Well, it is now official. One of the first-time homebuyer programs the FHA currently provides, is ending as of 1 October, 2008. This program allowed someone (seller, builder, friend, relative, etc.) to gift the 3% down payment requirement to a first time homebuyer.  After October 1st, relatives or friends, or anyone that will not benefit from gifting the 3% down payment is allowed to gift/contribute the 3%. You just won't be able to request the seller or builder to contribute this down-payment any more.

This program is still in effect through September, so if you're a first-time homebuyer, you can still find a home, and take advantage of this program as long as you close on the property prior to October 1st.

So why is this happening? Well, the primary reason that lawmakers have stopped this program is that 40 percent of those FHA loans that used this program just since October have gone in to foreclosure.

This does limit those that don't have 3 percent saved up to put down on a home, or a friend or relative that can gift the funds, however, all is not lost. Keep in mind that there are other programs for first time home buyers. In Florida there is the SHIP program as well as Florida Bond money--programs that can be used together and you can qualify for up to $17,000 in assistance to buy your first home. FHA will still allow use of these programs. There are stipulations for each program, however, they are designed to help the first time home buyer with down payment and closing costs. You may still have to provide funds for the down payment, but you may not need as much as you think.

And let's not forget about the $7,500 tax credit for first time homebuyers as well. This is a program that is expected to last only a year, but will give you a credit spread out over a few years.

SO--the question is, are they any truly 100 percent loans available any more? Well, things are always changing, however, right now--today, there is only the VA Loan program and US Rural Housing Loan that are 100% loan programs.

With a VA loan, you have to have served in the military for a specified amount of time (it differs from full time active duty and reserves/guard duty).

With a Rural Housing Loan, the home has to be in a Rural Housing area. In Fort Walton Beach, FL, there are no homes that fall in to the rural housing category, but there are some in Mary Esther. Crestview, and Defuniak Springs both have plenty of these opportunities, as well as some homes in Destin. There is a website that your lender or realtor can go to and input the address--and find out if it is considered a rural housing area.

SO, if you aren't qualified for a VA loan, and not in a position to use a rural housing loan, and want to take advantage of this FHA program, get to your friendly lender, call your neighborhood realtor, and get started!! Time is running out!

GOOD LUCK!

Hi all! School's back in session! Now it's time to get back in to that "school routine" for those of you that have school-aged kids.

With that in mind, one thing I've learned is that there is always something new to learn. Even with how the real estate market works, and how loans works. Markets change, so we learn how to deal with that. The mortgage industry also changes, so we learn what we can do with those changes.

With so many short sales on the market right now, it's smart to have some strategies in your pocket. As I've said before, short sales and foreclosures can be good deals, you just have to make sure you do your homework and determine how much work you are willing to do. I've seen some short sales that are move-in ready, while others need everything, including kitchen cabinets, walls and appliances.

So if you've found that home, it's a good deal, you have money for the down-payment, and even the closing costs, but that leaves you with NO funds to put in new flooring and painting the inside (many of these short sales only require a deep clean, new flooring and paint). So the question is "HOW can you buy a home like this?"

Well, you can get an FHA 203K Rehabilitation and Home Improvement Loan. Keep in mind, not all lenders are signed up to offer these, so if this is what you want, make sure you ask around. With an FHA 203K rehab loan, you can get this on a home you already own, or one you are getting ready to buy.

In a nutshell;

- Must be on an owner-occupied property (up to 4 units)

- One time closing with up to 5 draws

- 30-year fixed rate loan

- Low down payment requirements on purchases

- Flexible requirements--down to 580 credit score (changes 1 Oct)

- Up to 6% seller concessions for closing costs

- Non-occupant co-borrowers allowed

These funds can be used for rehabilitation, structural alterations and reconstruction, modernizing and remodeling, replacement of plumbing, electric, wells, and septic systems, flooring, roofing, gutters and downspouts.

There is a minimum of $5,000 in rehabilitation costs in order to get one of these, and you do need to get estimates from qualified contractors. You don't have to actually use these contractors--but you need the estimates from them. If, for some reason, you don't use all the funds you asked for, it will go towards the principal of your loan--as a principal reduction.

This is a fantastic way to get in to some of these homes out here right now. With so many short sales on the market, this is one way for someone with limited funds to get in to the home that needs a little "TLC" as we call it.

If you have questions, you can talk with your realtor if you are currently working with one, or call around to some lenders to find out who can do these loans, and what you need to do in order to get one of these.

Good Luck!

Hi all!

I was talking with my husband yesterday--he's working out-of-town right now--and he was telling me that when he took a break from all the reading he had to do, he was listening to two co-workers talk about the housing market. One is in the process of moving to another state, and just put an offer in on a new house there, and the other was saying to her "well, in this market, you offer at least 20% below what the listing price is..."

First off, anyone who knows my husband would expect him to speak up, but he chose not to this time--he wanted to hear what was being said. I'm not so sure I could have kept quiet...which is why I chose to write in my blog about negotiating an offer in this market.

Second...in ANY market, there are NO hard and fast rules about "always offer 10% less than what they ask" or "never pay full price." There is more to the picture than the listing price. ALL real estate is local. Even in today's market, there are areas of the country that the list price is the starting price and when you put in an offer, you put in what you are willing to pay over that. The key is knowing the market where you are planning to buy. Even within suburbs in a city the markets can be VERY different.

In my local multiple listing service, I ran a search to see what homes are selling for compared to their list prices in Fort Walton Beach, FL, and it's been steady since January 2007 that the sell-to-list ratio is at about 95%--meaning that on average, sellers are getting within 5% of their asking price. In 2006, it was at 90%, 2003, 2004, and 2005 it was 96%, 97% and 98% respectively. In 2002 it was at 95%. We've come full circle.

