Hal's Mortgage Blog

What if I told you Fannie Mae is offering special financing if you buy one of their bank owned homes? Would you believe me? Well you should because it is true!

Why does this benefit you? Well frankly... the terms of their offered financing is pretty darn sweet!

The benefits of their program include:

• Low down payment and flexible mortgage terms (fixed-rate, adjustable-rate, or interest-only)
• You may qualify even if your credit is less than perfect
• Available to both owner occupiers and investors
• Down payment (at least 3 percent) can be funded by your own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employer
• No mortgage insurance
• No appraisal fees
• FREE home warranty is included with the purchase.

Here is the best part about this program... There are dozens of homes available in Middle Tennessee right now that qualify for this program! Call me at (615) 895-4265for an up to date list. I 'll send it right out.

Here is some more specific information about their guidelines:

97% (3% down) for owner occupied financing with NO MORTGAGE INSURANCE!

Why is this such a big deal?
A typical FHA loan with an equivalent down payment (3.5% down) would require 1.75% of the loan amount to be paid upfront for a mortgage insurance premium. Then on top of your monthly payment (PITI), you would be charged .55% (of the loan amount) every year for ongoing mortgage insurance.

Let me break this down so I don't throw too much loan lingo your way.. Here is an example mortgage insurance fees for an FHA loan of $200,000...

$200,000 x 1.75 = $3500 You would be charged this amount at closing or you could roll this into a loan on a traditional FHA loan program for the upfront mortgage insurance premium.

$200,000 x .55 / 12 months = $91.67 This means $91.67 would be added to your payment every month for mortgage insurance.

With this special financing offered by Fannie Mae you could put .5% LESS down than a FHA loan and you do no pay ANY MORTGAGE INSURANCE! This really is a sweet deal!

Do you feel like a little more sugar today? Wait until you see what they will do for an investor!

90% (10% down) for non owner occupied properties with NO MORTGAGE INSURANCE!
If you are looking for an investment home, you know that you will get a better return on your investment if you have less money in the deal. Right now with typical financing (actually offered by Fannie Mae for non-Fannie Mae owned homes), you should expect to put down at least 25%.

Wow! So for example if you purchased a home for $150,000 (not owned by Fannie Mae), you would need to put down $37,500 plus closing costs. If you buy a home owned by Fannie Mae, you only have to put $15,000 plus closing costs. If that does not help you"sharpen your pencil" I am not sure what will! This is a really big deal!

They even offer a renovation program that allows you to finance light renovations upfront and add it to the loan amount. So if you find a Fannie Mae owned home that maybe has some vandalism issues (which many do), you can probably get a discount for the home and finance in the repairs that are needed to bring it back to livable condition!

It is so nice to be able to report some good news to folks. It really has been a drag having to shovel through the bad news to try and find something good to report as far as guideline changes go!

We can offer this special loan program... so just give us a call at (615) 895-4265 and we can discuss this opportunity further!

Happy Hunting!

Hal

The Mortgage Bailout Explained . . .

Young Chuck in Montana bought a horse from a farmer for $100. The farmer agreed to deliver the horse the next day. The next day he drove up and said, 'Sorry son, but I have some bad news, the horse died.'

Chuck replied, 'Well, then just give me my money back.'

The farmer said, 'can’t do that. I went and spent it already.'

Chuck said, 'Ok, then, just bring me the dead horse.'

The farmer asked, 'what ya gonna do with him?

Chuck said, 'I'm going to raffle him off.'

The farmer said, 'You can't raffle off a dead horse!'

Chuck said, 'Sure I can, Watch me. I just won't tell any body he's dead.'

A month later, the farmer met up with Chuck and asked, 'What
happened with that dead horse?'

Chuck said, 'I raffled him off. I sold 500 tickets at two dollars a piece and made a profit of $998.'

The farmer said, 'Didn't anyone complain?'

Chuck said, 'Just the guy who won. So I gave him his two dollars back.'

Chuck grew up and now works for the government. He was the one who figured out how to "bail” us out

Congress is considering giving judges the power to discharge mortgage debt in Chapter 13 bankruptcy and rewrite payment terms. This is commonly known as a "strip-down". Sounds like a good idea, right?

Here are some facts to consider:

• Many Chapter 13 bankruptcies fail - filer never obtains a discharge of his debts.
• 20% fail before the court confirms filer's plan.
• Another 55% fail between confirmation and discharge because the filer is unable to make his payments
• Nearly one-third go on to file bankruptcy again.
• Attorney fees of $2500-$5000 could double as strip-downs are more complex and take more time.
• Less than 5% of homeowners are more than 60 days behind on their mortgages - the usual measure of delinquency.
• Strip-down would be available to 50 million homeowners who are current on their mortgages if they filed bankruptcy.

Some of the unintended consequences:

• To protect themselves from future strip-downs, lenders would have to demand increased down payments. Most likely 20 - 30% - that's $30,000 to $45,000 on a $150,000 purchase.
• Hardest hit would be first time homebuyers (40% of the purchase market) who have no existing equity to bring to the closing table.
• Lenders would demand higher interest rates and fees as compensation for taking the added risk of losing money when the loan is stripped down.
• The promise of debt relief may encourage more individuals to file for Charper 13

Do not be surprised to hear your elected officials touting this as another way to "help" the economy.

Hal