What you need to know when buying a flipped property.

10 10 2011

Here’s the HUD memo that details the extension on the waiver of anti-flipping regulations.  It gets pretty tricky and double-negative-y pretty quickly, so here’s the simplest way I explain it:

During the housing bubble days, when homes were increasing in value quickly, home flippers would buy homes, do minimal repairs (ie paint) and sell it quickly for a profit.  Some of these homes had major issues like mold that had been quickly painted over, or foundation issues that had been temporarily patched together.  Also, some of these transactions had fraudulent, selling a home for more than it was worth to a buyer who never intended to live there, and who received a cut of the money from the sale.

 So HUD looks very closely at any transactions where the seller bought the property less than 6 months before the new sale.  They are looking to make sure that the property is in good shape, that it is worth the sales price, and that the transaction isn’t fraudulent.  Here’s what that means to you:

 Normally HUD would not even allow any sales under 90 days after when the seller purchased the home.  The only exceptions were when the seller inherited the property, since this would not be a sale, or a typical investor buying and flipping properties.  HUD recently started allowing transactions under 90 days if the house and the transaction meet additional guidelines.  Even though HUD will allow this, not many investors will close transactions under 90 days.  Check with your lender if they will allow FHA closes under 90 days.  But here are HUD’s guidelines for closing an FHA loan during the 90 day period:

1. The transaction is arms-length: no business relationships between the seller, buyer, or other parties in the transaction.  The seller is on title to the property.  If an LLC or other company is involved in the transaction, it was already established before the transaction began and was operating according to applicable laws. 

2. The property’s value is accurate: It has not been bought and resold multiple times in the past 12 months.  It was marketed on the MLS.  If the value increased more than 20%, then you must document the value with the following:

    a.  Appraiser documents the improvements to the property and the reasons for the increase in value. (usually this will be copies of the repair receipts and invoices from the seller)

     b.  A home inspection.  Any health issues (mold, unsafe gas heaters, etc) or structural issues (foundations, roofs, etc) must be repaired and the repair must be documented by the home inspector or the appraiser.

Most lenders require a second appraisal to double-check the value and condition of the home.  The lower value of the two appraisals will be used and any repairs mentioned by the appraisers must be fixed and documented like on 2b.

The bottom line is that it CAN be done, to close a flipped property in under 90 days.  But you need an excellent, proactive lender who addresses these additional issues for buying a flipped property.  And I’d love to be that excellent, proactive lender for you.  As always, I’m here to serve you.

Wilhelm Koenig

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Why do I get to skip a payment when I buy or refi?

3 10 2011

In some situations, you could skip two payments.  But let’s take a closer look at what is happening with the first payment on your loan.

Interest is always paid in arrears on a loan.  This means that the interest has to accumulate before there is anything to pay.  It’s like a water bill- you use the water first, the utility company checks to see how much you owe, and then bills you the next month for the previous month’s usage.  So the interest accrues during your skipped month and your first payment applies to the interest from the previous month and the loan principal.  That’s why you get to skip a month.

How do I get to skip two months?  If your loan funds during the first 5 days of the month, you could pay less closing costs and skip one payment, or pay slightly more and skip two.  Since you are only paying the interest for the skipped month, it’s usually only about 2/3rds of what the normal payment would be.

Many times a home purchase or refinance happens when you’re going through a life change– a new marriage, baby, job relocation, divorce or death in the family—and many times skipping one or two payments helps with all the small “other” costs that go along with these life changes, whether they are diapers for babies or diapers for taking in elderly parents.

I am honored to help you save money on your home financing, especially when you are going through these life transitions.  So far I have saved fellow Oklahomans $18.3 million on their homes this year, and I want to help you be a part of that savings.  Please reach out to me, and I’m happy to help.

As always, here to serve,

Wilhelm Koenig

405.249.5993





Q: What documents do I need to get pre-approved?

26 09 2011

A: More than you’ve got. 🙂

Seriously, if you are prepared, getting pre-approved for a home loan is simple.   You and I set up a time to talk about what you want to achieve with this transaction.  This can be on the phone or in person, and usually takes between 15 and 30 minutes.  We’ll cover the bases of getting approved, the homebuying process, and we’ll look at different strategies to save the most money on your home over time.

By the end of this conversation, I will tell you whether or not I can help you, and if I can, exactly what I will do for you.  I will also give you a detailed list of documents to gather, so I can give you a pre-approval letter that shows I have verified your income, assets, and credit and that you are fully approved.

