What to Expect During a Home Inspection

What to Expect During a Home Inspection

What to Expect During a Home Inspection

The first thing you need to know about home inspection: You’ll feel all the feels. There’s the excitement — the inspection could be the longest time you’re in the house, after the showing. Right behind that comes … anxiety. What if the inspector finds something wrong? So wrong you can’t buy the house? Then there’s impatience. Seriously, is this whole home-buying process over yet? Not yet. But you’re close. So take a deep breath. Because the most important thing to know about home inspection: It’s just too good for you, as a buyer, to skip. Here’s why.

A Home Inspector Is Your Protector

An inspector helps you make sure a house isn’t hiding anything before you commit for the long haul. (Think about it this way: You wouldn’t even get coffee with a stranger without checking out their history.)

A home inspector identifies any reasonably discoverable problems with the house (a leaky roof, faulty plumbing, etc.). Hiring an inspector is you doing your due diligence. To find a good one (more on how to do that soon), it helps to have an understanding of what the typical home inspection entails.

An inspection is all about lists.  

Before an inspection, the home inspector will review the seller’s property disclosure statement. (Each state has its own requirements for what sellers must disclose on these forms; some have stronger requirements than others.) The statement lists any flaws the seller is aware of that could negatively affect the home’s value.

The disclosure comes in the form of an outline, covering such things as:

  • Mold
  • Pest infestation
  • Roof leaks
  • Foundation damage
  • Other problems, depending on what your state mandates.

During the inspection, an inspector has three tasks: To:

  1. Identify problems with the house
  2. Suggest fixes
  3. Estimate how much repairs might cost

He or she produces a written report, usually including photos, that details any issues with the property. This report is critical to you and your agent — it’s what you’ll use to request repairs from the seller. (We’ll get into how you’ll do that in a minute, too.)

The Inspector Won’t Check Everything

Generally, inspectors only examine houses for problems that can be seen with the naked eye. They won’t be tearing down walls or using magical X-ray vision, to find hidden faults.

Inspectors also won’t put themselves in danger. If a roof is too high or steep, for example, they won’t climb up to check for missing or damaged shingles. They’ll use binoculars to examine it instead.

They can’t predict the future, either. While an inspector can give you a rough idea of how many more years that roof will hold up, he or she can’t tell you exactly when it will need to be replaced.

Finally, home inspectors are often generalists. A basic inspection doesn’t routinely include a thorough evaluation of:

  • Swimming pools
  • Wells
  • Septic systems
  • Structural engineering work
  • The ground beneath a home
  • Fireplaces and chimneys

When it comes to wood-burning fireplaces, for instance, most inspectors will open and close dampers to make sure they’re working, check chimneys for obstructions like birds’ nests, and note if they believe there’s reason to pursue a more thorough safety inspection.

If you’re concerned about the safety of a fireplace, you can hire a certified chimney inspector for about $125 to $325 per chimney; find one through the Chimney Safety Institute of America.

It’s Your Job to Check the Inspector

Now you’re ready to connect with someone who’s a pro at doing all of the above. Here’s where — once again — your real estate agent has your back. He or she can recommend reputable home inspectors to you.

In addition to getting recommendations (friends and relatives are handy for those, too), you can rely on online resources such as the American Society of Home Inspectors’ (ASHI) Find a Home Inspector tool, which lets you search by address, metro area, or neighborhood.

You’ll want to interview at least three inspectors before deciding whom to hire. During each chat, ask questions such as:

  • Are you licensed or certified? Inspector certifications vary, based on where you live. Not every state requires home inspectors to be licensed, and licenses can indicate different degrees of expertise. ASHI lists each state’s requirements here.
  • How long have you been in the business? Look for someone with at least five years of experience — it indicates more homes inspected.
  • How much do you charge? The average home inspection costs about $315. For condos and homes under 1,000 square feet, the average cost is $200. Homes over 2,000 square feet can run $400 or more. (Figures are according to HomeAdvisor.com.)
  • What do you check, exactly? Know what you’re getting for your money.
  • What don’t you check, specifically? Some home inspectors are more thorough than others.
  • How soon after the inspection will I receive my report? Home inspection contingencies require you to complete the inspection within a certain period of time after the offer is accepted — normally five to seven days — so you’re on a set timetable. A good home inspector will provide you with the report within 24 hours after the inspection.
  • May I see a sample report? This will help you gauge how detailed the inspector is and how he or she explains problems.

