Industry Developments
FHA/VA
Development - Conventional 100% financing no longer exists. FHA Down Payment Assistance (DPA) “has left the building” as of October 1St. Borrowers now must be prepared for a down payment when they purchase a home.
Trend - 97% financing on 30 year fix financing is the most popular option with FHA 30 year fix being the lead choice over conventional for the following reasons:
- Mortgage insurance is lower with FHA
- Credit guidelines are more forgiving with FHA
- Loan approval is typically easier through FHA
100% financing still exists through VA. Always ask you client if they have VA eligibility.
Action - Become more familiar with writing FHA/VA contracts. Contact me to help complete the FHA addendum- MIP financed, repair section, closing cost, due diligence, septic letter, well letter, etc. are all critical details that I can help you address as you consider an offer with FHA or VA financing.
Jumbo Loans
Development - Non-conforming rates (loan amounts over $417,000) are not priced aggressively as conventional/conforming loans.
Trend - There are fewer borrowers applying for jumbo financing thus fewer borrowers are buying luxury homes.
Exception - Relocation buyers and those buying foreclosures are out there and active.
Action - I am structuring loans that have a first mortgage at $417,000 and then a second mortgage. This allows buyer to enjoy the low rates of conventional financing on the first mortgage and then putting a second mortgage in place for the difference between the combined loan amount and $417,000. Benefit is better rate, lower closing cost and greater tax advantage.
Monthly Tip
Stay Positive and upbeat!
The Presidential election has identified the economy as issue #1 and the subprime crisis/housing crisis is first reason for justifying today’s economic state. Our customers hear it at every turn (TV, water cooler conversation, radio etc.).
Three reasons why to buy right now:
- 30 year fixed rates are low
- Home prices are discounted
- Mortgages are still available for most people with respectable credit, verifiable income, and some liquid assets.
Collectively we must get an energetic message out to our clients. They must feel the opportune time we are experiencing in real estate.