So, you’re browsing through the online listings of homes for sale in Orange County, and you come across a great little house that says, “No Appraisal Financing!”.  Woohoo!  That sounds easy…

HomePath

You may have heard of a new Federal home loan program called HomePath.  HomePath loans feature several tempting benefits, such as low down payments, flexible terms (fixed-rate, adjustable-rate, or interest-only), low down payments, no mortgage insurance, and no appraisal fees.  In fact, you can get a HomePath loan with no appraisal at all!

Why would someone lend you money on a home with out an appraisal to verify the value of the property?  Because this feature is only available on Foreclosed homes that Fannie Mae owns.  In other words, since Fannie Mae owns the REO, they’re willing to loan you the money to buy it from them without an appraisal – as long as you accept it “AS IS”, with all potential repairs and rehab your responsibility.

Know Your Options

In addition to this one major caveat, there are other reasons you might want to consider something other than a HomePath loan.  HomePath loans tend to have higher pricing adjustments that will push your interest rate (and monthly cost) much higher than it would be with a conventional loan, or even an FHA loan with mortgage insurance.  If you’re interested in a home that requires major repairs, you can look into an FHA 203k loan – and build the cost of the repairs into your financing.

What’s the bottom line?  There is no free lunch, and if it seems too good to be true it probably is, so home buyer beware.  The “no appraisal” feature of HomePath loans was designed with a specific purpose of giving buyers flexibility in purchasing Fannie Mae REO’s, but it comes with a cost that may make other programs a better choice depending on the specific situation – on the specific Orange County home that you want to buy.  The details matter!

A Home Loan with NO APPRIASAL? Too Good to Be True? is a post from: Orange County Real Estate-Orange County Homes For Sale

Check out these Mission Viejo REO homes for sale - three great options for Orange County home buyers looking for a great deal in today’s real estate market.  Whether you are a cash investor looking for a good property to flip, or an FHA 203K borrower - basically building the cost of the rehab into your loan.  Any number of financing options will work!

There’s a four bedroom in Cordova Vista with a built in BBQ and Spa in the back yard, and beautifully landscaped front gated entry courtyard. 

 

Another option for the bargain-hunting buyer is a 4  bedroom in the El Dorado tract with a funky addition in the back yard. 

One more Mission Viejo REO that I would mention is 3 bedroom single level Madrid with an upgraded kitchen and hardwood floors.

Each of these Bank Owned homes for sale in Mission Viejo need work – ranging all the way from your basic paint and carpet, to missing lighting fixtures and rotted patio covers, to dryrot and suspicious holes in walls and ceilings, and major issues with unpermitted additions.  The good news is that they all have all the normal and customary kitchen appliances and bathroom fixtures (like toilets.)  For those of you who have seen an REO without a kitchen and with the toilets and bathroom sinks removed, you will know what a relief this is to see.

Check in with us for all the updated information on great deals on homes on the market in Mission Viejo and other great South Orange County communities like Rancho Santa Margarita, Coto de Caza, Ladera Ranch, Laguna Niguel, and Dove Canyon.  We never want you to miss out on a great deal on a home for sale that might be perfect for you!

Mission Viejo REO Homes for Sale – Market Update is a post from: Orange County Real Estate-Orange County Homes For Sale

REO Orange County Homes for Sale + FHA or VA Financing = Some Things to Watch Out For

So you are ready to make the move off the “I’m one of the hundreds, if not thousands, of Orange County home buyers who can finally get into the Orange County Real Estate market but are sitting on the proverbial fence, waiting for the BOTTOM OF THE MARKET to finally arrive” because you’ve decided that rates are finally low enough and you’ve found the home that works for you.  Congratulations!!  Best move you’ll make this decade.  But here’s the 411 on your upcoming purchase – if you are using FHA or VA financing and are buying an REO (also known as Bank Owned of Lender Owned) home in Orange County today.

FHA and VA Loans Have Property Condition Requirements that MUST BE SATISFIED

The main thing you need to know is that FHA and VA loans require that the home be immediately safe and “livable.”  Like, it needs to have a furnace (I’ve seen some lately where the furnace is missing!) and the furnace needs to actually blow hot air.  Something you would want to have, right?  Your new FHA or VA financed home in Orange County also needs to have a stove.  You’d want some hot food with your dinner, correct?  How many Orange County REO homes for sale have you looked at where the stove is missing?  I can’t count that high on my fingers and toes combined.  Cracked sink?  Inoperable shower?  No hot water?  Fence falling down?  M-O-L-D (gasp and get your gas mask on)? Missing tiolets?   These are all likely to be cited by your FHA or VA appraiser as being “Appraisal Conditions” which must be cured, fixed, replaced, remedied, or some how made right and good before you can get the loan to buy your dream home.

What Does an Appraisal Condition Mean and What Can You Do About It?

You are in escrow on your Orange County dream home and you get slammed with the dreaded Appraisal Condition.  What does it mean and what do you do?  You pray you have a great Realtor and a great Lender, then you get to work.  Most recently, I have seen Appraisal Conditions met by having my buyer agree to additional inspections and for-fee proposals to remedy all of the Appraisal Conditions – this done through my leg work and connections with trades people, general contractors, and HVAC professionals.  Then I negotiated with the agent representing the lender, and we hatched a really workable plan.  But here’s the catch – no one in the transaction had any money to put in to the deal to fix all the things that had to be fixed before the deal could be closed.  Let me make that point perfectly clear.

• When buying an REO, the bank has already lost money and will not pay up front to buy a stove or fix the furnace.  Very unlikely to happen.
• You are tapped out as it is, with your down payment and closing costs – and why would you pay to have a stove, furnace, sink, or toilet installed on a home you don’t even own yet?
• Your Realtor can’t throw you a bone here - she hasn’t gotten paid yet.
• All of the Appraisal Conditions can be move from “Prior to Doc” to “Prior to Funding” requirements – if you have a super smart Realtor and an equally intelligent Lender – this buys everyone more time.

Here’s a Creative Solution to the FHA and VA Appraisal Condition Requirement

Upon Final Loan Approval, meaning you loan has gone all the way through Underwriting and has been approved beyond revocation by the lending institution, then request the seller to pay for the necessary repairs (because if he needs to do it to get your loan through, he has a 70% chance of having to do it for the guy behind you, if he cancels your contract) by releasing your deposit to pay the repairs directly to the vendors.  Oh – there’s the other hitch in this giddy up – no vendor will bill for these repairs through escrow.  Not in this economy.  So, your seller agrees to release the deposit to pay the bills to fix the broken stuff to pass the appraisal re-inspect to get the loan to buy the house of your dreams.  Simple. Problem solved.  Any more questions on buying an REO in Orange County using FHA or VA financing?  Drop me a line.

Buying an REO with an FHA Loan or VA Loan is a post from: Orange County Real Estate-Orange County Homes For Sale