Industry Developments
FHA/VA/USDA
Development- 2009 will be another great year for first time homebuyers, and government programs will be a major source of financing for all buyers for some of the following reasons:
- As of Jan 1st 2009, the minimum down payment for FHA buyers is 3.5%.
- Additionally the one time Mortgage Insurance Premium for FHA buyers is only 1.75%.
- The FHA loan amount for Metro Atlanta has now been DECREASED to $320,850 from $346,250, thus more buyers will qualify.
We will need to work together on these opportunities. Call me to assist in completing financing portion of contract. I originate all three government programs - FHA, VA, USDA.
Also, pay attention to the following trends in government programs:
Trend- VA 100% financing is a growing opportunity with an increasing population of citizens who have served our country over the last 15 years. VA offers zero down payment and no monthly MI.
Action- Advertise to public for buyers with VA eligibility. Market yourself as a Real Estate specialist representing veterans. There are many myths or misunderstandings about the VA loan. We can work together to educate eligible buyers and the numbers will suggest VA financing as real possibility with no money down. This is a super financing option!
Trend- Opportunity for buyers to offer $100 down payment on their bid for HUD Repo’s with FHA financing. Call me for details. Excellent chance for buyer to get into FHA owned home without normal down payment. As agents, you must know how to write that into your bid.
Action- IF you have a buyer that meets the credit guidelines for FHA financing but has no down payment, show them HUD homes. This is a great chance for instant equity and potential for down payment to be $100. Ask HUD to pay for closing cost and prepaids. We must still prepare buyer for earnest money to be collected at contract and credited back at closing.
Trend- USDA loans becoming are more popular. Why? This is a Government program offered to develop rural areas. No down payment is required BUT the buyer must not exceed the income limit, and the property must be eligible for USDA financing.
Action- Contact me to see if your listing is eligible for 100% financing through USDA. This is a great opportunity to advertise a qualified listing for “zero down”. If you have a buyer with no real down payment this type of financing can still make home ownership possible.
Monthly Tip
Frequently I am asked what the future looks like on interest rates. I may quote a client an interest rate below 5% and they will ask, “Well do you think it will go any lower?” My answer is it could but I do not know for sure, nor do I know when or for how long. I go on to explain that in my 19 years of originating loans, only a handful of clients secured a fixed mortgage rate south of the magical 5% barrier.
To provide context, I give them the range of rates from Columbus Day of 2008 in mid October where rates fluctuated between 6.25%-6.75% on a 30 year fix. On the first Tuesday of November rates were in the mid 5% range.
Then I suggest to my client that IF I had offered a 4.875% 30 year fixed rate on Election Day not only would people have jumped at the opportunity they may have even voted for me for President!
Don’t roll the dice. Save the temptation to gamble for Vegas and ensure you don’t come up craps.
Anytime a fixed rate is below 5% it is a real and rare opportunity. Cash in!