So HOW do you negotiate an offer on your dream home? Well, as I always preach...get pre-approved first to make sure you are not wasting your time looking for something more (or less) than you can afford.

When you've found the home that meets your needs, you like the neighbors, the neighborhood, the schools, the amenities, the distance to everything you want and need, look at the houses that have sold recently in that neighborhood. You can look at the property appraisers page to see what has sold, however, in Okaloosa County, Florida, it takes 30-60 days for those to update after the sale of a home. This is where it pays to work with a realtor. If the house was listed in the multiple listing service, they will have near real-time--at most within 2-3 days knowledge of how much the house next door sold for.

Your realtor can get a comparative market analysis for you on the home you're interested in. It shows if this home is over priced, or under priced in comparison with other homes that have sold recently in the neighborhood. While some sellers are still stuck in the "boom years" and expect to get more than they paid for their house then (or think that the should be able to get the price others did during that time), more and more sellers are being realistic, and as a result, are pricing their homes competitively. You see, every seller is different, as is every realtor. Some houses will still be out there over-priced, and some won't.

If the home looks like it's underpriced, ask why--what's the sellers motivation? They're tired of it and they just want out? They want to pay off bills? They need to move? Sometimes "they're just ready to move" is the answer. But that doesn't mean they can or want to "give" the house away. If you as a buyer holds to that "offer 20% less rule" you may lose out on the perfect house in the perfect neighborhood that all your kids absolutely love because it has the yard that has the treehouse in it. The house is exactly what you've pictured, and has the layout you were looking for, as well as the size yard you need, and it's close to everything you want and need.

Sometimes terms are a bigger issue than price. A buyer knows what they can afford, and they're looking at that price range, but they have very little to pay in the way of closing costs. A buyer can ask for closing costs to be paid, plus offer a lesser amount, and see what happens.

I always tell my buyers to ask for everything, but don't expect to get it. I tell my sellers what I'm told is the buyer's motivation (no money to pay closing costs), so then they can decide how to come back with a counteroffer. Sellers have their bottom line that they want/need to walk away from the sale from, and that's where they negotiate from. Just as the buyer has their limit, so does the seller--so in the negotiating process, everyone wants to get the best deal. It is possible that can happen.

As a seller, it is best to come back with some type of counteroffer. This is part of the negotiation process. Sometimes it may take going back and forth a few times to make it all work.

Now, short sales and bank-owned properties are a whole different ball game. While the "motivation" is that the bank needs to get this property off their books, there is nothing "personally" motivating a corporate entity to negotiate a sale of a home. These are instances where you have to be patient and wait for the answer to come back. Sometimes there will be multiple offers, and you have no idea what the other offers are. All that you know is that the bank will take the offer that nets them the most money.

Builders are also a different issue. Usually they are not very flexible on their price, but they will offer other amenities or upgrades instead.

So the point is...know your market, wherever you are buying OR selling. If you don't have the time to figure it out and do the research, find a good Realtor that knows your market to help you out. It will be well worth your time.

Hi all!

I hope this finds you doing well!

The latest question that has come up is "Why are some loan programs better than others, and how are they better or worse?" Well, it all depends on your situation.

While there are Rural Housing Loans (the home has to be in a designated rural housing area), VA Loans (must be currently active duty, or a veteran with certain stipulations), FHA (government backed), there are also Fixed Rate, Adjustable Rate Mortgage (ARM), and Interest Only mortgages (just to name a few).

Fixed Rate Mortgages: when you get the loan, you get a fixed rate for 15, 20, 30 years. You pay that interest rate for the life of the loan, it does not go up or down. Your principal and interest payment will stay the same. That does not mean your payment won't change, though--your taxes and insurance may change, and if they do, it will affect your monthly payment. That's the advantage of having a fixed rate mortgage--knowing your payment won't change by too much. You can budget that amount for the next 15, 20 or 30 years (whatever the life of your loan), and know that it won't change. When you get the loan, your interest rate is based on "today's" going rate, and can be locked in for 30 or so days (how many days will depend on your lender--some will be longer, some shorter).

Adjustable Rate Mortgages (ARM): There are a many variations of these. They are fixed for a period of time, anywhere from one month to five years, and then they will adjust according to the index and the margin. The disadvantage of these is that your payment COULD go up, but it could also go down. When the interest rate adjusts, it adjusts according to what the rates are doing at the time of adjustment. There is a CAP rate you also need to be aware of. A CAP rate shows the maximum amount your rate can go up in an adjustment period and/or for the life of the loan.

Interest Only Loan: These are loans where you pay only the interest, and none of the principal on the loan. This means that your principal won't go down--you won't buy down any equity by making the payments. These usually have a balloon payment at a certain point, where you are expected to either pay off the mortgage in full, or refinance.

So what's the best loan to get? That depends on your situation. If you know you're going to be in your home for less than five years due to the nature of your job, an ARM isn't necessarily a bad option. With an interest-only loan, you may have gotten a GREAT deal, and already have a lot of equity in it, and only plan to be in it a short time (whether you occupy it, rent it or sell it or any combination of the three). Fixed rate, you're payment will pretty much stay the same except for tax and insurance adjustments that would affect your monthly payment.

The BEST thing to do is to talk to your lender about your current circumstances and what your future plans are regarding your current job, and with this home (live in it, rent it, buy/fix/sell it). AND ask a LOT of questions. Ask them to explain the different programs to you (there are SO many different ones, which is why it important to be honest with your lender). The ultimate decision is yours. It can all seem confusing, so if you need to, take the information home and read through it until you do understand it better. If you have additional questions, you can ask your Realtor, or your lender. There's a lot of paperwork you have to sign when you get a loan, so it's best to understand it before you get to the closing table.