Nevada Real Estate >> Las Vegas Real Estate Specialist: David Krushinsky (Mortgage Professional - Phoenix, AZ - NMLS 202115)

PHOENIX HOME BUYER FOUNDATION PROGRAM

Helping families rebuild the foundation after suffering from a foreclosure or short sale.

What is Phoenix Home Buyer Foundation Program?

Phoenix Home Buyer Foundation Program was founded on the idea to assist people in purchasing a home again and help stabilize home prices in the Phoenix community at the same time.  Phoenix suffered significant losses to property values and home equity.  Bringing qualified homebuyers back into the Phoenix real estate market will enable the values to steady. The Foundation Program helps people with a previous foreclosure or short sale interested in purchasing, do so, in the shortest amount of time required.   

How does the program work?

We will analyze your credit and develop a strategic program to put you in the best position to purchase a home in the least amount of time.  We will help you in determining your first eligible date of purchase.  We will also review your debts and develop a financial budget to help keep you on track. 

What is the cost?

There is no cost for this program.

How will I know when I can purchase a home?

Our program provides a personal countdown clock that you will always have access so you will know the exact amount of time before you can purchase. 

How often will I hear from you?

We will communicate with you quarterly until you are 12 months away from purchasing.  Once you are 12 months away from purchasing, we will communicate with you monthly.  60 days prior to your first eligible purchase date, we will review your current financial position.  One month prior, we will request updated financial information for your prequalification and refer you to one of our preferred real estate partners.  On the day you are eligible to enter into a purchase contract, we will send you and your real estate agent the prequalification letter. 

How do I get started?

Getting started is easy.  You can email david@dkhomeloans.com and request the form to get started.

If you know someone with a previous foreclosure or short sale that would like to purchase a home, please have them give me a call.

I get a lot of phone calls from blogs I've written about financing a home connected to a shared well with more than 4 homes using a FHA loan.  Many people find my article on Google titled, "Are You Buying A House In Arizona With A Shared Well Connected To More Than 4 Homes".  Most of the time, the buyers lender will not finance the home, but I am often able to assist them with financing.  In many cases, the buyer has the exact scenario outlined in the blog. 

I'm only licensed in the State of Arizona to originate mortgage loans, but I often receive calls from across the nation.  Believe it or not, many states have the exact same problem with shared wells and FHA loans.  I usually try to help the loan officers I receive calls from in other states by paying it forward. 

I received an email this morning that made my day.  Here's what it said: 

Hello David, 

I promised that I would get back to you about my nightmare situation regarding shared wells and FHA. 

We finally went out to all 4 duplex properties to figure out which property was on which well.  We had prior permission from all the tenants and owners to enter the properties.  The buyer, seller and realtor for the subject property accompanied me, along with an electrician and a well installer.  Long story short, despite there being two wells, all 4 properties were on one well and one pump.  This came as a surprise to everyone.  There was a second well on the property adjacent to the subject, but that had been shut off with a curb stop some time before.  The seller looked at the costs of reconnecting to the old well and paying for a shared well agreement and decided it was just cheaper and faster to drill a new well on the subject property.  That was done on Friday and we're just waiting for the water quality test.  A local engineering company did the site plan for us by updating an old plan they had done previously.   The seller paid for the well and the buyers paid for 2 hours of time for the inspection of the electrician and well installer. 

By the way, this involved a lot of standing outside in near zero temperatures in a foot of snow.   It just goes to show what can happen when everyone involved is working towards the same goal!

Thanks for taking the time to talk with me.

Marcia Robinson Loan Officer

Merrimack Mortgage Company, Inc.

221 Main Street, Suite 202
Nashua, NH 03060
Tel: 603-821-5184 ext. 203
Fax: 603-821-5188
www.MortgagePlannersNE.com

License Number NH163093

That's awesome!  Perseverance will lead to great things.  Thanks for sharing your story Marcia.

