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    How to Apply for Mortgage | Orlando Realtor Vince Paige

    Mortgage preparation:

    Credit Health: You’ve pulled your credit and are either working on increasing your scores or have stellar credit and are ready to move forward.

    Down Payment: You have reviewed all of your assets and you know how much you can viably put down.

    How much you can afford: You have run your preliminary numbers and have a basic idea as to what you can afford. Remember, you can adjust the property taxes and insurance (if you are condo don’t forget to add monthly assessments to your monthly mortgage payment).

    Rate Shopping: You learned how to responsibly shop for a mortgage lender, loan officer, fees and competitive rates. Additionally, you now understand the basics of how mortgage rates are derived.

    Documentation: While the list of paperwork may appear insurmountable, take one piece at a time (believe it or not you do have all of the documents). This is where your organizational prowess will come in handy.

    You’ve done a lot of work and will now move into the second half of the process. With all of your documentation and information in one place it’s time to contact your chosen loan officer and complete the application. The completion of your application should take about fifteen- minutes and once complete you can expect your loan officer will:

    Pull your credit.
    Discuss with you program options (i.e. Fixed or ARM)
    Check on the day’s rates for the program you are most interested.
    Request paperwork (which you have gathered and are ready to send).
    Run your application through an automated underwriting system. This is an automated engine which runs your loan scenario and provides an instant approval. While your loan still needs to be cleared by an underwriter, the automated approvals are very reliable.
    Issue a pre-approval letter.

    Any questions you have should be asked and don’t be shy – this is your money and your commitment.

    Upon receipt of your documents, your loan officer will review your paperwork and prepare your loan application package (also known as mortgage disclosures). The disclosure package can be securely emailed or sent via UPS, it’s your preference.

    The loan disclosures total approximately 30 pages; this also depends on the State in which you are purchasing as some States have additional disclosures. Ideally you want to return the signed disclosures within three days. You will have various questions; it’s best to run through the entire package then contact your loan officer with your list of questions.

    Upon receipt of your signed disclosures (mortgage application package) your loan will be on its way to be processed. At this stage the appraisal is ordered, rate locked and other administrative documents are ordered to prepare for submission to an underwriter.

    Now, take a deep breath and let your mortgage team work for you.

    By: Selene Garcia for Guarrenteed Rate.com

    To check out my profile, references and the references of the other agents, just click on my picture to go to my profiles and read what our clients say about us. Pick the broker that you think is right for you. Of course I hope it’s me, but if not then best wishes!

    Search on MLS here:http://luxurylivingorlando.idxbroker.com/idx/search/advanced

    Highest and best regards.

    Vincent Paige |REALTOR® | RE/MAX Showcase
    Certified Broker Price Opinion Registered Agent (BPOR)
    Florida Military Specialist (FMS)
    8934 Conroy Windermere Road | Orlando, FL 32835
    Direct: 407.256.8190 | Fax: 407.264.8073
    E-mail: vince@thepremiumproperties.com
    Search for homes here: http://luxurylivingorlando.com

    Foreign Buyers Issues when Purchasing US properties | Vince Paige Orlando Realtor

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    Foreign Nationals are allowed to own real estate in the US. In fact, there are very few differences between a foreign and US buyer when purchasing real estate.

    It is important that the Foreign Buyer understands the Buying Process and knows some basic information about general US real estate practices that may vary greatly from a buyer’s home country.

    US Real Estate Practices

    Transparency – In the US, real estate is very transparent. A new listing for sale is required to be posted to the listing service within 24 hours so that active listings are available to all agents. This is unlike in many other countries, where buyers have to go from agent to agent to find a property. We have access to all the listings in New York and Florida and can assist you in the sale of any one of them.

    Commissions – The sales commission is always paid by the seller (and then divided equally between both the buyer’s and seller’s brokers), so buyers don’t pay anything to have a buyer’s agent working on their behalf. It is always advisable for a buyer to work with an Buyer’s Agent who will protect the buyer’s interests in the transaction.

    Issues for Foreign Buyers:

    Financing is Readily Available for Foreign Buyers

    During the financial crisis, Foreign National financing dried up. However, over the last couple of years, banks have loosened their restrictions on Foreign National financing.

    Most qualified Foreign Buyers can obtain financing for properties with a 40% down payment. Here are the terms of HSBC’s Foreign Buyer program as of Q2 2011:

    • $100,000 on deposit with the bank (if you withdraw the money after the closing the interest rate increases by 0.375%).
    • 30% down payment (40% in Miami).
    • $1,500,000 loan limit, which translates to a property value of $2.142 million.
    • 12 months’ reserves (mortgage payment, maintenance and taxes) are required to be on deposit (in addition to the $100,000 above).
    • HSBC offers 30-year and 15-year fixed rate mortgages.

    Depending upon how long you think the holding period will be, you might want to go with an adjustable-rate mortgage that matches the holding period and has slightly lower rates.

    While banks are offering loans to Foreign Buyers, they require a long-term relationship with the customer beyond just the mortgage. That is why they require as one of their terms that the buyer hold the $100,000 deposit with the bank.

    While this is just one example of a Foreign National mortgage program, we have access to an array of mortgage brokers that suits the needs of a Foreign Buyer. Some of our mortgage broker contacts work with small banks that have very competitive terms and more flexibility than the big banks. Let us know if you want further information on this subject.

    Foreign Buyers do not have to be in the US to Close the Deal

    At the closing of the transaction, when the property is transferred to the new owner, the new owner does not need to be in the US. Rather, the new owner can provide his or her representative with “Power of Attorney” and the representative will have the right to close the deal on behalf of the new owner. This is quite common and convenient for the buyer who does not want to come back to the US for the closing.

    Foreign Buyers Should Consult with Their Home Country Tax Specialists

    A Foreign Buyer’s overall tax liability may be different than that of a US resident depending upon the buyer’s home country’s tax treaty with the US, if any. Therefore, it is best to consult a local tax advisor that is familiar with the tax treaty. For instance, the capital gains rate for US residents is 20% (if the property was owned for more than one year). Foreign Nationals, however, could be required to pay a higher rate, depending upon their home country’s tax treaty with the US and how they structure their purchase. A local tax lawyer who is familiar with your home country’s treaty would be the best resource for answers to these questions.

    Foreigners can Defer Capital Gains Taxes by Buying Another Investment Property

    The US government allows Foreign Sellers to use Section 1031 of the IRS Code to defer capital gains taxes. The rules are quite complex and one must not stray from the rules, otherwise the transaction won’t qualify for deferral..

    Foreign Buyer Must “Elect” to Pay US Income Taxes on Net Rental Income

    The US government requires that the Foreign National “elect“ to pay US income taxes on any net income (rental revenues less expenses) derived from rental property. If this election is not made in a timely fashion (e.g., US income tax returns not filed), a tax of 30% of the gross rental income will be assessed. Under this scenario, the investor would not be able to deduct any expenses such as depreciation, interest, property taxes, common charges, etc. Even if the Foreign Investor is incurring tax losses in the beginning years of their investment, and, therefore, doesn’t owe any taxes to the government, they still must file their tax returns in a timely manner in order to make the election.

    No Income Tax For the First 10 to 15 Years When Financing Real Estate Purchases

    Foreign buyers who finance their purchases with a 40% to 50% down payment will likely not pay income taxes on the net rental income for the first 10 to 15 years, since the US government is very generous when it comes to those expenses that are allowed to be deducted from rental income. Since mortgage interest, common charges, property taxes, depreciation of the asset over 27.5 years, insurance, and amortization of closing costs are all deductions against income, in the early years the property will generate negative taxable income. In future years, when the apartment is generating taxable income, such income can be offset by the prior year’s negative taxable income (a.k.a. tax loss carry forward). This results in no income taxes for many years.

    Foreign Investment in Real Estate Property Tax Act (FIRPTA)

    When a non-resident sells US property, the Internal Revenue Service wants to be sure they get paid capital gains taxes. Accordingly, the IRS withholds 10% of the gross purchase price of the property. When a US tax return is submitted reporting the capital gains tax, if there is any refund due, that money will be refunded to the filer.

    Foreign Buyers Must Plan for the US Estate Tax

    When a Foreign Buyer dies, his or her estate will be taxed by the US government at close to 46%. This is easily avoided if the Foreign Buyer does some upfront planning. The planning involves setting up a Limited Liability Corporation (LLC) and a Foreign Corporation. The LLC would own the property, the Foreign Corporation would own the LLC, and the buyer would hold shares of stock in the Foreign Corporation. Under this scenario, since the property is “owned” by the Foreign Corporation, the US government would receive nothing upon the death of the Foreign Buyer. This is a great tax savings for Foreign Buyers and is not very expensive to implement. This structure also allows for the easy transfer of the property from one party to another by the selling of shares of the corporation rather than the sale of the property, which might trigger a taxable event.

