203k program~Rehab Loans

Looking to Buy a ‘Fixer-Upper’? The 203k Program Can Help Make It Happen Today’s real estate market presents a lot of opportunity for interested home buyers—with the growing supply of foreclosure properties and short sales, there are certainly some great deals to be had. The problem in buying a “distressed” property, however, is that these homes are often damaged due to lack of maintenance or prolonged vacancy. So while the price tag might be right, the investment necessary to make the home livable might just push buyers well beyond their budgets. I have access to the latest information on mortgage and financing options. One particular option that is providing hope for many of today’s home buyers is HUD’s FHA 203k program, a loan that enables buyers to not only secure a mortgage, but receive the funds necessary to improve the home as well. Here are five facts about the 203k program to help you determine if it might be the right fit for you:

1. The FHA Section 203k program was originally introduced by HUD in 1978 as a program to rehabilitate and repair single-family homes. The 203k is a single mortgage loan that provides funds to purchase a home and make repairs and improvements. A simpler version, the Streamline 203k, was introduced in 2005. This version offers less documentation and lower loan fees for renovations that don’t exceed $35,000.

2. In today’s market, conventional financing, which often requires 20% – 25% down on a home and a perfect credit score, is often hard to come by. However, with less-than-perfect credit and as little as 3.5% down, you can get an FHA loan, such as the 203k.

3. The 203k approval process is a little more complicated than a conventional loan. For example, you’re required to secure renovation costs from an established, licensed contractor and deliver a package of the proper paperwork to the lender to secure FHA approval. Make sure you work with an agent—like a member of Top 5—who is well-versed in the 203k program, or who can connect you with a lender that is.

4. The 203k loan is not just for foreclosure or distressed properties. More than 80% of the homes in America were built before 1990—that’s over 100 million homes that are 20 years old or older—and almost every one is in need of some amount of repair and updating. The 203k loan, therefore, offers advantages for almost any home purchase.

5. The 203k loan is not just for home purchases but can be used to finance a home improvement, as well! For complete details on the HUD 203k program, you can visit www.fhainfo.com/fha203k.htm. Please feel free to e-mail us, too, since this information can be hard to digest and confusing. Be sure to pass this e-mail on to any friends and family who might also be able to take advantage of a 203k loan.

Looking to buy a foreclosure or short sale?  Don’t do it alone.  Buying in this market can be daunting.  Let us help.

kjpremier@atproperties.com

Department of Treasury Releases new Details on “Making Your Home Affordable”

Among the details released, this plan will allow home owners the ability to either apply for a loan modification due to economic hardships and a resulting decrease in salary or if you have experienced a rate adjustment which is causing your payment to be more than you can afford.  The second point is the ability to reapply for an FHA refinance when you’re home may not have previously had enough value to support a traditional re-fi.  The one point that must be taken into consideration here though, is that you must be current on your monthly payments.  Click here to see the press release in its entirety. 

The dept. is also offering a website where you can check your eligibility to see if you too can qualify for one of the loan assistance/modification programs.  These new programs are aiming to offer assistance to 7-9 million more homeowners, allowing more troubled Americans to stay in their homes, thus helping to deplete some of the surplus of housing inventory in much of the United States.  This will give another shot in the arm to the housing inventory as we go full steam into the Spring market.  To see if you qualify for one of these programs, click here.

For more questions on how to make your home more affordable or with help in finding a new one, contact us today at kjpremier@atproperties.com.

Lending to continue to loosen up

If you’re like me and you pay your mortgage on time every month but still can’t seem to get a break with your lender on your rate, things may begin to get better in the coming months according a report out of Washington today.  Rates are still at a historic low which make it an unbelievable time to either refinance or purchase.  However, some homeowners are finding that with the decline in home values in some areas, banks aren’t so willing to hand out better rates if your equity isn’t what it used to be.  Although they have yet to alter any mortgages because of the new plan, institutions like Citigroup and Bank of America may begin approving these lower rates.  To understand more about the new refinancing plans, check the article below from today’s Chicago Tribune.  Be sure to continue to check back here for future updates regarding the latest in the Mortgage and Real Estate industry or contact us today at kjpremier@@atproperties.com.

