Friday, May 4, 2012

Understanding the Down Payment for an FHA Mortgage

Buying a home under the FHA (Federal Housing Authority) program has helped millions of homeowners over the last few decades. In fact, the number of people that are using an FHA mortgage to buy their first home has noticeably increased in the past ten years. One of the primary reasons for the increase is the lower down payment requirement. While a conventional loan may demand a 5% or 10% down payment, FHA only requires 3.5% of the sales price or the home's appraised value, whichever is smaller. However, borrowers need to be aware that FHA has some strict rules concerning where the money for the down payment comes from.

Allowable Sources for Down Payment

FHA has made a list of the various types of accounts that are deemed acceptable as a source for the down payment money.

· Savings accounts

· Checking accounts

· Private savings club

· IRA account

· Savings bonds

· 401(k) account

· Money from the sale of other personal items

· Gift funds

Using a Gift for Down Payment

It is possible that the money used for the down payment can be in the form of a gift from a relative. For young couples buying their first home, it is quite common to get a gift from an older relative such as a grandparent or uncle. FHA does have rules governing the gifts.

If the gift is in the form of cash or personal check, then the donor needs to provide proof of withdrawal along with a copy of the check and the borrower must deposit the money in their account and show proof of deposit.

If the gift is in the form of a cashier's check then the donor must offer a copy of the withdrawal information showing that the funds indeed came from their personal account.

It is the responsibility of the closing agent to make sure the right documents are obtained and submitted with the loan file.

The Gift Letter

Besides the previously mentioned documents, the homebuyer will also need to get a gift letter that includes the following information:

· Full name of the person giving the gift
· Signature of the donor

· The amount of money being given to the homebuyer

· Home address for the donor

· Phone number for the donor

· Name of the borrower

· Relationship between borrower and donor

· Signature of borrower

· The letter must indicate that this is a gift without any expected repayment

· The letter should indicate that the funds did not come from any party that is involved with the sale of the home.

So long as a borrower receives a gift within these guidelines there should be no problem getting approved for the loan.

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Thursday, May 3, 2012

Making a Big Move - Buying Real Estate Out of State

Are you considering buying real estate in another state? For those who are planning a big move, there are many considerations to think about before making the decision or putting any plans in action. The problem is often to spend some time determining who you should work with to help you through the process. Often, it is critical for you to consider your goals, your budget and your desires. However, it is also important to find someone you trust to help you with the decision.

Hire the Right Team

When buying real estate from a distance, it is best to have a local team onsite to talk to you and to answer all of your questions. It is also necessary to take into consideration those professionals and their skills in working with you. Choose someone who has experience helping out-of-state buyers find the properties right for their needs. The problem is, you likely will not be in town long to view many homes and, therefore, you need someone local who can help you and guide you through the process of finding the best properties for your needs.

Things to Consider

To make this process work, there are a few things to do before you plan on visiting the area for the first time. Even if you are just in town to gather information, it is a good idea to know as much as you can about your needs and your options.

-Determine if the professionals are experts on the area you plan to move into. This professional should be someone that knows the area very well down to the various neighborhoods. This will help you to know if the area is right for your needs.

-Find out how well the professional understands your needs and is willing to work with you through the process. For example, be sure to communicate what you are looking for and why it is important.

-Buyers generally do not have to pay for the services of an agent out of pocket, as this comes from the seller's purchase price. However, it is always a good idea to ensure this professional has the time necessary to help you to locate the home you desire.

When it comes to buying real estate from out-of-state, take your time in choosing the right agent to help you through the process. These professionals can answer your questions and give you more information about your local options. Do not underestimate the importance of having an expert in the area to help you through the process. It can make a significant difference on your long-term outcome.

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Researching Real Estate Before a Buy

Before you buy real estate, you should know as much as you can about the property and the previous owners. Since this is a big decision, most people need to know as much as possible about the investment before they make the decision to buy. This means considering things like the overall value of the property. It means knowing the neighborhood well. If you want to know the most you can about any investment, it is often best to turn to the experts who can help you in the area.

How to Gather Information   
If you want to find out as much as you can about a piece of real estate before you buy it, turn to local agencies that can provide that information to you. As a buyer, you do not have to pay out of pocket for the services of these providers. Rather, you can simply agree to work with the agent and he or she can help to track down the types of property right for your needs. This professional's job is to help you to find out as much as you can about the properties you plan to buy, too.

What can he or she help you with? What should you know before you actually make the decision to invest? There are countless things to keep in mind including the following:
-What features does the property offer? When were additional features added?

-What did the property sell for when this owner purchased it? This can be important in situations where the sale is recent or when you want to consider the overall increase in value.

-Are there any liens or other loans against the property that may make buying it more difficult? What could hold up the sale of the property?
-Are there any concerns with the property such as water problems, foundation concerns or major system repairs that need to be handled?
-What is the neighborhood like? While you may be able to tell some things from driving through it, it is often best to find an agent who can tell you about the actual neighbors and the street's overall vibe.
Having as much information as possible about the property can help you to make a decision about any property. In real estate, where the value of buying is so important, it is hard to make a decision without knowing all of the facts possible. Most people can learn more by simply taking the time to gather information about the investment including its current condition, its history and its neighborhood. Turn to a professional who knows the area well to help you with this need.