    It is advisable for any owner of investment real estate (foreign or US) to create at least an LLC to hold the property, since using this structure limits the owner’s liability to the value of the LLC, which would strategically own only that particular property and, therefore, the owner’s liability would be limited to the net value of the property. Taking this one step further, using a Foreign Corporation to own the LLC would provide protection to the Foreign Buyer against the estate tax.

    If a Foreign Buyer does not want to maintain the LLC and the Foreign Corporation (perhaps because the investment is small), an alternative approach would be to obtain life insurance in the amount of equity in the property. For example, a 40-year-old man in good health would pay $350 per year for 20-year term life insurance paying a death benefit of $500,000. While the Foreign Buyer would not avoid the estate tax, his or her heirs would receive the same amount in the case of death.

    Our team of real estate agents, attorneys and CPAs have in-depth knowledge about each of the issues facing Foreign Buyers. We are here to educate our Foreign Buyers on all of the consequences of a real estate purchase.

    To check out my profile, references and the references of the other agents, just click on my picture to go to my profiles and read what our clients say about us. Pick the broker that you think is right for you. Of course I hope it’s me, but if not then best wishes!

    Search on MLS here:http://luxurylivingorlando.idxbroker.com/idx/search/advanced

    Highest and best regards.

    Vincent Paige |REALTOR® | RE/MAX Showcase
    Certified Broker Price Opinion Registered Agent (BPOR)
    Florida Military Specialist (FMS)
    8934 Conroy Windermere Road | Orlando, FL 32835
    Direct: 407.256.8190 | Fax: 407.264.8073
    E-mail: vince@thepremiumproperties.com
    Search for homes here: http://luxurylivingorlando.com

    Orlando Housing Market Report – July 2013

    To check out my profile, references and the references of the other agents, just click on my picture to go to my profiles and read what our clients say about us. Pick the broker that you think is right for you. Of course I hope it’s me, but if not then best wishes!

    Search on MLS here:http://luxurylivingorlando.idxbroker.com/idx/search/advanced

    Highest and best regards.

    Vincent Paige |REALTOR® | RE/MAX Showcase
    Certified Broker Price Opinion Registered Agent (BPOR)
    Florida Military Specialist (FMS)
    8934 Conroy Windermere Road | Orlando, FL 32835
    Direct: 407.256.8190 | Fax: 407.264.8073
    E-mail: vince@thepremiumproperties.com
    Search for homes here: http://luxurylivingorlando.com

    VA Home Loan Information | Vince Paige | Orlando Realtor

    Why get a VA loan over other types?

    Simply put, a VA Home Loan allows qualified buyers the opportunity to purchase a home with no down payment. There are also no monthly mortgage insurance premiums to pay, limitations on buyer’s closing costs, and an appraisal that informs the buyer of the property value.  For most loans on new houses, construction is inspected at appropriate stages and a 1-year warranty is required from the builder. VA also performs personal loan servicing and offers financial counseling to help veterans  having temporary financial difficulties.

    What if I’ve used a VA Home Loan Before?

    You can have previously-used entitlement “restored” one time only in order to purchase another home with a VA loan if the borrower has paid off the prior loan but still owns the property, and wants to use his entitlement to purchase a second home. This often occurs with active duty borrowers who PCS to a new station but want to keep their existing home for retirement. However if the prior loan has been paid off, AND the property is no longer owned, they can have their entitlement restored as many times as they want.  They can re-use their VA eligibility for every home purchase from the first to the last.

    Also, veterans who have used a VA loan before may still have remaining entitlement (see chart) to use for another VA loan. A veteran’s maximum entitlement is $89,912, and lenders will generally loan up to four times your available entitlement without a down payment, provided your income and credit qualifications are fine, and the property appraises for the asking price. Lenders may require that a combination of the guaranty entitlement and any cash down payment must equal at least 25 percent of the reasonable value or sales price of the property, whichever is less.

    Loan Amount Guaranty % Dollar Amount *Lender Amount
    Up to $45,000 50% $22,500 $90,000
    $45,001 – $56,250 40-50% $22,500 $90,000
    $56,251 – $144,000 40% $36,000 $144,000
    Over $144,000 25% $89,912 $417,000
    Manufactured Home or Lot 40% $20,000 $80,000
    *Lenders operate under their own regulations and guidelines in these matters

    For Alaska, Hawaii, Guam, and U.S. Virgin Islands? residents, note that maximum original loan amounts have now been increased 50 percent higher for first mortgages.

    Remaining entitlement and restoration of entitlement is not automatic. It can be requested through the nearest VA office by completing VA Form 26-1880. The entitlement may also be restored one time only if the veteran has repaid the prior VA loan in full but has not disposed of the property purchased with the prior VA loan.

    What service is not eligible for a VA Home Loan?

    You are not eligible for VA financing solely based upon service in World War I, Active Duty Training in the Reserves, or Active Duty Training in the National Guard. Note: Guard and Reservists are eligible if they were “activated” under the authority of title 10 U.S. Code as was the case for the Iraq/Afghanistan.

    Do all local lenders offer VA Loans?

    Not necessarily. Choose a VA-approved lending institution that can handle your home loan. A lender can help you review your credit history and determine how much of a loan you can qualify for. Be aware that different lenders have different closing costs and other fees, so it pays to shop around.

    What types of repayment options are available?

    The guarantees thirty-year loans with a choice of repayment plans: Traditional fixed payment (constant principal and interest); Graduated Payment Mortgage, or GPM (low initial payments which gradually rise to a level payment starting in the sixth year); and in some areas, Growing Equity Mortgages, or GEMs (gradually increasing payments with all of the increase applied to principal, resulting in an early payoff of the loan). There is no prepayment penalty.

    What is the maximum VA loan?

    Although there is no maximum VA loan (limited only by the reasonable value or the purchase price), lenders generally limit the maximum VA loan to $417,000.

    If I was discharged years ago and want to qualify for a VA loan, what forms or other documents will I need?

    Everyone is required to obtain a Certificate of Eligibility. If you do not have this Certificate, you will need to apply using VA Form 26-1880 and this will require a copy of DD-214 (Certificate of Release or Discharge from Active Duty) showing character of service. Along with the Certificate of Eligibility, loan applicants will need to document their credit, savings and employment information.

    Does a veteran’s home loan entitlement expire?

    No. Home loan entitlement is generally good until used if a person is on active duty. Once discharged or released from active duty before using an entitlement, a new determination of their eligibility must be made based on the length of service and the type of discharge received.

    Reservists are eligible for VA Loans, too. Who qualifies?

    Eligibility extends to members who have completed a total of 6 years in the Selected Reserves or National Guard (member of an active unit, attended required weekend drills and 2-week active duty for training) and received an honorable discharge; continue to serve in the Selected Reserves. Individuals who completed less than 6 years may be eligible if discharged for a service- connected disability. In addition, reservists and National Guard members who were activated on or after August 2, 1990, served at least 90 days and were discharged honorably are eligible. Eligibility for Selected Reservists is due to expire on September 30, 2009.

    Can I build a home with a VA Home Loan?

    Yes. But there are several clauses that may make this difficult to accomplish. Many veterans use their VA Home Loan Certificate of Eligibility to negotiate in good faith a private home construction loan and then refinance the completed home using VA Home Loans.

    Can you take out a VA loan for a second home or vacation cabin?

    The law requires that you certify that you intend to occupy the property as your home. But it specifically provides that occupancy by the veteran’s spouse satisfies the personal occupancy requirement. However, there are no provisions for other family members. VA Home Loans are available for a variety of purposes including building, altering, or repairing a home; refinancing an existing home loan; buying a manufactured home with or without a lot; buying and improving a manufactured home lot; and installing a solar heating or cooling system or other weatherization improvements. You are also allowed to buy income property consisting of up to four units, provided you occupy one of the units.

    Can a veteran obtain a VA loan for the purchase of property in a foreign country?

    No. The property must be located in the United States, its territories, or possessions. The latter consist of Puerto Rico, Guam, Virgin Islands, American Samoa and Northern Mariana Islands.

    What is a VA-guaranteed manufactured home loan?

