Cheap money may drive housing
The recent dip in mortgage rates may provide a boost in demand for housing. As of Friday the Idaho Housing and Finance Association website (ihfa.org) showed a 30-year fixed rate mortgage at 4.75 percent once again. This is good news for buyers who found themselves in panic when rates ticked up over the past several weeks. With the Fed continuing its bond buying program it looks like rates may stay low for awhile.
In addition to low interest rates there are many low down payment loan products available in the market, some giving the buyer an opportunity to buy distressed properties and borrow enough to remodel them. Here are examples of some current borrowing opportunities:
• HomePath Mortgage: This is a conventional loan that requires only a 3 percent down payment. There is no appraisal or mortgage insurance required. Gift funds may be used for costs associated with the home purchase and the borrower's minimum credit score needs to be 660 or above.
It is possible under this program to purchase investment homes when the down payment is increased to 10 percent. Eligible HomePath foreclosure properties, owned by Fannie Mae can found at www.HomePath.com.
• FHA 203K Purchase and Renovate: requires action of the property. Repairs or renovation are done after the sale and paid for from loan proceeds designated for that purpose. This is great for those not-so-perfect properties. The loan requires a 600 minimum credit score. The loan can be used to renovate any residence up to a fourplex. If a buyer buys a single family dwelling on property zoned for a triplex, it is probable that this loan may be used to build the triplex.
• Regular FHA: 3.5 percent down - Gift Funds OK - 600 min credit score.
• IHFA Good Credit Rewards Second Mortgage: 100 percent financing when combined with IHFA 1. This is a second mortgage that covers the difference of the first loan and the purchase price. $500 is required as a borrower contribution and the buyer needs a minimum credit score of 700. Income limits do apply.
• IHFA HOME Down Payment Assistance Program: This loan requires $500 as a minimum borrower contribution. This loan is for up to 3.5 percent of the purchase price as a "silent second mortgage" for eligible borrowers when combined with an IHFA 1 mortgage. It requires the buyer to have a 640 minimum credit score and there are income limits.
• Veteran's Administration (VA): 100 percent financing with no Mortgage Insurance premium for eligible borrowers - 600 min. credit score.
• USDA Rural Development Guaranteed Loan: At least until the Census figures come out these loans are still available in Post Falls and other areas with low population density. They offer 100 percent financing with no Mortgage Insurance, but require a minimum credit score of 600. Income limits apply.
• Conventional Loan with Lender Paid Mortgage Insurance: The 5 percent minimum down payment required for this loan must come from the borrower's own funds. It requires a minimum credit score of 680 but is more easily applied to properties in need of minor repairs than an FHA loan.
With the number of foreclosures climbing there are plenty of discounted bargains available still and with interest back to 4.75 percent, maybe it is time to take a look at real estate as an investment as well as a home. Keeping the market moving forward will be good for the economy and these low rates may provide the incentive.
For questions about these or other types of financing or to determine your credit score, contact any lender who is an affiliate member of the Coeur d'Alene Association of Realtors. Your Realtor can provide you a list.
For a safe trip home, call a Realtor. Call your Realtor or visit www.cdarealtors.com to search properties on the Multiple Listing Service or to find a Realtor member who will represent your best interests.
Kim Cooper is a real estate broker, Realtor and the spokesman for the Coeur d'Alene Association of Realtors. Kim and the association invite your feedback and input for this column. You may contact them by writing to the Coeur d'Alene Association of Realtors, 409 W. Neider, Coeur d'Alene, ID 83815 or by calling (208) 667-0664 with your questions or commentary.