FHA Extends "Anti-Flipping Waiver" to Help Stabilize Housing Market.
One of the most aggressive ways to finance a house purchase today is through FHA Financing. Some of the benefits include;
* Only a 3.5% down payment is required
* Gift funds are allowed up to 100% of the down payment required
* Lower credit scores are allowed (640 minimum)
* Higher debt-to-income ratios allowed (sometimes as high as 55%)
In an effort to continue stabilizing home values and improve conditions in communities experiencing high foreclosure activity, the Federal Housing Administration extended it's temporary waiver of the agency's anti-flipping rule. The extension is intended to accelerate the resale of foreclosed upon homes in neighborhoods struggling to overcome possible property abandonment and blight.
With certain exceptions, FHA regulations prohibit insuring a mortgage on a home owned by the seller for less than 90 days. Early last year, FHA temporarily waived this regulation and FHA recently extended this waiver through the remainder of 2011. This action will permit buyers to continue to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties or properties resold through private sales. It will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.
Because of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential homebuyers. Research finds that in today's market, acquiring, rehabilitating and reselling these properties to prospective homeowners often takes less than 90 days. By prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition, it would adversely impact the willingness of sellers to allow contracts from potential FHA buyers because they would have to consider the holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time. This action will now enable borrowers, especially first-time buyers, to take advantage of this opportunity and buy a home that has recently been rehabilitated. It will also help to move more foreclosed properties off the market and reduce the number of vacant homes in neighborhoods throughout this country.
As previously mentioned, one of the biggest obstacles that real estate investors faced when purchasing properties, renovating them and then trying to re-sell them was the ability of the new Buyer to obtain financing. This action by the FHA is a major step in the right direction.
With FHA's temporary waiver being extended, and interest rates still near all time lows, it remains a great time for both investor and homeonwer to purchase real estate.
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