The most common misconception TODAY is that the media has the public thinking that there is no money available for home loans. Nothing could be further from the truth. There is money to lend! It is true that the Real Estate Marketplace has undergone some significant changes in the past 24 months with Sub Prime Lending [borrowers with way less than perfect credit], Stated Income loans and insurance losses suffered by the Private Mortgage Companies. While some of these factors may have contributed to the Real Estate meltdown, changes in lending guidelines have strengthened the underwriting of new home loans and the outlook for home loans in Kansas City looks good for 2009!

Some things to consider are:

1. How can FHA Loans Help?
These loans are more credit lenient and will allow for borrowers with FICO scores in the high 580’s. The new change for 2009 is that a borrow will have to have a 3.5% down payment, but that down payment can be 100% gift! Better yet is that the seller can pay up to 6% in closing costs and pre-paids, but most of the closing costs and pre-paids run about 3% of the Sales Price. Maximum loan amounts for a single family residence is $271,050, which means with a limited down payment, the buyer can obtain a home for nearly $280,000! If a current homeowner is trying to consolidate debts, FHA loans allow the borrower to pull up to 95% of the home value to help consolidate loans. Current FHA loans can also be ’streamlined’ refinance, allowing for little documentation.

2. What are USDA Rural Loans?
100% or no money down loans are available in the Kansas City area. As the name implies, these loans are geographically restricted as well as income limited. For specific areas of loan availability, feel free to contact me or my Team.

3. Why do I need Private Mortgage Insurance?
Any buyer with less than 20% down will have PMI on a Conventional Loan. However, there are at least five options for PMI alternatives for loans with a 10% down payment and are 3 alternatives for loans with 5% down. Rate may not always be the key when solving the PMI issue for both refinance and purchase type of loans. So ask for your options on your loan.

4. Where Are Rates?
Everyone has read that the Federal Government will guarantee the mortgage backed securities sold on the secondary market, much like FDIC insures your savings account. While the Secretary of the Treasury said rates on Conventional loans will be at 4.5%, this includes a STELLAR credit of 740+, at least 10% down payment and 2 points of origination. We are currently at those rates if you can meet those guidelines, but remember, if you don’t want to pay points or you have a FICO less than 740, there are other great rates available. It will require a full loan application to see what loan fits best for you!

< back to Jim's Mortgage Game Plan