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7 Things All Borrowers Should Know About FHA Loans

by barbaraamstadter on July 5, 2010

in Buyers,Latest News,Mortgage and Finance,Real Estate Finance,Sellers,real estate

This article from RISMEDIA is so good, I am posting it here for all to read and want to give 100% credit to RISMEDIA.

FHA Pros, LLC, a national FHA condo approval service, has developed a list of facts speaking to the top misconceptions associated with FHA loans in order to help home buyers better navigate an already confusing market. FHA loans are mortgages issued by qualified lenders and insured by the Federal Housing Administration (FHA).

“We have seen home buyer interest in FHA loans go from practically zero three years ago to upwards of 87% today,” said Christopher Gardner, founder and president of FHA Pros, LLC. “Despite this rapid rise in popularity, many buyers still do not fully understand the benefits of these loans, and we believe it’s time to change that.”

1. FHA loans are not only for lower-income borrowers. FHA loans are available to everyone. There is no maximum income restriction associated with FHA loans, but borrowers do need to substantiate income and assets by submitting proper documentation. This requirement ensures that borrowers are well-vetted and truly able to afford their future homes.

2. FHA loans are not only for first-time buyers. Many people believe FHA loans are available only to first-time home buyers, but this is not the case. Whether borrowers are making their first home purchase or their fifth, they can look to FHA loans as a home financing option.

3. FHA loans are not just small loans; in fact, loan amounts can be as high as almost $800,000. The government recently raised the maximum loan amount from its original cap of $362,790 to $793,750 as a way to help stabilize the housing market. The amount a buyer can borrow varies from county to county though. Later this summer, condo buyers interested in FHA loans can visit www.checkfhaapproval.com to instantly identify FHA-approved condo associations and review maximum loan amounts for a given location.

4. FHA loans are not affiliated with the section 8 housing program. While both programs are administered by the U.S. Department of Housing and Urban Development (HUD), FHA loans have nothing to do with low-income subsidized housing. FHA loans are simply mortgages insured by FHA. This insurance provided by the federal government allows lenders to lend more freely by assuring them that they will be repaid in the event of default. Most traditional lenders, including Wells Fargo & Co., JP Morgan Chase and Citigroup are able to provide FHA loans to their customers.

5. FHA loans are often more affordable than conventional loans. While FHA loans typically offer the same interest rates as other loans, borrowers benefit from a much lower down payment of as low as 3.5%.

6. FHA-approved condo developments are more desirable to buyers. With 87% of home buyers indicating that they plan to use FHA loans, condo associations that are not FHA approved are missing out on a significant pool of prospective buyers. Under rules in place since February 2010, an entire condominium development must now apply to HUD and be granted FHA approval before a buyer can purchase a unit in an association with an FHA loan or before an existing unit owner can refinance into an FHA loan.

Due to the general unwillingness of today’s lenders to extend credit with respect to conventional loans, many borrowers find that FHA is their best bet. Lenders don’t mind lending when the federal government (FHA) assures them of repayment.

Homeowners associations (HOAs) should note that although FHA-insured mortgages might be easier to obtain, they are not “risky” loans, due in large part to the strict “full documentation” requirements placed on borrowers. Individual buyers or sellers can initiate the approval process or current owners can encourage their HOA to apply.

7. FHA loans are assumable. In addition to lower down-payment and credit-qualifying requirements as compared to conventional loans, FHA loans are assumable. This means that when a seller with an FHA loan sells his or her property, the loan and its financing terms (interest rate) can be transferred to the new buyer. This unique feature will certainly make a property more valuable in times of rising interest rates.

“Now, more than ever, buyers and sellers need to understand the options available to them when it comes time to buy a home,” continued Gardner. “At FHA Pros we have worked with countless HOAs, attorneys and individuals to easily and efficiently navigate the historically tricky FHA-approval process.”

Foreclosure Sales Report

by barbaraamstadter on July 4, 2010

in Latest News,foreclosures,real estate

RealtyTrac, one of the leading online marketplaces for foreclosure properties released its first U.S. Foreclosure Sales Report, which shows that foreclosure homes accounted for 31% of all residential sales in the first quarter of 2010, and that the average sales price of properties that sold while in some stage of foreclosure was nearly 27% below the average sales price of properties not in the foreclosure process.
Foreclosure sales accounted for 64% of all sales in Nevada in the first quarter, the highest percentage of any state. California posted the second highest percentage, with foreclosure sales accounting for 51% of all sales there in the first quarter Other states where foreclosure sales accounted for at least one-third of all sales were Massachusetts, Rhode Island, Florida, Michigan, Georgia, Illinois, Idaho and Oregon.

