Texas Home Loan Blog: The Death of 100% Financing.... The End is Near!!

Indeed.  But look for the MIP to go up sooner or later. 

I cant believe it's still happening :)

Tom - Glad this was featured.  FHA looks sexy but VA Loans look even sexier for those who qualify.

Thanks Tom for the heads up on this.

100% loans will always be needed to get people in homes. That helps drive the real estate market and the economy.

Cheers, KIM.

I believe PMI is the main reason we have the mortgage crisis we have. If banks did not have this crutch available to them they would have used better practices and that would have curtailed the foreclosure issues.

you mean you need money to buy a house.  What is this world coming to.  Just kidding, I think 100% loans are over.

How about a 680 to get over 90% and strick limitations with LPMI. This March, thousands of potential home owners will no longer qualify.

Sell, Lock, Underwrite NOW

Happy Selling!
Tony Grego - Indiana Mortgage Broker

Just a footnote to say that in Canada the 100% program is going strong and getting better without any of the ramifications that the Americans have experienced as a result of the sub-prime crunch.

For more information: 100% Mortgage Program just got better.....fully discounted rates!

Sorry about the blatant advert but I think those that can qualify should know we are not experiencing the same issues here in Canada.

Regards, DAVE

Tom... this is awesome... meaning, thanks for sharing this. I already knew that they would clamp down. I guess we'll see more MI companies follow.

In regards to Lenn's statement... sure, FHA will have risk based pricing, but the rate would still be cheaper than the conventional MI rates and the actual interest rates.

Overall, I partially agree with Team DiMuria's statement... not total blame, but partial blame. I agree, I am glad that this was featured, because I mentioned that we would see changes and said this 3 months ago.

Thanks for sharing the info.  I will keep my eye out for these changes.

I have to agree with the majority here....it's about time things got cleaned up as far as loans are concerned.  There are still a multitude of programs for folks, it's not unreasonable to expect that buyers come up with some down payment.....after all, you need two months' payments to get a rental, why should it be any less for homeownership?

This has been a long time coming!

 

Stacey McVey

Real Living Realty One

Hudson OHIO

Thanks for this update. It does not bode well for my area where very few people can come up with a down payment. I'm not feeling too bad for the PMI companies though.

FHA will look for like the new scenario.  It's always been good, but now it looks as if it'll be the main solution.

Tom good info.  

It won't be bad for people to have to put money down on a home. When a person can buy a home with less money than it takes to move into an apartment something needs to be changed. But watch for the FHA Reform and the 3% participation get reduced to 1.50% VA is still the best product out there and thats why not everyone can get it.

Tom thanks for sharing.

Have a great day!

Buyers shoul put some money into the transaction. Thanks for the information.

I have a VA client right now and the loan is going great.

thanks for letting me know about the end of 100%, yikes there goes a ton of my business, hopefully they can invent some new loans that can help put everything back in prespective

This is great info. We heard a couple of weeks ago that this was coming and here it is. FHA is definitely a good product and I think that if you or your company don't offer FHA, you are definitely missing out! Jeff Belonger did a wonderful comparison of FHA vs. Conventional a few days ago and I would highly recommend checking it out!

I was wondering when the MI companies were going to come out with this.  The reason why half the programs are gone now is becasue they cut thier guidelines!  I'm glad to see them standing up! 

Steve Fishman CRMS: YOU ARE RIGHT!!!!! you can buy a house for less than it would take to rent an apartment (high five!)

That will be  a problem for some buyers, that do not have the money to put down.....possibly they should make the requirements more stringent..but do away with it all together...

I understand that PMI company may be reducing LTV to 97% but what about the others?  I'm sure some MI companies suffered bigger losses than others and may be in a position to keep insuring 100%LTV products.

Geez.... A gold star = more work for me....

Lenn: This may only be the start of it. I expected MI pricing to go up, but this was a bit of a surprise.

Scott: I am never too shocked in this industry.

Jason: I love VA loans too!!

Kim: This is certainly going to affect many borrowers.

