Posts tagged as:

FHA

Still Stormy

by Larry D. McGee, Denver Realtor on August 15, 2008

Most people seeing a tornado for the first tend to stand still and stare at the awesome power of nature.

Real Estate's Perfect Storm

Real Estate's Perfect Storm

Something like a deer caught in the headlights of an oncoming car. The second time most people see a tornado, they run for shelter, because they remember the mess made from their first experience. In Colorado, it’s been 20 years since the real estate industry weathered a difficult market. Most people in the industry today, Realtors, lenders and title insurers all are still staring at the market like a deer in the headlights. Those of us that have that second time around experience need to lead the industry forward.It’s time to move on. It is too late to seek shelter, and it really is time to get moving again. While the capital markets are still recovering and mortgage loans are certainly not easy, they are not impossible either. The FHA is now heavily funded, so Realtors should find a lender that gets FHA, and start selling houses using FHA financing. The entire industry needs to get on the phone and start talking to people about buying. It’s hard work, fraught with rejection and MUST be done. NOW! Smile, get your attitude arranged, get over that hang-dog look, and get to work. To the frightened and lethargic public reader of this blog, if you need a home, go buy one. The reasons to buy a home are still the same as they always were: security, empowerment,a hedge against inflation (not an ATM machine), a secure place to raise a family, and a tax shelter.

I did a quick survey of a thousand homes purchased in July in the Denver area with a sold price between $100,000 and $200,000. 14% were purchased using cash. ( I expanded an earlier effort of 100 homes.) I believe it is reasonable to assume that the cash buyer in that price range in the Denver market place is an investor; buying low with an expectation of selling high for a sizable profit in 3 to 5 years. If savvy investors get it, why isn’t it true for the average Joe that needs a home?

With home builders on the sidelines for the near future, the previously owned home inventory will begin to appreciate in value as competition enters the market. Even today, many bank owned homes in good condition are receiving multiple offers.

Today, in the United States, there are over a million Realtors. If each Realtor begins a relentless effort to show potential buyers how to buy now and win, we can change the attitude and move the economy forward.

Or, we can stand still watching the oncoming tornado (or headlights) and get run over. Seems like simple choice.

Read more on this topic:

Housing’s Perfect Storm (part 1)

The Upside of a Foreclosure Market

Written by Larry D. McGee, Denver Realtor - Visit Website Sphere: Related Content

{ 1 comment }

FHA for Investment Properties? It can be done.

by Mark on November 11, 2007

Do you want to start investing in Real Estate but don’t have much of a down payment or maybe your credit isn’t that great? There is a little known secret to help buyers like you that want to buy some income property but they don’t have enough down payment for a conventional investment (non owner occupied) loan. The solution may be an FHA loan on a 2, 3, or 4 plex. FHA loans allow for a buyer to buy a duplex, a triplex or even a four-plex with just 3% down and as always FHA loans are not underwritten based on credit scores but credit situations.

These is a catch however. Because FHA is an owner occupied loan program, the buyer needs to move into one of the units. But this could be a great way for an entrepreneurial buyer to get started on investment property ownership. The other advantage to using an FHA loan program to buy a 2-3-4 plex property is that the FHA loan limits get higher as the number of units go up. Here are the current loan limits is the Denver Metro Area:

2-plex = $347,322
3-plex = $421,980
4-plex = $486,900

So as long as the LOAN amount (not purchase price) is under these levels then an FHA loan can be used.

There are a few more things that you need to keep in mind if this is a good option for your buyers. This is still a FULL DOCUMENT loan and unless there are current leases on the property that can be extended, we will not be able to use “potential” rental income to offset the payment in the Debt To Income ratio. Therefore the buyer would have to qualify for the entire payment themselves. If there are current renters in place then we could use 75% of those rent payments towards the debt ratio. However, The renters would have to enter into new leases with the new buyer.

As far as the interest rates go, there is no penalty for buying a property like this using an FHA loan. It would be the same rates as if your buyer were buying a single family home. Right now those rates are around 6% to 6.25%.

If this is something that you think could help you now or in the future, feel free to contact me with any questions.

Thank You,

Mark Afman

Direct 303-759-7392
Cell 303-905-2488

Written by Mark Afman - Visit Website Sphere: Related Content

{ 0 comments }