These days one of the biggest impediments to closing a real estate sale can be the buyer’s ability to get a mortgage.
Here are some tips for anyone who hopes to land a loan:
Turn to the government. The biggest source of loans these days is the Federal Housing Administration (FHA) and the Veterans Administration (VA). These programs accept borrowers with lower credit scores and allow them to put down as little as 3.5 percent of the purchase price.
Document, document, document. Borrowers will need bank statements, brokerage statements, W-2 forms and tax returns.
Boost credit scores. Borrowers should avoid having more than one-third of their maximum borrowing capacity outstanding on one credit card. If necessary, rotate the debt among several cards.
Work your connections. Comparison shopping is easy online, but if your customer has an established relationship with a local bank, suggest they try that lender first.
Source: BusinessWeek.com, Christopher Palmeri (01/23/09)
Earlier today President Bush signed into law a number of very significant changes that will occur starting October 1st. Please read these changes as they affect all of us and our Home buying abilities.
Details of the Housing and Economic Recovery Act are as follows:
The two items in bold will have the greatest immediate impact so please read these carefully.
Higher permanent loan limits for conventional conforming and FHA loans will become EFFECTIVE January 1, 2009. The act calls for limits to increase to a maximum amount of 625,500 , depending on the metropolitan area. The temporary limits established in March 2008 are set to expire December 31, 2008
-FHA floor limit to remain at 271, 500
-VA guaranty will increase
**Minimum cash investment for FHA loans WILL increase to 3.5%**
-A moratorium on RISK Based Pricing for FHA loans will go into effect on October 1, 2008
**Seller Funded Down Payment Assistance with FHA loans will be TERMINATED on October 1, 2008. No more DPAs like Nehemiah & American Dream.**
-Condo processing for FHA loans will be streamlined