Team Dimuria: Yes, banks shot themselves in the foot. Maybe this is a kneejerk reaction and will correct itself soon.

Jeff: Over? No! Not for good. We still have 80/20 loans.

Tony: 680 isn't hard to achieve.

Dave:

Jeff B: FHA!! FHA!! FHA!!

John: Thanks for stopping by.

Stacey: You are so right. Buying has been easier than renting.

Karl: Lenders with FHA will be busy. Lenders without will be scamperring to get signed up.

Larry: FHA has been a real option for many.... Now, many MORE.

Steven: VA is the best. Agreed!! But it SHOULD be reserved for those who have already 'paid'. ;-)

Richard: Thanks for stopping by.

Robert: I disagree 100% with your statement. Why sink money into an appreciating asset with tax deductible interest?

Cameron: Keep plugging away at those VA loans.

David: I don't know what is next.... but the days of inventing loans is over too.

 

Rich: Companies that don't have FHA are doing a disservice to their clients AND Realtor partners.

D. Bass: I thought rates would skyrocket. I didn't foresee thiss.

Konnie: 100% is not the problem. Guidelines are. And Fannie/Freddie set the guidelines that are un-insurable. Crazy!!

Eddie: I doubt that some rogue MI company will keep doing 100%. All of them will go to this. If one or two DOES stay in at 100%, expect that to be short lived. Rates will increase or the others will get back in.

 

Thanks for sharing.  I was lucky to get a 97% loan with no PMI based on the metro area I was buying into (Atlanta) 2 years ago.  

Tom, from my perspective, purchasing my first home in 1965, this looks like the type of mortgage that makes more sense than the 100%. In the old days, we had to come up with a downpayment for our home. We saved, and then bought. It's been so long I don't remember "how" much, but never 100%. Truthfully, I don't remember having to ever pay PMI. Maybe that didn't come into play until after the 60's.

I am fond of USDA Rural development for those that qualify.  No PMI and up to 102% to allow for closing cost and funding fee to be rolled in.

The two largest providers of private mortgage insurers, PMI and MGIC now pulled out of offering PMI in 4 states (CA, FL, NV and one other) plus several other metropolitan areas. This is pretty quickly going to make anything less than 20% down a thing of the past in those markets.

Tom, it looks like we went back about 10 years ago or maybe more.  We have bought many homes but have been settled in this home for the last 11 years.  We never even considered not having to put money down as that was not an option.

is time for FHA's yes!!

People actually will need money to borrow it now?  What a novel idea!

The PMI companies have been burned in this crisis and are making adjustments. I'll bet that 100% financing may disappear for a while, but it will be back, with strong guidelines.

People need to learn to save if they want own a home.  Sorry, but it's true.  I bought my first house with VA loan, my ex-husband was the veteran. I saved for the downpayment, yes I put money down, but then hadn't also stockpiled for any rainy days, or broken appliances, or leaky plumbing, or landscaping, and...well...you get my drift.  Homeownership is not a right, it's a priviledge and a responsiblity.  Sorry, I will step off my soap box now.

Will be interesting to see how the market changes with this. Thanks for sharing.

This will have an impact. Very definitely. Culturally, Americans expect to be able to buy things with No Money Down. You get money back when you buy a car even. So why should we have different rules when it comes to home purchases.
If this is truly the end of zero down for the near future, I hope the message is broadcast loudly for all the purchasers to hear.

The comments implying people should "have" to put a down-payment together to buy a home are off-base in my opinion. The real issue isn't down-payment but ABILITY to make the down-payment. When loaning money, it's the ability to repay that is important. Having a homebuyer put their last quarter into down-payment so they can finance 80% of the sales price, doesn't make them MORE likely to repay the loan. It makes them LESS likely as they have no cash reserves to fall back on.

Where the mortgage banking industry went wrong was in devaluing the importance of verified liquid reserves. The difference between financing $200,000 vs. $180,000 at 6.00% is $120 less per month. If the client kept the $20,000 difference in their bank account, I personally would prefer making that loan for an extra $120 in monthly payment knowing they had an ability and willingness to save in the past.

