a consultation.

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Stay positive and stay hungry!

Make it a great day,

Sean La Rue

Full Youtube Video: https://www.youtube.com/watch?v=mt7kVH1Qc7A&t=2s

Facebook: https://www.facebook.com/SeanLaRueHomeLoans/

Instagram: @seanlaruehomeloans

Linkedin: https://www.linkedin.com/company/sean-la-rue-sr-vice-president-franklin-loan-center/

TBWS Daily – Critical FHA MI Changes Coming

TBWS Daily – Critical FHA MI Changes Coming
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Critical FHA MI Changes Coming
 

Posted: 26 Nov 2012 12:15 AM PST
 

Click the post title above to watch today’s show. Catch all your real estate and mortgage news and commentary with Frank Garay and Brian Stevens right here at the National Real Estate Post!
 

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11 Questions to Ask A Hard Money Lender

When looking for a hard money lender, interview them to make sure you’re comfortable with the terms, conditions and the way they do things.

Ask the following:

  1. Do you lend in my state? (different states require licenses, some lenders only do markets they know and understand)
  2. What is your LTV?
  3. Do you lend rehab funds? How are draws done?
  4. What interest rate?
  5. What points? Are they to be paid up front or at the end?
  6. What are all the misc. fees? Paid up front or at end?
  7. How much notice do you need to close?
     
  8. Can you provide proof of funds?
  9. These terms are good for how long? Can I get that in writing? (Their terms might change in a few months, try to get it in writing)
  10. How many deals will you do at a time?
  11. What is the procedure to present a deal?

These questions will give you a guideline for what they’re looking for, what you will need and whether or not you’ll end up working with them.

Please take a second and share with everyone in the comments below any other questions you have asked hard money lenders or would like to know from a lender.

Thank you for reading and I’ll see you in the comments!

 

 

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