Orange County FHA and Home Loan Blog

IRS Rules Regarding Home Buyer Tax Credit for Orange County First Time Buyers

Tim Storm — Mon, 01 Mar 2010 01:45:00 GMT

The IRS recently clarified the rules for claiming the home buyer tax credit, which Orange County first time home buyers need to be aware of. In 2009, there were many people who fraudulently claimed the tax credit. Congress revised the tax credit in November, extending it until April 30, 2010. At the same time, Congress requested that the IRS come up with new policies to make sure the credit was claimed by people who were eligible to receive it.

Examples of Tax Credit Fraud

In 2009, people were claiming to have bought homes but never did. Also, people who did not qualify as First Time Buyers were claiming the first time buyer $8,000 tax credit.

What Is Needed to Claim the Tax Credit

The first time buyer will need to fully execute IRS Form 5405, which asks for the purchase price, income, and date of the purchase, all important information in relation to the tax credit. The tax credit has income limitations, and is based on 10% of the purchase price, or $8,000, whichever is less. A copy of the final closing statement or HUD-1, needs to be submitted with the tax return.

The tax credit cannot be claimed by filing taxes online. Unfortunately, the return will need to be mailed in, which means it could take between four and eight weeks to receive the check. Still, better late then never.

Time is Running out for Orange County First Time Buyers

Orange County first time buyers who want to take advantage of the $8,000 tax credit need to act quickly. Home buyers have until April 30, 2010, to have a signed contract to purchase a home. They will then have until June 30 to close escrow. With housing inventory levels so low, it is taking some time for home buyers to get an offer accepted. The first step is to talk to an Orange County Loan Expert who is specializes in FHA and VA loans who can walk you through the PreApproval process quickly and easily.

Authored by Tim Storm, an Orange County, CA Loan Officer - Please contact my office at Frost Mortgage Lending Group for more information about an Orange County, CA home loan. 877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County FHA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Licensed by Department of Corporations under the California Residential Mortgage Lending Act. PRMI Branch License 813F487.

First Time Buyer Tax Credit Deadline Approaches for Orange County Home Buyers

Tim Storm — Tue, 16 Feb 2010 03:04:00 GMT

Time is running out for Orange County First Time Home buyers to take advantage of the $8,000 tax credit. The tax credit, which was extended beyond its original November 30, 2009 deadline, will expire on June 30, 2010.

Two Dates to Be Aware of

The expiration of thefirst time home buyer tax credit will occur in two parts. The first time home buyer needs to have a signed contract to purchase a home by April 30, 2010. The Orange County First Time home Buyer then has until June 30, 2010, to close escrow. 60 days should be plenty of time to close a typical escrow. However, there are many reasons why an escrow can get delayed, which gives all the more reason to find a home before the April 30 deadline. To make things even more difficult, finding a home has not been easy for Orange County First Time Home buyers. Inventory levels have been low right when property values are down and affordability levels are higher than in years.

What's the First Step for an Orange County First Time Home Buyer

The first step for anOrange County first time home buyer is to talk to an FHA loan expert who can walk you through the initial prequalification stage of the loan process. These days, sellers will not even entertain an offer from a first time buyer without an accompanying PreApproval Letter from a Direct Lender. Finding a local Orange County Direct Lender who can answer a first time home buyers questions is important. Most lenders will not charge a fee for prequalification, and there is nothing requiring a home buyer stay with the lender who does the initial prequalification.

Authored by Tim Storm, an Orange County, CA Loan Officer - Please contact my office at Frost Mortgage Lending Group for more information about an Orange County, CA home loan. 877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County FHA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Licensed by Department of Corporations under the California Residential Mortgage Lending Act. PRMI Branch License 813F487.

Placentia Real Estate for Sale! FHA Financing Available on the Placentia Townhome

Tim Storm — Sat, 06 Feb 2010 19:28:00 GMT

Another great piece of real estate for sale in Placentia. This listing is held by Placentia real estate agent Bette Boren with Tarbell Realtors. Placentia is located in north Orange County and is a beautiful, quiet community with surprisingly affordable housing. This townhome, which is located within Sherwood Village. Sherwood Village is located on the border of Placentia and Yorba Linda. You will not hear any street noice as the project is hidden away from the street and is surrounded by trees.

This property is not subject to normal FHA condo guidelines because it is not a condo. The great thing about a townhome is you own the land. This helps to keep protect the property value and makes getting a loan easier.

1617 Sherwood Village Circle
Placentia, CA 92870
Very Private End Unit, FHA Financing Available

Bette Boren

01383892

Mobile:	714.595.4283
Website:	Visit Website

Price	:	$399,000
Bedrooms	:	3
Bathrooms	:	2.25
Square Foot	:	1,485
Lot Size	:	1
Community	:	Sherwood Village
County	:	Orange
Property Type	:	Condo or Townhouse
Year Built	:	1975
MLS Number	:	P718864

click for more information and pictures

Property Description

Oooh La Lah! Highly Upgraded TOWNHOME in Sherwood Village~Nobody Above or Below w/Only 1 Wall Attached~Prime End Unit!!! Small Well Kept Community w/Picturesque Setting of Winding Paths Greenbelt Tucked Away from Street Noise. Kitchen is Custom Remodeled w/New Solid Oak Cabinets including Large Pantry w/Pullout Shelves, Granite Slab Counter Tops, Travertine Backsplash, Newer Stainless Steel Appliances Sink, 6 Burner Stove w/Convection & Warming Drawer & New Sliding Glass Door leading to Private Enclosed Patio. All 3 Bathrooms are enhanced w/New Oak Cabinets, Granite Counter Tops, Designer Porcelain Tile w/Travertine Accents & All New Fixtures. Other Features:18 Porcelian Tile Floors~New Carpet~Designer Paint~Ceilings Scraped & Textured~Newer Heater & A/C~Vaulted Ceilings in Living Room~Built-In Desk & Cabinets. Very Spacious Master has Vaulted Ceilings, Own Bath & Full Wall Closet! Private Two Car Garage has Lots of Storage & Direct Access. Highly Desired El Dorado High School!

Features List

Townhome	Two Story	Dining Room
Fireplace	2 car garage	Central AC
Ceiling Fan	Fenced Back Yard	Open Floor Plan
Dishwasher	6 Burner Cooktop	Gas Range
Remodeled	Laundry in Garage

Equal Housing Opportunity.

Tarbell Realtors :18565 Yorba Linda Blvd -PlacentiaCA92886

Authored by Tim Storm, a Placentia, CA Loan Officer - Please contact my office at Frost Mortgage Lending Group for more information about an Orange County, CA home loan. 877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Placentia FHA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Licensed by Department of Corporations under the California Residential Mortgage Lending Act. PRMI Branch License 813F487.

