Here are the 10 things you need to know about these changes to your Georgia FHA Refinances:

1. The max LTV for rate & term refinances (including streamlines WITH an appraisal) is 97.75%*

2. The max LTV for cash-out refinances is 95%* for loan amounts less than the conforming limit and 85%* for loan amounts at or above the conforming limit. (Must have 12 months seasoning and no 30 day late payments)

3. Two appraisals will be required for all cash-out refinances with an LTV above 85%.

4. The mortgage must be current for the month due.

5. New or current 2nd mortgages are eligible with no maximum CLTV.

6. Loan amount for streamline refinances WITHOUT an appraisal cannot exceed the original loan amount.

7. UFMIP rates: 1.75% for all rate & term and cash-out refinances AND 1.5% for all streamline refinances.

8. The FHA Secure refinance will be terminated.

9. Loan amount CAN include: Closing costs, discount points, current interest, prepayment penalties, prepaids, late charges, and escrow shortages.

10. Cash back on rate & term and streamline refinances CANNOT exceed $500.

Jonathan Blackwell FHA 203K Renovation Specialist Hometown Lenders Atlanta, Georgia, 30317	Work: 404-551-3845 Mobile: 404-519-5383 www.203KLoan.net

If you are in the FHA 203K Renovation Loan business you inevitably deal with a LOT of foreclosures. There are a lot of myths out there about buying a foreclosure, but none so prevalent as the myth perpetuated by foreclosure listing agents looking out for the interest of their clients rather than the interest of the buyer. I understand, the client does pay the bills for them and provide them with that never ending REO gravy train. So what is that myth?

You Have to Get Your Financing Through a Certain Lender

No, you never are required to use the recommended lender. Some listing agents will insinuate that to make an offer you’ll need to use their preferred lender. This is NEVER true and steering you to a lender is actually ILLEGAL. You always have the right to choose the lender that presents the best option for your transaction. In some cases you may be required to be pre-approved by the foreclosure bank, but you DO NOT have to get financing through that bank. Keep in mind a couple of things though, when your choice is between a big bank with lots of advertising and loan officer salaries to pay or between an independent mortgage broker working on commission only, who do you think will be cheaper?

Jonathan Blackwell FHA 203K Renovation Specialist Hometown Lenders Atlanta, Georgia, 30317	Work: 404-551-3845 Mobile: 404-519-5383 www.203KLoan.net

I get a lot of calls from Georgia Realtor’s about the FHA 203K program. There’s a lot of bad info floating around out there as well as a number of misconceptions about how 203K Loans work. The following post is for my Realtor friends to help you when you are guiding your buyers through the Atlanta market looking for a property that is perfect for 203K financing.

Step 1 — Finding the Property

When you are property hunting with your clients and you will need to keep a few things in mind. First, is the scope and type of renovation that property will need. If the property requires a major rehab be aware that the process of getting that loan into submission will take a good bit longer. For renovations over $35,000 or with anything structural (like removing walls or whole additions) you add a few more steps to the process which lengthens the 203K process quite a bit. There is a specific flow that has to be followed on the full FHA 203K and it normally looks like this:

1. Home Inspection by FHA 203K Consultant
2. FHA Consultants Write-Up
3. Meeting with Architect & Architectural Drawings (not needed on ALL Full 203K Loans)
4. Architectural Drawings Provided to Contractor for Contractor Bids
5. Contractor & Consultant Work to Match Renovation Costs
6. Final Contractor Bid & Drawings Provided to Appraisal for After Repair Value (or Subject To) Appraisal.
7. Loan Submission

Not until each one of those steps has been completed can submit the loan. As you can say, that is a lot of third party stuff which can put a drag on the process. If you want to shorten the process then you will need to look at properties that need only cosmetic work that will total less than $35,000 which will qualify for the FHA 203K Streamline. On the Streamline 203K the process is more manageable, it looks a little like this:

1. Home Inspection
2. Contractor Bids
3. Final Contractor Bid to Appraiser for ARV Appraisal
4. Loan Submission

On that scenario you don’t need a consultant or an architect, that speeds up the process quite a bit and makes it possible to close in 30 days or less.

Step 2 — The Offer

When you make the offer on a property that needs renovation financing it is important to ask for extra contingency periods to allow for time let the Home Inspector, FHA Consultant (if required) and Contractor do their thing. I usually get my Realtors to try for 21 days so we can make sure all the numbers work together.