I received a phone call today from a real estate broker that I have worked with over the last few years.  I have some very loyal clients that I've done many loans for when they have purchased homes in Phoenix.  These clients actually found her after I had pre-approved them.  They have purchased a few homes with her, where I provided financing.  Her and I get along really well and I enjoy working together.  She called me today about a client she had previously referred.  The conversation started like this: 

Hi Dave!  You remember those clients I referred to you that where moving from Texas to Arizona?  You spoke with them and took their information over the phone.  You also asked them to send you paystubs, so you could verify their income.  I had one of my agents take them out to look at homes.  They didn't want to send their paystubs, so she referred them to another lender that did not require them to issue an pre-approval. 

I didn't have a chance to do the loan..... because I asked for paystubs to verify they were qualified???  Why would any agent not want to know that their clients were in fact qualified? 

Well Dave.. they put an offer on a home and it was accepted.  We ordered the termite report and it came back 4 weeks ago.  Now we are ready to fund, but the lender is telling me she can not fund because they do not have a clear termite report.  It has "water damage" listed as being on the property.  Have you ever had this problem? 

Yes!  Yes, I have and I would have prevented this from being an issue about 3 weeks and 6 days ago by simply reviewing the report when it was originally completed.  So, I tell her how we worked around this issue on a transaction we had the same problem on a year ago.  

It's a double edge sword.......Ask for too much documentation and your buyers go to someone else.  Don't ask for enough and your transaction falls apart at the 11^th hour.  I would prefer to lose the buyers and keep my integrity.

This video breaks down one necessary step to avoid having your Phoenix condo purchase transaction fall apart.

Many condo HOA's have high delinquency levels due to a weakened economy in Phoenix and the greater Phoenix area. Most HOA management teams projected around 10% delinquency rates of these condo complexes association dues at the beginning of 2010. However, the real numbers starting off in 2011 are closer to 25% delinquency rates. Don't let your transaction get too far and become another statistic too late.

The purpose of this article is to articulate some of the most common benefits of utilizing a FHA loan to finance a home purchase in Phoenix.  The first bolded sentence is what many real estate professionals believe to be truth.

1. Phoenix FHA mortgage interest rates are higher than conventional.With tiered FICO pricing on conventional loans, FHA loan rates can actually be lower than conventional. The minimum FICO score required on a conforming loan before the borrower has to pay more points or a higher rate is 740. Using FHA financing, a 660 FICO score gives the buyer the same interest rate as someone with an 800 FICO score.
2. Phoenix FHA loans are more expensive for the seller than a conventional loan. While this was true before 2006, this is no longer correct with FHA loans. Prior to Mortgagee Letter 2006-04, there were substantial costs involved that the buyer was not allowed to pay. Now, the only cost the buyer cannot pay is a $75 tax service fee (fee may vary from lender to lender – AmeriFirst Financial does not have this fee). This makes a FHA loan much more attractive to Phoenix sellers.
3. Phoenix FHA loans require more paperwork. In prior years dating back to 2000 and before, FHA loans required much more paperwork and documentation than conventional loans. Now, there are only about seven additional application documents, when compared to a conventional home loan, which a buyer needs to sign.
4. Mortgage Insurance cannot be removed on a FHA loan. When a homebuyer obtains a 15-year fixed FHA loan with 10% down payment, FHA requires NO mortgage insurance (MI). However, if MI is obtained, it must be held for at least 60 months.
5. Phoenix FHA loans take too long to close. Today's conventional loans have many of the same fraud detection requirements similar to FHA.  Most banks require 4506-T's for all borrowers, a verification of deposit and employment, and Social Security verification through Rapid Reporting.  In house underwriting makes closing a FHA loan fast and efficient. David and his team can process FHA home mortgage loans in less than 30 days, and sometimes in little as 12 days.
6. Phoenix FHA loans don’t benefit the buyer. FHA is the only loan with less than 5% down (3.5% down payment) in Arizona. MI is reasonable when compared to lower down payment conventional loans. Underwriting requirements are less strict on debt to income ratios and reserves.  Buyers can also use non-occupying coborrowers to help qualify, as long as they are relatives.  All of these things benefit buyers. There are VA, USDA and HomePath home loans that offer a lower down payment, but those are only applicable to Veterans and property specific homes.
7. You need money to close as a buyer. All down payment and closing cost funds can be gifted by an acceptable source. The buyer can actually close without having any of their own money into the purchase.
8. Phoenix FHA loans don’t benefit the seller. This is probably the most significant myth still active in today’s market. In truth, a 3.5% down payment with less than perfect credit and minimal cash reserves is a HUGE benefit to sellers in Phoenix.  
9. Conventional Financing is better than a FHA loan. In today’s market, conventional loans are much harder to close and the MI is more difficult to obtain. In my opinion, FHA is the best loan out there today for a buyer with a low down payment.
10. Buyers don’t understand FHA loans. It is very easy for even the most unsophisticated person to understand the numerous benefits of FHA. In years of the past, it is true that some FHA calculations were complex. This is no longer reality.
11. The Government gets involved in the FHA loan process.AmeriFirst Financinal, and many other mortgage bankers, control the entire process from application to funding.  AmeriFirst can complete the transaction quickly and meet timelines with zero interference from the Government.