Great News for Orange County FHA Borrowers as HUD Waives 90 Day Flip Rule

Tim Storm — Sat, 30 Jan 2010 23:05:00 GMT

The FHA "90 Day No Flip Rule" has been a thorn in the side forOrange County first time buyers using FHA financing to purchase a home. For the most recent 12 months the home inventory levels have been low, just when prices are finally affordable. However, FHA announced this month that the 90 day Flip Rule would be waived for 12 months.

How Did the Flip Rule Work?

The 90 Day Flip Rule was meant as a protection for FHA borrowers against unscrupulous sellers who may be taking advantage of home buyers. The rule first went into effect in 2003 and was meant to keep a "flipper" from artificially inflating the sales price of a property they had just acquired.

Why Did FHA Change their Mind About Flip's?

<:od><:od>FHA has found that in todays market, properties are being purchased, fixed up, and put back on the market in less than 90 days. Many of these properties would not have been in good enough condition for a loan without some rehab work, but once fixed up, the properties were being sold to buyers not using FHA financing. This was not a problem for Orange County VA loan buyers, since not even VA had a "No Flip Rule." But these recently acquired properties were not even available to FHA buyers. In Orange County, this was a big problem.

Conditions That Need to Be Met for the FHA Waiver of 90 Day Flip Rule

There are a few conditions that do need to be met in order for an Orange County First Time Buyer using FHA financing to purchase a property that has changed hands within the past 90 days.

<:od>All transactions must be "arms length" with no relationship between the buyer, seller, or other parties taking part in the sale of the property. The lender will need to verify the chain of title for the property to make sure there has not been a pattern of flipping over the past 12 months. Also, the property must of been marketed openly, either on MLS, For Sale By Owner, or some other means.
The sales price cannot be more than 20% above the sellers purchase price without meeting additional conditions. If the property is being sold for more than 20% above the sellers purchase price, the lender may require an additional appraisal and property inspection. The lender needs to make sure there is a legitimate reason the property is valued 20% higher than the recently acquired price.
The 90 Day No Flip Rule waiver is only for the "forward" FHA loan program. The waiver will not effect the Reverse Mortgage, or HECM in Orange County.

Who in Orange County will Benefit from the FHA Waiver

Not only Orange County First Time Home Buyers, but also real estate investors will benefit from their waiver. First time buyers will have more homes to make offers on, and investors will have more buyers to potentially sell to. FHA is just about the only loan program available for home buyers that allows a down payment of less than 10%. FHA only requires a 3.5% down payment, and the down payment can be a gift. The first thing an Orange County First Time Buyer needs to do is talk with an Orange County FHA loan officer who can prepare loan scenarios based on your qualifications and goals.

Authored by Tim Storm, an Orange County, CA Loan Officer - Please contact my office at Frost Mortgage Lending Group for more information about an Orange County, CA home loan. 877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County FHA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Licensed by Department of Corporations under the California Residential Mortgage Lending Act. PRMI Branch License 813F487.

Changes to FHA will Have Some Effect on Orange County First Time Home Buyers

Tim Storm — Fri, 22 Jan 2010 23:11:00 GMT

Major changes to the FHA loan program will have some effect on Orange County First Time Buyers. But the news is not as bad as it seems. Although a date has not been set for implementation of the changes, it is expected to go into effect in April.

What are the Changes to FHA Financing and how will it effect Orange County First Time Home Buyers?

The Upfront Mortgage Insurance Premium (UFMIP) will be increased from 1.75% to 2.25%. The UFMIP is financed into the loan, so realistically this will not be a big deal. For example, on a $300,000 base FHA loan, the UFMIP would currently be $5,250, resulting in a total FHA loan of $305,250. Assuming a 5.5% interest rate, the principal and interest payment would be $1,733. Using the new 2.25% figure, the UFMIP would be $6,750, resulting in a total FHA loan of $306,750. The payment, using a 5.5% interest rate, would be $1,741 per month. That is only a $8 payment increase. Not a big deal.
FHA is updating the combination of FICO scores and loan to value maximum. Currently, FHA does not have a minimum FICO score requirement for a home buyer putting the minimum 3.5% down payment down. Now, a minimum FICO score of 580 is required for 3.5% down payment. If the FICO score is lower than 580 then a down payment of 10% is required. Reality: So what. Most lenders have already instituted a minimum FICO score requirement of 620. Some won't go below 660. This change should have not effect on Orange County First Time Homebuyers. If a homebuyers score is less than 580 then they probably need to work on their credit before buying a home anyway.
Seller contributions will be reduced from 6% to 3%. Reality: Not a big deal, at least for Orange County First Time Buyers. A first time buyer purchasing a home for $350,000 in Orange County, and who needed the seller to pay for closing costs, could have the seller pay as much as $21,000 under the current guidelines. That would be excessive. Under the new guidelines of 3%, the seller could pay $10,500. That would be enough to coverall closing costs (assuming 1 point Origination) and most of the prepaid expenses in most cases. Maybe in areas with lower priced homes, like Tennessee, where you can buy a home for $50,000, will be effected by this, but not Orange County.

Upfront Mortgage Insurance Premium Information

<:od>FHA did release Mortgagee Letter 2010-02, which discusses the effective date for the increased UFMIP. The effective date will be April 5, 2010. The increase does not effect the Title 1, HECM Reverse Mortgage, or Hope for Homeowners. It does effect all purchase and refinances, including the FHA Streamline program. This should give more incentive to anyone considering an FHA Streamline program right now. Do it before the UFMIP changes. May as well take advantage of currently low Orange County mortgage rates and save the extra .5% in UFMIP that you know will be there on April 5.

Authored by Tim Storm, an Orange County, CA Loan Officer – Please contact my office at Frost Mortgage Lending Group for more information about an Orange County, CA home loan. 877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County FHA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Licensed by Department of Corporations under the California Residential Mortgage Lending Act. PRMI Branch License 813F487.

2010 Will Be Another Big Year for Orange County First Time Buyers and the FHA Loan Program

Tim Storm — Fri, 08 Jan 2010 06:47:00 GMT

2010 will be another big year for Orange County First Time Home Buyers and the FHA loan program. After several years of the FHA program seeing little action, nearly 35% of all home loans in Orange County were FHA. Orange County home buyers also increasingly used the VA loan program, which offers 100% financing.

Advantages of FHA Financing for Orange County First Time Buyers

There are no special qualifications a home buyer must have get an FHA loan. Not only does FHA only require a 3.5% down payment, but also the program is fairly flexible with credit scoring. Also, FHA will allow higher debt to income ratios than most Conventional loans programs, such as Fannie Mae and Freddit Mac. Realistically, if a buyer has less than 20% down payment, then FHA will be their best loan option. If a home buyers FICO score is less than 680, they may be better off with an FHA loan even if they have 20% down payment.

