Many Affordable Loan Options Still Available

Dear Sue,

I read your article last week with great interest and amusement. How do you expect anyone to buy “locally” if you can’t even get a mortgage loan today?

Are you suggesting that everyone with cash go out and buy a house? What about the rest of us who have to borrow?

Skeptical Skip

Dear Skip

I am glad you were entertained!

I called Ryan Rivera of Goldmine Financial and asked him if there were any loans available. He laughed and said that the news media was grossly exaggerating the tight money supply. As a matter of fact he said that a client was due in his office to fill out a loan application in a few minutes.

So, in the short time he had, I asked him if he was having trouble getting money to lend. I also asked him how much the current minimum down payment required was and if interest rates were high.

Ryan said there was plenty of money and he had no trouble with its availability. There are several loan programs available. He told me that it was very simple to get a loan. There is only one caveat. The borrower must qualify. He had loans that required as little as 3% down and the money could be borrowed or gifted. Interest rates have been fluctuating between 5 7/8 to 6.5%. As we speak they are 6.25%.

A conventional loan requires a minimum of 20% down. Because the larger down payment creates a lower loan to value ratio, it does not require mortgage insurance (which is equal to .55 percent of the loan amount.) Conventional loans also have another advantage because they are quicker to process. The Fannie Mae (yes, she’s still alive and well) approved automated desktop approval and funding system makes the process quicker.

“Half of my clients are going FHA,” Ryan explained. “If you are buying a home as your residence, FHA requires a minimum of 3% down.” If one is buying an investment property through FHA a 10% down payment is required.

Those funds can be from a credit card, a loan or gift from family, friends or even your church. FHA does not want the funds to come from anyone involved in the sale of the property being financed.

FHA has recently raised its local borrowing limits to $580,000. While mortgage insurance is required for an FHA loan, it is relatively inexpensive.

The low down payment allows one to buy a home or investment property without having to use very much of their own money. All FHA loans are federally insured, meaning that the federal government covers any defaults. FHA has several loan programs including “rehab loans.” These loans have been coming in handy for buyers of foreclosed properties that have been vandalized and/or stripped. FHA also has “energy loans” that will finance insulation, dual pane windows, energy efficient appliances including central heating and air conditioning.

Skip, if you are interested in purchasing in today’s incredibly affordable market I would suggest calling your local lender, it’s a Matter of Good Home $$s and Sense.