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Hurricane Irma Aftermath: 3 Types of Mortgages You NEED To Know About

It’s been almost 3 weeks since Hurricane Irma roared into the Florida Keys leaving lots of devastation behind.  We in The Keys have a long way to go for our recovery and housing needs are certainly a top priority.  There are a couple of mortgage options that I want to be sure that people are aware of for both purchase and refinancing:  FHA 203(h), Repair Loans, and Rehab Loans.


FHA 203(h):

This loan program is for those that lost their home or space they rented due to Hurricane Irma.  FHA is offering a 0% down FHA Disaster purchase loan.  To qualify you will need to prove that the buyer’s prior living area is non-livable.  The seller can pay their closing costs (if written in the contract that way), or the buyer can pay those on their own.

Here’s a snapshot of the program:

FHA Mortgage Loans for Disaster Victims (Section 203(h)

The program allows the Federal Housing Administration (FHA) to insure mortgages made by qualified lenders to victims of a major disaster who have lost their homes and are in the process of rebuilding or buying another home.

Through Section 203(h), the Federal Government helps victims in Presidentially designated disaster areas recover by making it easier for them to get mortgages and become homeowners or re-establish themselves as homeowners.

Type of Assistance:
Individuals are eligible for this program if their homes are located in an area that was designated by the President as a disaster area and if their homes were destroyed or damaged to such an extent that reconstruction or replacement is necessary. Insured mortgages may be used to finance the purchase or reconstruction of a one-family home that will be the principal residence of the homeowner. One to Four Family Homes.

This makes recovery from a disaster easier for homeowners:
No downpayment is required. The borrower is eligible for 100 percent financing. Closing costs and prepaid expenses must be paid by the borrower in cash or paid through premium pricing or by the seller, subject to a 6 percent limitation on seller concessions.

The Fine Print:

Repair Loans: 

This is for the buyer that wants to purchase a home that is slightly in disarray, but not repaired yet. The seller CAN put up to $15,000 in “repair escrow” reserves at closing for the repair items that the house needs. Buyers can follow through on buying and not be held up on closing until things are completed this way. It is a bit of extra paperwork of course, but it’s nice because with contractors backed up on roof work, etc. this can help closings to keep moving. The buyer can buy and seller can move forward. (This is for conventional, VA or FHA loans).


Rehab Loans: 

This can be used for a buyer that wants to buy a home with more significant damage (than $15,000) AND can help current homeowners to refinance that need help financing repairs. These loans are much more paper intensive and require contractor quotes, references, license and insurance info, etc. but they are wonderful tools for properties that need a lot of love right now.

Please contact me if you have any questions or would like to start your home search.  You can also visit my Recommended Lenders for additional information and to discuss your financing options.



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Transient Vs. Non-Transient: The Real Key West Facts

One thing you need to know when considering investing in Key West real estate is that there are two types of vacation rentals in the City of Key West; transient and non-transient.

A property with a transient license can rent like a hotel, by the night.  A non-transient licensed property requires a minimum 30 day lease.

Transient licensed properties allow for more rentals per year and as a result you can expect to see returns of 10-12% on the gross purchase price. The City of Key West used to issue transient rental licenses for a nominal fee to those homeowners who wished to rent their homes by the night. They stopped issuing those licenses quite a few years ago, but grandfathered all licenses that were in existence.   The result?  Think NYC taxi medallions, but on a smaller scale of course.

As a result of the high demand and limited supply, transient licensed properties have been selling at a premium and even above asking price in some cases.

Non transient rentals are required to have a month long lease (minimum 28 days) and can expect to see 5-6% return on their gross purchase price.  Although non-transient rentals can expect to see a bit less in rental income they also come with a lower price tag.  You are probably asking yourself if there is even a market for month long rentals in Key West.  The answer is yes, absolutely!  Technology has made Key West not only a popular spot for the retired snowbirds but also a go to get away for those who have a little more flexibility and prefer to work pool or beach side.

The type of vacation rental you purchase depends on what your needs and wants as a homeowner are.  Whether you are looking for maximum return, a seasonal home, or both I am uniquely qualified to help you choose the perfect home for your needs!  Contact me today to talk more about investing in Key West real estate.

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State of the Real Estate Market: Q1 Key West

The average listing price in Key West* as of March 2017 was $823,045 which is up 11.99% from last years average listing price of $734,904.  The average sale price in Key West* also took a giant leap from last year with an average sale price of $760,804 compared to 2016’s $637,184; a 19.40% increase.

What about time on market, how long are these houses sitting on the market before going under contract? The average time on market was 119 days compared to 2016’s 132 days; a 9.85% decrease. Homes in the $350K-$650K range are “flying off the shelves”, accounting for almost half of the residential sales YTD for 2017.

Key West is one of the hottest vacation rental markets in the United States, topping Forbes list in 2015 as America’s #1 vacation destination.  While home prices have been on the rise in the Florida Keys there are still excellent investment opportunities available for the savvy buyer.  For a home with a transient rental license you can generally expect between 8-10% return on your gross purchase price.  For a home with a non-transient rental license you can expect between 4-5% return on your gross purchase price.