The FHA 203(k) Program

1. Any one to four unit properties which have been completed (with a certificate of occupancy) for at least one year and are acceptable according to the provisions of local zoning requirements.

2. Homes that have been demolished or razed as a part of the rehabilitation process can be rehabbed as long as part of the original foundation remains.

3. A home can be moved onto a foundation on the mortgaged property, provided the proceeds from the sale of the previous location are not released until the foundation is properly inspected and the home is satisfactorily attached to the new foundation.

4. Property conversions. The buyer can convert a property from single family into a two to four unit, or from a two to four unit to a single family unit. The max is a four unit property. One unit must be owner occupied.

5. A manufactured home that was built AFTER June 15, 1976, and has been on a permanent foundation for over one year. The unit must have been delivered to the site when it was new, prior to being occupied.

6. A 203(k) can be used on a “mixed use” residential property provided it meets the following requirements:

* The floor space used for commercial purposes does not exceed…

* 25% for a one story building

* 33% for a three story building

* 49% for a two story building

* The commercial use does not affect the health and safety of the occupants

* 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.

7. Cooperatives are NOT eligible.

Best Cities to Relocate to in America

1. Pittsburgh, PA
The crime rate is low, it ranks high on both arts and colleges, and is ranked as one of the best sports cities, with the six-time Super Bowl champion Pittsburgh Steelers, the Pittsburgh Pirates baseball team and the Pittsburgh Penguins hockey team.

Indeed.com (Indeed) has named it the No. 18 job market, with two applicants for every job available.2. Buffalo-Niagara Falls, NY
A growing arts scene and affordability: The cost of living is 14.4 percent below the national average, and the average home price is $119,700, well below the national average of $171,700.

There are three applicants for every job available, making it one of the top 30 job markets in America, according to Indeed.

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Copyright 2010 NATIONAL ASSOCIATION OF REALTORS ®

The Federal Housing Administration released   new rules on home purchases that ramp up how much home buyers will need to cough up for down payments along with closing costs.

As if banks and lenders weren™t tough enough on consumers looking to buy a new home, now the government is cracking down, too. Still, loose lending policies fueled the economic collapse, so any new restraints on new home purchases may help œprotect the housing market from another implosion.

The FHA   needed to reduce its portfolio of bad debt “ in May it reported 8.97% of all of its home loans were seriously delinquent. That number was up from 7.93% in May 2009 and from 6.5% in December 2008.

As more FHA loans become delinquent, it sets off a chain reaction that essentially dries up the agency™s cash reserve below the government mandated 2% minimum. That scenario could force the FHA to ask the federal government for a taxpayer bailout “something it has never done. (Historically, the FHA earned revenue from home loan borrower™s insurance premiums.)

Now, Congress has thrown a monkey wrench into any potential bailout scenario. According to Section 26 of the 2010 FHA Reform Act, Congress has placed a œProhibition on Taxpayer Bailout of FHA Program. So the FHA is on its own, and has now developed new rules to protect itself from delinquent loan scenarios.

Here™s a quick look at what™s going on with the FHA™s three new loan restrictions, which were announced on July 15:

• Updated combination credit and down payment requirements. New borrowers seeking FHA-insured financing will need to have a minimum FICO score of 580 to qualify for FHA™s flagship 3.5% down payment program. New borrowers with credit scores of less than a 580 will be required to make a cash investment of at least 10%. Borrowers with credit scores of less than 500 will no longer qualify for an FHA-insured mortgage.
• Reduced allowable seller concessions from 6% to 3%. Allowing sellers to contribute up to 6% of the home™s sale price to offset a buyer™s costs exposes the FHA to excess risk by potentially driving up the cost of the home beyond its appraised value. Reducing seller concessions to 3% lets the FHA conform with industry standards.
• Tighten underwriting standards for manually underwritten loans. When using compensating factors in the underwriting process, lenders will be required to consider those factors that best predict loan performance, including the borrower™s credit history, loan-to-value (LTV) percentage, debt-to income ratio and cash reserves.

The FHA also announced a 30-day period for public comment, so expect the new rules to kick in by late 2010.

While most real estate professionals acknowledge the FHA had to put some new risk management protections in place, given the weakness in the real estate market, the changes will still have a big impact on home loan borrowers.

œThese changes will reverberate throughout the entire housing market because the FHA insures approximately 30% of all home loans in the U.S. today, says Gibran Nicholas, chairman of the CMPS Institute, an organization that trains and certifies mortgage bankers and brokers. œThe required buyer contribution when buying a home will be nearly doubled to 6.5% from the current 3.5%. This will hurt the housing market by making it more difficult for qualified buyers with high credit scores to buy a home.

Nicholas urges any homebuyers in the market right now to speed things up before the new rules go into effect. œHomebuyers considering an FHA loan should get moving today in order to avoid getting blindsided by these new rules, he adds.

Economists and housing industry experts have been warning about the possibility of a double dip recession in the housing market for months now.   Sales numbers remained high in the spring due in large part to the first time homebuyer tax credit.   The current housing market is adjusting to an incentive-free world and initial numbers from across the country are not very encouraging.   Research   to read an article in Time Magazine about the first indications that the housing market may experience another hiccup.  

As REALTORS know, all markets are local so while this is certainly discouraging news, it may not be applicable to the Fredericksburg market.   May and June numbers indicate that things have leveled off with houses fetching closing to asking price than in recent years and a relatively healthy supply of homes on the market. Will Fredericksburg avoid another dip in the housing market or are recent numbers not telling the whole story?

Now is not the time for timidity when considering a real estate purchase.   It is the ideal time for buyers to decide on the property they truly want.   It is a buyer’s market and if you are a “ready, willing and able buyer,” sellers are desperately seeking you.   Their need to divest and yours to invest can be a happy experience for you both.   Waiting could mean higher interest rates, expensive rate locks, loan  programs you were banking on disappearing or seeing a “SOLD” sign posted on the lawn of your dream house.  

If foreclosure or short sale homes are what you are looking for, be prepared to meet or exceed the asking price.   Competition in this area for a highly desirable property can put you in an escalating clause situation.   DO NOT assume you are the only set of eyes contemplating purchasing it.   If you have not gotten financially qualified for a loan, you are just window shopping.   The lending industry is a jungle right now, and you need a professional guide.   Call me.

Welcome to Alicia Croston’s Blog! This blog will provide you with valuable information, tips, and general insight into the real estate market in Fredricksburg.