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!

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!

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.

If a seller receives more than one offer on the property, the seller picks the best one and signs that offer only and sends it to the lender. I hope this clarifies when an offer is “Accepted.”

The term “first-time home buyer”  means an individual and his or her spouse who have not owned a home during the 3- year period prior to purchase of a home with assistance under subchapter II of this chapter, except that– (A) any individual who is a displaced homemaker may not be excluded from consideration as a first-time home buyer under this paragraph on the basis that the individual, while a homemaker, owned a home with his or her spouse or resided in a home owned by the spouse; (B) any individual who is a single parent may not be excluded from consideration as a first-time home buyer under this paragraph on the basis that the individual, while married, owned a home with his or her spouse or resided in a home owned by the spouse; and (C) an individual shall not be excluded from consideration as a first-time home buyer under this paragraph on the basis that the individual owns or owned, as a principal residence during such 3- year period, a dwelling unit whose structure is– (i) not permanently affixed to a permanent foundation in accordance with local or other applicable regulations, or (ii) not in compliance with State, local, or model building codes, or other applicable codes, and cannot be brought into compliance with such codes for less than the cost of constructing a permanent structure. (15) The term “singe parent” means an individual who– (A) is unmarried or legally separated from a spouse; and (B) (i) has 1 or more minor children for whom the individual has custody or joint custody; or (ii) is pregnant.”

Last year at this time, the 30-year FRM averaged 5.85 percent. The 30-year FRM has not been lower in the life of Freddie Mac’s weekly survey, which dates back to 1971 for the 30-year FRM. Rates for 30-year FRMs peaked last year at 6.63 percent on July 24th. With last week’s 30-Yr FRM, the interest rate difference is almost 2 percentage points, which amount to a savings of about $225 in monthly mortgage payments for a $200,000 loan.

Known as a 1031 or a tax-deferred exchange, this strategy can be utilized again and again, allowing taxpayers to continue to defer gains throughout their lifetime and to accumulate more and more quality real estate.

With a 1031 Exchange, taxpayers can also consolidate, diversify, or convert the nature of investment properties in preparation for relocation, retirement, or even setting up heirs to inherit gain-free properties in the future. With a little planning, the 1031 Exchange can be a perfect tool for acquiring an ideal retirement home or setting up an inheritance for one’s children.

0 Points-  5.875%

1 Point -   5.75%

2 Points-  5.625%

3 Points-  5.5%     

The latest Fed action was expected to be quickly followed by cuts in banks prime lending rate, the benchmark rate for millions of consumers and business loans. If the economy does not get its needed boost by this rate cut I believe we will see another one in the near future

Anne Arundel $362,790, Baltimore $362,790, Baltimore City $362,790, Calvert $362,790, Caroline $200,160, Carroll $362,790, Cecil $292,685, Charles $362,790, Dorchester $200,160, Frederick $362,790,

Garrett $332,500, Harford $362,790, Howard $362,790, Kent $248,588, Montgomery $362,790, Prince Georges $362,790, Queen Anne’s $362,790, Sommerset $225,150, St. Mary’s $282,000, Talbot $282,150,

Washington $275,500, Wicomico $225,150, Worcester $332,499