    A private lender makes a VA-guaranteed manufactured home loan. The VA will protect the lender against loss if the veteran or a later owner fails to repay the loan. The amount VA will guarantee is 40 percent of the loan amount or the veteran’s available entitlement, up to a maximum amount of $20,000. The guaranty amount is not the same as the amount a veteran can borrow.

    If a borrower has used a VA loan in the past, can that person be eligible again?

    Veterans who had a VA loan before may still have “remaining entitlement” to use for another VA loan. The current amount of entitlement available to each eligible veteran is $36,000. Veterans can have previously-used entitlement “restored” to purchase another home with a VA loan if: the property purchased with the prior VA loan has been sold and the loan paid in full, or if a qualified veteran buyer agrees to assume the VA loan and substitute his or her entitlement for the same amount of entitlement originally used by the veteran seller. The entitlement may also be restored one time only if the veteran has repaid the prior VA loan in full, but has not disposed of the property purchased with the prior VA loan.

    I am a Veteran who purchased a home with my spouse utilizing my VA eligibility. I am now divorced and my spouse was awarded the home. How do I get my eligibility back?

    When the property is awarded to the Veteran’s spouse as a result of the divorce, entitlement cannot be restored unless the spouse refinances the property and / or pays off the VA loan in full or the ex-spouse is a veteran who substitutes their entitlement.

    To check out my profile, references and the references of the other agents, just click on my picture to go to my profiles and read what our clients say about us. Pick the broker that you think is right for you. Of course I hope it’s me, but if not then best wishes!

    Search on MLS here:http://luxurylivingorlando.idxbroker.com/idx/search/advanced

    Highest and best regards.

    Vincent Paige |REALTOR® | RE/MAX Showcase
    Certified Broker Price Opinion Registered Agent (BPOR)
    Florida Military Specialist (FMS)
    8934 Conroy Windermere Road | Orlando, FL 32835
    Direct: 407.256.8190 | Fax: 407.264.8073
    E-mail: vince@thepremiumproperties.com
    Search for homes here: http://luxurylivingorlando.com

    FHA 203(k) | Rehab a Home w/HUD’s FHA 203 (k)

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    The Federal Housing Administration (FHA), which is part of the Department of Housing and Urban Development (HUD), administers various single family mortgage insurance programs. These programs operate through FHA-approved lending institutions which submit applications to have the property appraised and have the buyer’s credit approved. These lenders fund the mortgage loans which the Department insures. HUD does not make direct loans to help people buy homes.

    The Section 203(k) program is the Department’s primary program for the rehabilitation and repair of single family properties. As such, it is an important tool for community and neighborhood revitalization and for expanding homeownership opportunities.

    Many lenders have successfully used the Section 203(k) program in partnership with state and local housing agencies and nonprofit organizations to rehabilitate properties. These lenders, along with state and local government agencies, have found ways to combine Section 203(k) with other financial resources, such as HUD’s HOME, HOPE, and Community Development Block Grant Programs, to assist borrowers. Several state housing finance agencies have designed programs, specifically for use with Section 203(k) and some lenders have also used the expertise of local housing agencies and nonprofit organizations to help manage the rehabilitation processing.

    The Department also believes that the Section 203(k) program is an excellent means for lenders to demonstrate their commitment to lending in lower income communities and to help meet their responsibilities under the Community Reinvestment Act (CRA). HUD is committed to increasing homeownership opportunities for families in these communities and Section 203(k) is an excellent product for use with CRA-type lending programs.

    If you have questions about the 203(k) program or are interested in getting a 203(k) insured mortgage loan, we suggest that you contact an FHA-approved lender or the HUD Homeownership Center that serves your area.

    Introduction

    Section 10 1 (c) (1) of the Housing and Community Development Amendments of 1978 (Public Law 95557) amends Section 203(k) of the National Housing Act (NHA). The objective of the revision is to enable HUD to promote and facilitate the restoration and preservation of the Nation’s existing housing stock. The provisions of Section 203(k) are located in Chapter II of Title 24 of the Code of Federal Regulations under Section 203.50 and Sections 203.440 through 203.494. Program instructions are online in HUD Handbook 4240-4.

    203(k) – How It Is Different

    Most mortgage financing plans provide only permanent financing. That is, the lender will not usually close the loan and release the mortgage proceeds unless the condition and value of the property provide adequate loan security. When rehabilitation is involved, this means that a lender typically requires the improvements to be finished before a long-term mortgage is made.

    When a homebuyer wants to purchase a house in need of repair or modernization, the homebuyer usually has to obtain financing first to purchase the dwelling; additional financing for the rehabilitation; and a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage. Often the interim financing (the acquisition and construction loans) involves relatively high interest rates and short amortization periods. The Section 203(k) program was designed to address this situation. The borrower can get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property. To provide funds for the rehabilitation, the mortgage amount is based on the projected value of the property with the work completed, taking into account the cost of the work. To minimize the risk to the mortgage lender, the mortgage loan (the maximum allowable amount) is eligible for endorsement by HUD as soon as the mortgage proceeds are disbursed and a rehabilitation escrow account is established. At this point, the lender has a fully-insured mortgage loan.

    Eligible Property

    To be eligible, the property must be a one- to four-family dwelling that has been completed for at least one year. The number of units on the site must be acceptable according to the provisions of local zoning requirements. All newly constructed units must be attached to the existing dwelling. Cooperative units are not eligible.

    Homes that have been demolished, or will be razed as part of the rehabilitation work, are eligible provided the existing foundation system remains in place.

    In addition to typical home rehabilitation projects, this program can be used to convert a one-family dwelling to a two-, three-, or four-family dwelling. An existing multi-unit dwelling could be decreased to a one- to four-family unit.

    An existing house (or modular unit) on another site can be moved onto the mortgaged property; however, release of loan proceeds for the existing structure on the non-mortgaged property is not allowed until the new foundation has been properly inspected and the dwelling has been properly placed and secured to the new foundation.

    A 203(k) mortgage may be originated on a “mixed use” residential property provided: (1) The property has no greater than 25 percent (for a one story building); 33 percent (for a three story building); and 49 percent (for a two story building) of its floor area used for commercial (storefront) purposes; (2) the commercial use will not affect the health and safety of the occupants of the residential property; and (3) the rehabilitation funds will only be used for the residential functions of the dwelling and areas used to access the residential part of the property.

    Condominium Unit

    The Department also permits Section 203(k) mortgages to be used for individual units in condominium projects that have been approved by FHA.

    The 203(k) program was not intended to be a project mortgage insurance program, as large scale development has considerably more risk than individual single-family mortgage insurance. Therefore, condominium rehabilitation is subject to the following conditions:

     -   Owner/occupant and qualified non-profit borrowers only; no investors;
     -   Rehabilitation is limited only to the interior of the unit.
     -   Only the lesser of five units per condominium association, or 25 percent of the total number of units, can be undergoing rehabilitation at any one time;
     -   The maximum mortgage amount cannot exceed 100 percent of after-improved value.

    After rehabilitation is complete, the individual buildings within the condominium must not contain more than four units. By law, Section 203(k) can only be used to rehabilitate units in one-to-four unit structures. However, this does not mean that the condominium project, as a whole, can only have four units or that all individual structures must be detached.

    Example: A project might consist of six buildings each containing four units, for a total of 24 units in the project and, thus, be eligible for Section 203(k). Likewise, a project could contain a row of more than four attached townhouses and be eligible for Section 203(k) because HUD considers each townhouse as one structure, provided each unit is separated by a 1 1/2 hour firewall (from foundation up to the roof).

    How the Program Can Be Used

    This program can be used to accomplish rehabilitation and/or improvement of an existing one-to-four unit dwelling in one of three ways:

     -   To purchase a dwelling and the land on which the dwelling is located and rehabilitate it.
     -   To purchase a dwelling on another site, move it onto a new foundation on the mortgaged property and rehabilitate it.
     -   To refinance existing liens secured against the subject property and rehabilitate such a dwelling.

    To purchase a dwelling and the land on which the dwelling is located and rehabilitate it, and to refinance existing indebtedness and rehabilitate such a dwelling, the mortgage must be a first lien on the property and the loan proceeds (other than rehabilitation funds) must be available before the rehabilitation begins.

    To purchase a dwelling on another site, move it onto a new foundation and rehabilitate it, the mortgage must be a first lien on the property; however, loan proceeds for the moving of the house cannot be made available until the unit is attached to the new foundation.

    Ineligible Improvements

    Luxury improvements are not eligible.

