Declining Values in California and Florida!

Mortgage and Lending with Augusta Financial, Inc. NMLS ID: 241368

Hi again from Intuitive Loans!

As you may have become aware, many lenders are now requiring 5% of the purchase price of a home to come from the borrower.  Lenders want to make sure that the borrower has some of their own money invested in the property.  This helps to insure that the borrower will do everything in his/her power to avoid foreclosure.  The loan products that used to be 100%, will now be 95% in many cases.  This has become the norm in both California and Florida.

However, not all lenders have caught onto this yet and 100% loans are still available in many cases. Also, if you qualify for a VA loan, there are loan programs now available up to $1,000,000. 

In some cases, the 5% down payment can come in the form of a gift.  These gift monies often come from relatives and/or friends.  On top of this, many of the loan programs still allow up to 5-6% seller contribution.  This contribution can go towards all of the buyers closing costs as well as towards purchasing points to "buy" a cheaper rate from the lender. I.E. Paying one point (1% of the 1st loan amount) might take your rate from 5.875% to 5.75% on a 30-year fixed rate loan.  This is usually a good idea when somebody else is paying for it.

In short, while it is becoming more difficult to get a 100% loan in this adjusting market, it is not impossible.  If your credit is not perfect, now is the time to make sure you clean up any marks or inaccuracies on your report.

Feel free to contact me if you have specific questions or would like a further explanation.

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The market in certain areas still has a way to go before corrections.  We have an affordability in California.  It requires about $137K to afford a home under conventional terms, while the median income is less than $50K.

Jun 05, 2008 05:44 PM #1
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