Archive for August, 2013

New Waiting Time for FHA Borrowers In Default To Buy a New Home

FHA borrowers who have filed for bankruptcy or had their homes recently foreclosed upon or sold via short sale may be eligible for another FHA loan just 12 months after the negative event.

The Federal Housing Administration will require borrowers to follow several requirements to become eligible: 1) Document (with W-2’s and/or tax returns) that the negative event was caused by at least a 20 percent loss in household income for at least a six-month period. 2) On-time rent payments for a period of 12 months. 3) Fully-recovered credit for at least 12 months after the negative event (meaning no collections, late payments, etc.). 4) The borrower has to show that previous negative credit appearing on the credit report was due to the loss in income rather than a history of late payments, collections or financial mismanagement.

As with any major rule change, investors modify these guidelines until they receive clarification from the FHA on exactly what they will and will not accept on these files before qualifying borrowers for loans using these new rules.

The government-backed loan program is easing up its conditions, making it easier and quicker for borrowers who defaulted on their loans to purchase a home sooner. The American dream of owning a home is closer to achieve. America is a “forgiving” country. You default on your loan and before you know it, you are back in the market for a new house.

In some ways, it is good to get a second chance at a new life in a new home. But in some other ways, it may not teach borrowers to be financially responsible. The collateral of the unpaid loan is the house itself and nothing more.

Other countries provide for stricter penalties on mortgage defaults, foreclosures or bankruptcy — including jail time, community service, garnishing wages, and requiring expensive collateral other than the home that defaulted.

Those types of consequences teach borrowers a lesson about financial responsibilty that many in this nation greatly need.

August 26, 2013 at 12:37 pm Leave a comment

Tips for Buyers Using VA Loans

by: Maria Hass –

Sad but true:
Veterans’ Administration loans, otherwise known as “VA Loans,” are not appealing to sellers.

Although VA loan requirements to buy a house have become less stringent, many sellers still have the misconception that they will have to pay fees not normally found with cash buyers or other types of financing such as conventional or FHA loans. These fees include the seller paying for the buyer’s escrow fees and other junk fees.

However, the reality is that these fees can be paid by the buyer’s lender, family, friend or real estate agent and are not the sole obligation of the seller. Also, the VA doesn’t make loans on homes that are fixer-uppers or rehab homes. Move-in ready homes are usually your best choice.

It is unfortunate that the men and women who have put their lives in harm’s way for us sometimes have a difficult time buying a house. So, to increase the chances of making your next VA offer acceptable to the seller, especially in a bidding war, here are a few tips:

1. Buyer’s lender to pay for “non allowables”
– It is comforting for the seller to know that they do not have to pay for buyer’s fees and lose more money. In the offer, include the verbiage: “Buyer is doing a VA loan. Contrary to lines 79-80, seller only needs to pay 50% of the escrow fee and seller will pay $0 in buyer closing costs and $0 in buyer VA non-allowables. Buyer’s lender will be issuing lender credit for these items.”

2. Appraisal funds – If the listing is overpriced and an appraisal issue could come up, the buyer can express willingness to pay up to “x dollars” towards the difference between the appraisal value and the purchase price.

3. Letter to seller – It doesn’t hurt for the buyer to write a letter to the seller explaining why the buyer desires the house, buyer’s military service, situation and anything that would convince the seller to select your offer.

4. “As-Is” Condition – Buyer may choose to take the property in “As-is” condition or pay upto a certain X amount to cover for any repairs found during inspection. Either way, it is comforting for the seller to know that they don’t need to spend more money or negotiate on unexpected repairs found in the inspection. Common in short-sale and foreclosure era, many transactions have successfully closed with properties listed in “As is” condition.

5. Larger down payment – Sellers view the down payment as an indication of financial stability and buyer commitment. The bigger the down payment, the more committed the buyer is to the house and perceived as more responsible financially.

6. Shorter inspection period – Cut down the inspection period from 10 days to 5 to 7 days.

7. Do not ask for closing cost assistance – This strategy will increase your chance of getting your offer accepted in multiple offer situations.

8. Faster close – Most VA loans require 30-45 days to close on a home. Write on the pre-approval letter that VA buyer has been pre-approved through automatic underwriting. It makes your buyer appear stronger in the eyes of the seller.

These tips will make your VA offer stronger. Always seek out the assistance of an experienced, qualifiied Realtor. Acceptance of the offer will vary based on competing offers, cash deposit, price offer and type of financing.

August 15, 2013 at 9:19 am 1 comment



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