New Series:  Financing Options 

FHA Loan

A FHA (Federal Housing Administration) insured loan is a Federal Housing Administration mortgage insurance backed mortgage loan which is provided by a FHA-approved lender. FHA insured loans are a type of federal assistance and have historically allowed lower income Americans to borrow money for the purchase of a home that they would not otherwise be able to afford. To obtain mortgage insurance from the FHA, a mortgage insurance premium (MIP) equal to a percentage of the loan amount at closing is required, and is normally financed by the lender and paid to FHA on the borrower's behalf.

FHA-insured loans require very little cash investment to close a loan. There is more flexibility in calculating household income and payment ratios. The cost of the mortgage insurance is passed along to the homeowner and typically is included in the monthly payment. In most cases, the insurance cost to the homeowner will drop off after five years or when the remaining balance on the loan is 78 percent of the value of the property -whichever is longer.

Over time, private mortgage insurance (PMI) companies came into play, and now FHA primarily serves people who cannot afford a conventional down payment or otherwise do not qualify for PMI.

 What are the eligibility requirements? The borrower must meet standard FHA credit qualifications; The borrower is eligible for approximately 96.5% financing (minimum 3.5% down payment required). The borrower is able to finance the upfront mortgage insurance premium into the mortgage. The borrower will also be responsible for paying an annual premium.

For borrowers (owner occupants only) who want to save some money and use their home improvement skills, FHA-guaranteed loans for fixer-upper properties are also available [FHA 203 (k) and FHA 203 (k) Streamlined]. Just like a more traditional FHA mortgage, fixer-upper/rehab loans feature a minimum 3.5% down payment. 

The FHA also has a guaranteed loan especially for borrowers aged 62 and older who want to convert the value built up in a home over time into cash. The FHA HECM loan, (also known by some as a Home Equity Conversion Mortgage or Reverse Mortgage,) is for qualifying borrowers who live in the home full-time. According to the FHA, "no repayment is required until the borrower(s) no longer use the home as their principal residence or fail to meet the obligations of the mortgage." 

As always, it is best to work with both a qualified and licensed Home Loan Officer and professional and knowledgeable Realtor. 

Please seek Legal and Tax counsel advice if needed.

*Source:  FHA.com/HUD.gov

 Terminated by a Termite

...Be an Informed Buyer and Seller

Termites in Colorado? Yes there are...which turns it into a question asked by Homebuyers: Should I order a termite inspection? Every buyer is different, however if there is visible termite damage past or current or seller disclosure concerns, a termite inspection is recommended. The cost is the responsibility of the buyer, unless previously agreed upon arrangements have been made.

Sellers: The item regarding termites on the Sellers Property Disclosure is identified under I. Improvements/A. Structural Conditions/3. Damage due to termites, other insects, birds, animals or rodents. The question is specifically stated:  Do any of the following conditions now exist or have they ever existed. (CREC SPD29-8-10). 

What are termites? Termites are wood destroying insects sometimes confused with flying ants and are normally visible in early spring.  Telltale signs of termite infestation include soft wood in the home, mud tubes in the interior or exterior of your home (often near the foundation), and darkening or blistering of wood structures.  Termites love moisture; avoid moisture accumulation around the foundation of your home. Reduce humidity in crawl spaces with proper ventilation. Prevent shrubs, vines and other vegetation from growing over and covering vents. Remove old tree stumps and roots around and beneath the building. Most importantly, eliminate any wood contact with the soil. An 18-inch gap between the soil and wood portions of the building is ideal. It doesn't hurt to routinely inspect the foundation of your home for signs of termite damage. 

* www.pestworld.org 

For expert information contact your local termite inspector.

 Homebuyer Newsworthy Article of the Month 

Did you know FHA loan limits are decreasing?

El Paso and Teller County deadline:

September 3oth. 

Now: $325,000

Oct. 1st: $271,050.  

Learn More Here

Current/Future FHA Loan Limit Look-Up

ERA Herman Group Real Estate clients have total confidence that they are dealing with a complete professional, expressing the highest level of service and integrity.

Services:  Residential Real Estate, Property Management, Relocation Services, Short Sale Services.  Title:  Enterprise Title / Mortgage: Catalyst Lending, Inc.