Show Up for Inspection (and Bring Your Agent)

It’s inspection day, and the honor of your — and your agent’s — presence is not required, but highly recommended. Even though you’ll receive a report summarizing the findings later on, being there gives you a chance to ask questions, and to learn the inner workings of the home.

Block out two to three hours for the inspection. The inspector will survey the property from top to bottom. This includes checking water pressure; leaks in the attic, plumbing, etc.; if door and window frames are straight (if not, it could be a sign of a structural issue); if electrical wiring is up to code; if smoke and carbon monoxide detectors are working; if appliances work properly. Outside, he or she will look at things like siding, fencing, and drainage.

The inspector might also be able to check for termites, asbestos, lead paint, or radon. Because these tests involve more legwork and can require special certification, they come at an additional charge.

Get Ready to Negotiate

Once you receive the inspector’s report, review it with your agent.

Legally, sellers are required to make certain repairs. These can vary depending on location. Most sales contracts require the seller to fix:

  • Structural defects
  • Building code violations
  • Safety issues

Most home repairs, however, are negotiable. Be prepared to pick your battles: Minor issues, like a cracked switchplate or loose kitchen faucet, are easy and cheap to fix on your own. You don’t want to start nickel-and-diming the seller.

If there are major issues with the house, your agent can submit a formal request for repairs that includes a copy of the inspection report. Repair requests should be as specific as possible. For instance: Instead of saying “repair broken windows,” a request should say “replace broken window glass in master bathroom.”

  • If the seller agrees to make all of your repair requests: He or she must provide you with invoices from a licensed contractor stating that the repairs were made. Then it’s full steam ahead toward the sale.
  • If the seller responds to your repair requests with a counteroffer: He or she will state which repairs (or credits at closing) he or she is willing to make. The ball is in your court to either agree, counter the seller’s counteroffer, or void the transaction.

At the end of the day, remember to check in with yourself to see how you’re feeling about all of this. You need to be realistic about how much repair work you’d be taking on. At this point in the sale, there’s a lot of pressure from all parties to move into the close. But if you don’t feel comfortable, speak up.

The most important things to remember during the home inspection? Trust your inspector, trust your gut, and lean on your agent — they likely have a lot of experience to support your decision-making.

That’s something to feel good about.

 


elps consumers make smart, confident decisions about all aspects of home ownership. Made possible by REALTORS®, the site helps owners get the most value and enjoyment from their existing home and helps buyers and sellers make the best deal possible.

What You Should Really Know About Browsing for Homes Online

What You Should Really Know About Browsing for Homes Online
Man on laptop

What You Should Really Know About Browsing for Homes Online

Oh, let’s just admit it, shall we? Browsing for homes online is a window shopper’s Shangri-La. The elegantly decorated rooms, the sculpted gardens, the colorful front doors that just pop with those “come hither” hues.

Browser beware, though: Those listings may be seductive, but they might not be giving you the complete picture.

That perfect split-level ranch? Might be too close to a loud, traffic-choked street. That handsome colonial with the light-filled photos? Might be hiding some super icky plumbing problems. That attractively priced condo? Might not actually be for sale. Imagine your despair when, after driving across town to see your dream home, you realize it was sold.

So let’s practice some self-care, shall we, and set our expectations appropriately.

  • Step one, fill out our home buyer’s worksheet. The worksheet helps you understand what you’re looking for.
  • Step two, with that worksheet and knowledge in hand, start browsing for homes. As you do, keep in mind exactly what that tool can, and can’t, do. Here’s how.

You Keep Current. Your Property Site Should, Too

First things first: You wouldn’t read last month’s Vanity Fair for the latest cafe society gossip, right? So you shouldn’t browse property sites that show old listings.