You've been pre-qualified for a 3.5% down-payment, FHA home loan, to buy your dream home in Rio Verde, Arizona.  You and your Realtor have searched for months and finally narrowed it down to one home.  It's a bank owned home located in Rio Verde, AZ.  This is the ideal location; horse privileges, no traffic, close to terrific dining, and the perfect location to raise your kids. 

Your Realtor is very sharp and has many years of experience selling homes in Rio Verde, AZ.  You make it through the inspection period with no items needing repair.  Your Realtor gives your lender the go ahead to order the appraisal.  The FHA appraiser returns the completed appraisal with a value equal to the sales price.  You're feeling terrific because you've just locked in an incredibly low interest rate of 4.875%, which is fixed for 30 years, on an FHA home loan.

Everything seems to be moving along smoothly, until you get a call from your Loan Officer.  He sounds concerned and you immediately begin to panic.  The lender has declined your loan because the house has a shared well for water, which is connected to more than four homes.  You don't understand why your loan was declined?  Your Realtor doesn't understand either; he has sold many homes in this area without a problem, which were also financed.   

The reason some lenders cannot finance a home with a shared well connected to more than 4 homes, is that it doesn't fall within the standard FHA loan guidelines.  Prior to 2007, many of the homes in Rio Verde, AZ were financed with conventional financing.   Therefore, very few Realtors and Loan Officers ever experienced a problem with this specific circumstance.  Self-admitted, many industry professionals need to educate and enhance their knowledge of FHA guidelines.  It is possible for this home to be financed under FHA guidelines; however, it will require some additional documentation, more work from everyone and probably a few sleepless nights.  Hopefully, you are working with educated professionals that will be able to alleviate many of those restless nights and extra stress!

This was an actual scenario we experienced with one of our referrals.  Luckily, we were able to fund this client's loan after he received a loan denial from another lender.  Although in order for this loan to work, there are a few specific requirements that need to be met.  If you're currently considering purchasing a home with a shared well connection to more than 4 homes and need some assistance, please contact The Krushinsky Team.

Purchasing a foreclosure or bank-owned home in Phoenix may, arguably, allow you to buy the best home for the cheapest price.  Many lenders currently require a 20% down payment, however, it is still possible to buy a home in Phoenix with low down payment, even if the home can't be financed with a FHA home mortgage.   

With HomePath Financing, it is possible to take advantage of today's low interest rates and affordable home prices in Phoenix, while still benefiting from a reasonable down payment.  You can purchase a home, which is owned by mortgage giant Fannie Mae, for as little as 3% down.  Fannie Mae currently owns many homes taken over through the foreclosure process in Arizona.  These homes can be financed through a new HomePath^®program, specifically for Fannie Mae REO properties.  This program is exclusively offered through David Krushinsky of AmeriFirst Financial, Inc.  Listed below are some of the highlights of the HomePath Mortgage. 

