Dean's Blog

Realtor Mag, the official publication for the National Association of Realtors, just published an article on the top five real estate scams to know about. The five scams listed are:

• The Foreclosure Rescue Scheme
• Loan Documentation Fraud
• Appraisal Fraud
• Illegal Property Flipping
• Short Sales Schemes

It’s important that you become aware of these real estate scams. Even if you are not currently in the market to buy or sell real estate, you could be approached with an offer that may seem to benefit you into the future.

While there are many legitimate programs and options out there to help people, you must have your antennas up at all times for offers that don’t seem quite right, and these real estate scams are just a few.

Great news! 100% financing is back for rural areas. Congress approved the restoration of Rural Housing funding, subject to the President’s signature. We notified you in June that some of our lenders were closing Rural Housing loans in anticipation of the funding being restored, and now all lenders who are closing these loans should be joining the crowd.

The biggest advantages to this program are:

• 100% financing of the home purchase
• NO monthly mortgage insurance
• Competitive interest rates

This is a great program that provides up to 100% financing for the purchase of a home in rural areas. In this case, a rural area is where the population is less than 20,000 people. In Northwest Washington, all areas north of Marysville are eligible except for Mount Vernon and Bellingham. So, areas like Burlington, Sedro-Woolley, Anacortes and Oak Harbor are eligible! You can check your area for eligibility online.

There are income limits that cannot be exceeded, but they are pretty generous. For a family up to four people, here is a sampling of the maximum income allowed for 2010:

• Skagit County: $74,050
• Whatcom County: $74,050
• Island County: $89,500
• Snohomish County: $92,600
• San Juan County: $78,050

The income limits are even higher for families with five to eight people. You can check income limits for your area online.

The one major change for this program is the funding fee, which is used to self-insure the program. By self-insuring, there is no need for a monthly mortgage insurance payment from the home owner. That makes this program less expensive on a monthly basis in most cases when compared to FHA or conventional loans. The only other program that works this way is VA.

Additionally, instead of relying on Congress to re-authorize funds for this program each year, the funding fee has been increased from 2.0% to 3.5%. This funding fee can be financed into the loan, so when the seller pays for the buyer’s closing costs and pre-paid items, the buyer can achieve a no-money down loan.

Remember, not all lenders will originate Rural Housing loans. Either they don’t do any government loans, or they have elected not to have this product in their mix. So, make sure you’re speaking with a local, professional mortgage advisor who has access to all the available products. Our firm has several lenders offering this product, so feel free to contact me with any questions you have about 100% financing in rural areas.

Two days ago, the House of Representatives agreed to extend the closing date for the first-time home buyer’s tax credit from June 30, 2010 to September 30, 2010. Today, the Senate agreed to the same thing. All that is required now is the President’s signature.

While this doesn’t provide a new opportunity for buyers who missed out on the credit, it does allow those buyers who signed a purchase contract on or before April 30, 2010 extra time to get their loans closed.

There are many transactions that involve foreclosed properties or short sales which can take longer to process. This extension gives those buyers extra time to complete the process.

Many lenders and escrow companies, including those here in Burlington, Mount Vernon and Anacortes, have seen increased volumes due to the deadline which came and went yesterday. Not helping is the furlough days that Skagit County is taking, which shuts down the recording office.

So, if you’ve needed more time to close on your home purchase, it’s likely you’ll get it.