VA and FHA

I hope everyone had a spectacular holiday.  WELCOME TO 2009!

I'm very excited about 2009.  It's always great to come into a new year after doing your business plan or setting your personal goals.  It's re-freshing and invigorating.

Market is still volatile.  Automakers are getting their bail out money, Steel industry is looking for government help, Madoff scam, etc.  Makes everyone edgy.  People moving into Stocks which moves money out of Bonds thus rates go up than confidence wanes on Stocks so out of stocks into Bonds so the inverse happens.  The media everyday still instills fear.

Don't fear and Don't let the media overwhelm you with negativity.  There are loans being made everyday.  Do you have to qualify yes.  The opportunity to buy is stupendous.  Imagine just 2 years ago most couldn't get into the housing market, values were too high but now there is tremendous opportunity.  Think about this you can buy a house now for less than you can rent.  In a few years you can move up, rent the place you are moving from with a postive cash flow...  When was the last time we could do that in the Bay Area. 

FED is buying up $4B in mortgage backed securities (MBS) between now and June.  The Obama administraction is looking at an almost $1 trillion dollar package in tax relief and other money to put into the economy.  Between the FED and this possible new package rates will remain low for now.  Remember rates are the lowest they have been in 37 years.

With the passage of HR3221 the max loan amount was set to 115% of the home median price of a area but to a maximum of $625,500. 

Just want to hit some highlights on VA and FHA loans.  Next blog will be the changes that Fannie and Freddie will implement in April 1, 2009.

Both loans allow for single family homes, condos, and 2/4 unit properties.  However it must be a primary residence.

VA Loans: 

-  100% financing up to $417K.  Over $417 up to $1.5M small down payment needed compared to conventional lending.  Easy calculation to find out what the down payment would be.

-  Rates very reasonable - 5% 30 year fixed

-  VA can purchase a home even if aboard.  His/her family must live in property.  Just think you can buy a home for your family to live in.

-  Guidelines are more liberal.

-  An unre-married spouse of a vet deceased during action are eligible for the VA entitlement

-  Seller can pay most of the the closing costs

- Funding Fee in most cases can be financed into the loan - disabiled discharge maybe waived

- no cash reserves needed

FHA Loans

-  115% of median purchase price for area to max of $625,500

-  3.5% down payment which can come from gift, secured loan, and other ways.  Ask me about my 22 to ways to get down payment for FHA loans

- no cash reserves needed

- not perfect credit ok

- Seller can pay for most of the closing costs

Becareful of the anti-flipping rules on FHA.....  A lot of asset management companies are not FDIC and own foreclosed properties.  Thus if they have not been on title for 91 days FHA will not allow the escrow to close.  Just beware.