Get the latest listings from realtor.com®, which pulls its information every 15 minutes from the Multiple Listing Service (MLS), regional databases where real estate agents post listings for sale. That means that realtor.com®’s listings are more accurate than some others, like Zillow and Trulia, which may update less often. You wouldn’t want to get your heart a flutter for a house that’s already off the market.

BTW, there are other property listing sites as well, including Redfin, which is a brokerage and therefore also relies on relationships with brokers and MLSs for listings.

The Best Properties Aren’t Always the Best Looking

A picture, they say, is worth a thousand words. But what they don’t say is a picture can also hide a thousand cracked floorboards, busted boilers, and leaky pipes. So while it’s natural to focus on photos while browsing, make sure to also consider the property description and other key features.

Each realtor.com® listing, for example, has a “property details” section that may specify important information such as the year the home was built, price per square foot, and how many days the property has been on the market.

Ultimately though, ask your real estate agent to help you interpret what you find. The best agents have hyper-local knowledge of the market and may even know details and histories of some properties. If a listing seems too good to be true, your agent will likely know why.

Treat Your Agent Like Your Bestie

At the end of the day, property sites are like CliffsNotes for a neighborhood: They show you active listings, sold properties, home prices, and sales histories. All that data will give you a working knowledge, but it won’t be exhaustive.

To assess all of this information — and gather facts about any home you’re eyeing, like how far the local elementary school is from the house or where the closest Soul Cycle is — talk to your real estate agent. An agent who can paint a picture of the neighborhood is an asset.

An agent who can go beyond that and deliver the dish on specific properties is a true friend indeed, more likely to guide you away from homes with hidden problems, and more likely to save you the time of visiting a random listing (when you could otherwise be in the park playing with your canine bestie).

Want to go deeper? Consider these sites and sources:

Just remember: You’re probably not going to find that “perfect home” while browsing listings on your smartphone. Instead, consider the online shopping experience to be an amuse bouche to the home-buying entree — a good way for you to get a taste of the different types of homes that are available and a general idea of what else is out there.

Once you’ve spent that time online, you’ll be ready to share what you’ve learned with an agent.

 


elps consumers make smart, confident decisions about all aspects of home ownership. Made possible by REALTORS®, the site helps owners get the most value and enjoyment from their existing home and helps buyers and sellers make the best deal possible.

Tips for Investing in Rental Properties

Tips for Investing in Rental Properties
Real Estate Investing

Tips for Investing in Rental Properties

Investing in real estate has great potential for passive income. It can also be part of your retirement planning by selling the home and getting a big chunk of equity.

It also comes with risks.

So we wanted to share with you some of the things that we have learned when it comes to knowing our local real estate market and the real estate agents who specialize in working with real estate investors.

Know what’s happening in your area

Are people moving into your area because of job opportunities? Are people retiring there? Are you in a vacation area where you can buy short-term rental homes? Do you want to buy a duplex or four-plex home, live in one of the units and rent out the others?

Understand the costs involved

In addition to a mortgage payment, taxes and insurance, you will need to budget for repairs, landscaping/snow removal.

Long-term or short-term investing 

Investing in real estate can help you build your wealth over the long term. Or buying fixer-uppers and selling them immediately can give you more cash over the short term. You will need to decide which one is right for you.

Know all of your financing options

The mortgage rules are different in regard to the down payment, the closing costs and interest rate. We can help you decide which loan program would be the most advantageous for you.

Know your numbers

Cash flow and income tax rules can benefit you when you invest in real estate. That’s where a great accountant/CPA can help you determine if the numbers work for you and your tax bracket. (We can recommend one to you.)

Build your own real estate investment team

Even if you are only considering buying one or two rental properties, it’s best to work with people you can rely on to give you good advice. A real estate agent who specializes in working with investors (We can recommend some to you), a property management company (if you don’t want to manage your own), and a network of contractors who will help you if the home needs to be repaired.

If you are interested in exploring the possibility of investing in real estate, please let us know and we can set up a time to talk.

