Having received a number of calls from Buyers and Realtors that have been told the FHA 203k Rehab/Repair Loan is not longer available, Let me assure everyone that in fact it is available. Check out www.Ohio203K.com for complete information. For Buyers and Realtors that did not know it is an excellent loan when dealing with HUD Properties, Bank Owned or Distressed Properties. It can also be used to satisfy most community Point of Sale Inspections.

Instead of having an Investor purchasing a home and rehabbing it and then reselling the property at a profit to them, the FHA 203K allows an owner occupant the opportunity to purchase the home and also obtain the funds needed to rehab the property and pocket the profits that might otherwise go to an investor.

As is true with any home purchase the First Step is to be preapproved. When speaking with a lender the borrower needs to discuss their desired monthly payment as well as the monthly payment limit calculated by the loan officer. After determining a payment range, a Realtor familiar with FHA 203k loans can start showing you properties in the areas or communities that you wish to purchase a home.

Borrowers using the FHA 203K Loans are eligible for the $8.000 Federal Stimulus that is due to expire 11/30/2009 (It might be extended, but it might not so if you want to buy a home, do it now. There is also an additional State of Ohio - Mortgage Credit Certificate Program that is available to First Time Buyers that could give you additional tax credits. Visit this site to see the additional credits.

Anyone want to be preapproval for a 203K Loan or referral to a Realtor familiar with properties that could be purchased under this program can contact me or request a Preapproval here.

Note: Any Realtors that desire more information about 203K loans should call me at 216-324-8113

The Truth About Rates and APR

Here is a definition of APR (Annual Percentage Rate) we pulled for another mortgage Web site:

The first sentence is true.
The second sentence could not be further from the truth.

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The Real Truth About APR

Truth # 1 - Annual Percentage Rate disclosure requirements were established by a rule known as REG Z. All lenders are required to comply with REG Z by disclosing the APR on a form known as "The Truth In Lending Disclosure"
Truth # 2 - Reg Z allows each lender to comply with REG Z in their own way as long as they have a written legal opinion stating they are in compliance. Therefore, virtually all lenders have their own way of calculating their "Truth In Lending Disclosure."
Truth # 3 - Since all lenders do not apply the same rules in calculating the Annual Percentage Rate, it absolutely, positively does not provide consumers with a good basis for comparing loan costs.

Using the APR to comparison shop is absolutely worthless. Can we be any more clear?

How To Really Shop For A Home Loan - Five Steps to Peace of Mind

Step # 1 - Determine what type of loan you need and/or want. With today's rates, usually the choice is easy - a 30 or 15 year fixed rate loan.
Step # 2 - Shop at least three lenders. Even with a referral you need to get a written estimate so you can compare quotes. This is the only guaranteed way to get a good rate at a fair price.
Step # 3 - Request a written quote from each lender that discloses every fee, point, charge, cost and credit associated with your transaction, based on an interest rate guarantee of 30 days (a 30 day lock).
Step # 4 - Follow the rule of SAME. Make certain each lender quotes the SAME LOAN TYPE, for the SAME TERM, for the SAME RATE, for the SAME LOCK PERIOD on the SAME DAY. Anything less and you are not comparing apples to apples.
Step # 5 - Do the math. Sit down with each quote; eliminate the costs of interim (or per diem) interest, property taxes, homeowners insurance and mortgage insurance. Leave everything else in. The lender with the lowest cost after these adjustments is the least expensive. If the differences are too close to care about, then stick with the referred lender. If the differences are significant to you, then give the referred lender a last chance to earn your business. If a non-referred lender is the winner, then ask them for references.

Here is an update of the Cleveland NACA event as broadcast by www.WKYC.com a local TV Station.


Here is a link to the story ( http://www.wkyc.com/news/local/news_article.aspx?storyid=118350&catid=3 ). Also homeowners facing foreclosure may want to check with the individuals at Cuyahoga County's Foreclosure Prevention Program ( http://www.dontborrowtroublecc.org/ ) or one of the Local Counseling Agencies that have been assisting Homeowners in Northern Ohio for years.

Something needs to be done to Stimulate the Housing Market, coming up with the correct solution is the hard part. Looking at some of the options, I see

• 100% FHA Financing
• Return of DPA Programs (Seller Funded)
• Current $8,000 Federal Tax Credit
• Other Government Grants

Current $8,000 Federal Tax Credit
Currently there is a $8,000 Federal Tax Credit that is available to First Time Buyers (Subject to income limitations) The problem with this approach is that it is only available to First Time Buyers and instead of assisting buyers to purchase, it Pays buyers to purchase homes. It can be used towards closing costs or as an additional downpament once the buyer has satisfied the 3.5% Down Payment Requirement. A problem Because Tax Dollars are used for this program, we are putting our children and our future in debt.

Return of DPA Programs (Seller Funded)
Some will say that this program worked and that it should be permitted again. I ask that you look at a few things about the program before you openly endorse this. First, the 501C3 Non Profits that offered this program collected a processing fee. Because this is their primary revenue source, everyone should ask if they support this program because they want to assist home buyers or want the revenue. A second issue with this program is that the Seller Funded Gift/Grant is really paid for by the home buyer because the sales price is increased to compensate for the Gift or Grant. Some will say the same is true when a seller agrees to pay a buyers closing costs. This is true, however when you include the DPA and the closing costs, most will agree that you are inflating the sales price of the home. Looking at this mathematically if you inflate the sales price time after time, During the Bubble or Balloon of Home Values, sales like this were commonly used by appraisers to achieve the values to support the values appraisers were giving lenders.

Other Government Grants
For a number of years, States, Cities and Counties have been using a number of programs to encourage individuals to buy homes. Programs like these are tools to redevelop individual neighborhoods or to encourage Owner Occupied purchases. I support these programs in general, because they are Target ted instead of a One Size Fits all approach that Nationwide programs do not. In reading some other posts, there are some markets that are doing quite well.

100% FHA Financing
If anything is done to encourage housing, I believe permitting 100% FHA financing on a regional or nationwide basis could be an option to consider. No Tax Dollars are directly spent on this program because home buyers are financing the entire purchase price. There might be a residual cost to FHA because they are allowing 100% financing instead of the 96.50% that is now required. This 3.5% exposure would be a better option than the 10% Federal Tax Credit that is presently being discussed. Another advantage would be that it would be open to all buyers, not just First Time Buyers.

Share your thoughts

Having just spoken with a few Realtors and Buyers that were told by other lenders that OHFA funds are gone, Realtors should know that this is FALSE. OHFA does still have funds available under their Rate Based Program and also under their Mortgage Credit Certificate Program.

One Realtor also said their normaly loan officer said it is Too Much Paperwork to do OHFA Loans. If you desire to assist your buyers, find a lender that uses OHFA and has no objection to the little bit of extra paperwork. (One Form signed by the Seller, 3 Forms signed by the Buyer) If that is too much extra work for your Loan Officer, I suggest you find a new loan officer.

Also any Buyers considering a 203K loan will find the OHFA program the best deal available in most cases.