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I sell homes in the San Francisco-Oakland Bay Area and you bet I love this program because my clients have means by which to fix up older Victorian houses and restore them to original beauty with the help of great financing.  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;

Continue reading ‘How To Get FHA 203K Rehabilitation Loans To Buy That Fixer Upper You Keep Driving By!’

FHA Lending Program Kicks Butt for Home Buyers and Investors!

Although the new market for housing in the Bay Area has been hurt in some ways, there is room for optimism as markets shift to add value and offer deals to help Americans buy homes. FHA is a program that offers many great benefits and affordable interest rates and, quite frankly, our news media probably has not gone on record about how this financing program is helping people in great numbers today.  I have been working with clients recently in Antioch showing homes priced from $99,000 to $199,000. These are newer, beautiful 3 bedroom, 2 bathroom houses in great neighborhoods.

I am  excited to tell the Bay Area home buyers about the new FHA (Federal Housing Administration) financing. For today’s consumer it means that in spite of all that is going on in the real estate market this loan is a very straightforward, superb and easy to get loan program. This loan will  help today’s buyer get into a home and keep it. So, no matter what the media says about getting loans being a challenge … I say it just isn’t so!

Let me delve right in and share some of the benefits with you.

First of all … down payment for this loan is easy. FHA requires a 3.5% down payment. This can be a gift from a family member, too. No income limits!

The seller can credit you 6% of the purchase price towards your closing costs.

The initial mortgage insurance premium (MMI or PMI) can be financed in the loan, then you pay towards the next year monthly.

The FICO scores for this loan can be as low as 580 and I have heard several lenders say that they have been able to do loans with a 560 credit score (There were offsetting circumstances, like very little debt).

In the Bay Area (check with the lender for your area) you can go as high as a $625,000 purchase price if you qualify for a monthly payment.

The ratio of income to debt (money coming in to money going out) is flexible based on the lender’s guidelines and your individual income, debt and credit history.

Example:

$200,000 purchase price
$    6,500 down payment
$193,500 loan amount
$198,000 loan amount if you finance MMI (This is an example, as MMI rates vary)
$ 12,000 seller credit towards closing costs

With  this scenario you can buy with VERY LITTLE or NO MONEY  out of your pocket if you are able to obtain a gift for the down payment.

RATES ARE GOING DOWN AGAIN!

I have seen interest rates at 5.75 percent! Interest rates can vary based on lenders, points (money you pay at closing to lower the interest rate) and other factors.

Example of the total monthly payment of principal, interest, taxes, fire insurance and MMI  based on the above scenario with an interest rate of 5.75 % , and a 30-year, fixed rate loan.

Principal and Interest  $1,155.47
Property Tax                   208.33
Fire Insurance                    58.33
MMI Insurance                100.00
Total per month           $1,522.13

INTEREST AND TAX’S ARE TAX DEDUCTIBLE!!!!

If that payment concerns you, let’s go one step further. When we buy a house it now becomes a tax deduction, and one of the largest that you can use most times! If you are in a 28% tax bracket (Which you probably are if you qualify for this loan. However, your own tax accountant will need to give you the exact amount of the deduction. This explanation is for the theory of deductible interest and effective after-taxes house payment, and is not to be misconstrued as tax advice), you can deduct approximately $350 per month or $4,200 per year.

Total payment per month  $1,522.13
Tax deduction:                      350.00
Payment after tax               1,172.13

Continue reading ‘FHA Lending Program Kicks Butt for Home Buyers and Investors!’

 Monday, I showed property to Clients in Newark, CA. I showed a three bedroom, 2 bath house in a great neighborhood for bout $349,000. Can you believe this? I showed homes in this area years ago for roughly $549k to $600k; this was amazing for “Buyers”! 

Taking a tour of West Oakland in the last few weeks leaves one to believe two things: “Prices have definitely changed” and “There are great deals out there for Investors”. The way I see is a little different, being that I live in Oakland and most of these properties would stay “Jacked up” or “Deferred Maintenance” the housing crash will probably result in the fix up and repair of these homes eventually. In West Oakland, you have Duplexes selling for the low $100k ranges, you can actually get into a piece of good investment property for the low end, however it is not for people that cannot stomach any fix up work because there is a lot of work involved.