*American Financial Network, Inc. is not acting on behalf of or at the direction of the federal government, and this offer is not being made by an agency of the government. AFN is not a tax or financial advisor, and individual tax circumstances may vary. Please consult a licensed tax professional and appropriate government agencies to determine tax consequences of home ownership.

What Happens When Your Appraisal Comes in High…or Too Low

What Happens When Your Appraisal Comes in High…or Too Low
Appraisal High or Low?

What Happens When Your Appraisal Comes in High…or Too Low

When buyers and sellers come to an agreement on the price of a home, it’s the end result of the lowest the seller is willing to accept and the highest the buyer is willing to pay. During negotiations the offer and counteroffer can go back and forth until an agreed upon price is reached…or not. That’s the true market value at work. When you first work with your real estate agent and go over the list of things you want in a home such as how many bedrooms and baths or the school system or the commute to your work, you’re provided with a list of homes that meet your criteria. Working with your loan officer you also get your preapproval letter in your hand, knowing how much you want to borrow and what your monthly payments will be. Your preapproval letter essentially means your financing is all lined up and all that’s missing is a property address.

Sometimes, and this is often the case with first time buyers, the “perfect” home comes on the market and has everything the buyers are looking for. In their eagerness to get the home and be the lucky bidder, they might make an offer that’s over and above the asking price. And while the sellers are happy to take that offer, there might be an issue with the appraised value.

When an appraiser accepts an order to appraise a property, a copy of the sales contract is provided. In the instance of a refinance application, the home owners list what they feel the property is worth directly on the loan application. But this is only the starting point for the real estate agent. Upon receiving an appraisal order, the appraiser will first do a bit of homework, researching public records regarding the sales prices of similar homes in the neighborhood that have recently sold. The appraiser will look at three to four homes and select the best ones that are most like the subject property. Then, the appraiser comes up with a price-per-square-foot value and proceeds to make certain adjustments.

Very rarely are two homes exactly alike in the same neighborhood. They might look similar but there are differences, some small and some not so small, between then. One might have a bigger lot or one might have more trees or a swimming pool. Maybe there’s a three car garage instead of a two car garage. Inside, one house might have an upgraded kitchen or recent master bath remodel. Someone could have added an extra bedroom and added more square footage to the house. The condition of the homes will also be noted and the appraiser can make adjustments for that, too.

When appraising a property for a purchase, it’s common for the sales price on the contract to match the appraised value. After all, everything being equal, it’s an agreed upon price which in turn reflects current market values. But sometimes they don’t match. Sometimes the appraised property value is higher than what appears on the sales contract and sometimes the property is appraised at a lower value. During the course of a refinance when the value comes in higher, it can mean a slightly better interest rate if the loan program being selected is priced partly on the loan amount compared to the property value. Lenders refer to this as a “loan level pricing adjustment.” Or, in the instance of a cash out refinance, a higher appraised value can mean more cash to the buyers at closing.

In a purchase transaction, a higher appraised value doesn’t have much of an impact. When evaluating a loan application lenders will use the lower of the appraised value or sales price. This means when the value comes in higher than the contract price the buyers can’t automatically use that newly found equity as part of their down payment. All it says is that the buyers probably got a better deal than they thought as their accepted offer was lower than what similar homes have recently sold for in the area. In the instance of the appraised value coming in lower than the offer, then the impact is greater.

Let’s say someone makes an offer on a home for $200,000. The appraisal is ordered and after a few days is returned to the lender. The value according to the appraisal is $190,000, not $200,000. What happens? Because the lender uses the lower of the sales price or appraised value, the loan basis is on $190,000. This means the buyers must come to the closing table with the additional $10,000 difference. Or, the buyers can go back to the sellers and renegotiate the price. Most sales contracts today have an addendum that allows the buyers to back out of the deal if the property doesn’t appraise at contract price without penalty and get their earnest money deposit back. If the sellers decide not to renegotiate, the deal is cancelled and the buyers start looking for another home.

