FHA 203k Loans

What is the FHA 203k Loan?

When buying a home most buyers have a list of things they want to do to the house once they have the money.  For example remodeling the kitchen and bathrooms, finishing the basement, repairing the roof.   Because most buyers do not have the money to do these repairs, FHA launched the 203k program which allows a buyer to roll in the cost of repair(s) into the loan. 

Maximum Money

With the FHA 203k program, you have the access up to the total loan amount you qualify for or $406,000 (FHA Loan limit for Denver County) for repairs/rehab work on the primary residence you purchase.  Yes, this even allows for you to buy a house, scrap it and rebuild a fully customized home.

Eligible Properties

· 1-4 unit properties

· Must be a primary residence, no investment properties.

· Can turn a 1 unit into a 4 unit property

·       You do not have to be a first time home buyer, you can obtain FHA 203k financing multiple times.

Qualification

· 620 Minimum Fico Score

· Bankruptcy must be discharged 2 years ago

· Foreclosure must be 3 years ago

 Down Payment

· Minimum Down payment of 3.5% Can be used in conjunction with CHFA, allowing down payment to be less than 1%

· 30-45 days from contract date, depending on complexity of project

· Project must be completed within 6-12 months after the closing date

· As a division of Universal Lending, we are a full service banker with in house underwriting and funding.

· Very few mortgage companies have been approved to offer the FHA 203k Loan and even fewer of these companies will underwrite these loans onsite.  If you are using a lender that does not have onsite underwriting it could take up to 12 weeks to close this type of a loan. 

· Please call/email Jocelyn Predovich, Senior Mortgage Consultant of Limetree Lending Group (Division of Universal Lending) for questions on the 203k loan.  Phone: 303-325-3578  jocelyn@limetreelending.com

 

 Repair Ideas

 

· Upgrade Kitchen Upgrade Bathroom(s)

 

· Painting Interior/Exterior Finish Basement Replace Carpet·

 

· Replace Windows Replace HVAC

 

· Replace Roof Replace Plumbing  Replace Electrical 

· Repair Structural Issues  Septic System/Well Replacement

 

 

Credit 101 When Buying a Home

Credit 101 When Looking To Purchase A Home

Purchasing a home is an in depth process that begins well before you are out looking for homes. It is vital that you know your credit situation and make efforts to maintain your credit especially during the home buying process. When you are actively looking to buy a home it is imperative that you do not do the following without consulting your realtor or lender:

-Purchase a car

 -Make any large purchases (furniture)

-Pay off and close credit cards with long histories

Essentially do not make any moves that would drop your credit score while you are looking to buy a home. It can make the difference of a lower or higher interest rate and sometimes ruin your chances of obtaining loan approval or financing.

Know Your Credit Situation We often avoid pulling our credit score or fail to monitor it. Now more than ever with the lending industry creating stricter guidelines for home loans, credit scores are vital to the success of obtaining a loan. According to Jocelyn Predovich, a senior mortgage specialist, I work closely with, the days of getting a 100% financing without documenting income, having a 580 credit score and $20 in the bank are over. “With a solid credit history of “on time” payments, a 620+credit score, documented steady income and minimum debt- 100% financing is still possible,” says Predovich. For those self employed borrowers who cannot verify income through tax returns, you must have a down payment of at least 10% and a credit score of at least 660. We have identified a few tips to improve your credit scores. Make sure you pull your credit score semi-annually by a reputable bureau such as TransUnion, Experian or Equifax. If there are errors or items that you are not sure about on the report contact the creditor.

Know Your Balances Be conscious of the available maximum balance on your cards. If possible never use more than 75% of the available balance. “Once you have a balance over 75% of the overall limit the credit bureaus view this as being maxed out, demonstrating you are a risky spender, dropping your credit score,” said Predovich. She added, “Never use more than your available balance.” Whether you are carrying a balance on a card or have it paid off fully, do not cancel the card. If you are going to cancel a card only cancel cards with less than 1 year of history.

Establishing Credit If you need to establish good credit or have not established any credit via financing a car, obtaining a loan or having a credit card there are still a few loan programs available for people with little or no credit. “One of the ways to establish credit would be to become an authorized user on a family member’s credit account. “Make sure the person you are “teaming up” with has a good credit history,” stated Predovich. Some credit card companies will allow you to establish credit by starting you off with a self funded savings account. Eliminate All Late Payments Paying a bill or payment late will adversely affect your credit even if it is your first time being late. You can contact the creditor that reports the late payments and request a good faith adjustment that removes the late payments reported on your account. Predovich also encourages you to pay off any past due amounts or collections but only if they are under 2 years old.