Government ignites surge in home mortgage refinancing

As refinancings rise, hardest-hit still await relief

By Mike Dorning | Washington Bureau

April 10, 2009

Courtesy of the Chicago Tribune

WASHINGTON — In an economic round table with homeowners, President Barack Obama said Thursday that the government’s efforts to drive down interest rates have fueled a surge in mortgage refinancing—putting money into many homeowners’ pockets during the current crisis.

But almost all the refinancing so far involves homeowners with conventional mortgages who are not in serious financial trouble. The president’s own programs for helping troubled homeowners are just beginning to get off the ground.

Fannie Mae, the larger of the two government-sponsored entities that process refinancing requests under Obama’s mortgage-relief plan, just began accepting automated applications from mortgage lenders on Monday, a spokeswoman said. As of Thursday, fewer than 1,000 loans had been refinanced under the program, said a Treasury official, though the official noted that the pace is expected to pick up dramatically in the weeks ahead.

Turning his focus to the economy on his first day back from a lengthy foreign trip, Obama used the White House event to laud the surge in mortgage refinancing as “good news” for American families in the midst of the gloom of the recession.

He credited “some extraordinary actions by the Federal Reserve”—which in March began to aggressively buy mortgage-backed securities in order to lower mortgage rates—as well as his own housing relief plan, announced in February.

Mortgage rates are near historic lows, with the average rate on a 30-year mortgage at 4.87 percent this week, according to Freddie Mac.

Though economists mostly have credited the Federal Reserve’s actions for the lower interest rates, Obama economics adviser Austan Goolsbee also pointed to a $200 billion credit line the Obama administration announced in February for Fannie Mae and Freddie Mac, which guarantee mortgage securities. Goolsbee argued that the credit line helped improve confidence in mortgage-backed securities.

Mortgage refinancing applications are up 15 percent since the beginning of the year, according to a weekly survey conducted by the Mortgage Bankers Association. Obama noted that the same survey shows an even bigger jump in refinancing applications—88 percent—since he announced his mortgage relief plan in mid-February.

But Orawin Velz, an economist with the Mortgage Bankers Association, said lenders are insisting on high credit standards for borrowers, good mortgage payment histories and equity left over in their homes.

“Right now it’s become a lot more stringent,” Velz said.

Velz said the Obama administration’s relief programs for struggling homeowners are not likely to have a significant impact for several more months.

Still, with Obama’s mortgage relief program announced less than two months ago, federal officials have moved unusually rapidly to begin approving loans under the plan.

Obama administration officials pointed to signs of strong interest among homeowners. Bank of America  reported that 200,000 people have checked a bank Web site with information on the mortgage relief plan.

Since the Treasury Department released guidelines for eligibility on March 4, more than 1 million borrowers have visited Web sites operated by Fannie Mae and Freddie Mac that allow people to check whether they are eligible for refinancing under the Obama program.

The Obama administration’s $75 billion mortgage relief plan allows homeowners paying high interest rates but with little or no home equity to refinance their mortgages. Because of the drop in home values in recent years, low equity has become a common obstacle to refinancing.

The mortgage relief plan also provides a separate avenue for struggling homeowners at risk of losing their homes. The plan provides incentives for banks to renegotiate mortgages to make them more affordable.

Spokesmen for Bank of America and Citigroup, two of the nation’s largest mortgage servicers, said they have imposed moratoriums on foreclosures against borrowers who they believe will be eligible for the Obama administration’s loan-modification plan but have not yet altered any mortgages under it.

Citigroup has begun putting borrowers in a three-month trial period required by the plan to see whether they can meet a modified payment schedule, a spokesman said.