    Eligible Improvements

    The homeowner can use the 203(k) program to finance such items as painting, room additions, decks and other items even if the home does not need any other improvements. All health, safety and energy conservation items must be addressed prior to completing general home improvements.

    Required Improvements

    All rehabilitation construction and/or additions financed with Section 203(k) mortgage proceeds must comply with the following:

    A. Cost Effective Energy Conservation Standards

    (1) Addition to existing structure. New construction must conform to local codes and HUD Minimum Property Standards in 24 CFR 200.926d.

    (2) Rehabilitation of Existing Structure. To improve the thermal efficiency of the dwelling, the following are required:

    a) Weather strip all doors and windows to reduce infiltration of air when existing weather stripping is inadequate or nonexistent.

    b) Caulk or seal all openings, cracks or joints in the building envelope to reduce air infiltration.

    c) Insulate all openings in exterior walls where the cavity has been exposed as a result of the rehabilitation. Insulate ceiling areas where necessary

    d) Adequately ventilate attic and crawl space areas. For additional information and requirements, refer to 24 CFR Part 39.

    (3) Replacement Systems.

    a) Heating, ventilating, and air conditioning system supply and return pipes and ducts must be insulated whenever they run through unconditioned spaces.

    b) Heating systems, burners, and air conditioning systems must be carefully sized to be no greater than 15 percent oversized for the critical design, heating or cooling, except to satisfy the manufacturer’s next closest nominal size.

    B. Smoke Detectors. Each sleeping area must be provided with a minimum of one (1) approved, listed and labeled smoke detector installed adjacent to the sleeping area.

    Determining Upon One or Two Appraisal Reports

    The appraiser must provide an opinion of the After-Improved value of the subject property, and in some cases, may be directed by the lender to provide the As-is value.

    In those cases for which both As-is and After-improved values are required, the valuation analysis may consist of either one or two separate appraisal reports.

    The number of appraisals depends on the complexity, scope and lender review of the proposed rehabilitation and nature of the work.

    A. As-is Value. A separate appraisal (Uniform Residential Appraisal Report) may be required to determine the as-is value. However, the lender may determine that an as-is appraisal is not feasible or necessary. In this instance, the lender may use the contract sales price on a purchase transaction, or the existing debt on a refinance transaction, as the as-is value, when this does not exceed a reasonable estimate of value.

    Further, on a refinance transaction, when a large amount of existing debt (i.e., first and second mortgages) suggests that the borrower has little or no equity in the property, the lender must obtain a current as-is appraisal on which to base the estimated as-is value.

    On a refinance, the borrower may have substantial equity in the property to assure that no further down payment is required on the new loan amount. In some cases, the borrower will not have an existing mortgage on the property. In this case, the lender should obtain some comparables from a real estate agent/ broker to estimate an approximate as-is value of the property.

    Another way of establishing the as-is value is to obtain a copy of the local jurisdiction tax valuation on the property.

    B. Value After Rehabilitation. The expected market value of the property is determined upon completion of the proposed rehabilitation and/or improvements.

    For a HUD-owned property an as-is appraisal is not required and a DE lender may request the HUD Field Office to release the outstanding HUD Property Disposition appraisal on the property to the lender to establish the maximum mortgage for the property. The HUD appraisal will be considered acceptable for use by the lender if: (1) it is not over one year old prior to bid acceptance from HUD; and (2) the sales contract price plus the cost of rehabilitation does not exceed 110 percent of the “As Repaired Value” shown on the HUD appraisal. If the HUD appraisal is insufficient, the DE Lender may order another appraisal to assure the market value of the property will be adequate to make the purchase of the property feasible. For a HUD-property, down payment for an owner-occupant or non-profit organization is 3.5% of the accepted bid price of the property and 100 percent financing on all other costs.

    Recently Acquired Properties

    Homebuyers who purchase a property with cash can refinance the property using 203(k) within six (6) months of purchase, the same as if the buyer purchased the property with a 203(k) insured loan to begin with. Evidence of interim financing is not required; the mortgage calculations will be done the same as a purchase transaction. Cash back will be allowed to the borrower in this situation less any down payment and closing cost requirement for the 203(k) loan. A copy of the Sales Contract and the HUD-1 Settlement Statement must be submitted to verify the accepted bid price (as-is value) of the property and the closing date.

    Architectural Exhibits

    The improvements must comply with HUD’s Minimum Property Standards (24 CFR 200.926d and/or HUD Handbook 4905.1) and all local codes and ordinances. The homebuyer may decide to employ an architect or a consultant to prepare the proposal. The homebuyer must provide the lender with the appropriate architectural exhibits that clearly show the scope of work to be accomplished. The following list of exhibits are recommended, but may be modified by the jurisdictional HUD office as required.

    A. A Plot Plan of the Site is required only if a new addition is being made to the existing structure. Show the location of the structure(s), walks, drives, streets, and other relevant details. Include finished grade elevations at the property corners and building corners. Show the required flood elevation.

    B. Proposed Interior Plan of the Dwelling. Show where structural or planning changes are contemplated, including an addition to the dwelling. (An existing plan is no longer required.)

    C. Work Write-up and Cost Estimate. Any format may be used for these documents, however, quantity and the cost of each item must be shown. Also include a complete description of the work for each item (where necessary). The Rehabilitation Checklist in Appendix 1 of Handbook 4240.4 REV-2 should be used to ensure all work items are considered. Transfer the costs to the Draw Request (form HUD-9746-A).

    Cost estimates must include labor and materials sufficient to complete the work by a contractor. Homebuyers doing their own work cannot eliminate the cost estimate for labor, because if they cannot complete the work there must be sufficient money in the escrow account to get a subcontractor to do the work. The Work Write-up does not need to reflect the color or specific model numbers of appliances, bathroom fixtures, carpeting, etc., unless they are nonstandard units.

    The consultant who prepares the work write-up and cost estimate (or an architect, engineering or home inspection service) needs to inspect the property to assure: (1) there are no rodents, dry rot, termites and other infestation; (2) there are no defects that will affect the health and safety of the occupants; (3) the adequacy of the existing structural, heating, plumbing, electrical and roofing systems; and (4) the upgrading of thermal protection (where necessary).

    As detailed in Mortgagee Letter 1995-40, the Consultant must be able to prepare the work write-up and cost estimate without using contractor bids. It is important for the Consultant to use cost estimates that are reasonable for the area where the property is located. If contractor bids come in higher than the cost estimates, the Consultant will need to discuss this situation with the borrower and the lender to reconcile the differences and to determine if the proposed repair escrow account may be too low to complete the job. At that point, if the Consultant agrees with the higher costs, an adjusted work write-up with supporting documentation is required to be submitted to the lender for consideration.

    The work write-up and cost estimate are not required to match the contractor bids dollar-per-dollar. However, the work write-up and cost estimate are to be compared to confirm that all improvements/repairs have been addressed and to confirm the current market costs of materials and labor for the project.

    Definitions for Use in the 203(k) Program

    A. Insurance of Advances. This refers to insurance of the 203(k) mortgage prior to the rehabilitation period. A mortgage that is a first lien on the property is eligible to be endorsed for insurance following mortgage loan closing, disbursement of the mortgage proceeds, and establishment of the Rehabilitation Escrow Account.

    The mortgage amount may include funds for the purchase of the property or the refinance of existing indebtedness, the costs incidental to closing the transaction, and the completion of the proposed rehabilitation. The mortgage proceeds allocated for the rehabilitation will be escrowed at closing in a Rehabilitation Escrow Account.

    B. Rehabilitation Escrow Account. When the loan is closed, the proceeds designated for the rehabilitation or improvement, including the contingency reserve, are to be placed in an interest bearing escrow account insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). This account is not an escrow for the paying of real estate taxes, insurance premiums, delinquent notes, ground rents or assessments, and is not to be treated as such. The net income earned by the Rehabilitation Escrow Account must be paid to the mortgagor. The method of such payment is subject to agreement between mortgagor and mortgagee. The lender (or its agent) will release escrowed funds upon completion of the proposed rehabilitation in accordance with the Work Write-Up and the Draw Request (Form HUD-9746,A).

    C. Inspections. Performed by HUD-approved consultants/inspectors or HUD-accepted staff of the DE lender. The consultant is to use the architectural exhibits in order to make a determination of compliance or non-compliance. When the inspection is scheduled with a payment, the inspector is to indicate whether or not the work has been completed. Also, the inspector is to use the Draw Request form (Form HUD-9746-A). The first draw must not be scheduled until the lender has determined that the applicable building permits have been issued.