To view your credit report you can visit AnnualCreditReport.com, the only federally-sanctioned and cost-free service. For more information on credit or for any questions please contact me at 720-210-7377 or Jocelyn Predovich at 303-325-3578.

Down Payment Assistance for First Time Homebuyers

Finally some relief for those first time home buyers who have no money available for the minimum down payment requirements!

Colorado Housing and Finance Authority (CHFA) launched new home loans and financial partnerships to help clients in the current economic climate.  More specifically, for first time home buyers without money for a down payment, CHFA is now providing a down payment option.   CFHA will provide up to 3% of the loan amount towards the down payment or closing costs.  Currently the minimum down payment is 3.5% on a FHA loan, so at a minimum clients will be required to provide $1000-2000 towards their purchase.  

Additionally, Douglas County Housing Partnership has launched a Shared Equity Program, providing up to 20% towards down payment monies!  To be eligible for this program you must either be working and have worked in Douglas County for 1 day or have lived in Douglas County for 1 year and be purchasing a home in Douglas County.

Both programs have specific guidelines surrounding the maximum household income per family.  Please call  or email Jocelyn Predovich, Licensed Mortgage Consultant at Limetree Lending Group for more details.  Phone:  303-325-3578  or jocelyn@limetreelending.com

What the Stimulus Means for Colorado Real Estate

by Courtney Nelson

Stimulus Package and Real Estate:There are new exciting opportunities for buyers because of the recent Economic Stimulus Bill. These opportunities combined with great home prices and low interest rates makes it a perfect time for many homebuyers. First Time Home Buyer Tax Credit: Any homebuyer who has not owned a home or not owned a home in the last three years qualifies for a tax credit up to $8,000. This applies to any home that is purchased between Jan. 1, 2009 and Dec. 31, 2009. The credit you can receive is based on your tax liability so if you owe taxes each year you will owe less. If you receive money back at tax time this would be part of your refund. Please check with me and your accountant for more information.

FHA Loan Limits Increased: FHA loan limits have just been increased to $406,000 for the Denver Metro Area and $460,000 for Boulder. Previously the limit was $368,000. FHA loans are available to all buyers not just first time home buyers. Here are a few of the reasons FHA loans are an excellent option for any buyer: • FHA allows buyers to provide a 3.5% down payment to purchase a home • FHA charges less mortgage insurance than conventional loans. If you put less than 20% down you will owe mortgage insurance. • FHA interest rates are a ¼% lower, on average, than conventional products • No prepayment penalties on FHA loans and the loans are assumable • Easy streamline refinances are available • FHA requires a lower credit score with a minimum of 580 to qualify • You can have a co-signer on your loan in order to qualify and can also receive gift money from a relative for a down payment Information provided by Jocelyn Predovich with Limetree Lending 303-325-3578 Market Update Our local Denver Area real estate market continues to get great press for being one of the least effected real estate climates in the United States. According to Standard & Poor’s Case-Shiller Home Price Indices, “All 20 metro areas are reporting negative monthly and annual rates of change in home prices. Boston, Denver, Los Angeles, San Diego and Washington are reporting a relative improvement in year-over-year returns, in terms of lesser rates of decline than last month’s values.” Denver’s annual decline was only 4% where most cities saw an average of 19% decreases. This is great news! In January the number of homes under contract in the Denver Area was up 50% from last January and homes are spending less time on the market. We had 11 months inventory of active homes for sale in January 2008 and now have half of that at 6 months supply of inventory. We continue to move towards a more balanced market.

Trends ~ Buyers still are drawn to the short sale and lender owned properties. Here is a breakdown of what these two types of sales are. Short Sales: These properties are homes that a seller has either defaulted on or owes more than the home is worth. They usually are still occupying the property but may have a looming foreclosure date set. Realtor’s can help sell these homes as a short sale while working with the bank to negotiate an offer that is less than the loan amount. Lender Owned: A bank has become the owner of this home because a homeowner lost their home to foreclosure. These homes are popular because the bank is the only party on the other side. Because of their popularity buyers often find themselves in a bidding war. Both short sales and lender owned properties are great opportunities for buyers. Feel free to contact me for more details on the buying process.

Visit www.coloradosells.com for more info or to search all Denver Area Properties

Lock Your Loan: Rates Hit Record Lows

By Joceyln Predovich 11/25/08

Last week, you may remember me emailing you that rates will plummet.

 

The Fed announced this morning that they have decided to begin buying mortgage bonds, which has dramatically improved rates.  Just to give you an idea on rates today:

 

RATES RIGHT NOW WITH NO ORIGINATIN FEE

FHA – 5.5 %

VA – 5.375%

CONVENTIONAL 30 YR – 5.125%

CONVENTONAL 15 YR – 4.625%  (YES THAT IS a 4!)

