Changes are about to occur with FHA in Connecticut and throughout the country, the conditions needing to be met for a condominium complex to be approved for FHA backed financing will change as of Oct. 1, 2009 . Currently, a complex can be on the FHA approval list with 50% of the units having mortgages insured by FHA. Looking to reduce their risk as the number of loans they have insured in the last 2 years has soared, FHA will now only approve a condominium complex with no more than 30% of the units having mortgages insured by FHA.
The FHA website offers a “pre” Oct. 1st approval list and a “post” list – much to my surprise, there are currently no condominium complexes in Connecticut on the “post” list. I assume that the transfer of information has not been completed yet, but it does give me pause to realize that if a complex was not approved by FHA within the last year, the complex will now have to reapply for approval and I am told that process will take a minimum of 4-6 weeks.
At a recent FHA seminar, the discussion was held that the current list of over 10,000 currently approved condominium complexes will be reduced to 400-500 approved complexes for the entire country. This is only until the complexes area able to obtain a new approval, but given the new restriction on 30% or less of FHA mortgage insured units, many of these complexes will not be able to overcome that barrier for years to come.
One of the Attorneys we work with closely has stated that the expectation at the FHA seminar was that only one in 200 currently approved complexes will retain their approved status. We see many of our first time home buyers buying condominiums under $200,000 and up to $250,000 in the Storrs, Coventry, Glastonbury, Tolland, Manchester, South Windsor , Willington and Vernon areas with an FHA backed mortgage, so some creative challenges will be facing Realtors, sellers and buyers with these new changes.
FHA has become a central player in financing as a buyer can be approved for an FHA backed loan with as little as 3.5% downpayment. Most banks and lenders are no longer approving loans with a 3.5% downpayment unless it is guaranteed by FHA.
These changes will take place as of October 1st and if you are a buyer or a Realtor with a client involved in a condo transaction I would strongly encourage you to have the lender get the FHA case number on or before September 30th.
As I listen to buyers and review the offers coming in on homes for sale in the Storrs area, Tolland County, Windham County and Greater Hartford areas, it does not look like home prices have leveled off yet…and one of the indicators we are now seeing of this is the appraisal.
I had an interesting conversation with a loan officer last week who stated that she felt Connecticut property prices in the Storrs, Tolland County and the Windham County areas were starting to go up.
I was pretty surprised to hear this – and when I asked her why, she said because she is no longer having any problems with homes appraising at the agreed upon sales price. She said, in fact, many appraisals are now coming in OVER the sales price. This immediately made a bell go off in my head and supported what we have been seeing in the market: housing prices are still going down. I even wrote a blog about an appraisal coming in $20,00 above the selling price just a couple of weeks ago. Continue reading
Will CT Property Taxes Go Down?
Everyone asks me this question, so I thought it would be a good time to discuss it as there seems to be lot of confusion – the short answer is, unfortunately, no. Lower CT property values do not mean your property taxes will go down. The value of your home does not determine the budget for the Ct city or town you live in – and the money for the budget needs to be raised no matter what our homes are valued or assessed at.
CT Tax Assessments
This is the way it works: The tax assessor of each and every Connecticut town and city is required to list the value of all properties by Oct. 1st of every year. This is called the GRAND list – not sure what is so grand about it, but that is what it is called. Every year all the new construction is added to the list, increased home values when additions and improvements are made to are added in, as well as land development, etc. Even without doing property revaluations, in a busy, upswing economy, this all adds up to a bigger GRAND list. Continue reading
Why Living in Storrs – and Pretty Much Anywhere in Connecticut – is Waaayyy Better…and Other News
I love where I live, I admit it. Really, compared to most other places in the country, the changing seasons are beautiful, the people are great, and we all know our mascots are better. Do you know anyone with a better mascot that the UConn Huskie?! And of course, real estate in my beloved Connecticut and the home of the Huskies, Storrs Mansfield, is a lot more fun than anywhere else. Continue reading
Connecticut Homeowners Facing Possible Foreclosure – If It Sounds Too Good to be True…
It totally is. Always. And this doesn’t just go for Connecticut homeowners who may be facing foreclosure or a short sale. This pertains to all things. We do not want to see you taken advantage of – especially if you are in a difficult situation with your home. Honestly, you’re never going to get a car (that runs and has a radio) on Craigslist for 100 bucks, and if someone claims they can get you out of foreclosure fast and easy…they are lying and you need to be very careful.