If you are doing the full 203K then the contract period will need to be 60 days most likely, if doing the Streamline 203K then 30 - 45 will usually work. As ALWAYS consultant your lender before making an offer to determine how long they will need.

As with any FHA loan, the FHA 203K will require some specific disclosures (FHA Amendatory Clause) that will need seller and agent signatures. They should be presented during the offer process. You also need to indicate that you are using a FHA 203K loan.

Step 3 — Under Contract, Time for Loan Submission

On a FHA 203K transaction you may need to be available a little more than you normally would to let the buyer into the property. On typical transactions you may just need to be available for the home inspection, but on 203K transactions you’ll have contractors and possibly FHA consultants and architects to let in the property as well. All of these things need to be done as fast as possible so the loan can close on time. Let me say from experience that it can sometimes be a tedious task getting contractors to complete the needed paperwork after they walk through. The quicker you can get them in to to do that walk through the better.

Hopefully, you won’t have much to do for a couple weeks while the lender gets the loan clear to close. There are a lot of details to coordinate for us when we submit a 203K Loan and sometimes we may call for you help with getting a slow contractor to turn in some paperwork. Two people nagging is always more successful than one!

Step 4 — The Closing

Closing is just as it would be on any other transaction. You’ll get your paycheck as will I. We DO NOT have to wait until the renovation is complete and all the back end work will be handled by the company servicing the loan.

I know that some Loan Officers and some Realtors don’t like FHA 203K loans because they are a little more complicated, a little more work and takes a little more time. However, on quite a few of my 203K loans the home buyer is walking into 20% or more equity with only 3% down. That makes for a HAPPY home buyer and happy home buyers make for referrals. They understand the effort that we put in on that transaction for them and they will reward us for our hard work. You’d be surprised how eager home buyers are to talk of their success in creating a ton of equity in what all their friends think is a down market. You’ll be getting calls in no time from them wanting to do the same exact thing!

Jonathan Blackwell FHA 203K Renovation Specialist Hometown Lenders Atlanta, Georgia, 30317	Work: 404-551-3845 Mobile: 404-519-5383 www.203KLoan.net

This is the first in a series of posts outlining the basics of FHA loans. What you qualify for, how much the down payment is, underwriting and documentation along with tips and tricks for a smooth closing will all be covered. Feel free to contact me directly with any specific questions.

How Much Can I Borrow?

How much do I qualify for is ALWAYS one of the first questions I’m asked. There are two things to consider when you are looking to purchase via FHA in Georgia. First, you’ll be limited by FHA loan limits. These are county specific. For example an Atlanta FHA loan is limited to 2009 Metro Atlanta loan limits of $320,850 for single family residences. The rest of Georgia, including Savannah, are limited to $271,050.

The second thing to consider is debt to income ratio. FHA guidelines like for you to use no more than 31% of your income for housing. It is possible to exceed this amount with compensating factors such as a high credit score or plenty of assets. As far as your total debt to income ratio, FHA would like you to spend no more than 43% of your total income on debt. Of course, the same compensating factors listed above apply to this ratio as well so you can exceed that guideline in some instances.

What is the Down Payment Required?

The down payment requirements are changing to 3.5% in 2009 for traditional FHA purchases. However, FHA 203K Loans, along with FHA 203H loans for disaster victims and FHA Energy Efficient Mortgages, are not affected by the change and will remain at 3% down. One note is that on the FHA 203K and other FHA specialty products requiring the lower down payment, you can still include the appraisal and a portion of your closing cost in the down payment.

What Paperwork Will I Need?

When applying for your Georgia FHA loan you’ll need to fully document your income and assets along with providing full explanations of any credit problems in the past 2 years.

1. Two Years W2 & Two Most Recent Paystubs.
2. Tax Returns generally only needed for self-employed borrowers, borrowers with rental income and borrowers using commission income to qualify.
3. Two months full bank statements. Must be “official” statements and must include ALL pages.
4. Most recent statements for retirement and investment accounts.
5. Color copy of Driver’s License and Social Security Card.
6. Credit explanation letters, bankruptcy papers, divorce decrees, child support documentation, leases on rental properties, etc are required if applicable.

What Credit Score do I Need?

