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MORTGAGE INDUSTRY UPDATE: RATES, NEWS & MORE

***Smart Financial Weekly Mortgage Update June 26, 2009***

Interest Rates

In last week’s Update I said “My guess is we will see rates move up next week”. So much for my forecasting skills! L Rates remained essentially flat for the week with a slight downward pattern at the end of the week. The Federal Reserve made it know after their meeting mid week that they had no plans to buy more Treasuries and they are still committed to buying $1.25 Trillion in Mortgage Backed Securities (MBS) in 2009. They will “continue to evaluate timing and amounts” of any future increases in purchases. This statement helped keep the market calm which will hopefully be the case for the near term. We do NOT need any surprises!

 

 

Date	Rate
6/26/09	5.42
6/19/09	5.38
6/12/09	5.59
6/5/09	5.29
6/26/08	6.45
6/28/07	6.67

Note that actual market rates vary geographically and by lender, credit score and Loan to Value.

Source: Federal Reserve Statistical H.15.

 

Mortgage Industry Update

·         There has been some discussion in D.C. about increasing the Making Home Affordable Refinance limit from 105% LTV to as much as 125% LTV.

·         In March FNMA said they would not guaranty loans in condo communities with fewer than 70% sold up from the previous guideline of 51%. Some Senators including Barney Frank have asked FNMA to “make some adjustments” to their guidelines.

·         The National Association of Home Builders (NAHB) wants the condition of the home to be taken into consideration for home valuation. They argue that distressed homes are typically not as well maintained or damaged compared to others. They have suggested extending the geographical area for comps and/or the time frame for recent sales.

·         The Home Valuation Code of Conduct (HVCC) is getting a lot of attention from the mortgage and housing industry and it is not positive. There are many problems with the process which basically uses a centralized clearinghouse or management company to do appraisals. A big problem is there cannot be ANY communication between the lender, Realtor, Seller, etc and the actual person doing the appraisal. There are many groups actively seeking to lobby for changes in the process. One of these is Think Big Work Small. They have developed a petition which we have signed and recommend interested parties also sign. If you are interested their e-mail address is tbwsdaily@thinkbigworksmall.com

·         Reminder: Smart Financial will pay for the appraisal on your first loan with us!

 

Good News

·         Existing home sales for May were up 2.4% to 4.77 million just below expectations.

·         Existing home inventory for May was at 9.6 months down from 10.2 months in April.

·         Median home price for May was $173,000 down almost 17% from May 2008.

·         Durable goods were up 1.8% compared to forecast of down .9% (even with the increase in May year over year durable goods are down almost 27%).

·         Continuing unemployment claims were up slightly to 6.74 Million.

·         New home inventory was at 10.2 months down slightly from 10.4 months.

 

Statistics of Interest/Concern

·         The Government said this week that it had raised 80% of the funds it needs for FY 2009.

·         The Securities Industry and Financial Markets Association (SIFMA) says Q3 2009 GDP will grow .8%.

·         The Labor Department said that mass layoffs (50 or more employees from single company) increased in May and were the highest since 1995.

·         Quarterly CEO Economic Outlook Index was 18.5 for Q2 2009 compared to -5 for Q1 2009 (above 50 indicates expansion in the economy).

·         Weekly jobless claims were up slightly to 627,000.

·         New home sales market share of 7.45% in May was the lowest since 1968.

 

Commentary

The Harvard University Joint Center for Housing Studies issued a report that said the housing recovery will be slow due to job losses and continued foreclosures. I wonder how much that study cost?

 

 If you have any mortgage related questions please contact Burt Carlson at (602) 803-9660 or at burt@gosfm.com.

 

HVCC Call to Action – This Affects You Too! – PLEASE READ

I am blogging this with some new information as a reminder that we need to be diligent if we are going to get rid of HVCC and start actually helping our housing market recover! Take the time and email your elected officials again and again and let them know that the HVCC is KILLING our industry!

