Creative Financing 101 » mortgages

Stimulus Bill Could Raise Limits on FHA Loans

Jamie Beck — Wed, 11 Feb 2009 06:10:22 +0000

A version of the stimulus bill currently making its way through Congress proposes to increase the limits on FHA loans.

“The House version of the bill would restore the upper limits for Fannie Mae, Freddie Mac and FHA loan guarantee programs to $729,750 in high-cost housing markets, where they stood for much of 2008 before being reduced to $625,500 — a step endorsed by many real estate industry groups.”

There’s no guarantee that this provision will appear in the final legislation. But, if it does, homeowners living in higher cost of living areas (such as Los Angeles, San Francisco, and New York) will have the ability to buy more expensive properties with the benefits of an FHA loan. In most areas throughout the country, $729,750 would get you a pretty amazing mansion. But, in big cities like those listed previously, homeowners pay about that much for a nice, 3br/2ba home in a good neighborhood.

FHA-insured loans allow homeowners to buy with a low down payment (3%) and minimal closing costs.

photo credit: ktylerconk

See Also:

FHA Loan Basics

FHA Loans Step-by-Step

Agents Take Note of Seller Financing

Jamie Beck — Tue, 10 Feb 2009 02:33:38 +0000

A growing number of real estate agents are paying special attention to seller financing. Since home sales have decreased in most urban areas, agents are desperate to find new clients.

One way to score sales is to offer help to people who cannot necessarily qualify for traditional loans and need seller financing. For agents who are willing to wade through often confusing deals, the rewards can be worth it.

Real estate writer Broderick Perkins from Examiner.com reports:

“Tight mortgage money makes seller-financing, not a silver bullet to shoot down stiff underwriting standards, but an option to consider in a tight mortgage market…

Only a fraction of sellers are willing to take on the role of financier, but that fraction is likely larger than it was a few years ago when lenders had plenty money to lend.

That’s because today’s home buyers are having a tough time finding mortgage money and sellers are having a tough time finding buyers.”

Seller financing has quite a few drawbacks. But, when deals go smoothly, it can be a smart decision for all parties involved: the buyer, the seller, and the agent.

See Also:

Seller Financing Guide

Seller Financing Risks

Common Seller Financing Questions

Buying Foreclosures with FHA Loans

Jamie Beck — Fri, 06 Feb 2009 02:46:32 +0000

Buying a home that’s been through foreclosure has the same requirements as purchasing any property. It is possible to take out an FHA loan to buy a foreclosure home. However, there’s one big problem: foreclosure properties are often so trashed that lenders won’t issue a mortgage for them.

I once walked through a home where the previous owner had recently been evicted. It was clear that he left unhappily, and probably against his will. Junk was piled everywhere, major appliances were missing, and windows were covered over with saran wrap. The carpets were soiled, the hardwood was scratched up, and I could barely breath because of the smell. Many lenders wouldn’t dream of issuing a loan for a home in that condition.

This is where an FHA mortgage can come in handy. They have a special lending product, called the HUD 203(k) loan that allows borrowers to include the cost of repair projects in the mortgage. The loan amount is actually based on the estimated value of the home after the renovations are completed.

The FHA only insures these loans, they do not offer them. So, it’s possible to take out an FHA mortgage from just about any major borrower. If you find yourself looking at run-down foreclosure properties, this may be one of your best options.

photo credit: TheTruthAbout…

See Also:

FHA Mortgage Guide

HUD 203(k) Mortgages

A Return to Seller Financing in 2009?

Jamie Beck — Mon, 02 Feb 2009 23:42:05 +0000

Due to the tightening credit market, many experts believe that seller financing will make a major comeback this year.

Akron Ohio News reports:

“Creative financing’ is one of the items that is ‘in’ for 2009, according to an annual survey conducted by Mark Nash, a Coldwell Banker broker and real estate author who uses a network of 839 Realtors® in all 50 states and eight Canadian provinces to acquire consumer responses to a variety of housing questions.

Nash…believes that seller financing, or “carrying the paper” will return to popularity this year along with the lease-option.”

Not everyone is in a position to offer seller financing. But, for those who can, it’s often a smart way to attract buyers in a down market.

See Also:

Seller Financing Guide

Where to Find Seller Financed Properties

Seller Financing Laws