PROView - March 2008 - (Page 8)

Finance How Your Customers Can Find Home Loans By Robert Freedman It’s true that the days when lenders were tripping over one another to hand 100-percent loan-to-value (LTV) loans to even credit-risky borrowers are over. But if your customers are reasonable credit risks, options remain for them in today’s tighter lending climate. I spoke with two lenders on the front lines to hear what borrowers can expect. Here are highlights of what they had to say: 1. 95 percent LTV is the best most borrowers will get. “Lenders want some skin in the game today,” says Greg Kundinger, president of HomeFirst Mortgage in Alexandria, Va. of PMI. Now that cost has less of a bite. 3. Piggyback loans are still available, but the choices are limited. Many lenders offering second loans have left that sector and those that remain want to see higher credit scores among applicants. “If your credit score is below 680 today, you won’t be able to get more than 90 percent financing,” says Kundinger. And to get even that high LTV, “you pay the price for it” in increased points, he says. 4. FHA is genuinely back. Thanks to internal reforms Although it’s still possible FHA: “expect more business to flow to speed processing and the to put together a first and a second loan to cover 100 to federally backed loans this year collapse of its competition from subprime loan products, percent of the purchase cost, now that the federal government, FHA saw an almost 60 percent lenders’ guidelines are in a increase in new originations in constant state of flux, so a as part of the economic stimulus 2007, NAR data show. You can 100-percent deal that would package, has increased the expect even more business work one week might not be to flow to federally backed accepted the next week, says program’s loan limits ” loans this year now that the Michael D’Alonzo, president of federal government, as part Creative Mortgage Group in of the economic stimulus package, has increased the Willow Grove, Pa. Thus, if your customers can’t risk that program’s loan limits to a maximum $729,750 from kind of uncertainty, they’ll have to come up with at least 5 percent down. 2. Tax-law changes make private mortgage insurance more attractive. The federal government has permitted home owners to deduct private mortgage insurance (PMI) premiums from their federal income taxes since 2006. That authority was due to expire after just a year but the government last year enacted a three-year extension. That gives a shot in the arm to borrowers who would have trouble putting together the kind of piggyback loan package so popular during the housing boom as a way to avoid the cost 8 PINELLAS REALTOR® ORGANIZATION March 2008 http://www.forclosuresaveyourhome.com http://www.foreclosuresaveyourhome.com http://www.foreclosuresaveyourhome.com

Table of Contents Feed for the Digital Edition of PROView - March 2008

PROView - March 2008 Contents Chairman's Notes - A Strong Force, Working on Your Behalf Feature - Going Back to Basics: Are You Generating Leads ProActive - Amendment 1 Passes: What Now? What's Next? Finance - How Your Customers Can Find Home Loans Brokerage Design - Reject the Blindfold; Enlightenment is the Way to Go Marketplace Analysis - The Opportunity Market Home Sales Report MLS Update - Changes to Rules & Regulations Now in Effect MLS Mind Your Manners Education - Don't Let Time Run Out: Complete Mandatory Code of Ethics Training Now Calendar of Events & Programs PROBiz - FREE Real Estate Websites! New PRO Members

PROView - March 2008

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