Statistics from National Association of Realtors (NAR):

“Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 2.4 percent to a seasonally adjusted annual rate 1 of 4.77 million units in May from a downwardly revised level of 4.66 million units in April, but remained 3.6 percent below the 4.95 million-unit pace in May 2008.”

May’s increase was the first back-to-back monthly gain since September 2005. Sales of existing homes showed another gain in May, benefiting from favorable affordability conditions and a first-time buyer tax credit, according to the National Association of Realtors®.

Lawrence Yun, NAR chief economist said this:

“First-time buyers also are being drawn off the sidelines by the $8,000 tax credit, which is helping to absorb inventory. However, the increase in sales is less than expected because poor appraisals are stalling transactions. Pending home sales indicated much stronger activity, but some contracts are falling through from faulty valuations that keep buyers from getting a loan.”

Yun said the appraisal problem is serious. “Lenders [AMC’s] are using appraisers who may not be familiar with a neighborhood, or who compare traditional homes with distressed and discounted sales,” he said. “In the past month, stories of appraisal problems have been snowballing from across the country with many contracts falling through at the last moment. There is danger of a delayed housing market recovery and a further rise in foreclosures if the appraisal problems are not quickly corrected.”

TOOK LONG ENOUGH….are we not yelling this loud enough?

Plain and Simple: HVCC sucks. Please explain why readers…share your horror stories with your elected officials!

And by the way I am not big fan of the verbiage “using”…would have liked it to read “BEING FORCED TO USE”….besides that…good job Lawrence. From a micro point of view I can’t tell you how many emails I have received from borrowers asking if there are any ways around HVCC. My reply: Email Andrew Cuomo.

HVCC CALL TO ACTION

To: All Mortgage Brokers, Real Estate Agents, Appraisers, Lenders, Home Builders, Title Agents, and Consumers
From: Marc Savitt, President- National Association of Mortgage Brokers

After more than a year of exhaustive negotiations with Fannie Mae, Freddie Mac, James Lockhart, Director of FHFA (GSE Regulator), and NY Attorney General Andrew Cuomo, NAMB believes the time has come for your individual voice to be heard.

In order for this “Call to Action” to be effective, we ask that you fully participate, encourage others to join the action and continue calling and emailing every day, until advised to stop by NAMB. This will NOT be a one day action!

We have received hundreds of e-mails through the hvcc@namb.org e-mail address outlining specific cases where the HVCC has created delays and additional costs to consumers. NAMB has categorized and compiled a report of the examples received, which was sent to FHFA Director James Lockhart. Please use your own examples in your conversations with legislators, regulators, or their staff. Also, please visit the NAMB HVCC Resource Center for additional information and documents on the HVCC.

Who will you be contacting?

NY Attorney General Andrew Cuomo’s Office: (212) 416-8000, Internet Complaint
Federal Housing Finance Agency (FHFA): (866) 796-5595, director@fhfa.gov
Fannie Mae: (202) 752-7000, headquarters@fanniemae.com
Freddie Mac: (703) 903-2000, Internet Complaint
Senators, Representatives and Governors: Click here for contact information.
Also, please contact your local TV and Newspaper outlets.

Below are talking points and background information to assist in your conversations. Please remember we are all professionals and should conduct ourselves accordingly in any communication with the above parties. For the most successful and influential calls, it is important to concisely quantify how the HVCC is affecting your consumer and your business.

Please cut and paste whatever you wish below the line and take the time to tell a story about how the HVCC has negatively affected a transaction of yours. We need to get this corrected ASAP!

—————————— Copy and Paste Below the Line ———————————

Please take the time to read through this email and soak in the points being made here. These AMCs are not doing anything to help and they are killing our local economy!

ü NAMB conservatively estimates (breakdown below) that the HVCC is costing consumers over 2.8 BILLION dollars a year in extra fees, created by long delays (extended lock-in fees) and higher appraisal costs.

ü Unregulated Appraisal Management Companies (AMCs), who have been the subject of several misconduct investigations, are the centerpiece of the HVCC. The original Cuomo investigation involved a federally chartered bank and an AMC.

