Hal's Mortgage Blog

When mortgage interest rates ranged in the double digits back in the l970’s, seller financing was rather popular. Once rates began to fall, it fell out of favor. Now that lending standards have become tighter, we may see seller financing rise in popularity again. It may pay to know the seller financing options possible.

Lease to Own or Lease with Option
In the past, this has been the most common of the seller financing options. A portion of a renter’s payments goes to help finance the eventual purchase of the home. Most agreements include some type of deposit that is not refundable if the buyer decides not to buy. There is also generally an agreed upon expiration date on the right to buy.

Partial Financing Option
Perhaps the buyer can qualify for a mortgage but not enough to buy a particular property. In this case, the seller can finance part of the cost of the home and the lender can finance the other part. Note however that lenders may not be so willing to help finance these types of purchases in a tight loan market.

Seller Contributions
This option is more popular than ever and almost seems expected by many buyers in the current market. Traditional lenders may be concerned about the amount that sellers contribute to the buyer’s purchase, and many are limiting that amount to 3% of the home’s purchase price.

If you have additional questions, consult your real estate agent and mortgage professional for answers.

Every now and then I run across a video clip that bears watching. Since prospective buyers’ credit is something I analyze daily, I want to pass this one along. Click on the link 7 Errors That Can Ruin Homebuyers’ Credit then give me a call for a free Tri-Merge report of all three bureaus plus a consultation on what you can do to improve your scores. Even scores above 700 can be improved by 30 to 50 points by using a trick or two. And it may take no more than 30 -45 days. Could save you a lot of money in interest over the life of your loan.

In a nutshell this is going to cost homebuyers MORE money.

While no "date" has been set, the press release said it would be late spring/early summer when these changes are expected to take place.

• Lower credit scores will require more down payment money
• Up Front Mortgage Insurance Premium (MIP) will increase from 1.75% to 2.25%
• Monthly Mortgage Insurance will increase from .50% to .55%
• Seller contributions will decrease from 6% to 3%.

Another reason to buy now rather than later!

To read the entire announcement go to FHA Policy Change

The good news is . . . there’s still time to qualify for the $8,000 Tax Credit as long as you get a home under contract by April 30, 2010 and close by June 30, 2010

The bad news . . . all right it’s not really bad news! It’s just that the refund is taking up to four months before you receive it. And by the way, no e-filing your return, it has to be paper.

Here’s a link to the NEW IRS 5405

http://www.irs.gov/pub/irs-pdf/f5405.pdf