If there is one thing the media has made us aware of throughout the course of this morgage meltdown, its just how creative(and crazy) lenders were with the financing options.  As the credit from the banks tightened so did the lending options available for buyers.

While most of the exotic loans of the past are gone their are still many financing options available.  Below is a list of options and what it takes to qualify for the loan.

Conventional Loan: A conventional loan is a lender agreement that’s not guaranteed or insured by the federal government. At one point in our history, conventional loans were the only mortgage loans available and they were all made by local lenders such as banks, savings and loans, and credit unions. They kept and serviced these loans in their own portfolio until they were either paid in full or foreclosed on.

A Conventional loan typically requires a large down payment that may not be required when financing through the government, however it does offer more flexibility because you are working directly with a bank.

FHA: FHA loan is a federal assistance mortgage loan in the United States insured by the Federal Housing Administration. The loan may be issued by federally qualified lenders.  FHA primarily serves people who cannot afford a conventional down payment or otherwise do not qualify for PMI.

Required Documentation For FHA Loans

• A two year history of employment in the same field is required
• If you are a recent college graduate, your last two years of schooling can be used if you are currently working in your field of study
• Credit Scores normally need to be above 620 for Conventional financing-580 for FHA and VA looks at a case by case basis
• If no credit history exists-you may use cell phone bill, cable bill, previous rental history, etc. to establish a “pattern” of good credit payments
• Proper ID as defined by the Patriot Act (State Driver’s License or Birth Certificate along with a copy of your Social Security card required)
• Debt Ratios should be below 36/46

VA:  A VA loan is a mortgage loan in the United States guaranteed by the U.S. Department of Veterans Affairs. The VA loan allows veterans 100% financing without private mortgage insurance or 20% second mortgage. A VA funding fee of 0 to 3.3% of the loan amount is paid to the VA and is allowed to be financed. In a purchase, veterans may borrow up to 100% of the sales price or reasonable value of the home, whichever is less. Since there is no monthly PMI more of the mortgage payment goes directly towards qualifying for the loan amount, allowing for larger loans with the same payment.

The VA does not make home loans, they insure them.  We are VA approved and can help you with your VA loan request. Some VA benefits include:
- No downpayment is required in most cases
- Borrow up to 100% of purchase price
- Lower closing costs
- Mortgage is assumable
- No Private Mortgage Insurance (PMI)
- No penalties if you prepay the loan
- You may be eligible for waiver of VA funding fee
- VA support during temporary financial difficulties

GRH: A Guaranteed Rural Housing loan is a federal assistance mortgage loan in the United States insured by the RHS.

Some key features include:
-  No PMI. That’s right, no private mortgage insurance.  Like VA, this program has a Guaranteed fee that can be financed into the loan the same way VA loans have a Funding fee.
- 6% seller help/contribution is allowed
- No minimum contribution from your own funds.  FHA has a 3% requirement.  There are also no cash reserves required, as is the case with your typical conventional loan.
- This program only offers a fixed rate option for primary 1 unit residences.  Current maximum loan amount is $417,000.

requirements for loan:

• 1-unit primary residences, including single-family dwellings, condominiums, planned unit developments (PUDs) and eligible manufactured homes.
• Non-farm
• Leasehold and rehabilitated properties
• Property must meet the rural designation as defined by RHS

Good Neighbor Next Door Loan: Good Neighbor next door program is made available by HUD so law enforcement and Teachers may purchase a Hud home at half price.  If the police officer or Teacher uses fha financing for this purchase he/she will only need a downpayment of $100 and can finance the closing costs into the loan.

Interest Only and Adjustable Rate loans are still available but given the current market situation they are not used often.

J.D. Power’s polling results show that the importance of additional services has increased by 12 percentage points among buyers and by 8 percentage points among sellers from last year alone.  Simultaneously the survey reports that the use of these services has declined due to cutbacks among services offered by real estate agencies.

“In a tight market, every aspect of service offered will be scrutinized very closely,” Jim Howland, senior director of the real estate and construction practice at J.D. Power and Associates said. “For this reason, it is critical for real estate companies to promote the value that they bring to buyers and sellers, not only in any additional services they offer, but also in their agents and operations.”

Choosing and agent is a tough decision in the best of times, and can be downright daunting in hard economic times such as these.  Looking into the services offered by a prospective agency is a great place to start.  Not all companies are cutting services. In fact some are even offering new and creative options to help their clients such as the Mortgage relief Package.

Other findings in the study include:

• The proportion of first-time home buyers has increased considerably — to 56% in 2009 from 44% in 2008.

• For both buyers and sellers, the agent is still the most important driver of overall satisfaction.
• Home sellers report that, on average, 3.2 open houses were conducted for their property in 2009, compared with 4.5 in 2008.
• Approximately 64% of home sellers used a Web site listing to market their home in 2009, up from 61% in 2008.

 Mortgage Relief Program 2009

 

“After 15 years in East Valley real estate, this is my way of giving back to our community. With unprecedented prices and historically low interest rates, we have removed the last obstacle keeping buyers from becoming homeowners. This promise only helps in this uncertain time.” says Troy Reeves.

Troy Reeves and The Reeves Team are real estate industry innovators with over a decade of experience and hundreds of satisfied clients. Troy Reeves has created industry firsts, like:

“One Hour Return Call or Dinner For Two Is On Us”

“The 90 day Sale program”

“If you are not happy with the home you purchase with us, we will sell it for you FREE”

Troy Reeves was also one of the first REALTORS® in Arizona to create a “team” concept in the real estate market.

The following Terms & Conditions Apply:

• One or both spouses lose* their job over the next 365 days.  (person whom loses job must be primary mortgagee).
• Person or persons must purchase home with RE/MAX & The Reeves Team in 2009 and Troy Reeves & Team must receive 3% co-broke upon purchase of that home.
• If new home owner, at any time replaces or starts new job within 120 days of losing it, mortgage relief package does not apply   *”Lose” means laid off  (does not mean fired or quit)

You may have heard by now about the potential $15,000 tax credit for home buyers. The amendment will replace the current $7,500 tax credit for first time home buyers that is currently planned to expire in July of 2009. I have read the amendment two times, and being a former state representative you would think I could read a bill by now, but it is still somewhat confusing. Here is how I read it to be different from the current $7,500 tax credit.

• The $7,500 tax credit is for first time buyers while the $15,000 is for any buyer who will use the house as a primary residence.
• The $7,500 needs to be paid back, interest free, over 15 years while the $15,000 does not need to be paid back if you live in the home for 2 years.
• The $15,000 is a maximum and based on 10% of your purchase prise. So if you purchase a home at $100,000 you will get a $10,000 credit.
• The new amount will start on the day the bill is signed and be in effect for one year. It will not be retroactive.

Also likely to come some time before the stimulus package is finalized is an amendment that could greatly lower interest rates to as low as 4%.

*I am not an expert on this subject, this is my best understanding of the amendment from my reading of it. Also this has only passed the Senate and will need to pass the House and most likely a conference committee between the two chambers and could be changed at any one of those steps.