Are we getting busy? Is the Market moving?

So, the predictions have been made and we have seen some drastic meassures by the feds to help the economy. So have things changed?

So far from my personal expirience it seems that people are starting to buy houses. They are also taking advantage of the interest rates being low. Although the overall numbers may not lead to more activity than 2 or more years ago. I think our industry will see a great 2008. Competition has started to become less and less. There are less lenders, real estate companies, and loan officers.

In the past few weeks I have seen a dramatic change. More applications. More purchases. More people inquiring. I think somewhat driven by a bargain of lower home prices.

Lending is still being re-shaped. There are still issues at hand. But, overall I truely beleive this is a great time for a consumer to take advantage!

REO Financing – Distressed Property Rehabilitation

With REO listings growing and getting a higher demand from home buyers I thought I would start a post about the financing avenues.

In the past there was typically a problem in the lending community with education on how to include repairs and rehabilitation in a home purchase. So many loan officers would say they cannot do it or imply it is not available. Some would offer it and say you have to have good to excellent credit.The fact is that all the above is a myth and that the problem is loan officer education on the subject.

Programs available:

1) Construction/Rehab: This program is commonly offered by lenders whom do Home Construction.

Some limitations include:
a: Good Credit with limited or no delinquency.
b: Down Payment requirements of 5% or up to 25%.
c: Imposing a minimum on the Rehab project. Example: Rehabilitation minimum of $50,000.
d: Higher interest rates, limited amortization options, and sometimes only available as an ARM or Balloon.

Some factors that may help buyers:
a: More options for draw schedules.
b: More options regarding verification of income and assets.
c: Some offer self-rehab although limited.

2) FHA 203K: This program is offered by Approved FHA lenders. However, there is a course you have to complete as a Loan Officer to be able to do these loans. So, it is rare to find someone that offers an FHA loan and also is able to offer 203K. HUD has a list of approved FHA lenders and approved 203k consultants on their site.

Some drawbacks include:
a: Full Documentation Only. Most self-employed individuals struggle to be approved due to lack of profit showing on their Schedule C.
b: Limited Draw Schedules although it allows most of the work to be done more quickly.
c: Owner Occupied Only! No investors.

Some factors that may help buyers:
a: No Credit Score Requirement!
b: Limited to No Down Payment!
c: Typically there is no minimum requirement on rehab project.
d: Low interest rates regardless of credit score!

3) FHA 203Ks: This program is like the above but it is a streamline version. There is no additional requirement for a Loan Officer to do them. They only have to work for a company that is FHA approved.

This program is probably one of the best to use on any home. If your buyer has good credit or bad credit the rate is low.

The limitations:

- Up to $35,000
- Cannot do anything requiring blueprints

Say you hate the kitchen cause it is puke green. Done!

The house has no appliances. Done!

You are disabled and need wheelchair access. Done!

You want to gut it to the studs and hang new drywall, flooring, kitchen, bath, appliances, siding, windows, lighting, a new roof, down spouts, FURNACE, plumbing, HVAC, electrical, add a deck, add a porch, add a patio, basement finishing/remodeling/waterproofing, septic and a well. Done!

Perfect. Even those borrowers with limited credit, no credit, flawed credit can qualify.

 Fannie Mae also has a nice product available called Homestyle. It typically requires a 5% down payment but there are ways to get around that. FHA is far superior though.

Grant Money For Down Payment and Home Rehabilitation

Federal grant money is available to homeowners needing money for repairs and home buyers needing help with down payment. Home buyers can also repair a property with grant money.

How? Call your county! Contact their Planning and Development division. Some have various names for this but anyone working for the county who deals with real estate should know who you need to talk too.

 The county you should contact is the one in which the house is located.

FICO 08

So, are you ready to see what happens when the new method is released on calculating credit scores? They anticipate a release around March but there is much debate going on about how exactly this will unveil. It is supposed to be better at identifying low and high risk consumers for the financial services industry.

 Sounds like the best will get better and the worst will become even lower.

Buyer’s Market and Low Interest Rates!?

Yes! The market is saturated with homes for sale plus the interest rates are very low. When supply exceeds demand sellers try to cut prices to sell fast.

 The interest rates are so low that if you refinanced in the last 4 years you may see an interest break and save some money!