    D. Holdback. A ten (10) percent holdback is required on each release from the Rehabilitation Escrow Account. The total of all holdbacks may be released only after a final inspection of the rehabilitation and issuance of the Final Release Notice. The lender (or its agent) may retain the holdback for a maximum of 35 calendar days, or the time period required by law to file a lien, whichever is longer, to ensure that no liens are placed on the property.

    E. Contingency Reserve. At the discretion of the HUD Field Office, the cost estimate may include a contingency reserve if the existing construction is less than 30 years old, or the nature of the work is complex or extensive. For properties older than 30 years, the cost estimate must include a contingency reserve of a minimum of ten (10) percent of the cost of rehabilitation; however, the contingency reserve may not exceed twenty (20) percent where major remodeling is contemplated. If the utilities were not turned on for inspection, a minimum fifteen (15) percent is required. If the scope of work is well defined and uncomplicated, and the rehabilitation cost is less than $7500, the lender may waive the requirement for a contingency reserve.

    The contingency reserve account can be used by the borrower to make additional improvements to the dwelling. A Request for Change Letter must be submitted with the applicable cost estimates. However, the change can only be accepted when the lender determines: (1) It is unlikely that any deficiency that may affect the health and safety of the property will be discovered; and (2) the mortgage will not exceed the appraised value of the property less the statutory investment requirement. If the mortgage exceeds the appraised value less the statutory investment, then the contingency reserve must be paid down on the mortgage principal. If a borrower feels that the contingency reserve will not be used and he wishes to avoid having the reserve applied to reduce the mortgage balance after issuance of the Final Release Notice, the borrower may place his own funds into the contingency reserve account. In this case, if monies are remaining in the account after the Final Release Notice is issued, the monies may be released back to the borrower.

    If the mortgage is at the maximum mortgage limit for the area or for the particular type of transaction, but a contingency reserve is necessary, the contingency reserve must be placed into an escrow account from other funds of the borrower at closing. Under these circumstances, if the contingency reserve is not used, the remaining funds in the escrow account will be released to the borrower after the Final Release Notice has been issued.

    F. Mortgage Payment Reserve. Funds not to exceed the amount of six (6) mortgage payments (including the mortgage insurance premium) can be included in the cost of rehabilitation to assist a mortgagor when the property is not habitable during rehabilitation. The number of mortgage payments cannot exceed the completion time frame required in the Rehabilitation Loan Agreement. The lender must make the monthly mortgage payments directly from the interest bearing reserve account. Monies remaining in the reserve account after the Final Release Notice must be applied to the mortgage principal.

    G. Approval of Non-Profit Agencies. A non-profit agency, before it can be approved as an eligible mortgagor and obtain the same mortgage amount as available to owner-occupants on Section 203(k) mortgages, must demonstrate its experience as a housing provider to HUD and meet all other requirements described in HUD Handbook 4155.1 REV-4, paragraphs 1-5. It must also be able to provide satisfactory evidence that it has the financial capacity to purchase the properties.

    Maximum Mortgage Amount

    The mortgage amount, when added to any other existing indebtedness against the property, cannot exceed the applicable loan-to-value ratio and maximum dollar amount limitations prescribed for similar properties under Section 203(b). The down payment requirements are the same as under the Section 203(b) program. The Mortgage Payment Reserve is considered a part of the cost of rehabilitation for determining the maximum mortgage amount. Also refer to the requirements for incentives to acquire HUD-owned properties.

    The form HUD-92700 (Maximum Mortgage Worksheet) must be used to determine the maximum mortgage amount.

    A. Maximum Mortgage Calculation

    REFINANCE:

    Based on the lesser of:

    1) The existing debt on the property before rehabilitation, plus the estimated cost of rehabilitation and allowable closing costs or

    2) The lesser of the As-Is value plus rehabilitation costs or 110 percent of the After-Improved value multiplied by the appropriate LTV factor.

    NOTE: If the property was owned less than one year, the acquisition cost plus the documented rehabilitation costs must be used. If the property is a condominium, the after-improved value is limited to 100% for refinance and purchase transactions.

    PURCHASE:

    The maximum mortgage amount is based on the lesser of 1) or 2) of the below multiplied by the appropriate LTV factor.

    1) The as-is value or the purchase price of the property before rehabilitation, whichever is less, plus the estimated cost of rehabilitation or

    2) 110 percent of the after-improved value of the property.

    Principal Residence (Owner-Occupant) & HUD Approved Non-Profit Organization. For purchases with 203(k) financing: the maximum mortgage amount is to be based upon the HUD estimate of value in 1) or 2) above, less the statutory investment requirement. For refinances under the 203(k) program: the maximum mortgage amount is to be based upon 97/95/90 percent of the HUD estimate of value in 1) or 2) above.

    B. Cost of Rehabilitation. Expenses eligible to be included in the cost of rehabilitation are materials, labor, contingency reserve, overhead and construction profit, up to six (6) months of mortgage payments, plus expenses related to the rehabilitation such as permits, fees, inspection fees by a qualified home inspector, licenses and consultant and/or architectural/engineering fees. The cost of rehabilitation may also include the supplemental origination fee which the mortgagor is permitted to pay when the mortgage involves insurance of advances, and the discounts which the mortgagor will pay on that portion of the mortgage proceeds allocated to the rehabilitation.

    C. Exemption of the Market Value Limitation. The 203(k) regulations allow for a waiver request of the market value limitation, which allows the appraiser to go outside the targeted area to obtain the value of comparable properties. Such requests must be forwarded to the Assistant Secretary of Housing-Federal Housing Commissioner at the HUD Headquarters.

    Requests must include documentation that the following conditions are present:

    1) The property is located within an area which is subject to a community sponsored program of concentrated redevelopment or revitalization (See 24 CFR Part 220).

    2) The market value loan limitation prevents the use of the program to accomplish rehabilitation in the subject area.

    3) The interests of the borrower and the Secretary of HUD are adequately protected.

    D. Solar Energy Increase. The mortgage is eligible for an increase of up to 20 percent in the maximum insurable mortgage amount if such an increase is necessary for the installation of solar energy equipment.

    The solar energy system’s contribution to value will be limited by its replacement cost or by its effect on the value of the dwelling.

    E. Energy Efficient Mortgage Program. Under the FHA EEM Program, a borrower can finance into the mortgage 100 percent of the cost of eligible energy efficient improvements, subject to certain dollar limitations, without an appraisal of the energy improvements and without further credit qualification of the borrower. To be eligible for inclusion into the mortgage, the energy efficient improvements must be “cost effective,” i.e., the total cost of the improvements (including maintenance costs) must be less than the total present value of the energy saved over the useful life of the improvements. 

    Seven Unit Limitation

    HUD regulations and policies state that a real estate owner/entity should not be allowed to rapidly accumulate FHA insured properties that clearly and collectively constitute a multifamily project. In general, a borrower may not have an interest in more than seven rental units (FHA, VA, conventional or owned free and clear of any mortgage) in the same subdivision or contiguous area. For 203(k) purposes, HUD defines a contiguous area as within a two block radius.

    The seven unit limitation does not apply if (1) the neighborhood has been targeted by a State or local government for redevelopment or revitalization; and (2) the State or local government has submitted a plan to HUD that defines the area, extent and type of commitment to redevelop the area. A restriction may still be imposed (by HUD) within a redevelopment area (or sub-area) in order to prevent undesirable concentrations of units under a single (or group) ownership. H U D will determine that the seven unit limit is inapplicable only if: (1) the real estate owner/entity will own no more than 10 percent of the housing units (regardless of financing type) in the designated redevelopment area or sub-area; and (2) the real estate owner/entity has no more than eight units on adjacent lots.

    Interest Rate and Discount Points

    These are not regulated and are negotiable between the borrower and the lender. The amortization of the loan will be for 30 years; however, provisions of the Section 203(k) mortgage (described in Section 203.21 of the Regulations) are the same as prescribed under Section 203(b).

    Discount Points on Repair Costs and Fees

    Discount points the borrower pays on the rehabilitation portion of the mortgage proceeds are allowable rehabilitation costs.

    Maximum Charges and Fees

    The statutory requirements and administrative policies of Section 203(k) result in deviations from the maximum amount of charges and fees permitted under Section 203(b).

