3.875% Fixed Rate Mortgages

banner-bankThere is currently in Lake Oswego a very large volume of new construction, “spec” homes that are for sale.  A spec house is a house built by a builder who does not yet have a buyer at the time it is built.  The idea is that they will be able to sell the house while it is being built or as soon after it is constructed as possible.  In a good real estate market it is pretty low risk and allows builders to make a good living.  But when the market is slow, like it is right now, it is extremely high risk and forces builders into bankruptcy and the unsold homes into foreclosure.    There is a local lender, Banner Bank, that is trying to do something about this problem.

What they are doing is offering 30-year, fixed-rate mortgages, at 3.875% (APR is 3.973%) to buyers who purchase one of the spec houses on which they are holding the construction loan.  They have over 250 houses that this applies to in Oregon and Southwest Washington, 46 of which are here in Lake Oswego.

These loans are made possible because Banner Bank has borrowed money from the US Government that is available as a result of the TARP (Troubled Asset Relief Program) money.  While I hate the fact that our country is in the mess that it is currently in, I am pleased to see that the government stimulus is finally trickling down to a tangible level.

The properties upon which these loans can be made here in Lake Oswego inlcude some very nice condominiums in First Addition, a great new neighborhood in Palisades, and quite a few luxury homes.  It really is an opportunity that will benefit people who are ready and able to buy right now.   While standard interest rates are currently hovering at right around 5%, getting an interest rate at 3.875% would have a direct impact on how much house you can afford to buy.  Here’s an example:  buying a $600,000 house, putting 20% down, and getting a standard loan at 5%, would give you a house payment of $2576 (principle and interest).  Using the same scenario, but using the 3.875% interest rate, that same home would now have a payment of $2,257.  The savings in over $300 per month.

This program is available in amounts up to $1,000,000 with no increase in rate for a jumbo mortgage.  A jumbo mortgage in standard lending is a loan amount that is greater than $417,000 and can have interest rates that are substantially higher than rates for homes that are under $417,000.  So the savings becomes even greater if the loan is in the jumbo category.

Buyers do need to qualify for these mortgages with verifiable income and sound credit.  If a buyer has less than 20% to put down, there are additional options for them that involve a slightly higher interest rate of 4.875%.

It is also important to know that this program is currently being offered with a deadline of March 22nd.  The program exists because Banner Bank wants to get these houses sold and they want them sold now.

If you would like additional information about this program, please visit the Banner Bank website by clicking here.  If you would like addtional information about the homes that are for sale and that are offering this financing, please contact either Linda or myself, and we would be happy to send you a list of properties.