Rent to own is a popular option these days, and they do work out well for some who are looking to buy a home in the future, but how does this work?
The rent credit is established when a renter takes on a lease agreement stating that a portion of this payment will go towards the down payment of the property. The lease agreement must clearly state and account for this being the case. There must be a clause within that agreement that states how much of the down payment will go toward the purchase of this home. In this case, it is the lender’s responsibility to show that the estimate is above FHA’s required fair market rent. If the amount is not above, then the amount will be deducted from the sale price of the home as seller concessions.
When buying a home, you will have your down payment to consider as well as your closing costs. To aid in limiting the amount of money that the seller needs to bring to closing, the realtor and seller can agree to pay all or most of the costs. Before finalizing anything, make sure that you understand what is required of you in terms of money, because you need to be financially prepared.
Showing posts with label Los Angeles. Show all posts
Showing posts with label Los Angeles. Show all posts
Thursday, May 20, 2010
Get an FHA Approved Condo
If you are looking to buy a condo FHA you can, but there are some specific requirements that FHA has regarding condos. Typically in the past, it was not recommended to buy a condo because they were hard to resell. Families would opt for a house before a condo.
There are a few guidelines with FHA when it comes to buying a condominium:
1) The condominium project must be complete. FHA will not lend on a development. At the time of the loan, there cannot be any ongoing additions to the condo.
2) The control of the common areas, such as walkways and spaces in between condos are considered common areas. Another area considered common area is any yard space or parking.
3) The condo association must have the proper coverage for flood and hazard insurance.
4) Individual units must be held in fee simple. This means that the units are free to be opened up for home ownership.
5) There can be no legal restrictions on conveyance of any titles.
6) At least 90% of the units must be sold.
7) At least 51% of the units must be owner occupied.
8) No individual can own more than 10% of the units in the development.
There are many more small things to look for when buying a condo through an FHA loan. For more information please visit my website, www.fhaloansnow.net, or call me at (310) 498-2700.
There are a few guidelines with FHA when it comes to buying a condominium:
1) The condominium project must be complete. FHA will not lend on a development. At the time of the loan, there cannot be any ongoing additions to the condo.
2) The control of the common areas, such as walkways and spaces in between condos are considered common areas. Another area considered common area is any yard space or parking.
3) The condo association must have the proper coverage for flood and hazard insurance.
4) Individual units must be held in fee simple. This means that the units are free to be opened up for home ownership.
5) There can be no legal restrictions on conveyance of any titles.
6) At least 90% of the units must be sold.
7) At least 51% of the units must be owner occupied.
8) No individual can own more than 10% of the units in the development.
There are many more small things to look for when buying a condo through an FHA loan. For more information please visit my website, www.fhaloansnow.net, or call me at (310) 498-2700.
Wednesday, May 19, 2010
What is the Alternative to a Foreclosure?
With so many foreclosures happening across the country, the government needed to come up with a solution to help homeowners. There is now hope with HAFA. HAFA is, Home Affordable Foreclosure Alternatives Program. This program is designed to help eligible homeowners by pre-approving short sales before listing and releasing them from future liability of their mortgage debt.
The HAFA program was finalized and made public on April 5th, 2010. The only mortgages that qualify are any first lien mortgages that are not backed by Freddie Mac or Fannie Mae. They may or may not come up with an initiative of their own, but that is not yet determined.
The HAFA program also bases modifications of home loans up on the financial information they receive about the homeowner. There is a waterfall process that they use to be sure that they reach the debt to income target ratio of 31%. These steps go in the following order: 1) Capital Arrears, 2) Reduce Interest Rate, 3) Extend Loan Term, 4) Forbear Principal.
Capital Arrears means that they are looking at the accrued interest and other eligible expenses used to modify the loan amount. The second step is taken because they are looking to reduce that interest rate to reach the debt to income ratio target of 31%, and that includes your mortgage payment. The third step is Extend Loan Term. This step is taken when they cannot reduce the rate enough to reach the target of 31% for the debt to income ratio. Once they know that they can’t reach the target, they will then extend your loan term to a 40 year loan. Lastly, the Forbear Principal means that the borrower can try to work out an agreement with the servicer. This is done by reducing the principal amount owed on the loan, but then it would be due later as a balloon payment.
The HAFA program was finalized and made public on April 5th, 2010. The only mortgages that qualify are any first lien mortgages that are not backed by Freddie Mac or Fannie Mae. They may or may not come up with an initiative of their own, but that is not yet determined.
The HAFA program also bases modifications of home loans up on the financial information they receive about the homeowner. There is a waterfall process that they use to be sure that they reach the debt to income target ratio of 31%. These steps go in the following order: 1) Capital Arrears, 2) Reduce Interest Rate, 3) Extend Loan Term, 4) Forbear Principal.
Capital Arrears means that they are looking at the accrued interest and other eligible expenses used to modify the loan amount. The second step is taken because they are looking to reduce that interest rate to reach the debt to income ratio target of 31%, and that includes your mortgage payment. The third step is Extend Loan Term. This step is taken when they cannot reduce the rate enough to reach the target of 31% for the debt to income ratio. Once they know that they can’t reach the target, they will then extend your loan term to a 40 year loan. Lastly, the Forbear Principal means that the borrower can try to work out an agreement with the servicer. This is done by reducing the principal amount owed on the loan, but then it would be due later as a balloon payment.
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