The Third Option - Getting First Time Buyers into the Market

Mortgage and Lending with First Priority Financial

It's no mystery to anyone in the real estate business that the last 2 years have brought about huge changes in the mortgage market.  As home prices continue to decline, lenders have reduced the LTV to which they will lend, and if the market is marked as declining, an additional 5% reduction on the maximum LTV applies.    Currently many lenders are requiring 10-20% down on a home, which given home prices in California is a huge chunk of change.

 Realtors have basically 2 options in order to get homes sold: 

1. Price the home to sell and, when it doesn't sell, lower the list price.

2. Offer incentives such as a rate buydown or paying closing costs.

But neither of these options addresses the issue of the large down payment requirement or increasing the number of first time homebuyers in the market place.   However, there are programs out there for 100% financing if you know which lenders to call.  While FHA programs have been basically extinct in some areas of California, the temporary FHA loan limit increase provides a huge opportunity to bring First Time Home Buyers  (or even former homeowners) back into the marketplace.  The savvy individual knows this is a great time to buy real estate.

In addition to FHA financing, there are many charitable programs that will gift money for the down payment and closing costs (up to 10% of the purchase price.)  This program only requires that the seller, at close of escrow, gift the same amount plus a small handling fee back to the charity.   How does this help a participating seller?  It increases dramatically the pool of potential buyers and gives them an option other than a price reduction. 

If a seller is willing to lower the listing price or give incentives, the net result could be the same of better by participating in a Down Payment Assistance program.  

And think of the increased number of calls you could get with this type of sign added to your yard sign:

Sign Rider 24


The great part about these programs is that there are no income or geographical restrictions, and is not limited to First Time Homebuyers.   There are no qualifying criteria other than you've been approved on a qualifying loan product. 

This program is simple and increases the pool of potential buyers.  Now that's a bright spot in today's market.