December 2022 - Luxury Market Report for Sacramento County

December 2022 - Luxury Market Report for Lake Tahoe, California

124 Briggs Ranch Drive, Folsom, CA 95630

Quality built by Winncrest homes in 1991, this timeless residence boasts 1,925 square feet of single story living. As you enter into the grand foyer, you are greeted with tall ceilings in the formal living and dining room. Chef’s will delight in the gourmet kitchen with prep island and a dining nook. The family room features beautiful built-in cabinetry, wood flooring and a fireplace.

Down the hall, double doors lead to the office with a closet, a bedroom, full bathroom and the master suite. Amenities of the luxurious master suite include a walk-in closet, a linen closet, double vanities, shower stall, soaking tub and access to the backyard.

The private 10,890 square foot lot features a spacious covered patio, a dining deck, garden, a fruitful lemon tree, mature landscaping, a storage shed, and a seasonal stream. This striking home presents plenty of parking with an oversized three-car garage and possible boat parking along the side of the home. NO HOA OR MELLO ROOS!

Listed at $699,000

FHA 203k Loans: What Are They? What Are the Benefits?

FHA 203k loans are designed to help borrowers finance an older home that needs significant repairs.
To get an FHA 203k loan, you must work with an FHA-approved lender, which The Rojo Mortgage Team at UWL is approved!
You will also have to provide a detailed proposal of the work you want to do.
 
Getting a Mortgage Loan for a Fixer-Upper: A Primer on FHA 203k Loans
The idea of buying a fixer-upper and turning it into your dream abode can seem so perfect — every nook and cranny just to your specifications! The reality, however, can be harsh. When you realize how much it will cost to remodel, you often also realize that you can’t afford it. Or you find out that a lender won’t give you a loan because the home is considered “uninhabitable” as it is. That’s where an FHA 203k loan comes in.
 
An FHA 203k loan is a loan backed by the federal government and given to buyers who want to buy a damaged or older home and do repairs on it. Here’s how it works: Let’s say you want to buy a home that needs a brand-new bathroom and kitchen. An FHA 203k lender would then give you the money to buy (or refinance) the house plus the money to do the necessary renovations to the kitchen and bathroom.
 
Often the loan will also include: 1) an up to 20 percent “contingency reserve” so that you will have the funds to complete the remodel in the event it ends up costing more than the estimates suggested and/or 2) a provision that gives you up to about six months of mortgage payments so you can live elsewhere while you’re remodeling, but still pay the mortgage payments on the new home.
 
Which Repairs Qualify?
There are two main types of FHA 203k mortgage loans. The first is the regular or standard 203k, which is given for properties that need things like structural repairs, remodeling, a new garage, or landscaping; the second is the streamlined or limited 203k, which is given for energy conservation improvements, new roofing, new appliances, or non-structural repairs such as painting.
 
Among the other repairs that an FHA 203k will cover:
decks
patios
bathroom and kitchen remodels
flooring
plumbing
new siding
additions to the home such as a second story
heating and air conditioning systems
And more
The program will not cover so-called “luxury” improvements such as adding a tennis court or pool to the property. It also does not cover any improvement that does not become a permanent part of the property.
 
How Much Money Can You Get?
The maximum amount of money a lender will give you under an FHA 203k depends on the type of loan you get (regular vs. streamlined and purchase vs. refinance loan).
 
With a regular FHA 203k, the minimum amount you can borrow is  $5,000.
 
With a regular FHA 203k  loan, the maximum amount you can get  on a purchase loan is the lesser of these two amounts:
 
The Nationwide FHA Mortgage Limits
OR
The appropriate Loan-to-Value (LTV) ratio from the Purchase Loan-to-Value Limits, multiplied by the lesser of:
110 percent of the After Improved Value (100 percent for condominiums), or
the Adjusted As-Is Value, plus the following:
Financeable Repair and Improvement Costs, for Standard 203(k) or Limited 203(k);
Financeable Mortgage Fees, for Standard 203(k) or Limited 203(k);
Financeable Contingency Reserves, for Standard 203(k) or Limited 203(k); and
Financeable Mortgage Payment Reserves, for Standard 203(k) only.
Refinance limits are similar but also take into account the amount of the existing debt and fees of the existing loan.
 
With a streamlined loan, you can get a loan for the purchase price of the home plus up to $35,000 with no minimum repair cost plus the cost for energy improvements. To determine the as-is value of the property or the estimated value of the property post-repair, you may need to have an appraisal done. You will be required to put down 3.5 percent, but the money can come from a family member, employer or charitable organization.
 
What Kinds of Properties Qualify?
Qualifying homes for a FHA 203k loan include:
 
A one- to four-family home that has been completed for a least a year
A home that has been torn down, provided that some of the existing foundation is still in place
A home that you want to move to a new location
The home cannot be a co-op, but some condos are eligible
Your property will also have to qualify under the usual FHA requirements. For example, its value cannot exceed a certain maximum amount, which depends on where you live.
 