One year ago most lenders allowed FICO scores on an FHA loan to be as low as 580. Now, at the beginning of 2010, most lenders require a minimum FICO score of 640, with a few even wanting scoresof at least 660. This is still more flexible that Fannie Mae and Freddie Mac. Also, while Fannie Mae recently decreased their debt to income ratios to 45%, FHA will still approved buyers will debt to income ratios as higher as 55%, and that is even with the minimum 3.5% down payment.

FHA Interest Rates Remain Low

For most of 2009, mortgage interest rates in Orange County were very low. Most Orange County First Time Buyers were able to get an interest rate in the 4.5% to 5.5% range for the last 12 months. We have started 2010 in the same range, although edging towards the upper end of that range. It is difficult to forecast where interest rates will go as year progresses, but for now rates remain extremely low.

First Time Buyer Tax Credit of $8,000 is Still Going!

The First Time Buyer Tax Credit continues into 2010. New home buyers have until April 30 to have a signed purchase contract, and then June 30 to close escrow on their new home to qualify for the credit. This credit essentially means the government is giving money to home bueyrs to purchase a home. Taken in conjunction with the fact that home prices in Orange County have dropped to levels that make a home payment comparable to a rent payment, why wait any longer.

The first step in buying a home is FHA or VA Loan PreApproval. Home buyers need to find an experienced Orange County Loan Officer who can give them several loan options and scenarios, and walk them through the process. FHA and VA PreApproval is an easy process and doesn't cost a dime. Once Approved, the home buyer will know what price range to shop for, saving time and frustration.

Authored by Tim Storm, an Orange County, CA Loan Officer – Please contact my office at Frost Mortgage Lending Group for more information about an Orange County, CA home loan. 877-786-4243 x 7.

www.OCFHALoans.com

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

* Licensed by Department of Corporations under the California Residential Mortgage Lending Act. PRMI Branch License 813F487.

Placentia Home For Sale. Only 3.5% Down Required with FHA Loan on this Orange County Home For Sale

Tim Storm — Sun, 15 Nov 2009 20:51:00 GMT

1546 Tuffree Blvd
Placentia, CA 92870
Beautiful Placentia Home! Try 3.5% Down FHA Loan!

Bette Boren
01383892

Mobile:	714.595.4283
Website:	Visit Website

Price	:	$675,000
Bedrooms	:	4
Bathrooms	:	3
Square Foot	:	2,594
Lot Size	:	7 sq.ft.
County	:	Orange
Property Type	:	Detached
Year Built	:	1967
MLS Number	:	P709869

click for more information and pictures

Property Description

Upon entering the beautiful custom front doors you will find a great floor plan in this tri-level home with spacious living family rooms. The large living room has an adjoining formal dining room and features new carpet newer dual paned windows. The spacious family room is open to the kitchen and kitchen dining area for wonderful entertaining and enjoyment. Its wood laminate flooring, warm colored paint, fireplace and French doors lending a view of the pool and backyard accentuate the inviting family room. Upstairs you will find three large bedrooms, two of which have their own front balcony access and the roomy master bedroom with its own bathroom and dressing area. There is a bonus room downstairs that could be a 5th bedroom or home office. It is pleasantly located in the highly desired award-winning El Dorado High School District with Tuffree Middle School and Sierra Vista Elementary.

Equal Housing Opportunity.

Tarbell Realtors :18565 Yorba Linda Blvd -PlacentiaCA92886

Mortgage Interest Rates Remain Low for Orange County Home Owners in 2009

Tim Storm — Fri, 06 Nov 2009 07:21:53 GMT

Interest rates have remained low through most of 2009, which has been great for Orange County home owners. Except for the typical fluctuations from time to time, mortgage rates have been very low all year.

FHA Mortgage Rates for Orange County

FHA mortgage rates have been in the 5% to 5.5% range for most of the year, with a short term dip to 4.5% in April. Rates tend to be slightly higher for “Jumbo” FHA loan amounts between $417,000 and $729,750. In this higher loan amount range, rates have tended to be between 5.25% and 5.75%.

VA Mortgage Rates for Orange County

VA mortgage rates tend to mirror FHA mortgage rates. Lenders do have a bump in pricing or rate when the loan amount goes over $417,000. VA offers 100% financing in Orange County to a loan amount of $737,500. Amazing.

Conventional Mortgage Rates for Orange County

Conventional mortgage rates for the 30 year fixed program (assuming loan amounts under $417,000) have been in the 4.75% to 5.5% range for most of the year. Pricing on Conventional loans can be tricky. The best pricing is available to borrowers with FICO scores above 740 and loan amounts at 60% of the properties value or less. If a borrower is looking to pull cash out, or if their FICO score falls below 740, the rate or fee will be higher, as mandated by Fannie Mae and Freddie Mac. 15 year fixed programs have lower rates by as much as .25% to .5%. Also, the 5 year fixed program has been in the 4% range for much of the 2nd half of 2009.

Forecast for 2010

Mortgage rates can’t stay this low forever, but there is not an expectation that they’ll dramatically increase in 2010. As the economy recovers (we all hope), mortgage rates will begin to go up. The current environment of low home prices and low interest rates has worked to create an excellent time to refinance or purchase a home. Couple that with the First Time Buyer Tax Credit and now the Move-Up Buyer tax credit, and how much better can it be.

Authored by Tim Storm, an Orange County, CA Loan Officer – Please contact my office at Frost Mortgage Lending Group for more information about an Orange County, CA home loan. 877-786-4243 x 7.

www.OCFHALoans.com

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

* Licensed by Department of Corporations under the California Residential Mortgage Lending Act. PRMI Branch License 813F487.

Orange County Home Buyers will Benefit from Extension of Loan Limits Through End of 2010

Tim Storm — Sat, 31 Oct 2009 16:24:00 GMT

Orange County, CA home buyers will continue to benefit from the increased loan limits of $729,750. On October 29, 2009, Congress agreed to extend the temporary loan limits through 2010. This extension is not only for Fannie Mae and Freddie Mac, but also FHA.

What Does This Mean for Orange County Home Buyers?

Only 2 years ago the Conforming loan limit was only $417,000, and the FHA loan limit for Orange County, CA was $362,790. In 2008 Congress raised the limits, first to $625,500, and then to $729,750, since Orange County is considered a "high cost" area. Los Angeles county also has the same limits. The continuance of the high loan limits enables Orange County home buyers to have access to loan programs that would not otherwise be available since the secondary market for mortgages took a bath in 2007.

The increased loan limits have added liquidity to the Orange County real estate market. FHA only requires a 3.5% down payment, which means home buyers can purchase a home for $756,000 with only 3.5% down payment. That's only a $26,460 down payment. For those home buyers who have a bigger down payment, going with a Fannie Mae/Freddie Mac loan with 20% down will make more sense. The purchase of a $912,000 home, with 20% down, will work with these loan limits.

