At this morning’s sales team meeting, Grant Norris from RPM Mortgage talked about new loan programs that can get loans of about 5 percent with 5 percent down, and in some cases even lower, more like about 4.5 percent. They have some programs for Jumbo loans up to $979,750 that require only 10 percent down, which is usually unheard of for jumbos. They can do these 5 percent down loans even for attached condos and townhouses, which is a big deal because the low down payment FHA loans required that condos and townhouses either be completely freestanding or that the complex already be on the approved list, which is small in our area.
Grant had some worrisome news, however. There is a draft bill in Congress that will increase FHA downpayment requirements from the current 3.5% to 5 %. Worse, other provisions of this same bill will reduce GSE loans from the current high in Los Angeles of $729,750 all the way down to $412,500 — even lower than the low limit we now have of $417,000. This means that if someone were buying a home for $750,000 with an FHA loan, whereas today they would pay 4.5% plus Mortgage Insurance, in the future they would have to pay 5 1/8 percent, which would for most people kill the affordability — the payment would go from $3667 a month to $3940 a month, almost $300 different.
With the current “cut the deficit” cries in Congress, they almost certainly will do SOMETHING to muck up the interest rates for loans. If you are thinking about buying, NOW IS THE TIME while interest rates are still at historic lows, along with very low prices.