default avatar
Welcome to the site! Login or Signup below.
Logout|My Dashboard

What’s a buyer to do?

Font Size:
Default font size
Larger font size

Posted: Friday, February 1, 2013 8:59 am

Everywhere you look low housing inventory is being reported. It’s not just local to our area. Home prices are picking up because the number of homes for sale continues to drop despite sales volume gains. The number of homes for sale fell to 1.82 million at the end of 2012, an 8.5 percent drop from November and a 21.6 percent decline from one year earlier, according to the National Association of Realtors.

The result of the lack of inventory is also limiting the supply of move-in ready homes available for sale. Many buyers, especially first time buyers, tend to overlook properties in need of extensive repairs. However, because of current market conditions many buyers should reconsider homes they previously overlooked. Thankfully a federally backed lending program enables buyers to roll the cost of necessary repairs into their mortgage.

Take a look at some of the advantages and see if it might help in your home search:

The Federal Housing Administration’s 203(k) program provides for loans that cover purchase and renovation costs for single-family homes and multifamilies with up to four units. The total loan amount is based on the property’s appraised value once the repairs are completed. The down payment requirement is 3.5 percent.

FHA 203(k) loans are not available to investors – borrowers must live in the properties. But some borrowers have used a 203(k) loan to buy and renovate a multifamily property, live in the property for a year or so, refinance into a conventional loan, and then sell the rehabbed property.

The loans are more expensive than conventional financing, because the interest rates are slightly higher and private mortgage insurance is required.

Additionally, borrowers must pay a building consultant, who writes the initial estimate of the cost of planned repairs. Fees range from $400 to $1,000, depending on the extent of the repairs.

The loans do not cover the addition of luxury items, such as a pool. But allowances are made toward the cost of repairing or removing a pool, as well as for the addition of solar panels.

Other details of the program require renovations to be made within six months after closing. The contractor is paid in intervals after periodic inspections of how the work is progressing. Borrowers should make sure they hire experienced contractors who understand that they won’t be paid upfront and must adhere to strict timelines. As with any real estate related transaction I recommend that you seek the advice of your local Realtor® specialist and mortgage consultant.

In our lifetime we have not seen the extraordinary combination of historically low home prices merged with unusually low interest rates. Even though these two amazing factors are creating tough completion, I want to encourage you to keep looking and making offers. The result of owning your home is well worth the extra effort.

Sheri Aguilar is the president of the Lodi Association of Realtors and can be reached at Sheri@YourLocalAOR.com

Rules of Conduct

  • 1 Use your real name. You must register with your full first and last name before you can comment. (And don’t pretend you’re someone else.)
  • 2 Keep it clean. Please avoid obscene, vulgar, lewd, racist or sexually oriented language.
  • 3 Don’t threaten. Threats of harming another person will not be tolerated.
  • 4 Be truthful. Don't lie about anyone or anything. Don't post unsubstantiated allegations, rumors or gossip that could harm the reputation of a person, company or organization.
  • 5 Be nice. No racism, sexism or any sort of -ism that is degrading to another person.
  • 6 Stay on topic. Make sure your comments are about the story. Don’t insult each other.
  • 7 Tell us if the discussion is getting out of hand. Use the ‘Report’ link on each comment to let us know of abusive posts.
  • 8 Share what you know, and ask about what you don't.
  • 9 Don’t be a troll.
  • 10 Don’t reveal personal information about other commenters. You may reveal your own personal information, but we advise you not to do so.
  • 11 We reserve the right, at our discretion, to monitor, delete or choose not to post any comment. This may include removing or monitoring posts that we believe violate the spirit or letter of these rules, or that we otherwise determine at our discretion needs to be monitored, not posted, or deleted.

Welcome to the discussion.

Some helpful real estate tips for both buyers and sellers

We are pushing into the Spring months where the real estate market normally starts to pick back up. The phones are already starting to ring on existing listings, inbound emails from both buyers and sellers have picked up dramatically in just the past few weeks.

Posted: January 30, 2015
Comments (0)
more »

Loan Calculator

Your News

News for the community, by the community.

Mailing List

Subscribe to a mailing list to have daily news sent directly to your inbox.

  • Breaking News

    Would you like to receive breaking news alerts? Sign up now!

  • News Updates

    Would you like to receive our daily news headlines? Sign up now!

  • Sports Updates

    Would you like to receive our daily sports headlines? Sign up now!

Manage Your Lists