Arizona Real Estate Market Conditions

The Real Estate market is forever changing. Factors beyond our control has a tremendous affect on the United States Real Estate market. It is impossible to forecast market conditions, but it is imperative to know where we are today by looking at recent events to make an informed decision about buying or selling Real Estate in Arizona.

Right now in Arizona, it is becoming harder and harder to get a loan for a few different reasons. Many banks in Arizona have gone out of business because of an extremely high foreclosure rate. The reason many banks went out of business is because these banks home buyer approval standards were too low. When something like this happens, the other banks that are still in business begin to tighten up their home buyer approval standards. The banks now are requiring more documentation on buyers, and raising the bar when discussing getting approved for a home loan. Banks are going to want buyers that have higher credit scores, make more money, and have a very good work history.

About a year ago, the Arizona market was booming, it was nearly impossible to get a home without competing with four or five other buyers for the same home. Out of state investors were coming in and buying up a lot of Real Estate in Arizona because the interest rates were at a nearly all time low, and home prices were affordable. Investors drove the home prices up to a point where it became un-affordable to low and average income families. Home builders in Arizona decided to start building massive communities to feed the investor frenzy. The prices topped out, and began to fall. On top of this fall, the interest rates started to climb. Now, in many areas of Arizona, builders are stuck with homes that are built with no one to buy them. Residential re-sale sellers are having the same problem. Who would buy a home in Arizona when home values are dropping, and interest rates are climbing?

Over the last few months, prices have continued to drop. Sellers and builders are giving buyers incredible incentives to buy. A few weeks ago in the United States, Wall Street took a big hit because of foreign market fluctuations. There was a huge loss on Wall Street and worried many that the United States may be facing another recession. The United State economy thankfully started to bounce back after the big loss. What does this mean for the consumer?

When Wall Street takes a hit, and the United States economy indicates a possible recession, they drop the interest rates to stimulate the market. The interest rates at this point in time are actually very good. Many sellers in Arizona right now are re-financing, and many buyers are beginning to buy because the prices have dropped to a point were the average person can afford a home. When the prices start to level out, and the interest rates drop, it may be an extremely good time to buy in Arizona right now. If you have a high interest rate and you are a home owner, now is a great time to re-finance your home. It is not the best time to sell right now, but not impossible. The home just needs to be priced correctly. The days buying a home one month, and selling the home a month later for a forty thousand dollar profit are gone, for now. So if you are selling, you home needs to be in the top one or two in the neighborhood when talking about price per square foot.

If you are not interested in no deposit bonuses , then you have already missed a lot.

Crisis Or Opportunity – The Truth About The Arizona Real Estate Market

The present real estate market is acting just as it should on the heels of the greatest real estate boom in the last 40 years. There is a long way to fall to get back to “normal”. This falling back into a normal market, coupled with the contraction of the sub-prime mortgage market has the real estate consumer, and many homeowners in a state of fear. The various media continue to depict a very grim picture of the markets in general without distinguishing between the national market and local markets, such as the Arizona real estate market, with factors unique in the ways of population growth and investor activity. I have seen numerous articles referring to the sub-prime debacle as a global crisis. That may be taking it just a bit too far.

The truth is, there is no geopolitical significance to recent events in the U.S. real estate market and the sub-prime crisis. To rise to a level of significance, an event — economic, political, or military — must result in a decisive change in the international system, or at least, a fundamental change in the behavior of a nation. The Japanese banking crisis of the early 1990s was a geopolitically significant event. Japan, the second-largest economy in the world, changed its behavior in important ways, leaving room for China to move into the niche Japan had previously owned as the world’s export dynamo. On the other hand, the dot-com meltdown was not geopolitically significant. The U.S. economy had been expanding for about nine years, a remarkably long time, and was due for a recession. Inefficiencies had become rampant in the system, nowhere more so than in the dot-com bubble. That sector was demolished and life went on.