Orange County Move Up Home Buyers Taking Advantage of High Loan Limits

<:od>

Orange County home buyers have been taking advantage of the high loan limits. FHA is not just for First Time Buyers, as many move up buyers are experiencing. With the drop in values, many move up buyers don't have as big a down payment as they would like. But with FHA allowing a small down payment, move up buyers are able to purchase homes that only a few years ago were valued in the millions. Of course, the first step for any home buyer is to get Prequalified or PreApproved for a mortgage.

Authored by Tim Storm, an Orange County, CA Loan Officer – Please contact my office at Frost Mortgage Lending Group for more information about an Orange County, CA home loan. 877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County FHA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Licensed by Department of Corporations under the California Residential Mortgage Lending Act. PRMI Branch License 813F487.

An FHA Loan is Not Just for Orange County, CA First Time Buyers

Tim Storm — Thu, 01 Oct 2009 05:58:00 GMT

FHA financing is not just for first time buyers, as many Orange County, CA move up buyers are finding out. Although FHA is quite often associated with First Time Buyers, being a first time buyer is not a requirement for qualifying for an FHA loan.

Why Do People in Orange County, CAThink FHA is only for First Time Buyers?

Flexibility with Credit - While Conventional Financing requires higher FICO scores, most lenders offering FHA will go down to a 620 FICO score.
Small Down payment - California is considered a "declining market", and as such, conventional financing requires 10% down payment. And to get that, you'd better have a 740 FICO. Realistically, anyone with less than 20% down will probably benefit by going with FHA. Plus, FHA only requires 3.5% down payment.
Flexible Underwriting - Alright, these days lenders will ask for more than you could ever imagine. "First born and a pint of blood" is not far off base. But there is still some flexibility with FHA when it comes to job history, especially for recent college grads with less than 2 years of employment history.
Down Payment can be from gift - Conventional financing allows this, but only with a 20% down payment. FHA will allow the entire down payment (all 3.5% of it) to be a gift from a relative.

Just a quick note. The only thing better than an FHA mortgage is a VA mortgage. In Orange County, CA, A Veteran can buy a home for $737,500 with $0 down.

Why FHA is Good for Orange County Move-up Home Buyers

This is the best time in years to move up into the dream home you've always wanted but maybe couldn't afford. The only problem is you've lost most of the equity in your current home. A few years ago an Orange County, CA home owner could have sold their home for (we're just estimating here) $600,000. Lets assume they would have had $250,000 of equity to pull out and put down on a new home. The price range they were interested in was $$900,000. Now, there $600,000 home is only worth $375,000. After selling their home, they will only have $25,000 to $30,000 for down payment. Not the 20% down payment they are thinking they need. But the home they liked a few years ago, worth $900,000, is now worth $550,000. Using an FHA loan they will only need $19,250 for the down payment. Not only that, the total mortgage payment, counting taxes and insurance, will be much less than it would have been if they had bought the home 2 years ago with 20% down. ($900,000 price and $720,000 loan.)

So yes, now is a great time to consider making a "move up" into the dream home. And FHA may be the best loan program for the job. First things first. Have an Orange County FHA Expert prepare loan scenarios to see if it make sense.

Authored by Tim Storm, an Orange County, CA Loan Officer – Please contact my office at Frost Mortgage Lending Group for more information about an Orange County, CA home loan. 877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County FHA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Licensed by Department of Corporations under the California Residential Mortgage Lending Act. PRMI Branch License 813F487.

9 Sources of Down Payment Funds for an Orange County, CA FHA Loan

Tim Storm — Sun, 06 Sep 2009 17:24:00 GMT

One of the major factors that have typically kept Orange County, CA first time home buyers on the sideline is the down payment. Even though FHA only requires 3.5% down payment, that is approximately $10,000 on a $300,000 home. Plus, it is important to have monehy left over for reserves and/or closing costs. Besides having money in checking or savings, where else can these funds come from?

9 Sources of Down Payment for an Orange County First Time Buyer Taking Advantage of FHA Financing

Sweat Equity - This is where labor or materials have been supplied by the home buyer prior to the close of escrow.
Secured Loans - Check with your 401K. Loans secured against a 401K are not considered in the debt to income ratios on an FHA loan. Also, some investment accounts will allow loans for down payment.
Trade Equity - If you own a boat, or maybe a classic car, it can be traded and counted towards the total cash required.
Gift Funds - Gifts can come from family or very close friends who have no financial interest in the property. Even an employer can potentially give a gift.
Loans from family - These can be either unsecured or secured against the property. The payment from a family loan is included in the debt to income ratios.
Rent Credit - Also known as a lease option, a portion of the rent paid can be credited towards the down payment. The catch here is that the amount credited is the amount of rent paid that is above the going market rent price.
Commission from sale of the home being purchased - If the Realtor representing the home buyer is a close family relative, then the agent can credit a portion of, or all of, the commission from the sale of the home back to the home buyer to be used for down payment or closing costs.
Sale of Personal Property - this is similar to Trade Equity, except that the boat or classic car is sold prior to closing escrow. Verification of the actual value of the item being sold will be required.
Bridal Registry Accounts - This is where a bank account is opened before the wedding, allowing friends and family to deposit gifts directly into the account. This can add up fast.

An important thing to remember is that an FHA loan is a Full Documentation loan. Everything will need to be thoroughly documented. Many times first time buyers will think they have found a loop hole in the guidelines, allowing them to quickly get their down payment funds together. But the lender will review the most recent two months bank statements. Any unusual deposits that cannot be attributed to payroll will need to be documented. For example, if a potential home buyer deposited a $500 check into their account last month, that deposit will need to be verified. A cancelled check and explanation letter will be required. The lender needs to make sure the homebuyer is not getting credit card advances to help with the funds needed to clolse escrow. Cash deposits are a no-no. Cash cannot be verified and cannot be used towards the verified funds required to close escrow.

Before a First Time Buyer starts to look at homes, they should first talk to a Orange County, CA Direct FHA Lender who can guide them through the loan process. It is important to not only get PreApproved for an FHA loan, but also to get advice that will help the purchase close smoothly.

Authored by Tim Storm, an Orange County, CA Loan Officer - Please contact my office at Frost Mortgage Lending Group for more information about an Orange County, CA home loan. 877-786-4243 x 7.

www.OCFHALoans.com

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

* Licensed by Department of Corporations under the California Residential Mortgage Lending Act. PRMI Branch License 813F487.

