Orange County FHA, VA & First Time Buyer Loan Information: April 2010

FHA financing on condo's is not as difficult as some believe, as long as the project is on the FHA approved list. But what many Orange County homebuyers and their agents don't realize is not all attached homes are considered a condo.

When looking at an attached home, most people will automatically assume that if the project is not on the FHA approved list for condo's, then an FHA loan will not be possible. At least not until the project gets approved. However, if the property is not legally considered a condo, then FHA will allow financing without the project being approved.

FHA Financing on Planned Unit Development's

A Planned Unit Development, or PUD, encompasses not only Single Family Residences, but also single family attached homes, commonly referred to as townhomes or rowhomes. With a little research, it can be determined whether or not a property was built is listed as a condo or Single Family Residence.

 http://www.wordle.net/.

FHA Financing on Site Condo's

There are also detached homes within Condo projects. Even if the project is not FHA approved, FHA financing can be done on a detached home within the project. A detached condo is typically referred to as a Site Condo. Although project approval is not required, a Condo Rider is still required for the loan. Below is a quick excerpt from a recent FHA Mortgagee Letter regarding Site Condo's.

"Site Condominiums are single family detached dwellings encumbered by a declaration of condominium covenants or condominium form of ownership.  Condominium Project approval is not required for Site Condominiums; however, the Condominium Rider (Attachment D) must be included in the FHA case binder submitted for insurance endorsement."

Orange County has quite a few attached home projects which are not "condo's" There are also quite a few detached condo's that will qualify for FHA financing even if the project is not approved. It is important to understand the in's and out's of property eligibility for FHA financing before making an offer on a home. If a property is a condo, then check the FHA website to see if the project is approved. If the property doesn't show up on the list, check to make sure it is a condo at all.

Orange County VA loan eligible home buyers who are shopping for a condo need to check with the VA condo approval website.

Contacting an Orange County FHA Loan Expert is an important step in helping to determine whether a property is eligible for FHA financing.

Authored by Tim Storm, an Orange County, CA Loan Officer - Please contact my office at Trust One Mortgage for more information about an Orange County, CA home loan.  877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County FHA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Trust One Mortgage Corporation is licensed and supervised by the California Department of Real Estate ("DRE"), License # 01087829

FHA began allowing financing on flipped properties on February 1, 2010, but as been the case, FHA lenders, including those in Orange County, were not quick to follow suit. However, within the past few weeks, several Orange County FHA lenders have begun to allow financing on flipped properties.

FHA Announcement on January 15, 2010 Regarding Flipped Properties

On January 15, 2010, FHA announced in a press release that it would be temporarily lifting the "90 day no flipping rule", effective February 1, 2010 through February 1, 2011. However, there are a few guidelines that need to be met.

1. The seller and buyer cannot be related.
2. If the new purchase price is 20% above the sellers acquisition price (within the last 90 days), then the lender may require a second appraisal. Also, the appraisal should have specific notations justifying the increase in value.
3. If the property is being purchased for more than 20% of the sellers acquisition price, then the lender will require a home inspection report, which can be paid for by the buyer.

Orange County FHA LendersWill Allow Financing on Flip's, But with Major Caveat

Most lenders are now allowing FHA financing on flipped properties, but not if the property is being sold for 20% more than the sellers acquisition cost within the last 90 days. Unfortunately, this effects most flipped homes. For example, if an investor purchases a property at auction for $300,000, then he would not be able to sell it for more than $360,000 (and have an FHA buyer). The lender is not looking at the investors profit, just the acquisition cost versus sales price. While there will be some cases where FHA financing will work, it is important to know what financing is available before making an offer on a home with FHA financing. If a property is being sold for more than 20% of the recently acquired price, make sure the lender handling the financing can still do the loan.

Before even making an offer, it is important that Orange County first time buyers talk with a local Orange County Direct Lenderwho can walk them through the initial Prequal and PreApproval process.

Authored by Tim Storm, an Orange County, CA Loan Officer - Please contact my office at Trust One Mortgage for more information about an Orange County, CA home loan.  877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County FHA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Trust One Mortgage Corporation is licensed and supervised by the California Department of Real Estate ("DRE"), License # 01087829