- How does FHA work?
The U.S. Department of Housing and Urban Development offers a variety of loan
insurance programs through the Federal Housing Administration which require approximately
3 to 5 percent cash down. FHA loan limits vary depending on the county where the property
is located. FHA loans administered by HUD are originated by private lenders. For more
information, contact lenders who offer FHA loans or a regional HUD office.
Resources:
- "FHA Forms, Booklets and Publications," U.S.
Department of Housing and Urban Development Printing Branch, Room B-100, 451 7th St.,
Washington, DC 20410; call (800)767-7468.
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- Which lenders offer FHA
loans?
Lenders who handle Federal Housing
Administration loans typically advertise in the Yellow Pages under "real estate
loans" and in the real estate sections of newspapers. FHA also supplies limited lists
of approved lenders. For general qualifications and program details, see the FHA brochure,
"How to Qualify for an FHA Loan." To order, write the U.S. Department of Housing
and Urban Development, Printing Branch, Room B-100, 451 7th St., Washington, DC 20410;
(800) 767-7468.
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- Are there low-down-payment
home loans?
A host of private lenders offer
low-down-payment loans. In addition, there are government programs to help cash-strapped
buyers.
The U.S. Department of Housing and Urban Development offers a
variety of programs through the Federal Housing Administration that require approximately
4 to 5 percent cash down. Loan limits vary depending on the county where the property is
located.
Fannie Mae's Community Home Buyers program allows people to
buy with just 3 percent down. For details, contact lenders who offer government-insured
loans. In addition to calling lenders for information, contact Fannie Mae directly at
(800) 832-2345.
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- Where are fixer-uppers
found?
You can find distressed properties or
fixer-uppers in most communities, even wealthier neighborhoods. A distressed property is
one that has been poorly maintained and has a lower market value than other houses in the
immediate area.
Ascertaining whether the property you're interested in is a
wise investment takes some work. You need to figure what the average house in a given area
sells for, as well as what the most desirable houses in that area are like and what they
cost.
Some experts suggest that buyers who take this route try to
find a "cosmetic fixer" that can be completely refurbished with paint,
wallpaper, new floor and window coverings, landscaping and new appliances. You should
avoid run-down houses that need major structural repairs. A house price that looks too
good to be true probably is. A smart buyer will find out why before buying it.
The basic strategy for a fixer is to find the least desirable
house in the most desirable neighborhood, and then decide if the expenses needed to bring
the value of that property up to its full potential market value are within one's rehab
budget.
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- What home-buying costs are
deductible?
Any points you or the seller pay for
your home loan are deductible for that year. Property taxes and interest are deductible
every year.
But while other home-buying costs (closing costs in
particular) are not immediately tax-deductible, they can be figured into the adjusted cost
basis of your home when you go to sell (any significant home improvements also can be
calculated into your basis). These fees would include title insurance, loan-application
fee, credit report, appraisal fee, service fee, settlement or closing fees, bank
attorney's fee, attorney's fee, document preparation fee and recording fees.
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- What exactly is bad
credit?
There are numerous types of credit report
problems that would cause a lender to reject your application for a loan.
Such problems include: missing a credit card payment,
defaulting on a prior loan, filing for bankruptcy in the past seven years or not paying
your taxes. Other black marks on a credit report include a judgment filed against you
(perhaps for non-payment of spousal or child support) or any collection activity.
If you feel that your credit report is wrong, experts say
it's best to take it up with the organization or company claiming you owe them money.
But if you've been late paying your bills, regroup by paying
in full and on time for six months to a year to prove to the lender that the late payments
were an aberration.
You can order a copy of your own credit report by calling the
three major credit reporting agencies: Experian at (800) 392-1122, Equifax at (800)
685-1111 and Trans Union at (312) 408-1050.
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- How does someone sell a
slow mover?
Even in a down market, real estate
experts say that price and condition are the two most important factors in selling a home.
The first step is to lower the price. Also, go through the
house and see if there are cosmetic defects that you missed and can be repaired.
Secondly, home sellers should make sure that the home is
getting the exposure it deserves through open houses, broker open houses, advertising,
good signage and a listing on the multiple listing service (MLS).
Another option is to pull the home off the market and wait
for the market to improve.
Finally, frustrated sellers who have no equity and are forced
to sell because of a divorce or financial considerations could discuss a short sale or a
deed in lieu of a foreclosure with the mortgage lender.
A short sale is when the seller finds a buyer for a price
that is below the mortgage amount and negotiates the difference with the lender.
In a deed-in-lieu-of-foreclosure situation, the lender agrees
to take the house back without instituting foreclosure proceedings. But these would be
considered more radical options than lowering the price.
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- What are the benefits of
seller financing?
Seller financing offers benefits
to both buyers and sellers including tax breaks for the seller as well as offering an
alternative when conventional loans can't be found.
The risks involved are the same risks facing any lender. Is
the borrower a good credit risk? Will the property hold enough value over time to allow
for the repayment of all loans made against it?
Sellers should run a full credit check on the borrower,
require hazard insurance on the property and include a due-on-sale clause. There also are
financing, disclosure and repayment-term requirements that should be met.
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- How is the price set?
It's very important to price your home appropriately relative to current
market conditions. Because the real estate market is continually changing, and market
fluctuations have an effect on property values, it's imperative to select your list price
based on the most recent comparable sales in your neighborhood.
A comparative market analysis provides the background data on
which to base your list-price decision. Study the comparable sales material presented to
you by the different agents you interviewed initially. If the analyses are more than two
or three months old, have your agent update the report for you.
If all agents agreed on a price range for your home, go with
the consensus. Watch out for an agent whose opinion of value is considerably higher than
the others.
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- What is the best time to sell
your house?
In addition to supply and demand, and
other economic factors, the time of year you choose to sell can make a difference both in
the amount of time it takes to sell your home and in the ultimate selling price.
Weather conditions are less of a consideration in more
temperate climates, but most of the time, the real estate market picks up as early as
February, with the strongest selling season usually lasting through May and June.
With the onset of summer, the market slows. July is often the
slowest month for real estate sales due to a strong spring market putting possible upward
pressure on interest rates. Also, many prospective home buyers and their agents take
vacations during mid-summer.
Following the summer slowdown, real estate sales activity
tends to pick up for a second, although less vigorous, fall market, which usually lasts
into November when the market slows again as buyers and sellers turn their attention to
the holidays.
Sellers often wonder whether or not they should take their
homes off the market for the holidays. Generally speaking, you'll have the best results if
your house is available to show to prospective buyers continuously until it sells.
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© 2008 Century 21 Real Estate LLC. CENTURY 21 © is a registered trademark licensed to Century 21 Real Estate LLC. Equal Housing Opportunity. Each Office is Independently Owned and Operated.
