100% Financing Available – USDA Loans

Looking to finance 100% at a great interest rate….now you have options. Your very own Department of Agriculture is offering $16 billion in funding for home loans rural areas. Surprisingly, some areas of Hillsborough County and Pasco County qualify as rural areas. Homes in New Tampa, Wesley Chapel, Land O’Lakes, Lutz and other areas may qualify. To see if a specific address is eligible, go to this page:

http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

(click on Single Family Housing on the left, then enter the address)

The USDA Rural Development program has a set of eligibility standards to determine if you qualify based upon the county and zip code the home resides in, your current income and credit history, as well as the number of dependents you claim.  USDA guidelines are very specific, and only certain lenders have certification and experience dealing with USDA government financing. Contact Team Bohannon for a list of our go-to lenders for USDA Loans.

Tampa Condo Market Turns The Corner?

Price reductions have spurred a potential rebound in condo sales throughout the Tampa Bay area.  The number of condos sold in Hillsborough County has risen from 180 units in December, to 256 units in February, to 387 units in March; though 3602 units remain on the market – an 18 month supply.

Financing options for condos tend to be limited. Eligible complexes can apply for a Fannie Mae loan at just 3.5% down. For a list of FHA-approved condominium projects, see this link . If a complex is not FHA-approved, your lender many be able submit am application for approval if the complex meets strict guidelines. Otherwise, you will put down a minimum of 20%, though some complexes require cash sales due to low owner occupancy rates.

While prices are down, there are risks to consider. We suggest a thorough review of financial documents and meeting minutes prior to making a decision, as many complexes may be on questionable financial footing due to foreclosure activity.

Avoid Last Minute Surprises at Closing

Tampa home buyers and Tampa Realtors can avoid last minute surprises at the closing table by triple checking all the details in advance. Bob Saltzman, one of our go-to-lenders @ Home Financing Network, recently had this timely observation in his weekly newsletter:

 
It’s Always Something!
We have noticed lately that underwriters that previously would allow certain loan approval conditions to be met at the closing table now require them to be signed off on prior to closing.  Maybe a simple initial on a contract, a pay-stub or escrow check that seems relatively unimportant  may delay a closing at worst, or inconvenience buyers and/or sellers at best. We all know that there is a credit crisis, so it makes some sense that there are more hoops to jump through, but there is a more specific reason for more caution on behalf of lenders that provide FHA or Fannie/Freddie financing – which is practically all the lending going on now.

The challenge for lenders is that with no other investors buying loans, the cost of even the simplest of errors is catastrophic.  Where previously a “scratch and dent” loan that is performing (perhaps it is 6 months old and the borrower has been making timely payments) would be snapped up for perhaps a 1 to 3 percent discount to the market, now the slightest error or missing document makes this otherwise valuable loan a tremendous liability to the lender who is lucky to sell it for a 40% or more loss.  That means for every single error a lender makes in following agency requirements, they now must close 40 or so flawlessly to make up for the one fumble.  All the more reason for all of us to pay attention to detail and manage expectation accordingly with our customers. Thought you may appreciate knowing the reason for any additional scrutiny you experience.

Bankruptcy Reform Will Hurt Many

Congress is considering legislation called the “Helping Families Save Their Homes in Bankruptcy Act”, which would allow bankruptcy judges to change the terms of a borrower’s mortgage contract (cram-down). I believe this proposal would benefit a small minority homeowners, but would severely worsen the outlook for the rest of us.

Allowing a Bankruptcy judge to unilaterally change the terms of a mortgage contact will force lenders to compensate for the added risk by: increasing down payment requirements, charging additional fees, and/or increasing interest rates.  An article in the Atlanta Journal-Constitution reports that analysts predict a resulting increase in interest rates of 1.5% across the board.

On a $300,000 loan, for example, the current interest rate of 5.25% would require a payment of $1,657 per month. If bankruptcy reform passes, rates would go to 6.75% or $1,946 per month. The borrower would be looking at an increase of  is $289 more per month; $3,468 per year; & $104,040 over the life of the loan. This will adversely impact home values, home buyers, and home owners looking to refinance.

– By Dale Bohannon

Underwater & Ineligible for Foreclosure-Prevention Plan

The foreclosure prevention plan outlined by President Obama yesterday is not intended to help everyone. Feeling left out of the bailout game? You are not alone. If you are more than a little underwater (5% +) ; if your mortgage still owned by a bank (portfolio loan); or if you have a jumbo loan…..then the new plan does not apply. See article.

