Fixer Upper Mortgages

One of the big challenges of buying a home these days is how to buy one of the many distressed houses that need fix-up.   The traditional ways to do this is to either save your cash and fix up with your own funds or take out a construction/rehab loan and later replace this loan with a traditional fixed rate mortgage (see ‘Doing the Two Step‘).  Both of these methods are beyond the means of most home buyer’s.  In an earlier post I talked about one program offered only on Fannie Mae owned properties called HomePath.  Today I want to talk about another program for financing real estate, the FHA 203K,  which a can be used on almost any distressed house.  This program is not available to investors.  But this program can be a great way to create the home of your dreams from what first looks like a run down mess.  The Minnesota Real Estaete Team will sponsor a seminar  Fixin’ to Stay? Use a 203k - Tuesday, March 2nd, 6:30-8PM in Burnsville.

There are two versions of the FHA 203K.  Both loans involve only one mortgage which finances both the purchase and rehab with one mortgage and one closing.

1.) The Streamline FHA 203K is meant for projects under $25,000 which are not too complex in nature.  This is perfect for those neglected homes that need paint, flooring, and non-structural repairs.

2.) The full version or just FHA 203k, can take on just about any rehab project up to tearing down the house and reusing the foundation.

These are great loans in today’s market, because there is so much fixer upper  inventory available today.  The FHA 203K also allows even first time home buyers to customize a home to fit their dreams.

So What’s the catch?

Actually there are a lot of “catches.”   First of all you need to find a lender willing to underwrite an FHA 203K  because not all lenders have the experience and capacity to help a home buyer with a 203K.  It also helps if you have a Realtor who can team with the lender to help you coordinate the complications of a 203K purchase.  Purchasing a house with a 203K requires a step buy step process that will involve a team of professionals to be involved.  The entire team needs to understand the process and paperwork.   There is also an order that should be followed to insure the best outcome.  Understanding, the loan process, the construction process and all the paperwork involved requires teamwork and preparation.   To borrow another sports cliche´ you first  need a game plan and you need a team to carry out that plan. Here are the key players needed besides your lender and Realtor: contractors, inspector, consultant (not needed for Streamline 203K),and appraiser.

FHA 203K Rehab Game Plan

As you might suspect that someone (me)  who writes a blog about Fixer Uppers might be able to help you put together that game plan and find great players for your team.    I’ve put together an online Businesses I Refer list online on my website FYIBob.com.  I have the names and contact numbers of people who would be a great additions to any FHA 203K team.   I can also provide you with great search tools for finding just the right fixer upper to rehab into your dream home.   I can set you up with MLS search functions for your phone for when you are driving around a neighborhood you like,  and an online home search engine you can use on your computer.

If you would like to sit down and discuss your own plans my contact numbers are on the sidebar of this blog.  Or you can use the contact form at the bottom of this post.   The Minnesota Real Estate Team will also be sponsoring a seminar to help you become more familiar with the FHA 203K rehab process. As I mentioned above;  on Tuesday March 2 from 6:30-8 pm Cornerstone Mortgage and the Minnesota Real Estate Team will sponsor “Fixin’ to Stay? Use a 203k!”

Use the contact form to reserve a spot at the seminar, request more information, or set up a one on one consultation.

[contact-form]

Technorati Tags: FHA loan, Fixer Upper Inventory, real estate finance

Here is a cut and paste right off the HomePath site:

The benefits include:

• Low down payment and flexible mortgage terms (fixed-rate, adjustable-rate, or interest-only)
• You may qualify even if your credit is less than perfect
• Available to both owner occupiers and investors
• Down payment (at least 3 percent) can be funded by your own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employer
• No mortgage insurance*
• No appraisal fees
• Also eligible for HomePath Renovation Mortgage (see details below)
• HomePath Mortgage financing is available from a variety of lenders – both local and national

Check out the local inventory on your own.  On the HomePath website you can find a property search feature along with financing information.  If you have any questions as to how to buy, finance, and fix up one of theses Fannie Mae homes give me call.

