Today’s Tampa real estate marketplace is plentiful with foreclosures and short sales. The downfall of these properties is they are sold “as is” and usually in need of repairs. The FHA 203k program may be the loan that will fulfill the Buyer’s needs to purchase the property and perform the renovation that is needed.
FHA 203k is a little known program that has been in existence since 1978 and enables the Buyer to borrow monies to cover the purchase AND any repairs/renovations needed. This Federal Housing Administration loan is federally-insured and allows the costs of the needed repairs to be included in the original loan amount. With the many historic homes in the Tampa real estate market, this program could be beneficial to prospective buyers.
The renovations/repairs with a FHA203k need to be completed within a six month period after the escrow closing.  These loans can be used to pay for new appliances, room additions, remodeled bathrooms and kitchens, in addition to necessary repairs such as doors, windows, roof, etc.. The FHA203k allows Buyers to purchase a home in an “as is” situation and complete the renovation before they move in.
An example of how the program can benefit a Buyer:
Last year, John Williams was looking for Tampa real estate when he found a home in the Hyde Park area that was priced as a short sale and was listed as an “as is” sale. Being an old bungalow, it was in need of wood replacement, new roof, window repairs, etc. – but being in the location of other higher priced homes, the home would be well worth the completed project. The FHA203k enabled him to purchase the home for $ 150,000 and roll another $ 100,000. into the property renovations. John was able to buy the property, renovate it to be structurally sound and update the electric, plumbing, kitchen appliances and bathroom fixtures.
With the reduced prices, interest rates at historic lows, and the substantial Tampa real estate inventory available combined with programs like the FHA203k, it is the most advantageous time in recent history to become a home owner.
The Federal Housing Administration has announced policy changes to FHA mortgage guidelines. Due to increase of FHA loans over the past couple of years, FHA’s reserves have been depleted below the 2% that is congressionally mandated. Although FHA has changed several criteria in their policies to help strengthen the capital reserves, these changes are expected to have little impact on the housing market.
FHA will increase the “up-front insurance premium” from 1.75% to 2.25% of the loan amount. Because these fees are added into the loan amount without affecting the LTV, the amount of monies that a Buyer needs for the purchase will not be affected.
Under current FHA guidelines, the Seller can contribute up to 6% of the sales price toward the Buyer’s closing costs/pre-paids, etc – this amount will decrease to 3% contribution under the new FHA policies.
To further strengthen and protect insurance reserves, FHA will require a larger down payment for Buyer’s with low credit scores. For borrowers with below a 580 credit score, they will now need a 10% down payment instead of the 3.5% for borrowers with higher credit scores. Since there are few lenders, if any, that will loan to borrowers with a credit score below 580, this is inconsequential to the present housing sales of FHA properties.
These FHA changes will be implemented over the next several months. If you should have any questions, please contact me at FBC Mortgage LLC, stimmerman@fbchomeloans.com.
Rates for a 30-year, fixed-rate mortgage averaged 5.04 percent, with points averaging 0.7 for the week ended Sept. 17. That is down from previous week, when it averaged 5.07 percent, according to Freddie Mac (NYSE: FRE).
Last year at this time, the 30-year, fixed-rate mortgage averaged 5.78 percent.
The 15-year, fixed-rate mortgage this week averaged 4.47 percent, with points averaging 0.6, down from the previous week, when it averaged 4.5 percent. A year ago at this time, the 15-year, fixed-rate mortgage averaged 5.35 percent. This is the lowest it has been since the McLean, Va.-based lender started tracking it in 1991.
“Interest rates for fixed-rate mortgages eased for the third consecutive week and remained at three-month lows,” said Frank Nothaft, Freddie Mac VP and chief economist, in a news release.
On Wednesday, the Mortgage Bankers Association reported that loan applications fell by a seasonally adjusted 8.6 percent, the result of the Labor Day holiday.
Smith & Associates Real Estate’s preferred Mortgage Consultants will be happy to discuss available loan programs with you. For more information, please visit the website.
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Freddie Mac: Mortgage rates fall
FHA – Low Down Payment
With new incentives throughout the real estate industry, there are buyers in the marketplace that are new to the process of residential mortgages. With the FHA program, the required down payment is only 3.5% and this down payment can be a gift from a relative. In addition, the Seller can contribute up to 6% of the purchase price of the home towards the Buyer’s closing costs and prepaid items.   When you combine these two features of the FHA product, a Buyer can come to the closing table with no money out of his/her pocket. This has enabled many people to purchase homes that do not have the 20% down payment required by most conventional lenders.
The FHA mortgage loan limit in the Tampa Bay Area is $ 292,500.00 – with the 3.5% down payment, the maximum purchase price would be $ 303,105.00 .  An FHA loan does have standards for the home to qualify. Basically, the home needs to be in sound structural condition including roof, windows, doors, etc..   Minor cosmetic repairs are permitted under the FHA mortgage loan guidelines.  FHA does allow the purchase of multi-unit properties up to 4 units as long as the Buyer lives in the property as a primary residence.  Smith and Associates’ realtors are aware of these standards and work closely with us to ensure a seamless process.
FHA loans are also available to refinance your present mortgage to a lower interest rate. Homes can be refinanced up to 96.5% of today’s market value. This can be significant if you presently have a high interest rate and/or have an ARM loan that will be adjusting within the next couple of years. Contact us to evaluate your present mortgage to determine if you would benefit from a FHA loan.
USDA – No Down Payment
USDA is a program through the Federal Government that allows up to 100% mortgage financing in rural areas. The home has to be within a certain rural area which is determined by population concentration.   Tampa Bay area locations include Land O Lakes, Wesley Chapel, southern Hillsborough County, east Hillsborough County, etc.
As with FHA loans, the Seller can contribute up to 6% of the closing costs/prepaid items, the Buyer can receive gift monies from relatives, etc.  Additional criteria to qualify for this loan program include income limitations for the Buyer(s) which vary according to the area of the country and the number of people that will be living in the home.
Smith & Associates Real Estate’s preferred Mortgage Consultants will be happy to look up properties and evaluate your situation to determine if you are eligible for this loan program. For more information, please visit the website.
Bond yields pushed mortgage rates slightly lower this week with the average 30-year, fixed-rate mortgage at 5.08 percent for the week ended Sept. 3. That’s down from last week when it averaged 5.14 percent, according to Freddie Mac (NYSE: FRE). Last year at this time, 30-year, fixed-rate mortgages were hovering at about 6.35 percent. The 15-year, fixed-rate mortgage averaged 4.54 percent, down from last week’s 4.58 percent. One-year, adjustable-rate mortgages averaged 4.62 percent this week, down from 4.69 percent last week. “Low mortgage rates are helping to keep housing very affordable, said Frank Nothaft, Freddie Mac vice president and chief economist, in a media release. On Tuesday, the National Association of Realtors reported that pending sales of existing homes rose for the sixth straight month in July, a trend not seen since the NAR began reporting data in 2001. July’s sales were the strongest since June 2007.
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