March 2009 Northern Virginia Sales Info

April 15, 2009

chartMarch 2009 home sales activity for Fairfax and Arlington counties and the cities of Alexandria, Fairfax and Falls Church and the towns of Clifton, Herndon and Vienna (this sounds like a weather alert, doesn’t it?):

A total of 1,384 homes sold in March 2009, an increase of 11% over March 2008. That’s great, but look at this – pending home sales, based on signed contracts, are 2,306, up a fantastic 33% from last year!

Active listings – homes on the market – decreased by 20% from last year, with 8,069 active listings in March, compared with 10,123 homes available in March 2008. Fewer homes on the market usually means prices are poised to start rising. The supply of homes has again fallen into the under-six-months “seller’s market” range.

Another sign of strong activity – the average days on market (DOM) for homes in March 2009 decreased by 18% to 89 days, compared with 109 days in March 2008.

Sales prices continue to remain lower than those realized last year. The average sales price in March fell 17% percent from March 2008 to $395,512, while the median price was $335,000, also a decline of 17%. Interestingly, though, the average and median sale prices are both about 5% higher than last month.

Agents are reporting a considerable number of multiple-offer situations on foreclosures, and on attractive well-priced homes in good condition, particularly in price ranges under $425,000. If you are looking for such a home, be prepared to act decisively – and, if the home is right for you, don’t let yourself be outbid.

Kim Hannemann, Real Estate Consultant/Realtor®, Samson Realty
Cell: 703-861-9234 • Fax: 703-896-5055 • Email:

It’s Good To Have A Friend In The Business®

If you would like to discuss real estate questions, sell or buy a home in Northern Virginia – including Alexandria, Annandale, Arlington, Burke, Centreville, Chantilly, Clifton, Fairfax, Fairfax Station, Falls Church, Kingstowne, Lorton, McLean, Reston, Springfield, or Vienna – contact Kim today.

4 – 4.5% Listings with First-Class Service — Cash Back to My Buyers!

Making Your Home Affordable – The Plan

March 4, 2009


The US government’s Making Home Affordable plan was released this morning. Millions of homeowners wanting to see if they qualify under the plan for either a refinancing or a loan modification will be eager to check out this program.

You might qualify for refinancing under the plan:

  • If the home you want to refinance is your primary residence; and
  • The loan on your home is controlled by Fannie Mae or Freddie Mac; and
  • You’re current on your mortgage payments (not more than 30 days late on your mortgage in the last 12 months); and 
  • You have sufficient income to support a new mortgage.

You can owe between 80-105% of the current value of your home, but no higher than 105%.

If you think you might qualify to refinance, you’ll need to give the following documents to your mortgage lender:documents

  • Your monthly gross (before taxes) income of your household, including recent pay stubs.
  • Your last income tax return.
  • Information about any second mortgage on the house (you can only refinance your first mortgage under the plan, but having a second mortgage won’t automatically exclude you).
  • Account balances and minimum monthly payments due on all your credit cards.
  • Account balances and minimum monthly payments for all your other debts, like student loans or car loans.

You might qualify for a loan modification (first mortgage only) under the plan: 

  • If you originated your mortgage before Jan. 1, 2009; and
  • You are an owner-occupant; and
  • You have an unpaid balance that is equal to or less than $729,750 (for a single-family home); and
  • You have trouble paying your mortgage due to financial hardship – perhaps because your  mortgage payments increased, or your income was reduced, or you suffered a hardship (such as medical problems) that increased your bills, or you can show that you soon will be unable to make your payments. You will be required to enter an affidavit of financial hardship; and,
  • Your monthly mortgage payment must be more than 31% of your gross (pre-tax) monthly income.

You must successfully complete a three-month trial period at the modified rate. If you make all payments on time, you will keep this lower rate that will be fixed for five years.

The idea is for your monthly payments (not including private mortgage insurance) to reach 31% of your pre-tax monthly income. The monthly payments are defined as payments on the principal, interest, taxes, insurance (not including mortgage insurance) and homeowners association/condo fees. First, the lender will reduce the interest rate to no less than 2% on the loan, so that the monthly payments are less than 38% of your monthly income. Then, the Treasury will match further reductions, dollar-for-dollar, with your lender, to bring the monthly payments down further, to 31% of your monthly income.