ü AMCs are driving honest appraisers and mortgage brokers from business, eliminating competition, increasing costs to consumers and reducing state revenue. The HVCC is causing significant delays in real estate transactions, hurting real estate agents, title companies and other third parties reliant on turnaround time.

ü HVCC does nothing to reduce fraud, as it legitimizes the same failed model, which was the subject of Attorney General Cuomo’s investigation.

ü No Portability! Consumers are “trapped” with a specific lender. If a better deal becomes available with a different lender, the consumer is forced to pay for another appraisal.

Lack of Portability
	A.	Lenders are not allowing borrowers to transfer appraisals, regardless of the reason.
	B.	Forces the borrower to pay for another appraisal and wait for a new appraiser to be assigned and complete it, increasing the total cost and time needed for obtaining a home. Delays in turnaround times also cause the borrower to miss rate lock deadlines and possibly face penalties charged by the lender.
	C.	In a poll conducted by NAMB, 75.8% of respondents said that 0% of their appraisals are portable since the enactment of the HVCC.
II.	Lack of Quality
	A.	AMCs are assigning appraisers from a different municipality, county, or even state to appraise the target house, therefore unfamiliar with the neighborhood and unable to produce an accurate appraisal.
		i.	Because of this, the HVCC is forcing appraisers to be in direct violation of the Uniform Standards of Professional Appraisal Practice (USPAP) for jurisdictional competence.
	B.	Because AMCs pay appraisers such low fees, those assigned appraisers willing to do the work are often inexperienced and fail to adequately appraise the home.
III.	Increased Cost of Appraisals
	A.	The minimum increase we have seen in direct consumer cost is $150 per appraisal. That, coupled with the drastically increased appraisal turnaround times that impose extended lock periods at an average expense of $561.95 per loan, is now costing consumers an estimated additional $711.95 per transaction.
	B.	$150.00 – minimum increase per appraisal $561.95 – average loan amount of $224,778 at .25% for extended lock period $711.95 – average total increase per transaction x 3,870,552* – 2007 HMDA report of residential real estate loans originated $2,755,639,496 – $2.8BILLION in increased fees to consumers!
IV.	Articles Illustrating the Effects of the HVCC
	A.	The Appraisal Bubble – The Center for Public Integrity
	B.	The Cure is Worse than the Disease – AppraisalPress
	C.	Appraisals Roil Real Estate Deals – The Wall Street Journal

—————————— Copy and Paste Above the Line ———————————

Please forward this to everyone that you know. Thanks for your consideration in correcting this horrible political mistake of a law!

MORTGAGE INDUSTRY UPDATE: RATES, NEWS AND MORE

***Smart Financial Weekly Mortgage Update June 19, 2009***

Mortgage rates remained in a narrow range as the week ended. I think it is a safe bet that we will not see 5.00% rates going forward. The culprit is excessive government spending and borrowing along with the budget deficit as we have discussed before. Thursday the Fed announced the sale of a RECORD $104 Billion of bonds next week. My guess is we will see rates move up next week.

 

Date	Rate
6/19/09	5.38
6/12/09	5.59
6/5/09	5.29
5/29/09	4.91
6/19/08	6.42
6/21/07	6.69

Note that actual market rates vary geographically and by lender, credit score and Loan to Value.

Source: Federal Reserve Statistical H.15.

 

Mortgage Industry Update

·         Recently I have been asked about lenders property flipping guidelines. So what follows is a summary of what I learned;

FHA: Any purchase contract must be dated at least 91 days from the date the property changed hands.

VA: There are no seasoning limitations so they vary from lender to lender.

Conventional: Varies by lender with some having no season requirements and others having limitations for example.

