New FHA Financing Available For Condo Buyers That Has A Low Down Payment

Posted in Real Estate by Michigan Real Estate Expert on October 10th, 2019

New FHA Financing Available For Condo Buyers That Has A Low Down PaymentCondominium owners and buyers have previously been at a disadvantage when trying to use the Federal Housing Authority (FHA) support to get a home mortgage. Single-family homes could get better FHA mortgage deals than condominiums. In October 2019, this changes.

New FHA Condominium Financing

As of October 15, 2019, FHA loan availability is extended to condominium buyers. This is important news for first-time buyers who frequently purchase a condominium. First-time buyers appreciate FHA loans because they only require a very modest 3.5% down payment.

FHA loans were strongly curtailed after the real estate market collapse in 2008. Since 2009, most condos did not qualify for FHA loans. The problem was that FHA loans require mortgage insurance and this insurance was only available for about 6.5% of all condos.

In America, there are about 160,000 condominium projects (complexes and buildings). The new FHA program makes mortgage insurance possible for about 20,000 to 60,000 more condominium projects nationally. Not all condos will qualify for the new FHA program; however about half of them will.

Both first-time buyers and people who are down-sizing by selling a larger home appreciate condos. The median price for a condo nationally is around $260,000. This is about $29,000 less than the median price for a home that is about $289,000. Maintenance costs and upkeep for a condo are typically less than caring for a larger home.

Refinance Opportunities

For condo buyers, who could not get FHA loans in the past, they may now qualify for the mortgage insurance needed if they could not get it before. Then, they can refinance a loan to get a better deal with FHA financing if they want to do this.

Easier Condominium Sales

For those who are putting their condos on the market for sale, this new FHA loan program is worthwhile to investigate to see if the condominium building or complex qualifies. If the condo is in a facility that qualifies, this new FHA financing option will potentially attract more buyers

Summary

Real estate agents should become aware of the new FHA program and inform their clients if a condo buyer can use an FHA loan to finance the purchase. This is a very impactful change for the condominium market dynamics. This new FHA loan program is the first of its kind to occur since around 2009, a decade ago, which is great news for condo buyers.

If you are in the market for a new home or interested in listing your current property, be sure to contact your trusted real estate professional.

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More Home Loan Options Now Available For Borrowers With Bad Credit

Posted in Mortgage by Michigan Real Estate Expert on October 9th, 2019

More Home Loan Options Now Available For Borrowers With Bad CreditFor a long time after the real estate housing crisis in 2008, buyers with a poor credit history had a difficult time finding mortgage financing. It was a problem that trapped those seeking to buy a home because so many lost their homes from the inability to pay their mortgages.

Some suffered damage to their credit history that was severe. Millions filed for bankruptcy.

Not only did mortgage lending requirements get stricter for home buyers, but the funds available for home loans were also severely reduced. Even those with a good credit history found it more difficult to qualify for mortgage financing.

Time For A Second Chance

Now, there is a much better environment for homebuyers with a bad credit history who are seeking a loan. Those with a bankruptcy on their record, which was settled at least ten years ago, will see the bankruptcy taken off their credit history. Suddenly, their credit score may increase dramatically.

Unconventional Financing

Conventional financing is available for those with decent credit. This includes attractive terms and conditions for FHA loans and other federally-based loan programs. Those with bad credit may not qualify for these loans. If they want to buy a home, their only option is to use unconventional financing, also called non-qualified mortgages (non-QM).

Unconventional financing has higher costs and no federal insurance. In 2008, these non-QM loans were a total of $65 billion per year. In 2009, this figure dropped to $10 billion and, in 2010, the low of $8 billion.

Since 2010, the availability of these non-QM loans steadily increased. By 2018, the total amount of these loans was up to $45 billion. That figure will be higher in 2019.

Is There Another Real Estate Bubble Happening?

Are we back to where we were before when the real estate market collapsed in 2008? As far as the total amount of non-QM loans, we are close. However, the qualifying standards for these loans are stricter than a decade ago.

There is less predatory lending where borrowers who do not truly qualify get a no-doc loan without proving income. Before those predatory loans often had a teaser introductory rate that quickly escalated to an amount that made it impossible for the home buyer to continue to make their mortgage payments. There are fewer of these loans now.

Summary

Besides the big picture real-estate-bubble worries, the positive news is that borrowers with a poor credit history can now participate in the housing market again.

Be prudent when considering a mortgage and carefully think about the ability to make the monthly payments. Read all the details of the loan requirements carefully. Use competent professional advice from a trusted home mortgage professional to make sure there is a very clear understanding of the loan terms and conditions.

When you have your financing secure, be sure to consult with your trusted real estate professional to help you find your new home.

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3 Tips To Save For A Down Payment

Posted in Mortgage by Michigan Real Estate Expert on January 24th, 2019

3 Tips To Save For A Down PaymentSaving up for a down payment can feel overwhelming. Most people have never saved up the kind of money it takes for a down payment. It can be done, though. The goal is to put 20% down on a house. This is what it takes if you don’t want to have to pay private mortgage insurance every month.

However, you don’t have to absolutely put 20% down. Some mortgage programs, such as VA and FHA loans, let borrowers put down as little as zero down or about 3.5% down. There are extra requirements with any kind of mortgage you get, so be sure to discuss those with your lender.

Whichever kind of mortgage you decide to try for, here are some tips for saving for a down payment.

Get A Head Start

The sooner you start saving for a down payment, the easier it will be. Even if you currently can’t see having any extra money for savings, tuck as much as you can into a savings account. Every single dollar will help later on. 

Invest Safely To Earn Interest On Your Down Payment

If your home purchase goal is two or more years away, consider investing your savings so it earns interest. Since you’re counting on that money to use for a life goal, invest in things with low or no risk. Also, invest in things that allow you to cash out with no penalties when you think you’ll be ready to buy.

Ideas include a bank CD, money market, tax lien certificate, or municipal bonds. You won’t earn massive amounts of interest with any of these vehicles, but in return you’ll have flexibility and security.

Request An Inheritance Advance

If you know that your parents have you in their will, you can request to get part of your inheritance early. Your parents may be able to give you up to a certain amount for your mortgage down payment with no penalty.

Be sure to check with your potential lender. Some mortgage programs have caps on how much of the down payment can be sourced from a third party.

Once you decide what kind of home you might like, and which mortgage programs you might qualify for, you can decide how much you’ll need to save for a down payment. Use these three tips to save up. Before long, you’ll be ready to start shopping for the home of your dreams.

An essential partner is your trusted home mortgage professional. You can count on them to guide you every step of the way through your home loan process.

Remember, it’s never too early to contact your real estate professional. Looking at properties you like can be a helpful motivation to keep saving!

 

 

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