| FHA Program Gives Fixer-Uppers a Boost | FHA is allowing buyers to roll the costs of minor repairs on a property into their mortgage. The "limited repair" loan, known as Streamlined K, is a version of the agency's 203(k) renovation loan program. Its goal is to get properties with relatively minor problems into the hands of creditworthy buyers.
Streamlined K is part of the U.S. Department of Housing and Urban Development's effort to make FHA relevant after finding its market share crimped by private lenders reaching out to borrowers who years before would have had trouble getting loans at a rate that made sense.
The Streamlined K program is designed to overcome the reluctance of many real estate professionals to accept contracts that called for FHA-insured loans because appraisers were requiring sellers to make what they considered to be nit-picking repairs or majors fixes they didn't want to make.
A maximum of $35,000 in repair costs can be rolled into the mortgage, up to 110 percent of the appraised value of the property.
Repair items eligible under the program are:
1) Repair or replacing roofs, gutters, downspouts, heating and air conditioning systems, plumbing and electrical systems, windows and doors, flooring, septic systems, wells, decks, patios, and porches.
2) Minor remodeling that does not involve structural repairs.
3) Exterior and interior painting.
4) Weatherization, including storm windows and doors, insulation and weather-stripping.
5) New appliances, including microwave ovens, washing machines, and clothes dryers.
6) Accessibility improvements for handicapped people.
7) Lead-based paint stabilization or abatement.
8) Basement remodeling or finishing that does not involve structural changes.
9) Re-siding.
10) Basement waterproofing.
Source: Lew Sichelman, United Feature Syndicate (01/30/06) from an article published by Realtor Magazine Online.
10 Questions for Ask Your Lender
1. What are the most popular mortgage loans you make? Why?
2. Which type of mortgage plan do you think would best for us? Why?
3. Are your rates, terms, fees, and closing costs negotiable?
4. Will I have to buy private mortgage insurance? If so how much will it cost and how long will it be required? Note: Private mortgage insurance is usually required if you make less than a 20% downpayment, but most lenders will let you discontinue the policy when you've acquired a certain amount of equity by paying down the loan.
5. Who will service the loan? Your bank or another company?
6. What escrow requirements do you have?
7. How long is your loan lock-in period (the time that the quoted interest rate will be honored)? Will I be able to obtain a lower rate if they drop during this period?
8. How long will the loan approval process take?
9. How long will it take to close the loan?
10. Are there any charges or penalties for prepaying the loan?
Source: Realtor Magazine Online, January 2007
What Your Home Inspection Should Cover
Siding-
Look for dents or buckling
Foundations-
Look for cracks or water seepage
Exterior Brick-
Look for cracked bricks or mortar pulling away from bricks
Insulation-
Look for condition, adequate rating for climate (the higher the R value, the more effective the insulation is)
Doors and Windows-
Look for loose or tight fits, condition of locks, condition of weatherstripping
Roof-
Look for age, conditions of flashing, pooling water, buckled shingles, or loose gutters and downspouts
Ceilings, Walls, and Moldings-
Look for loose pieces, dry wall that is pulling away
Porch/Deck-
Loose railings or steps, rot
Electrical-
Look for condition of fuse box/curcuit breakers, number of outlets in each room
Plumbing-
Look for poor water pressure, banging pipes, rust spots or corrosion that indicate leaks, sufficient insulation
Water Heater-
Look for age, size adequate for house, speed of recovery, energy rating
Furnace/Air Conditioning-
Look for age, energy rating. Furnaces are rated by annual fuel utilization efficiency; the higher the rating, the lower your fuel costs. However, the other factors such as payback period and other operating costs, such as electricity to operate motors.
Garage-
Look for exterior in good repair; condition of floor-cracks, stains, etc.; condition of door mechanism
Basement-
Look for water leakage, musty smells
Attic-
Look for adequate ventilation, water leaks from roof
Septic Tanks (if applicable)-
Adequate absorption field capacity for the percolation rate in your area and the size of your family
Driveways/Sidewalks-
Look for cracks, heaving pavement, crumbling near edges, stains.
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