Jumbo 5/1 ARM: 5%

 

DO YOU HAVE CLIENTS ON THE FENCE?!

·       Email this out to your database, past clients, sphere, current clients. Don’t miss this opportunity   

·       We can Lock without a property – may want to put them on a 60 day lock and then go find the house.

·       We can relock – if rates continue to drop

 

About Us

·       We are a mortgage bank and will fund the loan with our money

·       We have in-house underwriters and processors here in Denver

·       LOAN PROGRAMS: Conventional, FHA, FHA Rehab Loans,  VA, CHFA, HOAP, etc

 

Call me with questions!

Jocelyn Predovich– 303-325-3578

Licensed Mortgage Consultant

Jocelyn@limetreelending.com

New FHA and Mortgage News

 

 

 

Mortgage Update: August 2008   Effective August 1, 2008, Fannie Mae has implemented some major changes with regard to seasoning of bankruptcies, seasoning of short sales, seasoning of Foreclosures, & conversions of primary residences into rental properties.  This update will give you all the pertinent information you need to conduct your business in the best manner possible.  These are not all of the guidelines but it will give you the important details of the changes.   Bankruptcy Seasoning ·        All bankruptcy filings, except for chapter 13, must be seasoned for 4 years from the date of discharge or dismissal.  The major change to this was the dismissal addition. ·        Chapter 13 Bankruptcies must be seasoned 2 years from the date of discharge or 4 years from the date of dismissal. ·        In cases of multiple filings in the past 7 years, the borrower must wait a minimum of 5 years from the date of the most recent dismissal or discharge regardless of the bankruptcy action. ·        In cases of extenuating circumstances, borrowers must wait 2 years from the date of discharge or dismissal regardless of the bankruptcy action.   Foreclosures Borrowers that have had previous foreclosures are now under greater scrutiny when applying for financing under these new guidelines.  Below are some of the major bullet points: ·        Minimum time frame a borrower must wait before they are eligible for financing is increased to 5 years from the date the foreclosure was completed. ·        Between the 5 and 7 year time frame a borrower may only purchase a primary residence.  Investment properties and second homes are not permitted. ·        Each borrower applying for the loan must contain a minimum FICO score of 680. ·        Minimum down payment of 10% is required.   Pre-Foreclosure or Short Sales   Fannie Mae views any sale of a property to a third party for less than is owed on the delinquent mortgage to be a pre-foreclosure sale.  (We call them short sales)  The new guideline states that the borrower must wait for a minimum period of 2 years from the date of the sale, before being eligible to buy a new primary residence.  Currently, there is no exceptions to this due to extenuating circumstances.   When speaking to clients this is one of the reasons why short sales are more preferred than a foreclosure – they can buy a primary residences in 2 years instead of 5!   Conversion of Primary Residences to rental property VERY IMPORTANT THIS HAPPENS A LOT Changes to guidelines with regards to converting a primary residence into an investment property are extremely important.  Fannie Mae felt that the previous guidelines that stated a borrower simply had to supply a 12 month lease agreement and lenders could offset the monthly mortgage payment by the amount stated in the lease is no longer valid.  The new guidelines state that if a borrower wants to purchase another home and turn their current primary residence into a rental, the following will apply: ·        The borrower must provide proof they have at least 30% equity in the current primary residence.  This can be determined by an appraisal, AVM, or BPO. ·        The borrower must provide an executed 12 month lease agreement on the current residence to offset the mortgage payment.  Also, the borrower must provide receipt of the security deposit and show the security deposit has been deposited in the borrowers account. ·        75% of the monthly lease amount will be used to offset any mortgage payment.  25% is used to account for any vacancy that may occur. If 30% percent equity cannot be determined, the following will apply: ·        Rental income on the current property may not be used to offset the mortgage payment.  Borrowers must qualify for both mortgage payments. ·        Borrowers must have at least 6 months PITI reserves for both mortgage payments; sourced and seasoned.   Please understand these guidelines only apply to conventional financing and does not include FHA or VA.  If you’re wondering what you can count on in today’s market, the answer is constant change.  Feel free to give me a call at 303-325-3578 to go over any scenarios or questions.   Thank you,   Jocelyn Predovich Senior Mortgage Consultant 303-325-3578   The information contained is this newsletter is for educational purposes only and should not be construed as investment and/or mortgage advice.  Although the material is deemed to be accurate and reliable, there is no guarantee it is not without errors. If you wish to no longer receive this newsletter, please reply to this email with “REMOVE” in the subject line.