If you keep your payments on time after the modification, the government will pay up to $1,000 each year in the first five years toward reducing the principal on your mortgage.

After five years, the interest rate on the loan will start to increase by no more than 1% per year, but can’t go higher than what the market rate was on the day your loan was modified.

The amount you owe versus the current value of your home doesn’t matter for this program.

The foreclosure process will stop while you’re being considered for the program, or for any alternative foreclosure prevention option.

The borrower does not have to pay any charges or fees. Any fees are supposed to be paid by the company that holds the loan, and the servicer of the loan will pay for your credit report. The company that services your loan will get a an incentive fee of $500 for each modification they do. Once your lender modifies your loan, they’ll be paid a $1,500 incentive.

Gather these required loan modification documents:

  • Information about the monthly gross (before tax) income of your household, including recent pay stubs if you receive them or documentation of income you receive from other sources;
  • Your most recent income tax return;
  • Information about your assets;
  • Information about any second mortgage on the house;
  • Account balances and minimum monthly payments due on all of your credit cards;
  • Account balances and monthly payments on all your other debts such as student loans and car loans;
  • A letter describing the circumstances that caused your income to be reduced or expenses to be increased (job loss, divorce, illness, etc.).

Then call your mortgage servicer (the company you make payments to). Your servicer is not required to join the program, but the government hopes that the incentives will motivate them to participate.

Kim Hannemann, Real Estate Consultant/Realtor®, Samson Realty
Cell: 703-861-9234 • Fax: 703-896-5055 • Email:

It’s Good To Have A Friend In The Business®

If you would like to discuss real estate questions, sell or buy a home in Northern Virginia – including Alexandria, Annandale, Arlington, Burke, Centreville, Chantilly, Clifton, Fairfax, Fairfax Station, Falls Church, Kingstowne, Lorton, McLean, Reston, Springfield, or Vienna – contact Kim today.

4 – 4.5% Listings with First-Class Service — Cash Back to My Buyers!

What’s My Home Worth?

January 27, 2009

The first question a potential home seller has is undoubtedly, “What’s my home worth?”homesaleprice

A real estate professional will establish the likely selling price by doing a comparative market analysis (CMA) – comparing your home to others like it that have sold recently. We would include market conditions, such as the inventory of homes for sale and the ease of purchase (interest rates, mortgage availability).

Ideally, your agent will be looking for homes

  • of similar size;
  • in similar condition;
  • in the same or a nearby neighborhood; and
  • sold in the past three months.

In a large subdivision or condo complex with many recent sales, this can be fairly easy. If your home is very similar to several recently closed sales, except for the level of improvements, adjustments can be made for the various differences.

It is more difficult to establish market value when there are few or no comparable sales (“comps”). Sometimes your home is unique compared with nearby homes sold recently. In this situation establishing a reasonable market value will also be a matter of adjustments, but the adjustments will be trickier.

The most important factor is location, so up to a point we would tend to favor closer homes over more recent sales from a distance. On the other hand, if we can locate several recent sales of similar model homes by the same builder in a distant neighborhood, we can adjust for location.

mcmansionAdjustments may be made for the home’s “fit” in the neighborhood. A home that “sticks out like a sore thumb” – either too fancy or too big compared to nearby homes, or relatively small or unimproved relative to the neighborhood – will require more up or down adjustment. If the comps are in a more highly sought after school district than your home – or vice versa – it will be necessary to adjust for the schools.

Occasionally we might try multiple approaches. For instance, in addition to pricing recent sales of similar homes from other neighborhoods,  we can also research sales in your neighborhood from previous years and then adjust for what has occurred in the local market since then. By establishing the value from several perspectives, a more accurate price range for your home will become clear.

Finally, when a property sells, it’s not just about the price. There are other factors that influence what a buyer will pay and how much a seller will accept:

For example, terms such as these might induce a seller to take less money:

  • an all-cash offer (no mortgage contingency to worry about);
  • an as-is offer (no concern about repairs);
  • a fast closing or a longer closing, depending on what the seller prefers; or
  • a free rent back, to allow the seller time to complete his move at a more leisurely pace.

