Mortgage Crisis - A Light at the End of the Tunnel
Posted Oct 17, 2007 @ 1:24 pm, Viewed by 698 Visitors, Read 717 Times.
So...the word on the street from my lender (and girlfriend) is that FHA is going to raise their limits to $417k (the minimum for jumbo loans.) Her source is extremely reliable - as in "knows people." They're looking to make this happen by the end of the year.
This is absolutely fantastic, as FHA is one of the best alternatives to sub-prime borrowing. Oftentimes, borrowers with horrible credit scores can be approved for FHA financing, because the programs are credit history driven - not credit score driven. We have access to an FHA product that simply asks for 12 months clean credit, 2 years job history, no BK w/in 3 years, and a few other minor details. Imagine how many buyers interested in spending ~$3500/month on housing can claim that!
The only downside to FHA is that they just did away with down payment assistance - however, they WILL allow 0.75% of the seller credit to count towards closing costs. So...you roll in all closing costs & the buyer only comes out of pocket 2.25% at closing. If you can't come up w/ 2.25%, you con't have any business buying a home that will cost $3500/month!!!
Anyways....looks like a light at the end of the tunnel. I truly believe we'll see more & more over the coming months, and will be swinging again next summer (granted, I don't think the lenders will get 2006 crazy again for a long time.)
This is absolutely fantastic, as FHA is one of the best alternatives to sub-prime borrowing. Oftentimes, borrowers with horrible credit scores can be approved for FHA financing, because the programs are credit history driven - not credit score driven. We have access to an FHA product that simply asks for 12 months clean credit, 2 years job history, no BK w/in 3 years, and a few other minor details. Imagine how many buyers interested in spending ~$3500/month on housing can claim that!
The only downside to FHA is that they just did away with down payment assistance - however, they WILL allow 0.75% of the seller credit to count towards closing costs. So...you roll in all closing costs & the buyer only comes out of pocket 2.25% at closing. If you can't come up w/ 2.25%, you con't have any business buying a home that will cost $3500/month!!!
Anyways....looks like a light at the end of the tunnel. I truly believe we'll see more & more over the coming months, and will be swinging again next summer (granted, I don't think the lenders will get 2006 crazy again for a long time.)
Eric Bramlett is the broker & co-owner of One Source Realty, an Westlake real estate brokerage. Eric has been an active Lake Travis real estate agent since 2003, and an active broker since 2005. Eric specializes in central, west, & downtown Austin, including central Austin condos. Eric considers himself somewhat of an online marketer wannabe, and writes an SEM blog.
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I am an Austin Real Estate broker & Realtor. I am co-owner of One Source Realty, an Austin Texas real estate company, and manage our web marketing.
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