There is a light at the end of the tunnel and no, it’s not a train!

May 5, 2008

Spring has sprung, the weather is great. Interest rates are wobbling a little but they are still at all time lows. The endless droning of the bobbling head news guys who tell us how bad it is….and how many foreclosures and short sales there are, is having an interesting effect. People are starting to think that this may actually be a good time to buy a house. The market is really pretty active.

For the first time in decades in Atlanta there are homes that you can buy and rent out and actually make positive cash flow. There are neighborhoods that have been out of reach for lots of folks who would love to live there that suddenly are having some actually affordable homes on the market. It’s no longer true that you can’t get a decent home in a safe neighborhood under $300,000 any more. There are actually lots of homes for sale in safe areas closer to $200,000. And there are homes out there that I would live in myself or let my daughter live in under $100,000! …even inside the perimeter, in Atlanta Georgia today! You can own a decent home at an affordable price.

The Intown areas that were being renovated heavily and flipped a few years ago, like Reynoldstown, Kirkwood, Edgewood, East Atlanta and East Point had begun to get pretty pricey.  When the crunch started a lot of the investors/ house flippers with short term hard money loans were left holding the bag. A number of big builders went down because they were sitting on too much inventory. So a lot of these those houses are now on the market as foreclosures. They are in various stages of completion, some are done and move in ready and some have been gutted and have nothing put back. A house in the West End that I personally sold (as the listing agent) nearly 2 years ago to a first time homebuyer for $134,900, recently went on the market in exactly the same condition for $44,900. This was not a loan fraud deal, no money went back to the purchaser under the table. This was an educated buyer who bought a home to live in and lost it. What this means is that if you missed the boat ten years ago when prices were low, you have been given a second chance to own a home at an affordable price. There are a lot of people who get it. When a home goes on the market in these types of neighborhoods for $64,000 is sells, frequently in a bidding contest. 

 

Posted by danconnolly | Filed Under Market Conditions 

Loans after Bankruptcy or Foreclosure - FHA Insured Loans

May 2, 2008

In todays volatile lending market there is an old standby that is moving forward to a new place in American finance…. The FHA loan.

    The History of the FHA The Federal Housing Authority was set up after the depression of the early 1930’s to help Americans recover from the tremendous numbers of foreclosures during the depression and get Americans back into home ownership. Prior to the FHA there were not 30 year loans generally available, people were financing homes with 5 to 10 year loans. FHA may be doing the same thing now as traditional lending goes through it’s changes. Initially and for most of the history of the organization it was completely self funded and did not rely on any taxes for it’s operating capital. It was funded initially by mortgage insurance premiums and appraisal fees. It took till this year for the FHA to come to the Government to help make up a budget shortfall. The predictions are that the FHA will recover as it is the only option for credit challenged borrowers, and is writing a record number of loans.  

    Today’s FHA We have seen conventional loans tacking on rate increases for borrowers with lower credit scores. A couple of years ago anything above 600 was considered decent while now some lenders are adding 1/2 a point to the interest rate on 30 year fixed rate loans for borrowers with credit scores between 650 and 680 and 1.25% added to interest rates for borrowers with credit scores between 620 and 650. Below 620 is considered "subprime" and the rates rise dramatically. Yet FHA will still make loans to borrowers with credit scores as low as 580. These are 3% down loans with interest rates fluctuating between 6 and 6.25% 30 years fixed. The loan amount has increased to $346,250 recently in most of metro Atlanta.  It may now be a better deal for not only credit challenged buyers, but for the mid-range credit purchaser with 650-680 credit scores.

    There is a one time mortgage insurance premium of 1.5% of the loan amount which can either be paid in full at closing or added to the loan amount and financed, then there is a monthly mortgage premium which is .5% of the loan amount per year, (1/12 of that paid each month). Conventional loans also have mortgage insurance. The rate is about a quarter of a percent higher than the lowest conventional rate available for strong credit borrowers but for people under a 680 credit score, it is a lower rate!

    Some of the Guidelines for FHA insured loans after Bankruptcy or Foreclosure 

    FHA INSURED LOANS are available to people who have had both bankruptcies and foreclosures in their past. There are some restrictions, the borrower must have virtually perfect credit since the bankruptcy or the foreclosure. These loans are also subject also to normal qualifying guidelines with income and debt limitations. 

    • Chapter 13 Bankruptcy There must be 12 consecutive months of on time payments on all accounts (including utilities, cell phones etc) from the filing of the chapter 13 bankruptcy. 
    • Chapter 7 Bankruptcy There must be 24 months of perfect credit from the disposition of a Chapter 7 bankruptcy.
    • Foreclosure There must be 3 years of perfect credit from the foreclosure.

     

        Posted by danconnolly | Filed Under FHA Insured Loans 

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