Homestead mailing list

[Lisa Perry <lkvp AT floydva.net>]

Tvoivozhd contributed:

> Zero cash-down would be fine if sweat equity were the real 
> down-payment---providing a real equity cushion, and an enormously 
> beneficial side-effect of teaching construction skills to 
> home-owners---an economic flywheel to sustain them during periods in 
> which their regular jobs disappear.

The only time I see sweat equity or similar, is when the client wishes 
to build a home and purchased the land a few years back.  Quite 
honestly, lenders don't care much about sweat equity, they'd rather have 
the client mortgaged to the hilt.

> The Boston Globe <http://www.boston.com/news/globe/>
>   Zero-down mortgage initiative by Bush is hit
>    Budget office says plan likely to spur more loan defaults
> By Chris Reidy, Globe Staff  |  October 5, 2004
>
> Bush contends that reducing the required 3 percent down in the Federal 
> Housing Administration mortgage program to zero down would help 
> 150,000 first-time buyers in the first year. Homeownership rates are 
> now about 69 percent nationwide, compared to about 64 percent 10 years 
> ago. The FHA insures many private-lender home loans.

Rural Development (RD), a division of FmHA, has offered 100% loans with 
the Seller able to pay up to 6% of closing costs for years.  The only 
difference in the FHA and RD loan is that FHA will still finance 
doublewides and RD will not.  With RD, you can finance up to the 
appraised value, which in some cases is slightly higher than the sales 
price, and allows the buyer to finance some of the closing costs if the 
seller is not.  Rural Development loans are available in rural areas, 
but you can get one in areas that are somewhat sububuran in nature.  The 
definition of rural is pretty flexible from what I have seen.  If you 
don't qualify for FHA, there are plenty of other 100% loans, and 100% 
loans for those that live in large cities as well.  If a first-time 
homebuyer needs a loan, one already exists to meet their needs.

> An unanswered question remains, he acknowledged: "We have no 
> experience of how these loans will perform when the market is weak."

Oh really?  I wonder if he can take a wild guess.

Lisa
...feeling overly cynical this morning but loving the recent polls....