In contrast to real estate holdings, the dot-com companies often consisted of no real property, no real chattel, and in many cases very little intellectual property. It really was a bubble. There was virtually, (pun intended), no substance to many of the companies unsuspecting investors were dumping money into as those stocks rallied and later collapsed. There was nothing left of those companies in the aftermath because there was nothing to them when they were raising money through their publicly offered stocks. So, just like when you blew bubbles as a little kid, when the bubble popped, there was absolutely nothing left. Not so with real estate, which by definition, is real property. There is no real estate bubble! Real estate ownership in the United States continues to be coveted the world over and local markets will thrive with the Arizona Real Estate market leading the way, as the country’s leader in percent population growth, through the year 2030.

As for the sub-prime “crisis”, we have to take a look at the bigger picture of the national real estate market. To begin with, remember that mortgage delinquency problems affect only people with outstanding loans, and more than one out of three homeowners own their properties debt-free. Of those who have mortgages, approximately 20% are sub-prime. 14.5% of those are delinquent. Sub-prime loans in default make up only about 2.9% of the entire mortgage market. Now, consider that only 2/3 of homeowners have a mortgage, and the total percentage of homeowners in default on their sub-prime loans stands at around 1.9%. The remaining two-thirds of all homeowners with active mortgage prime loans that are 30 days past due or more constitute just 2.6% of all loans nationwide. In other words, among mortgages made to borrowers with good credit at application, 97.4% are continuing to be paid on time.

As for the record jumps in new foreclosure filings, again, you’ve got to look closely at the hard data. In 34 states, the rate of new foreclosures actually decreased. In most other states, the increases were minor — except in the California, Florida, Nevada, and Arizona real estate markets. These increases were attributable in part to investors walking away from condos, second homes, and rental houses they bought during the boom years.

Doug Duncan, chief economist for the Mortgage Bankers Association, says that without the foreclosure spikes in those states, “we would have seen a nationwide drop in the rate of foreclosure filings.” In Nevada, for instance, non-owner-occupied (investor) loans accounted for 32% of all serious delinquencies and new foreclosure actions. In Florida, the investor share of serious delinquencies was 25%; in Arizona, 26%; and in California, 21%. That compares with a rate of 13% for the rest of the country. This makes for some great buys for the savvy Arizona real estate investor in the area of short sales, foreclosures, and wholesale properties.

Bottom line: Those nasty foreclosure and delinquency rates you’re hearing about are for real. But they’re highly concentrated among loan types, local and regional economies, and investors who got their foot caught in the door at the end of the “boom” and are just walking away from those poorly performing properties. Most of those investors still have homes to live in, maybe more than one.

In the wake of the boom years, we now have a high inventory of homes on the market, Investors and speculators who quickly bought up homes dumped them just as quickly back on the market in hopes of a fast return. The frenzy of investors purchasing homes put pressure on inventories and drove prices up, further increasing investor activity. Then, as if all at once, many of those investors put their properties on the market, creating an imbalance in the reverse direction. With so many homes on the market, prices began to stall and then fell. Prices will continue to fall until demand chews up excess inventories.

With investors no longer a big part of housing demand, primary homeowners are slowly chipping away at the existing inventory. The Las Vegas housing market will rebound in March 2008, according to the largest and most respected appraisal firm locally. The main contributing factor to the sooner than later rebound of this southwestern city is a growing population and thriving local economy.

Arizona and Nevada are expected to lead the country in percentage population growth for the next 20-25 years. The population of Arizona is expected to approximately double during that time so we can expect a strong housing demand going forward. Normal inventory levels for Phoenix real estate are about 6-8 months. Current inventory is about 10-12 months. So, we are not far above “normal” inventories in Phoenix. There are, however, outlying cities in this large metropolis that have inventories in excess of 1 year. Queen Creek real estate inventory is the worst with approximately a 2-3 year surplus of homes on the market, mostly due to the large percentage of new homes purchased by investors and then quickly flipped back onto the resale market. Surprise and Peoria real estate markets have a 1-2 year inventory for largely the same reason. We are already seeing some Scottsdale real estate and Paradise Valley real estate prices increase in value. Billions of dollars are being poured into the local economy in the way of commercial development from the downtown area to Northeast Phoenix and Scottsdale.