When an appraisal comes in high it can indicate a rather robust real estate market and when it comes in low it can indicate a faltering one. Either way, the lower of the two values is used when processing a new loan application. Again, lower or higher values are the exception in most markets and not the rule. Yet by working closely with an experienced real estate agent who knows the market well, your offer will likely be spot on.

Home Buying Process

Home Buying Process
House Keys

Home Buying Process

CONSULTATION
Ideal Lending Solutions meets with you to discuss loan options and help you determine the right loan choice for your situation and financial goals.

PRE-APPROVAL
Ideal Lending Solutions issues your pre-approval and you start looking for a home with a real estate agent.

SEARCH FOR YOUR HOME
You search for your home. It is suggested to use a real estate agent, as they can help guide you in your search and negotiate the property price.

MAKE AN OFFER
Once you find your dream home, your real estate agent presents an offer. Once the offer is accepted, a closing date is set.

CONTRACT
You review and sign your contact with your real estate agent.

APPLICATION
Any remaining documents are required at this time. Once the contract has been submitted to Ideal Lending Solutions, the loan goes into processing.

APPRAISAL & INSPECTION
Ideal Lending Solutions orders appraisal, title report, insurance binder and other necessary documents. A home inspection takes place to determine any repairs needed.

PROCESSING
Receives and reviews all the documents, verifies all information and prepares the file for underwriting.

UNDERWRITING
Loan is conditionally approved or declined and underwriter asks for conditions. Homebuyer provides conditions.

HOMEOWNERS INSURANCE
A copy of the property appraisal and mortgagee clause must be provided to secure homeowners insurance policy.

CLEAR TO CLOSE
Final approval is issued and any final conditions are collected and satisfied. Loan is clear to close, closing documents are sent to the title company.

CLOSING SCHEDULED
It’s time to schedule the closing! You and your Realtor will be notified that your loan is clear to close and a closing date is scheduled.

FINAL WALK THROUGH
Borrowers complete one final walk-through of the property to approve condition of the home.

CLOSING
All parties sign the closing documents to finalize the purchase of your home.

IT’S MOVING TIME!
You’ve closed on your home and it’s time to move in. After closing, we will send you a customer satisfaction survey. We appreciate your participation and referrals.


*A pre-approval does not constitute a loan com-commitment or guarantee of a loan. Pre-approval is subject to a satisfactory appraisal, satisfactory title search, and no meaningful change to borrower’s financial condition.

6 Costs Homeowners Overlook and How to Pay for Them

6 Costs Homeowners Overlook and How to Pay for Them
6 cost blog photo

6 Costs Homeowners Overlook and How to Pay for Them

For many people, a house is the biggest investment they’ll ever make. And whether you’re a first-time homeowner or you’re buying your third property, you’re bound to end up covering some unexpected expenses. Here are six costs homeowners tend to overlook and how to pay for them:

1. Property taxes

Be prepared to pay property taxes and keep in mind that they rarely decrease. Homeowners often pay them every month along with their mortgage payments. If your loan is backed by the Federal Housing Administration, you’re required to have an escrow or impound account.

If you don’t have to make property tax payments through an escrow account, they may be due at the end of the year. In some counties, you might pay them in installments.

2. Homeowners association fees

Whenever you move into a new home or condominium, you become part of a community. In many cases, there are fees associated with the maintenance and general upkeep of shared common areas. The money collected might cover snow removal, landscaping or repairs to a meeting room.

Monthly homeowners association (HOA) fees for standard single-family homes tend to cost between $200-$300, but rates can vary depending on several factors, including how recently a housing community was built and the kinds of amenities that are available. That’s why it’s best to know how much fees cost upfront. In West Hollywood, Calif., for example, residents in Sierra Towers condos get access to a 24-hour concierge service and valet parking, but spend around $4,000 per month on HOA fees.

3. Insurance premiums

If you own a home, another cost you should include in your budget is insurance. The average annual homeowners insurance premium costs $1,120, according to recent data provided by the National Association of Insurance Commissioners, but the amount you pay may be higher or lower based on where you live and the kind of policy you choose.

