Wednesday, October 31, 2012

Use An FHA 203K Loan To Buy A Home That Needs Renovation

The recent housing collapse has many people who were considering buying a home feeling a little uneasy. There are many questions on the minds of would-be homeowners.

If you are one of these many people, you may be wondering if the market is right for you, if you can afford to own your own home, and how you go about it without sacrificing everything. The good news is that the market is perfect for first time buyers and that there are options even if you don't have a tremendous amount of money for a down payment.

I Can't Afford to Own My Own Home

This is a common belief held by many renters or other potential homeowners. First, you probably think you need to have a huge amount of money just sitting in your bank as a down payment before you can even think of owning a home.

In today's economy, setting aside tens of thousands of dollars for a big down payment can seem like an unconquerable obstacle for a first time buyer. After that, you would have no money left over to renovate, buy all appliances you need, or even have a safety cushion in case of an emergency.

Prior to the 203K renovation loan, you would have to pay for all of your needed renovations right out of pocket. Fortunately, there is an option for you that you may not know about.

The Advantage of the 203K Loan

FHA insured 203K renovation loans are designed especially for first time home buyers who don't feel as though they can afford the costs associated with a home that needs repairs. You may already have considered distressed homes listed as foreclosures at a local bank.

These homes are ideal for a first time buyer, and a 203K loan is ideal for these kinds of homes. What a 203K allows you to do is wrap up the mortgage from a distressed home and all the renovation costs into one affordable package. The initial down payment is incredibly low and the interest rates are historically low.

With one of these loans, you can afford a distressed house from a bank foreclosure which will typically be had for substantially less than a renovated house since the bank will want to unload it quickly. You will also be able to use the loan to pay for certain renovations without incurring a huge out of pocket expense.

Find an Experienced Realtor and Lender

You will want to discuss the 203K option with your real estate agent if you have one and if you don't you will want to consider multiple lending agencies or loan officers before you make your decision. If you decide that a 203K is right for you, you can begin looking at properties to assess what the initial costs will be and how much renovation they will need.

If you are able to find a distressed home in a neighborhood you like, you can get it for well below market value and spend the money you save on renovations. In the end, even someone with little money to put down can turn a foreclosed distressed home into the home of their dreams.

Article Source:

Sunday, October 28, 2012

Basics Of FHA 203k Loan Rates

Before you learn about the 203k loan rates, you must know what it means and how it affects your finance. Basically, the Federal Housing Administration (FHA) is a United States government agency that was established as a part of the National Housing Act of 1934. This agency was created with the following goals:
1. To improve housing conditions and standards
2. To provide a proper home financing system through mortgage loan
3. To control and stabilize the mortgage market
Sometimes FHA 203k loans are also called 'rehab' or 'fixed'. 203k loan scheme comprises two loans together - home improvement loan and credits for buying a new project. Following is a discussion regarding the advantages and disadvantages of applying for credits with 203k loan rates.
Advantages and disadvantages
The major benefit of a 203k loan is that you get only one scheme for both home improvement and purchase of a property. This reduces your paperwork and the costs that are incurred in the whole process. Being a government funded agency, the rates are quite competitive as compared to banks and other lenders. With 203k loan rates of interest buying a home that banks might otherwise not provide funding for, becomes easier.
There are not many disadvantages of a FHA 203k loan rates for funding home improvement or property buying project. It just takes longer to close. To minimize the disadvantages, there are many credit broking organizations that might help you to drift smoothly with your money management.
Working of 203k
This scheme can pay for a home and its improvement. The amount of the money borrowed that you are entitled to depend on your geographic location. The amount of coverage also varies accordingly. Generally FHA 203k loan rates of interest are for loans which are 110 percent of home's projected value after the improvement or purchase. There are also smaller schemes which allow you to take on smaller projects. 203k loan rates are based on the agreement that work must be finished within 6 months of closing. Remember that you cannot borrow extra amounts if you run out of the amount given to you. You must therefore consult with a good broking company that might help you with accurate estimation prior to application for the amount.
One such company is Great Northern Mortgage Corporation. You can get all types of solutions and services regarding mortgages, loans, debt consolidation, and managing your finances.

