FHA 203k Loans: What Are They? What Are the Benefits?

Original Article Was Posted on www.Zillow.com by Andrea Smolin

FHA 203k Loans: What Are They? 

What Are the Benefits?

Getting a Mortgage Loan for a Fixer-Upper: A Primer on FHA 203k Loans

The idea of buying a fixer-upper and turning it into your dream abode can seem so perfect -- every nook and cranny just to your specifications! The reality, however, can be harsh. When you realize how much it will cost to remodel, you often also realize that you can't afford it. Or you find out that a lender won't give you a loan because the home is considered “uninhabitable” as it is. That's where an FHA 203k loan comes in.

An FHA 203k loan is a loan backed by the federal government and given to buyers who want to buy a damaged or older home and do repairs on it. Here's how it works: Let's say you want to buy a home that needs a brand-new bathroom and kitchen. An FHA 203k lender would then give you the money to buy (or refinance) the house plus the money to do the necessary renovations to the kitchen and bathroom. Often the loan will also include: 1) an up to 20 percent “contingency reserve” so that you will have the funds to complete the remodel in the event it ends up costing more than the estimates suggested and/or 2) a provision that gives you up to about six months of mortgage payments so you can live elsewhere while you're remodeling, but still pay the mortgage payments on the new home.

Which repairs qualify?

There are two main types of FHA 203k mortgage loans. The first is the regular 203k, which is given for properties that need structural repairs such as a new roof or a room addition; the second is the streamlined 203k, which is given for non-structural repairs such as painting and new appliances. Among the other repairs that an FHA 203k will cover: decks, patios, bathroom and kitchen remodels, flooring, plumbing, new siding, additions to the home such as a second story, and heating and air conditioning systems. The program will not cover so-called “luxury” improvements such as adding a tennis court or pool to the property.

How much money can you get?

The maximum amount of money a lender will give you under an FHA 203k depends on the type of loan you get (regular vs. streamlined). With a regular FHA 203k, the maximum amount you can get is the lesser of these two amounts: 1) the as-is value of the property plus repair costs, or 2) 110 percent of the estimated value of the property once you do the repairs. With a streamlined loan, you can get a loan for the purchase price of the home plus up to $35,000. To determine the as-is value of the property or the estimated value of the property post-repair, you may need to have an appraisal done. You will be required to put down 3.5 percent, but the money can come from a family member, employer or charitable organization.

What kinds of properties qualify?

Qualifying homes include: a one- to four-family home that has been completed for a least a year; a home that has been torn down, provided that some of the existing foundation is still in place; a home that you want to move to a new location. The home cannot be a co-op, but some condos are eligible. Your property will also have to qualify under the usual FHA requirements. For example, its value cannot exceed a certain maximum amount, which depends on where you live.

What are the pros and cons of these loans?

The main benefit of these loans is that they give you the ability to buy a home in need of repairs that you might not otherwise have been able to afford to buy. Plus, the down payment requirements are minimal, and often you get decent interest rates (note that the interest rates and discount points will vary by 203k lender, so it's important to make sure that you're getting a good deal on the loan).

The downsides are that not all properties qualify, there are limits on the funding you can get and applying for the loan isn't easy. For example, to apply for the loan you may need to hire an independent consultant to prepare the exhibits required (to get the loan, you have to provide a detailed proposal of the work you want to do and cost estimates for each item). For more information on 203k loans, check out.

Joe Barbee

Elite Realtors of Georgia

www.WarnerRobinsHouseHunter.com

Foreclosures For Sale In Warner Robins, Ga

         Click on the link below for a list of foreclosure Listings in Warner Robins, GA!!

                                                      Warner Robins Foreclosures

               If you are interested in ANY of the homes, please give me a call at 478-978-3428

                                                                           OR

                                     You can email be at TheBarbeeTeam@Gmail.com

Joe Barbee

Associate Broker

Elite Realtors of Georgia

478-978-3428

www.WarnerRobinsHouseHunter.com

www.WarnerRobinsRealtor.com

                                              We Would Love To Earn Your Business!!!

Warner Robins Real Estate Reflected Overall 2013 Uptrends

It’s time for this Warner Robins Realtor observer to tackle the New Year’s roundup of the Year in Real Estate (along with the traditional disclaimer that, since the actual statistics won’t be tallied until 2014, this has to be a lot more sizzle than steak!) But this is one time in the year when we local residents get to take pause to relax, perhaps put a bottle of bubbly in the fridge for later on, and take a sweeping view of the general direction of things across the land.