What Are the Pros and Cons of These Loans?
The main benefit of these loans is that they give you the ability to buy a home in need of repairs that you might not otherwise have been able to afford to buy. Plus, the down payment requirements are minimal, and often you get decent interest rates (note that the interest rates and discount points will vary by 203k lender, so it’s important to make sure that you’re getting a good deal on the loan).
 
The downsides are that not all properties qualify, there are limits on the funding you can get and applying for the loan isn’t easy. For example, to apply for the loan you may need to hire an independent consultant to prepare the exhibits required (to get the loan, you have to provide a detailed proposal of the work you want to do and cost estimates for each item). Get more information on 203k loan by calling the Rojo Mortgage Team.

Top 12 Benefits of an FHA Loan

One of the primary purposes of a Federal Housing Administration (FHA) loan is to help make homeownership more possible for those buyers who may not qualify for a conventional mortgage. FHA loan benefits are numerous, from low down payment requirements to competitive FHA rates.
 
Though there are certainly pros and cons of an FHA loan, in this article we’ll focus on the reasons these mortgages are an important tool for millions of homeowners throughout our country. Following are our top 12 benefits of an FHA loan.
 
1.   Easier credit qualifications
FHA loan requirements are less strict than they are for a conventional loan. It's one of the easiest loans to qualify for, especially if you have less than perfect credit.
 
The FHA minimum credit score is 500, however, this comes with a required loan-to-value ratio (LTV) of 90%. But lenders are allowed to set their own minimums, called overlays. A common lender overlay is an FHA credit score of 620.
 
Qualifications for an FHA loan are even more accessible because of compensating factors. This means that you can submit proof of additional factors to strengthen your application and prove your creditworthiness.
 
Acceptable compensating factors for an FHA loan include:
 
Verified cash reserves
Minimal housing payment increase
Low debts
Residual income
Substantial non-taxable income
Increased earning potential
2. Shorter time to qualify after negative credit
Still concerned about obtaining an FHA loan with bad credit? It’s true that past bankruptcies and foreclosures can make getting a mortgage more challenging. But with an FHA loan, you don't have to wait as long to get a mortgage after you've had a major credit event.
 
Let's compare the waiting period of the FHA and conventional loans.
 
FHA Loan
 
Conventional Loan
 
Chapter 7 Bankruptcy Waiting Period
 
2 Years Since Discharge
 
4 Years Since Discharge
 
Foreclosure Waiting Period
 
3 Years
 
7 Years
 
This means that borrowers who have had significant credit events have a better chance of getting an FHA loan sooner.
 
3. Low down payment
FHA loans require a down payment, but it’s likely you need less time to save up for your home than you imagined. FHA mortgages are designed to help borrowers who may not have 20 percent to put down, especially in pricier markets where this can represent a barrier to homeownership.
 
FHA loan down payment requirements are based on credit score. Those with a credit score below 580 are required to come up with a higher down payment. Because many lenders require a credit score above 580 to qualify for an FHA loan, 3.5 percent down is very common.
 
Credit Score
FHA Minimum Down Payment
580 and higher
3.5%
500–579
10%
Here are some examples of how much a 3.5 percent down payment would be:
 
$200,000 condo: $7,000 down payment
$250,000 townhome: $8,750 down payment
$300,000 single-family home: $10,500 down payment
4. More lenient on gift funds
If you don't have money for a down payment, it's acceptable to get help. FHA loan down payment requirements allow gift funds to come from family, close friends, an employer, a union, or government down-payment assistance programs. Those rules are not as strict as those of conventional loans, which only accept gift funds from relatives.
 
But it must indeed be a gift. There can't be any expected repayment.
 
Once you have someone or an organization ready to give you down payment money, you'll need to document it in a gift letter. Your loan officer can show you an example.
 
5. Low (or no) closing costs
Here's even more money-saving news: A seller can pay up to 6 percent of the sales price toward some of a buyer’s closing costs. FHA loan closing costs can average 3 to 5 percent of the loan amount. Negotiating to have the seller pay for some of these can help you get into your home with less out of pocket.
 
Closing costs can include:
 
Property taxes
Escrow fees
Homeowners insurance
Title insurance
Lender fees
There are other creative ways to pay less money up front. Some closing costs can be rolled into your loan. Another option is with lender credits: You pay a slightly higher interest rate; in exchange, your lender gives you a credit that helps cover your closing costs.
 
Talk to your real estate agent and loan officer if you'd like to negotiate or finance closing costs. Each will work on your behalf to find the best solution for you.
 
6. More affordable FHA mortgage insurance
Have you heard that mortgage insurance is a drawback of FHA loans? Take heed: FHA mortgage insurance is actually what makes it possible for millions of Americans to become proud homeowners!
 
