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what are the steps involved in buying a renovated house using FHA

I'm tying to buy a house I really like in the Orlando, 32825 area. Its a house that has was purchases 5/29/this year for aprox 70,000 and fixed up to resale at 125,000. the thing is counting the  option to use the $8,000 to use towards down payment I can comfortably pay 12,000 down.... because I am doing FHA I was told by my Realtor that I'd have to wait until 8/30 this year to start going to the loan process for the house etc... my questions are.
1) looking at the OCPA website the house Just value is $106,000 is 125,000 too much (house is 3/2 1089 sq ft.)?
2) Do I really have to wait all the way until August to and use FHA or could I get a conventional loan at about the same rate having only proximately 10-15% to put down?
3) why can't we start looking for loans now on the house? wouldn't it be best to start early and have everything ready before the 30th of august if I do have to wait that much longer?

This is my very first home so any advice will help with the buying process.
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August 14 2009 - Orlando
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Answers (4)

and fixed up to resale

Fixed up how?  As Roberto pointed out earlier, carpet and paint don't cost $55,000.    

Property Flipping was the rage in 2004, but this is 2009.  Unless the owner lucked out and got it really, really low it is hard to imagine how the value could increase that much in 3 months.

As for OCPA,  Florida Property Appraiser Values are notoriously inaccurate and unreliable.  You need to be looking at recent comparable sales prices (recent meaning 90 days or less) to determine value, not Property Appraiser Valuations.

(CMA's may provide some data, but be careful if they come from the Listing Agent.   The Agent may have looked long and hard to find "comps" that justify an inflated asking price).

With due respect, do a search on Realtor.com for Orlando Houses for sale.  I plugged in "$70,000 to $125,000" sales price, and got over 1600 results.

With that many houses for sale, perhaps you should shop a little harder.

Best wishes to you,
   Fred
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August 14 2009
Kehoa:

Let me see if I may help you with some information.  1st thing is your realtor is right - FHA has a strict rule - no contract on a home until after 90 days of ownership unless they are a qualified non-profit entity with special permission see lender letter 06-14 on the FHA.gov website. Now how about a conventional loan - well Fannie Mae and Freddie Mac also have a 90 day rule and I believe a 20% cap on the increase if under 180 days. In regards to the value - the property appraisers in Florida decided to use this year foreclosures and short sales to value property so values are down.  Now since the appraised value on the property appraisers office is what you are taxed on - I would want to be a heck of a lot lower than my market rate.  That's just my opinion especially since you will be homestead an capped on your taxable increase.
Now you mentioned using the 8K credit as down payment - If you are using FLHOP - then realize you will have a lot of competition and you will have to go through the down payment assistance process to access the money at the table. City of Tampa will only have enough for about 10 people for the first round. If you have the 3.5% and can get seller concessions why take 12-16 hours of classes for money you can spend 5 minutes filling out a form and sending in and waiting about 4-6 weeks for?
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August 14 2009
sounds like you are making a very very bad decision. Do you really believe that this flip has suddenly almost doubled in value? carpet, paint window treatments etc don't cost even half of that!

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August 14 2009
Kehao, thanks for the post.  Let me address your questions in order:

1) OCPA "sometimes shows" a conservatively low value which does not reflect the true market value for the home.  To be certain you are not paying too much have your Realtor do a market analysis.  The market analysis will reveal what homes are truly selling for in the area.  

2) You can begin the loan process on the property now but FHA will not allow you to close on the property until the current owner has owned the property for at least 90 days.  FHA is very strict on this rule.  Conventional lenders tend to be more lenient this rule, so you may go conventional and get the deal done.

3) Again you can start the process now, but you will not be able to close until after 8/29.

Hope this helps.  Let me know if you have anymore questions.

Regards,

Aubrey Kipp
Lic. Real Estate Broker
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August 14 2009
 
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