Orange County FHA Loan | Case Study #1 | Placentia Home Purchase by First Time Home Buyer

Tim Storm — Mon, 17 Aug 2009 00:18:00 GMT

FHA loans have become one of the primary ways for financing a home in Orange County, CA. This series of case studies describe recently closed FHA transactions in Orange County, CA. To protect privacy, personal details have been changed, but the information on the closing of the loan is accurate.

First Time Home Buyer Uses FHA Loan for Purchase of home in Placentia, CA

John and Theresa Garcia had tried to buy a home in 2005, but home prices were too high. Although they had been PreApproved in 2005 for a purchase price of $600,000 with $0 down payment, the monthly payment was too far beyond their budget and they knew it. The lender was offering a Stated Income loan that would adjust in only 2 years. The Garcia's were reserved to the fact that they would not be able to buy a home in Orange County any time soon, if ever.

Fast forward to February, 2009. With the blow up of the mortgage industry and all the crazy loans that were being used to qualify people for more than they could actually pay, property values have dropped by nearly 40%. Homes that were $600,000 only a few years ago were now on the market for $400,000. For the first time in years, the rent payments are similar to a home payment. (for a similar home.) After making offers on several homes the Garcia's got an accepted offer on a 3 bedroom 2 bath single family home in Placentia, CA. The purchase price was $410,000. The escrow period was set for 30 days. Time to get the loan going.

FHA Loan PreApproval Helps to Get the Offer Accepted

It used to be recommended that home buyers get PreApproved prior to making an offer on a home. Now it is all but required. There are too many reasons for an escrow to fall apart for a seller to even consider an offer from a home buyer who hasn't already submitted paperwork to a lender. In this case, the Garcia's had been PreApproved by an Orange County FHA Direct Lender prior to making the offer. Now, with the offer accepted, they already had a big head start on the closing. The lender already had a completed loan application, 2 years tax returns and W2's, paystubs for the most recent 30 days, and bank statements for the most recent 2 months. Credit had already been run. On day 1 the FHA appraisal was ordered. Also, the Garcia's ordered a Home Inspection, which, although not required by the lender, is a smart thing to do when buying a home. The termite inspection was also done in the first few days of escrow. Within 1 week the lender had the completed appraisal, escrow instructions, and the preliminary title report. The termite inspection was also turned in.

Everything seemed to be smooth sailing except for a few minor items that needed repair per the Termite Report. One issue that did come up was regarding the down payment funds. The Garcia's were getting a $10,000 gift from their parents. FHA is very concerned with down payment funds and where they come from. There needs to be a clear papertrail of where the money comes from. It cannot come from a credit card advance or be a loan from a friend. It also cannot come from cash "under the mattress." You cannot document cash to a lenders satisfaction. It was important that the Garcia's properly document the gift. Per the recommendation from their Expert FHA Loan Officer, the gift funds were wired directly from their parents bank account to the escrow company. This made it easy for the lender to make sure the funds came directly from the parents.

When escrow closed 30 days later, the Garcia's were able to move into their new home. In this case, the Garcia's also qualified for the $8,000 First Time Buyer Tax Credit. They immediately filed an amended 2008 Tax Return in order to get their $8,000 as quickly as possible. And of course, a House Warming party was planned.

This all worked out well for the Garcia's. There were definitely a few bumps in the road, but because they did their homework up front and got PreApproved for an FHA loan before they even began seriously searching for a home, they were confident escrow would close.

Authored by Tim Storm, an Orange County, CA Loan Officer – Please contact my office at Frost Mortgage Lending Group for more information about an Orange County, CA home loan. 877-786-4243 x 7.

www.OCFHALoans.com

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

* Licensed by Department of Corporations under the California Residential Mortgage Lending Act. PRMI Branch License 813F487.

Orange County, CA VA Loan Limits for $0 Down are $737,500 for 2009

Tim Storm — Sun, 26 Jul 2009 19:28:20 GMT

The loan limits for a VA loan with $0 down in 2009 in Orange County, CA are $737,500. On October 10, 2008 the President signed into law the Veteran Benefit Improvement Act of 2008. This allowed for expanded $0 down financing limits through December 31, 2009. This is the highest the $0 down financing loan limit for a VA loan in Orange County, CA has ever been.

The timing was good for this law to pass, since financing for loan amounts formerly considered “Jumbo” financing, or loans over $417,000, had all but disappeared. The previous VA loan limit was not enough to purchase a typical single family home in Orange County. But now, with these high loan limits, Veterans are able to buy in most areas of Orange County with no down payment. $737,500 will purchase a very nice home.

It is important for Orange County Veterans to first determine whether they are eligible for a VA loan.

Orange County, CA VA Loans are Full Income Doc

VA loans, like FHA and Conventional Fannie Mae and Freddie Mac loans, require full income documentation to qualify. Really, all mortgage loans are full doc these days. This means that to qualify for a VA loan, besides having the property VA Entitlements and supplying a DD214 and then Certificate of Eligibility, the Veteran will need to provide the following items:

Paystubs for the most recent 30 days. These need to show a consistent income, whether it be an hourly wage or salary. Overtime will be averaged out over the past 2 years, as long as it is continuing at present. The lender will be looking at the Gross income, before taxes and other deductions.
W2’s for 2007 and 2008, or the most recent 2 years. Again, the lender is looking for some consistency. There are situations where the lender can look at other factors if consistency is not apparent. Compensating factors are important in any loan file. A compensating factor can be any of the following: time on the job, good cash reserves, high FICO scores (over 740), low debt to income ratio’s.
2 months most recent bank statements. Although VA does not require cash reserves, it can help the loan file if other areas are weak. Also, a VA underwriter will look for NSF’s on the bank statements, which would require a letter of explanation.

Some types of income are not taxed. When the lender is calculating debt to income ratios, these types of income can be “grossed up.” For example, on the LES, or Leave and Earnings Statement, BAS and BAH income can be grossed up 15%. BAS is Basic Allowance for Subsistence and BAH is Basic Allowance for Housing. If the lender is not experienced with VA financing, not knowing this could be the difference between qualifying and not qualifying for a loan. For example, if a borrower gets $3,000 per month combined for BAS and BAH, the lender can qualify the borrower using $3,450 per month rather than $3,000 per month. ($3,000 x 115% = $3,450)

Advantages of a VA Loan versus FHA Loan for Orange County First Time Buyers

FHA is a great program and only requires 3.5% down payment. But for those who are eligible, VA does not require any down payment up to a $737,500 loan amount in Orange County and LA County. Also, FHA has an aggressive mortgage insurance program as compared to a Fannie Mae or Freddie Mac loan. With a 3.5% down payment, an FHA borrower will have a monthly mortgage insurance payment equal to .55% of the loan amount divided by 12. This is essentially equal to having an interest rate that is .5% higher than the actual Note rate. For example, if an FHA borrower has an interest rate of 5.5%, their payment, including the mortgage insurance, is similar to having a 6% interest rate. VA does not have monthly mortgage insurance. This will save the VA borrower approximately $46 per $100,000 of loan. This means on a $300,000 loan the Veteran will save $137 per month in payment versus a similar FHA loan. Or on a $737,500 loan, the Veteran will save $338 per month.