HomePath^® Financing Highlights

If you haven't began your search for a new home, you can get started searching for Fannie Mae REO's in Arizona by clicking here.  Fannie Mae is also offering a 3.5% incentive* for buyerswho purchase and close on a Fannie Mae-owned home on or before December 31, 2010 and within 60 days of offer acceptance.  A $1,500 bonus is also awarded to the selling agents on HomePath properties in Phoenix.  This incentive applies only to owner occupants purchasing a HomePath approved property, but a home buyer may still negotiate seller paid costs at the time of purchase for second homes and investment properties.    

Our mortgage team works with many local Phoenix Real Estate Professionals that specialize in locating these homes for our borrowers.  Please feel free to contact us for a referral of someone who is qualified to assist you in writing a contract, negotiating terms and obtaining the best long-term strategy for you and your family.  Purchasing a home involves many other aspects than just negotiating a sales price.  It's very important to know, upfront, how to properly structure your real estate offer upon submitting your contract to Fannie Mae.  Contact us today to begin the process.

Conventional, FHA and VA mortgage loans in Phoenix may soon become harder to obtain for those with a troubled credit history. Currently, a borrower with up to $5,000 in collections may still eligible to purchase a home in Phoenix, in many cases. The new guideline change could also affect current Phoenix home purchase transactions you may have in process. 

The following policy change was announced from U.S. Bank Home Mortgage, specifically relating to the Correspondent Lending Division's Underwriting policy for all loan products including FHA, VA and Conventional loans.

Collections, Charge-Offs, Judgments, Garnishments and Liens:

Delinquent credit must be paid off at or prior to closing. This includes taxes, judgments, collections, charged-off accounts, tax liens, mechanics' liens, and liens that have the potential to affect US Bank's lien position or diminish the borrower's equity.

Documentation of the satisfaction of these liabilities, along with verification that there were funds sufficient to satisfy these obligations, must be included in the underwriting file.

Per the US Bank memo, this policy will be effective Monday, October 4, 2010, for all loans submitted for underwriting to a USBHM Underwriting Center, for MI Contact Underwriting and loans submitted for purchase by their Delegated Correspondents.

All collection accounts (including medical collections) and charged-off accounts do not have to be paid off at or prior to closing if the total balance of all accounts combined is $1,000 or less. No minimum monthly payment has to be included in monthly debt unless one has been set up and the borrower has been paying a set amount.

Collection accounts or charged-off accounts that exceed the above $1,000 limit in combined balances do not have to be paid off at or prior to closing, provided all of the following are documented:

1. A strong credit profile
2. Meaningful financial reserves
3. Evidence that the accounts pose no threat to our first mortgage lien

This announcement is not industry wide, but specifically relates to loans delivered to US Bank Home Mortgage through Correspondent Lending. US Bank Home Mortgage is known as one of the more conservative residential lenders, sometimes coming out with guideline changes up to 6 months before other lenders. This memo also doesn't insinuate that all lenders will change the guidelines they use to underwrite, rather with the tightening of the market, there is possiblility. However, if this does become more prevalent your clients will become frustrated that they didn't have adequate time to prepare additional cash reserves, you will have to cancel your Phoenix home purchase contracts and your real estate career will suck. 

Anyone that has successfully closed a short sale in the last few years can benefit from knowing what to expect when purchasing a home in the future.  It's very likely the borrower had to make late payments during their negotiations with the bank before their short sale closed.  These late payments may no longer be affecting their current credit score; however, the underwriter will review their entire credit history when determining their ability to repay a mortgage loan.  If late payments are reflected within their mortgage history, the underwriter will want a letter of explanation. 