·         Hope for Homeowners update! Back in late May the President signed into law legislation that among other things revised the Hope for Homeowners program. Some of the revisions are the loan balance can only be reduced to 93% of property value instead of 90%, servicers will be paid $1,000 per modification, there will be equity sharing with the investor up to the original appraised value and any servicer participating in the Making home Affordable program must offer Hope for Homeowners. For more information on this program the first place to call is your current lender.

 

Good News

·         May housing starts were up 17% to 532,000 annual rate.

·         Building permits in May were also up.

·         PPI (Producer Price Index) was up .2% in May compared to forecast of +.6% (in the past year the PPI is down 5% the sharpest decline since 1949).

·         CPI (Consumer Price Index) for May was up .1% compared to forecast of up .3%. The year over year CPI is down 1.3% the lowest since 1950.

·         Weekly initial jobless claims of 608,000 were right at expectation.

·         Continuing jobless claims were down 148,000 to 6.69 million.

·         The Conference Board report on leading economic indicators for May showed 7 of 10 positive resulting in a 1.2% gain. This follow April’s revised number of +1.1%.

 

Statistics of Interest/Concern

·         According to the Treasury Dept. the budget deficit for FY 2009 will be $1.84 TRILLION compared to the $455 Billion deficit for FY 2008.

·         New York Mfg Index of -9.41 was worse than expected (anything below zero indicates contraction).

·         The National Association for Credit Counseling said in 2006 it counseled 1.5 million people. The number increased in 2008 to 3.2 million and so far in 2009 that number has increased by 34%. They found that their average client has 6 credit cards that total 62% of family income EXCLUDING mortgages, autos, etc.

·         According to the Mortgage Bankers Association (MBA) 9% of the country’s 45 million mortgages were delinquent in May. This is the highest number since the MBA started tracking this statistic since 1972.

·         13 states now have unemployment rates of 10% or more.

 

Commentary

I was thinking of how to put the rate increases into perspective. So being a numbers person I decided to compare this year with last year at this time. Last May the average home price was about $271,000 compared to $163,400 in 2008. Last year’s average mortgage rate was 6.42% compared to this year’s rate of 5.38%. OK, so you already know where I am going. Clearly as far as affordability is concerned the decline in home prices far exceeds the impact of “higher rates”. Even with rates moving up a Buyer can still purchase more home for far less than a year ago AND the basic loan qualifying standards have not changed that much. Folks, it is a GREAT time to buy a home!

 

Finally, while there always seems to be bad news or data the amount of good news and positive data suggests that the recession is weakening. While the recovery may be slow and it may take some time for “full recovery” we are doing much better than the end of last year. So, if by the end of 2009 we see the same amount of progress in the last half of the year that will be fine with me.

For more information on mortgages and mortgage related questions please contact Burt Carlson at (602) 803-9660 or burt@gosfm.com.

 

 

 

MORTGAGE REVIEW:RATES, NEWS & MORE

***Smart Financial Weekly Mortgage Update June 12, 2009***

Interest Rates

Holy cow! Mortgage rates have moved up sharply again in recent days (albeit moderating as I write this) as indicated by the chart below. The reasons for this have been discussed in my past two Newsletters but the same issues are at play: huge budget deficits and government spending requiring the government to raise record sums of money to finance the spending. The Wall Street Journal observes that the Fed is not likely to increase its buying of Bonds and Mortgage Backed Securities (MBS) but may discuss possible adjustments at its meeting June 23 and 24. The Fed’s actions have kept long term rates artificially low. The Fed continues to be threading a very fine needle with whatever they decide being potentially harmful to the recovery. You may want to check out media reports on the results of the Fed meeting but if you cannot not to worry as we will update you.

Date	Rate
6/12/09	5.59
6/5/09	5.29
5/29/09	4.91
5/22/09	4.82
6/12/08	6.32
6/14/07	6.74

Note that actual market rates vary geographically and by lender, credit score and Loan to Value.

Source: Federal Reserve Statistical H.15.