Technorati Tags: Fixer Upper Inventory, Foreclosures, Investment property, real estate finance

Daunting, mysterious, scary — are these words that describe your feelings about buying your first home? Just say “no” to the negatives and “yes” to the positives!  Come learn about the buying process, from working with a loan officer to getting pre-approved and house-hunting with a Realtor, to getting your offer accepted and finally closing on YOUR first home!  Learn about the special first-time buyer programs that are available just for you. Many programs offer down-payment and closing cost assistance as well as lower-than-market interest rates.

Join Darcy McDonald of Cornerstone Mortgage and Steve Howe of The Minnesota Real Estate Team as they lay the groundwork for you to travel through the real estate transaction.  This seminar is set up to show you how to get off to a fast start, and prepare you for every step along the way until you reach the end of your journey — moving into your new home. They will also address today’s current marketplace, the extended tax credit and special loans to help you fix up those not-so-nice houses.  After attending this seminar your feelings about buying a home will be fun, exciting, and easy.  Feel free to bring your questions and get ready to become educated on buying your first home!

Call 952-240-5949

Technorati Tags: First Time Home buyer seminar

Overall I expect the climate for investors in single family homes to improve greatly.  Here is my reasoning:

1.) The first time home buyer tax credit will either expire or get an extension.  Either way, the pressure on new home buyers to ‘git r done ‘now will decrease.

2.) There have been indications that our historically low interest rates will remain low for some time.

3.) The inventory of bank owned homes shows no signs of abating.  Defaults are still high.  Government programs to keep defaulting homeowners in their homes have missed the mark by a wide margin. There are some who predict we will see even more foreclosures in 2010.

4.) Winter is coming.  Here in the Minnesota buyers tend to hibernate till spring.

5.) The rental market for single family homes remains strong.  This allows patient investors the opportunity to buy and hold for consistent profits.

There are opportunities now, and I expect there will be an even better opportunities in 2010. So if you’ve been sitting on the sidelines so far don’t fret that you have missed the bus.   Hang in there! Get ready for great opportunities this winter.  Check out our seminars. Get your finances together.  And be ready to take advantage of this historic opportunity to invest in real estate.

Technorati Tags: first time home buyers, real estate finance, real estate investing

I use the simple guidelines I outlined in my post June 10.
I looked at three bank owned properties on June 24. Here are my notes.

First: A 1953 1 1/2 story house in Richfield priced at $106k. First day on Market! It’s in a nice location in west Richfield near Richfield Lake. It has 4 legal bedrooms and a large detached 2 car garage. It looks good structurally.
As I go though my list:
1.)Landscape is ok,
2.) Roof is older, but has several years left, siding and trim is metal and fading, Windows and doors are older and could be replaced.**
3.) AC unit outside is old, Furnace looks newer, Electrical panel needs upgrade
4.) Interior walls and ceilings in fair shape-need paint. Main floor bedrooms are hardwood in fair shape. Needs flooring throughout, Needs some minor repair to trim.
5.)Kitchen is original plywood cabinets, baths needs some work,
6.)Garage door is shot, but opener ok, siding is original combed cedar, needs minor repairs and paint.
7.) Sidewalk needs some repair
Overall not a bad house. it may be worth running comps and doing a rough estimate.
** As a bonus I was able to get an estimate from Universal Windows Direct for replacing the exterior doors and windows.**
A special thanks to Steve Brager for this.
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Second: A 2400 square foot split entry with a tuck under garage in Burnsville. Built in 1969 and listed under $90k.
This house has a tax valuation of $243k. The big issue is the foundation. There may be a good opportunity here, but it will require the major work to the foundation.
No need to go through my check list. This deal needs a bid from a contractor who handle the foundation work.
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Last for today: A very large 1390 square foot 1957 rambler in Lakeville listed at 130k. This is one of those sad stories of a good house gone bad. At one time this house had lots of character and amenities. Unfortunately this home was turned into a non-conforming duplex and is now a complete mess. It’s also on a very busy corner. Too much obsolescence for me bother with.
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That’s it for this inventory search

Technorati Tags: Bank owned, Fixer Upper Inventory, Investment property