The National Association of Realtors (NAR) says it has received reports that as many as a third of the buyers eligible for the credit have already been notified by their lender that they won’t make the June 30th deadline. The Senate’s amendment, approved Wednesday by a vote of 60 to 37, would give homebuyers and their lenders until September 30th to complete their transaction.

The FHA 203k Financing Program is a good option for anyone looking to purchase a home that needs updating or repairs that the seller is unable or unwilling to fix due to the property being a short sale, foreclosure or estate sales.

In the past 203k loans were tedious and difficult. I use to avoid them as much as possible but I would still end up assisting about 2- 3 clients a year to navigate through the process. Most lenders during those days did not specialize in 203k financing so many were learning with each transaction.  We never went to settlement on time because a step was always missed and we had to back track. Today I can gladly tell you that is no longer the case. Most lenders who offer FHA 203k financing have a 203k department and loan officers that specialize in the process. I have 2 clients this year who have used FHA 203k financing and both went smooth.

Streamline vs Traditional

Buyers today have the option of doing a streamline or the traditional 203k. A streamline 203k is good for a buyer who is financing $35,000 or less in repairs. The buyer receives half the repair money at settlement. If you go over the $35,000 for repairs you must use the traditional 203k financing. I recommended that my clients who were first-time home buyers to use the traditional 203k instead of the streamline option even though their repair amount was less than $35,000 for several reasons. My first thought was that I wanted my clients to have a good experience and lessen their risk and potential loss of money. The traditional 203k requires that the contractor  the buyer has chosen do the work before he gets paid.  If the contractor puts in a new kitchen for the buyer a FHA Fee Inspector must come to the property look at the work and sign off on the repairs with the buyers permission before the contractor will get paid. This insures that the contractors does the work correctly the first time or make any necessary modification before receiving his/her money. When a buyer does the streamline 203k and receives half the money up front most of the time they will give it to the contractor and if the buyer is not satisfied with the work the contractor has been paid some or most of the money. Most contractors will not start the work without receiving money in advance. I have found several contractors that specialize in traditional 203k financing and are willing to put up their money and get paid when their work is completed. And my clients are having a wonderful experience. In the past most 203k’s did not work because of issues with contractors. Things have changed for the better and I now recommend FHA 203k financing to my clients its a Good Option!

Since 1999, the Bank has funded over $59 million in FHP dollars to help more than 9,700 families  purchase their first home. More information should be available soon about the program requirements and the funding process. Last year several of my clients used this program to purchase their first home. Don’t miss out! Contact me for more details.

1. What percentage of units is owner-occupied? What percentage is tenant-occupied? Generally, the higher the percentage of owner-occupied units, the more marketable the units will be at resale.

2. What covenants, bylaws, and restrictions govern the property? What grandfather clauses are in place? You may find, for instance, that those who buy a property after a certain date can’t rent out their units, but buyers who bought earlier can. Ask for a copy of the bylaws to determine if you can live within them.

3. How much does the association keep in reserve? Plus, find out how that money is being invested.

4. Are association assessments keeping pace with the annual rate of inflation? Smart boards raise assessments a certain percentage each year to build reserves to fund future repairs. To determine if the assessment is reasonable, compare the rate to others in the area.

5. What does and doesn’t the assessment cover? Does the assessment include common-area maintenance, recreational facilities, trash collection, and snow removal?

6. What special assessments have been mandated in the past five years? How much was each owner responsible for? Some special assessments are unavoidable. But repeated, expensive assessments could be a red flag about condition of the building or the board’s fiscal policy.

7. How much turnover occurs in the building?  This will tell you if residents are generally happy with the building. According to research by the National Association of REALTORS, owners of condos in two-to-four unit buildings stay for a median of five years, and owners of condos in a building with five or more units stay for a median of four years.

8. Is the condo building in litigation? This is never a good sign. If the builders or home owners are involved in a lawsuit, reserves can be depleted quickly.

9. Is the developer reputable? Find out what other projects the developer has built and visit one if you can.

10. Are multiple associations involved in the property? In very large developments, umbrella associations, as well as the smaller association into which you’re buying, may require separate assessments. 

1. Find a real estate agent who you connect with. Home buying is not only a big financial commitment, but also an emotional one. It’s critical that the agent you chose is both highly skilled and a good fit with your personality.

2. Remember, there’s no “right” time to buy, just as there’s no perfect time to sell. If you find a home now, don’t try to second-guess interest rates or the housing market by waiting longer- you risk losing out on the home of your dreams. The housing market usually doesn’t change fast enough to make much difference in price, and a good home won’t stay on the market long.

3. Accept that no house is ever perfect. If it’s in the right location, the yard may be a bit smaller than you had hoped, but the kitchen is perfect. Make a list of your top priorities and focus in on things that are most important to you. Let the minor ones go.

4. Remember your home doesn’t exist in a vacuum. Don’t get so caught up in the physical aspects of the house itself-room size, kitchen, etc.- that you forget about important issues as noise level, location to amenities, and other aspects that also have a big impact on your quality of life.

