Home Buying in Brooklyn>Question Details

Byudkin, Home Buyer in Brooklyn, NY

203k with Sonyma?

Asked by Byudkin, Brooklyn, NY Wed Feb 20, 2013

So I was waiting for a raise, and it finally came and it's more generous than expected... More than the SONYMA Achieving the dream max which I wanted to do.
Based on all this, the maximum I think I could qualify for is $425k, not a big bump from the "ATD" maximum. With FHA I could get more, but if I want to do FHA, I need to either get assigned a loan number in a hurry to miss the rate increase or it gets ridiculously expensive.

Third option I'm considering is to do the house on SONYMA and do 203k immediately after. I'd finance the house on a 30yr fixed and the 203k maybe on a 15 year with a lower LTV to minimize PMI. So my questions:

-- Is there a minimum LTV or time I must have been in my home to qualify for a 203k on an existing property?
-- For PMI purposes, is the LTV for the loan based on:
-the increase in the current/after appraisal values?
-the after appraised value less existing loan outstanding?
-other?
-- Does this plan make sense from a PMI and DTI standpoint?

Help the community by answering this question:

Answers

10
Javier Meneses’ answer
Ok I understand. Well you'll just have to find a property by April and have your Loan Officer get an FHA case number. So if March 30th you found a house and your Loan Officer does their end by then, and gets a case number, you're set. You don't necessarily need to close on your loan by April, just need a case number by April.

Javier Meneses
Senior Loan Officer
NMLS #23130
STERLING NATIONAL BANK
310 Crossways Park Drive
Woodbury, NY 11797
jmeneses@snb.com
(516) 740-4478
2 votes Thank Flag Link Wed Feb 20, 2013
The easiest and least expensive way would be to do a SONYMA Remodel NY or SONYMA Own it Fix It program when you first purchase the house and then you don't have to worry about paying that second set of closing costs or the MIP rate going higher April 1st or the lifetime of loan MIP starting June 1st. My bank (M&T Bank) is the statewide servicers of SONYMA loans so we are one of the few lenders to do the programs. Thanks - Andy K (NMLS #23490), akrastins@mtb.com
0 votes Thank Flag Link Sat Feb 23, 2013
Hi Budykin,

While I understand that you may need a 203k loan for the renovations you envision, I'm not clear on your expected down payment, and this will make a big difference on how long you will have to pay the mortgage insurance premium (MIP) on any FHA 30 year loan (with renovations or without) as of June 01st. In short, from June 1st on FHA mortgages obtained with less than 10% down (or 10% equity for refinance transactions) will require the payment of the MIP for the full 30 year term of the loan. This may add 1000's of dollars to the cost of your FHA loan over the next 30 years.

There are other options apart from FHA, if you buy a property that does not require renovations before occupancy. I have recently obtained Conventional mortgages for clients with as little as 5% down, and the guidelines allow us to do so with only 3% down. Mortgage insurance on these loans are often less than 1/2 of the MIP for FHA, and it gets eliminated once you reach 20% equity.

There are too many variables in your scenario to be addressed adequately in this forum. Please seek out an experienced and licensed loan officer to further explore your options. I have assisted many first time buyers with FHA and Conventional mortgages for 1-4 family homes including many 203k loan, especially in the boroughs. For more information or if you need assistance, please contact me directly at 917.699.0183 (text is fine) or via email below. Follow me on twitter @mdenniston247.

Michael Denniston l Cell: (917) 699-0183
Residential Home Funding, Corp.
Licensed Mortgage Loan Originator l Sales Manager
6901 Jericho Turnpike Ste. 219 | Syosset, NY 11791
Main: (516) 605-1733 | Fax: (888) 881-2557
NMLS # 24076 | Company NMLS # 34973
Mdenniston@RHFunding.com
http://www.rhfunding.com
0 votes Thank Flag Link Thu Feb 21, 2013
The deadline I'm referring to is the FHA deadline for the 2012 PMI rates vs. the 2013. I'd rather not walk into a loan knowing I have to refi to get rid of PMI.

Don't have a contract or anything, I'm still figuring out what I want to ask for on the prequal... but clock is ticking if I want to try to get in on the old FHA rates.

If I want to price out $200k in work, it will definitely take more than another week.

