For Realtors

This section is dedicated to Realtors and serves as a tool kit that provides forms and information you can use in your day to day practice.

Forms You Can Use

 

FHA Amendatory Form

It’s important to note that FHA updated their policy recently and now requires that this form be dated on or before the contract date. Adding this to the contract package will simplify things for you and our shared client.

VA Escape Form

For all VA deals, this form needs to be executed by the veteran and by all sellers.

Broker Identification Form

This form came about as a result of TRID. The information on the form is needed for the Closing Disclosure.

Contract Addendum

I’ve added this template in case you need one on the go or don’t have a form that suits your needs. For example, I will need one of these whenever a contract date needs to be extended beyond the original contract date.

USDA Eligible Community Map and Income Guidelines

USDA offers a 100% financing solution in designated “rural” communities (see attached map). The program is income-limited with most Connecticut families having a household income threshold at/under $99,200. The program follows, for the most part, FHA guidelines for property condition.

Loan Types and Maximum Financing

The decision on which type of loan is best suited for a buyer is based on a lot of variables including their qualifying income, debt, credit scores, available assets, and credit history. I think my job is to find the lowest possible payment among the loan programs that the borrower qualifies for and then updating their team of trusted advisors with relevant guidance to help with their search.

The table below provides the maximum loan amounts available for each loan type and the corresponding maximum purchase price based on the minimum down-payment permitted for the program.

 

Loan Type Conventional FHA – By CT County VA USDA Jumbo
Max Loan $424,100 Hartford = $353,050

Tolland = $353,050

Middlesex = $353,050

New London = $280,600

New Haven = $305,900

Windham = $285,200

Litchfield = $357,650

Fairfield = $601,450

$424,100

(See note)

$424,100 >$424,100
Max LTV 95% 96.50% 100% 100% 90%
Max Price $446,421 Hartford = $365,854

Tolland = $365,854

Middlesex = $365,854

New London = $290,777

New Haven = $316,994

Windham = $295,544

Litchfield = $370,621

Fairfield = $623,264

$424,100

(See note)

$424,100 Varies
  • VA loans can be done above $424,100, however, the veteran must contribute a portion of the purchase price.

Inspection Requirements by Loan Type

The table below provides a quick summary of the inspections and tests required by loan type.

Loan Type>> Conventional FHA VA USDA Jumbo
Public
Utilities
NONE NONE Pest only Pest Only NONE
Private
Well
NONE Water Test Required

(See note 1)

Water Test Required

(See note 2)

Water Test Required

(See note 3)

NONE
Septic System NONE Only if required by appraiser

(See note 4)

Only if required by appraiser Only if required by appraiser Only if required by appraiser
Pest Inspection Only if required by appraiser Only if required by appraiser Always – may not be paid for by Veteran Always Only if required by appraiser
Radon NONE NONE NONE NONE NONE

 

  • FHA requires connection to public water if available on the street and cost to connect is less than 3% of sales price.
  • VA requires connection to public water if available on the street.
  • USDA requires connection to public water if available on the street and cost to connect is less than 3% of sales price.
  • The separating distance between a private well and septic system must be at least 100’. In cases where the distance is >75’ but less than 100’, must provide evidence from the local health district that the lesser distance is permitted.

Flipping Guidelines

Generally speaking, with Conventional, VA, and USDA loans, there are no restrictions on the amount of time since the seller took title. However, common-sense dictates that a property held for fewer than 90-days that has not been renovated or improved will get closely scrutinized by a lender.

For FHA, the rule is that the contract may not be executed until the 91st day after the seller has taken title. If the sales price is more than 100% greater than the seller’s acquisition cost and fewer than 180-days have passed, then FHA requires a 2nd appraisal to be performed at no cost to the buyer.

My suggestion is that you reach out to me for coaching whenever the property is a flip and you are not certain what the applicable limitations may be.

Renovation Financing Guide for Realtors

I’ve done scores of these loans, ranging from appliances-only to complete tear-downs and rebuilds. Their ability to provide both the purchase money financing as well as the construction funds all in one transaction is unique. The secret sauce that makes these work is that they are based not on the purchase price but the “after-improved” value.

In the wrong hands, these mortgages create a lot of heartache: busted contract dates; frustrated sellers, buyers, and agents; and deals that never close. It’s no wonder they aren’t the most-loved mortgage available and it’s no wonder that few mortgage lenders offer this solution.

The goal of this Guide is not to turn you into renovation mortgage experts but, rather, to provide an overview of the programs, process, and pitfalls so that you may confidently approach clients who are interested in properties that need some TLC.

Insider’s Guide

I’ve written this Insider’s Guide to help protect you from irresponsible loan officers who issue Pre-qualification letters and Pre-approvals that aren’t worth the paper they are printed on. By giving you some tools that you can use – both as a buyer’s agent as well as the listing agent – to evaluate the validity of a pre-qual, pre-approval, and even a Commitment, you’ll better serve your clients, protect your income and your reputation, and you’ll sleep better, too!

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