    A. Supplemental Origination Fee. When the Section 203(k) mortgage involves insurance of advances, the lender may collect from the mortgagor a supplemental origination fee. This fee is calculated as one and one-half percent (1-1/2%) of the portion of the mortgage allocated to the rehabilitation or $350, whichever is greater. This supplemental origination fee is collected in addition to the one percent origination fee on the total mortgage amount.

    B. Independent Consultant Fee. A borrower can have an independent consultant prepare the required architectural exhibits. A borrower can also use a contractor to prepare the construction exhibits or prepare the exhibits themselves. The use of a consultant is not required; however, the borrower should consider using this service in order to expedite the processing of the 203(k) loan. When a consultant is used, HUD does not warrant the competence of the consultant or the quality of the work the consultant may perform for the borrower.

    The consultant must enter into a written agreement with the borrower that completely explains what services the consultant will perform for the borrower and the fee charged. The fee charged by the consultant can be included in the mortgage. A fee of $400 is acceptable for a property with repairs less than $7,500; $500 for repairs between $7,501 and $15,000; $600 for repairs between $ 15,001 and $ 30,000; and $ 700 for repairs between $30,001 and $50,000; $800 for repairs between $50,001 and $75,000; $900 for repairs between $75,001 and $100,000; and $ 1,000 for repairs over $100,000. An additional fee of $25 can be charged for each additional unit in the property under the same FHA case number. For this fee, the consultant would inspect the property and provide all the required architectural exhibits. State licensed architect or engineer fees are not restricted by this fee schedule. The architect and engineer fees must be customary and reasonable for the type of project.)

    C. Fee Consultant. Prior to the appraisal, a HUD-accepted fee consultant must visit the site to ensure compliance with program requirements. The utilities must be on for this site review to take place. The fee is as follows and may not be changed without HUD Headquarters approval:

    1) Initial review prior to appraisal:

    Cost of Repairs/Fee: <$15,000=$100.00, >$15,001 but less than or equal to<$30,000=$150.00, >$30,001=$200.00

    2) Additional unit review (two to four units with same case number)-$50.00/unit.

    3) Additional review (reinspection of the same unit)-$50.00. When travel distance exceeds 30 miles round trip from the reviewer’s place of business, a mileage charge (established by HUD Field Office) may be applied to the above charges, including toll road and other charges where applicable.
    D. Appraisal Fee. The lender may charge a borrower no more than the actual amount the lender pays the appraiser, whether the appraiser is on the lender’s staff, or external to the organization. The lender may include the appraisal fee in the closing costs.

    E. Inspection Fee (during the rehabilitation construction period). Established by the local HUD Field Office.

    (1) Fees for a maximum of five draw inspections will be allowed for inclusion in the cost of rehabilitation. If all inspections are not required, remaining funds will be applied to the principal after the Final Release Notice is issued.

    (2) If additional inspections are required by the lender to ensure satisfactory compliance with exhibits, the borrower or contractor will be responsible for payment; however, the lender has ultimate responsibility.

    F. Title Update Fee. To protect the validity of the mortgage position from mechanic’s liens on the property, reasonable fees charged by a title company may be included as an allowable cost of rehabilitation. When the mortgage position is protected and is not in jeopardy, this fee may not apply Borrowers may wish to obtain lien protection, but the fees must be paid by the borrower where such lien protection is not required to ensure the validity of the security instrument. The allowable fee should not exceed $50.00 per draw release. If all draw inspections are not made, monies left in escrow must be applied to reduce the mortgage balance.

    Application Process

    This describes a typical step-by-step application/mortgage origination process for a transaction involving the purchase and rehabilitation of a property. It explains the role of HUD, the mortgage lender, the contractor, the borrower, consultant, the plan reviewer, appraiser and the inspector.

    A. Homebuyer Locates the Property.

    B. Preliminary Feasibility Analysis. After the property is located, the homebuyer and their real estate professional should make a marketability analysis prior to signing the sales contract. The following should be determined:

    1) The extent of the rehabilitation work required;

    2) Rough cost estimate of the work; and

    3) The expected market value of the property after completion of the work. Note: The borrower does not want to spend money for appraisals and repair specifications (plans), then discover that the value of the property will be less than the purchase price (or existing indebtedness), plus the cost of improvements.

    C. Sales Contract is Executed. A provision should be included in the sales contract that the buyer has applied for Section 203(k) financing, and that the contract is contingent upon loan approval and buyer’s acceptance of additional required improvements as determined by HUD or the lender.

    D. Homebuyer Selects Mortgage Lender.  To help find a lender, the borrower may search HUD’s Approved Lender  list.  To find a 203(k) lender, uncheck the default search criteria and select the 203K filter option.    

    E. Consultant Prepares Work Write-up and Cost Estimate.

    F. Lender Requests HUD Case Number. Upon acceptance of the architectural exhibits, the lender requests the assignment of a HUD case number, the plan reviewer, appraiser, and the inspector.

    G. Fee Consultant Visits Property. The homebuyer and contractor (where applicable) meet with the fee consultant to ensure that the architectural exhibits are acceptable and that all program requirements have been properly shown on the exhibits.

    H. Appraiser Performs the Appraisal.

    I. Lender Reviews the Application The appraisal is reviewed to determine the maximum insurable mortgage amount for the property

    J. Issuance of Conditional Commitment/Statement of Appraised Value. This is issued by the lender and establishes the maximum insurable mortgage amount for the property.

    K. Lender Prepares Firm Commitment Application. The borrower provides information for the lender to request a credit report, verifications of employment and deposits, and any other source documents needed to establish the ability of the borrower to repay the mortgage.

    L. Lender Issues Firm Commitment. If the application is found acceptable, the firm commitment is issued to the borrower. It states the maximum mortgage amount that HUD will insure for the borrower and the property.

    M. Mortgage Loan Closing. After issuance of the firm commitment, the lender prepares for the closing of the mortgage. This includes the preparation of the Rehabilitation Loan Agreement. The Agreement is executed by the borrower and the lender in order to establish the conditions under which the lender will release funds from the Rehabilitation Escrow Account. Following closing, the borrower is required to begin making mortgage payments on the entire principal amount for the mortgage, including the amount in the Rehabilitation Escrow Account that has not yet been disbursed.

    N. Mortgage Insurance Endorsement. Following loan closing, the lender submits copies of the mortgage documents to the HUD office for mortgage insurance endorsement. HUD reviews the submission and, if found acceptable, issues a Mortgage Insurance Certificate to the lender.

    O. Rehabilitation Construction Begins. At loan closing, the mortgage proceeds will be disbursed to pay off the seller of the existing property and the Rehabilitation Escrow Account will be established. Construction may begin. The homeowner has up to six (6) months to complete the work depending on the extent of work to be completed. (Lenders may require less than six months.)

    P. Releases from Rehabilitation Escrow Account. As construction progresses, funds are released after the work is inspected by a HUD-approved inspector. A maximum of four draw inspections plus a final inspection are allowed. The inspector reviews the Draw Request (form HUD-9746-A) that is prepared by the borrower and contractor. If the cost of rehabilitation exceeds $10,000, additional draw inspections are authorized provided the lender and borrower agree in writing and the number of draw inspections is shown on form HUD-92700, 203(k) Maximum Mortgage Worksheet.

    Q. Completion of Work/Final Inspection. When all work is complete according to the approved architectural exhibits and change orders, the borrower provides a letter indicating that all work is satisfactorily complete and ready for final inspection. If the HUD-approved inspector agrees, the final draw may be released, minus the required 10 percent holdback. If there is an unused contingency fund or mortgage payment reserves in the account, the lender must apply the funds to prepay the mortgage principal.

    Continue to 203(k) Rehabilitation Loans Questions and Answers


    More info go to http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/203k/203kabou

    To check out my profile, references and the references of the other agents, just click on my picture to go to my profiles and read what our clients say about us. Pick the broker that you think is right for you. Of course I hope it’s me, but if not then good luck.

    Search on MLS here:http://luxurylivingorlando.idxbroker.com/idx/search/advanced

    Highest and best regards.

    Vincent Paige |REALTOR® | RE/MAX Showcase
    Certified Broker Price Opinion Registered Agent (BPOR)
    Florida Military Specialist (FMS)
    8934 Conroy Windermere Road | Orlando, FL 32835
    Direct: 407.256.8190 | Fax: 407.264.8073
    E-mail: vince@thepremiumproperties.com
    Search for homes here: http://luxurylivingorlando.com

    VA home loan myths | Vince Paige | Orlando Realtor

    [kkstarratings]

    Dismiss VA home loan myths about the federally-backed, zero down loan program.

