The FHA 203k Streamline Is Popular When Buying Foreclosures

by Foreclosure Financing on August 19, 2009

Many times when buying a Foreclosure, the home is in need of a little bit of work before you can live in it. There are a small handful of loan programs that are available for homes that need a little TLC including the FHA 203k, the FHA 203k Streamline and the Fannie Mae HomePath mortgage programs.

foreclosures-near-light-rail

Which one is the “best” program?

It depends.

Start by asking these 2 simple questions:

  1. Is the home currently owned by Fannie Mae? If yes, then the Fannie Mae HomePath mortgage program is probably the best bet.
  2. Does the home need less than $35,000 of repairs and not owned by Fannie Mae? If yes, then the FHA 203k streamline program is probably the best bet.

The FHA 203k Streamline Program

Since many homes are not owned by Fannie Mae and most need less than $35,000 in repairs, the FHA 203k Streamline program is a popular option. Some of the highlights of the FHA 203k streamline program include:

  • It works like a construction loan – you are able to buy a home that wouldn’t qualify for FHA financing and finance the repairs that will bring it up to FHA loan standards
  • The total amount of the loan is the purchase price plus the amount needed for repairs
  • FHA has limited the Streamline 203K program to a range between $5,000 and $35,000
  • The requirements to qualify are the same as a traditional FHA loan
  • The construction phase can’t begin until the loan closes. The funds to pay the contractor come from escrowed funds at the closing
  • Up Front Mortgage Insurance Premium and Monthly mortgage insurance are paid to FHA just like a regular FHA loan
  • Appraisal required

As with everything – the financing packages available when buying a bank-owned home will need to be weighed carefully. Be sure to ask multiple people and do your research… but in the end, you will find that by asking the 2 questions listed above, you will most likely get to the right answer.

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Buy A REO Home Near Light Rail: Free Money Available!

by Foreclosure Financing on August 18, 2009

If you are considering buying a home near the new Light Rail, you will want to be aware of a program called the Neighborhood Stabilization Program where you could get a grant for 22% of the purchase price of the home — as long as the home is a bank-owned property and you meet the income limits required.

bank-owned-property-near-light-rail

Neighborhood Stabilization Program Overview

  • The home you purchase must be your primary residence and you must agree to live in the property for a period of time (5,10,15 years) based on how much grant money you receive.
  • Prior to writing an offer on the home, you must attend and complete an eight‐hour Homebuyer Education Class provided by one of the ADOH participating homebuyer counseling agencies. (A list will be provided by your lender once you begin the process.)
  • You must have a maximum debt‐to‐income ratio of 31/43.
  • You must have two months PITI reserves.
  • You can use any type of financing with the NSP program – including paying cash. That means you can still get up to 22% of the purchase price even if you pay cash for the house.
  • You must be approved and have your paperwork completed for the program prior to submitting an offer on a house.

The income limits for the program are based on family size – but for a family of 4 in Maricopa county, a family can have a maximum income of $79,100 in order to qualify. The property must be bank-owned (a Foreclosure) and only 1% of the down payment must come from the buyers own pocket — which means that the other 2.5% required by an FHA loan can be a gift from someone other than the seller or “interested party” (read: parents, relatives, etc.).

The Neighborhood Stabilization Program is a great program and will have money available for the next year or so, so be sure to act fast if you want to take advantage of  the NSP program and the $8000 tax credit.

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Phoenix foreclosures heating up

by Light Rail Real Estate info on July 12, 2009

The Phoenix foreclosure market is heating up just like our Summer temperatures. Investors are snatching up properties all over the Valley and first time home buyers are looking to take advantage of tax credits and low interest rates. When searching for homes, many consider location, lifestyle and convenience as a primary determining factor in their home buying decision. That’s true if you are purchasing a home for an investment or for a long term stay. Either way, homes near the light rail line make sense for a lot of people in any market.

Take a look at the following areas to see if any of these available homes fit your needs and feel free to contact us with questions or to set up a specific search that fits your needs.