These are usually:

All pages of the last 2 years of your Federal tax returns

The most recent 1 month of paystubs

All pages of the last 2 months of bank statements

All pages of your most recent retirement or investment account statements

Driver’s license and social security cards

And if you are refinancing, your most recent mortgage statement, your home owner’s insurance declarations page, and your tax sheet

That’s typically all you need.  Then we have a follow-up meeting after you’ve gathered the documents so we can finalize your approval.  We’ll address any challenges on your approval and make sure that we have solutions.  This way there are no last-minute curveballs before closing. 

I’ll educate you on the different ways we can structure your loan to maximize your savings monthly or over time, and you can choose what is best for you.  This is how I am saving your fellow Oklahomans over $20 Million dollars on their home financing this year, and I want to help you be a part of this family.

Please contact me for a complimentary consultation today.

Wilhelm Koenig

405.249.5993

 





0% Down Payment VA loans: Could you be Eligible?

27 08 2011

There is a lot of misinformation about VA loans.  I’ve heard everything from “it’s too difficult,” to “I don’t like the VA, so I’m not going to consider a VA loan.“ But let’s look at the facts, because a VA loan could be the best program for you.  In our post-meltdown days, it is one of the few no down payment programs still around.  Plus, there is no monthly mortgage insurance, so you can buy a better home with a more affordable payment.  But first let’s look at who can qualify:

Veterans

Any eligible veteran who served more than 90 days of active duty during a time of war or 181 days of duty during peacetime should be eligible for VA home buying benefits, with certain exceptions.

Reservists

Reservists with more than 6 years of duty should be eligible for the benefits.

Spouses of veterans

Surviving, unmarried spouses of deceased veterans can be eligible to receive their ex-spouse’s eligibility, as long as their deceased spouse was eligible.

To make sure you are eligible for the benefits, you will need a certificate of eligibility from the VA.  You can receive your COE online, from your lender, or directly from the VA by mailing in your request for COE.  Based on your situation, you may need to supply some other documentation to receive your COE, like your DD214 discharge papers, or LES statement.

A VA loan is unlike any other mortgage.  A well-done VA loan can open the doors to a house for you with perks you can’t get anywhere else.  But a poorly-done VA loan could be a nightmare, taking unnecessary time, money, and documents.  The biggest key to a smooth process is choosing a lender who has years of experience with VA loans and who knows the specific VA guidelines.  So do your research and hire the one whose experience and knowledge gives you confidence that they can get it done smoothly.

Thank you for your service for our country.  I hope I or another colleague can serve you as our way of saying thank you.





The must-have app if you are buying or refinancing

22 08 2011

An app should make something simple.  So if you are considering buying or refinancing, or especially if you are a first-time homebuyer, you need the MBA’s Home Loan Toolkit app.  It’s free and is available by searching for “MBA’s Home Loan Toolkit” through Apple’s iTunes store, the Android Market, and Amazon.com.

MBA’s Home Loan Toolkit app gives consumers a rough idea of how much they can practically borrow when looking to buy a home, and has a searchable glossary of all the confusing mortgage acronyms and terms. 

And when you decide to buy or refi, I want to be your app– to make it quick, simple, and painless for you.

Here to help,

Wilhelm Koenig





Do I have to pay for closing costs too?

5 07 2011

It depends on how you write your contract. 

Look at this house, the parts of the home represent the parts of a mortgage.  The door is the down payment, the house is the loan, and the chimney are the closing costs, because they stick up above the rest of the house.

If the sales price is $100,000 and the down payment is 5%, then the door costs $5,000 and the home costs $95,000.  The closing costs probably would be around $3,500. 

So if you ask for the seller to pay for your chimney, you can get into your home with only paying for the door ($5,000.) 

Sometimes the seller will pay for the chimney only if you raise the sales price to cover the cost of the chimney.  The new sales price would be $103,500, the down payment would be $5,175, and you would pay no closing costs. 

In either case, it is extremely important to hire a competent loan officer and realtor who both work for you.  I would love to explain your loan details as clearly as the example above and put you in touch with a solid realtor who will work to make the transaction fit your needs.  Please reach out to me when you need help financing your home.





3.5 Tips for a simple condo loan process

14 06 2011

 

A condo usually means simplicity—less maintenance and worries.  But many buyers encounter unique challenges while getting a mortgage for their condo.  Here are some tips for buying your condo the simple way:

  1. Get pre-approved by a quality lender first, and have them do their homework on the condo(s) you are considering.
  1. Check to see if the condo is on the HUD or Fannie Mae approved condo list.  This could allow you to buy your new condo with a lower or no down payment.
  2. Look at the terms of the HOA rider before buying to check out the fees, maintenance, and coverage of the HOA.  Also read the bylaws to know if any will affect you.

3.5  Get to know your neighbors; you may share more than a wall.

 

I’d be honored to help you with the financing on your condo.  Please reach out to me to start the process.    Thank you!