I've personally seen a borrower's credit report reflect a 700+ credit rating after having a foreclosure less than 6 months prior.  Unfortunately, this person was told by a mortgage lender that they would qualify for a home loan.  Once the file was sent to an underwriter, their loan application was denied.  Even though this borrower had a great credit score, they were unable to obtain a mortgage loan because of their previous mortgage disposition or disposition of property.  The guidelines for a FHA loan require a 3 year seasoning period after a foreclosure before utilizing FHA financing to purchase a new home. 

So what is disposition of the mortgage?  Per the IRS, the disposition of a property or mortgage includes the following transactions:

• You sell property for cash or other property.
• You exchange property for other property.
• You receive money as a tenant for the cancellation of a lease.
• You receive money for granting the exclusive use of a copyright throughout its life in a particular medium.
• You transfer property to satisfy a debt.
• You abandon property.
• Your bank or other financial institution forecloses on your mortgage or repossesses your property.
• Your property is damaged, destroyed, or stolen, and you receive property or money in payment.
• Your property is condemned, or disposed of under the threat of condemnation, and you receive property or money in payment.

While underwriting a file, an underwriter looks for reasons the loan may be ineligible to finance.  If there are multiple late payments on a mortgage loan, the underwriter will probably request a letter of explanation as to why there were late payments.  A short sale transaction isn't always reported with full disclosure on the credit report.  A veteran Mortgage Loan Officer will probably notice the lates and request a reasonable explanation.  However, if you're working with someone who lacks experience that merely runs the file through Automated Underwriting and assumes the borrower qualifies - your transaction will fall apart.  The reason being once the underwriter asks about the disposition of the property and finds out it was sold for less than owed, the borrower will have to wait the required time period to purchase. 

Be careful, as this will be more common in the next few years.  Working with trusted professionals benefits everyone involved.

It appears that the government has finally found another solution to stop Mortgage Loan Originators (MLO) from abusing and deceiving consumers.  This new rule will likely have the same benefit to today's consumer that HVCC and the new GFE has - more fees and higher loan costs.  Below are the highlights on the final rules on the Loan Originator Compensation and Steering.

The final rules protect mortgage borrowers from unfair, abusive, or deceptive lending practices that can arise from loan originator compensation practices.

The new rules apply to all persons who originate loans, including mortgage brokers and the companies that employ them, as well as mortgage loan officers employed by depository institutions and other lenders.

The final rules, which apply to closed-end loans secured by a consumer's dwelling, will:

• Prohibit payments to the loan originator that are based on the loan's interest rate or other terms. Compensation that is based on a fixed percentage of the loan amount is permitted.
• Prohibit a mortgage broker or loan officer from receiving payments directly from a consumer while also receiving compensation from the creditor or another person.
• Prohibit a mortgage broker or loan officer from "steering" a consumer to a lender offering less favorable terms in order to increase the broker's or loan officer's compensation.

Provide a safe harbor to facilitate compliance with the anti-steering rule. The safe harbor is met if:

• The consumer is presented with loan offers for each type of transaction in which the consumer expresses an interest (that is, a fixed rate loan, adjustable rate loan, or a reverse mortgage); and
• The loan options presented to the consumer include the following:

1. the lowest interest rate for which the consumer qualifies;
2. the lowest points and origination fees, and
3. the lowest rate for which the consumer qualifies for a loan with no risky features, such as a prepayment penalty, negative amortization, or a balloon payment in the first seven years.

The final rules are effective April 1, 2011, to provide lenders and originators time to develop new business models, implement necessary changes to their systems, and train personnel.

The Dodd-Frank Wall Street Reform and Consumer Protection Act also restricts practices concerning loan originator compensation. The Reform Act includes provisions that are similar to the Board's final rules but also addresses other practices not covered by the final rules. The Board plans to implement the Reform Act provisions in a future rulemaking with opportunity for public comment.

Short sales, in most cases, are one of the most economical solutions for all parties involved when a borrower can no longer afford their home.  The bank typically incurs a smaller financial loss than would result from an ultimate foreclosure or continued delinquency on the mortgage payments.  Borrowers may be able to soften the overall damage to their credit, and potentially settle future deficiency judgments. The big question on hand is.......What is life like after a short sale??  

