Low cash out of pocket loans are not impossible!

Ok Folks, it's been a while with the holidays and all but in truth, I have been a little busy. Our area of the state has been reported by Real Estate Brokers as having a 6% increase in sales over 2006! Wow, huh?

So I want all of you to know a very common way us lenders get you or your customer to the table with very little cash out of pocket.

Interest rate and closing costs/ pre paids are like a scale. You can pay your closing costs/ pre paids yourself and have a lower interest rate. OR You can have your lender finance a large portion of your closing costs/ pre paids and pay a slightly higher rate.

Speaking mainly of FHA, IF you can get a gift or a seller contribution for the down payment and afford the slightly higher rate by financing closing costs, you can have a home for around $1500 out of your pocket.

That $1500 includes your appraisal, first years homeowners insurance, and your ernest money deposit on the home.

I stress to you, these numbers are not exact nor meant to be etched in stone. However, it is possible and likely you can get a loan like this or very similar.

WV Housing

WV Housing is a well known program among local lenders. It offers a chance for many that need assistance in down payment assistance, closing cost, or a slight reduction in interest rate in order to afford that dream home.

The Mortgage Revenue Bond Program allows up to 100% of purchase price financing along with the possibility of closing cost assistance through a second loan.

The renovation loan known as Mountaineer Mortgage Plus, Renovation is particularly aggressive in the market providing up to $25,000 to renovate a property needing repairs or improvements. Of particular interest are the lack of limits on home prices or income. Customers need not be first time for this program.

Although more restrictive, the Mortgage Revenue Bond Program still is an attractive option to middle income customers wanting to purchase modest homes.


One final item of interest, although the State wants to assist in the revitalization of our fine State, it still needs to be able to put money back into the system.

Why is this important to you?

It is important to note when you use these programs, there are likely prepayment penalties and monies owed back to the State if you live in the property less than 10 years.


In closing, WV Housing has great programs to offer. Please make sure you want to stay there for a good while!

Check this link for details!

Quick Tip on FHA

Many lenders will tell you a 3% commitment is needed for FHA financing. That is correct, but, here is something you might not know or be told.

A 3/4 % origination may be charged on the loan and may be buyer financed. This can do several things.

• Require less money at closing.
• Lower your rate
• Slightly raise your payment.

Normally your payment will raise slightly but sometimes a good option.

A quick tip for those on Social Security-Disability

Just a quick tip to those with low incomes attempting to purchase homes. All is not lost, there is help you might not be aware of. Most banks will "gross up" social security and disability income due to it being untaxed.

Let's say you make $2000 in social security/ disability, to the bank, you make $2500. This can make the difference in buying the house you don't want verses the house you do.

Now I know what you are thinking, what kind of house can I afford at $2500 a month. Well, there are programs for people that have low income that need housing. Some even give you money! Some lower your interest rate! Take a look! http://www.rurdev.usda.gov/ or http://www.hud.gov/offices/pih/programs/hcv/homeownership/

Brought to you by "me!"

Police, Firefighters, and Teachers Need a Break! Oh! Here's one!

Let's face it, some people do a lot of work with virtually no return. You guys put your life on the line every day ( including teachers ) every day for meager wages. There is a little know Federal loan program that might put a little light in your life. It is called the " Good Neighbor Next Door " program. What is in it for you, you might ask.

• Less strict underwriting guidelines.
• Purchase price 50% less that the Government's asking price.
• $100 needed at closing.
• FHA rehab loans are available.
  

Sounds pretty good, eh? Well, here is the down side.

• Limited availability of housing.
• Cannot have owned a home for last 12 months prior to purchase.
• Homes listed are in high demand and sometimes are distributed via a lottery system.
• They like you to purchase where you work or service.
• It's a one time deal.
• If you stay there less than three years, you owe a pro rata portion of the other 50% of the home balance.
• The houses are usually trashed.

Things you as public servants need to do:

• Call HUD and see if you qualify.
• Interview Realtors that Specialize in HUD programs. You have to have one.
• Interview lenders. Trust me, some won't know what you are talking about. I say test them, see if they know at least what I have already told you, if not, RUN!
• Accept my thanks for your public service and invite me to your next Fire Hall supper ( well ok, you don't have to do that)

For more specific guidelines and instructions, go here!

FHA as compared to conventional loans

An FHA loan differs from a conventional loan in several ways. An FHA loan is partially guaranteed by the Government. It offers less of a down payment and usually a slightly higher interest rate than normal prime loans. It is normally used by first time buyers.

FHA loans have mortgage insurance in most cases that can also increase your payment.

Underwriting guidelines are sometimes less stringent on FHA loans and require a manual underwrite of credit instead of relying strictly on your credit score. Sometimes, non traditional credit is utilized, such as rental history, to stamp an approval on your loan.

Seller assistance is also a plus and usually available with FHA loans. They may contribute up to 6 % to the buyer and sometimes more with donations to non profit organizations.

Prime (traditional) loans normally require a down payment and rely on a more traditional credit score model. Mortgage insurance may not be a necessity and interest rates may be lower.

My best suggestion is to have your lender show you good faith estimates on several loan products so you may see the benefits of each.

If you are looking for a new home, don't...

• Insult the seller with a ridiculous offer thinking you can just steal a house. Be fair.
• Wait forever. These home prices will not last forever.
• Bother me with the " I want a 100% loan, I have a 375 score and no money" Those days are over, at least, for me.
• Forget to get a Realtor. Hey! You don't pay anything for them as a buyer and they are not the enemy!
• Listen to the news. Trust me, those knuckle heads have never closed a loan. And if they did, they weren't good at it or the wouldn't be reading a tele prompter.

The fact is, you won't find a better buyers market for a long time. Interview a few lenders and Realtors. Find people you like and gather your paperwork. Don't expect miracles but know, they might be out there. Happy hunting!