Archive for July 15th, 2009

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FHA Rehab Loans 203K

July 15, 2009

* 203k loans allow you to FINANCE the cost of the repairs in the new loan amount. (Not to exceed 110% of the after improved value determined by the appraiser and 203k consultant) What does this mean? I buy a house for 200,000 that needs 50,000 in repairs and I can borrow the extra 50,000? Too good to be true? NOPE. That’s it in a nutshell…. ok details please……… * Down payment is basesd on the sale price PLUS the final cost of the repairs x 3.5% so for example: Sale price is 200,000 (DO not calculate 3.5% on this) PLUS 50,000 in repairs/costs (which includes certain costs and reserves the lender will require) 250,000 x 3.5%. Down payment is $8750.00 (closing costs are separate as usual) * Buyer will hire (lender can recommend) a HUD approved FHA 203k Consultant to go to the property with the buyer to determine the required repairs and wish list repairs. The fee charged by the consultant can be included in the mortgage. The fee can range anywhere between $ 400 to $1200 depending on the repairs required. Please check with the consultant prior to scheduling your appointment. *Buyer will obtain estimates from several licensed contractors for the work to be completed depending on how extensive the repairs. Three estimates are recommended for each contractor but not necessary. The buyer can act as their own general contractor only if experienced and licensed. (FHA says experienced, but most investors require the buyer to be licensed) The contractors must provide documentation to be approved by the lender prior to approval. The consultant will determine the “required” repairs versus the “wish list repairs”. You must start with the required repairs and then move on from there for you wish list. This is an important step for the consultant and appraiser so that you don’t over improve the home and exceed the comparable properties in the area. * Once the consultant completes his report of required and wish list repairs, the lender will forward it to the appraiser for an “After Improved Value”. This is where you may run into problems with OVER improving the property based on current values. Between the consultant, appraiser and buyer – the FINAL FINAL report will be tweeked to come up with a final report that the contractors will be hired to do. * So now the file is submitted to underwriting and approved ( you need to qualify at the full amount you are borrowing of course, which may include your current mortgage payment for the home you will live in during the rehab period) and the normal steps for closing will occur. (BIG PLUS – you can include 6 months of mortgage payments in the new loan amount since it’s assumed that you will have TWO housing payments during the rehabiliation of the new home. This money will be deducted each month during the reahab process) This is optional. * Closing occurs, and the work begins within 30 days of closing/funding. (This is when your mortgage payments start since this is when you started borrowing the money – however, if you included the 6 mths mtg payments, they will be deducted from escrow starting when your first payment is due) * Disbursments are made throughout the following 6 months from the escrow account (normally 4 draws with one final inspection, but this can be increased for higher repair amounts) as the work is completed. Remember you paid the seller for the price of the home, and then you borrowed an additional amount of X which is sitting in an escrow account to pay the contractors (your total loan is the total amount you borrowed) Once the last disbursement is made and the final inspection showing COMPLETED AS PER THE CONTRACT……..you are done! Simple ast 1 2 3 – okay maybe not, but that’s why having an experienced lender on your side is crucial! There are specific properties and repair requirements for this type of loan. Call me if you are interested in this program. 323.804.2008

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Home Prices Rising

July 15, 2009

Nationwide, detached, single-family home prices gained 1.6 percent in May, according to Integrated Asset Services, a specialist in default management and residential collateral valuations.

The increase is the largest since July 2005, IAS reported. The index had previously declined more than 19 percent from its peak in June 2007.

Compared to April, the Northeast was up 3.2 percent, the Midwest 1.9 percent, the South 1.1 percent, and the West 0.9 percent.

In all areas but the South, prices also rose in April.

“Two month’s worth of positive data hardly signals a turn in the national housing market,” says Dave McCarthy, President and CEO of Integrated Asset Services. “But we have to be encouraged by what we’re seeing in several important counties and neighborhoods.”