AZ Refinance Offers Mortgage Relief to Arizona Borrowers

AZ refinance is an option for Arizona homeowners who want to reduce monthly mortgage payments. When borrowers refinance mortgages they take out a new loan to pay off outstanding mortgages. This finance option is typically used when property owners can reduce interest by at least 1-percent.

Prior to applying for AZ refinance, Arizona homeowners should review their current home loan documents to determine if a prepayment penalty exists. Many lenders offer borrowers a reduced rate of interest if they agree to remain in the home for at least five years. If borrowers sell or refinance early a penalty is assessed. Each lender’s prepayment policy varies, so homeowners must take time to determine early payoff penalty amounts.

Not all Arizona mortgage loans include prepayment clauses. FHA and VA loans do not include early payoff penalties, nor do home loans obtained through chartered credit unions. Property owners should contact their mortgage provider to discuss loan terms and refinance options.

Refinancing in Arizona can be more challenging than other states. According to the U.S. Bureau of Labor Statistics, Arizona currently has an unemployment rate of 9.1-percent. Unemployment rates have increased by nearly 3-percent since July 2008; causing many homeowners to remain unemployed or entered into a new job earning less income.

The East Valley Tribune reports Arizona property values dropped 13-percent in the first quarter of 2010, leaving many homeowners owing more on their mortgage note than their property is worth. Homeowners in Phoenix experienced the highest drop in real estate values with a decrease of nearly 18-percent.

One of the most daunting reports of the Arizona real estate market comes from The Arizona Republic, which claims Arizona’s new immigration law, SB 1070, could cause mass exodus from the state and result in additional foreclosures and further property value decline.

While all of this may sound discouraging, many AZ residents still qualify for mortgage refinance. Those who have been able to maintain a solid employment history and hold adequate home equity can benefit from refinancing into a lower interest loan. However, certain aspects of the process must be considered.

Borrowers who enter into mortgage refinancing can incur multiple expenses. In addition to prepayment penalties, banks often assess loan application and origination fees, property appraisals, home inspections, lawyer review fees, and closing costs.

AZ refinance rates can equate to several thousand dollars. However, reducing interest by 2-percent or more reduces monthly installments; allowing borrowers to recover costs within a short period of time. Depending on the amount refinanced and reduced interest borrowers can potentially save thousands over the term of the loan.

Property owners often turn to their servicing lender to refinance, but it is a good idea to comparison shop. The Internet makes it easy to compare multiple lenders interest and refinance rates. One of the most trusted sources for lender comparison is Borrowers can locate nationwide and Arizona-based lenders, compare interest and refinance rates, and utilize mortgage calculators to discover potential savings.

Arizona residents should obtain a current copy of their credit report and fico score. In order to obtain prime interest rates borrowers must have a credit rating of 760 or higher. Home loan interest rates can fluctuate as much as 2-percent between pristine credit and poor credit.

Banks provide borrowers with a Good Faith Estimate of anticipated refinance fees. These estimates do not include services from third party services such as property appraisals and inspections. Lenders generally provide a list of refinance requirements and borrowers contact third party providers for cost estimates.

Homeowners who obtained bad credit mortgage loans and have restored their credit might benefit from AZ refinance. Bad credit loans carry a higher rate of interest and can add several thousand dollars to the loan amount. Borrowers with bad credit should strive to obtain a credit score of 720 or higher to reduce interest by as much as 2-percent.

AZ refinance can reduce monthly mortgage installments, but can be costly to initiate. Arizona property owners should take time to research mortgage refi options. As with most important life decisions education is the key to success. If necessary consult with a real estate attorney or mortgage specialist.

