Media Scare Tactics

Is the housing market here in King County really as bad as media and publication outlets make it out to be?   I guess it truly depends on what your investment strategy is. Are you in it for the short term sprint or the long distance marathon? Over the past few years the Real Estate market has created an atmosphere of rogue Real Estate Flippers and unqualified buyer’s who have inflated the values of homes at an unprecedented rate, and now that the financing has tightened back up the truth has reared its ugly head  everyone is scared. Investing in property is not for the weak hearted and does not go from purchase to renovated and sold in a half hour- like some of the shows you may watch on TV. Those that have nerves of steel and a vision for the future know that NOW is the time to get in if you’re not already in and add to the portfolio if you already have one in progress. 

Every time I read the newspaper or watch the news they have a different statistic to show that the housing market is in trouble. It’s more of a scare tactic than a hard cold fact. Know don’t get me wrong it is truly BAD for a lot of people out there but not for everyone. Like I said earlier its about when you got in and when you plan to get out or upgrade. Not all areas in King County are taken a beating . There are some areas that are still growing, not at the same pace as previous years but 50% of something is better than 100% of nothing. If you purchased your home recently you might not agree with me but that’s because you’re looking at the short term picture versus the long term game plan. Over the past 5 years Seattle is still up 61.9%. Did your investments in the stock market give you the same kinds of returns along with all the tax benefits and right-offs?

Homes are a long term investment and should be treated as such especially during these rough economic times.  Like the stock market you buy low and sell high to maximize profits. So where is the low point and where is the high. The median price for single-family homes reached their peak in July of 2007 hitting $481,000. So where is the bottom- its coming.  According to Moody’s, “Despite the darkening national economic outlook and the weak conditions in the housing market, some positive signs give hope that housing is about to hit bottom.” They predict that home prices will stabilize by the end of the year. You can see it through the average price of of single-family homes and condominiums in certain areas of King County. In the Seattle area the median price of condominmiums was up over 9%. With record low interest rates and motivated sellers there are great opportunities out there you just have to know where to look, I do!


FHA 203k Loan

FHA 203(k) Rehabilitation Home Mortgage loans are used to Purchase or Refinance and rehabilitate an existing One to Four family residences (Residence must be 1 year old) that will be used for residential purposes. FHA approved Condos are eligible as well.

With Conforming loans a lender will not release mortgage proceeds unless the condition and value of the property provide adequate loan security and, therefore, will require completion of any rehabilitation before closing the mortgage. The 203(k) program is intended to help a purchase/refinance a house in need of repair or modernization without having to get high-interest interim loans to purchase the dwelling and to do the rehabilitation construction and then secure permanent financing when the work is completed to pay off the interim loans.

A homeowner who purchased a property with cash can refinance the property using a 203 k loan within six months of purchase, just as if he had originally purchased the property with a 203 k loan, and receive cash back, less any down payment and closing cost requirement for the 203(k) loan.

Eligible improvements include items such as structural alterations, additions, reconstruction, remodeling, new siding, plumbing, painting, decking, heating, air conditioning, electrical systems, roofing, flooring, carpeting, energy conservation improvements and major landscape work.

In some cases the mortgage requires both an appraisal on the as-is value of the property and an appraisal on the estimated market value when the work is complete.  The minimum investment, mortgage term and MIP are the same as under the FHA Purchase program (97% LTV). The mortgage amount may include funds for the purchase of the property or the refinance of existing indebtedness, the costs incidental to closing the transaction and the completion of the proposed rehabilitation.

203k maximum Loan amount is the lower of the following:

–    The as-is value, if appraised, or the contract sales price, plus the cost of repairs and improvements; or

–    The existing debt on a refinance plus the repair costs.

A 203(k) begins when mortgage proceeds allocated for the rehabilitation are placed into a rehabilitation escrow account. Proceeds allocated for the purchase of the property will be released, while those for the rehabilitation will be escrowed in an interest-bearing rehabilitation escrow account, to be released in draws as work progresses. Inspections of the work are performed by HUD-approved fee inspectors. A 10% holdback is required on each release from the rehabilitation escrow account.

For a Step by Step Checklist on the 203(k) loan process, or to find out if you qualify for a 203(k) loan, feel free to contact Your Mortgage Planner William Doom for your 203(k) approval.

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