If you want to sell more homes, you NEED to understand mortgage financing and the available options.  Besides being a MN real estate broker and selling homes for the past 23 years, I've owned a mortgage brokerage since 1995.  I run the mortgage business-Venture Development-with my wife.

Because we are involved daily with the mortgage business, we are able to learn about mortgage programs and then educate buyers and seller on how they work.  We are able to recognize more opportunities to get deals done because we know how the mortgage financing options fit into the puzzle.  My challenge to you, is to locate a few good mortgage providers-lenders or brokers-and have them teach you about ratios, down payment options, arms, level ratings, credit scores, first time buyer programs, and investment property financing options.  The more you learn, the more value you will provide to your buyers and sellers.  We all can fill out the listing forms, being the best advisor you can be is what separates one Realtor from the next.    

Let me tell you about what I believe will save the real estate industry and bring buyers back into the market.  Are you ready?  Here it is " Down Payment Assistance."  Did you know that FHA allows a non profit organization to give a gift (called down payment assistance) to a buyer that can be used for the down payment and closing costs? Why is this HUGE?  Your seller can give a give to Nehemiah(a down payment assistance provider) or similar approved 501c3 charity.  The buyer of the seller's home can apply for a gift from the down payment assistance provider and use this to buy the home.  How many sellers keep reducing the price of their home in order to get it to sell?  Does this really help-at least today? Often it isn't the price-it's the terms.  Buyer's today may be able to make the payment but can't come up with the required downpayment or closing costs.  The down payment assistance programs solve this problem and allow a cash poor but otherwise qualified buyer to purchase the home.

The Twin Cities metro area has been designated a decling marketplace.  This means Fannie Mae and Freddie Mac-the two purchasers of the majority of conventional loan products-are requiring buyers to put 5% down.  This will make the housing crisis worse and last longer by eliminating otherwise qualified borrowers.  FHA loans are sold to Ginnie Mae, and as of this writing, there is no adjustment for a declining marketplace.  Now that you know about FHA and the possibility of a downpayment assistance option, you can overcome the 5% requirement.

Many mortgage brokers are not FHA approved because HUD requires audited financial statements and a net worth in the company of 63K.  Not everyone can meet that threshold.  So, if your favorite mortgage broker isn't FHA approved, you will need to find a broker or bank that is.  It is estimated that FHA will finance 1/3 of the loans next year.  If you aren't educating your buyers on a way for them to buy a home, I can guarantee you that another agent or lender will. 

One of the oldest down payment assistance programs is called Nehemiah.  Their website is http://www.getdownpayment.com  You can go there to get the specifics.  In addition, you can get a listing presentation and order free sign riders once you register at their site.  You can also list your home as a participating home on their website for FREE. 

When you are in competition for a listing, how many other agents are going to explain this program as a unique way to sell their home?  My guess is not many-at least at this time.  Grab this competitive edge while you can. 

Terrific Tips for Minnesota First Time Home Buyers and first time buyers everywhere

Are you currently thinking about buying your first house? Real estate is a fantastic investment. Don't let the media hype fool you: low interest rates combined with reduced home prices make this an excellent economic environment for first-time home buyers. Here are a few tips to help you along the way.

The first and most important thing to remember is to buy only as much house as you can afford. Just because a lot of young people in your area are buying gigantic homes with acres of property and four car garages doesn't necessarily mean they could afford their mortgages.  All you have to do is look at the foreclosures situation to see examples of  people who purchased more than they should have.

Adjustable rate mortgages, or ARMs, have been exceedingly popular in the last ten years. When the housing market was on fire a few years ago, banks were giving out loans to practically anyone, regardless of their income or credit.

ARMs made it possible for people to buy enormous homes even though they didn't make a lot of money because they start out with low payments and then balloon as time passes. This is a big contributing factor to the current housing crisis.  More and more people who had adjustable rate mortgage loans are defaulting as their homes go into foreclosure.  I tell you this not to discourage you from looking at ARMS, but to help you understand the risks.  In fact, FHA offers a great ARM that have 1% annual caps and a lifetime cap of 5%.  This will beat any conventional ARM offered.

Because the banks are feeling the crunch, credit standards are being raised. If you are uncertain of your credit score, it is wise to check online with a company like TransUnion or Experian to find out where you stand before you apply for a home loan. Clear up any financial loose ends and get your score looking the best it can before you start the home loan process. You'll get a better interest rate and have more leverage with lenders.  It may even allow you to get 100% financing.  Yes, we still can do 100% financing and you don't have to be a veteran.

As far as your down payment is concerned, you may want to come up with as much money as you possibly can. Why, you ask? PMI, or principal mortgage insurance, will add to your monthly payment until you've paid for twenty percent of your home. Even if you can't get that much money together, and most first time home buyers simply can't, try your best if you want to avoid PMI.  As an added bonus, a nice down payment improves your chances of getting your loan in the first place.The good news is that your PMI might be deductible.  You have to have an adjusted gross income of under 100K to deduct it all otherwise it will phase out when it reaches 110K.

You will pay half a percent to one and half percent of your loan value every year until it reaches approximately 75-80% of either the initial loan balance or of the market value.  The rules are different for FHA and conventional loans and vary slightly.  Generally,lenders won't tell you that you're eligible to get your PMI dropped from your payment. So, be sure to keep tabs on your remaining loan balance and contact your lender to get the PMI dropped. It will save you quite a bit of money in the long run.