Monthly Archives: October 2022

Just Listed! Check out this Don Anthony Realty 3 bed, 2 bath house for sale in Louisburg, NC in Wilders Village!

Just Listed! Check out this Don Anthony Realty 3 bed, 2 bath house for sale in Louisburg, NC in Wilders Village!

Click the link below for pictures and property details…

https://10WildersLane.utour.me

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Want to sell a townhouse in Cary, NC with low commission like this Don Anthony Realty client? It’s now Under Contract!

Want to sell a townhouse in Cary, NC with low commission like this Don Anthony Realty client? It’s now Under Contract!

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Want to sell a house in Concord, NC with low commission like this Don Anthony Realty client? It’s now Under Contract!

Want to sell a house in Concord, NC with low commission like this Don Anthony Realty client? It’s now Under Contract!

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Just Listed! Check out this Don Anthony Realty 3 bed, 2 bath house for sale in Mint Hill, NC in Ellington Farms!

Just Listed! Check out this Don Anthony Realty 3 bed, 2 bath house for sale in Mint Hill, NC in Ellington Farms!

Click the link below for pictures and property details…

https://6322RobinHollowDrive.utour.me

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Just Listed! Check out this Don Anthony Realty 3 bed, 2 bath house for sale in Clayton, NC in Riverwood Athletic Club!

Just Listed! Check out this Don Anthony Realty 3 bed, 2 bath house for sale in Clayton, NC in Riverwood Athletic Club!

Click the link below for pictures and property details…

https://165MarinoPlace.utour.me

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Finding Funds for a Down Payment

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A soft second loan, sometimes called a silent second, is subordinate to the first mortgage, whose payment is deferred or forgiven until a specific date or the resale of the property. This would mean that buyers would not have to contend with regular payments thereby keeping their debt-to-income ratio lower and more affordable.

While normal lending institutions may not be open to such types of financing, family and friends may be. In some cases, these relatives and friends may be inclined to make a gift to help buyers get into a home. Instead of an outright gift, if the person makes the loan, they have options to be repaid at some point in the future or in other cases, they could forgive the debt but don’t have to make that decision today.

There are more than 2,000 down payment assistance programs nationwide. State, county, and city governments run many of them. Other programs could be from churches, employers, non-profit organizations, regional Federal Home Loan Banks, federally recognized Native American tribes and their sovereign instrumentalities or public agencies.

Various local or state Housing Finance Agencies have used "soft second" mortgages for down payment and closing costs to eligible borrowers. For example, the Indiana Housing and Community Development Authority offers down payment assistance in the amount of 3 to 4 percent of the purchase price of the home at zero percent interest with no monthly payments. The loan is fully forgiven after two years if the borrower remains in the home.

In a more mainstream application, let’s say that a parent or other relative was willing to help a buyer with their down payment and possibly, closing costs to purchase a home now. However, they will need the money for their retirement at some determinable point in the future, possibly, five to ten years.

The sales contract would disclose a "soft second" together with the terms which could include interest and due date such as ten years from execution of note or when they sell or refinance the property whichever comes first. It would also specify that no payments would be made until the maturity.

The mortgagor of the "soft second" may also retain the right to forgive the loan.

The lender of the first mortgage must be aware of the intended soft second and it should be mentioned in the sales contract so it can be underwritten by the lender appropriately. Failure to disclose a soft second to the lender is illegal and borrowers who fail to do so could be prosecuted. Mortgage fraud is classified as a Class C felony under federal law.

Both liens would be recorded for public record for the safety of all parties concerned.

Since this procedure is not commonplace, the advice is to run this concept past your lender prior to writing the offer. With full disclosure in the contract and the proper terms to satisfy underwriting, you should be able to structure a transaction to get a qualified buyer without a down payment into a home.

Some things to consider in the second mortgage note is a firm due date far enough down the road that it isn’t going to trigger risk issues. An example would be ten years or when the property is sold or refinanced, whichever comes first. Specify an interest rate and arbitrary payments which would give the buyer the option to make payments if they wanted. By doing this, the underwriter can calculate payments and amount owed at the term.

