100% Financed Mortgages – CHFA Helping To Stabilize the Local Real Estate Marketplace

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The Connecticut Housing Finance Authority (CHFA) has a program in place designed to assist homeowners or potential homeowners with the purchase of distressed properties.  The program, called the Homeowners Equity Recovery Opportunity Program (or HERO) provides for several concessions that would allow the buyer to purchase a short sale or bank-owned property with reasonable ease.

Very Little Money Down

Like most FHA loans, buyers would only have to pay 3.5% down on a CHFA HERO financed purchase – an amount that is very doable for most prospective buyers these days, especially in light of the current economic downturn.

Down Payment Assistance

An added benefit of the program is that buyers that qualify for down payment assistance may be able to finance that portion of the purchase as well, effectively making the home purchase 100% financed.

More Distressed Properties Sold Equals Marketplace Stabilization

As the CHFA website states, the program is “designed to support neighborhood stabilization by providing first mortgage financing to encourage first-time homebuyers and existing homeowners to purchase and/or purchase and rehabilitate foreclosed or abandoned properties including properties conveyed by deed in lieu of foreclosure or short sale.” Buyers can qualify for this loan only for the potential purchase of distressed properties.

Newly Expanded Rules Makes for Broader Range of Buyers

The HERO program was conventionally available only for first time homebuyers but the rules have since expanded, allowing existing homeowners to also fall under the umbrella of qualified applicants of this financing program.  This opens up the realm of possibility to a much wider range of homebuyers.

Own and Rent at the Same Time and Still Qualify for HERO

If you are looking for either a short sale or a bank-owned property, and you want to be an owner-occupant and move into that home,  CHFA will allow you to keep your existing home and while using up to 85% of your net rental income from your existing home to qualify on your next loan to purchase the second home and move into it.  In other words, you can own two properties at the same time, using your existing/current home to qualify your second purchase.  By tapping into the rental income potential of the first property, you will have then strengthened your investment portfolio significantly.

Lower Than Average Interest Rates

Though as a nation we are already used to seeing the all-time low interest rates that have made international headlines across the board, the benefit of the CHFA HERO loan program is that rates are even lower than many other markets.  Since the rates do fluctuate, the most accurate rate quote will come from a loan officer, but the fact is that when you combine all other factors of the HERO program along with the low, low rates – the opportunity is an amazing one!
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To learn more about CHFA, check out their website here or if you want to read  specifically about the HERO financing program visit this link.

The Home Warranty Advantage; Providing Assurance to the Buyer and Peace of Mind to the Seller

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Homeowners Insurance is great – it covers a lot of things like fire, theft and vandalism – and in case there is a storm that causes significant damage, the policy’s right there to protect the owner.  But what about a policy that looks after the interests of the property while it listed on the market and one that works to the advantage of both sides of the buying and selling fence?  A home warranty is a perfect supplement to a homeowner’s insurance policy and it broadens the overall coverage in a variety of ways.  Here is a rundown of the variances between the two and how a seller getting a warranty policy on their home for sale is a great tool!

The Benefits of a Home Warranty Policy

While home insurance largely covers catastrophic incidences and damage, a home warranty policy goes far beyond in that it address the home including wear and tear items.  Also, maintenance and repair is typically includes in a home warranty policy.  As a selling tool, this is fantastic, because during the process – or even after the home is sold – for up to 13 months, the areas of the home covered under the policy are warranted.  Oftentimes, a buyer will come across an issue with something in the home that could become a deal breaker but with the added peace of mind of a warranty, the seller can sit back and relax knowing that most things will likely be covered.  Examples of things that fall into range of coverage on a home warranty are flooring, plumbing systems, electrical systems, and wear and tear of these areas plus also the furnace and in come cases, the roofing or other major components of the home.

Home Insurance Policy Advantages

The single biggest difference between a home warranty versus a home owners insurance policy is that the latter covers the basic replacement value in general if there is a major catastrophe such as a storm that cause damage, fire, theft or vandalism or personal liability.  There is not personal liability coverage under the home warranty policy, rather it focuses on the “used” contents of the home.


