What the Media Hasn’t Told You About the Mortgage Market

By Raymond Stoklosa · March 19th, 2009

San Mateo Mortgage Myths

Time for Order in the Chaos

It’s time to bring order and understanding to the chaos and confusion in today’s mortgage market. The media has contributed greatly to the volume of misinformation and disinformation about the cost and availability of home loans in San Mateo. If you’re a prospective buyer, here are some important facts you deserve to know what your mortgage options are so you can make an informed decision.

Facts About FHA Government Loans

The FHA (Federal Housing Authority) offers several great programs for both home buyers and investors. The following list details several important facts about the FHA loan programs:

The FHA offers mortgage programs with as little as 3.5% down. Yet, media reports are saying home buyers need a minimum 10-20% down payment.
FHA will qualify borrowers with a 580 credit score, sometimes lower. Uninformed reports warn buyers that 700+ FICO scores are required.
If you buy your house in 2009, you will receive an $8,000 tax credit as a first time home buyer. That is a dollar for dollar reduction on the income taxes you owe. Last year’s $7,500 tax credit was described as an interest free loan that may be forgiven if certain conditions were met. The recently passed stimulus package approved as a full $8,000 income tax credit with no repayment.
Your down payment may be gifted by a family member or friend, so your down payment does not have to come directly from your savings.
The seller is allowed to pay up to 6% of the sales price in concessions for loan points, closing costs and “prepaids” such as insurance, HOA dues or property taxes.
It is possible not to use any of your personal money to purchase a San Mateo County home by obtaining an FHA loan with 3.5% down (gifted) and seller paid closing costs.
Fixed rate 30-year FHA loans are available for a little as 5.25% (as of March 19, 2009). Remember interest rates change constantly.
FHA mortgages are assumable, so when you sell your home, the new buyer can take over the low payments which may increase the value of your San Mateo County home substantially should interest rates go up.
Don’t be mislead by “too good to be true” internet loan programs or rate quotes. Meet personally with an experienced and reliable FHA approved lender, like our co-author Chris Williamson at the San Mateo Mortgage Blog, to obtain a good faith estimate and loan approval in writing.

San Mateo Home Buyer’s Golden Rule

It is critical to be approved before you start looking for a home in San Mateo County so you are ready to react to the great values available in today’s market. As we tell our clients, find a loan first, then find a home. In any market, good or bad, the best homes sell first and fastest

Smart Money Moving Into San Mateo Real Estate

This is the time to buy and the smart money is moving back into San Mateo real estate. With interest rates at historic lows, housing values down 10-35%, the 2009 $8,000 tax credit and significantly increased affordability, buying a San Mateo County home is more affordable and offers the best value we’ve seen in decades.

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