    Myth #1 – VA purchase loans are not for short-sale or foreclosed real estate
    Myth #2 – Surviving spouses don’t qualify for VA mortgages
    Myth #3 – Military members deployed overseas can’t get a VA-guaranteed loan.
    Myth #4 – All realtors are good VA home loan advisors
    Myth #5 – VA loans take forever to close

    Fact #1: VA home loans can be used to purchase foreclosed and short-sale with as little as no money down.  VA-eligible borrowers may have an advantage over those who need up to 20% cash down to qualify for conventional loans.  A VA appraiser is trained to certify value and safety and can spot red flags of distressed properties.

    Fact #2: Veterans, active duty and certain surviving spouses are eligible for VA home loan benefits. Qualified surviving spouses may borrow up to $417,000 (more in high-cost counties) with no money down.  And, surviving spouses are exempt from paying the VA funding fee.

    Fact #3:  Military members deployed overseas can sign a document called power of attorney or (POA) designating a spouse or someone else to act as on their behalf for a VA loan transaction.  The POA grants permission for the attorney in fact to sign on behalf of the VA-eligible borrower.  The service member must give intent to obtain a VA loan through an email, letter or other correspondence. Only a spouse can satisfy the occupancy rule (move in within 60 days of closing) in a deployed serviceperson’s stead.  Otherwise, the borrower serving away from home will be granted an extension of up to 12 months to occupy the home.

    Fact #4:  A VA certification for real estate agents does not exist.  Therefore, a real estate agent should not be used as a reliable source for VA loan information.  Real estate agents who are not well-informed about VA loans can even unintentionally dissuade VA-eligible borrowers from choosing the program which may be best for them.  A VA specialty lender, one whose majority product is VA-backed loans, can provide reliable VA loan facts.

    Fact #5: If a lender is specialized in VA home loans, then closing can often happen within 30 days.  The VA-approved lender is given flexibility to decide on its own whether a borrower is a satisfactory credit risk.  Even a borrower with extenuating circumstances may close quickly.

    To check out my profile, references and the references of the other agents, just click on my picture to go to my profiles and read what our clients say about us. Pick the broker that you think is right for you. Of course I hope it’s me, but if not then good luck.

    Search on MLS here:http://luxurylivingorlando.idxbroker.com/idx/search/advanced

    Highest and best regards,

    Vincent Paige |REALTOR® | RE/MAX Showcase
    Certified Broker Price Opinion Registered Agent (BPOR)
    Florida Military Specialist (FMS)
    8934 Conroy Windermere Road | Orlando, FL 32835
    Direct: 407.256.8190 | Fax: 407.264.8073
    E-mail: vince@thepremiumproperties.com
    Search for homes here: http://luxurylivingorlando.com

    Fannie Mae’s Condo Financing requirements | Vincent Paige

    [kkstarratings]

    “Condo financing is very situational because it depends not only on the borrower, but also on the project itself,” says Matt Ostrander, CEO of Parkside Lending LLC in San Francisco. “The guidelines have tightened because lenders want to see a financially healthy condo development. They want to see a higher concentration of owner-occupants and they want to see that delinquency rates on condo fees are low.”

    Standards differ

    Lenders follow guidelines from the Federal Housing Administration, Fannie Mae and Freddie Mac for condo mortgages.

    Among Fannie Mae’s requirements:

    • More than half of the condo units must be owner-occupied.
    • No owner may own more than 10 percent of the units.
    • No more than 15 percent of owners can be delinquent on condo dues.
    • All amenities must be completed if the development is more than 12 months old.
    • Buyers who make a down payment of less than 25 percent will pay an additional 0.75 percent of the loan amount at the closing or a higher interest rate of about 0.25 percent.

    The FHA has much friendlier down payment requirements, but strict guidelines for condo associations.

    “It’s a misconception on the part of the public that you can’t buy a condo without a big down payment,” says Ed Wilburn, a mortgage banker with FEMBi Mortgage in Miami. “The rules are stricter now, but if you find a building that has already earned an FHA approval, you can get in with a down payment of 3.5 percent. FHA approval depends on the financial health of the condo, so the condo association needs to prove that they have adequate insurance, a budget with reserves, no pending lawsuits and no anticipated special assessments.”

    Where to begin

    Wilburn says condo buyers should start by checking to see if a building is approved for FHA loans. If not, they can ask the lender to see if the building meets Fannie Mae and Freddie Mac guidelines. Buyers can ask condominium managers if they have recently completed a homeowners’ association certification or questionnaire, which provides information on condo fee delinquencies, insurance and other factors that affect eligibility for loans.

    “Even if the condo meets the Fannie Mae guidelines, buyers may find that they must make a down payment of 20 percent or more because mortgage insurance companies are less willing to provide mortgage insurance on condo loans, since they are considered riskier,” Wilburn says. “In fact, most mortgage insurance companies won’t insure a Florida condo. It may be easier in other markets.”

    McClellan says a local lender will know which local complexes have FHA or Fannie Mae approvals. “Have a list of places you like and check the status of their approval” with the lender, he says.

    Options thin out

    Condos that are not approved for FHA or Fannie Mae financing are known as “nonwarrantable” and offer few options for buyers or refinancers.

    “Buyers can either pay cash or they can look for a local bank that is willing to lend, but they should be prepared with a hefty down payment of 50 percent or more, have excellent credit and still be prepared to pay a higher interest rate,” McClellan says. “They should expect to pay as much as 7.5 percent when rates are 4.5 percent for other loans.”

    Homeowners interested in refinancing will first need to face the potential problem of a lack of equity, since condo values have dropped in many areas.

    “Condo owners can ask their management company if their complex is FHA- or Fannie Mae-approved, and if not, they may want to contact a local lender to see if they start the process for obtaining an approval,” McClellan says. “It’s in the best interest of all the owners to do what they can to meet FHA guidelines, since that approval can increase the value of all the homes in the development.”

    Click here to check if your selection is approved.

    https://entp.hud.gov/idapp/html/condlook.cfm
    Read more: http://www.bankrate.com/finance/mortgages/how-to-jump-through-condo-loan-hoops.aspx#ixzz2ZS4sAtLs
    Follow us: @Bankrate on Twitter | Bankrate on Facebook

    Highest and best regards,

    Vincent Paige |REALTOR® | RE/MAX Showcase
    Certified Broker Price Opinion Registered Agent (BPOR)
    Florida Military Specialist (FMS)
    8934 Conroy Windermere Road | Orlando, FL 32835
    Direct: 407.256.8190 | Fax: 407.264.8073

    E-mail: vince@thepremiumproperties.com

    Live MLS!  www.ThePremiumProperties.com or call Vince Paige the Dr. Phillips Realtor.

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    How To Get Multiple Offers On Your Home | Vince Paige

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    Here are some tips on how sellers can best position themselves to get multiple offers, and how buyers can best position themselves to get the house of their dreams.

    For Sellers:

    Spruce Up. It helps tremendously if the home is move in ready.  Repainting the inside, repainting the front steps, power washing the outside, and cutting the bushes back is definitely worth the effort.

    Take professional Pictures! Do not take the pictures with a camera phone and try to slide by… Do NOT take just a couple… The MLS lets you post over 20, why would you give just 1 picture taking from the county records? Laziness! Get another realtor, your realtor should give 1000% like their hair is on fire! Take enough to spark interest!

    Build up excitement.  Leak the word out in the neighborhood that you might be putting the house on the market. Then list the house on a Monday with no showings until Friday to generate interest to see what the home has to offer.

    Use An Experienced Agent. Do not get emotional when offers come in, it is a business transaction of your most precious object, your home. The goal is to net as much as you can in the shortest amount of time. The longer your home sits on the market the “staleness” sets in and you lose negotiating leverage. Read the contracts thoroughly, and take note of contingencies!

    For Buyers:

    Put down a big deposit.  The deposit, or earnest money, can speak volumes. The more earnest money you put down, the more serious you appear to the seller.

    Limit contingencies. If a buyer demands too many contingencies, that can decrease the appeal of the offer.

    If there’s no financing, buyers can waive the right to an appraisal (typically a house has to appraise at or above the purchase price in the contract). I have even seen buyers bring a home inspector or contractor with them to a first or second showing to look at structural issues and help the buyer make a fast decision, without a home inspection contingency.

    Pay cash. “The best offer for a seller is cash and a quick closing.”