And these terms might make the seller demand more money:

  • seller financing all or part of the purchase price;
  • seller paying for closing costs; or
  • offer contingent on sale of buyer’s home.

If you would like to know the likely market value of your home, please contact me. I’ll be happy to help you evaluate your property’s value.

Kim Hannemann, Real Estate Consultant/Realtor®, Samson Realty
Cell: 703-861-9234 • Fax: 703-896-5055 • Email:
It’s Good To Have A Friend In The Business®


If you would like to discuss real estate questions, sell or buy a home in Northern Virginia – including Alexandria, Annandale, Arlington, Burke, Centreville, Chantilly, Clifton, Fairfax, Fairfax Station, Falls Church, Kingstowne, Lorton, McLean, Reston, Springfield, or Vienna – contact Kim today.

4 – 4.5% Listings with First-Class Service

IN and OUT For 2009

January 13, 2009

in_n_out1No, I’m not referring to the West Coast burger chain (which can’t match up with Five Guys). I’m talking about home buyers!

What’s IN

  1. Sidelined home buyers. Family or lifestyle additions or changes made in buyers’ households in the last three years are forcing those waiting out the market transition to finally get off the fence and say, it’s time for our family to buy the home that suits our new needs. 
  2. Home uplifts. Not a big renovation, but some new finishes that can work for stay-put home sellers. Not a “gut rehab to the studs” new kitchen, but new flooring, countertops and appliances. 
  3. Collaborative home pricing. The old days of home sellers configuring a home’s price are out. What’s new is that the seller with their agent will look at closed comparables, set a price, then the buyer and their agent agree or disagree, but in the end, a mortgage lender and their appraiser will set the price, as they are assuming the most risk in the transaction. 
  4. Balanced reporting by real estate and personal finance journalists. Consumers learned in 2008 that the ‘doom and gloom” residential real estate market headlines don’t apply to all markets. What’s been lost in the foreclosure hype is that there are still homes selling in short market times (in as little as 1 day), homes selling at full price and some selling with multiple contracts on the table. Existing home sales will be 5.02 million versus 5.652 million for 2007, a decrease of just over eleven percent, considerably less that the recent correction in the U.S. stock market – plus a realistic view that over five million people purchased a home despite the headlines in 2008. 
  5. Creative home seller financing. Exhausted home sellers are turning to self-financing to move properties. Installment sale contracts and lease to own are the most popular and effective ways for sellers to begin to receive income from a property that has languished on the market. 
  6. Real estate agent as a housing resource not salesperson. New-age real estate agents help consumers through the home sale or purchase process, which takes a skilled agent who is not driven by sales, but instead provides resources to help the consumer determine if they should buy or sell a home. Home ownership is not for everyone. Factors such as a job move in 3 years or less, marginal credit, or lack of interest in home maintenance can be reasons for a resource-driven agent to advise their client not to buy. 
  7. Architectural overhead garage doors. After years of bland vanilla garage doors, the architecture has permeated the door most people look at the most. Traditional styling has arrived with mullioned windows, faux wrought iron hinges and latches that provide the original non-overhead garage door look. Contemporary looks now include the adjacent siding applied over the door for a seamless look, much like the panels installed on refrigerator doors to complement cabinets in a kitchen. 
  8. Loveseats. A pair or trio is gaining acceptance as the functional way to rearrange a living or family room. Consumers appreciate the ease at which they can rearrange them, move an extra one to another room, or provide long-term furniture flexibility in future homes. Plus, they’re tired of sitting miles away from others on over-sized sectional sofas. 
  9. The master bed as a throne. With consumer spending down and more nesting at home, home owners are focusing on making their bed like an at-home luxury hotel experience. Posh linens, pillows and mattresses create a getaway without leaving home. 
  10. Older war-horse appliances. Collectable, working appliances from the 1940’s through the late 1980’s have found a new niche among homeowners who appreciate their rock-solid construction and durability. Harvest gold double ovens from the 1970’s (we had a great one in Almond) have been repainted a metallic red and go from boring to bold. A Coldspot refrigerator from the 1950’s refinished in sky blue perks up the butler’s pantry in a suburban home. And, the early 1960’s dryer that looks like it’s from a Jetson house – painted pink – punches up the in-unit laundry room in a condominium. 
  11. Dining chairs that don’t match. With consumers watching their non-essential spending closely and electing to stay home to entertain friends, many have found a quick pick-me-up for their dining room suite, mismatched pairs or single chairs. Feedback from friends and family has been favorable to this easy and cost-effective way to say welcome to my cutting edge table. 
  12. Obama-era paint colors. The President-elect will add a fresh, younger and forward-looking feel to residential interior paint decor in the spaces at The White House when he and future First Lady Michelle have a say. Look for parchment whites, cashmere yellows, bright optimistic blues and radiant golds. Depressing Bush-era colors such as plum, chocolate brown, rusty mustard and pale sage will happily be replaced by more optimistic colors in American homes.