How a Home Warranty Policy Helps in a Real Estate Transaction

Home Warranty of America is a company that provides very good coverage under their policy (for a list of their benefits, click here) including 13-months of free seller coverage, with coverage beginning on the first of their home being listed for sale.  The free coverage period for the seller lasts for up to 180 days and the policy is only paid for upon sale of the home at closing.  The best part of a home warranty policy is that even after the buyer has taken possession of the property, the coverage continues.  That means that as a seller, you will not have to contend with any last minutes issues that can and do come up. When applying for the warranty, be sure to choose coverage that address all potential concerns you may have for the home so that if there were a need for repairs or coverage, you would have it provided as a benefit.

An industry association held a study in which it was determined that not only do homes sell up to 50% faster when there is a home warranty policy in place, but also the selling price typically comes within three percent of the list price.  In today’s real estate market – this is an advantage that any seller would want to avail!

Three Absolutely Critical Components of Selling Your Home

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With national and local housing inventories at such historical highs, it’s no wonder that homeowners are scrambling to sell their homes in the wake of all the competition that surrounds them.  But there is hope for those people that follow these three simple but very effective guidelines that are suggested by experts and proven to work.  As long as you are committed, are willing to sacrifice a little to gain a lot and do these steps in a timely manner, success is all but guaranteed!

Make Sure the Exterior is Warm and Inviting

Curb appeal is such an important aspect of homes that there is an entire show dedicated to it on a popular television network.  Curb appeal effectively pulls potential buyers in and keeps them interested – something that is very important when you are up against other homes being sold in the neighborhood.  Before you set out to sell your home, take some time to survey the exterior.  List all the things that need updating, are outdated or areas that can stand to have some fresh plants and landscaping.

Once you have mapped out what is needed, determine your budget and then do your best to modernize the area, while making it warm and inviting to outsiders.  This includes things like neutral stone walkways, mulch flowerbeds, a brand new welcome mat or attractive planters set up at the entry way.  You can also invest in relatively inexpensive light fixtures and if there is some space, a small bistro table and chairs set.  Just remember that from the moment that buyers drive up, they should want to feel the urge to come inside to see more.

The Center of the House Should Be the Center of Your Attention

No room is more frequented than the kitchen and when it comes to buying a home, that is the first room that most buyers check out to decide whether the home is worth pursuing or not. If you have an outdated kitchen or one that has some elements that need to be updated, decide your investment limit and be smart by putting in a sizable amount toward the kitchen.  New countertops, sink and large appliances are hot ticket items.  Also tile, wood or laminate flooring is a popular kitchen feature that attracts homebuyers.  While these things can cost quite a bit, especially if you opt for expensive features like custom-built granite countertops or stainless steel major appliances – the investment also usually pays off.  Dollar for dollar, homeowners that invest in their kitchens and other major areas of the home are able to yield a higher sale price.

Pristine, Clean, Sparkling Bathrooms Are Buyer Favorites

Imagine shopping for a home only to find that the main bathroom has old cabinets, a stained toilet and tub or flooring with cracks, dirt and grime.  An automatic turnoff, most buyers will not even consider the rest of the home if this essential part of the house is not up to par.  Bathroom renovation, repair and updating does not have to cost too much.  Of course you can invest as much as you like however with a few key items the entire bathroom can be updated sufficiently.  Most national home improvement department stores carry new bathroom vanities, some with built-in sinks that do not cost too much.  If you add new sink and light fixtures, hire a professional cleaner or install a new standard toilet – you can completely transform the bathroom.  A few cosmetic touches also does the trick; adding some plants, new rugs and towels.
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If budget is a concern, it is a good idea to list all of the potential problem areas and then check off the major ones that you can tackle leading up to the listing of your home.  For a consultation and some advice on what areas might benefit more from renovation, check with your Realtor.http://www.youtube.com/watch?v=TrXQxYQRcKA

Four Essential Components to a Successful Mortgage Pre-Approval

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Slowly but surely the real estate market is inching toward some sort of normalcy.  Still we are experiencing a soft market where there is plenty of inventory and some eager buyers who want to avail the amazing interest rates and other concessions being offered to buyers these days.

While interest rates remain the number one motivation for many buyers who are buying their first home, moving up into something better or investing in a property – the fact remains that the mortgage industry is tight.  Lenders are being faced with myriad regulations both in-house and through the government agencies that are largely insuring many of the loans today.