     

    Elevate your expectations,

    Vincent Paige |REALTOR® | RE/MAX Showcase
    Certified Broker Price Opinion Registered Agent (BPOR)
    8934 Conroy Windermere Road | Orlando, FL 32835
    Direct: 407.256.8190 | Fax: 407.264.8073
    E-mail: vince@thepremiumproperties.com
    Website: http://www.ThePremiumProperties.com

    Orlando Sees 22% Increase in Year-over-Year Home Values

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     According to the latest housing data released by the Orlando Regional Realtors Association, Florida’s housing market continues to show growth and recovery. Since March of last year (2012), home prices in the Orlando area have increased by 21.74% to a median home price of $140,000. On a monthly basis, this number is up 5.26% from February 2013’s median price of $133,000.

    “March marks the 15th consecutive month that the statewide median sales prices for both single-family homes and for townhouse-condo properties rose year-over-year,” said Florida Realtors President Dean Asher.

    One of the main reasons for the jump in home prices is that the number of non-distressed “normal” home sales increased by nearly 50%. Another big driver of home prices is net migration. According to a recent blog by Investor Intelligence, the Orlando metro area grew by 50,000 people last year alone. In addition to this, the dwindling inventory of listings has had an effect on home prices. In March 2013, inventory was 19.95% less than it was in March 2012.

    The number of existing homes available for purchase in Orlando is continuing its steady decline that began all the way back in July 2010 at 16,563 homes and is now at 6,937 homes. In March 2013, current inventory combined with the rate of sales created a 2.66-month supply of homes in Orlando, which can be compared with the 3.56-month supply in March 2012.

    All the best,

    Vincent Paige |REALTOR® | RE/MAX Showcase
    Certified Broker Price Opinion Registered Agent (BPOR)
    Florida Military Specialist (FMS)
    8934 Conroy Windermere Road | Orlando, FL 32835
    Direct: 407.256.8190 | Fax: 407.264.8073
    E-mail: vince@thepremiumproperties.com

    Live MLS!  www.ThePremiumProperties.com or call Vince Paige the Dr. Phillips Realtor.

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    Orlando Real Estate Market Statistics – May 2013

    Rapidly rising interest rates are spurring Orlando homebuyers into action and in May contributed to yet another double-digit increase in sales (15.63 percent to be exact), while unbearably tight inventory again sent prices climbing.

    “The relative good news about inventory is that there was a 10 percent increase in the number of new listings that came on the market in May, the majority – 65 percent – of which were “normal” sales,” says Orlando Regional REALTOR® Association Chairman Steve Merchant, broker-owner of Global Realty International. “We’re seeing more and more homeowners who realize that now is an extremely opportunistic to sell, and sell fast.”

    The median price of existing homes sold in Orlando during the month of May rose 23.33 percent, to $148,000, when compared to May 2012 and 2.99 percent compared to April 2013, reports ORRA. Orlando’s median price has risen more than 37.04 percent in the 17 months since January of 2012.

    In addition to the overall median increase, each individual sales type experienced a year-to-year median price increase in May, with foreclosures leading the way with an 18.07 percent jump. The median price of short sales increased 14.00 percent; the median price of normal sales increased 12.50 percent.

    Completed Sales

    Members of ORRA participated in the sales of 2,855 homes (all types combined) that closed in May 2013, an increase of 15.63 percent compared to May 2012 and increase of  3.14 percent compared to April 2013.

    Single-family home sales increased 16.64 percent in May 2013 compared to May 2012, while condo sales increased 7.85 percent.

    Compared to May of 2012, the number of short sales (620) decreased 8.96 percent and the number of foreclosures (539) decreased 12.78 percent. The number of completed traditional sales (1,696), however, is a 44.96 percent increase compared to last year.

    In May, short sales and foreclosures made up 40.60 percent of the entire sales pie, while normal sales made up 59.40 percent. Last year in May, those percentages were 52.61 percent and 47.39 percent, respectively.

    Homes of all types spent an average of 68 days on the market before coming under contract in May 2013, and the average home sold for 96.70 percent of its listing price. In May 2012 those numbers were 85 days and 95.76 percent, respectively.

    The average interest rate paid by Orlando homebuyers in May was 3.64 percent. Last month, homebuyers paid an average interest rate of 3.49 percent; this month last year, homebuyers paid an average interest rate of 3.89.

    Pending Sales

    Pending sales – those under contract and awaiting closing – are currently at 8,631. The number of pending sales in May 2013 is 16.13 percent lower than it was in May 2012 (10,291) and 1.75 percent lower than it was in April 2013 (8,785).

    Short sales made up 57.31 percent of pending sales in May 2013. Normal properties accounted for 29.58 percent of pendings, while bank-owned properties accounted for 13.12 percent.

    Inventory

    The number of existing homes (all types combined) available for purchase in Orlando is 11.78 percent below that of May 2012 and now rests at 7,272. Inventory increased in number by 70 properties over last month.

    The inventory of single-family homes is down by 14.93 percent when compared to May of 2012, while condo inventory has decreased by 1.42 percent.

    Current inventory combined with the current pace of sales created a 2.55-month supply of homes in Orlando for May. There was a 3.34-month supply in May 2012 and a 2.60-month supply last month.

    Affordability

    The May affordability index is 212.25 percent, a decrease of 10 percentage points from April’s index of 222.36. (An affordability index of 99 percent means that buyers earning the state-reported median income are 1 percent short of the income necessary to purchase a median-priced home. Conversely, an affordability index that is over 100 means that median-income earners make more than is necessary to qualify for a median-priced home.)

    Steady increases in median price have caused the affordability index to drop 40 points since January 2013.

    Buyers who earn the reported median income of $55,100 can qualify to purchase one of 3,702 homes in Orange and Seminole counties currently listed in the local multiple listing service for $314,131 or less. First-time homebuyer affordability in May decreased to 150.93 percent from last month’s 158.12 percent.

    First-time buyers who earn the reported median income of $37,468 can qualify to purchase one of the 2,541 homes in Orange and Seminole counties currently listed in the local multiple listing service for $189,874 or less.

    Condos and Town Homes/Duplexes/Villas

    The sales of condos in the Orlando were up 7.85 percent in May, with 426 sales recorded in May 2013 compared to 395 in May 2012.

    The most (85) condos in a single price category that changed hands in May were yet again in the $1 – $50,000 price range and accounted for 19.95 percent of all condo sales.

    Orlando homebuyers purchased 270 duplexes, town homes, and villas in May 2013, which is a 21.08 percent increase compared to May 2012. Most (40) fell within the $120,000 – $140,000 price range category.

    MSA Numbers

    Sales of existing homes within the entire Orlando MSA (Lake, Orange, Osceola, and Seminole counties) in May were up by 8.32 percent when compared to May of 2012. Throughout the MSA, 3,464 homes were sold in May 2013 compared with 3,198 in May 2012. To date, sales throughout the MSA are 9.48 percent above this time last year.

    Each individual county’s monthly sales comparisons are as follows:

    • Lake: 14.37 percent above May 2012 (565 homes sold in May 2013 compared to 494 in May 2012);
    • Orange: 6.48 percent above May 2012 (1,709 homes sold in May 2013 compared to 1,605 in May 2012);
    • Osceola: 5.87 percent above May 2012 (541 homes sold in May 2013 compared to 511 in May 2012); and
    • Seminole: 10.37 percent above May 2012 (649 sold in May 2013 compared to 588 in May 2012).

    This representation is based in whole or in part on data supplied by the Orlando Regional REALTOR® Association and the My Florida Regional Multiple Listing Service. Neither the association nor MFRMLS guarantees or is in any way responsible for its accuracy. Data maintained by the association or MFRMLS may not reflect all real estate activity in the market. Due to late closings, an adjustment is necessary to record those closings posted after our reporting date.

    ORRA REALTOR® sales, referred to as the core market, represent all sales by members of the Orlando Regional REALTOR® Association, not necessarily those sales strictly in Orange and Seminole counties. Note that statistics released each month may be revised in the future as new data is received.

    Orlando MSA numbers reflect sales of homes located in Orange, Seminole, Osceola, and Lake counties by members of any REALTOR® association, not just members of ORRA.

     

    Vincent Paige |REALTOR® | RE/MAX Showcase
    Certified Broker Price Opinion Registered Agent (BPOR)
    Florida Military Specialist (FMS)
    8934 Conroy Windermere Road | Orlando, FL 32835
    Direct: 407.256.8190 | Fax: 407.264.8073
    E-mail: vince@thepremiumproperties.com

    Live MLS!  www.ThePremiumProperties.com or call Vince Paige the Dr. Phillips Realtor.

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