FHA 203K Rehab Loan - From Handyman Special to Dream Home

An FHA 203K loan allows a home buyer to compete with the real estate investor. This loan allows for repairs to a property that generally would not qualify for financing due to property condition. This is a very popular loan for the budget conscious home buyer in New Jersey.

There are 2 types of FHA 203K loans. The full "K" and streamline "K."

A property that needs structural repairs or repairs exceeding $35,000 will require a full 203K loan. It is best to use a certified HUD plans consultant for cost estimates of your desired work. A HUD consultant will make the paperwork a lot easier. The average contractor may not be familiar with the required documentation. Using a HUD consultant allows for a smoother flow. The consultant will not do the repair work. They will do the detailed cost estimate. The estimate will be based upon what you want done. You are allowed to renovate, carpet, paint, add new appliances, etc.

Streamline FHA 203K's are best if the required work is $35,000 or less and no structural repairs are necessary. The contractor will usually prepare the estimate on this loan. The paperwork is less detailed so it can easily be done without a HUD plan consultant. Up to $8,000 of energy efficient improvements may be added to any 203K loan.

A full FHA 203k and a Streamline 203K will allow you to use multiple contractors or one general contractor. You will chose your contractors. You should compare prices and the quality of their work. You may choose one contractor that specializes in flooring and another that is a licensed electrician. This is allowed but detailed written estimates must be obtained from each contractor.

This is the normal process flow:

1) Find a home.
2) Make an offer.
3) The offer is accepted.
4) Choose your contractors and get written work estimates. A HUD plan consultant may also prepare the estimates.
5) The contract and repair estimates are delivered to a qualified 203K lending specialist.
6) A mortgage application is prepared.
7) The work estimates are forwarded to the appraiser. The appraiser will prepare an appraisal with a value "subject to" the desired work.
8) The loan is approved.
9) The loan closed and seller is paid. You become the new homeowner.
10) Work begins.

The contractor has up to 6 month to complete the necessary repairs. They will be paid in as the work is done and inspected.

A 203K loan has a provision where you may remain in your current residence with no mortgage payments due if the new property is not habitable. This allows the contractor to complete the necessary work without a strain on your budget.

An FHA 203K loan is a fantastic way for you to take advantage of a great deal on a distressed property.

Article Source: http://EzineArticles.com/4067432

FHA Loans: One Step Closer To Homeownership

A lot of people who are looking to own a home know that they have an option called FHA loans but they do not know exactly what that means and they specifically do not know what it means in terms of them trying to secure funds to purchase a house with a lower level of income. Well, it is relatively easy to understand and taking advantage of this offer is an excellent way to own property and also to provide for a family.

The government, in order make it easier for people to own a home, established the Federal Housing Administration. This department insures the lenders against losses in cases where the homeowner defaults. By providing FHA loans, lenders are allowing people who may not otherwise qualify for a housing loan to get financing. For the lenders this is not a risk however because there is a guaranty from the government on the money.

While FHA loans do offer people a chance to own property it is not without its own requirements. One must typically have two years of steady employment and preferably in the same field. Additionally, it reflects positively if there is a trend of increasing compensation for your work as time goes on. Additionally, it is necessary that a person can afford the minimum payment on the amount borrowed. That typically means that it cannot be more than 30% of one's total income and all finance charges including auto loans, student loans, and credit car bills cannot be more than about 40% of monthly income. It is also necessary to have relatively good credit and not have any recent bankruptcies or foreclosures. Finally, one is only eligible to have one federally backed loan at a time so be aware that if the total of the new home is not covered by the amount borrowed one will have to find alternative financing.

FHA loans are fantastic options for first time homeowners because they allow for a relatively low down payment. This allows those with relatively little savings to be in a home easily. Usually the amount necessary is less than 3% down. Also, while decent credit is strongly favored it is not necessary to have perfect credit or even extensive credit history. Often first time buyers are accepted. Also, they have a relatively low interest rate compared to other types of financing.

Although FHA loans offer a great benefit to those who are eligible they may not be for everyone. Instead of relying on this one type of financing it is better to talk with a broker about the many options available. Also, because the interest rate is negotiable for borrowers it is worth shopping around fro the best rate.


Article Source: http://EzineArticles.com/7014726

To Rent or to Buy a House?

Should You Buy a House or Rent?

Rent or buy a house? It's a dilemma facing lots of people right now. Writing that big check for a down payment can be onerous. But, with home prices and interest rates down, is this the time to grab the opportunity and buy a home? If you are paying $1,200 - $1,800 in rent each month, wouldn't it make sense to put that money toward home equity?

The answer is yes. Renting had been a better choice for cash flow for quite awhile, but the tide has turned and now buying a home is the smarter choice.

Rentals are expected to take a climb in the next couple of years - as much as 7% annually. Combine that with home prices that are down 32% from the 2006 peak and may be showing signs of bouncing back soon. If you do the math, as economics experts have, you see that buying a home is a much better decision - if you plan to stay in that home for at least 8-10 years.

There are other factors that make buying a home the best move. Real estate tax and mortgage interest can be a tax deduction. Today, you can buy many homes with 5% down. That's leverage that you just don't find in other types of investments. And although renting might be easier on your cash flow, buying will save you more money in the long run.

When you buy a home, there are lots of other expenses that take on more value. Improvements you make to your home, landscaping, etc. will enhance your home's value rather than being benefits that you just pass on to the next renter.