If you're married and your spouse has recently had a short sale, you may still be able to purchase a home. 

For the majority of married couples, their homes are purchased together using joint credit, income and assets. This article will address the following situations; the spouse purchased a home before the couple was married in his/her name, or the spouse purchased a home, qualified on his/her own qualifications and the other spouse disclaimed their interest in the property. 

Let's take a look at an example of what a typical scenario might look like for a typical borrower. 

Mr. Smith bought a home in 2002.  He was forced to do a short sale in 2008 because he lost his job and could only find employment that paid 50 percent of his previous income. When Mr. Smith purchased his home, he was able to qualify on his own and Mrs. Smith was not included on the loan.  Mrs. Smith signed a disclaimer deed at the closing.  Mrs. Smith has since graduated from medical school and returned to the workforce.  Mr. Smith and Mrs. Smith would like to purchase a new home together. Unfortunately, Mr. Smith's credit will not allow him to be part of the loan due to the short sale.  Even if Mr. Smith's credit score has rebounded from the effects of the short sale, Mr. Smith still must wait 2-3 years before he can buy using most traditional financing. 

Mrs. Smith can qualify for a home on her own even though Mr. Smith had a short sale less than 2 years ago, provided she meets the standard qualification standards.  Mrs. Smith would like to purchase the home with a FHA loan.  In community property states, such as Arizona, Mrs. Smith can still purchase the home even though the lender will review Mr. Smith's credit history.  However, any additional debts which appear on Mr. Smith's credit report will have to be included in her qualifying ratios.  As long as she can qualify on her income alone, she will be able to purchase a home.  Mr. Smith will have to sign a disclaimer deed, relinquishing all of his rights to the property. 

Please note: This article was written per Arizona State laws and other states may differ.  Please consult your mortgage consultant to discuss the laws and regulations applicable to your state.

As consumers, we've all been taught that shopping around for a mortgage to get the best deal is critical.  When shopping for your Phoenix home mortgage, it's fairly easy to check online or make some phone calls to determine rates.  

Once you have had an opportunity to narrow down your search for the right lender, it will also be important to ask some essential questions to make sure they're educated regarding mortgage rates.  With Phoenix mortgage interest rates changing quite frequently, sometimes several times during the day, it's important to make sure your lender can answer basic questions. The following questions and answers will allow you to determine if your lender can provide you with an affordable loan and, most importantly, have the expertise to get you the lowest rate.

•1.       Who determines mortgage rates and what are they tied to?

Mortgage interest rates are determined by the pricing of Mortgage Backed Securities or Mortgage Bonds.  The media often implies mortgage rates are based off the 10-year Treasury Note, which is incorrect.  While the 10-year Treasury Note typically trends in the same direction as Mortgage Bonds, it is not unusual to see them move in completely opposite directions.

•2.       How often do mortgage rates change?

Mortgage rates constantly change throughout the day; however, since mortgage rates are based on Mortgage Bond prices, they only change on days when the Bond markets are trading securities.  Think of a Mortgage Bond's sales price similar to that of a Stock.  It trades up and down during the course of a day.  For example, the FNMA 30-Year 4.50% coupon is selling for $100.50.  The price is 50 basis points lower from the previous day's closing price of $101.00.  In simple terms, the consumer would have to pay an additional .50% of their loan amount to have the same rate today that they could have locked in the previous day.  Alternatively, the consumer would also have the option of increasing their rate by .125%.

•3.       What causes mortgage rates to change?

Mortgage Bonds are largely affected by various economic forces that influence the ever changing demand for bonds within the market.  Each week various economic reports are released that influence the movement within the bond markets.  Some of the key economic factors that have the greatest impact are unemployment percentages, inflationary fears, economic strength and the overall movement of money in and out of the markets.  Like stocks, most fluctuation is caused by consumer and investor emotions.