Promising Numbers for Connecticut Real Estate Market
Things are far from perfect. Just check out Connecticut’s 7%+ unemployment rate. But there is a bit of sunshine creeping through the proverbial clouds…and it’s not just because Spring is here! For instance, Storrs area pending home sales were up for the second straight month. The greater Hartford area home sales were up 21.66% (!!!) compared to 15 percent in the Midwest and 4.4 percent in the Southern states. Only the Western region saw a decline. Bummer for home sellers in the western region of the country, I know – but I’ve got my fingers crossed for you California!
Six Reasons To Consider Jumping In and Buying a Home in Connecticut
The Storrs and Connecticut real estate markets are starting to take off (like somebody has been telling you…), and now I’ve got some great points to prove what I’ve been saying all along.
1. Uncle Sam Wants You!
…To buy a house. For one, first time home buyers can receive a tax credit of up to $8000. That’s a heck of a lot of scratch. And check this out- “first time” buyers are considered people who haven’t owned in the last three years. It doesn’t really have to be your first house! Also, interest rates are historically low right now, aaannnddd….. The Fed is doing everything it can to free up loan money. Continue reading
$8,000 Tax Credit for First-Time Home Buyers
Great news for Connecticut first-time home buyers in 2009! The stimulus plan that President Obama signed into law contains a new $8,000 tax credit for qualified first-time home buyers. And, unlike the $7,500 tax credit from last year, this credit does NOT have to be repaid to the government…as long as you stay in the home for at least 36 months after the purchase date.
Remember, a tax credit is much more valuable than a tax deduction. A tax credit reduces dollar for dollar the amount of tax you owe. A deduction merely reduces the amount of your income that is taxable. This means the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset.
A Step-By-Step Walkthrough
Pre-approval – Get pre-approved for a mortgage and know in advance exactly how much house you can afford. Completing this step will also increase your negotiating power since you’ll be viewed as a “cash buyer”.
Loan Search – Put yourself in the hands of an experienced mortgage professional, someone who will help you to determine which financing options best suit your needs today and in the future.
Loan Application – It’s crucial to supply the lender with as much information as possible, as accurately as possible. All outstanding debts as well as assets and income should be included.
Documentation – Paperwork supporting the application must also be submitted. Information commonly sought includes pay stubs, two years’ tax returns, and account statements verifying the source of the down payment, funds to close and reserves.
The Hunt – Begin shopping for a house. Once you find the right one, the terms of the sale will be negotiated, including the price and potentially the terms of the loan being sought.
Appraisal – Lenders require an appraisal on all home sales. By knowing the true value of the home, the borrower is protected from overpaying.
Title Search – This is the time when any liens against the property are discovered. A lien may have been placed on a property to ensure payment of outstanding debts by the owner. All liens must be cleared before a transaction can be completed.
Termite Inspection – While most purchase loans do not require a formal inspection for termite and water damage, some loans (especially government loans) allow for the possibility. If problems are found, repairs may be necessary.
Processor’s Review – All pertinent information will be packaged by your mortgage professional and sent to the lending underwriter, including any explanations that may be needed, such as reasons for derogatory credit.
Underwriter’s Review – Based on the information put together by the loan professional, the underwriter makes the final decision regarding whether a loan is approved.
Mortgage Insurance – Many lenders require private mortgage insurance when borrowers put down less than 20 percent on a loan.
Approval, Denial or Counter Offer – In order to approve a loan, the lender may ask the borrowers to put more money down to improve the debt-to-income ratio. The borrower may also need a bigger down payment if the property appraises for less than the purchase price.
Insurance – Lenders require fire and hazard insurance on the replacement value of the structure. Flood insurance will also be required if the property is located in a flood zone. In California, some lenders require earthquake insurance on condominiums.
Signing – During this step, final loan and escrow documents are signed.
Funding – At this point, the lender will send a wire or check for the amount of the loan to the title company.
Confirmation of Funding – The lender authorizes the disbursement of loan proceeds.
Closing – Documents transferring title will now be officially recorded by the County Recorder.
Congratulations, you are now a homeowner!
If you’d like to learn more, please give me a call. I’d be happy to speak with you!
In an unprecedented effort to breathe life into the mortgage & housing markets, the Federal Reserve on Tuesday chopped down the range for the Fed Funds to 0% to 0.25% – the lowest rate in the Federal Reserve’s nearly 100 year history. This should trigger a drop in consumer interest rates for home equity lines of credit, credit cards, and car loans. While mortgage rates won’t directly benefit from this rate change, the historic low rates help provide more money for banks…which will eventually translate to more money for home loans for home buyers in Connecticut and across the country.
There is still money out there for home loans! Let The Burns Real Estate Group help you discover available programs for your next home in Connecticut – give us a call at 860.429.2853.