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Friday, December 12, 2008

Hope for Home Buyer!

Hope for Home Buyers!

I know that I am always trying to write about the positive aspects of the real estate market and how you might take advantage of it and I have to admit that I was having trouble maintaining a positive attitude in the last few weeks of the presidential election.

I went out to dinner last nigh,t which was the Friday immediately following the election and the restaurant was completely packed. The owners of the restaurant said they did not expect this type of crowd but they figured that with the outcome of the election people were feeling relieved and excited and apparently willing to spend money on eating out again because they hadn’t seen these type of crowds in a long time. That is the kind of hope I am talking about. You can read between the lines and see that I am a Democrat, but I spoke with some Republican friends who were disappointed they lost but still excited about the change that they felt was upon us both in the economy and the world at large.

OK, OK so what about your positive spin for home buyers Hans? So, we all know that there are a bunch of foreclosures available for sale at good prices but we have been reading the paper and we see that we need to have 50% down payment, perfect credit and at least a 20 year sterling credit history to get a home loan…….

That is simply not the case my friends. I am closing 4-8 loans per month right now. These are not the kind of numbers that I am used to closing and I am working a lot harder to achieve this feat than I had to in the past. The majority of the loans I am closing right now are purchase loans on foreclosed properties with 97% FHA fixed rate mortgages. That is correct, I said that these first time buyers are putting 3% down and getting into homes in this market. If you want to buy a home as an investment, you need to put 20-25% down. The funny thing is that this is the way it was when I got into this business in the early 90’s……

Here is what I am really excited about. There is a loan called an FHA 203k loan and it allows a person to buy a home that needs work and then finance that work into the purchase of the home. Let’s say that you find a home that needs some work but it is a decent home at a great price. You do a little homework and get some bids on what it will take to fix up the house and we lend you a piece of the fix up money as well. There is a streamline 203k loan up to $35,000 in repairs that is pretty easy to do and then there is the regular 203k loan that requires quite a bit more time and effort to make happen but if you need that much work on the home, it is probably worth it in the end. The FHA loan is designed for people who plan on living in the home only. Did I mention that we can do this loan to 97% as well?

There is a conventional loan available as well called Fannie Mae HomeStyle Renovation which has a catchier name and offers similar options. This loan requires 10% down payment on the cost of the home + fix up costs. There is no streamline option on this loan. Fannie Mae does offer an investment option as well but the minimum down payment would be 20% on investment property.

I don’t want to talk politics with you but I welcome questions about these home loans and the real estate market in general. Please let me know what you want to hear about in future articles.

Hans Bruhner, CMPS is licensed in CA & HI. If you have a question, please contact Hans at (707) 887-1275 or . First Priority Financial, Inc. is licensed by the CA DRE #00654852.