What’s OUT

  1. Fixer-upper homes. With larger down payments required by mortgage lenders, and credit cards maxed out, home buyers want a home in move-in condition. The DIY days are on the wane as buyers want new kitchens and bathrooms from the get-go. 
  2. Foreclosure fluff. The foreclosure rate nationally in 2008 was just under 3 percent. In the Great Depression it was just over forty-percent. 
  3. Home buyers endless “circling” prospective short-list properties. Overly optimistic thinking by buyers to circle a preferred property indefinitely, often for months, waiting for further price reductions or to wear out long weary sellers. This practice has backfired for buyers who practice this style of pre-negotiating. They often lose their short-list dream home and frustrate savvy price-right sellers. Ditto the bottom-feeder buyers. 
  4. Home staging. A recently over-used low cost marketing band-aid for vacant or occupied homes with longer than normal market times. Buyers have said enough of the non-professional usage of assorted leftover props placed around a for-sale home to make it supposedly homey. Buyers say, market it as it is and clear out the tired silk flowers and stale potpourri. 
  5. Indoor-outdoor carpet. The staples of quick-fix home sellers for basements, balconies, screened porches and lanai’s, buyers have said enough. Many have told agents that inexpensive indoor-outdoor carpet is visual pollution and often masks flaws in a home. 
  6. Track lighting. Thought of by homeowners to be a quick way to get an art gallery look, many prospective buyers usually take them out and discount their appeal. As one Gen-X home buyer said, “Why do sellers install them when they don’t really have any interesting artwork or architectural features to spotlight? They bring undue attention to nothing.”

Thanks to Mark Nash. Originally published in Realty Times 12/31/2008

Kim’s Big Johnson College Bowl Mania Is Here!

December 6, 2008

bigjohnsonGet In On Kim’s Big Johnson College Bowl Mania!!!

You know if it has three (!!!) exclamation points, and is written in red, it’s gotta be good.

This contest involves choosing the winning team for each of the 34 (yes, now it’s 34!) upcoming college football Bowl Games, to be played between December 20 and January 8. In addition to choosing the winning teams, you have to assign a Confidence Points factor of 1 to 34 to each game – your personal view of how certain you are of the outcome of each game. If you have high confidence in your choice, you give that game a high value; conversely, if you have no idea which team might win, you would assign a low value. If the team you pick wins, you get the points you assigned. For a tiebreaker, you have to guess the score of the BCS Championship game.

nanoThe contest will feature a small prize of some sort – probably involving chocolate – to everyone who beats me, and an engraved 8GB iPod Nano (your choice of color) to the top scorer. Second prize is a 1 pound tin of Mrs. Hanes Moravian Sugar Crisp Cookies. Mmmmmmm . . .

If your entry is really hot, you might win something from ESPN, too, but who cares? The Big Johnson is special!

You enter the contest by going to the ESPN website and follow the instructions below. There is no cost. You are welcome to invite your friends – any friend of yours is a friend of mine.

Let me know if you have any other questions.