It is critical that you, as a prospective buyer, obtain prior approval for a mortgage.  Not only will this give you an extra edge over other buyers who many not have done so, but it will also provide you with a snapshot of exactly what you can afford.  Sellers like nothing more than to see a pre-approval letter along with an offer.  It demonstrates that the buyer is serious and it also shows that a lender has offered them a preliminary amount with which to work.

Credit Really Does Matter Most

At one point more than a few years ago there was a plethora of advertisements claiming to provide anyone and everyone with a home loan – regardless of bad credit.  Gone are those days, in fact, credit is the very first thing considered before a loan officer will even process a loan application.  The minimum FICO score for an FHA loan is now 620, with a preference of course to a higher score.  It also goes without saying that the higher a score is the better an interest rate or other terms one will likely enjoy.

Be sure to view your credit report before you embark on a home buying journey. Know exactly what items are on the report, dispute any errors well before you apply for a mortgage so that your chances of getting an approval are greater and rectify any bad credit concerns you may see on the report.

Past Income History Weighs In Heavy

Right up there with credit health is your financial health.  Lenders will require two years of income tax statements along with W2s and any other attached schedules if you are a self-employed borrower.  Your mortgage loan officer will carefully review all aspects of your income and whether you write off any specific expenses.  To help avoid the risk of mortgage fraud, more and more lenders are requiring the 4506t process to be completed, to verify income tax filing accuracy directly with the IRS.  Anything that goes against your income will be carefully weighed in making their decision.

Be Sure You Can Prove The Source of Cash

Large deposits are a major issue that many prospective homeowners do not realize comes up in mortgage loan applications.  Each and every dime must be accounted for when it comes to incoming cash and deposits that are larger than $1000. What this means is that you cannot dip into your secret stash of cash and suddenly present a down payment to your lender.  You must be able to prove the source of all large deposits – both those that appear in the two previous bank statements that will be provided as part of the application and also in case of any new deposits.

Since cash gifts are allowed for down payments and closing costs, this same scrutiny will be applied to those who are providing the cash gift to the buyer.  This means that if friends or family members are helping you with your closing costs, there is a chance each and every one will be required to show the source of their funds.

Job History Shows Responsibility

Lenders need to know that you are reliable and that your income is stable.  The standard method is through an analysis and confirmation/verification of your work history.  It is essential that any and all gaps be accurately reported though lenders prefer to see at least two years on the same job.  Unknowingly to many home loan applicants, things like overtime, shift differentials and self-employment or business income are things that affect the income calculation used to determine eligibility and approval.
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It is not as easy as pie to get a mortgage loan anymore but these days there are still many buyers that are successfully getting into new homes and at historic rates.  It’s more important than ever to be fully prepared going into the process, providing your loan officer with anything they need – in a timely and efficient manner.  This will ensure a smooth transaction for the seller, Realtor – and most importantly, the buyer.

What Are FHA Loans and How Do They Benefit Me As A Consumer?

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The Federal Housing Agency (FHA) doesn’t directly offer loans. Instead, its purpose is to provide mortgage insurance for Americans to purchase or refinance a principal residence.
To put it another way, the mortgage loans are funded by private lending institutions (mortgage companies, banks, savings and loan associations, etc.), and those mortgages are then insured by FHA/HUD.

The Benefits of FHA Loans

If you qualify as a prospective homeowner, these loans have three great benefits. First of all, your down payments are lower. Second, closing costs are also lower. And, finally, it’s easier to qualify for credit.

Who Qualifies?

FHA has programs for:

• First-home buyers
• Seniors
• Fixer uppers
• Manufactured housing and mobile homes
• Energy efficiency, etc.

If you’re a first-time home buyer, a FHA loan can be a good deal for you. See the eligibility requirements below. Later, I’ll cover the fixer-upper category requirements. Check with the FHA on other programs.

First-Home Buyer Programs

These programs have the following eligibility requirements:

• You must meet standard FHA credit qualifications (judged by the individual’s credit record).
• You’re eligible for approximately 97% financing.
• You’re able to finance the upfront mortgage insurance premium into the mortgage.
• You’re also responsible for paying an annual premium.
• Within this category, the eligible properties are one-to-four unit structures. As of this writing, the highest maximum FHA mortgage is $362,790 while the lowest maximum amount is $200,160.


The 203(k) Program for Fixer-Uppers
The 203(k) program issues loans to allow you to buy or refinance a property. In the loan, you can also include the cost of making the repairs and improvements.

