Everything You Need To Know About Investing In Foreclosures
Bidding On A Hud Foreclosure Home
In June of 2008, foreclosure filings were up an average of 50% in most American states. You can take this news in many ways. But for the real estate investor, this is great news. There are now more choices than ever to not only make a profit, but to help become your own boss and be in charge of your financial future. Read the rest of this entry
Fha Streamline 203k – The Basics
One of the most exciting opportunities today for loan officers and real estate agents alike is the opportunity to sell off the glut of foreclosed homes on the market. A big problem with these potential deals is that most people who are losing their home because they can’t make the payments usually lack the money for routine maintenance as well. Once foreclosed upon, those homes hit the market needing some serious sprucing up.
In 2005 HUD came up with a new FHA insured mortgage program they called the “Streamline (K)” Limited Repair Program. The Streamline 203k loan permits homebuyers and those refinancing to borrow up to an additional $35,000 into their mortgage to improve or upgrade their home.
Most loan officers go looking for a special set of guidelines for Streamline 203k loans. There are some specialized guidelines and loan to value rules, but the key thing to remember is that all standard FHA underwriting guides apply just the same way they for any regular FHA loans when it comes to credit, income and asset documentation. This includes decisions reached by both automated underwriting systems and manual underwrites.
Here are the general criteria for a deal to qualify for Streamline 203k:
* May be used for purchase or refinance of one-to-four (single family) residences, including HUD REO properties
* May be either fixed or adjustable rate mortgages
* Combines the funds to purchase or refinance (pay off existing liens) along with the funds needed to repair/rehabilitate the property.
Repairs are completed after closing. (NOTE: A 203K cannot be a Cash-Out Refinance. All money must go to repairs.)
* One closing, with rehabilitation funds escrowed and disbursed as the work is satisfactorily completed
* Can be used to update homes, correct health and safety issues, pay for higher cost items such as a roof, etc.
* Property value must be sufficient to purchase/refinance and complete the rehabilitation
* Property must be 100% complete or equivalent document and must be at least one (1) year old.
(EXCEPTION: Presidentially declared disaster areas for one (1) year after the disaster)
* Borrower and credit eligibility same as for other programs (No Investors, including REO sales)
Here are a few additional aspects of the Streamline 203k:
* No minimum borrowing threshold, but there is a maximum of $35,000, which most lender require to include at least a 10% contingency fund
* Appraisal is completed as “Subject To Repairs”
* A minimum 10% Contingency Fund is required
* Unlike regular 203k’s no consultant and plan is required
* No general contractor is required
* The lender is responsible for ensuring that the repair cost is reasonable and customary for the area in which the property is located
* No preparation of architectural exhibits (as required in HUD Handbook 4240.4 REV-2, Paragraph 3 – 2) is necessary
* Streamline 203k helps address the repair issues that are often delaying or preventing sales and refinancing
Obviously there will be some differences between regular FHA and streamline 203k when the time comes to calculate the maximum mortgage amount.
Here is how the maximum Streamline 203k mortgage amount is calculated:
The mortgage amount can be the lesser of:
A. The maximum (statutory) mortgage limit for area
B. The “As is” value (usually the purchase price or outstanding debt in case of a refinance transaction) plus cost of rehabilitation
C. 110% of “After Improved” value; Condominiums are limited to 100% of “After Improved” value.
D. If the borrower has owned the property for less than one year, the acquisition cost is the maximum.
Only a handful of lenders are accepting loans under the full FHA 203k guidelines, but many FHA lenders are offering the streamline version.
By: Carl Pruitt
Article Directory: http://www.articledashboard.com
For FHA training for loan officers go to fhaloanadvice.com
Carl Pruitt has 23 years experience in the mortgage and real estate industries as an FHA mortgage specialist.
Finding A Great Deal In The Real Estate Market With Bank-owned Or Reo Properties
Home buyers are typically searching for an excellent deal on a home. Whether they are upgrading, investing or buying their first homes, those in the market for real estate know that foreclosed and real estate owned (REO) properties offer the opportunity to get a fabulous deal on a home. Read the rest of this entry
Short sales have become very popular recently due to the financial crisis and real estate market melt-down. Many homeowners are holding mortgage loans that are more than the homes are worth. Learning how to do short sales is now pretty much a requirement if you are interested in investing in foreclosures and pre-foreclosures.
Closing And Funding Short Sale Deals With Transactional Funding If you’re a preforeclosure investor, with the tightening credit markets, you have no doubt noticed how much more difficult it is these days to close short sale deals. Read the rest of this entry
Lease Option has long been a great alternative for investors who want to hold their investment properties long term but don’t want the hassle that comes with traditional landlording. In current declining real estate market and foreclosure crisis, most quick-turn, hit-and-run type of exit strategies are no longer viable for investors. Read the rest of this entry
As the real estate market collapse, more and more homeowners finding themselves owing more on the mortgage than what their home is worth. A short sale allows investors to create equity out of thin air. It is a great way of investing in foreclosures.
Check Out Short Sales On The Real Estate Market
If you have been considering the real estate market, I’m sure you have detected that many of the homes up for sale are listed as short sale. Buying a home for under the amount that is owed on the property is called a “short sale.” Read the rest of this entry
Buying Pre-foreclosure Homes: An Option For First Time Home Buyers
Professional real estate investors know that buying foreclosure real estate can be difficult, frustrating and at best a total waste of time. That is, it can be all of those things to an unwary new investor straight out of a “Make Big Money In Foreclosure Real Estate” seminar. Read the rest of this entry
Real Estate Investing: Getting The Best Preforeclosure Deals
Most people who are savvy at real estate investing would agree that investing in preforeclosure property can yield lucrative real estate profits. But those who reap the best preforeclosure deals are the ones who exercise patience and diligence by shopping around.
Read the rest of this entry
