Question:

What are the drawbacks for mortgage brokers on full doc and stated income rehab to perm mortgage loans?

Answer:

Most stated income home loans for rehab to permanent will not allow ground up construction. Rather, they will be available for redesigning and in and out revitalization and rehabilitation of the property. Funding on these loans can be somewhat more complicated, and not every broker is doing them.

Brokers would have to put extra effort underwriting stated income rehab-to-perm mortgages.

The final interest rate for the permanent for full and reduced doc rehab-to-perm loans should be locked when the rehab loan is closed but this may not be possible for all loans of this type.

Stated income on those loans will require 670 credit score in the least. Even with stated income documentation, brokers will have to put extra efforts gathering loan documentation.

Also, the whole mortgage closing process may take up to 5 months to complete and brokers will have to wait to get compensated for their services until the permanent loan is closed.

Rehab-to-perm loans for special use properties that are difficult to appraise may be difficult to fund. You will have to find lenders specializing in a particular niche if you need to find financing for gas stations, motels or restaurants, golf and bowling venues. If you want it the easy way, stick to office, multifamily and warehouse buildings.

No matter how much harder it can be to underwrite a single-close rehab-to-perm loan, the remuneration is worth the effort when the permanent loan closes successfully.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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