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You also talk about this graph you put together, Dan thanks for this, talks about the month of November was 25% over the previous year.
Obviously it has gone down and it looks like it then has gone back up and so once we finish selling off this inventory there is a good chance that we are going to be finding or hitting the bottom.
I think just in that region of $150,000 to $200,000 region that prices have really stabilized at this point they may go down a little bit more but I think for the most part because that is where the financing is right now with the FHA and the conforming loan limits anybody is that price range can still get a loan.
If you are looking to buy something over 4,5,$600,000 you are going to have a lot more trouble just because the financing is not available.
Well the financing is a lot more difficult over the 417 loan amount number.
Luckily Velocity Financial still has some of the interim small jumbo financing available still with decent rates and the larger jumbos there is still financing available but nothing like this median home price 275 and below.
Well and I think what that goes back to specifically with the FHAs because, what percentage of the closing costs can be contributed by a seller on an FHA loan? It is pretty high right? It is , with the FHA financing, the Federal Housing Administration has had a standing rule for quite some time that the seller can contribute up to 6% of the sales price towards the closing costs.
Realistically on a 250 purchase price you are not going to need 6% towards closing costs so in you would want to use that money to lower the price or buy down the interest rate, or any number of different things.
So in a situation like that you could have the seller come in pay all of your closing costs for you, you can keep that money in the bank, you could use it to fix up the house, you can do whatever, and all you would be responsible for is a small down payment.
That’s correct, 3% of the sale price down you can have the seller pay the property taxes up to a year in advance, the home owner’s insurance the home owner’s association fees, they are called prepaid or escrows.
They can pay all of that What is the loan limit right now for FHA loan? Currently the FHA loan limit is $346,250 its kind of an odd number that does go away at the end of this month, December.
However if you are lucky enough to have a home picked out in that price range you want to try to get it done by the end of the year, so long as we are able to get it underwritten in house our firm will still be able to close on that with a higher loan limit after the first of the year.
The new limit is probably going to be your next question so as of January 1 in Maricopa County it is $271,000.
Even at 271 with the scenario I was talking about Before, within Maricopa County 70-80% of the home sales still would have fit within that 271 limit.
Yes, one thing that I do want to point out is that when the Housing and Recovery Act of 2008 expires that huge loan limit of 346 expires, that was the deal, they are going to try to get it extended but we can not plan on that necessarily but 10% of the properties in Maricopa County fit into that 271 to 346 range.
Now I know the answer to this but you do not happen to be qualified to do FHA loans are you? Yes we are Velocity Financial is FHA approved we are one of less than 15% of the lending institutions in Arizona that can do FHA financing not only for purchases but for refinancing as well.
Which I think is some of the stuff we want to talk about as well because some of the old rules for refinancing simply do not apply anymore.
Brett did you have anything to add? Yes, two things stood out to me in that discussion and one of the things was the bigger picture concept in my mind that’s the way it works.
It is hw I am wired I start with that then I narrow my way down to the specific scenario given a client’s circumstance.
What that big picture represented to me and one of the things that you pointed out with your charting Dan and the work that you have done is the year over year home sales is shrinking the inventory that exists in Maricopa County and when that inventory shrinks we all know that new homes and building had pretty much dried up so allowing that inventory to shrink is a very positive thing in terms of stabilizing, or placing at a bottom, or putting the housing market back on a path of growth long-term, and so that was one of the things that stood out to me.
The other thing is just how important this 3% that you are describing is, and in your example Michael, with the buyer coming in with probably what is perceived by a lot of folks as a significant amount of money.
They think that they have to come up with tens of thousands of dollars to make a purchase and in reality that is not the case.
No, not even $10,000 in these examples and it can be all gift.
We will be back in just a few minutes you are listening to the velocity of money on KFNX 1100AM to get more information call (480)Velocity and we will be right back after the break.
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