Article Source:

Thursday, October 25, 2012

Looking for a Fixer Upper?

Thinking about buying a fixer upper? Learn more about the FHA 203(k) loan program. 

Monday, October 22, 2012

Don't Buy a Foreclosed or Short-Sale Property Without Reading This White Paper First!

FHA 203k Renovation Loan, the Unsung (and little known) Hero of the Existing Home Sales Mortgage Loan Market

Every once in a while, a Government-backed program designed to help millions of average Americans goes unnoticed and under-utilized, largely because of a lack of public information servicing, as well as misunderstanding and misconceptions about the program. The FHA 203k Rehabilitation Loan is just such an unknown gem.

What is an FHA 203k Mortgage Loan?

The FHA 203k Loan is designed to provide cash to repair, renovate, or remodel an owner-occupied residential home. It can also be used for multi-unit residential rental properties of three or less units, as long as one of the units is owner-occupied. The home's value must come in under or at the FHA Loan limits established for the County that the home is located in, and must also conform to minimum HUD standards.

The loan's amount is based on the mortgage amount plus the amount of added appraised valued to the property that will be realized once the renovation or remodeling projects have been completed, thereby providing much needed cash to complete the construction projects.

The loans aren't offered by all Mortgage Lenders, and each Lender has established the guidelines under which they will offer the loan.

What Can the FHA 203k Mortgage Loan be Used For?

The FHA 203k Rehabilitation Loan can be used for a wide range of residential property improvements including bringing the home up to the latest trends and styles in kitchens and bath design, completing exterior or interior repairs, replacing old appliances with new Energy Star appliances and HVAC systems, undergoing complete renovations and additions, replacing flooring, and even landscaping. There are a small number of "luxury item" exclusions, such as hot tubs and swimming pools (although some maintenance and repairs are covered).

There are two versions of the loan; a "Streamlined" loan which can provide up to $35,000 of cash to make "non-structural" repairs and improvements, and the "Full" loan which covers a broader range products and services and can provide cash of up to 35% of the property's appraised value (including the value of the improvements being made). Your Mortgage Lender can help you decide which loan is best for your particular situation.

Why the 203k is a Loan for Our Time (A Rare Source of Renovation Financing)

The FHA 203k loan helps solve a major problem facing the current residential real estate market; how to accelerate the sale (and removal) of these distressed properties from the sales inventory.

A large percentage of the current existing home sales market comprised of "Distressed Properties". These include not only homes that have been foreclosed on and are now bank owned, but also homes that are being marketed under a "short sale" agreement with the financial institution that holds the note on the home.

Many of these homes suffer deterioration due to being un-occupied, as well as having regular maintenance that was never performed on the home. There are also instances these types of properties that have become victim to vandalism.

Even if these homes have been reasonably maintained, they generally fall outside of the current kitchen and bath design trends and styles. This makes them an extremely attractive bargain, because these types of projects add the most "bang for the buck" and greatly increase the likelihood that the remodeling projects will add substantially to the appraised value of the property after taking into account the improvements.

The FHA 203 loan is a fantastic option for financing remodeling and repair projects at a time when limited solutions exist in the market place that provide cash for these purposes. What's more The FHA 203k loan can not only be used to purchase a home and finance improvements, but can be used to re-finance an existing home and provide cash to do all of the same types of constructions projects.

Why Waiting to Renovate Often Translates into Never Renovating

The vast majority of remodeling and repair projects fail to be funded to completion or ever undertaken at all. It is very difficult for the average homeowner to finance large projects withcash reserves, primarily because of the many competing priorities on the family's finances and cash.

