Looking to Buy a ‘Fixer-Upper’? The 203k Program Can Help Make It Happen

Today’s real estate market presents a lot of opportunity for interested home buyers—with the growing supply of foreclosure properties and short sales, there are certainly some great deals to be had.

The problem in buying a “distressed” property, however, is that these homes are often damaged due to lack of maintenance or prolonged vacancy. So while the price tag might be right, the investment necessary to make the home livable might just push buyers well beyond their budgets.

As a member of the Top 5 in Real Estate Network®, however, I have access to the latest information on mortgage and financing options. One particular option that is providing hope for many of today’s home buyers is HUD’s FHA 203k program, a loan that enables buyers to not only secure a mortgage, but receive the funds necessary to improve the home as well.

Here are five facts about the 203k program to help you determine if it might be the right fit for you:

1. The FHA Section 203k program was originally introduced by HUD in 1978 as a program to rehabilitate and repair single-family homes. The 203k is a single mortgage loan that provides funds to purchase a home and make repairs and improvements. A simpler version, the Streamline 203k, was introduced in 2005. This version offers less documentation and lower loan fees for renovations that don’t exceed $35,000.

2. In today’s market, conventional financing, which often requires 20% – 25% down on a home and a perfect credit score, is often hard to come by. However, with less-than-perfect credit and as little as 3.5% down, you can get an FHA loan, such as the 203k.

3. The 203k approval process is a little more complicated than a conventional loan. For example, you’re required to secure renovation costs from an established, licensed contractor and deliver a package of the proper paperwork to the lender to secure FHA approval. Make sure you work with an agent—like a member of Top 5—who is well-versed in the 203k program, or who can connect you with a lender that is.

4. The 203k loan is not just for foreclosure or distressed properties. More than 80% of the homes in America were built before 1990—that’s over 100 million homes that are 20 years old or older—and almost every one is in need of some amount of repair and updating. The 203k loan, therefore, offers advantages for almost any home purchase.

5. The 203k loan is not just for home purchases but can be used to finance a home improvement, as well!

For complete details on the HUD 203k program, you can visit www.fhainfo.com/fha203k.htm. Please feel free to e-mail me, too, since this information can be hard to digest and confusing. Be sure to pass this e-mail on to any friends and family who might also be able to take advantage of a 203k loan.

Is Buying a Foreclosure Really a Bargain? What You Need to Know

In today’s tumultuous economy, it’s no surprise that there are foreclosure properties to be found in just about every community across America—even ours. While a terrible hardship for homeowners to endure, foreclosures can present a unique opportunity for first-time home buyers and investors looking to purchase a “bargain-priced home” with the potential for building instant equity.

As an experienced real estate professional, I want to advise you to tread carefully when it comes to foreclosures—they might not be quite the bargain you expect. Here are some important facts you need to know before venturing out into the foreclosure market:

- Homeowners faced with foreclosure are understandably stressed and resentful, which can often lead to neglecting routine maintenance on a home. Sometimes, even deliberate damage is done. Assessing the home’s condition, therefore, is a must.

- Foreclosure properties have often been vacant for an extended period of time. Look for problems caused by damp conditions, such as mold.

- Get a thorough home inspection before bidding on the property. Once the damage/disrepair of the home is assessed, factor this in when bidding on the home.

- Contact a real estate professional—like me, a Member of the Top 5 in Real Estate Network®—who is well steeped in the community and can provide information about pre-foreclosure properties, that is, homes that have been scheduled for foreclosure but have not yet gone to auction or been sold off. These homes need to be sold quickly as owners are trying to avoid foreclosure and its impact on their credit.

-Last but not least, go to www.hud.gov for information on how to buy homes acquired by the U.S Department of Housing and Urban Development as a result of foreclosure action on an FHA-insured mortgage. The site also has information on special programs and opportunities for teachers, law enforcement officers and others.

While buying a foreclosure property takes patience and research, the results can be well worth your time and effort. For more information, please e-mail me, and please pass this on to anyone you know who might be interested in exploring a foreclosure purchase.

