Home prices are down by 57.3% from the peak in July 2006 according to a report released by Integrated Asset Services. Pasco County home values were amongst the hardest hit in Florida. For the article in the Tampa Tribune, click here.
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:
(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.
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.
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.
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
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.