In this time of tighter credit requirement agents and Loan officers need to look for alternative lending options for you buyers. Some of those are Buyer's Dream, Niamiah, Chapa, or other 501 (C) (3) not for profit corporations. The 100% loan is still out there like FHA (Disaster Loans), Freddie Mac Home Possible but your buyers need higher credit scores to qualify. In the Gifting program the buyer & seller enter into an agreement where the seller gives a gift to a not for Profit charity corporation. The not for profit charity keeps a fee then gives the funds to the buyer for their down payment. If you need help in closing fees the seller can help in that area also. Different loan have different requirements so you need to talk to your lenders to get all the information & percentages. The great thing is the charity gets funds the buyer gets their down payment and the seller gets their home sold. It's a win, win, win situation. You will want the right appraiser also. Some of the appraisers look at the gift as an artificial inflation to the purchase price. I myself am against appraisers getting a copy of the contract. But in Missouri it's required. I don't see the relevance in the contract price and the appraised price. Some years back I was refinancing our home in Hawaii. I wanted to use my VA loan because Jimmy Carter had all but wrecked the economy and interest rates were going through the roof. So we called an appraiser in to do his job. When he arrived he asked me how much I was refinancing the house for. I was thinking what does that have to do with the price of turnips on the moon? I told him $100,000 his reply just about floored me. He said "I can do that". I can do that? I just gave this guy $250 to tell me something my 10 year old son could tell me. I can hear him now "Hay dad how much are you refinancing the house for" $100,000 "I can do that". I asked well what was the house worth? He said "$100,000" that was a quick $250 down the tubes. I was talking with an appraiser in our area that I Trust to give an honest appraisal. My question was if you as an appraisers are constantly look backwards to get your comps how do the homes in our area ever appreciate. I mean there has to be some mechanism that allows you the ability to show supply and demand. One of the first things you learn in any area of commerce. If you have a limited supply and an upward demand the price will elevate. If on the other hand you have a surplus of supply and a diminished demand the price will subside. He told me they didn't. The question is what does the contract price have to do with the appraised price? Absolutely nothing!
In Your Service, Russ Prothero
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