Allowing home purchases with no money down AND no verified assets in reserves....now THAT was a problem.

Yes I agree and all is not lost the people who have been around know how to get their clients good loans still

Thanks for the inside scoop Tom.

 

John hurbon

Tierra Antigua Realty                          google   benson horse property

I guess that we can look back to the good ol' days with appreciation. All these changes are frustrating.

Tom good thing you are not in south Florida.  You see the guidelines and then the oh declining market label hits.  oops sorry folks can't do it.  In Florida it is harder and harder for higher LTV's

I would expect 100% financing to be a thing of the past pretty soon. Those who take advantage of it can least afford the consequences.

We still have 80/20's

Audrey: Thanks or stopping by.

Teri: 100% is a good thing..... as long as the lenders make sure that the home is affordable.

Joe: USDA is a great program.

Matt: We still have 2nd liens.

Marchel: We put money down too.... although we qualified for 100%. I was shocked to learn that I qualified for twice what I was comfortable with paying.

Maria: I love me some of that FHA.

Gene: As long as there are reserves, I have no problem with 100%

Wayne: Exactly!!

Rebecca: Correct. It is a priviledge. Soooo many eople I talk to think they have a RIGHT to the big house with a nice car parked out front.

Bob: Thanks for stopping by.

Sarah: 3% down is nothing. With seller paying most of the closing costs, it is not a big hurdle.

Ken: I couldn't have said it any better. Soooo many people rip the 100% financing, when it isn't the problem. Willingness and capacity to pay!!!

Rick: Reason for realtors to search for top notch loan officers.

John: Thanks for stopping by.

Nathan: Yes, frustrating. AND confusing to the consumers.

Mathew: Is the whole state declining? I bet it is hard, indeed!!

Dan: I disagree. I have MANY clients who elect 100% when they have the $$ in the bank to do 5 or 10% down.

Christine: Yes, at 9.5% 2nd liens(Texas rates)..... LOL.

 

Many loan officers fear FHA, but at this time in the market these government loans need to be embraced. I help many of my first-time homebuyers with the Oregon State Bond loan, which is done as an FHA.

Marc: When I first started out in this business, I had a broker tell me that FHA was too hard and that there were better options. Then I learned how expensive it was to be FHA approved(the real reason why he didn't offer FHA). Then I left that broker for another shop that had FHA loans.... life has been good since.

I bet they are tired of paying. I am sure once everything settles, those loans will come back again. Very nice post.

Christy: Like drug addicts, they will be back.

 

I agree that we will probably see them again in the future. History repeats itself.

There is so much uncertainty in the market right now. I agree with Christy...I think they will come back also.

I wish there were stats on the foreclosures of piggyback loans vs PMI loans and owner occ vs NOO.  Am guessing they are mostly investors here who got in with no money down on a piggyback loan. 

FHA is very sexy here and people are taking advantage!!  On the same note, it was near impossible for a tipped wage earner to get in on an FHA from 2004-present so why should they have to pay for the sins of the past in PMI increases?

I do, however, agree that this is a declining market and people should be required to put more down.

Kathy: Thanks for stopping by

Renee: I wish I had access to more stats too. Tipped wage earners can get an FHA loan.... but they can't have their cake and eat it too. If I had a dollar for everytime someone whined about how they don't claim all of their income, and "it isn't fair"

Tom,

Thanks for sharing this. Maybe my side will pick up soon, this market is killing me.

Tom:

 Thank you-good infomation to digest...

Thank you for sharing this information with us...I hope things get better...

Thanks,  Ca has had it's share of struggles with 100% financing, too.

Doug

Steven: Time to seek our additional referral sources. Business is still there.

Michael: Thanks for stopping by.

Donna: It isn't too bad... yet.

Doug: Declining markets are the toughest right now.

 

 

Not yet Dave. I bet Americans were thinking the same thing a year ago.

Tom, thank you for the update.