Homeowners insurance typically covers personal possessions, liability for injuries that take place on your property, the structure of your house and additional costs associated with living elsewhere if your home is severely damaged. If you live in an area prone to natural disasters, you might need a supplemental policy like flood insurance.

4. Repair and maintenance costs

Repairing or replacing a roof, furnace or air conditioner can be expensive, and at some point, you might have to address plumbing issues or trade in some old appliances.

The cost of home maintenance is another thing you’ll have to factor into the cost of homeownership. You’ll need money to keep your yard, gutters, carpet and everything in between in tip-top shape.

Financial experts generally recommend setting aside 1 percent of your home’s value to cover the cost of unexpected repairs and maintenance. If you’re trying to save money, you’re better off doing some of the work yourself. Just make sure you have enough funds for the materials you need to get the job done.

5. Costs associated with selling a home

Having a home that’s well-maintained not only lets you enjoy your house while you’re living there, but also prevents you from being saddled with additional costs when you’re ready to sell it.

Replacing your roof or furnace might be something you want to put off, but failing to make necessary repairs or meet demands made by potential homebuyers could hurt your market value or cost you a sale.

6. Pest control costs

Pests are a real concern for many homeowners. Over time, all sorts of critters—like termites, ants, spiders and rodents—might invade your home. Depending on how serious the problem is, you might need to fumigate your house.

If you’re interested in buying a home, make sure you hire an inspector to check for bugs and termites that could cause structural damage. While lenders don’t always require homebuyers to pay for pest inspections, it’s important to have one done. You don’t want to close on a house only to find out later that there’s an issue. Termite inspections generally cost between $75-$150, according to Angie’s List.

Build a rainy day fund!

It’s always better to be prepared for a storm than to be caught in a downpour without an umbrella. Despite the high costs, owning your own home can be a rewarding experience.

Hope for the best and prepare for the worst by keeping enough money in your savings account to cover unforeseen costs. Make sure you account for all of the hidden expenses and fees associated with buying a home and budget accordingly.


Housecall

Hippo is an InsureTech company that’s reimagining home insurance through the lens of homeowners. Hippo Insurance is available to homeowners in 10 states throughout the U.S. and will be available to more than 60 percent of the nation’s homeowners by the end of 2018.

Approved Sources for Down Payment and Closing Cost Funds

Approved Sources for Down Payment and Closing Cost Funds
House keychain and Money

Approved Sources for Down Payment and Closing Cost Funds

Whether you’re a first time home buyer or getting ready to retire and buy your “forever” home, you’ll need to consider how much you’ll need to have for a down payment as well as pay for closing costs associated with getting a mortgage. Some loans such as the VA and USDA programs don’t require a down payment but there are still closing costs to consider. If you’re looking at a 3.5% down payment for an FHA loan in Jupiter or you want to put 20-25% down for a jumbo loan in Miami, it’s time to open up your bank and investment accounts to see how much you’ll need. Here are the approved sources for down payment and closing cost funds.

Bank Accounts 

This is perhaps the first and most obvious source for funds to close, your bank accounts. Funds can come from a checking or savings account and the accounts must have your name listed on the statement. If there is more than one name on the account that is not buying the house with you, you’ll only be allowed to use half the amount listed in the account or otherwise have the individual on the account with you provide a statement showing that you can use as much of the funds as you want. Lenders will also look to see if there are any irregular deposits. If you get paid on the 1st and 15th of every month, the lender knows it’s from your employer. If there is an amount of say $5,000 that pops up on the 10th, you’ll need to document the source before it can be counted when certain threshold tolerances are exceeded.

Retirement Accounts 

Do you have an IRA or 401(k) plan? It’s possible you can use these funds to help pay for closing costs and a down payment. If you’re a first time buyer and not of retirement age, you can withdraw as much as $10,000 from an IRA without incurring an early withdrawal penalty. Most 401(k) programs allow employees to take out a loan of up to 50% of the employees’ vested balance. In certain cases you may be able to liquidate all or a portion of your 401k for down payment. Your human resources department can let you know if you can borrow from the account and under what terms.

