What About The Lending Institutions?

The biggest change today is that you have to have some money, an income, and a job! Lenders have put people in houses WITHOUT any of those things! With the loss of the sub-prime market, we are seeing tighter underwriting demands.

One optional choice is to go with an FHA loan, but now we still have to be careful with Lenders giving you an FHA loan since some are charging very high rates and fees for these government insured loans! Most of the consumers don’t question the rates since they do not usually have “perfect” credit and FHA being a government insured loan, it is perceived to be safe and immune from abuse by unscrupulous lenders. The lenders are making much less off of these loans than what they use to on the sub-prime loans, so they are increasing the rate and fees!

Make sure you are working with a Realtor who can guide you in choosing the right Lender that has integrity. You can borrow up to $200,160 in sales price. You do need to have at least 3% of the sales price for a down payment or for closing costs. But the seller can contribute 6% toward your closing costs but be careful because the price will go up with the seller paying that much! Gifts from a family member are still allowed on FHA as well.

Even the “seller funded down payment assistance programs” are disappearing as well. There are only two left: AmeriDream and Nehemiah and they are only active until April, 2008. In these loans, the price is increased to cover both down payment and closing costs which really makes the Buyer pay so much above market for the home and miraculously, the homes appraise! (I have never liked those loans and have never written one! I would tell you to go home and save some money and work on your credit!!)

If you have a credit score of 660 or greater, you should get an interest rate of 6.25% with that FHA loan at the present time of this writing (11-8-07) with only $658 in Lender’s Fees, which is low. You will have Title fees and escrow fees as well, but Lender fees are very reasonable with FHA. There were fees in the past that were required to be paid by the Seller with an FHA loan, but they are no longer required for Sellers. That was one reason FHA loans were not popular with Sellers in the past!

But we will see more FHA loans around now. If you have other questions about the Market or Mortgages, please email us or call us at 972.985.4747.