Relocating? Top 5 Reasons to Find the Right Real Estate Agent

Believe it or not, even though selling and buying a home is one of the most stressful, most important financial and lifestyle investments you’ll ever make, most people spend very little time in selecting a real estate agent to work with. Even worse, most people tend to believe that all real estate agents are the same and possess the same skill sets and capabilities.

As a member of the Top 5 in Real Estate Network®, an elite group of real estate agents that requires members to meet a series of stringent criteria before joining, I know all too well how wrong the above perceptions are. When confronting any real estate decision, especially one that involves relocating to a different region or state, it is critical to select an agent with the necessary skills, experience and proven results.

Here are the top 5 reasons to use a professional real estate agent to handle your relocation:

1. The amount of homework involved. Moving to a new area means conducting a lot of research to learn about school systems, recreational activities, community services, etc. A seasoned, qualified agent will do most of this work for you and will suggest accurate resources for you to search out on your own.

2. The need for sounding boards. A relocation places a fair amount of stress not just on you, but on your entire family. There will be lots of concerns, questions and anxieties involved. A professional real estate agent has dealt with this situation hundreds or thousands of times and will know how to listen and respond with the right information to allay the fears of your entire family.

3. Settling into the new area. Successfully acclimating to the new area means quickly finding access to your favorite sports, hobbies, interests, etc. A professional real estate agent is well-steeped in his or her community and will help get you and your family involved in the things you love to do right away.

4. Gathering the right paper work. From school records to medical information, there is a lot of paperwork that needs to relocate with you. Your real estate agent should be able to provide you with a checklist of all the materials you will need to gather and transport well in advance.

5. A network of professionals. Successfully relocating to a new area requires not just working with a professional real estate agent, but many other credible professionals as well, such as builders, landscapers, handymen, child care providers…the list goes on. The right agent is well entrenched with many proven professionals in all of these fields and more, and can serve as a single hub for great referrals. Top 5 Members have access to a large network of other Top 5 Members across North America, ready to assist in your successful relocation.

Handled correctly, a relocation is a positive, exciting experience—a fresh start, not a painful mistake. If you’d like to learn more about ensuring a smooth and happy relocation, feel free to e-mail me and I’d be happy to share what I know. Please pass this e-mail along to family and friends who might also have a relocation in their future.

Sincerely,

John Bendall
RE/MAX Classic Group
Office: (908) 231-0700 650
Mobile: 908-578-1485
john@bendallgroup.com
http://www.centralnewjerseyhomes.com

FHA Announces Policy Changes to Address Risk and Strengthen Finances

New Measures Will Help FHA Better Manage Risk, While Maintaining Support for the Housing Market and Access for Underserved Communities

1. Mortgage insurance premium (MIP) will be increased to build up capital reserves and bring back private lending
   • The first step will be to raise the up-front MIP by 50 bps to 2.25% and request legislative authority to increase the maximum annual MIP that the FHA can charge.
   • If this authority is granted, then the second step will be to shift some of the premium increase from the up-front MIP to the annual MIP.
   • This shift will allow for the capital reserves to increase with less impact to the consumer, because the annual MIP is paid over the life of the loan instead of at the time of closing
   • The initial up-front increase is included in a Mortgagee Letter to be released tomorrow, January 21st, and will go into effect in the spring.
2. Update the combination of FICO scores and down payments for new borrowers.
   • New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%.
   • This allows the FHA to better balance its risk and continue to provide access for those borrowers who have historically performed well.
   • This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.
3. Reduce allowable seller concessions from 6% to 3%
   • The current level exposes the FHA to excess risk by creating incentives to inflate appraised value. This change will bring FHA into conformity with industry standards on seller concessions.
   • This change will be posted in the Federal Register in February, and after a notice and comment period, would go into effect in the early summer.
4. Increase enforcement on FHA lenders
   • Publicly report lender performance rankings to complement currently available Neighborhood Watch data – Will be available on the HUD website on February 1.
     • This is an operational change to make information more user-friendly and hold lenders more accountable; it does not require new regulatory action as Neighborhood Watch data is currently publicly available.
   • Enhance monitoring of lender performance and compliance with FHA guidelines and standards.
     • Implement Credit Watch termination through lender underwriting ID in addition to originating ID.
     • This change is included in a Mortgagee Letter to be released tomorrow, January 21st, and is effective immediately.
   • Implement statutory authority through regulation of section 256 of the National Housing Act to enforce indemnification provisions for lenders using delegated insuring process
     • Specifications of this change will be posted in March, and after a notice and comment period, would go into effect in early summer.
   • HUD is pursuing legislative authority to increase enforcement on FHA lenders. Specific authority includes:
     • Amendment of section 256 of the National Housing Act to apply indemnification provisions to all Direct Endorsement lenders. This would require all approved mortgagees to assume liability for all of the loans that they originate and underwrite
     • Legislative authority permitting HUD maximum flexibility to establish separate “areas” for purposes of review and termination under the Credit Watch initiative. This would provide authority to withdraw originating and underwriting approval for a lender nationwide on the basis of the performance of its regional branches