This particular search is for foreclosure homes near the Thomas and Central light rail station.

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Phoenix foreclosures near light rail

by Light Rail Real Estate info on June 2, 2009

Today, I did another search of foreclosures near (within 1/2 mile) the entire 20 mile light rail line and found a total of 179 properties that are either listed as a “short sale,” “lender owned” or a “pre-foreclosure” sale. In researching the stations, there appears to be a large number of homes available near the light rail stop at Central and Camelback. This station has a pretty large park and ride lot that holds over 400 cars and is not far South of the northern end of the line where high volumes of riders and commuters board the trains. In fact, the park and ride lot at 19th and Montebello holds 794 cars and is one of the busiest stops.

With the large amounts of traffic in these areas, we hope to see economic development continue to improve. I am enclosing a sampling of homes for sale near this area for your review. To see a complete list or to see a search of more specific criteria, please feel free to contact us any time.

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Use The $8000 Tax Credit For Closing Costs

by Foreclosure Financing on June 1, 2009

No matter what kind of home you buy — whether it is a foreclosure or not — whether it is along the light rail route or not — you may be eligible for a tax credit of up to $8000 if you are a first time home buyer.

Not long after the $8000 tax credit was announced, there were people trying to figure out how to “monetize” the tax credit;  or, in other words – how to use some or all of the $8000 tax credit for closing costs rather than waiting for the IRS to issue the credit to you.

As of Friday, it became official mortgage news. HUD announced that people who were eligible for the $8000 tax credit could now “monetize” it and get the money fast from an FHA approved organization.

According to CNN Money:

On Friday, the U.S. Department of Housing and Urban Development (HUD) announced that first-time homebuyers using FHA-approved lenders can now get an advance on the $8,000 tax credit created by the stimulus package and apply it toward their down payments or closing costs.

“We believe this is a real win for everyone,” said HUD secretary Shaun Donovan in a speech before the National Association of Homebuilders (NAHB). “Families will now be able to apply their anticipated tax credit toward their home purchase right away. What we’re doing today will not only help these families to purchase their first home but will present an enormous benefit for communities struggling to deal with an oversupply of housing.”

The $8000 tax credit is expected to help as many as 160,000 people buy a home in 2009 that may not have been able to without the credit – and monetizing the credit will probably increase those numbers slightly. While the 160,000 new home buyers is nationwide – there is no little doubt that a decent amount of those people will buy a home right here in Arizona.

According to Reuters:

The National Association of Home Builders estimates that the $8,000 first-time homebuyer credit will stimulate 160,000 home sales across the United States — 101,000 purchases from first-time buyers and another 59,000 purchases by existing homeowners who sold dwellings to first-time buyers.

Can You Use The Tax Credit For Your Down Payment?

Yes, — but you cannot use the tax credit to cover the first 3.5% of your down payment, you must come up with that on your own or have it gifted to you from a blood relative.

Once you come up with the initial 3.5% down payment that is required by FHA, if you would like to use the 8000 tax credit to add to that down payment, that is allowed.

How Much Does It Cost To Get “Monetize” The Tax Credit?

The costs to monetize the 8000 tax credit are pretty reasonable because HUD has given specific guidance regarding any fees charged. According to the Mortgagee Letter:

Any costs attendant to the purchase of the tax credit are to be nominal and discounting the anticipated credit to cover the costs and expenses of the transaction must be reasonable and disclosed to the homebuyer.  In FHA’s view, fees and costs that total more than 2.5% of the anticipated credit are considered excessive.  (Example:  $6000 to be refunded, with all fees and costs discounted, borrower should receive not less than $5850.00 for sale of tax credit.)

Most people still have at least one question about how the monetization of the 8000 tax credit works, so here are just a few more resources that are available to help you learn more.  Also, be sure to contact a loan officer who works for an FHA approved lender – they will also be a great help.

HUD Official Announcement

Official Mortgagee Letter 2009-15

New Home Buyer 8000 Tax Credit Down Payment: Answers To Questions

8000 Tax Credit Questions and Answers

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