QUAD CITIES REAL ESTATE WITH RE/MAX

SERVING THE ENTIRE IOWA AND ILLINOIS QUAD CITIES ............................................................

DAVENPORT - BETTENDORF - ROCK ISLAND - MOLINE AND SURROUNDING COMMUNITIES

TOM & CYNDEE BROWNER - CRS, ABR, GRI

BROKER OWNERS OF RE/MAX BI-STATE - SERVING IOWA & ILLINOIS

1-563-388-0008 Office - 1-563-388-0083 Fax - 1-866-388-0083 Toll Free - 1-563-570-7629 Cell - 355-1616 Home

Have a question? The answer is just a call or e-mail away. Contact us at tom&cyndee@quadcitiesrealestate.com

We are both Accredited Buyers Representatives (Certified Buyer's Agents) we know you want to make the best decision. You want the best home possible for your investment. We know the market, and we work at your pace and not ours. We will guide you through all the forms, take you through the first time buyer programs and/or financing, inspections and explain everything each step of the way. We take care of all the details and problems before they become a problem to you. Call us on our private line at 570-7629 at RE/MAX BI-STATE or Contact us at tom&cyndee@quadcitiesrealestate.com - LOOKING TO SELL? Check out the services an Certified Residential Specialist can mean to you.

CONVENTIONAL - VA- FHA FINANCING - DREAM - IHAP

When you are buying your home, one of the biggest decisions is financing. After all the strategy meetings with your Realtor, the open houses, the showings, offer presentation and final offer agreement, you find yourself at the whim of appraisers, bankers and underwriters.

What are the differences in finance? First there are the terms. Mortgages are generally amortized over 30 years, although there are 20 year and 15 year mortgages also. Then there are fixed rate and adjustable mortgages. Fixed rate are mortgages that remain at a constant interest rate over the period of the loan. Adjustable rate mortgages are mortgages that can change rates over the life of the loan. These changes can take place annually, or after the rate was fixed for 3, 5 or 7 years. Generally the shorter the fixed rate time period, the lower the starting rate. However, in recent years, the difference in rate between the one year arm and the 30 year fixed rate has not been enough difference to take the risk of the adjustable rate. There is one exception, that is the buyer who is going to be transferred within a short period, say 3 or 5 years. For them, the adjustable rate makes a lot of sense. The rate is lower on the adjustable rate loans because the banks are only risking the loss of possible revenues from raising rates for a few years instead of 30 years. Then you have Conventional, Veterans Administration and Federal Housing Authority loans.

Conventional loans are changing rapidly. They can now be 0% down, 3% down, 5% down or any percent above 5% that the buyer wants to invest. The 0% and 3% down require immaculate credit or higher interest rates. The 5% down and above are at the going quoted bank rates . There is private mortgage insurance of .05% of the principle amount that is collected from the buyer monthly with his payments. This is due on all conventional loans of less than 20% down, but the buyer can appeal to have it removed as soon as 20% down loan to value is reached either through property appreciation or principle reduction. Rates can vary from bank or mortgage broker to another lender, so buyers should shop around. The bank will send out an appraiser to verify that the property is worth at least as much as the buyer agreed to pay the seller. Any glaring possible flaws may cause the appraiser to demand an inspection by a competent professional in that field. However, the appraisers do not have a large laundry list to check as in FHA and VA. Conventional loans usually work on 28% of gross income for total home payment, (principle, interest, taxes, insurance, private mortgage insurance) and 36 to 38% of gross income for all long term debt including charge cards, student loans, child support, auto payments, furniture payments, signature notes, loans, home and any other long term debt. All payments are calculated as minimum payment demanded to keep loan active and paid on time.

FHA is a government insured loan. The insurance is .038% that is added to the principle loan amount and another .05% of the principle and original PMI (Private Mortgage Insurance) and the insurance payment must continue until the loan is paid in full. FHA loans have a laundry list for Appraisers. Houses may fail if the grading is inadequate, if there is any loose or peeling paint, major foundation cracks, furnaces or roofs without a 2 year life, and other items. Generally there is nothing for the seller to worry about if the home is in decent condition. If the appraiser flags the property for a violation, the seller merely has to make the repair to allow the transaction to close. These violations are health or value hazards and most sellers would not consider purchasing such a property with such violations, so why should you?

The reasons buyers go FHA rather than conventional are many. Credit problems, or past problems, less money and need to borrow some of their closing cost, less time on the job or the need for higher debt ratios to qualify for the loan. The disadvantage is the government sets the rate. That rate is often 1/8 to a quarter of a percent higher than conventional loans. The private mortgage insurance is higher also. The advantages are the buyer can have a 41% long term debt ratio, may borrow most closing cost and until recently needed less down. Credit does not have to be as good, time on the job less, and because of higher ratios, you the buyer can buy more home.

VA loans are for veterans. The Veteran is charged a VA funding fee which is like Private Mortgage Insurance Policy, and this amount can be added to the principle amount borrowed. The loan is guaranteed by the government, and the veteran can go 0% down, just pay his closing cost. Again the interest rates can lag and be slightly higher than conventional rates. Again the appraiser has a laundry list of things to look for. The debt ratio is higher than conventional, but slightly lower than FHA due to the reserve formula.

For the seller, there is no difference. He sells you his home, cashes out and goes on. If you are afraid that you have a problem with appraisal, you can always have an appraiser preview the home and let you know if you have a fatal defect. The cost is about $50.00 for the preview but will be normally abated if the appraiser is used by you in the purchase of your home. It can be slightly more hassle than conventional, it is the government! Nothing to get overly alarmed about as a seller and there are potential benefits for you the buyer. You may be able to buy now rather than wait, thus avoiding possible housing price and/or interest rate increases.

If you qualify there are first time buyer programs. Dream is a series of classes given at the United Neighbors building on Harrison in Davenport. For taking the four classes they will give you a minimum of $300 and sometimes up to $800 or more to purchase your first home. IHAP (Iowa Housing Authority Program) will match your down payment and certain closing cost up to 5% of the purchase price. There is also a low interest bond program available, and from time to time a Tax rebate program of up to 25% of your interest expense to be written of your federal income tax. First time buyer programs change month to month, each has different qualification requirements. All require that you have not owned a home for at least the last three years.

One of the best things to do after you choose a Realtor is to see a lender and get pre-approved. As a strong buyer that is pre-approved, sellers know that you are not fooling around and they have little risk in dealing with you. In the case of multiple offers, the pre-approved buyer often gets the sellers nod, even if their offer is not as good as another offer.

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