Eleanor Thorne 919-649-5057 Cary Mortgage Loans

FHA offers a great mortgage program for folks who want to make improvements to their home (through a refinance) or those who are purchasing a home that needs some "TLC!" The program's official name is 203k.

If you are not familiar with the loan, you can find basic program details, like how the FHA 203K loan works, by clicking here. If you want to know what Improvements are Eligablie (and not Eligable) with the FHA 203K mortgage program, please click here! This program works GREAT for folks purchasing foreclosed property!

BASIC INFO ABOUT FINDING AND HIRING

A CONTRACTOR TO DO WORK UNDER THE FHA 203K HOME LOAN PROGRAM:

• All repairs/work must be completed within 3 months of the closing date.
• Repairs must be completed by a contractor unless the borrower can
  demonstrate the required expertise/experience (ie: plumbing repairs would
  require a licensed plumber, electric work would require a licensed electrician).
• The contractor making the repairs does not have to be a licensed general
  contractor; however, he must provide a resume along with two letters of references
• The cost of repair(s) must be reasonable.
• The house must be "Complete" when the home is renovated! See Ineligible repairs
• "Cost Plus" or "Time and Material" contracts are prohibited.
  

Use of Contractors:

• Contractors provide estimates for the work to be done. The buyer / owner and the Contractor must both sign and date this form.
• Contractors provide a resume and two letters of references - these can not be emails. You need actual letters from actual people regarding the folks who are doing the work. They can say, "I had Joe's Roofing Company replace my roof last spring and thought they did a great job, showed up on time, and were very reasonably priced. I would recommend them for your roofing needs." They need to be signed, dated and have a telephone number on them.
• The Underwriter will review the contractor's credentials verifying jurisdictional requirements for licensing, bonding & insurance are met (we will need a copy of all these docs). MEANING... you need to work with a "REAL" company. We are going to be looking at the NC Sec. of State site to verify that this is a COMPANY.
• Each contractor must sign a homeowner/contractor agreement. (Different from the estimate provided by the contractor - this is a FHA form we will give you) The cost estimate(s) provided must clearly state the nature and type of repair and cost for completion of the work item. You can not have an agreement that says, "general miscellanious carpentry work $20,000." I need SPECIFIC details of what is going to be done.
• If you do not provide a detailed estimate of work, the underwriter may require additional cost estimates from the borrower. We recommend you get estimates from 3 people and keep those estimates in your folder in case the underwriter asks for them!
• "Cost Plus" or "Time and Material" contracts are prohibited.

Self Help (borrowers completing work):

• The borrower is required to have the necessary expertise and experience to complete the work in a satisfactory manner (ie: borrower is a licensed plumber and will complete that portion of the work).
• The cost of labor is included in the repair/rehabilitation cost (in case the borrower is unable to complete the work and a contractor must be hired).
• The borrower may not be compensated for his/her labor. No sweat equity.
• The borrower must provide written estimates of the repair/rehabilitation costs as well as written estimates from the suppliers of the materials that the borrower will purchase
• The borrower must sign and complete the self help agreement that we provide them.
• "Cost Plus" or "Time and Material" contracts are prohibited.

Once we have all of this paperwork, the signed Estimate, the signed Contractor Agreement, the Letters of Reference - then we will submit the information to the appraiser. It is important to know that once we submit your loan for approval - you can NOT change which contractor you use! Get the price settled, get the best deal you can - but don't try and change the contractor after the loan has been submitted for approval! Because getting all of this paperwork takes some time - we suggest that you expect at least a 45 day closing!

FHA 203K loans are for owner occupied properties, and the maximum loan is calculated based upon the limits in your county! Click Here to find the maximum loan limit in your county!

Did you know that if you are a FIRST TIME HOMEBUYER you might qualify for an $8,000 TAX CREDIT! To find out more about this great program, click here!

If you have questions about purchasing a home in NC, or refinancing so that you can use the FHA 203k mortgage loan program, please call Steve and Eleanor Thorne, First Financial Services, in Cary, NC 919-851-3031

FHA increased the loan limits in 2008, and then lowered them January 1, 2009 and THEN raised them back UP on February 24, 2009! WOW!

So, if you are considering a purchase in NC, you might want to check out the NEW FHA Loan Limit for the County you are interested in!

Wake County/ Johnston County Limit $295,000

Durham County/Orange County Limit $334,650

New Hanover County/ Brunswick County / Pender County $303,750

Onslow County $306,250

Guilford County /Forsyth County $271,050

Mecklenburg County/Union County/ Cabarrus County $303,750

Iredell County $271,050

Buncombe County $303,750

FHA loans do not have a limit on the amount of income your family earns (like USDA does) and they allow you to receive a gift for your downpayment! FHA Guidelines is a bit more forgiving when it comes to credit, and you can purchase a home with a foreclosure or bankruptcy in your credit history!

If you are interested in purchasing property in a NC county I didn't list - please click here to check the new limit in your area! Don't forget, you might qualify for an $8,000 check from the new stimulus plan if you purchase property this year! Please read this for more details on how to qualify for the Government's Tax Credit!!

Have questions about purchasing a home in NC using FHA financing? Give us a call! Steve and Eleanor Thorne, .

Since the beginning of the year, subtle but significant changes made their way into the underwriting guidelines in NC, and credit score requirements have been changing! As we are all learning, each market seems to be somewhat "dis jointed" when it comes to home values, and jobs - therefore we've seen some underwriting guidelines "tailored" to a geographic area.

