Financing in Frisco>Question Details

Kevin, Home Buyer in Frisco, TX

Any chance of 95-100% financing in this economic environment?

Asked by Kevin, Frisco, TX Mon Mar 2, 2009

I live in a 3/2/2 in Creekside at Preston in Frisco, and I'm looking to upgrade to a 4-5 bedroom home in the next year or two as my family grows. I would like to take advantage of some of the good deals in the area, and I have about $30K equity in my current home (20%), but I would rather keep it and rent it out for several years rather than sell it right now since the rental demand is increasing and home sales prices are down.

I have great credit (790-800) and about $15K cash to use on a down payment and closing costs, which I realize doesn't go too far when considering purchasing a home in the $250K range. Will banks still finance 95-100% of a mortgage with reasonable interest rates (w/pmi or a piggy-back of course), or is that a thing of the past?? Also, will they count the mortgage payment on an investment property toward the max debt/income percentage even if it is producing income?

Any suggestions are welcome and I appreciate your time.

Kevin

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Hi Kevin,
100% financing is out unless you are a veteran. However, you can do an FHA with 3.5%. The USDA loan has to be for a home in a rural area. If you are staying in Frisco, there is no area that qualifies, but there are a few in Little Elm.

Your credit score is awesome!!! way to go. There are a few deals on the market down the street at the Dominion and across the street from you with 5 bedrooms. I work heavily in the area and I actually just sold a couple homes on Drexel, one and Ambrose and one on Rankin within the last couple of weeks.

A few people that were renting in the area just purchased homes so a couple more homes are going to come up on the market for lease.

Naima
214-289-8555
Naima@Sumner-realty.com
2 votes Thank Flag Link Mon Mar 2, 2009
Yes, VA and USDA both offer 100% financing.

You would need to be either a veteran, married to one, or choose a location in eligible USDA areas. Yes, areas near you are eligible. Sorry, no Dallas county.
Web Reference: http://www.Mortgages-TX.com
1 vote Thank Flag Link Wed Mar 4, 2009
Hey Kevin, it used to be that you could have a lease signed and move on to another property. Today the lenders want to see a tax return with your lease property showing as such. So yes, your DTI (debt to income ratio) will be depleted in the short term against your buying strength. It's ever changing in the lending market and you do have the right idea about renting yours and waiting until the market picks up in your area. If you are in a position to wait it out, some are not, I'd stick with that plan.

As far as buying, if you have an FHA loan, you can't have two FHA loans at a time, as far as I know. So you would have to structure this as buying a new primary residence and show you now current home as an investment. As long as you can qualify for both payments you are okay. New loan would be conventional 5% down and be shown as your primary residence. Depending on the underwriter it can be tricky still due to the state of lending right now as well.

It get's sort of deep, and things could change, but as as today that's how you'd do it. Lenders out there, correct me if I missed something.

Good Luck
Web Reference: http://www.robpurifoy.info
0 votes Thank Flag Link Fri Mar 6, 2009
Hello Kevin,

We can assist you will equity loan. kindly contact me via..james_baxter@live.com for more information.
0 votes Thank Flag Link Tue Mar 3, 2009
Hi Kevin,

Thanks for your question. It looks like you've gotten some great responses thus far.

I encourage you to call Hal Coon w/Leader One Financial at 214-728-9681 or e-mail him at halacoon@msn.com. He can help you plan for your future loan and let you know specifically where the geographic areas are where you can get the 100% USDA loan if that is of interest. Some areas in Little Elm have Frisco schools. Congrats on your credit score! You've done a super job. Please let me know if we can help in any other way.

Thanks!
Terri Hayley
The Hayley Group, Keller Williams
0 votes Thank Flag Link Tue Mar 3, 2009
Hi Kevin,
Home sale prices are down in Creekside at Preston in Frisco? I have not found that to be the case. Demand for a home in Frisco under $200k is GREAT. It was last year, too. Frisco has location-location-location. I lease and sell in Creekside every year. The market is strong for both. Consider selling your current home and then using your equity position to buy a new family home and an investment property. Your credit score means you qualify for the best offerings in the lending and insurance trades right now. USDA loan won't work in Frisco since geographically, it isn't included. But, did you know Prosper is? And Aubrey, Little Elm, Oak Point, and parts of The Colony.

You will very likely go FHA with your purchase. And, expect closing to take 30-45 days. FHA processors are absolutely swamped right now, so it's not a good time to push for expedited closings.

Inventories in Frisco are pretty low right now, compared to last year at this time. It's not a bad time for you.
Happy to help if you want to get together. I am managing a lease on Galaxy right now and am in your neighborhood every week.

Ronda Allen, C.P.M., Realtor
The Keith Dobbs Team at RE/MAX Dallas Suburbs
Web Reference: http://www.keithdobbs.com
0 votes Thank Flag Link Tue Mar 3, 2009
Kevin: Looks like you have received some great answers, however the question regarding the rental income was not addressed. Typically, rental property Income/expense is calculated as follows:

Gross Rents less Cost x .75 = Rental Income

Cost = Mtg. Payment+Prop Tax+Insurance+Association Dues (if applicable) -

There are many opportunities available. I hope this was helpful and best wishes to you.
0 votes Thank Flag Link Tue Mar 3, 2009
102% Financing is available in Eligible areas with the USDA Rural Development Loan Programs. Much more information available on my website. Sorry short on time to elaborate more.
0 votes Thank Flag Link Mon Mar 2, 2009
Hi Kevin,

Lenders have tightened their restrictions on turning your current residence into an rental property. You are in the right area with 20% equity. That is the first requirement. 100% financing is out unless you are VA. There are 3% FHA and 5% Conventional products available with the right credit. You must have a lease agreement for the rental property before you can close on the new home. Now is a great time to move up and take advantage of the market and interest rates. Even if you choose to sell your current home, you save more on the buying end as you move up. But it sounds you are close to the requirements for converting your existing home that you should talk to a lender about the fine print. I have been dealing with a couple of clients who are considering similar moves. Give my lender a call and let him walk you through the details. Call Mark Potter at McKinney Mortgage Group. 975-542-9975 or mpotter@mckinneymg.com.

If you need a market analysis on your current house or would like an idea of the current lease rates, I can provide that information as well as help you find a great deal on a new home.
0 votes Thank Flag Link Mon Mar 2, 2009
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