Taos Real Estate

In the "good old days" past, I would normally advise a seller to list their home for 'conventional" financing only.  The FHA process was too difficult, inspections too picky, and in general it was just too much of a hassle for the Taos real estate seller to endure.  Well, those were definitely the "old days."

With the mortgage crisis causing conventional lenders to drastically reduce their offerings, as well as become a lot more picky about loan approvals, the market is different.  The FHA has responded to this situation by loosening credit score requirements, limiting mortgage insurance to five years, making inspections less cumbersome, and keeping a minimum 3% down payment in place.  As of today, I was advising a seller to allow conventional and FHA financing for their listing agreement.

To read more about this, and to see that there is at least one lender in town ready and approved to do FHA loans, read this text from an email for Taos Lending Team:

Taos Lending Team is proud to announce we are now able to provide FHA loans and 203 K HUD loans to your borrowers.

FHA allows for up to 97% financing with additional seller paid fees for purchases. Refinances, ARMs and Fixed Rates are also available with FHA loans. Lower credit scores are accepted recently changed to as low as 580 (depends on purchase or refi) with mortgage insurance also changed to a fixed 5 years rather than for the life of the loan. Mortgage Insurance is tax deductible and FHA loans are also assumable.

A 203K loan is where the borrower can get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property. Rehabilitation applies to repairs/replacement of roofing, the thermal efficiency of the home (insulation of windows, ceilings, and attics), heating, and ventilation.  Luxury items and improvements that do not become a permanent part of the real property are not eligible as cost rehabilitation. However, the homeowner can use the 203(k) program to finance such items as painting, room additions, decks and other items even if the home does not need any other improvements. All health, safety and energy conservation items must be addressed prior to completing general home improvements. Expenses eligible to be included in the cost of rehabilitation are materials, labor, contingency reserve, overhead and construction profit, up to six (6) months of mortgage payments, plus expenses related to the rehabilitation such as permits, fees, inspection fees by a qualified home inspector, licenses and consultant and/or architectural/engineering fees.

203 K applies to purchases for primary and secondary homes with some limitations to 2^nd homes that do not apply to primary homes.

Condominium purchases are also eligible for 203K rehab financing but are subject to certain conditions:

	Owner/occupant and qualified non-profit borrowers only; no investors;
	Rehabilitation is limited only to the interior of the unit. Mortgage proceeds are not to be used for the rehabilitation of exteriors or other areas which are the responsibility of the condominium association, except for the installation of firewalls in the attic for the unit;
	Only the lesser of five units per condominium association, or 25 percent of the total number of units, can be undergoing rehabilitation at any one time;
	The maximum mortgage amount cannot exceed 100 percent of after-improved value.

After rehabilitation is complete, the individual buildings within the condominium must not contain more than four units. By law, Section 203(k) can only be used to rehabilitate units in one-to-four unit structures. However, this does not mean that the condominium project, as a whole, can only have four units or that all individual structures must be detached.

Please bear in mind these loans take longer to close given the excessive amounts of paperwork and time to underwrite. Plan on 6-8 weeks to close unless applying for the additional 203 K which can extend the loan closing process to 3-4 months. This of course depends on the expediency of the contractor and/or subs completing the work.

If you have any questions or would like more information please feel free to email me at your convenience.

Sincerely,
Elisabeth Guillemin

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