Georgia FHA Home Loans - (& Opinion)

We have hashed and re-hashed what the First Time Home Buyer's Tax Credit (FTHBTC) is and is not. Some are still confused and I am not even about to breech that subject of whether or not it can be used as a down payment. If you look good in orange feel free to try that out yourself. What I do want to tell you is, as of this date, an indisputable fact:

If a buyer does not close on their first home before December 1, 2009 they will not be eligible for the Federal First Time Home Buyer's Tax Credit of up to $8000.

Mark These Words

In November of 2009 (this year) my phone, fax, email, copy machine, and front door will all get a work out of people having to close before the end of the month. Many of these people will miss the deadline because underwriting will get jammed, loan officers will be backed up and probably appraisers, title companies, closing attorneys, etc., will also likely be over loaded.

If You Are A Buyer

#1 - Before you even pick up the phone to call an agent call your local FHA lender. Local ... let me repeat that LOCAL. Nobody will be able to answer your questions more accurately and anticipate any bumps you may experience and you can drive to their office look them in the eyes if need be. Your agent may know some basics about prequalifying you but they do not know what the underwriting engines may say once your information has been input into the automated system.

#2 - Start making offers as soon as possible. I know everyone wants to close in 14 days but in today's economy and real estate market that is pretty much unreasonable. We have had purchases close in 28 days and we have also had them go over up to as long as 45 days mostly due to valuation issues. That's another thing you have to consider if the appraisal comes back lower than your offer you'll at least have to go back to the negotiation table with the sellers which could add another 2 weeks to the process.

If You Are An Agent

Most of us do not like to be "pushy" but your First Time Buyers are going to need to be helped along if they want to take advantage of this offer. Whatever you do, do NOT let your offers go over into November. I can all but guarantee you will miss the deadline. Beyond that you better not be calling any loan officer on November 15th pressuring them because I can guarantee they will be swamped trying to get all the late comers closed on time.

A Closing Word

Someone reading this post will be involved in a transaction with an FTHB who will not close in time and will not get their FTHBTC. Someone will want to blame it on the lender even though they waited until the last minute to submit. Between you and I you better have your full package including an executed and legible copy of the sales agreement to the lender before November 1, 2009.

Don't say you were not warned.

Scenario: Buyers find a home they really like in a neighborhood they love and the price is perfect. It just needs a few things like maybe a new roof or new HVAC system and they're in! Since it is either a bank REO or a distress sale there is no way the seller is going to make the repairs. Even though the total work needed is less than $35,000 the buyers (a) cannot get a loan approval because of the needed repairs and (b) don't have the money to do the work anyway.

Meet your friend, the buyer's friend, the seller's friend and my friend: 203k FHA Streamline Renovation Loan.

The 203k streamline has the same qualification factors and loan limits as a standard FHA loan. The "streamline", in this case, refers to the limited amount of rehab (maximum $35,000) and not the documentation to qualify as on an FHA streamline refinance 203b. Generally speaking, at least with my Novation Mortgage, the borrowers will need a minimum credit score of 620 (middle), sufficient income, 3.5% of the loan amount in down payment from their own funds or a qualified gift, and to be buying a primary residence.

The 203k streamline does work in conjunction with the Energy Efficient Mortgage (EEM) and is available to first time home buyers.

The one thing the 203k streamline does not like is structural repair.

"FHA's Streamlined 203(k) program permits homebuyers to finance up to an additional $35,000 into their mortgage to improve or upgrade their home before move-in. With this new product, homebuyers can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or FHA appraiser."

This program is also permitted to be used in conjunction with HUD owned homes even the HUD $100 down purchases in Georgia and possibly other states.

When working with a 203k streamline mortgage it is important to work with a mortgage broker who has experience with the program and who can explain each "moving part" as you need to know. They take a little longer to close, require a little more patience and can be very rewarding to all parties involved.