Monthly Archive: February 2012

Feb 26

Grants and Down Payment Assistance (DAP)

Funds needed for down payments and closing cost are often a problem for home buyers, especially the first-time home buyer.  There are four programs offered throughout the state from Kentucky Housing Corporation (KHC).

The Regular DAP is a loan up to $6,000 repayable over ten years at 6% interest. This program is not limited to first-time home buyers. It does have an income limit that varies from county to county but is very liberal.  It can be used as all or part of the down payment on new or existing homes up to a maximum purchase price of $243,000.

The other three programs can be used to purchase a home up to the maximum price of $195,700.

Next is the HOME DAP, it goes up to $4,500 and is forgiven 20% per year over a 5 year period.  No monthly repayment is required. The intended user for this program is households that fall under a certain income level, again differs from county-to-county. Here is the chart for the Income Limits for this program.

The third KHC program is the HOME Family DAP, it has the same income limits as the Home DAP but requires at least one child lives in the home.  This puppy picks up where the Home DAP leaves off beginning at $4,600 and goes up to $10,000.  Same terms as the Home DAP, no repayment and forgiven over 5 years.

The fourth program is the HOME Special DAP, it is the same as the HOME Family except instead of requiring a child, at least one of the home buyers must be 62 or older or at least one person must have a permanent disability and is receiving disability income.

Louisville Metro has yet another program for purchasing a home in Jefferson County.  This one goes up to $10,000 and is forgivable over 5 years.  This one also adds another $2,000 for closing cost.  I have closed over a million dollars’ worth of transactions using this program.

There are many other ways to come up with the funds needed for down payment and closing cost.  I have closed more than a thousand transactions with seller assistance for the buyer’s closing cost.  The best way to discover the options that are available to you is to research and plan with the help of someone that has done it before.

Want to be pre-approved for a DAP in Kentucky?

Visit my online application site or print and use this simple form to get started. If you prefer we can do it over the phone, call my direct line during normal office hours, (502) 753-4127.

Feb 25

New Condo Resource Added

Five out of the last six condo loan applications I have processed were rejected because the property did not make it through the system.  This is a serious problem for people that want to buy or sell a condo.  Being a slow learner it took a few rejections for me to wake up and see the need to increase my knowledge on the subject.

The core of the problem is that in order to finance a condo the process requires an additional approval beyond the normal appraisal.  To complicate it even more there are different approval process for the different types of loans a borrower may want to use.

This is important to both buyers and sellers because it can have an impact on the value of the individual condo unit.  Nothing is more frustrating for a loan officer than having a willing buyer and seller only to have the property rejected!
I want to help eliminate this problem!

So I took some training on financing condominiums.  It prompted me to add a section in the Resource Center about condos.  I am going to expand this section to include the information learned in the training class that will help HOA’s keep their communities approved for different forms of financing.  This is going to be a long term project and I am currently working on the financing section.

Buying a property in Kentucky and want to be pre-approved  for a mortgage? Visit my online application site or print and use this simple form to get started. If you prefer we can do it over the phone, call my direct line during normal office hours, (502) 753-4127.

Feb 20

Buying an REO or Foreclosure

Most of the homebuyers I help pre-qualify for financing have no intention of buying a foreclosure (a home that has been taken back by a lender). Only a very small percentage of the people I speak with are specifically looking for a distressed property. However, it would be difficult to look at very many homes today without stumbling upon a bank owned property.
Foreclosures and REO’s are two interchangeable names for properties that have been taken back by a lender.  There is nothing wrong with buying a home from a lender as long as you follow a few simple rules.

Work extremely close with your Realtor. Always a good rule to follow but especially true when buying a distressed property. Most buyers AND sellers are not close enough to their Realtor.  Get to know your agent on a deeper level but more importantly let them know you.  The more your Realtor knows about you the better their service will be.

Home Inspection. A very big must when buying an REO.  Some buyers think they are getting a bargain by purchasing a bank owned property, that may or may not be true.  Most foreclosures happen over a very long period of time, months or sometimes a couple of years.  Homeowners usually have cash flow problems long before losing their home.  During that time they often neglect to make necessary repairs to the home.  Many lenders will not make repairs to a home they have taken back, the idea of throwing good money after bad.  So make sure you get a through home inspection.

Selection of Title Insurance Provider. This one is hard to grasp even for me because the industry makes it complicated.  Most of the purchase contracts I have seen on a foreclosure designate a specific law firm or title insurance company that the seller wants to use for closing the deal.  This clause is inserted by the company that will benefit from handling the closing, the law firm or title company.  They are like a pack of rabid dogs and do their best to scare the purchaser into using the closing firm “designated” by the seller. In almost every case they were involved in the foreclosure process. They are exactly the last entity the buyer should use!  If an attorney made a mistake taking a property from the previous owner are they likely to discover the mistake when transferring the property to the new buyer?  Not likely.
Besides, what buyer in their right mind would think using the seller’s attorney is a good idea?  I ran into this last week.  The seller’s attorney had a paralegal contact the buyer’s Realtor and tell them it would cost the buyer as much as $800 more if they used another closing attorney, it was a lie.  The seller’s attorney knew I had already ordered a tittle report from someone I trust. In fact they had already delivered the fully executed deed to the closing attorney I preferred.  Pretending to work with us she went around our backs and directly contacted the Realtor.  Would you want someone that sneaky protecting your most valuable asset, your home?

I called her boss to complain and he told me he instructed her to act like that, said it was how they market their services.  I let him know how despicable his methods are.  He told me he wasn’t interested in my opinion and will do it again if given the opportunity. The lender is required to get title insurance; it is optional for the buyer. This is not the kind of person I want issuing my title insurance.

REO’s can be a good deal for a buyer but not always.  Just do your homework and protect yourself like you would while dealing with any other seller.

Buying a property in Kentucky and want to be pre-approved for a mortgage?  Visit my online application site or print and use this simple form to get started.  If you prefer we can do it over the phone, call my direct line during normal office hours, (502) 753-4127.