Mortgage Lenders and Private Home Sales
by Shayla Damery, First Foundation Residential Mortgages.
     A lot of new policies have been implemented with mortgage lenders (and the government) since the economic slowdown. We've seen the removal of 100% financing, a variety of lenders suspending their Home Equity Lines of Credit (HELOCs), and the “prime minus a discount” rates on variable rate mortgages turn into “prime plus a premium”.
     Another thing we've seen come into play is some mortgage lenders' refusal to lend money for private home sales. Many lenders see a "For Sale By Owner" or "FSBO" as a riskier transaction because it usually doesn't come with the same degree of due diligence that a sale does when listed on the MLS by a licensed real estate associate.
     FSBO sales are more difficult to finance because lenders perceive an increase in the possibility of fraud and the difficulty of determining an appropriate market value.
     Many lenders are also refusing to finance properties marketed by "FSBO" services like ComFree. As many of you know, ComFree is a private sales service. Besides the reasons above, many homes offered for sale through ComFree have sale prices that are often not consistent with actual market values, especially since today's market is changing so quickly. ComFree just can't keep up, and lenders prefer to be sure about market value. Having a licensed person or two as part of a real estate transaction is important to help protect both the buyer and the seller and to prevent fraud.
     Overall, while obtaining a mortgage on a private or ComFree sale is still possible, it can be more difficult and it could become even harder in the future. Therefore, it's a good idea to explore your financing options and employ the services of a Realtor to be sure you're protected.
For excellent mortgage advice, recommended by Preferred Real Estate Group, visit First Foundation Residential Mortgages website.