Seller-Carried 2nd Mortgages; Problem With Huge Lots; 5 Misleading Rate Quote Tricks; When FHA Deals Are Better Than Fannie’s; #1 Reason America Will
I was rummaging through some past blogs today while looking for a response to a question from an agent, and I found several that were worth repeating.
1. Seller-Carried 2nd Mortgages: Do’s and Don’ts
Summary: A down payment is still required, e.g., seller can’t carry 20% behind an 80% first mortgage; Terms must be “reasonable,” e.g., not zero percent interest;” Payments counted in debt ratios no matter what.
I like this blog because we tend to see more seller-carried 2nd mortgage offers when rates are higher, when markets are softer, and/or when sellers have a lot of equity and are not in need of cash.
2. When Huge Lots Kill Transactions – What Are the Rules?
We have a purchase right now with a 900-square-foot house on a 5-acre lot. But fortunately, the lot is steeply sloped so the “effective lot size” is only about an acre. This saved our deal because it will ensure that the “land-to-value” ratio is reasonable.
When land-to-value ratios are too high, lenders won’t finance the property.
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3. 5 Misleading Rate Quote Tricks!
This problem is particularly bad right now, when transaction volumes are low and lenders are desperate, especially the online guys. Borrowers come to us all the time with ridiculously low rate quotes that they want us to match, but when we dig into their “LE” or Loan Estimate we ALWAYS find enormous fees that the loan officer wasn’t fully explaining. A borrower with a $650,000 loan came to us last week, in fact, with a rate that was 1/2% lower than our rate quote, but it turned out there were $23,000 of fees buried in the quote. Our quote was “no points,” but if we had charged $23,000 our rate would have been over 1% lower.
4. FHA Loans Sometimes Much Better Than Fannie/Freddie Loans
In this blog, I remind readers that FHA loans are often much better than Fannie and Freddie loans (even with FHA MI) for borrowers with lower credit scores who are putting down 10% or less.
5. #1 Reason America Will Always Reign Supreme
This blog was just a note of optimism in the face of a lot of doom and gloom. The #1 reason is something Peter Zeihan illuminated in his famous book “The Accidental Superpower,” but numerous other pundits often bring it up as well. It is something no other country has or can have too.