How To Play College Bowl Mania the Big Johnson Way



To enter, fill out the free game registration at the ESPN website. A valid ESPN member name and password will be used as an identifier to sign in to game play, and to keep track of your entry’s score and standing. If you are already a registered ESPN account holder, you do not need to go through the registration process. If you’ve had an ESPN account in the past but forgot your password, visit Member Services and have your account information sent to you.


After you have signed in, you will be prompted with a screen with a “Create Entry” button. After you click on the button you will be automatically redirected to the “Entry Settings” page where you will be asked to name your entry and decide whether you would like email reminders.

  • Name your entry: Use the text box to determine how your entry will be displayed in the game. Use your imagination. Please. 
  • Scoring system: Use the radio buttons to select Confidence Points (required for our game).
  • Email Reminders: Use the radio buttons to select whether or not you’d like to receive email reminders from ESPN pertaining to game locks and game rules. I will send emails through the ESPN system to the participants about the game, so be sure to read the email account you use to register!

Once you have completed your game settings, click on the “Submit Entry Settings” button.


To join the Big Johnson group after you submit your entry settings, click on the words Create Or Join A Group. Search for the group named Big Johnson, and join the group using the password, “kimsentme” (get it? Kim Sent Me?). You can join the group as soon as you create your entry – you don’t have to make any picks first. Let me know if you have any problems getting into the group.


You won’t be able to make your picks for the games until all the bowl game contestants are known – probably by Wednesday, December 10. Then you will be able to pick your winner for each game, and predict the final team scores of the National Championship Game as the game’s primary tiebreaker. To select the team you think will win, click on the table cell containing the team name or the checkbox next to the team name. Once you’ve made all of your picks, you can “click and drag” the game up or down in the list to change the assigned Confidence Value for that game. The higher the confidence you assign to a bowl game, the more points you will earn if you have selected the winning team. Each game must have a different confidence value assigned to it from 1 to 34. To predict the final team scores of the National Championship Game, enter your predictions in the fields designated as “Score Guess.” Once satisfied with your selected picks, the confidence values for those picks, and the championship game’s score guess, click the “Submit Your Picks” button to enter them.

Register and submit your entry no later than the first kickoff of the first game of the college football bowl season (Saturday, December 20, 2008 at 11:00 am ET) at which point the game will lock and no additional picks can be made. If you change your mind about a game, you can go back and change your picks until the first game starts.

Step 5 – SCORING

In the Confidence scoring system, the higher the confidence you assign to a game, the more points you will earn if you have selected the winning team. If your chosen team wins, you get the points you assigned to that game. You do not lose points for incorrect picks.


You can join up to three (3) different groups with the same entry, not that you will give a hoot. Once you have enjoyed the Big Johnson, all the others are, well, kinda puny. Each user may have up to three (3) different entries – but only ONE entry in the Big Johnson.

Midtown Springfield On Hold?

December 4, 2008

The Midtown Springfield proposal, 9+ acres now occupied by a motel, closed discount wine store, near-vacant office tower, abandoned veterinary clinic and two restaurants, appears to be off the table. Last July, the Fairfax County Board of Supervisors received a letter from the developer (Kettler/KSI) saying that efforts to resurrect the sagging project had failed. The Fairfax County Planning Commission has indefinitely deferred its decision to approve the project.

Kettler/KSI lawyer Gregory Reigle wrote in the letter, “Our belief was [that] the combination of additional time and continued partnership with the community and county would provide the opportunity to resolve the remaining issues and deploy still evolving county revitalization policies and programs.” But, the letter continued, “These efforts were not successful. Rather than pursuing a diluted plan that does not respect community expectations, there is no practical alternative than to withdraw the rezoning.”

The proposal called for three towers of 21 to 28 stories with 800 apartments and condominiums, a 160-room hotel, 40,000 square feet of offices and up to 100,000 square feet of retail space, all surrounding a central public plaza and gallery or auditorium. Parking garages and landscaping were to buffer the buildings from I-95 and the huge flyover ramp that looms behind the site.