If you’ve been reading here throughout the year, you already know that 2013 Middle Ga real estate activity might easily justify chilling a superior vintage champagne: it’s been a pretty darn good year! A smattering of last week’s press reports confirms it:

·         * From the East Coast to Oahu (where there was a “1 in 3 chance” that if you sold a house, it was for more than the asking price), reports were of steadily rising prices.

·         * The Business Insider reported that the Big Apple “managed to shatter several real estate records in 2013.” One of the records was a tidy listing for a modest little 62,000 sq. ft. private coop residence. Sure, $130 million may sound a little steep to us here in Warner Robins, but that might be because so few of our digs have 82-foot swimming pools or tennis courts…at least not indoors, inside our five-story apartment atop a skyscraper.

·         * More down to earth might be NAR’s assessment that “Housing prices rose faster than expected” — with a lot of credit given to the fact that “affordability remained high.”

·         * Another factor: “More first-time buyers” were entering the market due to “rising rents and pent-up demand.”

·         * Following suit, the Dallas News was touting a local home market that “came roaring back in 2013;” one that had “builders rushing to keep up with demand for new houses.”

·         * The Realtor® web awarded credit for the strong real estate year to “Low mortgage rates, all-cash buyers, and tight inventories” that sustained the housing market recovery. Our area real estate saw much of the same. 

·      *   There was one notably bleak spot: “ACT real estate hit hard by election” the Times reported. “Uncertainty” about election politics had created “subdued performance during the year” and some “negative house price growth.” The best news: this was the Canberra Times – and the country was Australia!

So let’s wish those Down Under a quick turnaround; then, after a relaxing day watching the Rose Parade and a bowl game or two, let’s get ready to charge into an equally dynamic 2014.

Happy New Year, everyone!

www.WarnerRobinsHouseHunter.com

Joe Barbee

Associate Broker/Property Manager

Elite Realtors of Georgia

478-978-3428

TheBarbeeTeam@gmail.com

A Warner Robins Foreclosure Can Sometimes Be Avoided

Even though national foreclosure rates have continued to drop, the threat of becoming another Middle Ga Foreclosure statistic is still very real for some homeowners. It’s at least somewhat reassuring to understand that most banks don’t really want a foreclosure — so for homeowners who take an early proactive approach with their lender, losing their home does not have to be inevitable.

Mortgage Restructuring

For anyone who has fallen behind on payments, Job One is to discuss the situation with your banker. If a mortgage restructuring is possible, you may have an opportunity to refinance at a lower rate with more manageable payment amounts. In some cases, it may be possible to alter other terms of your agreement — for example, you might arrange to postpone any delinquent payments to the end of the loan’s term. You have to ask.

Payment Deferral Options

If payment failure has been caused by losing a job, a medical condition one of the other more common causes, some banks will work out payment deferral options. If you have prepared documentation to back up your hardship claim, it is more likely that the lender will be able to offer an agreement to defer your payments while you get back on track. 

Short Sale

If the financial situation is such that you know you can no longer sustain regular payments, it may be best to consider a short sale — the option where the bank agrees to accept sale to a third party for a sum that falls short of the loan’s balance. It means loss of the property, but results in a better credit history than does a local foreclosure.

A foreclosure in Warner Robins becomes inevitable if the reality of a tough financial situation isn’t recognized and addressed. If you take positive steps as soon as you realize you’re going to miss a payment, you put yourself in the best position to open options that are less problematic than full foreclosure. If you find you could benefit from a strictly confidential price evaluation on your home, call me ­— sometimes a property can be worth more than you think!   

www.WarnerRobinsHouseHunter.com

Joe Barbee

Associate Broker/Property Manager

Elite Realtors of Georgia

478-978-3428

TheBarbeeTeam@gmail.com

Basics of Buying Foreclosed Homes in Warner Robins

   You may have seen the reports — and they are correct — that the number of new foreclosures has dropped almost everywhere throughout the country. Although the Mortgage Bankers Association’s report about the drop in non-seasonally adjusted foreclosure starts might indicate otherwise, this year, sharp-eyed buyers can still find any number of foreclosed homes in Warner Robins. For those whose goal is to find an appreciably nicer home at a lower-than-average price, a few basics shed light on the process.



   Short sales differ from foreclosures. Although the sale price may be a good deal less than what is still owed on a loan, it may be more or less than the actual value of the home. A foreclosed home in Houston County is one that is actually owned by the bank holding the underlying loan — with the previous homeowners already having moved on.



   Success in the foreclosure realm means saving money by buying Warner Robins foreclosed homes — and it means being aware of the motives of the lender. First, any bank will typically offer foreclosed homes on an as-is basis. To keep losses in check, no repairs will have been made on the property. Some homes may be in fine condition, but others will not. That’s why it’s so essential to be willing to pay for an inspection on the property: it’s the only way to know exactly what you are getting into before you sign on the dotted line.

