Opening Pandora’s Box of Loans

Since 2008 (and in some cases 2007) we have witnessed the demise of banks and other lending institutions, and watched as the remains of a number of loan programs were scraped off the table. Many buyers found themselves in loans that were suddenly dead-ended: their program was eliminated and they were forced to either start over or accept the end of the road. Suddenly buyers felt the shrinking options in loans, not unlike walking into a Molly Moons to discover that chocolate and vanilla are the only ice cream flavors left. Thus lending criteria tightened as programs slipped into the darkness and the real estate market squeaked along. The motto for the mortgage reps was something like that of the little engine that could: "I think I can I think I can" yet sometimes...they could not. Now we are 6 to 7 years down the road and we're seeing Pandora's Box of Loans opening up!

In just the past couple of months I've heard of more new loan programs than I have in years and many sound, quite simply, too good to be true. In one case, a private investor will purchase a home for a would-be buyer who doesn't have strong enough credit to purchase on their own, and the buyer is able to rent the home from the investor for up to six years, then purchase it at the original purchase price AND reap the benefits of appreciation. Sounds like a dream right? Well it is just one of the many creative loan programs that I've heard from one of the main mortgage brokers I work with, Lori Richmond of Absolute Mortgage.

Lori’s company has been finding all sorts of private lenders and programs to help pretty much any buyer get into a home…and most importantly these loans are safe and don't run the risk of outrageous financial risk. So I asked Lori about her the market and some of her favorite programs, and she says that because many buyers are also sellers (and contingent offers don't fly these days) that she loves the bridge loan.

About the Bridge Loan: In today’s fast-paced, low-inventory real estate market, "move up" buyers face a unique challenge that first time homebuyers don’t have to worry about: how to buy their next home when they have one to sell. Most people don't want to face a reality in which selling a current home is followed by a few months of renting that finally results in the purchase of a new home. Thus if the mother of invention is necessity, there has never been a more necessary time for bridge loans than the present. Our bridge loan program (also known as a swing loan or gap financing) can be used when a move up buyer is waiting on the proceeds from the sale of their home that has not yet closed. When a buyer is caught between two closings, it provides the necessary cash to move forward with a purchase before the sale of a current home.                                                                                                                

I also spoke to another one of my favorite mortgage folks, Evon Phua who is with Wells Fargo, and he discussed some of the amazing programs they are offering as well. Her favorite is that they are offering loans up to $1,000,000 with only 10% down and NO PMI! She also mentioned that Wells Fargo is offering VERY low interest rates right now that can’t be beat!

Finally, there are some quirky new and old programs creeping out of Pandora’s Loan Box now such as new construction loans, down payment assistance loans, new non-conforming loans, which really cover the whole gamut!

 So how are buyers and sellers supposed to take in all these new options? Should we feel nervous about another market crash and bubble or shall we organize a flash mob performance to celebrate? If we keep in mind that the lending world is now highly regulated and that programs are heavily scrutinized before emerging from the box, and consider that lending ratios have tightened to prevent borrowers from over spending on their home, I'd say it is time to celebrate...let the Flash Mob commence!

What Do You Want?

Okay, so we’ve all had those moments where we’re looking at someone and feel ready to just belt it out…WHAT DO YOU WANT? We think we know what they want, we try different words, actions, approaches, but in the end, no progress is made. Well, despite my frustrated capital-letter statement, I’d really like to know, what you want. Is there something you’d like to know more about? There are a number of new programs for financing, finding home values, figuring out what a house payment will look like, or how much you’ll net. So, in a soft and professional tone I am asking, what do you want to know more about?

Here are a few topics that might be of interest to you and if one strikes your fanceeeey (a word that must be said in a drawn out manner), please let me know!

1.     Did you know that there is first time buyer down payment assistance?  If your income is $105,000 or less, there is a killer program out there for you that will help get you into your first home!

2.     There are, once again, loans for new construction AND lot loans, so if you have dreamt of building your own little abode…now you can!

3.     Your home value is higher than it has been in YEARS!  Yep, and if 2-3 years ago you were upside down, well heck you might not be now!

4.     Ok here is a crazy new program and yes, it is real.  So let’s say you have a little financial blip in your history that may have the words; short sale, foreclosure, deed in lieu, bankruptcy or something similar. You have cash saved up and would LOVE to buy a place, but alas, no one will give you a loan.  Well, there is a company that will buy your home for you, let you rent it for up to 6 years and you can then purchase it from them at today’s price!  Plus…if it increases in value..the appreciation is all YOURS, and you can even sell your position.  I know…crazy…but true!

5.     Rates are lower than they were about a year ago so your buying power is higher!

6.     Do you want to know the value of your home and be able to check it monthly or more, well there is a new program for that too!

7.     Let’s say you want to buy a vacation home in…Paris, Barcelona, Texas, yep all the primo places in the world. I can help you with that as well.

8.     Okay here is a fun one, let’s say you inherit some great wine that someone says is worth a pretty penny…I can easily direct you to someone at the Sotheby’s Auction House who’d be more than happy to help you out.

9.     What about the wonderful world of design you ask? Do you like quirky looking homes, creative spaces, kitchen redesigns, tree houses, traditional, international homes? So do I!

Alas the list could go on…and on…so please don’t make me ask you again. Send me your thoughts, your ideas, your dream home questions, and let me know what you want!