Jim Scheller - ABR, SRS, e-Pro, GRI

I have good news to report: the US Department of Agriculture is guaranteeing no-money-down loans in smaller towns throughout the country with their Rural Housing Loan Program. Actually, it doesn't even need to be in a town, just outside of the areas the USDA considers a large enough city. That leaves out Mankato/North Mankato/Eagle Lake, but allows Madison Lake, Lake Crystal, and St. Peter.

Here's the link to find out whether you and your desired property qualify: http://tinyurl.com/6s73ko

The USDA is not originating loans, so you'll need to work with your lender, who should be able to help. If you don't have a lender and would like a suggestion, let me know.

The days of 100% loans are not over! (And with home prices what they are, that's a good thing.)

Jim Scheller
www.MankatoHomesOnline.com

With rates as low as they've been since they've started keeping track thirty seven years ago, I'm sure most of us with a mortgage are thinking "Let's do this thing!" Unfortunately, it isn't that easy, now that credit has tightened up.

Nowadays, this is what you'll likely need to refinance:

• something close to 20% equity in the home *
• a credit score of at least 720 *, and
• a debt/income ratio of no more than 43%. *

While that may be doable for many of us, it will, unfortunately, rule many others of us out. But there are things a person can try in order to qualify.

To improve your debt/income ratio, there are three possibilities: either increase your income, lower your debt, or both.

1. To increase your income, get a(nother) or better job. Or ask for a raise, and tell your employer exactly why it's important for you. He or she may be sympathetic to your plight.
2. To lower your debt, throw every spare dime onto your credit cards, auto loans, or whatever else you have out there until you can qualify. After you get the new loan, you can ease up a bit, unless you've begun to like the idea of cutting down on your debt faster than ever...
3. Of course if you can do both, that's even better.

To increase your credit score, and do so quickly, here's a trick one person on the other end of the phone call to a credit card company told me once: each month, make one extra payment. Even if it is only $5.00, send it in, and it will look like you're REALLY trying to get your credit card debt down. (This is very easily done if you pay your credit cards online.) Of course, it never hurts to check your credit reports and make sure only the things that belong there are there, but this little trick may also help you out.

About the 20% equity position? Unless you have some friends, relatives, or other benefactors who may help you out, I'm afraid you may be out of luck. So far, at least, I haven't heard of any personal bailouts yet. Dang.

* Source: Business Week, Lauren Young (12/22/08)

Jim Scheller
www.MankatoHomesOnline.com

I was listening to NPR this morning and a financial person of one kind or another was expressing his idea that lowering the interbank rate was a bad thing, as that would encourage the kind of bad loans that got us into this credit mess in the first place.

I know a few lenders, and they are now, at least here in Minnesota, MUCH more careful about qualifying buyers. Underwriting has undergone a sea-change, and lenders know enough to be careful.

Me? I'm glad rates may go even lower. There are plenty of buyers for whom a lower rate will be enough to get them to buy a new home (with a FIXED rate mortgage, thank you very much), and the more of them we get to buy, the fewer homes we have cluttering the marketplace. There is still a glut, no?

Okay, normally I'm not much of a fan of the overuse of question marks, but in this case I'll make an exception. Here's why: I'm working with a client and a few days ago we submitted an offer. It turns out there were thirteen offers on this house. Yes, you read that right. Thirteen. In a buyer's market.

All right, now the full disclosure: this was a bank-owned (REO) property and the bank cleverly listed the property, probably worth about $40-45,000, at $25,000. So of course everyone and their brother in the market to buy and flip houses (and some, like my client, who wanted to live there for a couple of years before selling) were there in the first couple of days submitting offers. I've seen this work identically for another REO property where the final selling price was $42,000 on a house originally priced at $25,000.

Underpricing big-time is a very good strategy for a very low priced home, by the way. And you know, this may work for a regular home seller too, as long as it's clear any offers will be presented at the same time about a week after the house is listed. It basically becomes a week-long auction.

I may have a chance to suggest this to a client. If I do, I'll let you know how it works.

Meanwhile, don't forget to check out my site: MankatoHomesOnline.com. Thanks!

Good People,

Rather than have this space empty, let me just say I'm getting ready to do some regular updating on the status of the Mankato area real estate marketplace. Saint Peter, too.

It will be monthly, and I'll provide lots of data for you. But since it's only two days from the beginning of a new month, I want to wait for April so I can give you figures through the end of March. Be patient.

What I can say is that lots of buyers are calling me, and that my business is picking up, big time. Thank you for that. From what I'm seeing and hearing from other Realtors in the area, the same is true for them. Hopefully the numbers will corroborate that, but I'm confident things are picking up.

Tune in again next week: Same Bat-Time, same Bat-Channel!