The loans are provided through approved mortgage lenders nationwide, and they’re available to buyers wanting to occupy the home.

The down payment requirement for an owner-occupant (or a nonprofit organization or government agency) equals about 3% of the acquisition and repair costs of the property.

There are several steps to obtaining such a loan:

• You find a fixer-upper and sign a sales contract after doing a feasibility analysis of the property with a realtor.
• The contract should state that you’re seeking a 203(k) loan. It should also state the contract is contingent on loan approval based on additional required repairs by the FHA or the lender.
• You then select an FHA-approved 203(k) lender and arrange for a detailed proposal showing the scope of work to be done. The proposal should include a detailed cost estimate on each repair or improvement of the project.
• The appraisal determines the value of the property after renovation.
• If you pass the lender's credit-worthiness test, the loan closes for an amount that will cover the purchase or refinance cost of the property, the remodeling costs and the allowable closing costs.
• The amount of the loan also includes a contingency reserve of 10% to 20% of the total remodeling costs. It’s used to cover any extra work not included in the original proposal.
• At closing, the seller of the property is paid off and the remaining funds are put in an escrow account to pay for the repairs and improvements during the rehabilitation period.
• The mortgage payments and remodeling begin after the loan closes.


You can decide to have up to six mortgage payments (PITI) put into the cost of rehabilitation if the property is not going to be occupied during construction, but it cannot exceed the length of time it’s estimated to take to complete the rehab.

• Escrowed funds are released to the contractor during construction through a series of draw requests for completed work.
• To ensure completion of the job, 10% of each draw is held back; this money is paid after the lender determines there will be no liens on the property.
Whew, somewhat complicated, isn’t it? Well, we’re dealing with a government program! But, FHA loans can be a good deal for you, and I’m available to guide you throughout the entire process. Just give me a call today!

FSBO - Your Advantages and Disadvantages - Why Shouldn't I Try to Sell My Home by Myself?

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Many home owners think about selling their own home but relatively few attempt it. Why? Because it's an extremely time-consuming and often exhausting process, especially if you're working a full-time job! It's the Realtor who takes this burden off your back.

Nonetheless, I don't discourage you from putting your home on the market and attempting to sell it yourself.
But before you do it, I do encourage you to become extremely knowledgeable about the process and aware of the both advantages and disadvantages of it.

Below, I've provided information on the benefits and drawbacks of doing a "For Sale By Owner" (FSBO) sale. 

Read it carefully and then make your decision!

Advantages of Selling Your Own Home

Of course, the biggest advantage a FSBO is that there's no commission to be paid to a Realtor. You get all the proceeds from the sale, minus any marketing costs you incur.

A second advantage is that you have complete control of the transaction. You don't have to rely on anyone else. You're totally independent.

A third advantage concerns your equity. If it's low, you have the possibility of selling your home without having to write a check.

A fourth advantage is that you don't have to rely on a realtor to schedule showings, answer inquiries, etc.

Disadvantages of Selling Your Own Home

Perhaps the greatest disadvantage is the tremendous amount of time you have to put into the sale.

It's a time-consuming process to do all the paperwork, the marketing and advertising, the showings, etc. by yourself - not to mention the hours it takes to get acquainted with all the legal, financial, and other issues. You must be prepared for this.

A second disadvantage is the costs in terms of marketing and advertising. If you don't exactly what you're doing, this can be very expensive!

A third disadvantage is that you won't have access to the Multiple Listing Service (MLS) unless you pay a fee to have your listing included. If you don't pay that fee, then you'll end up hunting for buyers one at a time, a very inefficient, ineffective, and frustrating process.

The fourth disadvantage relates to your knowledge of the market. If you're not knowledgeable about it, you may not price your house correctly.

That is, you may underprice it or overprice it. If you underprice your home, you lose money. If you overprice it, you lose buyers. By the same token, if you do find a buyer and you're not experienced at negotiation, you could be taken advantage of.

A fifth disadvantage relates to a belief of some buyers. They believe that since you're selling the house by yourself and not paying a commission, then they're the ones who should get the savings instead of you!

My Advice: Do your homework before considering selling your home by yourself! And, if you do decide to go the FSBO route, be fully prepared in all aspects of home sales!

If you'd like more information and advice on selling your own home as well as my real estate services, contact me.