25 Sep 08 
Buy and Bail and FHA’s Response
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So wouldn’t you know FHA found that the original rule for Buy and Bail was a little too steep and left many homeowners stuck in their home with no other course of action than to sell or head towards foreclosure.
If you are not quite sure what Buy and Bail means see my other articles on Buy and Bail Rules and Buy and Bail Part I and Part II
Now on to the new adjustments and how to work with this new rule to get what you want out of your Real Estate transaction.
- To be eligible to purchase a home using a FHA loan you would need to be relocating for a new job.
- The new home must reside outside a reasonable distance from your current residence and this is based upon underwriter’s discretion.
- Must have a full 1-year lease agreement from the closing date forward.
- You will need to show evidence of rental/lease by showing security deposit as cashed and/or first months rent.
- The adjusted equity position in your existing home is now 75% up from 70% but the appraisal can only be 6-months old or less. Now there is a small wrinkle in there that states you can show you put a 25% down payment based upon original purchase price but they may still require an appraisal to support the purchase price. Again the underwriter’s discretion.
Now the above rules are a good start but be prepared to have your potential rental income put under a microscope. FHA is extremely concerned about inflated rental agreements and has put in extra measures on the underwriting side of things to prevent fraud in this area.
Good news is that this amount of income that can be applied to your loan application for potential rents may be increased 15% in some cases and that will really help in qualifying for your new home.
Just in case you missed it, there are a couple ways to play the game:
- Add a non-occupying Co-borrower to you loan, must be a relative, to help you qualify.
- Make enough to cover both mortgage payments, current home and the new one.
- Short sale your home and buy before the negative reports on your credit report.
As always use a true Real Estate or Mortgage Professional because what you don’t know will hurt you in the end NOT the Realtor or Loan Officer.
Brent Lane
The Lane Group
Tags: buy and bail, closing date, co-borrower, existing home, fha, fha loan, home loan, Homes for Sale, lease agreement, loan eligibility, loan officer, loan qualifications, mortgage info, mortgage professional, Real Estate, rental agreements, rental income
15 Sep 08 Buy and Bail: Making The Rule Work For You. Part II
If you missed Part I of this post you should read it because this rant may not mean too much to you without it.
Sometimes the housing market can be a bit much for people and they get frustrated. Let’s see one persons opinion and let me know if you share her thoughts.
HI Brent
I find the whole situation just backward.
Banks loaned money to people they KNEW could not afford a 800,000 house….all hell breaks loose and now those of us who had and still have excellent credit will not be able to get a house unless we jump through hoops to get it….we still have credit scores in the 800’s….YES…I said 800’s……
we have bought and sold 5 houses in the last few years (we moved a lot) and ALWAYS came out great after each sell….but we have NEVER had 20% to put down…we always did around 10 to 15% then got an 80/20 for the remaining amount….
we made 60,000 on our last sell and then moved back to V. and paid 382,000 for our current townhouse…put 30,000 down, and then put 10,000 in remodeling, and we still have 20,000 in the bank….but now unless we come up with the full 20% a bank will not loan to us?????? i just don’t get it…..
we are just staying here for another year and scratching the money aside so that if we do find a REO Home we really like we can try to jump on it….there is no way we make enough money to cover two loans…..so that option is out for us….
i am just sick of this whole thing…..but thank you for getting back to me….
C.
____________________________________
It’s interesting, I appreciate the email and I can see how frustrating this whole situation can be. You may not be the person who is committing fraud but there is no way for us to convince the bank otherwise!
Keep your head down and focus because there will come that moment when this all goes away and those paying the most attention will reap the biggest financial rewards.
Brent Lane
The Lane Group
www.thelanegroup.blogspot.com
Tags: bank loan, brent lane, buy and bail, credit crunch, credit score, down payment, fha, home loan information, housing market, mortgage loan, real estate owned, reo, the lane group
31 Jul 08 FHA Loans: Down Payment Assistance Programs
So you want to buy a house and you have little or no money for a down payment!
You ask a relative for support and you get little in the way as a positive response.
What options are you left with?
Well for the savvy homebuyer you know that you are limited when it comes to 100% Financing knowing the closest option is 97% through FHA.
Side bar, I know there are other complicated, detailed and those loans that tease you with 100% financing but I am NOT going into detail on those because in my opinion those loans are SO difficult to close I will leave it up to someone else to be that expert and focus in on FHA financing and where we are headed.
I am back to business.
So if you have limited down payment and need more where do you turn?
Luckily you can find a “Down Payment Assistance Program for FHA Loans.”
There are several different programs out there but they all have one thing in common:
THEY ARE ABOUT TO BE ELIMINATED BY
THE NEW HOUSING BILL OF 2008!
I often wonder what officials are thinking when they put something like this into effect but honestly that is a topic I don’t care to discuss here or for that fact ever. I just try to remain focused on the outcome and what we need to do to move forward.
Personally I use Down Payment Assistance Programs for FHA Loans and my clients quite often. The Program I use is called Nehemiah and can be found at www.getdownpayment.com WAIT before you leave here for there you will still need to know a few things.
To use this program you will be facing some real issues getting offers accepted by home sellers but good news is that you will get the 100% financing you are looking for.
Now if this law truly remains as is we will see this program TERMINATED on October 1st 2008 so start looking soon if you plan on using this program but be prepared for a true test of desire because again, Sellers want little to do with this program.
How it works, when you write a contract you ask the seller to contribute 6% of the sales price to the Down Payment Assistance Program for FHA Loans. IF the seller agrees they pass 6% of the sales price to the Down Payment Assistance Program for FHA Loans and a small fee is collected by the program which in turn sends in the 6% back to escrow as a gift to the buyer.
Logistically speaking, the Down Payment Assistance Program for FHA Loans typically sends the money ahead of funding of the transaction and escrow coordinates the delivery of the funds and fees.
Now the real question here is “What will happen when Down Payment Assistance Programs for FHA Loans go away?” NOT forgetting the new changes around Buy and Bail!
I think these two things will REALLY impact the Real Estate Market across the board and it will be interesting moving forward.
As always I am here to help! You can find more topics at my BLOGS www.brentlane.wordpress.com and www.thelanegroup.blogspot.com
Brent Lane
Tags: 100% financing, brent lane, buy a house, buy and bail, down payment, down payment assistance program, fha, fha loans, homebuyer, housing bill 2008, nehemiah, new housing bill, real estate market, the lane group
