POSSIBLE PROBLEM-TYPE PROPERTIES

Did you know you may have some trouble selling a certain type property these days?

Loans that are long-term fixed, lowest rates, least down are CONVENTIONAL LOANS that, even though they may be serviced by local lenders, are SOLD on secondary market. If you've ever heard the term Fannie Mae, Freddie Mac, Gennie Mae, these are where the bulk of the funds come from for today's mortgages. When lenders do a 30 year fixed rate loan, they use their own money to do the loan, then the loan is sold and they are reimbursed their funds so they can do more loans. The buyer may continue to make their loan payments to that lender, even though the loan is sold, or they could be paying someone else. A lender sells the loan, but can choose to retain the "servicing" or the handling of the loan payments. Loans can be sold at any time during their term.

In-house loans are loans where the lender uses their own funds and does not sell them. You will not get a 30 year fixed. Most likely, it will be a 1-3 year adjustable rate (ARM) or loan with a balloon payment that is due in 1-3 years. They will not tie up their funds for 30 years. It's not good banking business.

To get these long term, fixed rate, low rate mortgages they need to meet the requirements of secondary market, or as I like to say, borrowers have to JUMP THROUGH THE HOOPS. Believe me, there are a lot of hoops these days. Secondary market, to simplify, only wants cookie-cutter homes that will sell easily and fast if they need to foreclose on them. The hoops are their way to ensuring the chances of getting that loan back minimal.

Because of the continual tightening of mortgage guidelines, properties that may be difficult to get the secondary market loans on these days are:

1) Investment property - 1-4 unit non-owner occupied income/rental properties need 25% down, a high credit score, and unless the borrower has had a 2 year history of being a landlord, they probably won't let them use any rental income to help qualify them for the loan. Most people need that rental income to qualify.

2) Unique properties - Secondary market doesn't like unique properties. If it's unique they may have trouble selling it if they foreclose on the property. Also, to be acceptable on secondary market, there needs to be 2-3 comparable sales that have sold in 30-90 days. Unique properties are an appraiser's nightmare and hard to appraise. Unique properties are Dome houses, earth homes, log homes, 1 bedrooms, multiple out buildings, holding tanks, 2 homes on one lot.

3) Manufactured homes - Loans for manufactured are VERY DIFFICULT these days. Borrowers are most likely going to need a substantial down payment, and won't be able to get a fixed, long-term loan. Don't get manufactured confused with MODULAR. Modular are not as tough. Make sure you let your lender or Realtor know upfront you are selling or buying a manufactured so you avoid problems. Make sure you know the obstacles involved with manufactured homes.

4) Acreage - We're back to minimum acreage again. Years ago, no one liked loans with excessive acreage (more than say 5-12 acres). Over time, as long as there were comparable sales, 40 acres was OK. Not any more. The land value can't exceed 30% off the total value. You may need to plan on splitting off the house and 5-10 acres and buying the excess acreage separately.

If you have a unique property you're tyring to sell, give me a call and I'll walk you through some possible options.

Have a great day.