So for those Orange County or LA County home buyers who are Veterans and thinking of buying a home, this is a great time to take advantage of the the low home prices and high loan limits. The first step is to talk to an Orange County VA loan Expert.

Authored by Tim Storm, an Orange County, CA Loan Officer – Please contact my office at Frost Mortgage Lending Group for more information about an Orange County, CA home loan. 877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County VA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

How to Buy an Orange County Home With $0 Down Using a VA Loan

Tim Storm — Sun, 28 Jun 2009 23:26:00 GMT

It is still possible to purchase a home in Orange County with $0 down if you are eligible for a VA home loan. VA has been around for a long time and has many advantages for those that qualify.

What are the Benefits of a VA loan versus an FHA loan for Orange County home buyers?

While FHA requires a 3.5% down payment, which is great, VA does not require a down payment. Both FHA and VA allow the seller to pay all closing costs, which means that VA eligible home buyers can purchase a home with no money out of pocket. Also, FHA has monthly mortgage insurance, which is essentially equal to a .55% interest rate increase. VA does not have any monthly mortgage insurance. On a $300,000 loan amount this would calculate to a $137 a month savings for the VA home buyer.

**** Beginning October 1, 2009, it will be very difficult to get FHA financing on a condo. FHA has ended the Spot Approval program and has also now decided to start their condo approval list from scratch. VA actually has their own Orange County, CA VA Condo Approval list. This means VA home buyers will have a big advantage when purchasing condo's.***** Updated Sepember 13, 2009.

One great benefit that both FHA and VA have is the Streamline Refinance program. The VA Streamline Refinance, also know as the IRRRL, does not require an appraisal or income qualifying. If rates have dropped, this program makes it very easy for a VA borrower to take advantage of lower rates.

How Do I Find Out if I am Eligible?

To obtain VA home loan veteran benefits you must have served on active duty in the Air Force, Army, Coast Guard Navy or Marine Corps and have been honorably discharged. You may still be entitled to benefits if you were discharged under other than honorable circumstances. This requires further research by the VA. In the end the VA makes the final determination.

The first thing you need to obtain in order to use your VA Entitlement is a VA Certificate of Eligibility. If you do not have one already we would be happy to assist you in getting one. The process is quick and easy. Just call our office and we will be glad to send out to you a VA Form 26-1880 or request for COE. Simply fill it out and return it to the VA and you should have your COE within a couple of weeks. If you are in a hurry, you may visit your local VA Office and have your COE in as little as one day.

What are the Orange County, CA VA Loan Limits?

For 2009 the VA loan limits for $0 down financing in Orange County, CA are $737,500. That is quite a bit higher than the limits have ever been.

Who Actually Funds Orange County VA Loans?

You just need to find an Orange County VA Lender. A Direct VA Lender will process, underwrite, and fund your VA loan, rather than just originate and then "broker" to another lender. You will also want to find a loan officer who has experience with VA loans and can provide you with a loan scenario showing a complete break down of the purchase price, loan amount, payment, and closing costs involved with a VA loan. It is important to get as educated as you can on all that goes into getting a VA loan before you actually begin making offers on homes.

Authored by Tim Storm, an Orange County, CA Loan Officer – Please contact my office at Frost Mortgage Lending Group for more information about an Orange County, CA home loan. 877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County VA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

* Licensed by California Dept. of Real Estate. Lic. # 01190897

Orange County FHA Mortgage PreApproval

Tim Storm — Tue, 09 Jun 2009 22:57:00 GMT

The first step an Orange County First Time Buyer should take in the homebuying process is PreApproval. But what exactly is PreApproval? How hard is it to get PreApproved for an FHA loan? Does it cost money to get PreApproved?

Why is FHA PreApproval Important for Orange County First Time Home Buyers?

Prior to looking for a home, a buyer will want to make sure they are even looking in the right price range. Any reasonable person will have a sense that they will not be able to go out and buy a waterfront house in Newport Beach if they make $40,000 per year. But how about a $300,000 house? What is the difference in payment between a Condo and a Single Family Home? PreApproval will answer all of these questions.

Typically a qualified FHA Loan Expert can quickly discuss a buyers options over the phone and then prepare sample "loan scenarios" that will give a good idea for the buyer of what price range they should be looking in. These loan scenarios will give the buyer a complete breakdown of the purchase price, loan amount, payment, closing costs, and amount of money needed to close the transaction.

What Items Are Need for FHA PreApproval.

The following items are needed for PreApproval.

Paystubs for the most recent 30 days
W2's for the most recent 2 years. (2007 and 2008)
Federal Tax Returns, all schedules, for the most recent 2 years. (2007 an 2008.)
Copies of the most recent 2 months bank statements, all pages.
Copy of Drivers License and Social Security card. (scanned copy is preferred over a faxed copy.)

A loan application is typically completed over the phone by the loan officer, and can be done in less than 10 minutes. A first time buyer may also want to meet the FHA Loan Expert in their office. A face to face meeting can help to make the buyer comfortable with the homebuying process.

Once the loan application has been completed, the credit report is run and reviewed. Next, the loan application is run through an Automated Underwriting System (AUS), where, if all works out, the initial loan approved is received. An underwriter will review the income and asset documentation received from the buyer and then a PreApproval letter is issued. This whole process actually only takes 1 or 2 days.

Authored by Tim Storm, an Orange County, CA Loan Officer – Please contact my office at Frost Mortgage Lending Group for more information about an Orange County, CA home loan. 877-786-4243 x 7.

www.OCFHALoans.com

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

* Licensed by California Dept. of Real Estate. Lic. # 01190897

Orange County First Time Home Buyers are Benefitting from the $8,000 Tax Credit

Tim Storm — Sat, 30 May 2009 22:17:00 GMT

The $8,000 First Time Buyer tax credit has been a real "gift" for Orange County First Time Home Buyers. This credit replaced the $7,500 tax credit that went into place in 2008. The old tax credit was repayable over 15 years. The new credit is a true Tax Credit and is not repayable.

I've Owned a Home Before. Am I still Eligible?

A first time buyer, according to the rules for eligibility, is anyone who has not owned a home with the last 3 years. So even if you owned a home for 10 years and then sold it in February 2006 (just as an example), since it has now been more than 3 years, you are eligible for the tax credit.

Can the Tax Credit be used for the Down Payment?