•4.       What do you use to monitor mortgage rates?

There are several great subscription based services available to monitor Mortgage Bond pricing.  The key is to make sure the lender is aware they should be monitoring Mortgage Bond pricing, such as the Fannie Mae 30-Year 4.50% coupon, and not the 10-Year Treasury Note.

•5.       When the Fed changes rates, why do mortgage rates move in the opposite direction?

It is a common misconception that when the Federal Reserve implements a rate cut that it is immediately correlated to a reduction in mortgage rates.  The Federal Reserve policy influences short term rates known as the Fed Funds Rate ("FFR").  Lowering the FFR helps to stimulate the economy and increasing the FFR helps to slow the economy down.  Effectively, cutting interest rates (FFR specifically) will cause the stock market to rally, driving money out of bonds and creating potential for inflation.  Mortgage Bond holders need to obtain a higher rate of return on their money if inflation is increasing, thus driving up mortgage rates.   With the Federal Reserve Board meeting every six weeks, this is an important question to ask.  If your lender does not have a firm understanding of this relationship, they may leave your rate unprotected costing you thousands of dollars over the life of your mortgage.  

•6.       Do different programs have different interest rates?

Conventional, FHA and VA loans can all carry different rates on a 30-Year fixed mortgage.  FHA and VA loans are insured by the Federal Government in the event of defaults.  Conventional mortgages are insured by private mortgage insurance companies, if insurance is required.  Typically, FHA and VA loans carry a lower rate because the investor views the government backing as less of a risk.  While rates are usually different for each program, it may be more important to compare the monthly and overall cost during the life of the loan to determine which program best suits your needs.

•7.       Why is an Adjustable Rate Mortgage (ARM) rate lower than a fixed rate mortgage?

An Adjustable Rate Mortgage (ARM) is usually fixed for a specific period of time.  The period is typically 6 months, 1 year, 3 years, 5 years or 7 years.  The shorter time period the rate is fixed, the lower the interest rate tends to be initially.  This is due to the borrower taking the future risk of increasing interest rates.  The only instance where this would not be true is when there is an inverted yield curve where short-term rates are higher than long-term rates. 

•8.       Why are rates higher for different factors such as investment property?

Mortgage interest rates are based on risk-based pricing.  Risk-based pricing allows adjustments to par pricing for risk factors such as; FICO scores, loan-to-value percentages, property type(SFR, Condo, 2-4 Units), occupancy (Primary, Vacation or Investment) and mortgage type (Interest Only, Adjustable Rate etc).  This allows the investors who lend their money for mortgages to receive additional compensation for taking additional risk.  An example is if the borrower encounters a financial hardship, are they more likely to make the payment on the home they live in or the one they rent?

Does creative financing still exist or are there ways to purchase homes in Phoenix without traditional financing these days?  If you're like me, you're probably saying, "No way".  If so, read on. 

Recently, I had the privilege of speaking with a real estate investor, by the name of Nick Johnson, that specializes in Short Sales and "Subject To" purchases.  Nick and I got introduced through a mutual friend, Matt Rosen @entrepreneurHI, from Twitter.  I learned a lot about Nick after talking with him for only an hour on the phone.  I learned all about his high regard for his family, his unparalleled ethics and his business philosophy.  Additionally, I also learned he is also the author of the eBook, "Subject2".    

While most of us in the Phoenix area and beyond are all too accustomed with the term Short Sale, "Subject To" was not a practice in which I was all too familiar.  Being the type of individual that prides myself on keeping current with what is available in today's marketplace, I immediately had to do some investigative research.   I figured that I would share a little overview of what I discovered. 

"Subject To", also referred to as "Subject 2" or "Sub2", is a form of creative financing in which the seller deeds the property to the buyer while keeping the existing mortgage note fully intact.  The buyer, typically a real estate investor, simply makes the mortgage payments on the existing mortgage.  These transactions can provide an array of benefits for both the buyers and sellers.