The FHA doesn't issue loans. Instead, they offer lenders mortgage insurance. This insurance, referred to as an FHA mortgage insurance premium (MIP), protects the lender from default.
 
The length of time you pay your MIP depends on your down payment. For a down payment of less than 10 percent, MIP is paid for the loan's entire life. With a 10 percent down payment or more, the MIP is paid for the first 11 years.
 
There are two types of MIP:
 
Up Front Mortgage Insurance Premium (UFMIP) – Upon closing on an FHA loan, there is an upfront mortgage insurance premium of 1.75 percent of the loan amount. This can be rolled into the loan or paid as a closing cost.
FHA Monthly Insurance Premium (MIP) – There is also an annual MIP that can range from 0.45 percent to 1.05 percent depending on your loan parameters. This is usually split into monthly installments as part of your mortgage payment.
Mortgage insurance applies to conventional loans, too, if your down payment is less than 20 percent. And if your credit score is less than 680, that mortgage insurance can be pretty expensive. If you’re comparing the two, FHA mortgage insurance is typically the more affordable option. It’s always possible to remove MIP by refinancing to a conventional loan once you reach 20 percent equity, as many FHA borrowers do.
 
7. Lenient FHA debt-to-income ratio
FHA loan income requirements look at your debt-to-income ratio (DTI). This ratio compares your total debt and your gross income (before taxes). The lower, the better. A lower DTI means you have more money to put toward a mortgage payment. Most FHA lenders will require DTI to be 43 percent or lower. Some lenders may accept a 50 percent DTI with compensating factors.
 
DTI includes your housing costs and recurring bills like credit cards and car loans. If your income is $4,500 per month, your monthly debts can’t exceed $1,935. ($4,500 x .43 = $1,935). That amount includes your mortgage payment (principal, interest, taxes, and insurances), credit card minimum payments, auto, and installment loans.
 
To see how the following scenarios lead to an acceptable or unacceptable FHA DTI, divide the total monthly debts by the monthly income. For example: $2,628 ÷ $6,500 = .404
 

8. Non-occupant co-borrowers accepted
With an FHA home loan, a borrower can be on the loan even though they're not going to live in the property. That's called a non-occupant co-borrower. This arrangement works well if you, the primary borrower, can't qualify because you don't have enough income.
 
So, a parent can help their child buy a home even if they live across the country. The underwriter will take the co-borrower's income into account. A child can also help a parent or other sibling.
 
Here's what the FHA says about who can be a co-borrower:
 
Borrowers related by blood, marriage, or law, such as spouses, parents/children, siblings, stepchildren, aunts/uncles, and nieces/nephews
Unrelated individuals who can document evidence of a longstanding, substantial family-type relationship not arising out of the loan transaction

9. Low FHA rates
FHA loan interest rates are some of the lowest in the industry. If you have a credit score of less than 650, the FHA rate will almost always be lower than a conventional interest rate.
 
Interest rates are tied to the perceived risk that lenders anticipate in making a loan. The lender has less risk because they are backed by the Federal Housing Administration and covered by mortgage insurance, resulting in a more favorable interest rate.
 
Some of the best FHA loan rates are available through credit unions. Because credit unions are nonprofit, they may pass their tax savings on to their members in the form of lower interest rates for various loan products, including FHA mortgages.
 
10. Financing available for one- to four-unit properties
Did you know that FHA loans aren't just for one-unit properties? Eligible borrowers can purchase two-unit, three-unit, and four-unit properties.
 
But you must live in one of the units as your primary residence for at least one year. The advantage of this is that you can rent the other units out to help cover the mortgage – making the monthly payment more affordable.
 
One of the main criteria a lender will look at is if you have experience as a landlord. If you don't, this option may not work. Each case is looked at on an individual basis.
 
11. No income limits
Many low down payment options for conventional mortgages also include low income ceilings. Higher-earning borrowers make too much for these programs and, in most cases, need to put down 10 percent or more, which can add up to a significant amount.
 
With an FHA loan, there are no income limits restricting your chance of approval. This allows you to choose the loan that works for your financial needs no matter what neighborhood you’re focusing your home search in.
 
12. FHA lenders
Applying for a home loan can be a high-pressure experience. While you want to be excited about the potential of the home you’re purchasing, your days are filled with gathering and submitting paperwork for mortgage underwriting. Working with a faceless, impersonal lender can make for a nerve-racking and frustrating experience. At UWL we take that pressure off and you will deal directly with me and have your approval in 24 hours
 
When you add it all up, FHA loans are designed to help all kinds of homeowners make their real estate dreams a reality. With lower costs and more availability for borrowers from a wide range of financial backgrounds, the FHA loan benefits reflect a commitment to making homes more affordable.

November 2022 - Luxury Market Report for Lake Tahoe, California