 

 

 

 

  

   

 

Credit 101- Managing and Improving Your Credit Score

By Courtney Nelson

Broker Associate Keller Williams Executives

Know Your Credit SituationWe often avoid pulling our credit score or fail to monitor it. Now more than ever with the lending industry creating stricter guidelines for home loans, credit scores are vital to the success of obtaining a loan. According to Jocelyn Predovich, a senior mortgage specialist, I work closely with, the days of getting a 100% financing without documenting income, having a 580 credit score and $20 in the bank are over. “With a solid credit history of “on time” payments, a 620+credit score, documented steady income and minimum debt- 100% financing is still possible,” says Predovich. For those self employed borrowers who cannot verify income through tax returns, you must have a down payment of at least 10% and a credit score of at least 660. We have identified a few tips to improve your credit scores. Make sure you pull your credit score semi-annually by a reputable bureau such as TransUnion, Experian or Equifax. If there are errors or items that you are not sure about on the report contact the creditor.

Know Your BalancesBe conscious of the available maximum balance on your cards. If possible never use more than 75% of the available balance. “Once you have a balance over 75% of the overall limit the credit bureaus view this as being maxed out, demonstrating you are a risky spender, dropping your credit score,” said Predovich. She added, “Never use more than your available balance.” Whether you are carrying a balance on a card or have it paid off fully, do not cancel the card. If you are going to cancel a card only cancel cards with less than 1 year of history.  

Establishing CreditIf you need to establish good credit or have not established any credit via financing a car, obtaining a loan or having a credit card there are still a few loan programs available for people with little or no credit. “One of the ways to establish credit would be to become an authorized user on a family member’s credit account. “Make sure the person you are “teaming up” with has a good credit history,” stated Predovich. Some credit card companies will allow you to establish credit by starting you off with a self funded savings account.

Eliminate All Late PaymentsPaying a bill or payment late will adversely affect your credit even if it is your first time being late. You can contact the creditor that reports the late payments and request a good faith adjustment that removes the late payments reported on your account. Predovich also encourages you to pay off any past due amounts or collections but only if they are under 2 years old.  To view your credit report you can visit AnnualCreditReport.com, the only federally-sanctioned and cost-free service.For more information on credit or for any questions please contact me at 720-210-7377 orJocelyn Predovich at 303-325-3578.    

Capitalizing On the Rental Market

By Courtney Nelson

Broker Associate Keller Williams Executives Realty                                                                

Rental Investment OpportunitiesLocally and nationally people are jumping on the chance to become real-estate investors, specifically, in the rental sector. According to the Wall Street Journal, “It can be lucrative. For the first time in several years, rents are rising in many places, in  part because the sub prime– lending crisis is making it harder for people with marginal credit records to secure mortgages, increasing rental demand.” Locally, vacancy rates are at a six year low at 7.1% while rents are going up gradually with an average of $842.69 a month. With limited new construction this year– primarily “niche” projects like those along light rails or part of “lifestyle: shopping centers,” vacancy rates will continue to drop, according to the Rocky Mt. News. More and more people who have never entered the real estate investor realm or looked at being a landlord are taking advantage of our buyers market in many areas and a surplus of homes.

How to Earn Money Off CampusThe Wall Street Journal featured an article on the great need for off campus housing around universities. College-town real estate is booming in many areas largely in part to the lack of available housing for students and growing college enrollments. According to the NY Times the success of this market is not tied to the general economic performance. It is tied solely to growth and enrollment in schools. “College enrollments are expected to increase by a minimum of 13% between 2004 and 2015,” according to the National Center for Educational Stats. Meanwhile, tighter budgets at many State Schools are likely to limit new construction of new on-campus housing. For instance, CU Boulder provides only 24% of University owned beds for student’s. That is on the high end for a university. So only a ¼ of the student body has access to on campus housing. The NY Times emphasized that “A well located property in a college town is going to be 100% full- you usually don’t see that in traditional rental properties.” They also note that college-town investors can bank on some home-price appreciation for their properties. The opportunity that the university markets present is mainly from buying homes to hold as rental properties. For the most part, except where property values are very high (mainly on the Coasts) college landlords will not experience negative cash flow.

Becoming a LandlordThe idea of becoming a landlord can be daunting but with the right tools and information it can be a positive experience. First you need to make sure you research and purchase a rentable property. Know the going rental rates, know what your mortgage and costs will be to break even. Just like anything in real estate location, location, location is the key! A house will attract only so much rent. If you overpay, you can raise the rent only so much before your property starts sitting vacant.  Make sure you talk to your accountant, there are tons of tax breaks, deductions and write-offs with rental income. For more information on becoming a landlord, visit my Blog for numerous articles on this subject, or call me with questions at 720-210-7377.             

Visit  http://courtneysrealty.wordpress.com/