 The buyers do not need to go through the headache (I know all about this) of getting qualified for a new mortgage note.  There is no credit, income or asset verification required.  The investors own the property, but do not assume the loan.  This leaves personally liability on the sellers.  Typically, the main advantage for buyers in these transactions is acquiring a property at a much lower interest rate than if they were to purchase the property outright.

It may seem unbelievable to most of us that a homeowner would deed over their property to another individual, but there are many reasons that sellers find this a great option.  The primary reason that many sellers opt for Sub2 financing is to obtain debt relief.  Some are facing foreclosure and unable to sell their property due to lack of equity.  Owning a property that is "underwater" is a concept that many Arizona homeowners can relate all too well.  Others simply want a fast sale.  They may be moving, transferring jobs, getting married, divorced or a whole list of various scenarios.  

Subject2 contracts should be implemented by a knowledgeable real estate professional.  We've all witnessed the dangers of working with someone who claims to be an expert but has no more expertise than you or me.  A sub2 contract is essentially the same as a standard state approved contract.  The only difference is the 'sub2′ addendum states the terms of the existing loan. 

In today's credit climate, we all know someone who may be struggling to qualify for a loan or continue making their monthly mortgage payments.  I would encourage you, no matter what your preconceived ideas of traditional financing are, to have them contact me before it's too late.  There are many times that I may not be able to help them but I can guide them in the right direction.  Don't let them become just another statistic.

So you've decided that you want to buy a home in Phoenix, AZ.  Besides the many advantages to living in the Valley, interest rates reaching all-time lows coupled with the recent plunge in home prices make Phoenix a very affordable and attractive option.   Nowadays, it is actually cheaper to purchase a home in the Phoenix area than rent.  The only down side to this scenario is that you're short on cash for a down payment.  Unfortunately, you cannot get a gift from your family, you've already tapped out your 401K, you are not eligible for a VA loan, you make too much money to qualify for down payment assistance, and you have no desire to live in a rural area.  So, the question is..... What can you do without a down payment???  Meet the qualifications for the $100 Down Payment HUD Home Program.

Let's take a trip back in time and describe why the availability to finance a home with the $100 Down Payment HUD Home Program arose.  During the housing boom, many of the homes in Phoenix were financed with Conventional loans.  Prior to the run-up in home prices, many first-time homebuyers used FHA loans to purchase housing.  Once home prices started rising at unsustainable levels; homeowners began to refinance their FHA loans into Conventional loans to pull cash out, remove mortgage insurance, and lower their monthly obligations.  Once these homes, now with Conventional financing, went into foreclosure, the banks began to sell their inventory at a discounted price.  At the beginning of 2007, many of the new homebuyers were forced to use a FHA loan due to inability to finance their purchases with Conventional mortgages in Phoenix.  These homebuyers were unknowingly still buying homes at inflated home prices.  Sadly, many of these homes purchased in 2007 and 2008 with FHA loans are currently going into foreclosure.  In most cases, the current values of these homes are significantly less than what is owed.  The $100 Down Payment HUD Home Program is a result of a FHA borrower foreclosing and HUD repossessing the home that is now for sale.    

So Who Qualifies? 

 Now that you've been able to determine you may be able to qualify, here is an outline of the next steps you need to take.

Step 1 - Get pre-qualified for the $100 downpayment HUD Homes Program

Step 2 - Choose search area and type of home (i.e. North Phoenix - 3 bedroom, 2 bath with 1,500 square feet or more)

Step 3 - Create a login and password at our customized database to search homes

Step 4 - Contact us to match you with one of our Realtor partners that can assist you with viewing the homes you are intrested in.  Please note, not all Realtors are trained and educated for HUD homes.  It's very important to work with one of our preferred partners that has experience with HUD homes.

Step 5 - Submit an offer, get acceptance and go through the loan process.

Step 6 - Close on your purchase using an FHA-insured loan.

It can be a very simple process but the first step is to get pre-qualified.