August 29, 2007

Two Strategies for Getting Buyers into Homes

The Washington Post had a very good article about how buyers must work around the credit crunch. Basically the lack of trust in the mortgage markets is forcing investors to shun all loans that are no "conforming" loans. Freddie Mac Govt limitations will not allow them to purchase or guarantee a loan above $417.000. Anything above this amount is called a Jumbo Loan and the rates are much higher, if you can get one at all.

Two Strategies for Getting Buyers into Homes

1. In many areas homes selling for under $417,000 after a buyers down payment should be much easier to finance with lower interest rates. Concentrating on buyers for homes around $500,000 may see less deals dissolve

2. If you do have a buyer for homes above $500,00 you should split the loan into one for $417,000, the maximum Freddie Mac will insure. This will get you the lowest rate available as a Govt insured loan. Then take a piggy back loan for the difference at a higher rate. You can then average the two loans for an overall lower rate and provide a litle more safety to the lender because the bulk of the laon can have a Govt backed assurance.

* This is why jumbo rates were rising and a conforming 30-year fixed-rate loan is the lowest it has been since June today.

As of 08/29/07

30-Year Fixed 6.08% 6.25%

15-Year Fixed 5.76% 6.02%

Jumbo 30-Yr Fixed 7.16% 7.27%

Thanks for Reading
Howard Bell for

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