   Unless you have prior success in buying Warner Robins foreclosed homes, it is universally recommended that you enlist a buyers agent to help throughout this process. An agent can advise you whether or not the property value is in line with the market for comparable properties in comparable condition. While you can work with the bank on your own, it is advantageous to have an experience professional to assist at the bargaining table.



   If you are interested in buying foreclosed homes in Warner Robins this year, why not contact me today to discuss your search parameters? The values really are out there to reward the patient — and anyone willing to put in a dollop of elbow grease!

www.WarnerRobinsHouseHunter.com

Joe Barbee
Associate Broker
Elite Realtors of Georgia
478-978-3428 - Direct Cell Phone
478-333-6008 - Office
www.WarnerRobinsRealtor.blogspot.com 

Distinguishing a Good Warner Robins Foreclosure from a “Walkaway”

While it makes perfect sense to assume that a Warner Robins Foreclosure should be more affordable than a non-foreclosure, not every one constitutes a great bargain. Even if the goal is to land your next residence, a worthwhile way to gauge the value of any foreclosure is to look at it from an investor’s point of view: would the property yield worthwhile returns?

Determining that involves using some common benchmarks. Here are some of the leading factors that contribute to making a cool foreclosure evaluation:



How much did other houses sell for locally?



While the price of a property you are looking at may strike you as quite affordable, whether it represents true value is only apparent when compared with recent area market trends. According to Calculated Risk, the discounts foreclosure buyers are finding have begun “to drop to pre-crisis levels.” That lines up with other evidence that the foreclosure market is stabilizing as underlying home values and inventories rise. In any case, be sure to have your agent provide comps for similar properties sold in the area.



How many houses are vacant in the neighborhood?



Some neighborhoods have a considerably higher foreclosure rate than others do. If the neighborhood you’re evaluating incorporates a high number of vacant properties, the price should reflect that. Such areas tend to be relatively unattractive to other buyers for a number of reasons (including a tendency toward higher crime rates). Even if you have no intention of reselling or renting out the foreclosure you are considering, the neighborhood’s character should be factored into your decision.



Cost to renovate?



While it’s hardly unusual for a foreclosure in town to need some work, the details can be decisive. Ask an appraiser to go over the property. A good one will be able to give you a close approximation of the extent of renovation you should expect.




Great deals can be found in unexpected places – sometimes it just takes the help of a great agent to uncover.  If you are considering buying a local home - foreclosure or not – I hope you will give me a call!

www.WarnerRobinsHouseHunter.com

Joe Barbee

Associate Broker/Property Manager

Elite Realtors of Georgia

478-978-3428

TheBarbeeTeam@gmail.com

Warner Robins Property Ownership: Retirement ‘Ace in the Hole’

The other day I ran across some eyebrow-raising financial trivia. There’s a takeaway that should be encouraging for everyone who already own property in town.

The undeniable value of home ownership is pretty clear when you take a look at some of these financial facts

According to the Employee Benefit Research Institute, 56% of workers report that they haven’t even attempted to calculate how much money they will need for a comfortable retirement. That should get them thinking (although it looks like it hasn’t). If the Center for Retirement Research is right that only 42% of private sector workers have any retirement savings at all, it might explain why they don’t want to think about it.

I believe we can safely ignore Fidelity Investments’ finding that a 65-year-old couple retiring last year would require an estimated $240,000 for retirement medical expenses. Not that they will require more or less, but with the Affordable Care Act currently being eyed suspiciously by politicians in both parties, who knows how much (or what proportion) of care will be provided by…who knows?

On the brighter side, a certain degree of realism seems to have crept into the general populace. That is, if the Employee Benefit Research Institute is right that only 14% of American workers are very confident they will have enough money to live ‘comfortably’ in retirement. It’s undoubtedly why more and more Americans are planning on working well past the former retirement age.

What you can deduce from these facts is how much brighter your own future is if you have owned your own local property for a while. Owning your property free and clear puts that shelter expense money back in your pocket. From the moment you make the final mortgage payment, the likelihood of having a ‘comfortable’ retirement goes up dramatically.

It’s why the American Dream of owning property is such a great wealth-building tool: one that forces long-term saving regardless of how daily living pulls in the opposite direction. If you haven’t started building your own property ownership yet, I’m here to show you how to make it happen!

Joe Barbee

Associate Broker/Property Manager

Elite Realtors of Georgia

478-978-3428

TheBarbeeTeam@gmail.com