Finding The Perfect Arizona Home

There is a lot of excitement involved when purchasing your first home. It’s a time of high emotion when things can seem to take forever or happen really quickly in the same day. It is this time when some snap decisions have to be made that can dramatically affect the purchase process. Everyone would love to have surplus time in which to consider their home purchase but sometimes that is not the case. Careful planning in the early stages is a good way to ensure smooth sailing once you start the process of making serious offers. Things can move quickly in the Arizona real estate market, you had better be prepared!

The best things you can do when purchasing an Arizona home is your homework. Spend some time learning about the process that a home purchase takes; learn about the different stages that it moves through so that you can be prepared for any situation that arises. Your realtor is a invaluable resource during this process as they are skilled at navigating the twists and pitfalls involved with the purchase of a home. Another good idea is to have your finances completely dealt with and verified before considering buying. Have your mortgage approved and ready to go on all counts before making an offer. If you wait until offers are made to secure financing, you could easily lose the home to another buyer with approved financing or end up in a bad situation where you find out that the financing that is available to you is not enough to cover your offer. This can be a terribly bad situation for all involved so avoid it at all costs.

Now, in searching for your perfect home, take a second to consider what the future will hold for you. If you are single, is marriage in the plans? Children? Is this going to be a home you live in for many years? Try to plan ahead for the home and realize whether or not an upgrade will be necessary or if this is going to be home base from the foreseeable future. Its much better to accommodate any future plans before purchase when there are still options available.

Understanding Seller Financing Benefits and Risks

Seller financing happens when the owner of a property agrees to finance the buyer. As anything it has its pros and cons. This article will discuss some of the benefits and risks/drawbacks for sellers and buyers.

Benefits for sellers

– Seller may be able to sell property faster. The pool of buyers increase significantly when the seller offers seller financing. Many buyers do not qualify for traditional financing and decide to seek seller financing opportunities.

– Seller can usually demand a higher price for his property. Seller financing is a value added benefit to the transaction. Buyers that do not qualify for traditional financing will typically be more flexible and will accept to pay more.

– Seller can defer taxes on the appreciation of the property. As you probably know, sellers pay taxes on the amount the property appreciated since he bought it. When they sell the property outright, they end up having to pay taxes that year. When they finance the transaction, they do not pay taxes on the appreciation until the new owner refinances the mortgage.

– Seller can typically receive a nice return on the money he has invested in the property. Sellers that offer seller financing will typically charge a higher interest rate than the prevailing rates charged by traditional lenders.

– Quicker escrow. Once buyer and seller agree on the terms, the transaction can move forward and close within a few days. Transactions using traditional mortgages still require a few weeks before they can close.

Benefits for buyers

– Opportunity to buy a property even if he does not qualify for a traditional mortgage.

– Lower closing costs. Traditional lenders charge a number of fees when they issue a mortgage. As a general rule, buyers are responsible for paying those fees. In seller financing transactions, sellers will typically charge fewer fees if any.

– Everything is negotiable. Buyer and seller can negotiate down payment, closing costs, interest rate, term, etc. Sometimes a buyer can obtain a lower down payment by agreeing to a higher interest rate, or vice-versa.

– Quicker escrow. As mentioned above, once buyer and seller reach an agreement, we can close within a few days.

Risks and drawbacks for sellers

– Seller does not receive his money until buyer refinance the mortgage few years later.

– Seller is now acting as a bank, with similar responsibilities. He has to collect payment, send past due notice, pay property taxes or confirm that buyer paid them directly, pay homeowner’s insurance or confirm that buyer paid it, etc. To minimize work, seller can hire a company to service the loan.

– If buyer defaults, seller has to initiate foreclosure proceedings in order to take the property back. Foreclosure is a complex process that needs to be executed correctly.

Risks and drawbacks for buyers

– Buyer will need to refinance the mortgage within a specific amount of time. Most sellers will carry the note for 2 to 5 years. Few sellers may go longer than that. However it is very uncommon for sellers to agree to carry the note for 30 years like a traditional mortgage. Buyer will need to pay for the refinance.

– There is a risk that the property may not appraise when buyer tries to refinance. To protect the buyer, the note should have a provision to deal with this situation.

– There is a risk that the buyer may not qualify for a traditional mortgage by the note’s deadline. To protect the buyer, the note should have a provision to deal with this situation. One way to address this risk is to have a provision that allows buyer extra time to qualify.

– Buyers eager to buy a new property, may end up overpaying. In a traditional mortgage, banks will order an appraisal that will provide another layer of protection for the buyer. A typical seller financed transaction will not have an appraisal done. Buyer should be extra cautious.

Seller financing is a wonderful instrument that can benefit both buyers and sellers. However, it is too easy to focus only on the benefits and forget about the risks and drawbacks. Buyers and sellers should invest the time to understand the process and seek advice of a knowledgeable professional.

Banking and Finance Attorney

The Arizona banking and finance attorney career center will help you with state and federal laws pertaining to the regulation of banks and financial institutions, including establishment of the institutions, day-to-day operations, and banking, both electronic and international.

However, before you approach the Arizona banking and finance attorney career center, you must understand the jobs of banking attorneys, how to select a good lawyer, and many other things. Banking attorneys deal with the state and federal statutory laws pertaining to the regulation of banks and financial institutions. Even if you are not facing litigation or a regulatory enforcement proceeding, retaining a banking and finance attorney to assure compliance with all state and federal banking laws, rules and regulations governing the operations of your institution will certainly help you avoid legal hassles later.

If you have a banking or finance problem and you do not already have a list of prospective lawyers, one of the greatest places to start your prudent search is the Arizona banking and finance attorney career center. You can do a free search to come up with a list of lawyers. Moreover, once you have a list of lawyers, you want to find out every thing you can about them and then do some initial screening to whittle down your list to three or four prospective candidates. You need to locate the best resource to get extensive yet authentic information on the various factors associated with the Arizona banking and finance attorney career center. This would help you to select the right Arizona banking and finance attorney career center.

Arizona Real Estate Power Hour – Overview of Section 2 of the Arizona Purchase Contract – Part 1-2

In this article we are going to discuss the second section (FINANCING) of the Arizona Residential Resale Real Estate Purchase Contract. The FINANCING section is used only if the buyer is planning on getting a loan to pay for part of the purchase price. For all cash transactions, the FINANCING section is skipped.

Please note that this article applies only to the Real Estate Purchase Contract in use in Arizona. For information on Real Estate Purchase Contracts in use in other states please check with the Association of REALTORS in each state.

The FINANCING section has 11 subsections. We will cover the first 6 subsections in this article and the remaining 5 in part 2.

2a. Loan contingency – this is probably one of the most important clauses in the whole Purchase Contract. It states that the buyers will not be obligated to complete the sale if they can’t obtain the loan to buy the property. One important point is that the buyers will have to provide a Loan Status Report (also known as LSR) when they submit an offer to purchase the property. The LSR describes in detail the type and terms of the loan the buyer is pre-approved for. The buyer is required to seek the specific loan with the lender that signed the LSR. If the buyers change the loan product or the lender and can’t obtain the loan, they will not be able to use the loan contingency to cancel the contract.

2b. Unfulfilled loan contingency – states that the contract can be canceled and the buyers will be entitled to receive a refund of the earnest money if they can’t obtain the loan. It is important to note that the buyers will have to demonstrate that they did all they could to obtain the loan. Failure to have the down payment and other funds to close the transaction; or failure to provide required documentation to the lender is not an unfulfilled loan contingency; and as a result can’t be used to justify contract cancellation and refund of earnest money.

2c. Appraisal contingency – another important clause to protect the buyers. If the property does not appraise for at least the sales price, buyers are not obligated to complete the transaction. Buyers will be entitled to cancel the contract and receive a refund of the earnest money. Buyers have five days after notice of the appraised value to cancel the contract. If they fail to cancel the contract within that timeframe, the appraisal contingency will be waived.

2d. Loan Status Report – LSR is a document issued by the lender which shows that the lender has pre-approved the buyer for the loan product and amounts described in the LSR. This subsection includes language to incorporate the LSR into the Purchase Contract.

2e. Loan application – states that buyers are required to complete their loan application within five days of Purchase Contract acceptance. Buyers are required to (1) complete, sign and deliver to the lender a loan application with requested disclosures and documentation; (2) grant lender permission access buyer’s credit reports; and (3) pay all loan application fees.

2f. Loan processing during escrow – requires that buyers work diligently during escrow period to provide lender with additional information and documentation necessary to obtain the loan. This subsection also authorizes lender to provide loan status updates to all real estate brokers involved in the transaction and to the sellers.

Arizona Land for Sale has good long-term Growth Potential

Land for sale in Arizona has become a popular investment, following the surge in home values in many areas of the state.

Investors who saw the growth potential – and invested a few years ago, have made some huge profits. However, as new inexperienced buyers enter the fray, have the big gains come to end – or are there more to come?

Let’s find out what the profit potential is for from land for sale in Arizona:

Land for sale is dominated by key players – who often hold large swathes that smaller investors want to buy – and they’re not selling it cheaply anymore – prices asked, and received tend to be quite high.

Not only are prices up – they’re expensive now – and the upside isn’t going to be what it was over the last 5 years.

Arizona land for sale tends to be more speculative than buying developed properties. That makes good Arizona land lots harder to value – and makes financing more difficult, if buyers want to pursue this option.

Some lenders – including most of Arizona’s largest banks, simply don’t give land loans to non-commercial buyers – except those who’ve selected land lots with sewer lines, road access, and other infrastructure in place.

“Ideal borrowers hold for 12 to 18 months while designing their dream homes,” said Mike Downing, a senior vice president at Chase Home Finance in Phoenix. “As for raw land, where people are looking for the next big opportunity to flip, we don’t participate in that.”

Hard lender terms encourage seller financing – and of course, cash deals. This can put raw-land purchases out of the reach of middle-class buyers – especially since land doesn’t generate any Income – it relies on development to bank a profit.

Buyers of Arizona land in lots, or parcels of 5 to 10-acre can pay up to $200,000, 10 years ago, you could buy for around $45,000.”

The phoenix market continues to attract investors – but how good an investment is the land? In addition, will prices really hit the highs that people expect – with the economy likely to slow in the foreseeable future? Can investors really make 50% – maybe, but there are problems ahead.

Raw land, not directly in the path of development is a blank canvas – whose use and value can be hard to predict.

Phoenix still has room to grow – to the southeast, and west – but with a good supply of land in this area, land may be difficult to sell quickly – and at a profit.

The history of land for sale in Arizona points to holding longer term. Land can generate excellent returns longer term – and in Arizona, this should continue. Anyone looking to become wealthy quickly from Arizona land may find it hard to do from now on.

Arizona Land Prices are fuelling another Market

As Arizona land prices look as if they’ll tail off, this is driving investors to look at other markets. One market that appeals to many Americans is Costa Rica. With Costa Rica being just a three-hour flight away, and with land prices up to 70% cheaper than in Arizona – Costa Rican land prices are booming – and prices will continue to boom.

In Costa Rica, many investors are making 100% profits in just a year! This is one market that doesn’t look like slowing down in terms of growth. Investments are hitting record levels – as Americans flock to this country for the good life.

The baby boomer generation is realizing they must take steps to preserve their lifestyle – and that’s why the trend in Costa Rica will continue – and land prices will continue to soar.

Costa Rica is stable, has good ties with the US, buying land is easy – and you get the same rights as the Costa Rican citizens themselves. Throw in tax advantages, and Costa Rica land for sale offers cheaper lots – and more growth potential, than Arizona land for sale.

If you’ve been considering buying Arizona land, but you’re not prepared to hold the land long term, but fancy some quick double digit profits – head south – to Costa Rica!

Choosing an Arizona Lender

When you decide to move to Arizona, the first thing you want to begin doing is looking for a home and an Arizona lender to finance your new home. Some people choose to do this before they move in order to have everything in place when their move is final, but others want to wait until they arrive so that they can physically see the property they are buying. The problem with waiting is that you delegate yourself to an apartment or hotel until you find a home and an Arizona lender to finance it, thus you incur expenses for storage of your furniture and other belongings that won’t fit into your temporary residence.

Even if you are going to wait until you arrive to find a home, you can still choose an Arizona lender to finance the purchase. Many mortgage companies today offer pre-approvals on their websites or over the telephone, so if you do nothing else, you can obtain approval for your mortgage and look for the home when you arrive at your chosen destination. Keep in mind that the pre-approved mortgage has an expiration date, so if you are not planning to eave for six months or more, you may want to wait before you apply for a pre-approved mortgage, or it may not be valid when you arrive. Depending on the Arizona lender you choose, thee may be other criteria you must meet once you arrive, so make sure that you don’t take on any additional credit and that you don’t miss payments on any of your loans or payments in case they decide to run another credit check when you actually submit your application.

Before you can choose an Arizona lender, you may want to make certain that you know the area where you want to live, especially if you want a local lender. If that isn’t important, you still want to make sure that the Arizona lender you choose is willing to finance property in the area of your choice. Sometimes lenders have a policy concerning areas they are interested in financing, especially local lenders. They may want property that is within a certain parameter of their office in order to maintain closer contact with the homeowner, so you want to be sure if there are any distance requirements before you apply. It doesn’t always happen that there are regulations on areas, but it does happen sometimes with small lenders who may not have the ability to travel outside of their regional area.

Arizona Real Estate Power Hour

In part 1 we covered the first 6 subsections of the FINANCE section of the Arizona Purchase Contract. In this article we will address the remaining 5 subsections.

Please note that this article applies only to the Real Estate Purchase Contract in use in Arizona. For information on Real Estate Purchase Contracts in use in other states please check with the Association of REALTORS in each state.

2g. Type of financing – this is the subsection where the buyers indicate what type of financing they are planning to use. The type of financing here should be the same one identified in the Loan Status Report (LSR) discussed in part 3. Common types of financing are:

– Conventional – a conventional mortgage is any loan that is not guaranteed or insured by the federal government.

– FHA – these are loans insured by the Federal Housing Administration (FHA) and made by approved lenders following FHA specific guidelines.

– VA – these are loans guaranteed by the Veterans Administration (VA) made to a qualified veteran (according to VA criteria) and made by an authorized lender on an approved property.

– Assumption – these are loans that allow buyers to take the sellers place in the loan. Instead of obtaining a new loan, the buyers will be assuming the existing loan the sellers have.

– Seller Carryback – these are loans where the sellers agree to finance the whole or part of the purchase.

2h. Loan costs – defines who (buyers or sellers) will pay for the different loan costs and fees, including Private Mortgage Insurance (PMI); discount points; A.L.T.A. Lender Title Insurance Policy; Loan Origination Fee; and Appraisal Fee.

2i. Other loan costs – defines the maximum amount the sellers agree to pay in addition to the amounts already defined in subsection 2h above. This will limit the sellers’ financial exposure to the amount included here. Also, for VA loans, sellers agree to pay the escrow fee. And lastly it states that all other costs to obtain the loan shall be paid by the buyers.

2j. Changes – buyers are required to get written consent from sellers prior to making changes in the loan program, financing terms, or lender described in the LSR. However buyers are not required to obtain prior consent from sellers if the changes do not (1) adversely affect buyers’ ability to obtain loan approval; (2) increase sellers’ closing costs; and (3) delay close of escrow.

2k. FHA Notice – this subsection applies only to buyers using an FHA loan. It states that the Department of Urban Development (HUD) does not warrant the condition of the property. It also requires FHA buyers to attach a signed copy of the form HUD-92564-CN, “For Your Protection: Get a Home Inspection”.