Mortgage Industry Update

· Today legislation was introduced in the Senate to expand the first time buyer’s tax credit. Among the proposed changes are 1) increase the credit from $8,000 to $15,000, 2) have the credit apply to any home buyer, 3) eliminate income caps, 4) allow tax deductibility in 2009 for homes purchased in 2010 and 5) extend the credit one year from the date of enactment. Now THIS is what we need from our elected leaders! A number of Senators and the NAR are supporting the legislation.

· FHA Update: More concern about the financial viability of FHA were expressed this week as some Senators think it is going to “explode” and harm communities, tax payers and homeowners if not managed correctly. The Congressional Budget Office (CBO) says FHA may break even this year while the head of HUD thinks they will make money. My money is on the CBO forecast.

Good News

· Consumer confidence hit 9 month high for June up slightly from May.

· IAS 360 says that in April home prices were down 13% from a year ago but that the decline may have leveled off.

· Wholesale inventories for April were down 1.4% from forecast of down 1.15. April was the eighth consecutive month inventories declined.

· The Federal Reserve Beige Book suggests that the worst of the recession may have passed.

Statistics of Interest/Concern

· Credit card delinquency increased 11% in 1Q 2009 to 1.32% accounts over 90 days delinquent.

· About 750,000 Option Arms are scheduled to re-set in 2010 and 2011 with 54,000 in August 2011 alone according to Bloomberg. California will likely suffer the most from the fallout of these re-sets.

Commentary

Since I believe strongly in all homeowners exploring loan modification I just wanted to remind you that if your loan is held or guaranteed by Fannie Mae or Freddie Mac OR your lender has received money from the government under the TARP they are REQUIRED by law to consider your loan for a modification.

For mortgage and related information please contact Burt Carlson at (602) 803-9660 or by e-mail at burt@gosfm.com.

Canadian Citizens

Canadian citizens document signings:  To sign in the United States, they will need a passport AND a visa as identification.  Should the party wish to sign in Canada, they have two choices:  They can go to the U.S. Consulate OR be signed by an attorney.  The signed documents must be accompanied by a Canadian Certification of Notary.  Sellers will also need to complete the FIRPTA (Foreign Investment Real Property Tax Act) forms.  Depending on the use of the property, there may be a charge at close of escrow of 10% of the sales price which is remitted to IRS per the FIRPTA laws.

The transfer of funds from a Canadian Bank must be in US Dollars and there may be charges for that conversion of funds from Canadian to US dollars.

Lisa Capes

Chicago Title Insurance

capesl@ctt.com

www.chicagotitlearizona.com/capes

Canadian Citizens Purchasing in Arizona

Canadian citizens document signings: To sign in the United States, they will need a passport AND a visa as identification. Should the party wish to sign in Canada, they have two choices: They can go to the U.S. Consulate OR be signed by an attorney. The signed documents must be accompanied by a Canadian Certification of Notary. Sellers will also need to complete the FIRPTA (Foreign Investment Real Property Tax Act) forms. Depending on the use of the property, there may be a charge at close of escrow of 10% of the sales price which is remitted to IRS per the FIRPTA laws.

The transfer of funds from a Canadian Bank must be in US Dollars and there may be charges for that conversion of funds from Canadian to US dollars.

What Makes a Home “Perfect” for a 203k Loan?

Do you 203k?  What the heck is that? 

Many people in the lending and real estate industry have learned about the “new school” 203k renovation loan.  What some people might remember, is the “old school” version of the 203k loan which was used widely in the 80′s and before.

Simply put, the “new school” version of the 203k loan which was brought back into widespread use by Congress passing The Housing and Economic Recovery Act of 2008 is much simpler to use than the older version – less paperwork, less red-tape, faster approval times.  At the current time, most lenders can approve FHA 203k Renovation Loans in approximately the same amount of time that they take to approve most standard FHA loans once the “new finishes” are determined by the homeowner.

While the initial thrust and what most people think of using 203k loans for  seems to be for fixing up existing bank-owned homes ”that were trashed”, the loan in effect not only applies for completely trashed houses, but also for some that just might need some new carpet and paint  – Basically, any home being purchased  (under the FHA maximum amount) would qualify as long as the the property updates “make sense”.

