Home prices are low but what financing options are left?Friday, November 14, 2008

This is the big question most people have ... they are seeing that prices and rates are very low, but what options are out there to finance homes these days? Surprisingly, despite all the negative press there are still excellent mortgage options available and not just for people with excellent credit and large down payments.

The Federal Housing Administration (FHA) has returned as the primary source for home financing for early/first time home buyers. FHA insures home loans so the sponsor banks have a layer of protection should the loan default. With this added security, the lenders are willing to allow borrowers 97% financing with very low, fixed interest rates that will never adjust. In addition, these FHA insured loans allow the 3% down payment to be gifted to the borrower from a family member or close family friend, and permit the seller to contribute up to 6% of the sales price in the form of closing cost credits.

In addition to FHA, there are many locally sponsored loan programs that allow home buyers easy entry into the marketplace. There are many different programs with various criteria for eligibility, but check with your trusted mortgage professional to explore the options available to you. In this market of low home prices, low interest rates and excellent loan programs, it is a wonderful time to enter the real estate market.