In the midst of a collapse in the mortgage and financial markets and a tightening of credit underwriting guidelines, is it possible a true No Down Payment opportunity still exists, and is one you can actually get closed? As far fetched as it may sound, the answer is a resounding – yes, maybe!
The American Recovery and Reinvestment Act of 2009 created an incredible opportunity for a group of home-buyers, one that could allow them to purchase a home with ultimately no money invested in the transaction. No down payment or closing costs, as long as the real estate agent and mortgage lender understand the new rules.
Under ARRA, first-time home-buyers are given a tax credit of up to 10% of the purchase price not to exceed $8,000, or $4,000 for married filing separately. This tax credit, unlike the tax credit provided in 2008, does not require the home-buyer to repay the credit, as long as they remain in the home as their primary residence for at least 36 months post closing. Additionally, as of February 25th, the IRS will allow this credit to be taken in either the 2008 or 2009 tax year. The only requirements to receiving the tax credit are, they must purchase the home prior to December 1, 2009 and their adjusted gross income does not exceed $75,000 for single or $150,000 for joint filers.
So what about the No Down Payment and closing costs I spoke about? If you’re working with someone who qualifies as a first-time home-buyer, someone who hasn’t owned a home in the previous 3 years, and you can place them in an FHA mortgage, here’s how it could go together. FHA requires a minimum down payment of 3.5% of the purchase price (must be paid by the buyer), plus they need money for closing costs, unless the seller agrees to pay those costs. If you negotiate the right transaction, your buyer will have no money invested in the transaction, compliments of the government.
Here’s a scenario: You have a buyer purchasing a home for $140,000, they will need $4,900 in down payment and an estimated $2,900 in closing costs (may vary slightly in different areas), for a total of $7,800 invested. If they purchase the home , having the money necessary to close the transaction, they would after closing, immediately file tax return form number 5405 with the IRS (either with their original tax filing or in an amended return, depending when they purchase). The will receive the $8,000 tax credit funds, making their investment in the property zero.
Now you have ability to help many people buy their own home, using this government assistance program, in a time when home buying opportunities are at their highest level. This becomes a win-win-win situation for everyone, go help you community!
Have you ever thought about your business hours? Not your company’s hours of operations, your business hours. Are you a 9 to 5 type? Or do you put in 70 – 80 hours a week? How would you define your hours of operation to your customers?
Too often the mortgage industry is seen as open during “general business hours”, or a typical 9 to 5, Monday through Friday. But is that how you see your business? Is that how you want your customers to see your business?
Wouldn’t you like to have your business open 24 hours a day, 7 days a week, 365 days a year? Wouldn’t you like it if customers could see you, do business with you, any time of the day or night? Do you think your business would increase? Do you think your customers would find value in that convenience?
I know what you must be thinking. How can I be available 24 hours a day 7 days a week? It would cost a fortune to have staff members available all hours of the day. And really, how much mortgage business will there be at 2 or 3 am? Good considerations. But in today’s business world you have the ability to offer your services on a 24/7 basis, and not have to stay up all night.
The proliferation of the Internet and the acceptance of the general public to use the Internet as an acceptable way to do business, can extend your business hours to 24 hours a day. Having your own website, not just a company site, will allow you to actively interact with your customers, 24/7. But to do this properly, your web site must be more than an advertisement or static website with nice pictures but very little value to the visitor.
Your customers must know that your personal website is just like your personal office assistant, it connects them with you and your business directly. The site should illustrate how you conduct your business, how they as a customer will be treated. So how you build a website is crucial. Your site must include certain elements:
a. Interactive. The site has to allow your customers to interact with you in describing and fulfilling their needs. From content to activities like taking an application, the site has to allow your customers the ability fulfill their needs.
b. Relevant Content. Your customers must be able to find content that is important to them. This could include interest rates, loan status, educational content and current mortgage market information. The content should be easily found and delivered in a format best suited to your customer.
c. Communication. Customers need to know you are serious about staying connected to them. They should feel that you treat their loan with absolute priority and that you use the website to help you accomplish this.
d. Security. For your customers to rely on your site as an extension to your office. They must feel their information and communications are private and secure. Each customer should have unique access to obtain and provide information.
Your business day doesn’t have to end when the office doors are shut and locked. Your business can continue to grow as you sleep, relax or take a vacation. Proper use of the Internet will truly allow you to conduct business 24 hours a day, and with those hours where will your business be 1-year or 5 years from today?
With our current economic times, we as consumers and business owners must become creative in our decision making. MTI has recently begun a blog series designed to provide sales tips for the residential mortgage finance industry, and ideas these professionals may use to benefit their clientele. Each week a tip or idea will be posted, check back often.