I'm aware that the DTI doesn't impact the PMI directly, I was referring more to "what can I get approved for, for how much, and how much PMI do I need to pay". SONYMA allows for a 40% front end but the PMI is 1/2 of FHA... so I had hoped to get the best of both worlds by going half and half.
0 votes Thank Flag Link Wed Feb 20, 2013
No, 203(k) is it. What deadline are you talking about? Are you in contract? Does it expire soon? Also, DTI has nothing to do with mortgage insurance. A 203(k) only takes an additional week than what any other ordinary loan takes. It isn't that much more of a difference.

Javier Meneses
Senior Loan Officer
NMLS #23130
STERLING NATIONAL BANK
310 Crossways Park Drive
Woodbury, NY 11797
jmeneses@snb.com
(516) 740-4478
0 votes Thank Flag Link Wed Feb 20, 2013
I didn't realize that a 203k could only be a secondary loan -- so you are correct that does not make much sense if I have to roll the primary in and refinance.

The intent was to get the lower PMI from SONYMA with the contingency that it had low DTI's, then squeeze a little more credit using a construction-to-permanent loan (203k).

So if a 203k can only be the primary mortgage, is there another construction-to-permanent loan which can be used as a secondary? There is no way I will have a 203k ready for the deadline.

Thanks for all your help so far!
0 votes Thank Flag Link Wed Feb 20, 2013
The mortgage insurance for FHA & the 203(k) will be the same. I just don't see any benefits in doing SONYMA and then immediately go to a 203(k). I'm essence what you're doing is mortgaging the purchase via SONYMA to later refinance that very loan to a 203(k). There is no such thing as having a 203(k) as a secondary loan, it can only be your primary mortgage. This means you're getting hit with closing costs twice, and so increasing the total cost of this house. Also, you're achieving nothing by doing this. There is zero benefits.

I don't know what variables are involved in you deciding between a $25,000 renovation or a larger $200,000 one. In either case, it sounds like you'll do better by going with a 203(k) from the start. Again, the ONLY way you'll avoid monthly mortgage insurance is to come with a bit more than 20% down payment on a 15 year loan, and the case number would have to be issues before April of 2013.

Javier Meneses
Senior Loan Officer
NMLS #23130
STERLING NATIONAL BANK
310 Crossways Park Drive
Woodbury, NY 11797
jmeneses@snb.com
(516) 740-4478
0 votes Thank Flag Link Wed Feb 20, 2013
few things:
SONYMA achieving the dream has an income limit of +- $68k -- all other programs are in the $90k's. My income is in between those.

As far as renovations, it really depends on the condition and loan. There's too many variables in that -- I could be doing $25k in finishes or $200k for a full gut depending on a lot of things -- mainly how it is all financed & what's required.

And to be clear -- the option being discussed is doing SONYMA for the primary loan and the 203k as a secondary. That implies that I have to clear the bar for SONYMA for being in livable condition & assess at the mortgage amount requested... then bring the 203k in after. If I have to go straight 203k, I doubt I will want to pay that much PMI on a construction-to-permanent loan & will try to beat the rate increase for a ready-to-go property on straight FHA (no 203k).
0 votes Thank Flag Link Wed Feb 20, 2013
For personalized answers you really should be consulting with any licensed loan officer; don't just rely on online information; be aware that a mortgage pre-approval letter is required in order to determine your price range and for any offers to be taken seriously.
0 votes Thank Flag Link Wed Feb 20, 2013
There is a few thins happening here. If I understand, you can't qualify for the SONYMA Achieve the Dream due to your pay increase? I would say that if this is the case you would not qualify for any SONYMA programs. The other thing I'm thinking about is, if you're seeking a 201(k), this means the house either needs work or you're looking to make some sort of renovations. Depending on the condition of the property you're looking to buy, you might only have a 203(k) as an option. If that's the case, you'll pay mortgage insurance unless you're looking to put slightly more than 20% down payment and finance it over 15 years as oppose to a 30 year, and it would need to happen before April which is when the HUD changes to FHA's mortgage insurance premiums go in effect. I also want to state that in this loan you'll go either with a conventional 30 year fixed OR a 203(k). I also want to point out that if you're going to get down payment or closing costs assistance from SONYMA, you will not be able to refinance right after IMO a 203(k) or any other loan. SONYMA is going to only allow a rate & term refinance, anything other than that will require that you pay those gifted funds back to them.

I strongly suggest you go over all this with a Loan Officer. There are too many things going on here for you to get a thorough answer online.

Good luck!

Javier Meneses
Senior Loan Officer
NMLS #23130
STERLING NATIONAL BANK
310 Crossways Park Drive
Woodbury, NY 11797
jmeneses@snb.com
(516) 740-4478
0 votes Thank Flag Link Wed Feb 20, 2013
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer