I asked Matt Young of MDC Financial Services Group (www.mattyoungloans.com) to answer a few questions posed by potential real estate buyers. He was kind enough to fill us in. In fact, his answers were so comprehensive that I decided to give you his complete answers and to spread this column over two issues.
Question No. 1 – Bob, in Los Angeles asks: I missed the low interest rates on fixed rate mortgages last year as I just couldn’t cobble together my down payment. But I’ve finally got it together. Am I too late to get a good rate?
Answer: Not by a long-shot. Rates are currently at some of the lowest levels we have seen in two years, and are significantly lower than where they were a year ago. Buyers are generally finding rates right now in the mid- to higher- 3 percent range for most 30-year fixed rate conforming, FHA and VA loans, with the 15-year fixed loans and ARMs even lower than that. Down payment options have relaxed a bit, as well. Fannie Mae and Freddie Mac have re-introduced their 3 percent down payment program for first-time buyers in an attempt to compete for what otherwise would be FHA business. And in response, FHA has lowered the monthly mortgage insurance premiums by .5 percent annually in an attempt to price FHA loans more competitively with Fannie and Freddie. And on top of all of that, we are seeing some rate reductions in private mortgage insurance (Insurance required for buyers without a full 20 percent down payment) for people with higher credit scores. So again, to answer your question, no, you haven’t missed out on anything. It is an excellent time to finance a home. It is also a great time to think about refinancing a home that you might already own
Question No. 2 – Linda and John, prospective first time buyers in Hillcrest ask: We’ve just gotten married and want to buy our first home. A house here is pricey, so we’re thinking condo. Is it just as easy to get a mortgage on a condo and can we get one with only a 10 percent down payment?
Answer: Congratulations on getting married! I am happy for you! Buying a condo is almost the same as buying a detached house. You can buy with as little as 3 percent down payment, just like you can with a house, and the transaction runs very similar in all other aspects but one: the required condo review. All conventional loans require an “HOA cert,” which is a questionnaire completed by the property management company confirming certain details about the building/project. The project must not be involved in litigation, the budget and financial health of the HOA must be strong, and no one entity/person may own more than 10 percent of the units in the project. Generally speaking, if you are buying a condo to live in, then the percentage of units occupied by tenants is not relevant to qualifying for the loan.
For FHA and VA loans, the project must be listed on the “approved list” on the HUD and VA Web sites, respectively. If they do not appear on the list as “approved,” then you cannot get an FHA or VA loan. Additionally, FHA will also require an HOA cert, but they will also require the percentage of units occupied by owners (vs tenants) to be at least 51 percent.
Check in next issue when Matt answers a few more pressing questions from our readers. Thanks, Matt!