Consequently, those projects that can add many years of enjoyment and utility to one's home never materialize. What's more, ongoing maintenance and repairs often get deferred, resulting in larger and more expensive repair projects that occur due to added years of destructive weather and pest damage.

The absolute best time to renovate your home is at the beginning of your ownership. This is the time when you are taking the home that you purchased and molding it into your lifestyle and furnishings. Create your perfect paradise by integrating remodel projects into your other move-in projects, and then sit back and enjoy the home paradise that you've custom-tailored to meet your standards and desires.

Article Source:

Friday, October 19, 2012

Why Use an FHA Home Loan?

I have had many come to me put off by how difficult it is to buy a home if you have bad credit. I have always encouraged people with bad credit to look into an FHA home loan before they give up on the possibility of owning a home.
FHA Home Loan Perfect for Those With Bad Credit
  • You can qualify with a lower credit score
  • You can use a gift as a down payment as well as other flexible down payment options
  • They are creative in proving credit when you don't have any or very little
Some of the reasons why people should seek out an FHA loan is when you may have some collections against your credit. Perhaps you have filed for bankruptcy or you have a mediocre credit score. They are especially good if you don't have money for a down payment or need help with closing costs.
Why can FHA do this?
Remember FHA is not the lender. They are the insurer. In other words, they insure the loan to the lender. Thus the loan monies are guaranteed. So the lender is willing to take a risk on you because FHA guarantees they will get their money. It's better than having a co-signer.
Although there is a cost for this guarantee. You have to pay mortgage insurance on your loan. Some might get upset with paying mortgage insurance, but for those of you who really want to buy a home and do not want to wait, it is possible.
Choose an FHA Lender
Since FHA insures the loan, they have some requirements the home may have to measure up to before they will insure it. Some real estate agents or loan officers don't want to work with those requirements, so they try to steer you away from any FHA loan products. That is why the search for a loan officer who is familiar with the FHA loan products is so hard to find.
But don't let that stop you. Be persistent in your search and find a loan officer who has closed several FHA loans to help you. Usually, a national bank will have loan officers who can work with these products.
There are many people who have seen their dream of owning their own home become a reality by qualifying for an FHA home loan. These mortgages are the best for the first time home buyer and those who need a bad credit FHA home loan. So its worth your while to see what you are eligible for.
My first home was an FHA home mortgage. I was really happy with their requirements for the home because there were some problems with the home that I hadn't caught. Of course I was very young (like 20 years old) and wasn't familiar with what problems to look for. FHA caught the problems and required the seller to fix them. That was my first home!
Even if the seller doesn't want to pay to fix the problems, there is an FHA product that will work with that problems as well. So if you are a first time home buyer, the FHA mortgage is your best choice!

Article Source:

Tuesday, October 16, 2012

Flip a Distressed Property Through FHA 203k

Did you know that FHA now allows flipping? Put simply, an FHA flip transaction is when a property is re-sold within 90 days of acquisition. It's true! They've waived the no flipping regulation 24 CFR 203.37. (b)(2)! Due to the high foreclosures / REO (real estate owned) and distressed properties on the market, FHA finally sees the need to help stimulate real estate sales across the US of A. This is great news to both investors and first-time home buyers alike. Mortgage rates and property values are at a sweet spot allowing distressed or abandoned properties to truly be affordable. The affordability factor of REO or distressed properties makes these types of transactions more feasible, because most of these properties will require renovation and rehabilitation.
To give you a better perspective of the real estate opportunities within Miami, I did a little research, and it's clearly a buyer's market out there. According to the January 2011 figures of Miami-Dade County Economic Indicators, the median sales price for a single family home for December 2010 was $173,600. Miami-Dade County Clerk of Courts reported there were over 34,000 foreclosure filings for in 2010 alone. Finally, as of today, reports over 8,500 single family residences for sale. These stats, along with historically low interest rates, point to a unique opportunity for those looking to buy. Think you can't get into the flipping game because of less than stellar credit, or limited funds for a down payment? FHA just might fit your bill. They have less stringent requirements in order to help homebuyers get the financing they need.
If you want to play in the flipping game here are some of the rules that must follow in order to meet Housing Urban Development (HUD) requirements:
1. The mortgagee must justify and document any sales price that exceeds the seller's acquisition costs by 20% or more
2. All transactions must be arms-length, with no identity interest between the buyer or the seller
3. Seller holds title to the property
4. Limited liability companies or corporations were established and are operating within the applicable state and federal laws
5. No pattern of previous flipping activity exists on the subject property as evidenced by multiple title transfers within the previous 12 months (chain of title can be found on the appraisal report)
6. Property must be marketed on openly and fairly through a multiple listings service, for sale by owner; no assignment of contract of sale could constitute a red flag
Some of the above rules do not sound too bad, just play fair ball and stay away from the funny stuff and you'll be fine. Worst case, if you are an investor looking to flip a distressed property and find a buyer who is a first time home buyer, just keep all of the records showing the renovation / rehab work completed to the subject property to justify the work completed if your asking price is greater than 20% above purchase price.
And here's the best part! Through an FHA 203K program, you can buy that distressed property that you have had your eye on, renovate it at minimal out of pocket costs, and flip it, hopefully at a pretty profit. Your flip will sell because you'll be able to make it look great and also market it as an energy efficient, green home.
Real estate profits in your pocket + Revitalizing part of a neighborhood + Reduced carbon footprint = Winning!!!

Article Source:

Saturday, October 13, 2012

Is a HUD 203(K) Consultant Required on Your Rehab Loan?

HUD is the acronym for the U.S. Department of Housing and Urban Development. HUD offers low-cost dwellings and grants to assist families in getting decent housing. FHA, or the Federal Housing Administration, is a division of HUD that provides mortgage insurance for loans on single-family homes that are the main residences for eligible families.

A 203(k) consultant has been approved to operate as a consultant by submitting the requirements requested by HUD and the FHA. These requirements mainly consist of experience in the construction and home inspection industry that allows the consultant to function in the capacity required in the 203(k) rehabilitation loan process.
Once the requirements have been met, HUD certifies the individual as a "203(k) Consultant". This certification allows the individual to operate as a consultant on loans insured by the FHA. The consultant is issued a certification number and the consultant's position can be researched on the HUD website by either looking up the certification number or the consultant's name.
The loans are typically originated by an FHA approved lender and once the borrower has met the requirements for the loan and the property qualifies for the program, the loan is issued and the repairs and improvements can be completed. See below for the HUD website that lists all approved 203(k) lenders by area.
What Does a 203(k) Consultant Do?
There are two kinds of loans under the 203(k) loan program. The first one is the "203(k) Streamline" and this can be used for minor repairs and cosmetic upgrades, but not for more extensive repairs or repairs concerned with structural repairs and upgrades. This loan has a maximum amount of $35,000. A 203(k) Consultant is not required for this type of loan, however it is recommended to make the procedure smoother.
The regular 203(k) loan covers more extensive repairs, additions and structural upgrades. The maximum amount for this loan varies by neighborhood.
Look into maximum loan amount by area here:
Check lenders in your area here:
On a regular 203(k) loan, a 203(k) Loan Consultant is obligatory. A consultant is involved from the inception of the loan process and continues to be involved throughout the construction until all the work is complete. The consultant inspects the property to assess its condition and evaluates what sort of repairs must be made per the HUD guidelines, called "Minimum Property Standards". If any of these requirements are in need of repair, the loan must have a budget amount to cover those repairs.
Above and beyond the minimum repairs that are required, the homeowner can borrow extra money to make repairs such as rehabilitate a kitchen or bathroom, or constructing a new addition. The consultant works with the borrower, the lender and the contractor to ensure the budget covers all the required repairs per HUD, the desired repairs by the homeowner and the various fees, such as permit costs and contingency budget to cover unforeseen items. Along with this budget, the consultant prepares all the necessary paperwork required by FHA and the approved lender to help fund the loan.
Once the loan funds and the construction has started, the consultant will visit the property to verify that the construction is being done per the specifications initially agreed upon and to verify that the contractor's billing is in line with the progress on the project. At this point the consultant will prepare a progress billing and present that to the lender for further processing and payment.
When the project is finished, the consultant will visit the property to make sure all the work has been completed properly, per the specifications and to make sure the permits have been signed off by the building inspector of record. When all these requirements have been met, the consultant forwards the final paperwork and billing to the lender and the remaining funds from the loan are paid out.
The 203(k) loan program is an terrific program for home repairs and when you have an experienced lender, contractor and a good consultant involved, it makes the process smooth. The loan is, to a degree, more complicated than a standard loan, but if you are working with experienced people, you will likely not run into any issues.

Article Source:

Wednesday, October 10, 2012

Section 203K Rehabilitation Mortgage Insurance

For home owners or home buyers who are looking for additional finance over their mortgage for rehabilitating the old home that they are purchasing, Section 203K rehabilitation mortgage insurance offer a convenient option of a single long term assistance, thereby saving them the time involved in finding another lender.

Among the various government loans given out in the US, the Department of Housing and Urban Development (HUD) has a specific financial assistance that is offered to home owners or buyers to either refinance the cost of rehabilitating, modifying or altering the house or to buy a house. This form of financial assistance is called Section 203K rehabilitation mortgage insurance and falls broadly under the category of housing loans offered by the US Government.

When a home buyer wants to buy a house that is not new, there are often repair and rehabilitation costs associated with the purchase. In most cases, it becomes difficult for him to get additional finance at reasonable rates for making improvements to the old building and Section 203K rehabilitation mortgage insurance is designed specifically to assist with this situation. Under this loan program, HUD insures the total amount incurred towards mortgage of the home and its rehabilitation. Thus, the lender is assured of recovery of his money in case of default of repayment while the home buyer gets the benefit of just one long term loan with a predetermined fixed or adjustable interest agreement, for the entire cost of the building and the renovation. This type of housing loans assistance also saves the buyer time as he does not have to find another lender for the additional loan towards home rehabilitation.

Once the Section 203K rehabilitation mortgage insurance loan is sanctioned, a part of the loan amount is given to the seller and the remaining held in an escrow account until the repair and rehabilitation work is complete. In the case of refinance, the earlier mortgage is paid off and the remaining amount transferred to the escrow for release after completion of rehabilitation work.

There are certain criteria to be met for a person to be eligible for this category of the Government Loans program. Any individual who is capable of making mortgage payments can apply for this assistance. The valuation of the property must meet the guidelines set by FHA with regard to the mortgage limit for that particular locality. The value is usually computed as the lower value of either the original value of the home and the cost of rehabilitation or 110% of the value of the rehabilitated home. The estimate for rehabilitation costs should be a minimum of $5,000. The home has to be at least one year old.

Applications for assistance under this housing loans program need to be submitted through a lender on the approved list of FHA. For further details on this financial assistance program, you can log on to the HUD website and locate an approved lender in your local area. Besides this, any further information about this loan program can be received from the online FHA resource center.

Article Source:

Sunday, October 7, 2012

FHA Housing Loan - 203k FHA Rehab Loan

Every single individual wants and needs a home. A house serves as a person's fortress where he or she can retreat from worldly problems and complications. It serves as a haven for comfort, relaxation, and security. That is why is highly crucial for every single person in this Earth needs to have even just a single house that they could settle in every single day and night... One will have no problem doing that through the use of the 203k FHA rehab loan. This type of loan is about giving its buyers the ability to buy and rehabilitate or renovate a house at a much lesser price than those houses which do not offer an FHA loan.

Those qualified to avail of this type of FHA housing loan must possess and have these important criteria:

Criterion 1: The buying and refining of the FHA house must be its future owner.
Criterion 2: The FHA house and its buyer should engage in non-profit funds.
Criterion 3: Qualified FHA home buyers should not be investors as they are not allowed.

If you are interested in purchasing and rehabilitating/reconstructing an FHA house then it is very crucial for you to follow these seven easy steps for you to get started on using the 203k FHA loan and ultimately own an FHA house:

Step 1: A contract of purchase which is non-contingent must be submitted upon you finding the FHA house you want.

Step 2: Once the contract of purchase have been approved and signed, you should now contact the 203k FHA loan agent and schedule a house tour/inspection and discuss the pricings and specifics of the house.

Step 3: Once all have been settled and dealt with, the 203k FHA loan agent will contact the house lender or mortgage broker and shall work on the three bid packages of the contractors for you.

Step 4: Look for general or multiple contractors to bid for your job.

Step 5: The appraiser will work on the house write-up to determine the value of your chosen house.

Step 6: The loan closes approximately 30 to 45 days in average.

Step 7: The transfer of the house and its renovations will soon take place and be yours.

Truly the 203k FHA loan is a benefit for all of us. Everyone will now be able to own and reconstruct a home thanks to the FHA house loans and services. So go ahead and get your FHA house now.

Article Source:

Thursday, October 4, 2012

It's A-OK With 203(K)!

Unfortunately, there are a bunch of foreclosed properties lurking about. The good news is that these same properties often are great deals for the right individuals. But when dealing with a foreclosure, typically, the seller won't make any repairs to the property. You see, the seller, usually a bank or a secondary lender, has already lost money on the property. So, these entities are very unwilling (or in some cases, completely unwilling) to put a new roof on the home or make sure the heat and air unit is working. And that poses a problem.

It's because when you get the fantastic 30 year fixed mortgage at the unbelievable low interest rates you hear about these days, the property has to be inhabitable. Certain things are a must. Health and safety concerns (banisters, working toilets and running water) are just non-negotiable. And the truth of the matter is that many foreclosed properties, while still fantastic deals, aren't exactly up to snuff in terms of "ready for the moving van." When one isn't able to make a mortgage payment, one doesn't necessarily maintain the property in top condition, which is the case many times with foreclosures. A lender requires you to be able to live in that residence you're buying. Otherwise, you may decide it's not worth it and walk away from your debt obligation.

So what are your options? Well, you can get a bank loan. But, the bank's guidelines are mostly short term. So it's not a long term solution. You can also perhaps get a 30 year fixed conventional loan, depending on the condition of the property. However, you can be limited by many factors. Especially if your credit score is below a 680, a conventional loan might not be very affordable.

That's where the FHA 203(K) loan comes into play if you're buying a primary residence. Because it's an FHA loan, you have a low down payment and premium pricing available with only a 620 credit score. So, that in itself is special about this product. Typically, FHA's standards regarding the condition of the property are pretty sound and unwaivering. Did I mention you have to be able to actually live in the home and have running water and a working roof when you close? Well, FHA is particularly particular on these matters. They want their customers in a safe, affordable home. That's the focus of their business. As well, you are limited by the FHA guidelines as far as loan size goes.

So, what's so special about a 203(K) loan? It allows the buyer to make some of those very necessary repairs or very wanted upgrades by financing them into the loan amount, and into only one loan. And I mentioned this earlier, but the 203(K) loan will work on a refinance, too. Maybe you want to bust out that wall and create a bigger closet. Whatever the need, it may be a solution.

The program allows you to finance up to $35,000 in improvements to the property. The value of the appraisal is based upon the "as completed" condition of the property once the upgrades or repairs are made. The repairs have to be completed by licensed contractor - you can't do the work yourself.

Thus, if you need a little work done, the 203(K) loan may just prove to be a top notch solution.

Article Source: