The World of Mortgage Blog - According to Kimberly and Cathy

FHA New Loan Limits Beginning with FHA Case Numbers pulled after October 1, 2011

	1 Unit	2 Unit	3 Unit	4 Unit
King	506,000	647,750	783,000	973,100
Pierce	506,000	647,750	783,000	973,100
Snohomish	506,000	647,750	783,000	973,100
USDA beginning October 2011
	Old	New
Upfront Fee	3.5% added to Loan	2% added to the Loan
Monthly Mortgage Ins	Zero	.3% annually / 12 months

***Reminder**** High Balance Conforming Loans set to Expire

Why is it important to share this with your Buyers and Sellers in the $450,000 - $600,000 price range?

Each year for the last several years congress has extended the normal loan limits for conventional and FHA loans from $417,000 to a temporary loan limit of $567,500.  While we aren’t 100% sure, we are starting hear very firm talk that the loan limits will not be extended past October 1, 2011.  It’s prudent to make your clients in this price range aware how this would affect their potential purchase or sale.

 

For Sellers:

• Currently buyers can purchase a home for just 3.5% down payment on a home priced up to $588,000 - Lower Fico scores/Lenient Debt-to-income requirements
• If the High Balance loans do disappear on 10/1/11 down payment requirements will increase to at least 10%, with stricter underwriting requirements
• NET AFFECT to Seller:  Fewer number of Buyers may be able to qualify. 
• Discuss with you seller a strategy for this next 30 days to get the home under contract before mid September.

 

For Buyers:

• Take a moment to review their financing with their lender so you understand if they’d be affected by this loan expiration.  If they are, help educate them about the importance of locking in on a home now.
• Try to close by 9/30/11 if possible.  If that’s not possible, check with the lender to check their drop-dead date for closing.

 

As a quick note: Mortgage rates have been a wild ride this week with the ups and downs of the stock market, the European debt issues and discussions over our debt.

Should Seller Lower Price Or Lower Buyer Rate?

Good Morning,

Attached is a tool you can use to educate your sellers and buyers on options.  The chart explains how a buyer can financially benefit from the seller buying down their interest rate versus lowering the sales price.  Maybe you can share the financial benefit with a buyer making an offer on your listing?  Maybe you can share these tools with a buyer you are representing?  Keeping the sales price and buying down their rate benefits all parties in a transaction.  It would be the same money out of pocket for the seller, but would keep prices up in area, lower the housing payment for a buyer and keep your commission paid on the higher sales price.  Take a moment to review and call/email us if you have any questions.

Download Seller paid CC vs reduction in Price