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Old 01-29-2008, 04:04 PM
 
Location: Sonoran Desert
15,874 posts, read 18,656,454 times
Reputation: 8224
Quote:
Originally Posted by Gretchen B View Post
Yes, the designation as a "declining market" is adding insult to injury, for sure.

Question for TimtheGuy . . . So what about purchasing a home for 5% below comps. If the appraisal supports that, would this "cover" the additional 5% down that Fannie Mae/Freddie Mac are requiring?
The percentage is on LTV. Basically you can have 5% less LTV for any of their loans products in a declining market. Applies to equity products as well. Their announcement also required 3 comps to support an appraisal. I found out all this on a refi application. Kind of muddies the mortgage waters.

Last edited by Ponderosa; 01-29-2008 at 04:16 PM..
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Old 01-29-2008, 04:05 PM
 
Location: Montana
2,203 posts, read 5,850,344 times
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Quote:
Originally Posted by Ponderosa View Post
The percentage is on LTV. Basically you have to have 5% more LTV for any of their loans products in a declining market.
So if the Value was 5% higher than the purchase price, then that should cover it. ???
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Old 01-29-2008, 04:14 PM
 
Location: Montana
2,203 posts, read 5,850,344 times
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Quote:
Originally Posted by Ponderosa View Post
The percentage is on LTV. Basically you must have 5% less LTV for any of their loans products in a declining market. Applies to equity products as well. Their announcement also required 3 comps to support an appraisal. I found out all this on a refi application.
Not only 3 sold comps, but now they're wanting at least one or two comps that are active. I'm assuming the appraisers can't use a short sale listing as one of the active listings, since those list prices are just an arbitrary price subject to bank approval; and sometimes agents will put a really low asking price out there just to get some action, knowing they've got to start somewhere with the bank. Problem is, it gives buyers a false sense of what they can actually buy a house for.
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Old 01-29-2008, 04:20 PM
 
Location: Sonoran Desert
15,874 posts, read 18,656,454 times
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Quote:
Originally Posted by Gretchen B View Post
So if the Value was 5% higher than the purchase price, then that should cover it. ???
As a zero down loan, yes, if I follow your question.

BTW, none of this applies to VA or FHA as of yet.
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Old 01-29-2008, 04:52 PM
 
59 posts, read 153,480 times
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Quote:
Originally Posted by Gretchen B View Post
So if the Value was 5% higher than the purchase price, then that should cover it. ???
No. As far as the lender is concerned the value of the house is what you paid for it. Even if you bought the biggest house in Paradise Valley for 100k you still need to come up with whatever the loan to value ration they require.
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Old 01-29-2008, 06:59 PM
 
Location: Montana
2,203 posts, read 5,850,344 times
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Quote:
Originally Posted by hootie View Post
No. As far as the lender is concerned the value of the house is what you paid for it. Even if you bought the biggest house in Paradise Valley for 100k you still need to come up with whatever the loan to value ration they require.
Hmmm. Well, if the house appraised lower than the contract price, then the lender would definitely lower the value on the house and expect the buyer to come up with the difference. (More likely, though, the buyer would renegotiate the price with the seller and expect the seller to cover the difference.) But still, the lender would only loan based on that appraisal. So it seems weird that if the appraisal was higher than the contract price that the appraised value would not be the "value" the lender would use. I'm really curious about this. I was aware of the extra 5% down because of the "declining market" status, but this is new to most of us. I'll have to check with one of my mortgage experts tomorrow and get the "low-down" on the value question.

Well, this new mortgage twist should certainly jump-start the housing market, huh.
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Old 01-29-2008, 07:06 PM
 
Location: Mesa, Az
21,157 posts, read 25,104,990 times
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And; I strongly suspect the housing market here will continue to decline another 15-20% in real terms before things turn around.

Some areas will ride it out whereas other enclaves will continue to implode.

I am fast coming to the conclusion that Queen Creek and Maricopa are close to rock bottom now and may actually start recovering first.

The more 'in town' areas have further to fall before that point.
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Old 01-29-2008, 08:30 PM
 
Location: Casa Grande, AZ (May 08)
1,126 posts, read 1,727,576 times
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So, Im reading over in the Real Estate Forum also, but I agree with the last statement. I am about to buy my first home in over 20 years in Maricopa or Casa Grande. My credit score is a little better than the original poster here (680-700) and I think that will make the difference, but I am also short on the down payment side. However, FHA will allow a 3% down payment, which can be a gift from a family member or anyone else for that matter, all closing costs can be rolled into the loan, and they dont go weigh higher credit scores quite as much as the conventional lenders do.

Also, refinancing is much easier with an FHA loan, there are no income limits, and the Debt ratios are much less (31% and 43% instead of 28% and 36% that conventional loans use). You can still get the same interest rate you always would get based on your risk.

There are costs... They do require that extra 1.5% up front for Mortgage insurance, and will require that ongoing .5% per month mortgage insurance. But the 1.5% can be rolled into the loan also and is tax deductible the year it is paid. The process is slightly more involved and cumbersome, but from everything I understand its not that bad, and lenders like FHA loans alot because they are insured!

Finally, as someone stated before....check into down payment assistance programs. Depending on where you live there are different ones...in Phx and Maricopa county there is the "home in 5" program, and in the rest of the state is the "Homes for Arizonans" program. There are limits on incomes for these, but I make 50K a year and I qualified so am going through the process now.

SO, for me its just a choice between bigger house in Maricopa without as many amenities and lots of empty houses around for awhile, or Casa Grande with more infrastructure but slightly more expensive? Drive isnt issue as I ll be working from home so........

Ooooops....just reread the first post again and saw her credit was 750 not 650.....!!! Sorry, but she should still go FHA if low on Down Payment funds!

Last edited by sh9730; 01-29-2008 at 10:05 PM.. Reason: Correction Added
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Old 01-29-2008, 10:27 PM
 
59 posts, read 153,480 times
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I'm a dude.
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Old 01-29-2008, 11:08 PM
 
104 posts, read 199,476 times
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I can still go 5% down from a loan broker but going through one of the Big Boys got me the 10% down requirement as well.

And we have stellar credit and i am pulling a very very good salary with no lingering debt aside from a 20k car note.

If you are okay going to a loan broker you might to give one a call and see about 5% down. Get a good referral.

This 10% thing is just the banks overreacting to their own mistake. There is a hard lesson that had to be relearned from this subprime crap... owning a house is not a right.
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