Sale of Personal Property 

Any item that you own that can be appraised can be sold or borrowed against as long as the asset can be appraised by an independent appraiser. This means you can sell a car you own or take out a loan against it. When borrowing funds to close, it must be secured and cannot be cash taken out from a credit card or a personal loan. Make sure you document the current market value of the item and keep copies of the transaction showing the amount you received as a result of the sale and that you deposited those funds into an account you own.

Gifts 

You may also receive a financial gift from a qualified source. Most gift funds come from family members such as a parent or other relative. Other eligible sources for gift funds include qualified non-profit organizations. Gift funds, like the sale of personal property, must be documented including the donor’s name, the amount and the amount of the deposit made. Government loans also require proof that the donor has the ability to make the gift to you in the form of a bank statement.

Sellers

For closing costs You may also get funds from the sellers of the property. Different loan programs have different limits on how much sellers can help out. For example, VA loans limit the amount of seller contributions to 4.0% of the sales price.

Lender Credit 

You can also ask the lender for some help. Lenders can work with you and adjust the interest rate on your home loan and provide a lender credit toward your closing costs at the settlement table. With a slight increase in rate, there can be a credit available. This credit is based upon the loan amount and the adjustment in rate.

The FHA 203(k) Loan Program Explained

The FHA 203(k) Loan Program Explained
FHA 203K blog image

The FHA 203(k) Loan Program Explained

The FHA 203(k) loan has somewhat of a funny name. The (k) refers to a specific section with FHA’s lending guidelines. A FHA 203(b) refers to yet another and is the most common FHA program in today’s market. A standard FHA loan to buy and finance a primary residence is an FHA (b) loan but no one really refers to it that way, it’s just an FHA mortgage. But so too is the FHA 203(k) program and for those who are wanting to buy and rehabilitate a property with one loan instead of taking out two, it’s an excellent program. The problem can be finding a lender or loan officer experienced with this product. Using someone that hasn’t worked with this program can lead to a very bumpy ride, or worse.

The 203(k) process is relatively simple but does have a few more steps involved. The first step is to submit an application to your lender for a preapproval. The application will have a property address as well as an itemized list of repairs/upgrades that will be financed into the permanent mortgage. What types of repairs are eligible for this program? There are actually two types of 203(k) loans, a streamline and a standard.

A streamline 203(k) loan allows you to make minor repairs up to $35,000. Such repairs are most often used in baths and kitchens but can be in other areas. The repairs must be considered “non-structural” which means you can’t add a new room or an outdoor deck for example or items considered “luxury” but you can finance

  • Kitchen and bath remodels
  • Appliances
  • Flooring
  • Roof repair/replace
  • Paint, interior and exterior
  • Energy-efficient improvements
  • And more

With a standard 203(k) loan, you can finance those improvements plus

  • Any structural changes
  • Connection to water/sewer lines
  • Major Landscaping
  • Moving the property to another location
  • Accessibility for disabled persons
  • And more

Once your plans and specifications have been drawn up, you’ll need to get a quote regarding the cost of materials and labor from a licensed contractor. Your licensed contractor must be an approved 203(k) contractor. Once your loan package has been completed it is submitted to the lender for an approval. The lender approves the loan and the contractor begins the work.

The construction period can take up to six months to complete and the lender will send an inspector to make sure the work is being done on time and on schedule for larger projects. Smaller, streamline refinance loans even allow you to move in while the work is being done when it’s practical. For standard 203(k) programs, you can also roll in up to six months’ worth of house payments. Your 203(k) has now financed the acquisition as well as the improvements with just one loan.

Florida ranks in Top 10 of Kiplinger’s 2018 “Where To Retire” list

Florida ranks in Top 10 of Kiplinger’s 2018 “Where To Retire” list
Retrired Couple

Florida ranks in Top 10 of Kiplinger's 2018 ``Where To Retire`` list

NEW YORK – May 9, 2018 – In contemplating retirement, the big question tends to be when to retire? Or, perhaps, how much money do you need to retire? But where to retire can be an equally pressing matter. In fact, according to a survey by Merrill Lynch and Age Wave (a research firm focused on the aging population), 37 percent of retirees have already moved in retirement and another 27 percent intend to. Even if you’re among the rest who plan to stay put in retirement, you might find that entering a new stage of life changes the world around you, requiring a reassessment of how your home state treats your nest egg.

