MAKING SENSE OF THE NEW MORTGAGE ENVIRONMENT

The new mortgage environment has changed dramatically in 2010, leaving many consumers very confused and uncertain. Borrowers that closed on a mortgage loan within the last ten years have probably heard of the terms “no-doc,” “limited-doc,” “stated income,” “zero down 80/20 loans”, and even “zero down-payment loans with 580 credit scores.”
Several of these mortgage programs were part of the subprime market, also known as non-conforming loans. We had a culture of “underwrite the file with automated underwriting systems,” then document them according to those underwritings findings. Many loans were originated and closed with nothing more than an appraisal and title work based solely on credit score. However, many buyers of those mortgages (AIG, Lehman, etc.) decided to no longer buy this type of paper, or they became financially insolvent, due largely to these types of loans. That was, essentially, the official end of the “subprime” mortgage market.

What remains is FHA, VA, and conforming lenders. They require full disclosure and documentation, which means two years of tax returns and W-2’s, a month of pay stubs, as well as a list of assets and reserves, among other things. This can be frustrating for those formerly able to get financing with as little less as a credit report and an appraisal. The self-employed individual that “writes off” or deducts most of the income on their returns, has little-to-no options in regards to conventional financing. Couple this with the decline in home values, and the mortgage market has become more challenging than ever before.
However, it’s not all gloom and doom. Mortgage rates for purchasing and refinancing are at 30 year lows. We are seeing signs of home values on the rise. There are also several low down-payment options for potential home buyers. FHA still only requires 3.5% down, and there are some down payment assistance programs that can even reduce that. A blood relative can still gift 100% of that 3.5% down payment and in Ohio the Ohio Housing Finance Agency (OHFA) still offers grants for down payment assistance. If you are a military veteran, VA still offers 100% financing for eligible veterns.

So keep the faith and have hope. Guidelines will ease as time passes. We’ll probably never go back to the lending policies of the 1990’s and 2000’s, but home ownership is still the American dream and it will always be for those willing and able to pursue it.

Mike Lang has over fifteen years experience and is a mortgage loan officer at Fifth Third Bank in Gahanna, Ohio; Mike.Lange@53.com; 614-775-5138.

Need Down Payment Assistance?

In today’s environment, many home buyers, especially first time home buyers, are in need of help in the form of down payment assistance in order to purchase their first home. Even if they can come up with the down payment, it may be a good idea to take advantage of down payment assistance, when available, as that money can then be used for other necessities.

As a realtor, I have access to and work with several builders and at least one agency that have programs to help with the down payment in the form of a grant or through work-equity. With the expiration of the home buyer tax credit, builders have come up with creative ideas to generate more sales and help potential purchasers buy their products. Both of these builders offer a wide variety of affordable homes in various styles, floor plans, options that make it affordable for the first time buyer.

One builder offers a program whereby the buyer can earn up to 3.5% of their down payment by doing easy tasks such as clean up, planting shrubbery, painting their new home. If buyers cannot come of with the down payment, or they would like to save that money for other purchases, this program can be very helpful and get them in the home of their dreams.
Another builder is offering a grant of up to $4,000 for one of its builder communities. In this same community, the builder will also pay the buyer’s closing cost, resulting in zero out of pocket expense for the buyer. Builders can also offer other incentives such as free upgrades, special options, or free finished basement.

Another option would be the Ohio Housing Finance Agency, which makes affordable housing opportunities available for low-to-moderate income Ohioans. They offer extra help for active duty military and military veterans, firefighters, police officers, emergency medical technicians, healthcare workers, paramedics and teachers. www.ohiohome.org.

These great programs make home ownership more affordable and within the grasp of someone who might not otherwise qualify.
Call me at 614-805-7793 for more information about down payment assistance program or to get you pre-qualified.

Berwyn Home Sold!

A little over a month ago, I listed a two-bed room brick ranch in Berwyn, a quiet little subdivision just east of downtown Columbus. I was a little nervous about the listing because I've always been told "two-bedrooms don't sell." It also was on a slab, but it did have a one-car garage.


This was a lovely brick ranch in Berwyn, where I'd sold a home recently, so I felt fairly comfortable the home could sell, as there is an active market that attracts a particular buyer. Berwyn is an older area where the neighbors seem to know and watch out for each other.

I actively marketed the property to other agents, called almost 200 homes in a half-mile radius to tell them I just listed, and sent out "Just Listed" postcards.

We had only one showing the first three weeks so we reduced the price. Right away we received a cash offer from one of the neighbors at 96% of market value and we're set to close by June 30th.

I could have allowed those negative thoughts to cloud my attitude, which would have turned into a self-limiting belief.

I'm certainly not saying to accept every listing, as you need to evaluate each home based on its qualities, but don't allow someone else's insides to affect your outsides.