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Borrow it all!

BOB KIEBER

Mortgage investors have sharpened their pencils and come up with mortgage programs that I only dreamed about ten years ago. We are now seeing mortgage programs that pay you to buy property, almost.A few years ago mortgage investors wanted to see a borrower with a 20 percent down payment in their hands before they would even consider approving a home mortgage application. Now, I have mortgage investors that not only let someone borrow the whole amount of the purchase price of the property, but will pay for the closing costs and wrap those costs right into the loan. One investor I have will allow this amount to go up to 107 percent of the purchase price. These programs are set up for buyers who are buying primary residences.For those of you who already own a primary residence but are looking to buy a second home or investment property, there are programs out there that are almost as good. How about a mortgage program with zero down? Yes, there are programs that allow a borrower to obtain a loan for the entire purchase price.As a bonus, the requirements for the borrower to have excellent credit scores have been reduced – now almost all borrowers can qualify for these mortgages.But, as always, when a deal sounds too good to be true, there is a catch. The catch here is that mortgage interest rates get higher as the borrowers credit scores go lower and the percentage of the loan amount to the purchase price goes up.As an example, Mr. Chuck Stake wants to buy a second home in the High Country. If he makes a 20 percent down payment, the interest rate will be in the mid-4 percent range for a five-year, adjustable rate mortgage. If he decides to put down only 10 percent of the purchase price, his interest rate will rise to the low 5 percent range, and if he decides to borrow the whole purchase price, the interest rate will be in the mid-6 percent range. So the risk decreases for Chuck Stake as his down payment decreases, but the reward to the mortgage investor increases.Now if his credit were just 20 points lower, his interest rate may increase another 0.25 to 1 percent. Once again the less risk for the buyer the greater the reward to the lender. Sounds like a fair deal to me!So, if you are looking to buy a primary residence, second home or investment property and are willing to pay the price of a higher interest rate, there’s a mortgage ready for you.For answers to your mortgage related questions, call Bob Kieber at (970) 262-1199 or e-mail him at rkieber@comcast.net. Bob is a local mortgage banker and principal of Resort Lending. He has 30-plus years of professional experience in real estate, finance and investments, and is a longtime resident of the High Country.


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