The Truth on Boone County Missouri

Over the past week or so I have heard so much miss-information concerning Boone County and its designation as a "declining market" that I really feel sorry for the individuals both releasing it and those who read it. So much so that I recently read an article released from a Boone County business that couldn't even spell Fannie Mae (or "May" as they put it) correctly. The purpose of this post to lay out the truth and hopefully lay to rest the rumors that are floating around out there.

First, Freddie Mac (not Fannie Mae) has designated Boone and Howard counties as "declining" markets. What does this mean? Simply put it will impact buyer's loans who want to purchase a home in this area or more specifically reduce their borrowering ability by 5%. For example if you have a buyer wanting to do 100% loan they now must put at least 5% down to qualify for a loan through Freddie Mac.

Second, Fannie Mae although very similar to Freddie considers markets as "soft". They scale this out from 1 to 5 with one being the best and five being the worst. Information released effective March 18th has Boone County as a soft market area of 1. Therefore any loan going through Fannie Mae will be able execute the maximum financing available as long as 3 things happen. First, the appraiser notates that the market is "stable" and not declining. Second, the marketing time for the area in question is less than 6 months. And three the appraiser does not note any other "negative" factors that would "suggest" a declining market. Simply put under normal operating procedures "most" deals should be fine. Anyone designated as a soft market 1-3 will implement the above guidelines. Markets designated as 4-5 must reduce the maximum allowed financing by 5% (like Freddie Mac). Again, Boone County is a 1!!!!

Third, there seems to be a notion that 100% financing is not available anymore and nothing could be further from the truth! There also seems to be a notion that you must have at least a 680 credit score to qualify for 100% financing these days. Again both of these assumptions are not true. I currently have access to 100% programs for Boone County down to a 620 credit score and yes they are through the GSE's or more specially Fannie Mae. There is financing available through the USDA that allows for 100% financing in certain "targeted" areas and at times down to a 580. We, has Missouri residents also have access to MHDC (Missouri Housing Development Corp.) that allows for 100% financing. Oh and let's not forget the growing FHA programs where for as little as 3% down you can qualify for financing regardless of credit score.

Of course changes to these programs happen quite often (none of them very significant) and yes the availability to access the funds to some of these programs can, at times be aggravating. However, the programs are alive and well and I continue to access these programs every day to help my clients purchase their home!

Most of the issues surrounding the rumors concerning the termination or "scaling back" of certain programs come from the changes of the Mortgage Insurance Companies. For those of you who do not know these companies are responsible for ensuring the dollar amounts above and beyond the 80%. For instance, if you have someone purchasing a $150,000 home and doing a 100% loan the "MI Company" would ensure the 20% down payment or ($30,000) that the borrower is financing. Now as you can imagine with the fall out in the mortgage and housing industry MOST of the MI companies have lost billions of dollars. In response to this they have really cut back their product line and in essence there desire to ensure some loans, this is why you see all the guideline changes to ltv, mi premiums, down payment requirements and credit scores. But like anything else in life these same companies have competition so what RMIC cannot do AIG otherwise known as United Guaranty can. And what PMI does not touch anymore MGIC will do and the list goes on and on. The important thing to remember is that there are some MI companies still ensuring 100% loans as long as the borrower meets their guidelines.

Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker