Thursday, February 28, 2013

Basic Requirements of FHA Loans

Federal Housing Administration Department (FHA) has helped many Americans buy new houses. They extended the benefits to such a level that low and middle income families were also able to qualify FHA loan requirements. The FHA loan requirements are much more feasible that any other conventional loans. Hence it is easily possible to get FHA home loans. But certain things are mandatory in order get a loan.

In case you are thinking of taking up a loan in order to get a house, then FHA financing has got a good deal to offer. It is very similar to any other lender. The borrower's credit will be checked, as this would be the indication for FHA down payments in the future. In case the borrower is having zero credit, he can still get loan. Unlike any other conventional loans, FHA loans lend loan if the borrower has a co-signer who has credit though they might not stay in the house. Many people in America have benefitted by taking loans in this way from FHA lenders. They also provide insurance protection to the lenders who provide mortgages to house owners.

FHA will check the income level when anybody applies for FHA loan. This is in order to verify that the borrower will be able to repay the loan installment regularly. FHA insurance is very helpful for those who might not be able to qualify conventional loan requirements. It is basically designed for first time buyers. The loan taken will be deducted considering the monthly and annual salary. The amount after deduction is the actual amount which is left at the end of each month. This indicates the amount the borrower can afford as mortgage payment.

There are a few basic necessities which are to be taken care of while applying for FHA loans:

• The borrower should possess a Social Security Number (SSN).

• The borrower should be a resident of USA.

• She/he should be of legal age so that she/he can sign the mortgage.

FHA expects the borrower to have a good history, so that they are satisfied that he/she will pay the loan installment. These rules are not as stringent as any other conventional loan lenders; hence making it easier for borrowers to get home loans. This makes FHA, one of the leading and most popular resources for borrowers when it comes to government loan options.


Article Source: http://EzineArticles.com/4080228

Monday, February 25, 2013

What is a FHA 203K Mortgage? Buy a Foreclosed Home With a FHA 203K Mortgage!

With a record number of homes being foreclosed all across the country, you may have investigated purchasing one. But since most of them need some fixing up, you may have thought against it, thinking the savings on the house would be more than eaten up in the cost of fixing it up. Or perhaps you want to keep your home, but it requires a lot of repair. The Federal Housing Administration (FHA) offers the FHA 203K Mortgage that can be used for both of these purposes.

This type of mortgage not only prevents neighborhoods from becoming blighted by a large number of foreclosures, it can also be used to help save the environment by altering homes so that they can become more energy efficient. Some of the green additions you can make include windows, furnaces, appliances, floors, landscaping, solar panels and insulation. Certain repairs can be made by the borrowers themselves and not a contractor.

Although not a loan from the government, a FHA loan is guaranteed by the government.

FHA 203K Mortgages have existed for decades, and have regained popularity in the wake of the sub-prime loan meltdown. Because some banks and mortgagors are struggling to survive due to unprecedented loan defaults, conventional loans are now requiring a 20 to 30 percent down payment. First-time home buyers are hard pressed to come up with this large amount of money.

However, a FHA 203K Mortgage only requires 3.5 percent down. These loans also offer more favorable terms and easier qualification than do conventional loans. If you have at least a good credit rating, even a prior bankruptcy, you could qualify for a FHA loan.

If you want to purchase a home, the amount of money you can borrow will be based on the comparable price of homes in the area. The amount of the loan will be the lesser of its present value plus the cost of rehabilitation, or 110 percent of the appraised value after rehabilitation.

There are a few restrictions on these loans. The homes that qualify for a FHA 203K Mortgage need to be at least one year old and the cost of the needed repairs used be at least $5,000, but that no longer apply. There are additional fees associated with this loan, including a supplemental origination fee, fees to cover the rehabilitation plan documents and appraisal fees.

The time to close can take as many as 60 days, but usually takes from 30 to 45 days.

So, if you see a foreclosed home or maybe a HUD Home for sale don't let the necessary repairs stand in your way of getting a bargain. Talk to your lender about a FHA 203K Mortgage and buy the home of your dreams!


Article Source: http://EzineArticles.com/2456224

Friday, February 22, 2013

FHA 203K Renovation Loans - You Don't Have to Move Out to Move Up!

When most homeowners want more space or a nicer place they call Real Estate Agent and start their search for a new home. It doesn't have to be that way though, you don't have to move out to move up!

Recently homeowners wanting new digs have found the going a bit tougher. Both Fannie Mae and FHA have instituted restrictive new rules aimed at homeowners looking to buy a new place and rent out their current residence until market conditions improve. For both you now must have significant equity, 25% and 30% respectively, to use the rental income on your current residence to qualify. That means that many people now have to qualify for TWO mortgage payments. Obviously, that simply isn't possible for many homeowners. All is not lost for those wanting a bigger space though, they just need to look a little closer to home.

Both FHA 203K and Fannie Mae Homestyle Renovation Loans allow homeowners to refinance and renovate their current residence. They allow it all based on the after repair value of the renovations. Only have 10% equity currently? That is not a problem for FHA 203K or Fannie Mae Homestyle renovation loans, they are only concerned with the equity you will have when you are finished with your renovations! So, how can you use FHA 203K or a Fannie Mae Homestyle?

New Freestanding Appliances, Complete Bathroom Remodel, Adding a New Master Bathroom, Upgrading Heating & Cooling Systems, New Siding, Fresh Paint Inside or Out, Attic Build-Outs, Finishing the Basement, Making the House Handicapped Accessible, Complete & Total Renovation, Adding a 2nd Floor, Adding a New Master Bedroom, New Deck & Outdoor Kitchen Area, Upgrading Doors and Windows, New Hardwood Flooring or New Carpet, New Lighting, Upgrading Plumbing & Electrical System, New Fixtures for Bathrooms and Kitchens, Opening Up a Floorplan, New Kitchen Counters, Vaulting Your Ceiling, Going Green with Solar Panels, and Building a New Garage to name a few!

There are hundreds of ways these loans can help you create the house you want without having to pack and unpack a moving truck. You can even add those green and energy efficient improvements you have wanted while you are creating your new space. With a tough market to sell you should always consider all your options when looking to move up. FHA 203K Renovation Loans can allow you to explore an angle you might not have previously considered


Article Source: http://EzineArticles.com/1547327

Tuesday, February 19, 2013

FHA 203K Mortgage - The FHA Home Loan Program For Fixer-Upper Homes!

In latest reports, home ownership rates have raised continuously due to the implementation of the FHA Home Loan Program. Acquiring homes continues to be made a lot easier mainly because of this particular advantage. But if you want to buy a home that needs repairs the best way to finance it is a FHA 203K Mortgage.

Through the years, FHA has aided Americans to realize their rights in buying the houses which they desire. Sensible home loan rates for middle class, creating property for the seniors and people with lower earnings, and funding military housing are only some samples of what the FHA has been doing on their behalf. But one of the best ways to finance or refinance a home that needs a lot of repairs is a FHA 203K Mortgage.

The full course of action starts with the loan companies advancing the mortgages to those whom commonly could not purchase a home devoid of their support. However, these individuals have got to satisfy the FHA specifications just before they can be provided with the mortgages which they may be trying to get. One qualification they have to satisfy is that they ought to possess a good credit score ranking.

When they have a poor credit history, they may have difficulty having their application accepted. Whenever they do have it accepted, it may mean that they will have to pay out an increased rate of interest when compared with anyone who has favorable credit history. FHA does have more lenient credit requirements than conventional loans.

Furthermore, FHA loans provide advantages to the people who desire to get houses but can't make down payments simply because they may be fresh college graduates, newlyweds, or individuals who will be still attempting to finish their schooling. The down payment for FHA Home Loan Program is only 3.5%. Additionally, there are several loan companies whom make it possible for folks having bad credit score to be eligible nevertheless. They are aware that these individuals are marred by foreclosure or bankruptcy nevertheless they are going to provide them with an additional opportunity.

The FHA 203K Mortgage is one among the most favorite FHA home loan. There is a fixed interest rate and this is the most perfect for first time home buyers. It enables the people pay up to 96.5 percent of their entire mortgage loan. What this means is the down payments are managed on a controllable level and also the settlement costs will also be at a minimum.

The FHA 203K Mortgage is the only mortgage loan where the sum of the settlement costs might be provided as gift from family, employer, or non-profit or governmental agency.

Nonetheless, the guidelines to consider in this entire transaction whenever working with the FHA 203K Mortgage is that there exists a minimum income requirement. The person should be eligible for this prior to be given an FHA 203k loan.

Your debt ratios can also be specific, based upon on the state he could be residing in. The FHA 203K Mortgage is a good investment decision since one can possibly obtain the house he's been seeking and have the repairs rolled into their mortgage.

The best place to do more research on the FHA 203K Mortgage and other FHA Home Loan Program loans is the Internet. You will be able to find websites with additional information that will help you buy your dream home even though it does need repairs!


Article Source: http://EzineArticles.com/3895885

Saturday, February 16, 2013

How to Move a House Using the FHA Renovation Loan Program


Do you really want a bargain when purchasing a home? Then the FHA renovation loan is the way to purchase, save money and get instant equity in your home.

This exciting renovation loan program allows a borrower to move a house from one location to another, have a new foundation poured and have the old house attached to the new foundation.

Some years ago, one of my clients was looking for a home, she was getting frustrated because she was not able to find a house within her budget that was the size that would accommodate her family.

At the same time she was looking for a house to buy, a developer in Roswell Georgia had purchased some land to build a sub division. There were houses on the land that needed to be demolished or moved so that he could complete his project. The houses were in good conditions so rather than demolishing them he decided to give them away, the recipient would be responsible for the cost of moving the houses. He donated the houses to a church, this was a smart move for the developer because it was a tax write off for him.

My client was an active member of the Church and she requested and received one of the houses; it was her responsibility to pay for the move. The new problem that she faced was not having somewhere to move the house right away. There where time frames that had to be met, because the developer had to get the houses moved so that he could start his build.

She started her search for land and was having the same problems she had when she was looking for a house, she was unable to find land within her budget that was large enough for the house. In a very rare instance HUD had a plot of land for sale inside the city limits of Atlanta. She would have to bid on the land and there was no guarantee that she would win the bid. She did win the bid and now it was a matter of her getting the house moved from Roswell Georgia to Atlanta Georgia a distance of about 15 miles.

The house movers had been contacted about the move, but they wanted their $9000.00 upfront and my client did not have that kind of cash. The beauty of the FHA renovation loan program is that the cost of the move can be financed into the loan, it was a matter of getting the House Mover to agree to wait for the loan to close in order to get his money. After speaking to the mover and explaining how the renovation loan program worked he agreed to wait until the closing, he also agreed not to take a deposit from my client because the loan program is FHA insured.

The cost of pouring the new foundation, attaching the old house and repairs after the house was attached came to $22,000.00. A 20% contingency fee was added into the loan just in case there were any problems that occurred during the move. There were no problems so that 20% was applied to reduce the principal balance.

Once the house was attached, the appraiser was called to project a value once the house was completed. The value he forecasted was $62,000.00, that was a lot of instant equity for my client.

It takes having a vision when purchasing a property using the FHA renovation loan program and my client certainly had a vision.


Article Source: http://EzineArticles.com/5701250

Wednesday, February 13, 2013

How to Get FHA 203K Rehabilitation Loans to Buy That Fixer Upper You Keep Driving By!

Some might say, "Why buy a fixer upper with a rehab loan?"

1) Have you found a beautiful home in a great neighborhood, however, you did not have the needed funds to repair it?

2) It gives you the chance to find a great property when inventory levels are tight.

3) You now have the chance to work on a rehab project.

4) Investors/Contractors finally have a flexible and workable program for them to purchase now to save a lot of cash being tied up for the long run.

5) Low interest rates for construction type financing.

6) Most of the homes for sale are distressed and this will allow financing.

FHA is the ticket to housing success either way you look at it today! The Federal Housing Administration (FHA), which is part of the Department of Housing and Urban Development (HUD), administers various single family mortgage insurance programs. These programs operate through FHA-approved lending institutions which submit applications to have the property appraised and have the buyer's credit approved. These lenders fund the loans which the Department insures. FHA and HUD do not make direct loans to help people buy homes. It allows the money to be insured so that the Lender can now sell it to the secondary mortgage market which is FNMA and other quasi-government entities.

Lenders have successfully used the FHA 203k loan program in partnership with state and local housing agencies and nonprofit organizations to rehabilitate properties. These lenders, along with Federal, State and Local government agencies, have found ways to combine the FHA 203k loan with other financial resources, such as HUD's HOME, HOPE, and Community Development Block Grant Programs, to assist borrowers. If you really want to see other means of using this program, remember that several well known state housing finance agencies have designed programs tailored specifically for use with FHA 203k loans. Buyer's will also be able to draw on the expertise of local housing agencies and nonprofit organizations to help manage the rehabilitation processing.

Here's a quick rundown of how FHA 203K loan can be used:

This program can be used to accomplish rehabilitation and/or improvement of an existing one-to-four unit dwelling in one of three ways:

- To purchase a dwelling and the land on which the dwelling is located and rehabilitate it.
- To purchase a dwelling on another site, move it onto a new foundation on the mortgaged property and rehabilitate it.
- To refinance existing indebtedness and rehabilitate a dwelling;

To purchase a dwelling and the land on which the dwelling is located and rehabilitate it, and to refinance existing indebtedness and rehabilitate such a dwelling, the mortgage must be a first lien on the property and the loan proceeds (other than rehabilitation funds) must be available before the rehabilitation begins.


Article Source: http://EzineArticles.com/2334006

Sunday, February 10, 2013

Fast Track Your 203k Loan


Fast Track Your Loan!

Want to get your loan to close faster? Of course you do. It is easy if you put together all of your financial data and have it ready to hand to your lender upon application. You can even get your 1003 application form filled out in advance. Don't wait till the last minute, find a house, then start gathering this info... it may take you a week to get it together. The loan application period starts after you turn this info in to your lender.

Click here for an application kit

Thursday, February 7, 2013

203K Loans


FHA 203K Loans

Are you interested in purchasing a fixer-upper home? If you know that the home you want to buy needs repairs and you are worried that you cannot get enough money back from your mortgage to make these repairs, then you should know about the Section 203(k) program offered by the FHA. Through this program you can purchase a home and get the money you need to fix-up the home financed into the mortgage.

For instance, if you want to purchase a home that is currently valued at $400,000 but it needs $50,000 worth of repairs many mortgage companies will not lend you more than the appraisal value of the home. With the FHA 203(k) program you can borrow the money to purchase the home and fix it up.

What types of homes can I purchase through the FHA 203(k) program?

You can use the program to purchase single family homes, up to four unit buildings as long as you live in one of them, and condominiums. There are certain restrictions for condominium repairs that you should consult your FHA approved lender about before purchasing.

Do I have to live in the home I purchase?

Yes. The FHA requires you to occupy the property you purchase.

Can I convert a single-family home into a multi-family home?

Yes. The FHA allows you to use the rehabilitation money from the loan to convert a single-family home into up to a four-unit home. The FHA also allows you to use the loan to move existing homes onto a new site if necessary.

What if the home I want to purchase need torn down and re-built, can I use the FHA 203(k) loan program for this?

Yes under certain circumstances. If you need to tear down the existing home and re-build a new home then you can use the 203(k) loan money as long as you are able to use some of the existing foundation.

How much can I borrow with an FHA 203(k) loan?

You can borrow up to 110% of the value of the home AFTER the repairs and rehabilitation of the home. The FHA will do a current value appraisal of the home in order to see what it is worth now. Then they will consider all of the rehabilitation you plan to do and do a second appraisal for what the home will be worth after the repairs have been made to the home. If you plan to install solar energy systems as part of your rehabilitation the FHA will insure up to 20% more of your mortgage values which means your lender will loan you more for your repairs and it will be easier to qualify for the loan.

Is there a minimum amount I need to borrow to make home improvements under the 203(k) program?
Yes. The FHA requires you to borrow at least $5,000 for repairs to the home in order to use the 203(k) program.

What improvements are allowed by the FHA?

The FHA requires you to make your home more energy efficient, but optional repairs that you can finance into your loan include:

• Repair to the structure of the home. This includes framing, chimneys, foundations, siding, new additions to the home, roofing, basement finishing, and more.

• Repair or the new building of bathrooms.

• New windows and/or skylights.

• Remodeling kitchens and new appliances.

• All types of flooring repairs or new flooring.

• Any repairs that are needed for safety like mold removal or lead paint.

• Repair to internal systems of the home like electrical, plumbing, heating, air conditioning, and ventilation.

• Repair or replacement of wells and septic systems (note that these repairs must be done first).

• Remodeling including new light fixtures, bathroom fixtures (even whirlpool bathtubs), painting, and more.

• Outdoor improvements including decks, patios, covered porches, landscaping, walkways, driveways, fencing, and more.

• Any rehabilitation that is necessary due to accessibility reasons for disabled people.

Once I have the loan money how long to I have to make the necessary improvements and repairs?

When you get a FHA 203(k) loan you sign an agreement that specifies what time frame you have to complete the repairs. You have to begin the rehabilitation within 30 days of signing the agreement and receiving the money. The rehabilitation must be completed within 6 months and any pause in the work cannot last for more than 30 days straight. This means that if you have different contractors working on different parts of your rehabilitation plan you need to make sure that there is not more than a 30 day stretch between the end and start of each contractor.

What if the price of the repairs increases once the work begins, can I borrow more money to cover the cost?

No. You need to find a contractor that can give you an accurate price before you take out your loan. Once you have the loan you cannot borrow more money. Discuss this with your contractor when you have the estimate done so that they know you cannot afford to go over the estimated cost.

I am not going to live in my home while it is being repaired, do I still have to make the mortgage payments out-of-pocket?

No. You do have to make the mortgage payments, but the FHA allows you to include the cost of your first 6 months of mortgage payments into the loan so that you do not have to try and bare the burden of paying your new mortgage and rent to live somewhere while you home is being rehabilitated.


Article Source: http://EzineArticles.com/7480570

Monday, February 4, 2013

FHA Foreclosures: Discounting an Already Low Priced Property


FHA foreclosures are properties secured by an owner through an FHA-insured housing loan. When the owner fails to meet their mortgage obligations the FHA repossesses the home and sells it to other buyers. These properties can be found in real estate web sites commissioned by the HUD to sell the homes. Realtors accredited by the HUD can likewise offer these homes with their commissions being paid by the government agency.

FHA foreclosures are offered to the market in their present condition. Since the agency will not pay for all the needed repairs it is imperative for buyers to conduct a thorough home inspection with a professional home inspector. Perhaps the major draw of FHA homes is that they require a down payment that is equivalent to only 3.5 percent of the price of the property. Private home financing schemes require at least 20 percent of the contract price. Plus the FHA does not really mind the source of the down payment so it could be the buyer's own money, a gift from a family member or a grant from a charity. Closing costs are also significantly lower than conventional loans making it all the more easier for middle- to low-income families wanting to buy their first home.

Other Loans and Grants from the FHA

There are several loans structures offered by the FHA to suit every need a buyer may have. Borrowers can oped for either a fixed-rate or an adjustable-rate mortgage. Other loans available for qualified borrowers include energy efficient loans or graduated mortgages. The very popular FHA 203K Mortgage allows individual to secure a loan to renovate the property or to purchase another home in another city or state.

Buyers interested in FHA foreclosures should seek the advise of a real estate agent and broker. There are several requirements to meet and guidelines to follow and some professional help is in order. But before you even consider this type of foreclosure make sure you have a good credit record and can qualify for a home loan in the normal way.


Article Source: http://EzineArticles.com/5272362

Friday, February 1, 2013

FHA 203k Loan Guidelines and Requirements


FHA 203k loan requirements and guidelines for qualifying: What buyers and homeowners should know before applying
The FHA 203k loan requirements and guidelines for renovation has the same qualifying requirements as a standard FHA 203B loan which has the most flexible guidelines with minimal down payment than any other type of loan at this time. The difference between the two is that the FHA 203K will allow for the repairs, rehab or remodeling of your home to be included into the new loan while the FHA 203B won't.
So, what are those qualifying guidelines:
Credit and Credit Scores:
Although lower credit scores are acceptable with FHA loans most lenders will require a minimum credit score of 640. Depending on the lender the minimum credit score can vary and exceptions could be possible.
Bankruptcy and foreclosure:
Chapter 7 is allowed if it has been 24 months after the discharge date, provided that good credit has been re-established.
If the Chapter 7 is less than 24 months (but not less than 12 months) it may be allowed provided the reason for the BK was due to extenuating circumstances. Along with that the buyer or homeowner should be able to exhibit the ability to manage financial affairs currently and that the BK isn't likely to recur.
Chapter 13 is allowed after 12 months of the pay-out period provided the performance has been satisfactory and customer receives court approval to enter into the mortgage transaction.
Foreclosure or Deed-in-Lieu is allowed after three years. Court ordered judgments and tax liens must be paid. For existing homeowners Tax liens may be included in the refinance.
Income and qualifying ratios:
The FHA 203k like all FHA loans are full documentation loans meaning proof of income is required.
Full or part-time income can be counted with two years of continuous history with some exceptions for schooling, training, maternity leave etc.
Self-employed /1099 income must be stable with a two-year history.
Rental income is also acceptable with a two-year history
Miscellaneous income is acceptable, including child support, alimony or maintenance payments and Note income but must show a 12-month history and evidence that the income will continue for the next three years
Qualifying ratios are 31/43% which means up to 31% of your gross income ( for w-2 earners) or (net income after expenses for 1099 & self-employed) can go towards the total house payment and up to 43% of your income can go to both the total house payment and other revolving & installment debts. These ratios are bench marks but can be exceeded with an automated approval or compensating factors.
Flexible Down Payment, Source of funds and Reserves:
3.5% minimum down payment is required and can come from checking, savings or other depository accounts such as 401k's. Down payment and closing costs can also be a gift from relatives, significant others or cash-on-hand with paper trail.
Contributions up to 6% for closing cost can come from interested parties involved in the transaction such as the seller and cash reserves are not required on 1-2 unit properties
Well, I hope this helps in giving you a general idea on what the FHA 203k guidelines and requirements are for qualifying. Keep in mind that each lender can have their own variation when it comes to qualifying so the sooner you get started the sooner you will know what to expect.
If you think an FHA loan is right for you then a FHA 203k loan lender who can do both the FHA 203B and FHA 203K will give you even more options and possibilities.

Article Source: http://EzineArticles.com/5899894