Mar 17
Seller Paid Closing costs is almost becoming commonplace on all new purchases. Why is this trend picking up across the country?
There are a few reasons:
- The age old reason was always a house needed a little extra cosmetic work. Instead of having the seller put rugs in, the new buyer might opt to want to make the decision on the colors or different flooring. Therefore, a credit towards carpet is a quick and manageable way to settle on a price and move forward with selling the house.
- Lack of funds or just trying to keep more money in your pocket. The seller concession is now a common way to help with the financing of your new home. It is a way to “finance” your closing costs in a way. You can not get money in your pocket after settlement.
- Buying down your interest rate. This is a reason a lot of people tend to miss or not know it is an option. But if you have 2% getting paid back to you at settlement this could potentially be used to get your rate down sometimes over ½ point. You could then go from a monthly payment you were “iffy” with to know being comfortable with.
How Much can be used: A seller can contribute either a percentage or a flat fee towards your closing costs. These are limited to your type of mortgage and needs to be gone over with your mortgage professional.
Does this work with people who are putting large down payments? Absolutely, this could be used for someone who has a set amount of money to put down and either doesn’t want to or can’t come up with any other.
Please send me an email if you want to see what the best use of seller paid closing costs can be used in your situation – jphillips@firstmutualcorp.com.
Mar 10
Over the last 4 years second mortgage rates have been so low that they were actually lower then the Mortgage Insurance alternative. Currently the prime rate which affects the Home Equity Line of Credit (HELOC) rates which a lot of people have (myself included) is 8.25%. Now depending on the margin you have on this HELOC could mean your rate can be between 7.75% - any where above. If you were one of the lucky ones and got a Prime MINUS rate. Then you are sitting around the 7.75% rate.
Over the last 6 months to a year we have switched gears to fixed rate seconds. Now in the last blog we were talking about the changes in the industry. The second mortgage rates are also changing. The second mortgage’s are also starting to have problems with people making the payments. They are starting to raise the rates up so high that people just won’t take them.
For Example - I had given a quote to someone at a rate of 9.75% second (this was a 100% loan - always a little higher) was kicking the competiton’s butt and then as of March 9th - that second mortgage program is not allowed for 100% financing and the next loan that allows 100% is a rate of 15%. I then went back to my 100% one loan program and the overall payment with mortgage insurance saved this gentlemen - $200 a month over the popular 80/20 loan we have all known to love.
If you are someone who has been pre-approved in the last 3 months and were looking at 100% financing - Please double check with your mortgage professional and have them double check that you are still in the best program combination to suite your needs.
If any one wants to get a second opinion please do not hesitate to reach out to me for some friendly advice… www.todayslendingrates.com
Have a great weekend!
Mar 09
There are a lot of changes happening right now in the mortgage industry as a whole.
Who is it affecting?
- People with lower credit scores that need 100% financing. A lot of big companies right now that use to give someone 100% financing are now out of business. They are out of business because the people that took these loans are going into foreclosure.
- A Lack of credit – someone that doesn’t have the creditors’ history. A good history to have is three creditors over a 2 year period. This will not hurt to start now if you don’t have them, even if it is a secured credit card. Credit Card (revolving) creditors on your credit are a major plus when paid on time. Note: do not max out the credit card that will in turn hurt you again. Keep it below 50% of the high credit limit and it will look good.
How can we get by this?
- FHA Mortgages- with a minimum down payment of 3% I have a lot of flexibility to getting you approved with today’s going rates with out a credit score requirement.
- Example: I had a friend of mine who had got hurt on the job. He could not pay his bills with out a pay check coming in. Once he went back to work all his bills were current we were able to go FHA and get him a rate at 6% on a 30 year fixed.
- Conventional Loans @ 100%. Right now with a minimum credit score of 575 I am able to still get you approved to 100%. This loan does have mortgage insurance but is a great replacement for the high rate mortgages people are use to.
If you are in one of these high rate mortgages – what do you do?
- The best thing to do is give me a call or send me an email and I can see if you fit into one of the programs above or another loan that will save you thousands of dollars a year. With a lot of the changes you would be surprised at how much I can actually save you monthly.