In today’s economy, there are a lot of companies that have rich cash reserves, as well as plenty of individuals also. Once buyers have identified a friend or relative to become the lender on the second mortgage, your agent will help you find a lender for the first mortgage who is willing to participate.

The buyer will become pre-approved and the process of finding the home can begin but not until the other steps have been finished.

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Over $31,000 MORE in their pocket!!! These sellers used Don Anthony Realty’s Discount Realtor program to sell a house in Davidson, NC and it’s now SOLD! Congratulations to our clients!

Over $31,000 MORE in their pocket!!! These sellers used Don Anthony Realty’s Discount Realtor program to sell a house in Davidson, NC and it’s now SOLD! Congratulations to our clients!

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Just Listed! Check out this Don Anthony Realty 4 bed, 2.5 bath house for sale in Holly Springs, NC in Sunset Oaks!

Just Listed! Check out this Don Anthony Realty 4 bed, 2.5 bath house for sale in Holly Springs, NC in Sunset Oaks!

Click the link below for pictures and property details…

https://109EdgepineDrive.utour.me

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Want to sell a house in Fort Mill, SC with low commission like this Don Anthony Realty client? It’s now Under Contract!

Want to sell a house in Fort Mill, SC with low commission like this Don Anthony Realty client? It’s now Under Contract!

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“Do you feel lucky? Well, do ya?”

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You may remember the famous line in the Dirty Harry movie when Clint Eastwood has just had a shootout with bank robbers and is standing in front of the lone surviving thief who is considering going for his gun. Harry with his gun pointed at the bad guy says to him ""Did he fire six shots or only five? Well, to tell you the truth, in all this excitement, I kinda lost track myself. But being this is a 44 Magnum, the most powerful handgun in the world and would blow your head clean off, you’ve gotta ask yourself one question: Do I feel lucky? Well, do ya?"

Our economy has had a long recovery from the great recession, due in most part to the housing crisis of 2007-2009. Then, the Pandemic hit in 2020 which tanked the worldwide economy but the surprise to homeowners happened to be housing. 2021 became a red-hot market with prices going up by 21% nationally.

In 2022, mortgage rates have increased by four percentage points and haven’t been this high since 2008. Inflation, at the end of September, reached a 40-year high at 8.2%. The Fed recently said they’ll continue raising rates until they can get inflation near their target of 2% annual rate.

People who own homes have seen their values go up dramatically and so has their net worth. Due to the extremely low inventories and the maturing millennial market, there is a lot of pent-up demand for housing.

This leads us to the scene in the movie. You may be considering buying a house now but at the same time, you’re thinking "Have prices and mortgage rates hit the top of the market so they’ll start coming down or will they continue to go up, making it cost more to get into a home?"

The facts are that the U.S. is the strongest economy in the world. The housing bubble of 2007 was created by over-inflated property values and predatory lending practices. Those conditions don’t exist today. There is a housing shortage in America due to not enough homes being built to keep up with demand and people staying in their homes longer.

Homeowners have record amounts equity in their homes and foreclosure rate hit a historic low at the end of 2021 even though it edged up a bit in spring of 2022 as reported by CoreLogic.

Homes are expected to continue to appreciate but not as fast as they did in 2021. The revised predictions for 2022 appreciation vary from Fannie Mae at 16%, Freddie Mac at 12.8% to NAR at 11.5%.

NAR Senior Economist Nadia Evangelou recently said "Mortgage rates are a heartbeat away from the 7% threshold. According to Freddie Mac, the 30-year fixed mortgage rate rose to 6.92% from 6.66% the previous week. While inflation remains elevated, mortgage rates will continue to move up, making homeownership even further out of reach for many."

If the home you could buy this year for $500,000, will cost you $550,000 next year and the mortgage rate goes up from 6.5% to 7.5%, the payment will go from $2,844 to $3,461 based on a 90% mortgage for 30-years.

If interest rates are temporarily high based on the Fed’s position to lower inflation, a home could be purchased at today’s price and refinanced later when the rates come down. 5/1 adjustable rate mortgages allow a borrower to lock in a lower initial rate for five years which would allow a person to find the best time to refinance.

So, back to the movie scene… "you’ve gotta ask yourself one question: Do I feel lucky? Well, do ya?"

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