FHA and lender guidelines generally require a 580 mid score or above to qualify. However, 620 or above should get you the best FHA rate available. The higher the better though and home buyers with excellent scores will generally be required less documentation and have faster underwriting turn times.

How Long Does the Process Take?

That depends on a number of factors, but 30 days or less should be the goal on a purchase. Borrowers with lower credit scores will generally be required to document more and therefore can sometimes take a little longer than borrowers with excellent credit. If you are doing a FHA 203K Renovation Loan then 30 days is still reasonable on the 203K streamline version, but plan for 45-60 on the full 203K due to the additional third party items needed. FHA Streamline refinances should be the quickest to close because of the reduced documentation requirements.

How Do I Get Started?

The first step is ALWAYS to call an experienced FHA loan officer to help you determine what you are qualified for so you can get a pre-approval. You should also be prepared with you income and asset documentation. The speed in which we can close you loan often depends on you more than anyone else.

Apply for Your Georgia FHA Loan

Jonathan Blackwell FHA 203K Renovation Specialist Hometown Lenders Atlanta, Georgia, 30317	Work: 404-551-3845 Mobile: 404-519-5383 www.203KLoan.net

The Housing & Economic Recovery Act of 2008 made quite a few changes to the mortgage industry, but none so important to home buyers looking to purchase in Atlanta with a FHA loan as the revision to the FHA required down payment and how it is calculated.

Under current FHA guidelines, borrowers need to come up with 3% for the down payment. This 3% could include closing costs, appraisal fees, earnest money and cash-to-close. Under the new requirements the down payment for Atlanta FHA home buyers has increased to 3.5% and you are no longer allowed to include closing costs or appraisal fees in the calculation. So when many loan officers and home buyers heard that the 3% down payment was moving to 3.5% their reaction was muted. However, when you get down to the facts of the increase you realize that this apparently small down payment increase is actually larger than you think.

There is a bright side to the changes Georgia FHA 203K Renovation Loans, Georgia FHA Energy Efficient Mortgages and Georgia FHA 203H Loans for Disaster Victims ARE NOT AFFECTED! That’s right, it requires LESS down payment for you to purchase and renovate than it does for you to simply purchase. Here’s the text from the Mortgagee Letter issued by HUD:

Specialty products with higher LTVs: Section 203(k), Section 203(h) for disaster victims, and FHA’s Energy Efficient Mortgage (EEM) programs are not affected by the LTV limit. All existing policy guidance regarding the rehabilitation program under Section 203(k), including streamlined (k), mortgage insurance for disaster victims, and the EEM program remain in effect.

If you are looking to simply purchase a property that isn’t needing repair you can still get in under the old guidelines if you call us before Jan. 1st, 2009. In other words, get to it! You don’t have much time.

Jonathan Blackwell

Hometown Lenders

404-551-3845

EMAIL

The Fed, in a much anticipated move, slashed the target rate .75% to 0.25% in an all out effort to stimulate the US economy. That wasn’t the only big news coming from the Fed though, they also announced they’d be buying mortgage backed securities in a BIG way! What does that mean to you? It means that your Georgia FHA mortgage rates in Atlanta are going to be going DOWN! When the price of MBS increase, interest rates decrease.

Your FHA 203K Renovation Loan rates have come down as well! Call us today to see what you qualify for!

Jonathan Blackwell

404-551-3845

EMAIL

We all know how expensive college can be and in a down economy we are all searching for ways to tighten the purse strings. One of the easiest ways to save some money on college housing is to look at the possibility of using FHA’s Kid Condo Rule to purchase your college student in Georgia a house or condo instead of renting. So, how does it work?

FHA Kid Condo Rule

FHA guidelines allow for a non-occupant coborrower to go onto a FHA loan for income purposes. They don’t have to live in the property to be included. To qualify your son or daughter will need to have some credit with above a 580 middle credit score. It helps if they have a part-time job as well although it isn’t required. The loan will be based of the combination of your income and credit along with that of your college aged student. So, how can this save us money? Besides being a good investment with potential for future appreciation, let’s look at a real live example of rent vs. own and how you can come out ahead on payment as well.

