Last week I addressed the issue that this is a good time according to history and the housing cycle to purchase a home. This week let's talk about funding and is it available. You need to be diligent and exhaust every resource. There are some sources that come and go depending if the fed is funding that program at that time. Many loan officers overlook these.
One source specifically is the USDA Rural Home Loan Purchase Program. This program is always changing and falling off from availability. When it is available it is awesome. There is little to no down payment, so you can use your money to improve the property. No mortgage insurance and you are investing in America.
If you have a commercial property you may fall within the guidelines of a 1031 exchange says Ron Ricard, Certified Exchange Specialist, Investment Property Exchange Services, Inc. Ricard says "Section 1031 of the IRS tax code allows you to sell a piece of investment real estate and reinvest it in other investment real estate, using the equity from the investment property you sold as a down payment and getting an equal or greater loan. This allows you to defer paying the taxes on your capital gain and depreciation". There are many ways to use this code, says Ricard.
Assumable loans were at one time something to look into. You do not hear about them at all anymore. In this same vein I would include inquiring about shared equity loans. We do see that all of these programs fade away and make comebacks so the more questions you can ask the better.
All of these loans are good, safe and stable. None of them are the types of programs that got us into this housing mess. You need to remember that your house is a home not a piggy bank. For an update on what is going on with traditional home loans I turn to Dan Stevens of Wells Fargo. "Bob, The positive but true spin is proper. Like you, I'm high on the market opportunity right now. FHA is still a good program to consider. 3.5% down payment, decent but not great credit, gifts accepted for down payment and full income documentation. To be able to buy a home with 3.5% down payment in Sonoma County and the after tax cost being equivalent to your rent payment is remarkable. I didn't expect that to ever occur again in my life time. Even with rates up almost 1% in the last month or so, you can buy a $300K home with $10K down (possibly all gift) with a monthly payment of about $2000...backing out the tax savings from interest and prop taxes, plus amount toward principal and you're at about $1400/month with a 30 yr fixed...a truly amazing opportunity for first time buyers.
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