According to multitudinous reports, the Housing market has recovered. There has definitely been a significant amount of activity over the past several years. Until recently, there have been two primary issues that have kept buyers from entering the Real Estate market in significant numbers. The first was the sharp rise in home values, causing the prices to rise rapidly. This has actually turned out to be a good thing and points to a more stable market in the future. The second issue was the lack of affordable and accessible lending.
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The State of the Mortgage Industry
As banks continue to recover from the financial crisis of the previous decade, they have been forced to adppt more stringent lending policies. A significant portion of the financial crisis and the collapse of the real estate market was due to extremely relaxed lending practices. This resulted in masses of people assuming home loans that they could not afford. As the bubble continued to expand the industry became more and more unstable. As more loans went into default, the bubble burst.
This ultimately resulted in extremely strict and restricted lending practices in which buyers found it very difficult to qualify for a conventional loan. As the Nevada economy continues to recover, banks are being forced to re-evaluate their mortgage lending criteria in order to ensure that they will be able to continue to generate revenue and profits. Some of their alternative lending opportunities are drying up and they are being forced to reconsider the home buyer.
This is good news for the home buyer. Another bit of good news is the fact that there are a number of mortgages in which the buyer does not have come up with a huge down payment.
No Down Payment VA Loan
There are loans that are guaranteed by Veteran Affairs — formerly known as the Veterans Administration. These types of loans are designed for veterans who qualify for VA home loans. These loans do not require any money down to obtain loan approval. These loans actually originate through private lenders, but they are guaranteed by the VA. Another great benefit with this type of loan is the fact that there are no mortgage insurance requirements. The borrower is required to pay what is known as a funding fee, but the fee can be rolled into the loan amount.
The funding fee for VA loans varies, depending on certain criteria such as whether the veteran in question served in the regular military or the reserves, and whether it is the veteran’s first VA loan or a subsequent one. The funding fee can be anywhere from 2.15 percent to 3.3 percent.
Navy Federal Loan
The Navy Federal Credit Union, which is the nation’s largest credit union in memberships and assets, offers 100 percent home financing to all of its qualified members for buying homes that will be used as a primary residence. The eligibility is restricted to members of the military, civilian employees of the U.S. Department of Defense, the military and their direct family members.
Department of Agriculture Loans
The Department of Agriculture has what is known as the Rural Development mortgage guarantee program. This program is so popular that it has consistently run out of money before the end of the fiscal year. This means that the timing of the homebuyer’s application is vital. Many mortgage consultants list this program as their favorite to recommend to many of their clients.
Despite the name of the program, the eligibility of this program is not confined to rural farmland. Those who may be interested should contact a mortgage broker or specialist to find out more about these types of loans.
Federal Housing Administration
The previous listed options are limited to certain groups, meaning that only the select group that qualifies are eligible; however, the Federal Housing Administration offers a low down payment option to the general public. With a minimum down payment of 3.5 percent, a homebuyer can receive a guaranteed loan.
In today’s market, about 15 percent of all mortgages are FHA insured loans. This is up by more than 12 percent from the market share that the FHA had during the housing boom. They have increased their market share due to the fact that many other low down payment options were eliminated when the housing bubble burst.
There are a number of other creative ways for home buyers to receive financing without having to produce large down payments. The problem is that many of these options are not commonly known by the average person. In most cases it is wise to contact a mortgage broker or consultant to help find the best mortgage program for a particular situation.
Working with the right mortgage expert will help alleviate a significant amount of the stress that is associated with finding the ideal lending situation.
