10/20/2007

Attractive Loan Options

A lot of people are taking a look at the Best Places to Live lately.

First time buyers should know that there are programs returning to the loan market that have not been very active for some time. California's Housing Finance Agency has an excellent program which offers several features depending the buyer(s). In the past, the income caps on such programs were often too low to assist many buyers, but on this one, Los Angeles County guidelines allow over $80,000 annual income for up to two buyers, with higher amounts for 3 or more buyers and more units. The interest rates are more competitive than regular conforming loans, and there are features allowing for assistance in closing costs payments and down payment coverage through this program. And, this loan is available for a FICO score as low as 620, pretty unusual in today's loan environment.


FHA loans are still bound by the same loan limits--there has been a push to increase the loan limit for California due to the higher market. They also have a variety of features for down payment assistance and closing costs, however, HUD, this month, just disallowed the seller from helping on the buyer's down payment as their tracking showed there was a much higher default on this type of loan (this kind of assistance has never been available on conventional loans). But all the other loan options remain the same, including government sponsored assistance, employer assistance, and down payment from a relative. FHA loans require PMI which previously was not tax-deductible, however that changed as of January 1, 2007, making FHA loans more "user-friendly". They already have the advantage of having extremely competitive rates with certain programs. FHA loans basically have more liberal lending guidelines, including not using FICO scores (but they do look at the overall buyer risk profile), because their sole purpose is to assist buyers in need.

This IS a good time to be a buyer; and, if you're waiting for the market to come down before you buy, keep in mind that most buyers and sellers are about 2 years behind the market, so by the time you think it's a good time to buy, the market could have changed already. And real estate prices are local, so for updated information on pricing for an area you're interested in buying or selling, feel free to contact me for a market analysis.


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