Why Buy Now

According to a recent survey commissioned by Move Inc., 23% of adults plan to purchase a home in the next five years and 53.5% of them happen to be first-time homebuyers. If you have potential homebuyers who are sitting on the fence thinking about purchasing a house, here are some talking points you can share with them.

Lower property values are making homeownership more attractive than renting in many markets throughout the country. Paying for a mortgage is now less expensive than renting in many large metropolitan areas, including Miami, Las Vegas, Phoenix and Washington, D.C., as well as smaller cities like San Antonio and Fresno, California.

Buyers have the upper hand as sellers are cutting prices on nearly one quarter of U.S. homes listed for sale in June 2010 according to the real estate website Trulia.com. That's up 9% from the previous month and represents a total price reduction of about $27 billion.

Lower mortgage rates are the result of the current recession. What does this mean for your clients? On a 30-year fixed-rate loan amount of $200,000 at 5%, the interest paid over the life of the loan is $186,512. That brings the total loan payments to $386,512. At 6%, the amount of interest paid rises to $231,676, a 24% increase. At 7%, it's $279,018, a 49% increase.

Investment opportunities abound as mortgage rates and home prices have dropped dramatically since March 2008. This has created one of the best buyer affordability conditions with the percentage of median household income needed to pay the mortgage on a median priced home at a 30-year low.

 

Information provided by:

Warren Potter

Loan Officer

Prospect Mortgage

NMLS# 221747

8700 E. Via De Ventura, Ste. 150

Scottsdale, AZ 85258

Office: (480) 951-1422 2611

Cell: (480) 694-6444

Fax: (877) 209-7263

Warren.Potter@prospectmtg.com

Making Good Use of Renovation Loans

When showing your clients a home that needs repair, give them some information on our Federal Housing Administration (FHA) 203K renovation loans. These loans are perfect for a bargain hunter who has spotted a fixer-upper or a foreclosure in need of immediate repair, or a client who has found a home that would be ideal if only there were a third bedroom and a second bathroom.

Our renovation loans provide the money to both purchase the home and finance the homeís renovation. With one loan, there is only one application, one set of fees, one closing and one monthly payment. At closing, the house is paid for, and the repair money is put into a trustee account for disbursement as repairs are completed. Improvements can include anything that adds value to the home, such as a room addition, new carpeting, landscaping, plumbing, roofing or a new kitchen. The loan can also be used for energy-efficiency improvements that qualify for tax credits* under the new stimulus package.

Another great advantage of a renovation loan is that it provides borrowers a loan based on the increased property value after renovation. But that's not the only financial upside. The required down payment on a renovation loan can be as low as 3.5%. As a tax deductible first mortgage, the renovation loan will usually feature a lower interest rate than a second mortgage and improvement costs can be spread over the term of the loan. The loan can also provide financing for up to six months of mortgage payments if the house is not occupied during construction.

Just knowing about our renovation loans may make the vital difference to motivate buyers to purchase. Give me a call today to learn more about how I can advise your clients on the right loan for their needs!

 

Information provided by:

Warren Potter

Loan Officer

Prospect Mortgage

NMLS# 221747

8700 E. Via De Ventura, Ste. 150

Scottsdale, AZ 85258

Office: (480) 951-1422 2611

Cell: (480) 694-6444

Fax: (877) 209-7263

Warren.Potter@prospectmtg.com

The FHA Loan

In 1934, the Federal Housing Administration (FHA) was created by the National Housing Act for the primary purpose of insuring long-term residential mortgage loans and, thereby, promoting home ownership in the United States. Today, the FHA is the largest government insurer of mortgages in the world.

FHA loans have surged in popularity. In 2005, government-backed FHA loans represented about 2.8% of total loans originated. Today, the number is closer to 30%. Over the past couple of years, as credit standards tightened, FHA loans have become the loan of choice for many homebuyers.

Contributing to the popularity of FHA loans is that the maximum loan amount limit has increased from $417,000 to as much as $729,750, depending on the county in which the home is located. Also, if you qualify for a loan, the loan-to-value (LTV) ratios are potentially higher than those for conventional mortgage loans. With FHA loans, a buyer can borrow up to 96.5% of the value of a home. The potential for a higher LTV also makes FHA loans an attractive option for homeowners wanting to refinance. And FHA loans come with fixed mortgage rates providing stable payments over the life of the loan. Also, FHA closing costs can be financed into the total amount of the mortgage.

Traditionally, FHA mortgages were used to assist first-time homebuyers who may not have otherwise qualified for a loan. But FHA loans are no longer just for first-time homebuyers. They are increasingly used by move-up buyers. The only restriction is that a purchaser may have only one FHA loan at a time.

 

Information provided by:

Warren Potter

Loan Officer

Prospect Mortgage

NMLS# 221747

8700 E. Via De Ventura, Ste. 150

Scottsdale, AZ 85258

Office: (480) 951-1422 2611

Cell: (480) 694-6444

Fax: (877) 209-7263

Warren.Potter@prospectmtg.com

 

The Home Affordable Foreclosure Alternatives Program (HAFA)

Trying to reduce the rising number of foreclosures in the U.S., the Treasury Department introduced a new federal program that makes it easier to process a short sale for people unable to keep their homes.

Home Affordable Foreclosure Alternatives (HAFA) streamlines the process for doing a short sale or deed-in-lieu of foreclosure for distressed homeowners who do not qualify for a federal home loan modification through the Home Affordable Modification Program (HAMP) or have missed consecutive payments after a modification.

The HAFA program started April 5, 2010, and ends December 31, 2012. Federal rules require servicers participating in HAMP to implement HAFA. The new program also requires borrowers to be released fully from future liabilities related to their first mortgage, including cash contributions, promissory notes and deficiency judgments.

Participation in HAFA cannot save homeowners from losing their property, but it can eliminate the effects of a foreclosure on their credit. Financial incentives for program participation include a $1,000 servicing bonus for lenders and a $1,500 relocation bonus for displaced homeowners. Lenders of other subordinate liens (e.g., HELOCs) may be allowed to keep a limited portion of the proceeds (up to $3,000 each) of a short sale, with the first-lien lender’s approval.

HAFA is designed for homeowners who have applied to HAMP for assistance but have had no success with their loan modification program. To participate in HAFA, homeowners must still meet HAMP’s eligibility criteria: home is principal residence; first-lien mortgage is in delinquency or default is reasonably foreseeable; loan closed before January 1, 2009; unpaid balance is under $729,750; and the mortgage payment is over 31% of gross income.

For more information on HAFA, go to the following link: ?hmpadmin.com/portal/programs/foreclosure_alternatives.html

Information provided by:

Warren Potter

Loan Officer

Prospect Mortgage

NMLS# 221747

8700 E. Via De Ventura, Ste. 150

Scottsdale, AZ 85258

Office: (480) 951-1422 2611

Cell: (480) 694-6444

Fax: (877) 209-7263

Warren.Potter@prospectmtg.com

 

I have worked with these lenders and they are great to work with.  They are knowledgable in the jumbo market as well as conforming loans.  Please give them a call if you are looking to get pre-qualified, refinance or have general lender questions.