Tulsa Mortgages

Blog

Archive for 'For Sellers'

What Happens When The Appraisal is Less Than The Purchase Price

Home AppraisalAn appraisal is a documented analysis of the value estimation for the home.  A licensed appraiser will by assigned by the lender to prepare the home appraisal report.  It recognizes fair market value based on the recent sales in the neighborhood, and is required for a mortgage loan approval to ensure the value of the property.  Homes sold in the last 90 days will provide the greatest weight in the sales comparison approach.

So what happens when the appraisal is less than the purchase price agreed upon?

If your home appraises for an amount that is lower than your purchase price there are 3 options

  1. Negotiate a new purchase price that take into account the appraised value
  2. Buyer increase their downpayment to cover the difference
  3. Buyer may choose to cancel home purchase contract through the appraisal contingency

Appraisal contingencies are also exercised to exit or renegotiate contracts when an appraiser identifies repairs that are required to complete the appraisal.

 

Posted in: For Sellers

Leave a Comment (0) →

Selling Your Mortgage With the Home?

Home In A Box

Your assumable mortgage may be marketable.

There are plenty of them out there.  All FHA loans are assumable if the buyer can qualify.  The VA loan is assumable if by another veteran.  Even USDA rural housing and 184 Indian Benefit loans are assumable, if the borrow and the property qualify. We are all told Conforming Mortgages are non-assumable, but in fact, Fannie Mae and Freddie Mac both allow assumptions on particular adjustable rate and “B” securitized products.

Get a cost analysis analysis

So, Why aren’t more sellers Marketing Their Assumable Mortgages? 

  • “Buyers will have to pre-qualify anyway.” – True. Since 1989 the lender and/or the appropriate agency must qualify and approve all mortgage loan assumptions.
  • “I got a lot of money in this house” – I can understand that argument.  Whatever cash the seller walks away with will have to come from the borrower’s pocket, either through down payment or secondary financing.
  • “Nobody would want my old loan anyway.” Ok, you’re rate is probably higher than what the market is offering today.

But you may not want to assume to be non-assumable.

  • If the seller’s loan is assumed, the closing process will be streamlined:  no appraisal, no inspections,
    and no repairs!
  • Save a pocket-full on closing costs!
  •  If time means money to you, the house could sell fast and close fast!

The buyer gets the existing payment schedule and all of the front-loaded interest the seller has already paid.  He will be making better principle reducing payments and could be looking at significant savings in the Total of Payments. 

A simple spreadsheet can show you the scenarios of an assumption vs. new financing for the particular situation, thereby giving the dollar value to both buyer and seller.  And knowing how the money flows allows for knowledgable decisions.

My point is this:  It may be a sledgehammer in your toolbox, but when you need it, knowledge of Assumable Mortgages could really help you get a job done.

Posted in: For Sellers

Leave a Comment (0) →

Tulsa, OK HUD Approved Condos

Tulsa CondominiumTulsa, OK HUD-Approved condos are hard to Find.

Tulsa OK HUD-Approved condos are hard to find. What does this mean for Tulsa condo owners trying to sell their condo?

This is a HUGE concern for Tulsa condo sellers, particularly if their condo is priced $250,000 or below. Not being able to accept FHA, VA or Section 184 Indian Loans literally removes 95% of prospective Buyers. How long will your Tulsa condo be on the market if you have to wait for a cash buyer or one with conventional financing with 20% down? Cash buyers expect a deal and may not be willing to pay fair market value. Buyers with conventional financing and 20% down are not usually shopping in the lower price ranges – OR do not want to tie up their cash on a large down-payment when it’s so inexpensive to borrow money.

And none of these loan programs (FHA, VA or 184) are available if the condo property is not HUD approved.

HUD Certified condominium complexes offer distinctive advantages over Non-Certified properties by qualifying for:

  • Lower down payments
  • Section 184 allows for 97.75% financing without monthly mortgage insurance
  • VA allows for 100% financing without mortgage insurance
  • 6% seller contributions are always available (conforming loans on condos usually allow only 3%), which equals less costs at closing for the buyer
  • Debt to Income Ratios and credit underwriting are much more lenient
  • You can borrow up to 110% so you can purchase and remodel in one loan
  • You can do an energy efficiency loan to replace windows, appliances, water heater, doors, etc.
  • Down Payment Grant Programs and Bond money most often amend FHA loans (click here for condo down payment assistance program)
  • Owners can be selling to a larger portion of the home buying market
  • It increases demand

Get an FHA Condo mortgage quote here

So what is HUD approval?

HUD oversees the FHA mortgage program, the VA sponsored program (100% financing) and mortgages back by the Bureau of Indian Affairs (checks and balances).  Since 2009 HUD has required condominium complexes to be “warranted” to be accepted for HUD mortgage programs.  This generally means an audit needs to be done to make sure the common areas are maintained, the complex is fully insured, association dues are 85% current, mostly owner occupied, the association is controlled by unit owners, etc. – mainly: just being well managed.

So Why are HUD Approved Properties hard to find?

Up until 2009, HUD allowed FHA mortgages to be placed on condo units through a process called a “spot check”.  That meant they would gather papers from the condo complex in a random, per-transaction method, and approve the quality of the complex on each individual loan.  This was inefficient and FHA absorbed many foreclosed loans due to condo association failures.

Then came 2009.  HUD does not allow spot checks any more.  The complex must get certified.

How To Become a HUD Certified Complex?

HUD is pretty friendly when it comes to approving well-managed properties.  They want to promote urban growth and are rebuilding their HUD approved roster.

The Distinction of Certification comes from one of two ways:

Go to HUD Directly – Called a HUD Review Approval Process (HRAP).  The process, if done well by you mortgage consultant, should take 6-8 weeks.  The application itself is free, but self-managing the process is not wise for amateurs and in reality fees will be paid to attorneys, management companies, appraisers, etc. to prepare the finalized application.

Use a HUD Direct Endorsed Lender – Called a Direct Endorsed Lender Review Approval Process (DELRAP).  Now a HUD direct lender is not the same as a lender that offers FHA mortgages.  Contact me to avoid middlemen and get one in your area.  This recommended route would usually take approximately 2-3 weeks.  DELRAP generally costs on par with a HUD direct approach but the process is faster and moderately more stream lined.

We will need some basic Condominium Association Documents:

  • The Declaration of Condominium, CC&R’s (Covenants, Conditions & Restrictions)
  • By-Laws of the HOA with (if applicable) amendments
  • Copy of the Current Annual Budget
  • Insurance Certificates held by association which should include General Liability and Hazard on Common Element Buildings
  • 90 days balance sheet

I can get you there.  Condo associations should usually be protecting the interests of the owners by keeping the condo development HUD-Approved.  This will increase the number of buyers who can purchase units in the development, which in turn increases the demand to buy into the development and helps support property values.

If the article doesn’t answer all of your questions, please don’t hesitate to drop a question in the commentsor for direct communication, please call me at 918-949-7248.

 

Posted in: Condos, FHA, First Time Home Buyers, For Sellers, Mortgage Types, Section 184 Indian Loans

Leave a Comment (0) →
css.php