FHA just extending the suspension of the “anti-flipping” rule for another year. This means that FHA (Federal Housing Administration) is now interested in helping low down payment borrowers, including investors who want to “fix up” foreclosures and bank owned homes, and in turn help out local communities burdened by these foreclosures. “This change in policy is temporary and will have very strict conditions and guidelines to assure that predatory practices are not allowed,” Donovan said. Previously FHA would not insure a mortgage on a house whose seller had owned it less than 90 days. The purpose of the anti-flipping rule is to eliminate the use of FHA loans to underwrite illegally-flipped homes, but it also hurt serious investors. Investors will now be more willing to buy these homes, fix them up, and then re-sell them to buyers who can use the benefits from FHA Financing, which is a low down payment option for home buyers (3.5% down). Investors will now be able to use the FHA 203k “Rehab” Mortgage Program, a special financing program that allows for borrowing money to cover the cost of repairs and upgrades to a house, as well as the purchase price. If you’d like some more information please give me a call at 360-739-6981
Great news for first-time home buyers. U.S. Department of Housing and Urban Development secretary Shaun Donovan said that the Federal Housing Administration is going to permit its lenders to allow homeowners to use the $8,000 tax credit as a down payment.
Mr. Donovan wa speaking at the Mid-year conference of NAR in Washington when he said â€œWe all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a downpayment,â€ he According to Donovan, the FHA’s approved lenders will be permitted to use the tax credit through short-term bridge loans which will allow eligible home buyers to access the funds immediately at the closing table. This will basically gives first-time homebuyers $8000 towards a down payment and/or closing costs on the new home.
I think this is a great step to help the housing market make a comeback as a down payment can often be a stumbling block for first-time home buyers. The government is finally stepping in to help them.