8 Ways to Get Out of Debt and Start Saving for the New Year

[1]RISMEDIA, December 30, 2009—With 2010 right around the corner, what will you be looking forward to in the New Year? Buying your first home? Sending your last kid off to college? Or obsessing over your own personal mountain of debt, even more worrisome in this uncertain economy? It may feel like “Resolution Impossible,” but if you follow Eric Tyson’s advice, you’ll remember ‘10 as the year you finally took control of your financial future.
“While the situation is improving, Americans carry too much consumer debt,” says Tyson, author of Personal Finance for Dummies, 6th Edition.. “If you have credit card debt or auto loans, take some solace in the fact that you’re far from alone and that many others have overcome these hurdles. Consumer debt is not okay, particularly in a slow economy such as this one. It can damage your personal relationships and mental well-being, not to mention the stability of your financial future.”

Here are a few tips from Tyson that will help you improve your financial health in 2010:

Partake in a little self-reflection. A misaligned mindset toward spending and shopping—compulsive or otherwise—can severely affect your financial and personal well-being. If you think you might have a problem with shopping or spending, there are several questions you should ask yourself:

-Do I feel guilty about shopping?
-Is my shopping causing financial trouble?
-Is my shopping, spending, and accumulated debt leading to feelings of helplessness, anger, confusion, fear, or depression?

Make a plan and stick to it. The reason so many New Year’s resolutions fail is that we simply state the thing we want to improve and then never create a plan for helping us get from point A to point B. Most people don’t like to plan unless we’re talking about something fun, like a vacation. But actually, planning for your financial future is a little like planning a vacation. You’re organizing your money and time so that you get to do all the great things you want when you get there. Look at it that way, and you might actually enjoy the process.

Get rid of your four-wheeled debt. Too many people define necessities by what those around them have. A brand new car is not a necessity, although some people try to make it one by saying, “I need a way to get to work.” Guess what? There are plenty of far less expensive used cars out there that will also make it to your office. If you take out an auto loan to buy a car that you really can’t afford and you take a similar approach with other consumer items you don’t truly need, you’re going to have great difficulty saving money and accomplishing your goals. Moreover, you’ll probably feel stressed all the time—which is a poor trade-off for the (short-lived) “new car smell.”

Start making your purchases based on need, not emotion. It can be easy to give in to all of those advertisements telling us how much we “need” that new car, expensive gym membership, or trendy outfit. Marketers play on insecurities, fears, and guilt and suggest that you can feel better about yourself by buying their products. You won’t be able to overcome spending and consumer debt until you recognize these pressures and how they corrupt your buying decisions.

Research before you enter the store. Prior to going shopping for necessities that aren’t everyday purchases—say, a new refrigerator—do some research first. Your research will help you identify brands, models, and so on that are good values. You don’t want to make an expensive mistake.

Watch your food budget. Dine out less and keep stock of the groceries you already have. Learn to cook if you don’t know how. Try to keep a healthy inventory of groceries at home. This will minimize trips to the store and the need to impulsively dine out because your cupboard is bare. Try to do most of your shopping through discount warehouse-type stores, which offer low prices for buying in bulk, or grocery stores that offer bulk purchases. Saving on the amount you spend on food will help you put more money toward paying off your debt and eventually setting money aside for investments.