5. Plan ahead. Don’t wait until you’ve found a home and made an offer to get approved for a mortgage, investigate home insurance, and consider a schedule for moving.

6. Factor in maintenance and repair costs in your post-home buying budget. Even if you buy a new home, there will be costs. Don’t leave yourself short and let your home deteriorate.

7. Accept that a little buyer’s remorse is inevitable and will probably pass. Buying a home, especially for the first time, is a big financial commitment. But it also yields big benefits. Don’t lose sight of why you wanted to buy a home and what made you fall in love with the property you purchased.

I wish everyone a Happy Holiday!

2. Be realistic- It’s OK to be picky, but don’t be unrealistic with your expectations. There’s no such thing as a perfect home. Use your list of priorities as a guide to evaluate each property.

3. Get your finances in order- Review your credit report and be sure you have enough money to cover your down payment and closing costs. Then, talk to a lender and get pre- qualified for a mortgage. This will save you the heartache later of falling in love with a house you can’t afford.

4. Don’t ask too many people for opinions- It will drive you crazy. Select one or two people to turn to if you feel you need a second opinion, but be ready to make the final decision on your own.

5. Decide your moving timeline- When is your lease up? Are you allowed to sublet? How tight is the rental market in your area? All of these factors will help you determine when you should move.

6. Think long term- Are you looking for a starter house with plans to move up in a few years, or do you hope to stay in this home for a longer period? This decision may dictate what type of home you’ll buy as well as the type of mortgage terms that will best suit you.

7. Insist on a home inspection- If possible, get a home warranty from the seller to cover defects for one year.

8. Get help from a Buyer’s Agent- Hire a real estate professional to represent you. Not the listing agent who represents the seller.

Many title companies and mortgage companies I have spoken with are swamped trying to meet the deadline. I am hoping that the deadline gets extended but no word  yet. Just a lot of speculation. A few words of advice to any buyer trying to meet the deadline.

1. Talk with your agent and lender once or twice a week for progress reports. You don’t want anything to fall through the cracks.

2. Make a check list of things you must do and get them done quickly.

3. If the lender or the processor contacts you about information they need from you get it to them immediately.

4. If your settlement or closing date is scheduled for Nov. 30th try to move it up a day or two (check with your agent or lender). If you can avoid the last day that would be great!

5. If you are just writing you offer on a property you must accept that you might not make the deadline. Your lender will try but most will not guarantee Nov. 30th.

The month of November will be a little crazy for some just hang in there the end results could be worth it!

The first step in the home buying process for everyone no matter the price range is to get prequalified so you know your numbers. Especially in this market. Lender guidelines are changing sometime daily.

These are the numbers you should always know before you start your home search;

1. What is my qualification amount?

2. What is my estimated interest rate?

3. How much down payment and closing cost do I need?

A lender can provide this for you in the form of a Good Faith Estimate in writing. I will not show houses to clients who do not know their numbers. If you request a Good Faith Estimate from a lender and he or she refuse to give you one I would proceed with caution. I can also assist you in obtaining one. So get a Good Faith Estimate and take some of the stress out of the home buying process.

And always KNOW YOUR NUMBERS!

Community Development Block Grant Program 2009 Income Limits are:

1 person $44,800

2 person $51,200

3 person $ 57,600

4 person $64,000

5 person $69,100

6 person $74,250

7 person $79,350

8 person $84,500

What are the benefits?

$5,000 down payment and closing assistance structured as a 5-year loan forgivable 20 percent per year. Buyer must contribute at least $1,000 towards purchase and must use the property as the principal residence. The home must be inspected by a member of the National Association of Home Inspectors or the American Society of Home Inspectors. The home must be free of any flaking, peeling or chipping paint insider and outside, and the home inspector must document no unstable paint surfaces. Closing on the property must occur within 90 days of the contract date. Loan is forgivable over 5 years.

This program is similar to the Baltimore City ADDI Program that started is October 2008 but ran out of funds by January 2009. The ADDI Program was assisting with $10,000 towards closing costs and down payment. Hopefully this program will last longer. Contact  me for updates and availability of the funds.

Rescoring is a service offered only to mortgage lenders by independent credit reporting agencies, which compile information from the three credit bureaus (Equifax, Experian, and TransUnion). The independents can work with the Big Three, fix errors, and then recalculate your credit score. If your score can go up, even a little, after the errors are fixed, you could save thousands of dollars on your mortgage interest.

The key is that rescoring works only on real errors. If you have a low score because you don’t pay your bills on time, then you can’t rescore. You must demonstrate to your lender that you have a legitimate error on your report and provide proof, such as payment records. If your lender does decide you have a legitimate case, you will have to pay up to $150 to have the rescoring done.

Rescoring is really an emergency maneuver. If you are planning to apply for a mortgage, you should get a copy of your credit report first. Go to www.annualcreditreport.com. You can get one free report each year from each of the credit bureaus. You will have to pay to get your score.