Wednesday, June 18, 2014

How much of a down payment do you need? Read below

You Don't Need That Much of a Down Payment

Many consumers are overestimating  the down payment they need in order to purchase a home, according to Christina Boyle, vice president and head of single-family sales at Freddie Mac.
Consumers believe they need 11 percent to 15 percent in order for lenders to approve them for a loan, according to a survey of renters and non-home-owners conducted by Zelman & Associates in New York. Thirty-nine percent say they need at least 15 percent of the purchase price in order to qualify for financing. Only 28 percent of respondents say they would even qualify for a mortgage.
But in reality, home buyers often can qualify for a conforming, conventional mortgage with a down payment of as little as 5 percent — and sometimes even 3 percent — Boyle writes. Between 2009 and 2013, Freddie Mac’s purchases of mortgages with down payments of less than 10 percent more than quadrupled. So far in 2014, more than one in five borrowers who took out conforming, conventional mortgages put down 10 percent or less.
“Letting more consumers know how down payments are determined could bring more qualified borrowers off the sidelines,” Boyle writes. “Depending on their credit history and other factors, many borrowers can expect to make a down payment of about 5 percent or 10 percent.” However, Boyle notes that any borrower who puts down less than 20 percent will be required to buy mortgage insurance.
Boyle says that buyers should also be encouraged by the abundant down-payment assistance programs that exist to help break into home ownership. Every state in the U.S., as well as many cities and counties, offer down-payment assistance programs for qualified borrowers, such as the American Dream Downpayment Initiative and HOME Investment Partnerships Program.
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Monday, June 2, 2014


As home prices have climbed and foreclosures tumbled in recent years, it’s been increasingly difficult for Phoenix-area home investors to score a bargain.
But new research by RealtyTrac today shows that hasn’t necessarily been a deterrent for house flippers.
In fact, RealtyTrac said the Phoenix area had the second-highest number of home flips in the nation between April 2013 and March 2014.
RealtyTrac defines flips as homes that were bought and sold within one year, and for a profit.
Maricopa County had 4,632 flips during the aforementioned period, second only to the New York-New Jersey metro area’s 7,066 flips, the report showed. Keep in mind the Phoenix metro area has a population of roughly 4.4 million, while it's a whopping 20 million in and around New York.
Phoenix-area flippers raked in a 31.42 percent gross profit on average, based on an average purchase price of $172,547 and an average sale price of $226,761.
According to the most recent Arizona State University data, house flippers made up 7 percent of all Valley single-family purchases in March, up slightly from 6 percent a year prior.
Also, the median price of those March investor flips — $172,500 — was up 18.2 percent year-over-year, which was the biggest jump of any transaction type, ASU said.
RealtyTrac did not, however, consider Maricopa County one of the best places for flipping. But that’s not really a bad thing.
One of the criteria for RealtyTrac’s top 14 list of best counties for flipping was that foreclosures increased year-over-year. These counties also had to have unemployment rates below the 6.7 percent March national average and the flips made at least a 30 percent profit on average.
While Maricopa County met the other criteria, it failed to make the list because foreclosures dropped 52 percent year-over-year.
Kristena Hansen covers residential and commercial real estate.