HUD just released information on how the Tax Credit can be used for part of the down payment above the 3.5% minimum down payment requirement, and/or closing costs. However, this is not as good as it sounds. The buyer still needs to come up with the initial 3.5% down payment, either from their own funds or a gift. It will still be better, for most people, to claim the tax credit after they have purchased a home. Remember, you can always negotiate to have the seller pay all of your closing costs anyway.

How is the First Time Home Buyer Tax credit calculated?

The tax credit is equal to 10% of the home purchase price and is capped at $8,000. Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit. Single taxpayers with incomes between $75,000 and $95,000, and married couples with incomes between $150,000 and $170,000 qualify for partial credit.

All homes purchased between January 1, 2009 and December 1, 2009 including single-family, townhomes, or condominiums will qualify for the tax credit, provided that the home is used as the principal residence. This also includes new construction homes if occupied by December 1, 2009.

The December 1 deadline to take advantage of the tax credit is approaching quick. Now is the time to get PreApproved for an FHA loan, which is the first step in the home buying process.

Orange County home buyers who want to learn more about the $8,000 First Time Home Buyer Tax Credit should follow the links for a report. FHA loan limits in Orange County, CA are very high compared to where they used to be. The Orange County FHA Jumbo loan amount now goes to $729,750, which will buy a "lot of home" in Orange County.

The tax credit work well for those buyers taking advantage of the low down payment requirements offered through an FHA loan, or even better, the 100% financing offered to those eligible for a VA loan.

__________________________________________________________________________________________________

Authored by Tim Storm, CMPS, Sr. Loan Officer with Frost Mortgage Lending Group, a Direct Endorsed FHA Lender located in Orange County, CA. For information on FHA or VA, or to be prequalified please call 877-786-4243 x 7.

Orange County First Time Buyers are Taking Advantage of the 2009 FHA Jumbo Loan Limits

Tim Storm — Sat, 23 May 2009 20:11:00 GMT

The increased FHA loan limits in Orange County, CA, which now max out at $729,750, are giving Orange County home buyers more leverage in purchasing a home. The FHA Jumbo loan, also known as the "High Balance" FHA loan, is any FHA loan between $417,000 and $729,750. Home buyers in these upper price ranges get the same advantages that FHA offers for a "normal" FHA loan, which is a loan under $417,000. The advantages are listed below.

Orange County FHA Loan Advantages:

Only 3.5% down payment requirement
The down payment can be all gift (from relative) or come from a 401K
Low FICO scores accepted. (This is relative to Conventional financing.) FICO's down to 620.
Low 30 year Fixed rates with no prepayment penalty.
Non-Occupant co-borrowers allowed to help with income qualifying.
Do not need to be a first time buyer.
No income limitations
FHA Streamline Refinance program available if rate drop in the future. The FHA Streamline refinance program requires no appraisal or qualifying.

Buy a Nice Home with an FHA loan in Orange County

If a buyer wanted to take advantage of the maximum FHA loan with the minimum down payment, or at least get close to it, they could purchase a home for $755,000 with only a 3.5% down payment. ($26,425 down.) The buyer could even negotiate to have the seller pay all closing costs. FHA is a Full Income documentation loan, so the buyer does need to make a pretty decent sized income to qualify for this, and verifiable for the past 2 years. The buyer would need to make approximately $170,000 per year to qualify, depending on debt payments for car, credit cards, or student loans.

Taking in consideration the tax benefits of owning a home, along with the principle paydown on the loan that is part of a mortgage payment, anyone paying rent of $3,000 or more and who also has the income, should seriously consider buying a home now.

For a personalized Rent vs Own analysis, contact Tim Storm with Frost Mortgage. We will also prepare customized FHA loan scenarios which will give a complete breakdown of the purchase price, loan amount, PITI, closing costs, and down payment required to purchase a home. This is the first thing a buyer should do prior to looking for a home.

Authored by Tim Storm, Senior Loan Officer with Frost Mortgage Lending Group, located in Irvine, CA. Frost Mortgage Lending Group is a Direct Endorsed FHA Lender, meaning all processing, underwriting, and funding is done in their office. Tim Storm has 20 year experience closing FHA loans and working with First Time Home Buyers in Orange County, CA and surrounding counties of Riverside, San Bernardino, San Diego, and Loan Angeles. For information please call 877.786.4243 x 7.

How to Get FHA Financing for a Non FHA Approved Condo Project Using the Spot Approval Process

Tim Storm — Mon, 11 May 2009 22:29:00 GMT

Although not commonly known, there is a way to get FHA financing in Orange County for Condo's that are not currently FHA approved. This process is known as FHA Condo Spot Approval. To find out if a condo project is already FHA approved, you can visit the HUD website and type in the Condo Tract ID. Click here for the link to the correction section of the HUD website.

Orange County FHA Condo's

There are quite a few condo projects in Orange County, CA that are not FHA approved. This is because for several years, with property values so high while the FHA loan limits were so low, very few home buyers needed FHA financing. Things have changed. In 2008 HUD increased the FHA loan limits in Orange County to $729,750. The old limit was only $362,790.

There is a way to deal with condo projects that are not FHa approved. It is called “FHA Spot Approval” and is not a very difficult process for a lender who has previous experience with FHA Spot Approvals.

Orange County FHA Spot Approval Requirements

The project must be competed. There should not be any ongoing construction of additional units or common areas.
Control of the common areas for the project must have been turned over to the home owners association for at least one year.
The home owners association must provide proof of insurance. (Hazard, liability, flood)
Individual units in the project must be owned in fee simple or be an eligible leasehold interest. the project’s legal documents must provide for undivided ownership of common areas by unit owners. By virtue of this ownership, unit owners must have the right to use all facilities and unrestricted common elements.
The projects documents should not place any legal restrictions on conveyance. Any provisions that seek to limit the free transferability of title is generally unacceptable. Such restrictions include rights of first refusal and restrictive covenants. Certain governmental or nonprofit programs designed to assist in the purchase or rental of low-moderate-income housing are exempted from the restrictions on conveyance provisions.
At least 90% of the units in the project must have been sold.
At least 51% of the units in the project must be owner occupied.
No single entity may own more than 10% of the units in the project. “Entity” includes as individual partnership, corporation, limited liability company, limited liability partnership, joint venture, investor group or other natural or legal person qualified to hold an interest in real property. The 10% restriction does not apply when the ownership of less than three units would disqualify an otherwise eligible project.
HUD recognized that the 10% cap on the number of units that may secure FHA insured mortgages in a given project can place a small project at a disadvantage, since only a few units will invoke the limit. Accordingly, a two-tiered system was established. For condo projects having more than 30 units, no more than 10% of the units may have FHA insured loans at any given time. Condo projects consisting of 30 units or less, can have up to 20% of the units encumbered by FHA insured mortgages.

