With the Financial and Mortgage Industries "tightening up" their loan requirements... an extra boost is often needed for buyers to be able to qualify for the home they want to purchase. Here are a few suggestions on how to help someone who wants to buy a home... but really needs some help in doing so.
One of the most frustrating things a seller can experience... is finding a buyer who is both READY to buy their home, is also WILLING to buy their home, but for a variety of reasons... is UNABLE to purchase. The ability to assist that buyer in a variety of ways... can often be the difference between a home selling... or staying on the market... and just "sitting there." Here are just two of those ways:
Many buyers have both the income, and the credit to qualify for their mortgage loan... even with the current sub-prime mortgage market crisis. Although many young buyers have great jobs and decent credit... the great majority of them have not been able to put away the necessary dollars to use for the "closing costs" needed in order to close on their home.
Buyers can fix this problem by allowing the seller to keep their price where it is listed... rather than making an offer on the home... and then asking the seller to use that money to help them in a different way.
Look at it this way: A price drop of Six Thousand Dollars will probably only lower the monthly mortgage for the buyer by approximately $42.00 per month. Not much of a payment drop to either get excited about... or to help the buyer qualify. But... if the buyer does not have the cash needed to pay their closing costs... they cannot close.
In cases like this, the prudent seller will find a buyer more willing to buy their home if they offer to pay the buyer's closing costs... which in my above example... will amount to $6,000.00 Without that help... no sale. With that help... Call The Movers !
A second way for a seller to help a buyer... would be when the buyer is having trouble qualifying because the payments are too high. This would really be helpful when the buyer is straight out of college, and will not hit their income "stride" for perhaps two years after being "on the job."
In cases like this, the same Six Thousand Dollars in the example above can be utilized in a different way to assist the buyer. It's something called a "Buy-Down." In an interest rate "buy-down... " which usually costs somewhere between 2.625 points and 3.000 points... (to be paid by the seller) the interest rate is reduced for year ONE by two percent, and in year TWO by one percent... leveling off in year THREE... and REMAINING at that level-three rate for the remaining Twenty-Eight years of the mortgage.
This is in NO WAY a type of ARM... or Adjustable Rate Mortgage... that has been in the news so much lately. This is a "fixed-rate" mortgage... sort of with a two-year "head start." By doing this, the buyer's house payment will be dropped hundreds of dollars in Year One, and Half that amount in Year Two.
Neither of these two ways for the Seller to assist the Buyer... is affected by the recent HUD ruling forbidding the use of a DPA program... a Down Payment Assistance program. Right now, FHA Mortgages allow the seller to "assist" the buyer by up to six-percent of the sales price of the home. These monies are what is referred to as the 6% Seller Contribution. The only caveat is that it cannot be used for the buyer's down payment. Therefore... this is still an approved method that the Seller can use to help the Buyer.
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Although Karen Anne Stone is not a mortgage professional, as a Realtor she has extensive knowledge of the mortgage market. You should, however, consult a mortgage professional to confirm Karen Anne's above suggestions. Karen Anne can be visited on her website at www.NewHomeHuntersOfTarrantCounty.com , or can be reached by phone at (817) 929-3400 , or by email at KarenAnneStone@gmail.com . If You've Got Problems... Karen Anne just might have the answers !
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