Seller concessions are not used enough. All too often people are tight for money at time of close, PMI could have been avoided, or buyers could have benefited from the use of lower payments by way of a (2/1) buydown. More below. // Market alerts seem to point to higher rates. Consider locking now. Again, more below. //  The loan modifications scene is a mess. Lenders are not responsive to the point of not living up to their agreements with the Treasury, Go here if you want to read up on it, and here if you are looking for loan modification assistance. //  Make it good week folks! - Paul

 

Why use a seller concession?
There are many more reasons than the obvious to use an SC:  

* Reduce the cash required (that was the obvious one :))
* Lower LTV to avoid PMI, or get a better rate
* Qualify at a lower rate, bought down with the SC
* Reduce monthly payments (temporarily) with a SC bought down rate

 

What's the benefit of a seller concession?

Buyer happy, seller happy, realtor happy - and nobody loses. The essence of an SC is that the seller gets nothing less and the buyer gets to finance the "closing costs". (Note the quotation marks. There is much more than closing costs that can be included).  To run scenarios with my Seller Concession Calculator. To read up on SCs go here.

 

 

Why NOT use a seller concession?

Here is one: Irrational pushback. Just bringing it up can be risky business. I have witnessed the mere mention of an SC scuttle more than a few deals. Fact is that SCs are allowed with virtually every mainstream mortgage program. It does not mean that the buyer is not qualified, nor does it mean that the seller is selling too cheap. I welcome any feedback on this. Read more

Rates up a bit, and may be trending higher
For the week ending July 6th the 30-year fixed averaged 5.22% with an average 0.6% fees and points, down from last week when it averaged 5.25%. Bond yields keep rising, and it is making me nervous. Freddie Mac rate surveys. 

Mortgage bond yields rise to 2 months high; Rates may climb

August 6 (Bloomberg) -- Yields on Fannie Mae and Freddie Mac mortgage securities held near the highest in almost two months, signaling that interest rates on new-home loans will climb and hurt the U.S. housing market. Read more

Pre-qualifications versus pre-approvals - What's the difference?

I was asked this after I wrote last week that pre-approvals are what is needed now. Big difference, here it is: For a PA we complete the entire application in detail and run formal a formal pre-approval through Underwriting. I also review the property, and if there is anything that gives rise to concern, I dig deeper.

If the applicant's qualifying income is in doubt I will get supporting docs and review those also. A lot more upfront work, but well worth it! Better safe than sorry! Contact me if you have clients that need to be pre-approved.