Points of Interest for You and Your Clients
Hurricane Irene’s after effects on mortgage lending are being felt this week. Lenders are requiring re-certifications on appraisals in FEMA listed areas of higher damage. This means an appraiser must re-inspect the property for condition and soundness. Real estate transactions in affected areas up the east coast are seeing settlement delays as these inspections take place and properties are cleared to close.
FHA and Veterans loans are now priced with sizable lender credits for closing costs. For example, at 4.25%, the lender credit can be over 1%-1.5% of the loan amount toward buyer settlement cost. This reduces the amount that the buyer may need to ask the seller to pay. Lender closing costs credits can be a useful tool to help a buyer purchase a home.
Since area high cost area loan limits are reverting from $729,250 to $625,500 very soon, getting to know non-conforming loans is necessary. For credit scores, having at least 720 will be important with higher loan amounts requiring 740+. Cash reserves are also important with most programs requiring 6 months PITI in the bank and up to a year for higher loan balances. Having 6 months payments saved for any additional properties owned can also be required. Residence and second home loans typically will require 20% down payment and it is difficult to find an investment property non-conforming loan. As these programs move into the spot light, look for program enhancements and changes.