Sunday, January 11, 2015

Good news for buyers re low down payments and lower mortgage insurance! And a teeny bit of bad news.

As you may know, low down payment loans are back.  Yes, 3%-down conventional loans (not just FHA loans) are available to buyers.  Before anybody gets all "slippery slope" on me, think about this: in L.A. and the SFV, with average home prices hovering around $500,000 to $600,000 for modest homes, who has $100k to put down on one? Or even $50k? Not young buyers, who are usually saddled with debt from student loans, have been paying high rent, and are usually salaried a little lower than older buyers.  Not move-up buyers, who have been paying a good part of their salaries for their existing homes and haven't been able to save.  (Only one buyer has to be a first-time buyer.)  Here's an article from Forbes about the new program.  Also, it's almost impossible to get a condo complex FHA-approved -- there will be far fewer condo approval issues with the new lower conventional loans.

And if that weren't enough, mortgage insurance has been lowered, too!  As many of you know, this is the premium that you pay if your down payment and loan-to-value is lower than 20%.  Here's an article from the Chicago Tribune about it.  I've always thought this was a rip-off -- this insurance sure didn't help anybody that was in trouble with their mortgage during the 2008-2009 recession.  But anyway, it's lower now, and will help buyers.

Here's the teeny bit of bad news for those of you buyers that live here.  It will still be hard to get a low-down loan accepted by your seller if you're in a multiple offer situation.  That's because sellers perceive -- rightfully so -- that high-down loans have a better chance of closing.  There are other ways to make your offer stand out, though, and we'll discuss that in future posts.

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