Become more energy efficient. Check out opportunities to make your home more energy efficient. Adding insulation and weather-stripping, installing water-saving devices, and reducing use of electrical appliances can pay for themselves in short order. Many utility companies will even do a free energy review or audit of your home and suggest money-saving ideas.

Watch what you are paying for insurance. Many people overspend on insurance by carrying coverage that’s unnecessary or that covers small potential losses. Coverage of small losses, such as $100 or $200, is not useful for most people since such a loss wouldn’t be a financial catastrophe.

“It won’t be easy getting out of debt, and it’s certainly not something you will be able to achieve overnight,” says Tyson. “Like losing weight, it’s something that takes constant dedication but has a great payoff in the end. Whenever you lose focus or feel like giving in, think about the wonderful benefits of financial well-being. Once you’re out of debt, the money you are able to invest will mushroom into substantial savings that will allow you to get more for your money,” concludes Tyson.

10 Time-Saving Tips to Take the Stress Out of Moving

When it comes to moving, a little preparation goes a long way. As a member of the Top 5 in Real Estate Network®, my experience tells me that tons of time and energy can be saved by planning ahead, staying organized and focusing on details.

Here are 10 great, time-saving tips to make moving fast and efficient, courtesy of HGTV’s FrontDoor.com:

1. Make a moving schedule. Starting 60 days before the move, use a week-by-week checklist to keep the process on track. The tasks to accomplish further from moving day might seem trivial at first, but staying on schedule will prevent last-minute headaches.

2. Hire a quality moving company. Resist the temptation to hire a company that offers a too-good-to-be-true rate. An unreliable mover will cost time and money in the long run if items are lost or broken. Check out moving company credentials with the Better Business Bureau and the Federal Motor Carrier Safety Administration.

3. Pare down your possessions. If an item won’t be used in the new home, don’t waste time packing it. Notorious clutter items—unread books, unfinished projects and half-empty cleaning products—are prime targets to leave behind.

4. Pack like a pro. Come up with a packing system so all boxes end up in the right rooms when they get to the new home. One option is to buy a set of magic markers and create a “color code” system for the movers—red-labeled boxes for the living room, blue for the kitchen, etc. On moving day, draw a floor plan of the new place with each room labeled and give it to the movers.

5. Make the house move-out ready. Most movers won’t disconnect anything that’s hard-wired, so unplug all the appliances and lighting fixtures that go. Make sure all paths are clear from the house to the moving truck. Speed up the process by knowing the ground rules for what movers will and won’t do.

6. Stock up on packing supplies. Don’t run out of packing tape the morning of the move; have plenty of supplies on hand. Early on in the moving process, start gathering boxes, tape, bubble wrap, newsprint, box cutters and markers. Try to save time and the environment by packing with materials you already have. Load up suitcases and plastic containers and use pillows, scarves and towels to “wrap” fragile items.

7. Pack a moving survival kit. Don’t throw everyday essentials like ID and medicine in with other belongings, only to have to dig through boxes later. Instead, pack a “last-to-go” box with all of the necessities—toiletries, snacks, important documents—and keep it with you instead of packing it in moving truck.

8. Spruce up the new home before moving in belongings. It’s easier to clean, paint and make improvements while the new home is still empty. Before hauling in all the furniture and boxes, be sure to vacuum, dust baseboards and wash the kitchen and bathroom floors.

9. Map out the new floor plan. Decide how to arrange the furniture before moving it into the new place. The best way to do this is to make paper cutouts of the furniture. Measure the dimensions of the piece and tape together newspaper pages to match the “footprint” of the furniture. It’s much easier to reshuffle newspaper than all that heavy furniture.

10. Change the address and notify companies before the move. Completing a change-of-address form before you head out can prevent hassles such as past-due bills, service lapses and even identity theft. Schedule dates in advance to discontinue utilities, phone, cable and Internet, and arrange for these services at the new address.

From start to finish, the moving process can be very stressful. Why not make it easier by following a few, simple steps. If you would like to receive more tips, such as these, please e-mail me, and be sure to pass this article along to your friends, family and colleagues.