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100% financing dwindling away....

By Candace Pinaud

Mortgage and Lending with Leave No Stone Mortgage Lending

February 25, 2008 10:32 PM

The mortgage market has not gotten any easier in the recent weeks....programs still being taken away from us and credit score enforcements are becoming even stricter.

The State of Michigan has been declared, by almost all investors, a declining value state, hence, no investor will loan their maximum loan-to-value.

What this means - NO more 100% financing unless you do a government loan: VA loan or USDA - Rural Housing loan. You can also do FHA, however, they still require the 3% total investment by the borrower; that can all be a gift - but not by a down payment assistance company as those are no longer legal.

Coach your buyers as much as possible that they NEED to have a credit score over 680 to avoid putting down 10% down payment - in the state of MI, however, I'm sure other states are not far from that requirement.

OR - support your buyers looking in the rural areas. The USDA loans are FANTASTIC! Rates are around 6.5% for a 30 year fixed with NO pre-payment penalty and with NO monthly PMI - you pay a one-time fee of 2% that is added to your loan amount and well worth it.

www.LeaveNoStone.com

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Dorene Shirley

The Mortgage & Property Connection - Campbell, CA

Silicon Valley Real Estate

Candace - I push the credit analyzer program to increase credit scores for clients. Once we've run a plan of action, the client won't go anywhere!

Feb 25, 2008 10:35 PM

Vincent McKamy

Samson Properties - Fredericksburg, VA

Realtor Fredericksburg Virginia

Thanks for the great information - and I wish you luck in the state of Michigan. I think we are seeing this nation wide - but, we will pull through.

Feb 25, 2008 10:37 PM

Matthew J Blum - (retired from the business)

Palm Beach Gardens, FL

Candace, I hear you. I am in south Florida and know what you are going through. Now Freddie Jumped in and basically is saying if you don't have a minimum of 10% don't bother.

Feb 25, 2008 10:38 PM

Lu Kalaj

Vision Realty Centers - Brighton Township, MI

How about refinancing rules? Does that apply for that also? I pray today is a great day for you. Thanks for blogging. Lu

Feb 25, 2008 10:39 PM

Candace Pinaud

Leave No Stone Mortgage Lending - Ypsilanti, MI

Hey Lu,

Refinancing has also been greatly tightened. Technically, you can still do 95% rate/term refinance and 90% cash-out, however, if the appraiser checks the 'declining value' box on the appraisal OR if the automated findings show the area is declining the investor can, and often does, drop the allowable LTV by 5%. Hence, 90% rate/term and 85% cash-out.

Who has 15% equity left in their homes these days with declining values what they are??

If you know of anyone who does - send 'em to me, eh ;=)?

Feb 25, 2008 10:45 PM

Morning Matthew,

Yes, that 10% down payment rule goes into effect here March 1st. Basically, if your credit score is lower then 680 then you need 10% down payment OR you have to go with one of those government loans.

I do love those three govt. loans, however, have bigger concerns about centralizing all of our loans in the governments hands ;-).

Feb 25, 2008 10:47 PM

Missy Caulk

Missy Caulk TEAM - Ann Arbor, MI

Savvy Realtor - Ann Arbor Real Estate

The USDA loans are great and they can be used in Saline, Milan, Dexter so that is a good way to go.

Feb 25, 2008 11:01 PM

Hey Dorene,

which credit analyzer program do you use? I have been doing credit repair for years but have recently learned even more about the credit bureaus and how to fix things and, most importantly, some misnomers about the bureaus and what their process is.

I live in a city that has many, many....many....bad credit folks - so any help would be appreciated and utilized!

Morning Missy - I LOVE the USDA loans. a little bit more stringent on the property condition - but well worth it!

Feb 25, 2008 11:10 PM

Gary McAdams

GMAC Schwartz Property Sales - Key West, FL

We have that same problem in FL too. It seems the days of 100% financing are dead and gone. Remember how it was 3 years ago? I could have gotten a giraffe financed.

Feb 25, 2008 11:21 PM

Candace - I use Southwest Credit Services. The have the "What if" simulator that can come in handy as well. It blows the clients away when they we run the analyzer and print out a game plan for increasing their scores. I am the expert in their eyes. Then they tell their friends and send them my way. It pretty inexpensive about $50 for all three, credit report, analyzer and "what if" simulator.

Feb 25, 2008 11:23 PM

Hey Gary,

You know - I do recall financing a elephant or two myself. Personally, even though my mortgage life is incredibly challening...I am happy we are reverting back to a time when a buyer has to have good credit, a down payment and a JOB :-).

Feb 25, 2008 11:46 PM

100% financing dwindling away....

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