Which brings us to the second point.  What the heck happened to people having “second mortgages” on their homes?  This one we pretty much all know the answer to – they are simply gone for the most part.  Lenders in particular really, really do not like being in second position when there are widespread foreclosures going on as is currently happening.

Simply put, “second’s” have largely been replaced by “203k’s” because there is only 1 loan on the property and the renovation funds are actually used for renovations which are adding value to the home.   Congress simply got tired of people taking out a second on their home to buy a motorcycle, go to Europe, pay down some credit card debt, and not using the money to actually improve the value of the property (that was the original intent of a second, right?  to borrow money against the house to actually improve the property…? ). 

Our great grandparents knew that the “whole system” which we had created by robbing Peter to pay Paul with our “equity” in our homes was a dead end street in addition to lenders up until the past few years being told by Congress that is was OK to loan up 125% of the value of homes in general.

Apparently, the ghost of FDR came to our members of Congress in 2008 and at least partially set them straight on what “renovation funds” should actually be used for.  If FDR were alive today, no doubt he would make sure that the 203k loan would also be promoted as a way to get people back to work as well as bringing civic pride back into both the appearances of our neighborhoods and also self-respect for those who now have viable employment.

The great thing about 203k loans is that the lender will loan on the “projected” value of the house once the renovations are completed (i.e., if updating that old kitchen might add some value to the house, your lender would want to talk to you about that so your “equity needed” would not necessarily be the same as if you were approaching these renovations as in the old fashion of “getting a second” which we all know to a large extent have dissapeared anyways).

So in effect, any home which could use a little updating, or just a little TLC in general and falls under the local FHA Maximum Amount is perfect for a 203k loan.

Is the 203k the REAL NEW DEAL?  It just might be.

Please visit www.TheAnswer.info for more details.

MORTGAGE INDUSTRY UPDATE: RATES, NEWS & MORE

***Smart Financial Weekly Mortgage Update June 5, 2009***

Interest Rates

Since last Wednesday rates have moved up sharply as indicated by the table below. The average 30 year fixed rate mortgage is 5.29% our sources had rates at end of day today above that level. While the increase is substantial compared to the last two years rates are still very attractive. Last week we offered some thoughts on the reasons for the increasing rate environment. Today we share some thoughts from a Wells Fargo Senior Economist.

He says that if he had one variable to watch on the direction of the economy it would be the Ten Year Treasury Yield. Personally I think the job numbers are more important but as Dennis Miller used to say that’s my opinion and I am sticking with it! The Wells Economist goes on to say the rise in long term bond yields can signal renewed economic growth and recovery. However, he believes that the recent run up in yields is more about inflation, the dollar, federal borrowing and Fed purchase programs. Does any of this sound familiar gentle reader? The bottom line for him is downside risks are on the rise. See the chart below comparing the 10 year Treasury yield with 30 year mortgage rates. With the ten year closing today at 3.83% and based on the chart which way do you think rates are headed?

Massive U.S. borrowing binge poses challenge to Fed, Treasury

Due to technical issues beyond our control the chart that was supposed to be above does not appear. We apologize for any inconvenience to the reader.

Date	Rate
6/5/09	5.29
5/29/09	4.91
5/22/09	4.82
5/15/09	4.86
6/5/08	6.09
6/7/07	6.53

Note that actual market rates vary geographically and by lender, credit score and Loan to Value.

Source: Federal Reserve Statistical H.15.

Mortgage Industry Update

· It looks like the program to loan home buyers money against the $8,000 first time buyers tax credit is moving forward but there are still no details available as yet.

· The Consumer Mortgage Coalition has urged FHFA (Federal Housing Finance Agency) to increase the conforming loan limit to $1,000,000.

· The Fannie Mae and Freddie Mac loan modification programs under the President’s housing bill will not show significant results until late summer the head of FHFA said Thursday. If you or someone you know is having a problem with their mortgage or modifying their loan please have them contact me!

