Newsletter #2 August 8, 2023

Down Payments? Help is on the Way.

Some folks quake when they see down payment requirements being 20%. 

Sellers, Buyers, and Agencies all Need You

I want buyers and sellers to understand that they have the power. I know it doesn’t feel that way, but look at it this way: the housing market, financiers, and agencies all need you. They have been in business long enough to place many laws and restrictions on the consumer, yet they know and quake at the thought that they need you.

You are what drives business. Without you, they wouldn’t exist. Yes, they can reject you when you do not meet their qualifications, but keep on UNTIL you get satisfied. If the debt-to-income ratio is too high, consider paying down some debt load or checking a debt-relief service.

Regarding down payments:

The FHA, Federal Housing Administration, does not loan money; The government protects the loan in case of a borrower’s default. Banks and finance companies lend the money.

With FHA, you only need 3.5% down and a credit score of 580 or higher.

If you can put 10% down, you only need a credit score of 500.

The loan limit is $726,200. In other words, your purchase price must be that or below. 

There are no income limits for an FHA loan. Sometimes high-income individuals may need an FHA loan because their credit scores are too low to qualify for a conventional loan. (School loans can cause this.)

An FHA loan is for everyone. 

To determine FHA loan eligibility, you will need: 

  • A credit score of 580
  • Debt -to income ratio of 43%
  • Verification of employment and income information. 

An FHA 203k loan allows you to purchase and renovate the house all within a single mortgage. (The renovation must be $35,000 or less)

You will need:

  • A valid government-issued ID (Passport or US driver’s license.
  • Two years of W-2 forms, pay stubs, or tax returns
  • Any additional documents depend upon the lender. 

The downside to FHA loans:

You must pay for two insurances.

  1. Mortgage insurance. (For 11 years.)
  2. Annual Home owns insurance premiums.

(The mortgage can roll those into your monthly mortgage payments.)

Home sellers sometimes don’t like FHA loans because they have guidelines for appraisers. The seller must repair health, safety, or security defects before selling. If a seller says, “No FHA loans,” it means the house needs some fixing.

Remember, I am not a loan officer; I am offering information. 

Thanks for reading,

Jo

Newsletter #1 August 2, 2023

I”m so excited.

Why People Who want to Sell Their Homes, Don’t

About 1/3 of homes purchased are by first-time buyers. That leaves around 68% of home owners who want to sell their homes in a bind.

Three main reasons people who want to sell don’t:

1. Repair Concerns

The owner wants to sell, but thinks, “My place is in a mess, I need to fix it before placing it on the market.” Most buyers use financing, and financial institutions require a certain level of quality. “I don’t have the money or the time to fix up this house,” says the owner.

Calvary to the rescue! There is an agency that will loan up to $35, 000, specifically for repairs. You can get the job done, place the house on the market, and move on to step 2.

2. Contingency

A contingency is placed on the new home the owner wants to buy, meaning his purchase is dependent upon the sale of his present home. Another bind.

He hasn’t yet sold his present house.. The new seller is reluctant to accept an offer that has a contingency, meaning if he takes the offer it will tie up his house for an undisclosed amount of time. The new seller isn’t happy to tie up his house until the buyer sells his.

If the home owner sells his house before he has another, he might have to rent. Short term rent is expensive, first and last months rent, deposits, getting approval, maybe he has more pets than the renter will allow, a catch 22.

Buffer agency to the rescue. He can move into his new home before his other one sells.

3. Interest Rate

Mortgage Brokers have little control over interest rates, but they will search for the best rate they can find. Remember they want your business.

Sometimes we as buyers, and even sellers too, feel vulnerable, like all those folks in big institutions, and big agencies have the power. It’s like the way we feel about doctors. Yet look at it this way, so what if you are trying to get a loan. The loan institutions need your business. so do the doctors. Go to their big conference tables KNOWING they need you. You have the power.

And don’t let those long conference tables intimidate you. Pretend you are sitting down at Starbucks and you bought the coffee.

When you have a Pink Flamingo FOR SALE Sign in your yard, it tells the world you aren’t running with hyenas.

We are a small Brokerage.

Thanks to Jason Fried and Davis Heinemeier for assuring me that being a small business is okay. Admit it. Don’t try to be something you’re not.

“What is it with business people trying to sound big? The stiff language… the artificial friendliness…the legalese. You read this stuff, and it sounds like a robot wrote it.” 

“This mask of professionalism is a joke. We all know this. Yet small businesses try to emulate it.”

–Quotes from Rework by Jason Fried and Davis Heinemeier Hanson. CrownBusiness@RandomHousse.com

The little out building is my dream meeting place for you all.

I wondered about being a small Brokerage when my daughter and I decided to start a Real Estate Brokerage.

I wondered if people would go for the big guys and ignore us.

Yet how did Avis, the car rental company, take on Budget? With their slogan, “We try harder.”

And then Enterprise beat them both by deciding that customer service was the way to go.

Tune in next Tuesday when I will share what I can find regarding help with down payments. You don’t always need 20% down, so don’t let that scare you.