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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Foreclosures near light rail - Good or bad?

by Light Rail Real Estate info on May 31, 2009

In any real estate market, you have buyers and you have sellers. The differences in types and numbers of buyers and sellers can obviously change dramatically, as has been evident over the past several years here in Arizona. To many, the term “foreclosure” can have a negative sound, to others it is the sweet sound of opportunity.

According to this REUTERS article , “One of eight U.S. households with a mortgage ended the first quarter late on loan payments or in the foreclosure process.” Obviously, this will be a big part of the market for quite some time.

When the market was in hyper-overdrive, people would buy anything that they could mortgage and the banks made it easy to do so.  Now, as lending guidelines change, prices adjust, investors and the average Joe try to recover, and a market looks to stabilize, people once again have the luxury of location, location, location.

Many of the real estate investors searching for property have different expectations today than in the “good old days” where homes would often appreciate $10k in a month.

This morning, I looked at a report of homes listed as a “short sale,” “lender owned” or a “pre-foreclosure” sale within 1/2 mile of the light rail line in Arizona. There were 180 homes fitting this criteria begining at just $23,000 which would have been unheard of during the market frenzy. The average time on the market for these homes within 1/2 mile of the light rail line is currently 90 days with an average list price of $120,350.

As investors look at a “sweet spot” in the low $100k range, there appears to be a tremendous number of homes near light rail for their choosing. We will continue to update different types of homes in this area to see if they make sense for your situation.

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