To help you weigh the pros and cons of each state when it comes to retirement, we ranked all 50 states based on financial factors critical to retirees, including living expenses, tax burdens, health care costs, household incomes, poverty rates and the economic wellness of the state itself.

Of course, plenty of other factors figure into this major life decision, from proximity to family to climate preferences. But we’ll leave assessing those personal considerations to you.

Whether you’re figuring out where to head next or just how you need to adjust your budget when moving into retirement, Click Here to see how every state in the union treats its retirees financially.

Florida
  • Ranking: #8
  • Population: 19.9 million
  • Share of population 65+: 19.1 percent
  • Cost of living: 1 percent above U.S. average
  • Average income for 65+ households: $51,187
  • Average health care costs for a retired couple: About average at $425,025
  • Tax rating for retirees: Most Tax Friendly

If you’re looking to party with your peers through retirement, head to the Sunshine State.

Nearly 3.8 million seniors call Florida home, giving its population the highest share of residents age 65 and older in the country. Indeed, it’s famous for its retiree-haven status, what with its warm weather, beautiful beaches and seven-season-long “Golden Girls” endorsement.

But the main attraction for retirees to the Sunshine State must surely be the tax situation. Florida has no state income tax, estate tax or inheritance tax, and it doesn’t tax Social Security or other retirement income, either. Plus, those benefits are pretty secure: Florida scores top marks for fiscal soundness, according to a recent report from the Mercatus Center at George Mason University, in large part due to its abundance of cash versus short-term liabilities.


2018 The Kiplinger Washington Editors, Stacy Rapacon – https://www.kiplinger.com/slideshow/retirement/T006-S001-all-50-states-ranked-for-retirement-2018/index.html

Questions About 3% Down?

Questions About 3% Down?
Man in front of question board

Questions About 3% Down?

Who is eligible for a Fannie Mae 3% down payment mortgage?

A 3% down payment mortgage is best suited for responsible homebuyers who may not have the financial resources to make a large down payment but would otherwise qualify for a mortgage. Homebuyers will need to meet other underwriting requirements and document their income. We can help you understand your eligibility.

What are the requirements for a 3% down payment mortgage?

The standard 3% down payment mortgage requires that:

  • the home being financed is a one-unit property (including townhomes, condos, co-ops, and PUDs) and not a manufactured home;
  • you plan to occupy the home as your primary residence; and
  • the mortgage has a fixed rate (adjustable rate mortgages [ARMs] are not eligible)
Can I use funds I’ve received as a gift or a grant to help pay some or all of my down payment?

Yes, certain funds you’ve received as a gift from a relative, a grant, or from other sources can be used toward your down payment and closing costs. There may be down payment assistance funds available in your area, too. Research your options — funds may be available from your local housing finance agency, your employer, nonprofit agencies, and others. Ask us for more details.

Will I need to pay mortgage insurance?

If your down payment is less than 20% of the home’s purchase price, you will need to pay Private Mortgage Insurance (PMI), generally as part of your mortgage payment each month. Unlike the mortgage insurance premium required on an FHA loan, you may be able to cancel PMI after you reach 20% equity in your home—either through paying down your mortgage over time or if the value of your home increases while you own it—which over time could save you money.

Can I make a 3% down payment when purchasing an investment property or a second home?

To be eligible for the 3% down payment option, you must plan to live in the home as your primary residence. Homes being purchased as investment properties or second homes require a larger down payment.

Can I make a 3% down payment on an ARM loan?

No, the 3% down payment option is available on fixed-rate loans only. Adjustable rate mortgages (ARMs) require a larger down payment.

 


American Financial Network, Inc. is not acting on behalf of or at the direction of the federal government, and this offer is not being made by an agency of the government. Source: www.fanniemae.com.