However, with ongoing developments in and around Springfield such as the Fort Belvoir base realignment, and revitalization of Springfield Mall, I can see this one springing back onto the drawing board pretty quick. Like other developers in the current economy, Kettler has had to pull back. They have ongoing major projects in Reston (Midtown Reston Town Center), Woodbridge (Port Potomac/Potomac Club/County Center), Manassas (Piedmont), Arlington (West Village, The Metropolitan), Alexandria (Midtown Alexandria), and that’s only scratching the surface. It made sense to back off on one that was not yet underway. But if Kettler doesn’t do it, someone will!

Check out the artist’s rendition:


Here Comes Springfield Town Center!

December 4, 2008

Springfield Mall – that disgusting blob of concrete, styrofoam and asphalt – is going to be a hot destination again. Really!

Vornado Realty Trust, which bought the 36-year-old mall in 2006, is converting the building from a closed-over big box into one that brings the outside in. Shops will face outward. Large windows will bring more light inside. Meanwhile, there will be courtyards and small parks connected by wide walking and biking trails. Later plans also include 2,200 homes, 1.5 million square feet of office space, a new multi-screen movie theater and a 225-room hotel above 175,000 square feet of new retail space. Total retail space will be about 2 million square feet.


The first thing to go will be the name “Springfield Mall” – now immortalized by The Simpsons. It’s now the Springfield Town Center. The first phase of the renovation has been planned for a fall 2010 opening. Interior mall renovations, which would gut the entire existing structure, are underway. The new mall interior will present shoppers with a long, single corridor featuring a new movie theater and a food court. The ceilings along the corridor will feature larger skylights, brightening up the interior. Outdoor plazas and public spaces with cafes and restaurants are included in Vornado’s plans. Every major corridor will have a special entrance, with some having glass-paneled walls and cascading waterfalls.


The second phase of the plan, requiring county approval, includes construction of hotels, office buildings, restaurants, townhouses and apartment complexes along Spring Village Drive beginning as early as spring 2010. The groundwork has been laid, with the unanimous approval from the Fairfax County Planning Commission and Board of Supervisors on the comprehensive plan amendment. The entire multimillion dollar mixed-use project will take anywhere from 10 to 15 years to complete. Sounds like a lot, but Reston Town Center was rezoned in 1989 and it is still under construction!

“It’s comparable to Tysons,” said Mark Looney, with Cooley Godward Kronish, the law firm representing Vornado, “in that you are taking something that is suburban development and making it urban. It’s going to be a 24-hour, seven-days-a-week place.”


Supervisor Jeff McKay (D-Lee), whose district includes the mall, called Vornado’s plans not only the “single-most-important” development project in Springfield, but in all of Fairfax, trumping the plans for Tysons Corner. “People already want to go to Tysons,” he said. “But Springfield Mall needs an immediate change. It can’t wait 20 or 30 years. There is a sense of urgency with this mall.”

The changes, he said, will not only revitalize an aging mall, but also help turn Springfield into another hub of business in the county. “We can’t put all of our eggs in Tysons and the Dulles Corridor,” he said. “I expect Springfield to be a major employment center in Fairfax County, like a miniature version of Tysons.”


Local business owner Bob Stockton (he cuts my hair!) welcomes the mall’s makeover, and says Springfield “is bound and determined” to blossom in growth just like Tysons. “We have all the transportation Tysons wishes it has,” he said. “Eventually, developers are going to realize that.”

Keep up with all the plans and details at the Vornado website for Springfield Town Center!


November 27, 2008


As I mentioned the other day, my family is visiting Pasadena this week to see my son Chris, whose first “real job” with eSolar is here. I must say, despite the rain (yes, it can rain in southern California), it is one of the nicest small cities we have had the pleasure of touring. The streets are clean, the town is eminently walkable, there are beaucoup places to shop and eat, and of course the climate is absolutely seductive.

Real estate is in the same boat as in the northern Virginia area, but it will recover well, I believe. I continue to urge Chris to buy – perhaps after the first of the year – and take advantage of the current pricing and mortgage rates. If you happen to be looking in the Pasadena area, I can recommend Chris’s agent Irina Netchaev and her website Pasadena Views.

Want To Buy A Home, But Can’t Afford To Fix It Up?

November 21, 2008

I hear this a lot:


“I’d like to buy a foreclosure because I can get a great deal, but almost every one I see looks like crap – dirty carpet, missing or broken appliances, lots of cosmetic repair work – and I don’t have much cash after the down payment, so how am I supposed to fix all this stuff?”

