ComeBuyAHouse.com

Buying vs. Renting

If you’re still renting because you don’t think you can afford to buy, try this:

Take your current rent and multiply that by 12 (months in a year). Then take that number and multiply that by 30 (number of years for a typical mortgage). If the result is greater than the average price of homes in your area, you can afford to buy!

By the way, the median home price in King County last year (2009) was $380,000. The median price in Snohomish County was $299,950.

When to Buy?

This is a GREAT time for buyers. Home prices are down, and interest rates are still at or near record lows. This makes now an affordable time to enter the market.

The Investment

Build up your equity. Don’t pay rent and help your landlord build up his equity. Homeowner tax advantages include interest and property tax deductions. Payments to principal put money back in your pocket. Money spent on rent is just gone.

The Dream

Start small. Your first house may not be your dream home, but smaller houses typically appreciate considerably faster — about 20% – than larger ones. It’s an advantage to become a homeowner sooner rather than later.

Rent for	Example of Savings	Buy For
	5% interest/30 year loan	$350K
	Loan (P&I Payments)	$1879
	Taxes & Insurance	$325
$1500	Rent	N/A
$1500	Monthly Payment	$2204
	Monthly Interest	$1458
	Property tax	$275
	Monthly deductible	$1733
X.32%	Tax rate	X.32%
	Monthly Tax savings	$485
$1500	Monthly payments	$2204
	Less Tax savings	$485
	Less Principal reduction	$421
$1500	Now Compare	$1298

At your service!
Lynette Hensley
Associate Broker

Tags: first time homebuyer, Rent vs. Buy

203K Loans Expand Possibilities

Renovation and Remodeling loan programs can offer you some options when buying a home, particularly a home that needs updates or repairs where the seller is unable or unwilling to make the repairs before closing. There are so many bank owned properties on the market that are great deals, but banks don’t typically fix anything during the sale process. This has put a speedbump in more than one transaction in the recent past.

To overcome this obstacle, you might consider a renovation or rehab loan, otherwise known as a 203K loan. David Hatlen at Homestreet Bank offers four products:

• FHA 203K
• Fannie Mae
• Portfolio Owner Occupant
• Portfolio Investor

The easiest one to use, and the one that is used most often is the FHA 203K streamlined loan. This is what I’m going to cover in this post.

Here’s a brief explanation of how this works:

• The cost of work must not exceed $35,000, and must be at least $5000
• A final inspection is only required for repairs exceeding $15,000
• Work must be completed by 6 months after closing
• Changes can be for improved function and modernization
• Health and safety issues can be included
• Repair or replace plumbing, heating, AC and/or electrical
• Roofing, gutters, downspouts may be included
• Floor coverings
• Energy conservation and weatherization
• Handicapped accessibility
• New kitchen appliances
• Interior and exterior paint
• Repair/replace or add exterior decks, patios, porches
• Basement finishing and remodeling which does not involve structural repairs
• Window and door replacements and exterior wall re-siding
• Septic system and/or well repair or replacement

Here are a few interesting uses for a 203K you might not have thought about:

• Use on 1-4 dwelling units
• Convert a one unit dwelling to 2-3-4 units or vice versa
• Convert non-residential to residential use
• Move an existing home to another site
• Place a detached garage or an ADU onto the site
• and more….

Does this get your ideas goin’?

Here’s how it goes: You come to an agreement with the owner of the house you’d like to buy. You have the inspection and get all your bids (we can help with that) and put your bids together into a proposal for the 203K loan. Once they are approved the rest of the loan process is very similar to a regular sale. After closing all the work needs to be done within 6 months. Any unused money will be applied to the loan balance.  In a streamlined 203K you may also do some of the work yourself.

Contact us for more information or David Hatlen for inquiries

Tags: 203K loans, rehab, renovation