Real Estate

Can I get Down payment money?

There is a huge misnomer in the world that if you have never purchased a home before that you will get some free money to help buy a home. And if you have already purchased a home, you are out of luck. This is simply not true. Let me explain.
Down payment assistance programs were created to help low to moderate income families purchase a home of their own. If you make too much money, you will not qualify. There are two types of down payment programs referred to as —bond loans and grants. Today most of these programs do not require you to be a first time homebuyer. In addition, if you have not owned a home within the past 3 years, you are considered a first time home buyer.
Bond loans generally carry a higher interest rate than the prevailing rate. While both bond and grant programs both have income guidelines, bond loans allow you to make significantly more money and still qualify. Bond loans will usually pay the buyer’s down payment only. The buyer will need to negotiate closing costs with the seller or pay them themselves. These programs require that live in the property for a set period of time generally 5 years and you are not usually allowed to refinance or rent the property during this time. If you have your own money saved for down payment, you are generally better off using it than getting a bond loan due to the higher interest rate.
Grant programs allow you to get a loan using the prevailing interest rate. They do not increase the amount of the interest premium. These programs usually require borrowers to make less than the median income or perhaps 80% of the median income for the county. Currently, the grant program in Cleveland county allows a family of 4 to make up to $51,600 a year. This particular grant program will however pay the buyer’s closing costs, down payment and up front MI. This is a fabulous help for a home buyer. These programs generally require the buyer to have a percentage of their own money invested (1% of purchase price as of this writing in Cleveland county), a home buyer education class, and a property compliance inspection. Grant programs also require you to live in the property much like a bond loan.
If you are thinking about buying a home and would like more information on grant programs in your area or you are thinking about selling and you like to know how I can help you market your home using down payment assistance, please call me Sandi Walker 405-213-2992.

Real Estate

The cost of mortgage insurance

Lots of home buyers get a FHA loan especially first time home buyers with limited credit history. This is a good loan product that is backed by Housing and Urban development.  This loan allows buyers to buy with a minimum of 3-1/2% down payment. This down payment may be gifted, or come from a grant or down payment assistance such as the bond program. This helps lower income buyers participate in the home buying process.

Since FHA allows buyers to buy with a low down payment and often have little to no money of their own invested in the property, the risk of foreclosure is higher. Therefore mortgage insurance is required. Mortgage insurance protects the bank incase the borrower defaults. Unless a borrower puts a minimum of 10% down on a FHA loan, the mortgage insurance remains on the loan for the life of the loan. Consequently, a borrower with a strong credit history and a high credit score may decide to use a conventional loan where the mortgage insurance will fall off after the value reaches a 78% loan to value or the borrower requests it at an 80% loan to value.

FHA charges an upfront fee, currently 1.75% of the loan amount as well as a monthly fee.  Recently the government lowered this fee from 1.35% per month per annum to .85% per month. This is a huge savings for buyers using a FHA loan.

How this equates.   I will use a 100,000 loan for ease of numbers. Note the savings on a $200,000 loan are double.

100,000 loan with a 1.35% per month per annum fee is $112.50 added to the loan each month.

100,000 loan with .85% per month per annum fee is $70.83 added to the loan each month.

This makes the monthly mortgage payment more affordable. This is a substantial savings over the life of the loan.

If you are looking for an experience realtor to help you buy a home, sell a home or invest in real estate, please call me at 405-213-2992 or visit my website at http://www.sandiwalker.com

HUD Properties

HUD will no longer provide an appraisal on their properties

HUD has changed the rules again on the repo properties. For as long as I can remember HUD has had an appraisal on the property that they are selling and used the appraisal price as the list price. They would also state if it was insurable or non- insurable. Meaning that it would be allowed to go FHA with some repairs or not (see a previous blog). Now HUD is no longer providing their appraisals to the buyer. The buyer must obtain their own appraisal.
HUD has not explained why the change in procedure nor have they explained some of the ramifications that can now occur under these new guidelines. The following are some questions that persist.
What if the appraisal comes in low? Will HUD change the price to the buyer to match the new appraisal price or will the consumer need to bring additional funds to closing?
What if the escrows are vastly different?
What if the new appraiser will no longer allow the property to go FHA?
Does the old standard of insured vs non-insured still apply?
Having spoken with various people including asset managers and listing agents, the facts are still very unclear. It seems most agree that if the appraisal comes in low that the property will need to be put back on the market, unless the buyer will pay the difference between the new appraised price and the contract price. Although I do not know if it will go back at the same price or the new appraisal price. The HUD asset manager was not sure when I asked.
Please know that two appraisers can have two different opinions of price and condition. This may result in a buyer paying for an appraisal on a property that they cannot get financing. This creates an issue for my buyers attempting to purchase a repo in order to save money. They will need to look at the condition of the property more carefully and decide if they are willing to risk the cost of an appraisal to learn if the property will indeed finance.
This may scare off owner occupant buyers and cause more HUD properties to be sold to investors. Only time will tell.
My personal thought is that HUD will try this approach for 6 months or so and then review the facts and determine if they are going to continue to sell property this way or not.
If you are looking to purchase or sell a home in the Oklahoma City area, I would love to help you. If you have questions regarding real estate, please call me. 405-213-2992 or visit my website http://www.sandiwalker.com

Real Estate

Are you a first time home buyer?

Buying a home is a large purchase and can be a little scary for most buyers starting out. Let’s face it this is the largest item that you have ever thought to purchase and if you buy it (close on the house) and decide you really don’t like it a week later, you can’t take it back. So here are some things to think about before you commit to buying a home.

1. Get preapproved to see what you can afford. If the lender tells you that you can afford a certain amount and you have not been paying any where near that in rent or do not feel comfortable paying that amount in a house payment, discuss that with your lender. The lender should be able to tell you what price range to look at based upon the amount you want to spend each month including taxes and insurance.

2. Find a realtor that you feel comfortable with. I think it is best to find a full time realtor, one that does not have another job. Someone who knows the area of town you want to buy in. Ask questions of the realtor you are thinking of hiring. What is your average price range that you sell? How many homes did you sell last year? Do you work with down payment assistance programs and what is available for me, if any? What hours do you work? Do you take a certain day off each week? Remember, any realtor can assist you in buying any house on the market regardless of whose sign is in the front yard, so find a realtor to help you personally.

3. Determine the location you want to live in. Is it close to family, friends, or work? What is the crime rate? Is the area improving or deteriorating?

4. Realistically decide on the number of bedrooms and bathrooms as well as other amenities. Remember everything is priced for a reason-location and or condition. Determine if you are willing to fix or can some things that may be required. Verify if your loan will allow you to buy certain properties that may require improvements.

5. Have your realtor set you up a search based upon your criteria. Review the search results, drive pass the properties to determine if you are still interested. Remember you can change what is on the inside of the house, you can’t change your neighbors house. So stand on the front porch and look out.

6. Call your realtor with the properties you wish to view and take a tour. And ask questions. You haven’t done this before, but your realtor has and should be able to answer your questions, or get the answers for you.

I love helping first time home buyers. If I can be of assistance, please feel free to call me at 405-213-2992 or visit my website at http://www.sandiwalker.com
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