It’s certainly true that in looking for a great deal on a foreclosure, you are going to encounter a lot of homes that have not been cared for very well. As you can imagine, when folks can’t make their mortgage payments, they have little money or incentive to maintain the property as well as they otherwise might. If you do manage to come across a foreclosure in good condition, you can be sure it will sell quickly, and the buyer will pay close to market price. Not the great deal you were looking for, right?

home-improveFHA has a loan program that is designed precisely for this situation, and makes it as easy as possible to get qualified and get the repairs done. The loan program is called the FHA 203k Streamline program and it allows homeowners to finance improvements costing up to $35,000 into the original mortgage. (For those homes that need major rehabilitation, there is also a full FHA 203k loan which will allow more than $35,000 worth of rehabilitation work to be done, but is much more complex. This post covers only the “Streamline 203k” – for more info on the “full 203k” see here.)

Because the 203k Streamline is an FHA program, all standard FHA guidelines apply when qualifying for the loan – low down payment, etc.

The maximum Streamline 203k mortgage amount is the lesser of:

  • The maximum (statutory) mortgage limit for area
 (Northern Virginia is $625,500 for 2009).
  • The “As is” value (usually the purchase price or outstanding debt in case of a 
refinance transaction) plus cost of rehabilitation
  • 110% of “After Improved” value; Condominiums are limited to 100% of “After Improved” value.
  • If the borrower has owned the property for less than one year, the acquisition cost is the maximum.What improvements are eligible under the new Streamlined (k) program?

The Streamline 203k program is for uncomplicated improvements to a home for which plans, consultants, engineers and/or architects are not required. It includes the improvements shown below:

  • Repair/Replacement of roofs, gutters and downspouts 
  • Repair/Replacement/Upgrade of existing HVAC systems 
  • Repair/Replacement/Upgrade of plumbing and electrical systems
  • Repair/Replacement of flooring 
  • Minor remodeling, such as kitchens, which does not involve structural repairs
  • Painting, both exterior and interior 
  • Weatherization, including storm windows and doors, insulation, weather stripping, etc.
  • Purchase and installation of appliances, including free-standing ranges, refrigerators, washers/dryers, dishwashers and microwave ovens 
  • Accessibility improvements for persons with disabilities 
  • Lead-based paint stabilization or abatement of lead-based paint hazards 
  • Repair/Replace/Add exterior decks, patios, porches
  • Basement finishing and remodeling, which does not involve structural repairs
  • Basement waterproofing
  • Window and door replacements and exterior wall re-siding
  • Septic system and/or well repair or replacement

That’s an extensive list of the sorts of things that need doing on most foreclosures. What properties are not eligible?  If they require the following sorts of work, you’ll have to use the “full” 203K:

  • Major rehabilitation or major remodeling, such as the relocation of a load-bearing wall; 
  • New construction (including room additions);
  • Repair of structural damage; 
  • Repairs requiring detailed drawings or architectural exhibits; 
  • Landscaping or similar site amenity improvements;
  • Any repair or improvement requiring a work schedule longer than six (6) months; or
  • Rehabilitation activities that require more than two (2) payments per specialized contractor.

Under the 203k Streamline guidelines, you must use contractors to complete the work unless you can provide documented proof that you can perform the work yourself (for example, if you are a licensed plumber or electrician) and the lender will verify your contractors’ credentials in the loan process. The contractor will also have to provide licensing, bonding and insurance documents and professional estimates. However, for the 203k Streamline program a general contractor is not required, so you can line up your contractors yourself.

Once the loan is approved and closed, the repair funds are held in escrow until payment is made to the contractors. You will have up to 3 months from your closing date to complete the work and no more than 2 payments (first payment and final payment) may be paid to each contractors. The first payment is limited to a maximum of 50% of the total cost, and all payments are disbursed to the contractor unless you are performing the work. In that case you have to provide receipts for materials and of course your labor is “free.”

For more information, you should speak with an FHA-approved mortgage professional. I can recommend a couple of good ones if you like!