Credit Score requirements are getting tighter, and this could be triggered by appraisal problems. There are "guidelines" and then there are the "Golden Rule" guidelines. FHA, VA and USDA do not make mortgage loans, they INSURE them (just like a PMI company) in the event of a default. So FHA might say, "we'll insure a loan with credit scores significantly lower than 620," but the BANK (who is actually loaning the money) might not be willing to go below that mark.

Since late last fall, appraisals include distressed sales in comparable analysis to determine value. Many Realtors and lenders were taught that distressed sales are NOT included in calculating the value of a property. Meaning, that if you live in a neighborhood where 3 of your neighbors where forced to sale the home - that lowered price was not used as a comparable to your home. NOT SO NOW, in 2009 we are definitely using those sales, and they are definitely pulling values down.

Recent reports indicate that during the 4th quarter of 2008, properties in NC (for the most part) did not appreciate as much as they did in earlier quarters. Okay, so we're still appreciating, but because we've gone (in general) from 3% to 4% down to 1.5% to 2% appreciation - NC has been put on several of the "watch" lists. This is new for us. California, Ohio, Florida, Nevada, Colorado - these guys have been on the "watch list" for months.

Going back to the "Golden Rule" and how more scrutiny regarding home values in NC might affect credit scores, think about it this way:

If you were loaning our YOUR OWN MONEY for a home in NC...

and you knew that among other things

the TOP employers in our largest City,

Charlotte, are under some pretty serious pressure

(think Wachovia, which was just sold to Wells and BofA)

Would you be a little pickier about WHO you loaned that money out too?

Well?....

Of course you would!

And so really it's not that surprising. Even though you might be reading posts that say you can get an FHA loan as long as you have a credit score near 580. Well, that is what FHA says, and there are a FEW people who meet the current acceptable risk if they have 580 scores - however, in general, if you are in NC - you need 2 credit scores (at least) above 600 in order to purchase a home. If you have a foreclosure in your background, and want some information click here. If you have a bankruptcy in your credit background, and want some more information click here.

We are working with folks who need to maximize their credit. Every credit report is like a snowflake - if you've had some credit boo-boo's you can believe they are delicate, and they are different. In general, some of the things we are seeing folks should consider to HELP SCORES are:

• Don't take the credit card to get the discount at Best Buy. This is not ALWAYS lowering scores but "third party" credit cards (meaning a card issued by HSBC FOR Best Buy, ditto Macy's, Victoria's Secret, Pottery Barn) are not HELPING your score. These are the cards you want to get paid down to at least 1/4 of the credit limit.
• Don't CLOSE your credit card accounts that you are not using without speaking to a mortgage lender who can give you personal advice. Those accounts have credit history and that history might be helping your score.
• If you have old collections and serious delinquencies on your file - make SURE you have at least 3 trade lines that are current, at least 12 months of open history and are paid down to less than 50% of the credit limit. Good credit with 2 trade lines is probably not going to get you up over the 600 mark.

These are GENERAL guidelines - but my point in writing this post is this... We all need to be more aware of what our credit scores are. We are going to see TIGHTER guidelines in the near future, and if you want to take advantage of the DEALS that are out there, and the Tax Credit from the Government - you need a solid credit score... and that might take some WORK!

To learn more about writing dispute letters, click here!

If you are considering a home purchase in NC, and would like some advice about your credit and a mortgage loan - please call Steve and Eleanor Thorne, First Financial Services. 919-851-3031.

This is a repost from last year....

Does your credit look like a train wreck? I've talked to several clients recently who hit a rough spot - and are working their way out. They had some questions I thought other people might need answered too!

How long does negative information stay on a credit report?

The Fair Credit Reporting Act says that negative information can stay on your report for a minimum of seven years (I always thought that said MAXIMUM - but I was wrong). There are some exceptions to this:

* Delinquency information like late payments remain for seven years from the DATE OF DELINQUENCY.

* Charge-offs stay for seven years PLUS 180 days from the date reported to the credit bureau.

* Student loan defaults report for seven years.

* Foreclosures stay on your report for seven years. The seven year rule also applies to Law suits, judgments and paid tax liens.

* Bankruptcy stays for 10 years from the date you file.*

* UNPAID TAXES stay on your report for 15 years! Ouch!

If you have questions about items you think might be holding you back from purchasing a home, and getting a mortgage, please consider our site devoted to answering your questions about disputes, and various mortgage loan program requirements! How To Improve My FICO

Yesterday, Experian and Fair Isaac decided to end their relationship... and the result will be that in a few weeks, Consumers will no longer have access to their FICO scores.

"Currently, myFICO.com is the only place you can purchase your FICO scores based on your three credit reports

from Equifax, Experian, and TransUnion. After February 13, 2009,

you won't be able to purchase your Experian credit report or FICO score

through myFICO.com. Moreover, you won't have access to your FICO score based on Experian data at all."

As a lender, we will still have access to the scores, and will continue to use them in decision making - however, the consumer will not have access... To get your current standing, order your Experian FICO score before February 13. After that the score won't be available. You can purchase your Experian credit score from Experian or Equifax, which both use a FICO-similar 300 to 850 point scale for credit scoring.

If you have questions about your credit, and are considering a NC purchase or refinance in the next 6 to 9 months, please call us, or click here for more information about credit scores!