10 Real Estate Myths for Buyers and Sellers

Celebrated Realtor Barbara Corcoran recently had some great observations on the Today Show in Jan 26th 2009. Her comments are very relevant to the Tampa housing market. Below are five myths held by home buyers, and then five myths held by home sellers.  See Video.

 

Buyer myth No. 1: The longer a home is on the market, the more you can negotiate.
Corcoran says: “When buyers ask how long a home has been on the market…they think 6 months means they can negotiate the price down; whereas it more often means the seller is stubbornly holding on to their price.” This is entirely true, as many Tampa homeowners refuse to acknowledge the market decline and cling to the idea that “it just takes one buyer” or “my house is special” and hence they do not price a home to sell.

Buyer myth No. 2: The sellers today are desperate.
Corcoran says: “Most aren’t. Always ask why the sellers are selling. It’s the key to finding how motivated and anxious they are.  I’m being transferred to Dallas is a very different answer than -We’d like to find something bigger. The first homeowner is hot to trot.” Corcoran’s point is well taken, as many Tampa sellers would like to sell and move up to a bigger homes to take advantage of this buying opportunity, but they do not “need” to sell. 

Buyer myth No. 3: You can’t buy a home today with less than 20 percent down.
Corcoran says: “FHA loans require only 3.5 percent down, and you can even ask the seller to pay the closing costs.” This is done routinely, where a Tampa home seller might be be asked to contribute up to 6% of the purchase price towards a buyer’s closing costs and prepaids: hence buyers can still purchase a home with very little down.

Buyer myth No. 4: You need good credit to get a good loan.
Corcoran maintains: “Once again, the FHA to the rescue! They’re happy to lend money to buyers with bad credit.”  Not so much. While FHA requirements have traditionally been less stringent, they have been requiring more documentation and are implementing higher standards. Team Bohannon’s best advice: talk to a recognizable lending institution and obtain a Pre-Approval letter to make sure you understand the true costs and availability of loans because the programs have been changing rapidly.

Buyer myth No. 5: You shouldn’t buy before prices have bottomed.
Corcoran says: “You can’t sharpshoot the real estate market. Once you identify the “bottom,” prices have already moved up.” Once again, we agree – it is impossible to time the market. We will know only when prices have bottomed out 6 months after the turn happens, and by that time interest rate moves may be more important than prices. 

Seller myth No. 1: Now’s the absolute worst time to sell.
Corcoran says: “Not necessarily. It depends upon where you live. Many of the worst hit markets, like Las Vegas, Phoenix or San Diego, are already beginning to turn around. And if you’re a homeowner who wants to trade up, the loss you’ll take on your current home will be more than offset by the bargain you’ll get on the next one.” Yes – the case for trading up is compelling. In Tampa, we have seen the number of sales begin to rebound, thanks in large measure to a 30-40% decline in prices. If you plan to sell within the next 3-5 years, we think that today’s market is superior to what you will see during the next few years.

Seller myth No. 2: Never respond to a low-ball bid.
Corcoran says: “All buyers today feel obligated to put in low-ball offers to see if the seller bites. If you respond with a reasonable counter offer, most buyers can be convinced to come up in price and make the deal.” Once again, Corcoran offers solid advice. It is not where you start, but where you finish. Always respond.

Seller myth No. 3: The first offer is never the best offer.
Corcoran says: “Most sellers believe that it’s smart to hold out for something better. But four times out of five, the first offer is the best you’ll ever see.” True! The first offer is usually the best. We have lots of data on this point….ask to see our stack of proof someday.

Seller myth No. 4: ‘I can always reduce my price later.’
Corcoran says: “Sellers often price their home high for a few weeks just to test the market. But buyers shop by price bracket and if your house is in the wrong one, you’ll just help sell everyone else’s home while yours sits there overpriced. And reducing your price later in small increments puts you in the position of chasing the tide as it goes out.” Agreed! First impressions matter. Sellers need to enter the market with a splash to capture the best buyers out of the gate; whereas multiple price cuts are akin to chasing a slinky down a staircase.

Seller myth No. 5: Before you refinance, shop around.
Corcoran says: “You can if you want, but you’ll usually get the best deal from your current lender. And you’ll be able to negotiate your closing costs.” We are not so sure about this one, as the re-fi options for homes in soft markets are a more challenging proposition. Some lenders have taken steps to limit downside risk in declining markets.
 
 – By Dale Bohannon with quotes from  Barbara Corcoran @ MSNBC.com

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