Orange County First Time Buyers should be aware of the advantages FHA offers. They should not shy away for condo's just because they are not FHA approved.

***There are changes effective October 1, 2009 that put an end to the Spot Approval process. Check out the latest on FHA financing for condo's in Orange County.****

Authored by Tim Storm, an Orange County, CA Loan Officer – Please contact my office at Frost Mortgage Lending Group for more information about an Orange County, CA home loan. 877-786-4243 x 7.

www.OCFHALoans.com

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

* Licensed by California Dept. of Real Estate. Lic. # 01190897

First Time Home Buyer Tax Credit is a Great Benefit for Orange County, CA Home Buyers

Tim Storm — Mon, 26 Jan 2009 06:28:00 GMT

The First Time Buyers Federal Tax Credit of $7,500 is still available, but as of right now, only for a limited time. To take advantage of this credit, buyers will need to close escrow on a home by July 1, 2009.

An FHA Loan is the Perfect Program for an Orange County, CA First Time Buyer

FHA only requires a 3.5% down payment. That means that an eligible First Time Buyer would be able to recoup most of the down payment by applying for the Tax Credit. Also, FHA allows the down payment to come from a 401K. If a buyer borrowed money from their 401K, they would be able to quickly pay back the loan with the tax refund.

The $7,500 tax credit is available to singles as well as married couples. The home being purchased must be the buyers Primary Residence. It cannot be a second home or investment property. A single buyers annual income need to be $75,000 or less to qualify for the full benefit. Between $75,000 and $95,000 the buyer would qualify for an amount less than $7,500. For a married couple, the annual income need to be below $150,000 for the full benefit and below $170,000 for a reduced benefit.

As written right now, the tax credit is actually a long term 0% interest loan from the government. It is repaid over a 15 year period at $500 per year, beginning the year after taking advantage of the benefit.

Potential Improvements May be Coming for the Home Buyer Tax Credit

Congress may be close to turning this program into a true Tax Credit. Part of the latest stimulus package in congress is a change that would make the Tax Credit an actual credit with no repayment. There's a good chance that buyers who have already taken advantage of the credit in 2008, or who close before a change takes place, will still get relieved of repayment of the credit if, or when, the change occurs. As of yet there is no word on whether the credit will be extended beyond July 1, 2009. So now is the time to take advantage of this excellent program.

To find out more information on this program, or to find more information on FHA loans and how they work, it is important to talk to an expert FHA Loan Officer. It is important to get PreQualified and PreApproved prior to looking for a home and then making any offers. Buyers need to have a good idea of what they can afford before they fall in love with a home that is completely out of their price range. I qualified Loan Officer can quickly prepare loan scenarios that will give a buyer a good idea of what they qualify for.

Authored by Tim Storm, Senior Loan Officer with Frost Mortgage, located in Orange County, CA. Frost Mortgage is a Direct Endorsed FHA Lender, meaning all processing, underwriting, and funding is done by our company. Tim Storm has 20 year experience closing FHA loans and working with First Time Home Buyers in Orange County, CA and surrounding counties of Riverside, San Bernardino, San Diego, and Loan Angeles. For information please call 877.786.4243 x 7.

Another Great FHA Loan Program for Orange County, CA Home Buyers – The FHA 203K Streamline

Tim Storm — Thu, 27 Nov 2008 17:31:41 GMT

The 203K program has been around for a while, but a few years ago the “Streamline” version of the program was released by HUD. The 203K is a Rehab loan program. The more popular “Streamline K” program is good for up to $35,000 in improvements. When this is combined with the fact that you can buy a home with an FHA loan with only 3% down (will be 3.5% in 2009) and then get an additional $35,000 to improve the home, the program really stands out as something to be considered.

This program is not just for purchasing a home. It can also be used as part of a refinance to make improvements to a home. Borrowers who want to improve their home instead of move. To see a video I put together on this program, click here.

The Best Deals are on the Damaged Bank REO’s

In Orange County, CA home buyers are finding that although it is a buyers market, there are a lot of buyers out there. A nice home in a good location will get multiple offers. Meanwhile, a Bank REO that was damaged by the previous owners, or even by squatters or thieves, can be a diamond in the rough. But first you need to have a little vision, and a Realtor and Loan Officer who know more than just the basic loan programs.

Typical Improvements Allowed on the Streamline 203K program

Kitchen or bath remodels
Patios, decks or terraces
Roofing
Safety, energy efficient and electrical upgrades
Flooring
Windows and doors, siding
Paint
Appliances – Yes, that’s correct. You can buy new appliances as part of this program.
Minor remodels that don’t require structural repairs
Heating and air conditioning

Luxury items are not permitted, such as swimming pools, hot tubs, tennis courts (but wouldn’t that be fun), saunas or alterations to support commercial use.

How Does the FHA 203K Streamline Program Work?

When the loan is funded, 50% of the rehab funds are disbursed immediately. Included with the initial disbursement is an instruction letter with details regarding the 2nd (final) disbursement. The final disbursement is issued only when all of the work is completed. If the work is $15,000 or more then a final inspection by an FHA appraiser is required. If the work is less than $15,000, then no final inspection is required. This would be perfect if appliances were the primary reason for using a 203K.

Is Qualifying Difficult?

No. The process for getting PreQualified for this program is the same as a normal FHA loan. Down payment is still only 3%, credit is flexible, and the initial approval can be, and in most cases is, Automated.

Once PreQualified, and then PreApproved, the next step is to go find a house. Home buyers will find there is not as much competition for a damaged home. Most people will shy away from these homes, leaving them for investors looking to make money by flipping the property.

Once a property is found, the borrower needs to determine improvements needed and schedules an inspection with a cost consultant. The cost consultant (or borrower in some situations) then completes the work write-up and prepares contractor bid packages to obtain cost estimates. The appraiser will use the work write-up to determine “as is” and “improved value.”

The Loan Officer and/or Realtor will be able to guide the home buyer through this part of the transaction. It is helpful to work with a Loan Officer who works with a lender who is a Direct Endorsed FHA lender and can fund the loan “in-house” rather than broker it out. Control of the loan process is very important and can also save money for the buyer.

This program will be very popular in 2009. Foreclosed properties are not known for being in pristine condition, and the banks selling the properties typically are unwilling to fix repairs. The FHA 203K Streamline program will be an important tool for any home buyer to have when beginning to home buying process.

Authored by Tim Storm, Senior Loan Officer with Frost Mortgage, located in Orange County, CA. Frost Mortgage is a Direct Endorsed FHA Lender, meaning all processing, underwriting, and funding is done by our company. Tim Storm has 20 year experience closing FHA loans and working with First Time Home Buyers in Orange County, CA and surrounding counties of Riverside, San Bernardino, San Diego, and Loan Angeles. For information please call 877.786.4243 x 7.
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