By Kay Wilson-Bolton
President, Ventura County Coastal Assn of REALTORS®
December 15, 2000
Home ownership is a topic that goes wide and deep in every town. Fortunately, opportunities have been created whereby more people can qualify for loans.
For those who have not sold a home for a while, it is not unusual for a seller to be asked to pay buyer’s costs.
There are some communities where the strong-assist loan programs are not viable due to the high median prices. However, in communities where the affordable range is lower, it is common for buyers to seek financial assistance from the sellers in completing the loan.
FHA loan programs are most commonly used in the affordable ranges. The rates are a bit higher, but the down payments range between 3 and 5% and there are fees, which the buyer cannot pay. These are called “non-allowable” costs.
The maximum loan amount for FHA purchases is $219,500. Clearly, this limit is well below the median price range for the County, and opportunities in this range simple do not exist in some communities.
There is a tendency in the marketplace for sellers to resent being asked to pay fees that help their buyer obtain their loan.
The idea behind this assist developed when the Department of Housing became concerned over the amount of fees buyers were being charged by aggressive lenders.
In a good market, sellers can likely find a buyer who does not need assistance with fees. At the same time, it is not uncommon for FHA, VA or CHAFFA buyers to pay premium prices for their home to compensate owners for the additional expense.
It is healthy to remember that these loan programs were designed to open the opportunities of home ownership, which tends to stabilize communities. These buyers are typically purchasing for the first time.
REALTORS® who work with first-time buyers have to work very hard to pull all of the pieces together. There are likely to be co-signers and that means multiple loan applications and duplicate processing.
These REALTORS® have to be specialists in a variety of loan programs and they have to partner with a loan agent who is equally skilled. Their work hours are often late into the evenings gathering people for signatures who are not accessible during the day. Unfortunately, these agents are often criticized for writing offers that require specialized financing and seller-paid costs.
The home has to be in good shape—no torn screens, lead based or peeling paint, no broken windows or uncorrected termite conditions. These items add up to the clean and safe housing that everyone deserves.
In the final analysis, wide varieties of loan programs create wider opportunities for buyers to enjoy and participate in home ownership.
REALTORS® are dedicated to that cause for in the end, buyers and sellers alike are equally served and enjoy the benefits.
When buying or selling your next home, choose a REALTOR®. There is a difference and you can benefit. For more information, contact Randy McCaslin, CEO, Ventura County Coastal Assn of REALTORS® at 981.2100. Our website is http://www.vc-realtors.com