Utah Real Estate & Mortgage Blog

In 1997, when I entered the financing world, I was awed by the availability of 100% financing. It was such a recent development in the mortgage industry that not many lenders were making it available. However, as time went on and competition became fierce, more and more banks and lenders made 100% financing available to the masses.

Not that long ago, 100% financing was available on an investment property with no income verification. Can you believe that? It amazed me how easy money was to obtain AND how little was needed to risk. Banks loosened their requirements to the point that not even work verification was needed. However, the bubble burst on such loans and many banks and financing institutions withdrew all of their 100% financing options. As many of you know, many of these banks and mortgage companies have closed their doors.

FHA, our government backed loan, followed suit and withdrew the availability of “seller assisted” down payment. This means that using the existing equity of a home for the required 3% down payment is not an option anymore. They even changed their required down payment from 3% to 3.5% effective January 1st 2009. This means that a borrower of an FHA loan will need more money out of pocket. This is good in many ways as it lowers the high risk these loans have fallen subject to.

Is there still a loan out there for those of us who need to buy and don’t have a down payment? YES, here is a list of 100% loans available today:

• FHA: This 97% LTV (Loan To Value) government backed loan will allow a borrower to finance up to 100% CLTV (Combined Loan To Value) of the purchase price IF the borrower can obtain the remaining 3% from another source. This is a great loan and has incredible rates. It’s 100% for those that can obtain a gift or a second loan from family, employer, church, etc. They allow energy-efficient upgrades above the sales price.
• Utah Housing: This is an FHA hybrid that allows first time home buyers to purchase a home in Utah using up to 103% of the purchase price. It’s technically an FHA loan up to the 97% and a concurrent 2nd mortgage is added for the remainder. This loan is incredible, it allows a qualifying borrower (some restrictions apply) to get into a home with no down payment.
• Conventional 100%: This is a conventional type loan that allows borrowers access to 100% financing using a combination of a 1st and 2nd mortgage. This loan is a last resort option for those not qualifying for other 100% loans because the rates are a bit higher.
• USDA Rural Housing: This is a government loan used to develop rural areas of the community (Eagle Mountain, Saratoga Springs, etc.) and allows 100% financing with no mortgage insurance. Qualifying is easier, and with no mortgage insurance the payment stays low.
• VA: This loan is reserved for veterans and active duty military. Borrowers have access to 100% financing and no mortgage insurance. This is the best loan available today. The rates are low and qualifying is more generous. They even allow for energy-efficient upgrades over the sales price!

As you can see financing options are still available with little to no money down. Please call us at 801-266-2466 for a friendly no-obligation quote. We can quote you rates and fees right over the phone or have them sent directly to your e-mail.

Buying a short-sale or a foreclosed home has its drawbacks, but it can also present a wonderful opportunity for a buyer. One of the most frequent questions that I get from buyers is “What is the difference between a short-sale and a foreclosure?” Let me explain…

Short Sales
A short-sale is when a lender agrees to take less money than is owed on a mortgage in order to facilitate the purchase of the property, usually to prevent the property from going into foreclosure. Typically a seller has incurred some type of financial hardship and is unable to continue making mortgage payments. The home is listed on the market to attract potential buyers usually at an estimated value. The listed price is usually not approved by the lender and buyers should be aware the actual sales price may be higher or lower depending on what the bank is willing to accept. Short-sales take anywhere from 3-8 months from listing to closing so if you are in a hurry to find a home, don’t bother.

Foreclosures
A foreclosure is a process in which the lender (aka bank) takes back the home from the borrower. This process happens after the short-sale period or to be more specific, after the home has been given back to the bank. When you are just dealing with the bank, the process typically is much faster and you can close within a matter of weeks!

Not every short-sale or foreclosure will be a great deal. When you are dealing with these types or properties you really need to do your due diligence and have them inspected by professionals prior to closing. These homes are in distress and may need some major improvements to make them habitable.

The Real Estate directory on zoomUTAH.com does include short-sale and foreclosure listings so you can begin your search there. If you are interested in learning more or would like me to assist you in your search for a distressed property, call me at 801-999-8005. If you request, I can also email you short-sale and foreclosure listings as they hit the market through our Listing Alert service. If you are a seller and facing a hardship, contact me today to discuss how to avoid foreclosure, and alternatives for dealing with lenders.