290 Appleby Drive # 153, Athens, GA 30606

Georgia FHA

Purchase Rent

Price                                      $83,000                                                         N/A

Payment                                 $689 PITI                                                      $700 Rent

Tax Deduction                       $4345/yr                                                         $0

Pmt Difference                         -$11                                                            +$11 Assuming No Rent Increases

Principal Reduction                $1171                                                            N/A

As you can see, not only does this investment yield a lower payment, but you are also reducing principal each year your child is in college as well as providing yourself with a tax deduction! If you’d like more info on the above property call Jerri @ 706-296-4395. If you’d like to see if you qualify for this program visit AtlantaHomeLoans.net and fill out our quick and easy pre-qualification form.

Jonathan Blackwell

Hometown Lenders

404-551-3845

EMAIL

All across Georgia HUD Homes are available for as little as $100 Down. We are using this incentive along with FHA 203K Renovation Loans to help our clients create huge equity positions with almost NOTHING out of pocket!

HUD foreclosures are homes that previously had FHA loans on them. Many of them fall into the perfect price range for the first time home buyer. Generally, you will see many of them listed in Georgia between $50,000 and $200,000. This listing price is usually at a deep discount to “as is” value and an even deeper discount if you are looking to renovate with a FHA 203K renovation loan.

1.) Locating the Property — If you want to find the deep discounts you’ll need a top notch experienced HUD Realtor. Feel free to contact us for help, we know the best in the business. In the meantime if you want to get an idea of what Atlanta HUD Homes are available go to www.HUDPemco.com and check out the selection. The bidding process is very important, the right Realtor guiding you is IMPERATIVE!

2.) Determining the Financing — Here I’ll assume you have already been pre-approved (ALWAYS THE FIRST STEP). Atlanta HUD Homes come in a few different flavors. First, there is FHA Insurable. That means traditional FHA purchase financing is available. It also means the HUD Home needs less than $5000 in repair. HUD will actually escrow that for you to complete what needs to be done to get it in minimum FHA allowable condition. If the house is not FHA insurable you’ll need to go with FHA 203K financing. FHA 203K loans allow for up to $35,000 in repair to be financed into your loan. If you want the scoop on FHA 203K I suggest you visit 203KLoan.net. For the purposes of this article will assume that you have choose a fixer-upper and need to renovate.

3.) Contractor Selection and Bids — I’ve written a more in-depth article that you can find on MyFHABlog.com about the selection process. This is the most important part of the entire process, select carefully or just call us and we’ll be happy to provide you with our fully vetted and approved 203K contractor list. Regardless, keep your repairs cosmetic and make your bids detailed. Underwriting will require and it will ensure you and the contractor are on the same page.

Once your FHA 203K loan close the contractor can begin work. If you have chosen properly the repair should be completed in 30 days. It is not unusual for our finished products to have 30% or more in instant equity. To get started on your FHA 203K renovation check out our FHA 203K Rehab Assistant.

Jonathan Blackwell

Hometown Lenders

404-551-3845

EMAIL

2008 is almost gone and 2009 is just around the corner. Home buyers in Atlanta need to be aware that we are facing some changes if we are looking to purchase a home using in FHA financing in 2009. The first big change is the FHA loan limits for Georgia will be decreasing some in 2009.

FHA Loan Limits 2008

Single-Family = $346,250

Two-Family = $443,250

Three-Family = $535,800

Four-Family = $665,850

FHA Loan Limits in 2009

Single-Family = $320,850

Two-Family = $410,750

Three-Family = $496,500

Four-Family = $617,000

The limits in the rest of Georgia outside the metro area will remain the same in 2009 as they were in 2008.

Georgia Non-Metro FHA Loan Limits 2008 & 2009

Single-Family = $271,050

Two-Family = $347,000

Three-Family = $419,425

Four-Family = $521,250

Finally, in addition to Atlanta’s FHA loan limits decreasing, the down payment will be increasing as well. Previously, FHA required 3% as the down payment. In 2009 FHA will require Atlanta home buyers to put 3.5% down on their next FHA purchase. There is still one exception to that rule for HUD foreclosures. They will still only require $100 down for home buyers purchasing a primary residence. You still have time to take advantage of the higher FHA loan limits and lower FHA down payments though, but you have to act FAST!. Give us a call TODAY to get started on your FHA purchase! If you are purchasing with a FHA 203K Renovation Loan then your down payments will remain the same!

Jonathan Blackwell

Hometown Lenders

404-551-3845

EMAIL