Get your news and stay up-to-date with the Rhino Times Newsletter.

Wednesday, November 14th, 2018

Category: Shorts

Rhino Shorts: Nov. 8, 2018

Sunday, Nov. 11 is Veterans Day, the day that marks the end of World War I – the war to end all wars. It’s also the 100th anniversary of the armistice between the Allies and Germany that ended World War I on the 11th hour of the 11th day of the 11th month of 1918.

Read More

Rhino Shorts: Nov. 1, 2018

It’s not surprising that over 2,000 people of all denominations attended the rally against hate and violence at Temple Emanuel following the shooting in Pittsburgh in which 11 Jews worshipping at the Tree of Life Temple were killed. Greensboro has always been an ecumenical city.

Read More

Rhino Shorts: Oct. 25, 2018

Nebraska’s new marketing tagline, “Honestly, it’s not for everyone,” makes me think that the tagline for Greensboro suggested by Rhino Times County Editor Scott Yost is pretty good. Yost suggested: “Greensboro, close to places...

Read More

Rhino Shorts: Oct. 18, 2018

It’s amazing how a couple of words can effect you. Like most folks, I had been reading about Hurricane Michael aiming straight for Panama City. But then I read that it had turned slightly and went right over Mexico Beach and...

Read More

Rhino Shorts: Oct. 4, 2018

Some of us old-timers remember back when BJ Barnes was not sheriff of Guilford County. The man who was sheriff before Barnes, Sticky Burch, is turning 100 this month and Barnes is having a party for him from 6 to 8:30 p.m. on...

Read More
Loading

No-Cost Loan For VA Borrowers

Veterans eligible for financing backed by Uncle Sam’s good faith and credit can borrow up to $453,100 without paying a dime for a down payment. But how about paying nothing out of pocket for closing costs, either? All without paying a higher-than-normal interest rate?

A nearly no-cost loan is just one of the latest offerings from lenders. There is also a low-down-payment program that offers borrowers a $2,000 Home Depot gift card plus a $1,500 grant to offset some closing costs, and another that allows borrowers to qualify based on their assets as opposed to their incomes.

Even the academics are getting in on the act, with a proposal for a new type of mortgage they believe will help renters with stable incomes, but no savings, purchase their first homes.

The no-cost loans are coming in the new year from NewDay USA, which only writes mortgages backed by the Veterans Administration. Under a new program, the Maryland-based lender will advise borrowers to ask sellers to pay all of their closing costs. If it is successful, past and present servicemen and women won’t need any of their own funds to buy a house.

Closing costs are expensive, so asking a seller to fork over that much could prove to be difficult. Nationally, according to ClosingCorp, a San Diego firm that supplies closing cost data to lenders, the average charge is $5,651 with property taxes and $3,438 without.

But Rob Posner, NewDay’s CEO, points out that in many markets, sellers often pay at least a share of the buyer’s closing fee, so getting them to pay somewhat more shouldn’t be a problem. In return, the seller will be receiving the full asking price for the home.

“We’ll ask for 5 percent (of the purchase price) back,” Posner said in an interview. “But if we only get 4 percent, everybody will still be happy.”

NewDay won’t negotiate on a borrower’s behalf; that’s the real estate agent’s job. But it will educate clients to ask sellers and their agents to pay their closing costs. On the flip side, the seller will have a buyer who is already fully qualified and approved based on credit and income.

“Even if a VA borrower has the cash, they should ask the seller to pay his or her closing costs,” said Posner. “They’re always better off paying full price, getting the concession and keeping their money in the bank.”

Home Depot is not a direct partner in the 3-2-1 Home loan from San Diego-based Guild Mortgage, which operates in 40 states. But with a Guild-donated $2,000 gift card for use at the big box retailer, would-be buyers can more readily consider a home that needs minor repairs or updates, says Guild President Mary Ann McGarry.

Borrowers applying for the 3-2-1 Home mortgage must put 3 percent down, but that can be funded by a gift. They also must have a minimum credit score of 620, complete a homeownership class and have incomes that fall within certain limits, which vary regionally.

With its SmartFunds loan, meanwhile, New Penn Financial of Columbia, Maryland, now allows high-end buyers to qualify for a mortgage based solely on their assets. To qualify, borrowers must have enough eligible assets to cover their total monthly obligations for five years and meet certain reserve requirements.

The loan is available in amounts up to $3 million with a maximum loan-to-value ratio of 90 percent. It is available for primary residences and second homes, but not for non-owner-occupied investment properties. New Penn is licensed in 43 states.

Elsewhere, a brand-new loan idea stems from the fertile minds of two economists who work in the Federal Reserve system. They propose a new fixed-rate mortgage that they maintain could alleviate affordability issues, boost the chance for renters to move into their own homes and still provide “a highly profitable asset” for lenders and investors.

Wayne Passmore and Alexander H. von Hafften say their idea eliminates the three major flaws with today’s 30-year fixed-rate mortgage: large down payments, the slow accumulation of equity and the expense of refinancing that prevents borrowers from taking advantage of falling rates.

Under their proposal, which they call the Fixed-COFI mortgage – COFI stands for cost of funds index – there would be no down payment and the fixed monthly cost would be equal to that of a traditional loan. Additionally, the new loan would not compensate investors for bearing the risk that the borrower would pay off the loan early. Instead, that money would be directed toward lower monthly payments or toward buying costs.

The idea is intriguing, but short on details, and would probably take years to reach fruition. Stay tuned for more updates and innovations.

 

Lew Sichelman has been covering real estate for more than 50 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at lsichelman@aol.com.

 

Read More
Loading

tel:18442605525

e-Edition

Subscribe to the Rhino!

Get The Rhino Delivered to Your Inbox

Stay informed with our headlines and weekend events newsletter from The Rhino Times.


Pin It on Pinterest