The down payment went from 5% down to either 10% or 20% depending on the part of the country that you were looking for a loan in.  In Florida 10% down was required for a conventional renovation loan by those lenders who offered it.  Many did not.  Also credit scores increased as well.  This resulted in the increase in popularity of the FHA 203k renovation loan and a new program the FHA 203k Streamline loan.  The FHA 203k Streamline loan was created by FHA in the early 2000′s in an effort to help control some of the costs that made the program less attractive to First time buyers and home buyers who were looking at a home that didn’t need much work and the repairs were non structural in nature.

The FHA 203k Streamline loan can have up to $35,000 in repairs.  This is up from $15,000 in repairs when the program was first rolled out.  It was a popular program when it first came out and has continued to grow in popularity now that the conventional renovation options are less attractive to a larger number of potential home buyers.  Of course the FHA 203k and the FHA 203k Streamline are for primary residences only and thus more likely to be used by First time home buyers.  In the Florida market where many homes are sold to 2nd home buyers and investors, the conventional renovation loan is the only option.  The buyers of the Florida 2nd homes and investment properties will not have an option of using the FHA 203k renovation loan or the FHA 203k Streamline renovation loan.  If they want to take advantage of the huge number of bank owned properties and short sales that liter the state of Florida and the properties are in need of repairs then they will have to be better qualified with higher down payments and higher credit scores.

Lucas

The enhancement available to other than First Time Home Buyers is for people who now own a home and have owned it for at least 5 years of the last 8 years and now want to buy a new primary residence anywhere in the US including Florida.  Another great aspect of the bill that showed some forethought was that the Tax Credit was good for all contracts signed before April 30th.  The buyers would then have 2 months to close.  This eliminated the guessing of when the last day would be to buy the house and still be able to safely navigate the rocky mortgage landscape.   Florida home buyers have seen mortgage closings taking longer and longer as Florida mortgage lenders have been reluctant to hire the additional employees needed with the fear that rates might rise quickly and the First Time Home Buyers Credit may have not been extended or both!

This credit has mortgage companies, real estate agency’s  and builders breathing a huge sigh of relief. In Florida, I know many of these people had been looking at an ugly month we were about to experience as the pressure to close before November 30th was fast approaching.  Many can now enjoy their turkey dinners without the fears of a truly black Friday and following Monday as the month end crunch was looking ominous.

Overall this is money very well spent in my mind.  Especially when you look at the cost of further bailouts that may have been needed if Florida real estate had taken another leg down.  Many banks would not be able to survive if that were to happen.

Lucas