Can you guess the 10 most recession proof cities in the U.S?

by barbaraamstadter on July 3, 2010

in Latest News,Mortgage and Finance,real estate,uncategorized

What characteristics do the 10 Most Recession-Proof U.S. Cities have in common?

The most recession-proof cities didn’t see home prices surge in the first place, so they didn’t experience a big housing bubble followed by a crash, and their economnies weren’t rooted in the auto industry.

The top 10 stable cities identified by MetroMonitor are:

1. Albany, N.Y.
2. Augusta, Ga.
3. Austin, Texas
4. Baton Rouge, La.
5. Buffalo, N.Y.
6. Columbia, S.C.
7. Dallas, Texas
8. Des Moines, Iowa
9. El Paso, Texas
10. Honolulu

Beware of Short Sale Scammers

by barbaraamstadter on June 18, 2010

in Buyers,Latest News,Sellers,banks,foreclosures,real estate,short sales

Beware of the Short Sale Scam
Because of the large number of short sales and because they promise to remain strong for the next five years, they are the perfect playing field for unscrupulous scammers.
Unlicensed “Short Sale” negotiators are approaching homeowners in distress and asking for upfront money to negotiate with lenders. This is illegal. Only attorneys and licensed brokers can ask for money up front – and only after the Department of Real Estate approves the agreement with an individual seller.
These “so called” Short Sale negotiators, including some real estate agents are lowballing offers to overwhelmed banks. This is called “flopping.” The home is then flipped to a waiting buyer for a much higher price. Beware when you are asked to use one of these “floppers” title companies. This could be a clue you are involved in a flop.
Another practice that is happening with regularity is that often the holder of a 2nd mortgage on the property is demanding extra money outside of escrow in a “secret deal”, because they don’t want the primary lender to know. If you don’t play ball with them they will refuse to approve the sale. It is out and out blackmail and extortion. The government really needs to crack down on this practice.
Some homeowners, especially savvy, well-off owners who owe far more than their houses are worth, are hiding savings and income to persuade lenders to agree to short sales. Many can afford their mortgages, but know it will take them years to recoup their 2006 values.
If someone asks you for money to negotiate a Short Sale, you should probably look elsewhere for help. HELP IS FREE! There are many well qualified people who can help for free. Look for an agent who holds a CDPE or SFR designation. These agents have been trained to help you through the process.

The Four Myths Regarding Housing Statistics

by barbaraamstadter on June 11, 2010

in Latest News,foreclosures,real estate,uncategorized

After years of hearing how home prices are plummeting and foreclosures are mounting, consumers want to feel hopeful about the housing market — but maybe they’re being too optimistic.

In a presentation to the National Association of Real Estate Editors in Austin, Texas, last week, Stan Humphries, Zillow.com’s chief economist, pointed to four myths he said consumers are latching on to as they try to make sense of recent housing statistics.

The four myths:

1.The housing recession is over. It’s not, Humphries said. He estimates the bottom in home prices won’t come until the third quarter, at least from a national perspective. Doug Duncan, chief economist at Fannie Mae and also a speaker at the conference, agreed with that estimation. Note: Realtytrac’s Rick Sharga disagrees…he is estimating that we are well over a year away from any sort of ‘bottoming’ in home values.
2.After markets hit bottom, prices will rebound to boom levels. Not going to happen, at least for a while, Humphries said. “Once we hit bottom, the bottom is going to be a long and flat affair across the markets,” he said. “What we’re going to see once we hit bottom is the second phase of the housing recession… that second phase is one of being flat.” Note: Excellent point that agents need to understand. Once home value depreciation finally levels off..we will experience years of flat or no home value appreciation. Realtors, STOP saying that homes are a great ‘investment’. Speaking in strictly financial terms, homes are NOT a great investment.
3.The worst of the foreclosure mess is behind us. More wishful thinking, according to Humphries. He estimates foreclosures will peak later this year, then remain elevated for a while. Rick Sharga, senior vice president of RealtyTrac, an online marketplace for foreclosure properties, said he doesn’t envision foreclosure activity stabilizing until late 2011.
4.The tax credits saved the housing market. With or without a tax credit, those who bought would have done so anyway, Humphries said. “The biggest impact [in home sales] we believe were low prices… low interest rates and the unsung factor here is the ramped up lending by the Federal Housing Administration.”

I want to acknowledge Realty Trac and Zillow for their contributions.