Good News

· First quarter 2009 home prices were down 2.2% on annual basis versus down 12.5% for fourth quarter 2008 according to IHS Global.

· May job lose at 345,000 compared to expectations of 520,000 PLUS adjustments from previous two months revealed 82,000 fewer jobs lost!

· ISM Mfg Factory Index for May 42.8 the highest since September 2008. Anything above 50 means the economy is in expansion mode.

· Pending home sales up 6.7% in April the largest increase in 7 years!

· First quarter productivity was up 1.6% higher than the forecast.

Statistics of Interest/Concern

· The Center for Responsible Lending says that so far this year there have been one million foreclosure starts.

· May unemployment rate 9.4 versus forecast of 9.2.

· Continuing jobless claims for the week were 621,000 met expectations.

· Total continuing jobless claims were at 6.74 million but for the first time since January actually declined slightly.

· Dice Holdings semi-annual survey of employers and recruiting firms showed most of those surveyed do not expect an increase in hiring this year.

· For April the Federal Reserve reported that consumer borrowing was down by $15.7 Billion following March’s $16.6 Billion decline which was the largest decline since 1943 when such records started being kept.

· Crude oil finished the week at $68 barrel.

Commentary:

Many states are having big budget problems. It is estimated that nationwide all states will require a $24 Billion increase in taxes to meet fiscal year 2009 budget requirements. The states with the biggest shortfall are California $11.3 Billion, Illinois $4.4 Billion and New York with $4.0 Billion.

If you have any questions or want to discuss your financing needs please give me a call at (602) 803-9660 or e-mail me at burt@gosfm.com.

The “Secrets” of Buying a Home Using a 203k Renovation Loan

As someone looking to purchase a home or as a realtor looking to help your client find a home, it is no small secret that the first question is:  How much do you qualify for or how much do you want to spend?

More often than not, people have a number in their mind, say $150,000 for our example.  So again more often than not, people in this case would  go looking at every house listed around $149,000, right?

So then what people find is say 50 houses ”in their price range” and they go and look at 2/3rd’s of them and none seem to fit what they are really looking for.  The realtor gets tired of driving the buyers around and the buyer starts getting more and more frustrated as the search seems to go on and on….

Ok, so here is the secret:

Look at houses $10, $20, $30, $40, and $50,000+ LESS than you are qualified for, but in the neighborhoods you want, with more square footage, number of bedrooms, and on a larger lot than you thought you would ever dream of owning.

The deals are out there right now, no question about that, but the “problem” has been that these houses you might be looking at “need too much work” – i.e., the kitchen is from 1978, the green shag carpet has holes in it, the A/C units were stolen, or maybe you just don’t like the pink tile in the master bathroom.

The “secret” of the 203k renovation loan is that it allows you to KEEP YOUR MONEY IN YOUR POCKET and roll a majority of those COSMETIC and other items that need to be repaired to get the property up to FHA minimum standards (health and safety issues) into the loan.  With only 3 1/2% down (which really is actually taken care of in many cases for you by Uncle Sam because of the $8,000 first time home buyer tax credit now being allowed to be applied directly towards the down payment), buyers are now also simultaneously improving the value of the property by bringing it’s finishes “into our decade”.

So again, what is the real secret?

Pick your new carpet.  Pick your new kitchen.  Pick your new paint colors.  Then go find the house.  Imagine the possibilities…….

It may seem kind of strange to bring up a quote from Gandi in an article about 203k renovation loans, but he said “Be the change in the world you wish to see.”

The 203k renovation loan was brought back to help restore pride in our local communities and eliminate the catch-22 of buying a home and then not having the cash to “customize” the property the way someone would want it (within reason and comparable to the neighborhood).   The 203k is the means by which the FHA is allowing each of us to contribute to the “change in the world (each of us would) wish to see” in our own homes and communities as well.

Please visit www.HowToFixTheEconomy.info for more details.

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