As many of you are highly aware of there is a little turmoil in the markets. As of today at 1133 am, I am doing 100% financing three different ways. They all have there own little pros and cons but they are a way to get the first time buyer into a home.
1) CalHFa with a Chdap silent second.This requires the borrower to have a 680 fico score but is a real strong candidate for consideration. This can be combined with an FHA first mortgage and you are on your way to 100%. CalHFA put a freeze on the CHAP and the Hicap as well as their 35yr IO and the 40 year products.
2) USDA rural housing program - This loan is awesome. It is a true 100% financing option with no Mortgage Insurance. It is available to first time home-buyers and requires a minimum 600 credit score. There is a 2% guarantee fee that can be financed and the seller can pay up to 6% in closing costs. The downside is that there are eligible area and income requirements. The income goes by the number in the household so if you have a large family the income limits are pretty reasonable.
3) VA 100% financing - The obvious downside is that you have to be a veteran to qualify. The upside is that this is a true 100% option for our Veterans. There is no Mortgage Insurance at all. There is a VA funding fee that can be waived if you are considered greater than 10% disabled by the military. VA will allow up to 4% in credits.
It is extremely important to get with your affiliates and find out the options that your buyers have in the market. With Fannie Mae's risk based pricing implementation I have found many cases that FHA pencils out better. Even for the client with a larger down payment this has been true. Fannie Mae has less of an add for the higher LTV (above 80%) because some of the risk is mitigated by the mortgage insurance. Now more than ever I think that it is important for the borrower to understand all of the options that might be available. They must be prepared to document anything that might present a question.
This is not an all inclusive guide to finance. It is simply to give you a quick idea of what is out there and the general pros and cons. There is a lot of business in the market and if any of you ever have a question I will make sure to answer it fast or find out the answer in the event I do not know.
To great success in the world of Real Estate.
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