Buying a house means security. A renter never knows when the monthly rent payment may be increased. Getting a fixed rate loan locks in a set payment so you know what to expect for the long term. And once you have been approved for a mortgage loan, you will have an easier time qualifying for other borrowing and credit cards.

There are several tools on the internet to help you calculate the specific economic advantages in your situation to buying a home versus renting. Ginnie Mae, the Government National Mortgage Association, provides such a tool, the Rent Vs Buy Calculator. http://www.ginniemae.gov/rent_vs_buy/rent_vs_buy_calc.asp

To use it, gather the following information:

Your current rent payment

The purchase price of the home you are considering buying

The percentage of the down payment you will need

The length or term of the loan (years you will have to pay on it)

The interest rate of the loan

The number of years you plan to stay in the home

The yearly property tax rate

The yearly home value increase rate

Crunch the numbers, and you will probably find that buying a home is the smarter choice right now.

Article Source: http://EzineArticles.com/7021718

Down Payments: How Much Money Do I Need To Buy A House?

When you get ready to buy a house, how do you know how much money you should have ready? Most people know they need a down payment to buy a house. But there are other costs involved as well.

The first check you will write when you make an offer to buy a house is "earnest money." This is to show the seller that you are serious about your offer and wanting to buy the house. Earnest money is put into an escrow account until you find out if your offer is accepted. If it is, it will be put toward your down payment and closing costs. If not, it will be returned. There is not set amount for an earnest money deposit to buy a house. Some states have minimum requirements. There are also amounts that are customary in each local market, but they usually fall between 1 to 3 percent of your offer. If you are making an offer to buy a house that is likely to sell quickly, or if you are making a lower offer, a larger earnest money payment may help get your offer accepted. Your real estate agent should be able to advise you of an appropriate amount.

The next payment is the down payment, which is a percentage of the agreed upon price. The higher your down payment is, the lower your mortgage payments will be. Typically, down payments are 20% of the purchase price for a traditional mortgage. But it is possible to find mortgages requiring 10 - 15% when you buy a house. FHA loans for first-time homebuyers are 3% or less. If your lender accepts a down payment less than 20 percent, they will usually require you to purchase Private Mortgage Insurance which is added to your mortgage payment. This is to protect the lender if you default on the mortgage. PMI can usually be cancelled as soon as you have built up equity equal to 20 percent of your home's purchase price.

The third payment you will make is for the closing costs which cover the paperwork needed to buy a house. This is collected when you sign your final papers for the house. Closing costs are on average between 3 to 4 percent of the purchase price. You should get an estimate of these costs when you apply for a loan. First-time homebuyers may be able to get some of these costs covered by HUD or the seller.

So let's look at numbers. If you are making an offer of $200,000 to buy a house, you will need an initial $2,000 (minimum) in earnest money, $40,000 for a down payment at 20% and $6,000 in closing costs. That's in-pocket money of $48,000. If you are making a purchase with FHA or HUD assistance, that amount can be as low as $14,000.


Article Source: http://EzineArticles.com/6986146

Housing Numbers On The Rise

Check out the latest video blog from our friends Frank Garay and Brian Stevens of Think Big, Work Small:

Housing Numbers On The Rise

A Walk Through Checklist for Buying a House

When you're ready to buy a house, you probably have a number of features you would prefer the house to have. There are several other things to look for as you view a home. It's a good idea to take a checklist or a notepad - after looking at several homes, it may be difficult to remember the characteristics of any one. Here is a list of the basics:

Plumbing - Check the water in the kitchen, bathroom, and laundry. Turn on the taps to assess the pressure. Make sure the water is clean. Look at the hot water tank. Is it big enough to supply all the water your family needs? Check the tank for leaks, rust and any signs of age or wear.

Foundation - Check for cracks in walls. Open and shut all doors - a sticking door may indicate subsidence. Take along a flashlight and be wary of rooms that are poorly lit as they may be hiding something. Stand away from the house and look at the structure for any bowed walls or sagging roof areas.

Water Damage - On the lowest floor of the house, feel the inside walls for dampness. Look for peeling, bubbling paint, watermarks and mold. Visit the house during or just after rain. Does the ground slope away from the base of the house? Are the gutters, downspouts and pipes in good condition?

Windows - Open and shut all windows to make sure they slide easily. Look at the frames to make sure there is no wood rot. Do all windows have screens that are in good shape? Is the hardware in good condition? Make sure bedroom windows are large enough in case you would need to use them to escape a fire.

Here are some amenities you should note that will help you compare before you buy a house:

Storage - Note all closets, crawl spaces and outdoor storage such as sheds.

Electrical - Are there enough electrical outlets in each room? Does each room have an overhead light?

Tile and grout - Check the bathroom, kitchen floors, and walls for loose tiles and crumbling grout.

Kitchen space - If appliances will not be left behind, make sure yours will fit. Take along a tape measure. If you want to add something like a dishwasher, is there room?

Insulation - Attics should have a minimum of R-19 insulation in a moderate climate and up to R-38 in colder ones. To check for the type and thickness of insulations, remove an electric outlet cover on a perimeter wall.

Fireplace - Check to make sure the flue works, opening and closing easily. Is there a fireplace screen or grate? Is the fireplace lined with terra cotta or firebrick? Has it been maintained?

Outside - Inspect decks, sheds, and unattached garages for structural integrity. Pay special attention to foundations and crawl spaces underneath. Check for cracks in any cement work, steps and walkways. Cracks in the driveway may indicate a drainage problem.

Article Source: http://EzineArticles.com/7030986

Happy Mother's Day

Happy Mother's Day!!

from Solano Mortgage