Steamboat Pilot & Today

Steamboat Springs — With historically low interest rates, lenders said now is a great time to buy a house. And, many buyers won't have to come up with a traditional downpayment.

Mary Krotz, of Alpine Bank Mortgage, said people able to pay $800 in rent on a moderate income could easily find a loan where they make $1,000 mortgage payments and little or no downpayments on the house.

"It is worth a call. It is much better than paying rent," Krotz said. "If someone is making an $800 rent payment, they should qualify for some type of housing."

Regardless of the downpayment, Krotz said interest rates make it a great time to finance a home loan. This week the interest rate has wavered between 6.25 and 6.125 percent. A few weeks before, interest rates on home mortgages hit a historic low at 5.75 percent.

And Krotz said the rates are expected to go back down heading into the first quarter.

"You can definitely afford more of a house with rates being low," she said.

Tom Ihrig, of Community First Mortgage, agreed.

"Now is a great time to look for a house," he said. "With rates as low as they are, and they have been going up the last couple of weeks, it is a very good time to look for a house."

Ihrig also noted lower interest rates make it easier for lower income homebuyers to qualify for loans.

"It really does make the ability to qualify that much better," he said.

Ihrig said Community First Mortgage has just created a program that would allow first time homebuyers to make no downpayments or a downpayment as low as 3 percent.

And, it would also let homeowners have a higher debt to income ratio than what is customary.

The National Home Ownership Program does require that those borrowing money make 120 percent or less of Routt County's median income, be first-time homeowners, must occupy the home, have the same line of work for two years and have a good credit rating.

A conventional loan would require a downpayment of 5 percent. That would mean to get a loan for a $200,000 house; homebuyers would have to put down $10,000. But under this program, mortgage payments could be zero down or up to $6,000.

Ihrig said the program also allows a gift for the downpayment, meaning money bestowed by parents, grandparents or others can be used for the downpayment. Ihrig said lenders are usually suspicious of sudden deposits into bank accounts before closing on the home. But this program would let that happen as long as the deposits are gifts.

Another advantage to the program, Ihrig said, is letting homeowners have a debt to income ratio of 45. That means if some one is making $1,000 a month, just $450 could go toward debt. Those debts would include mortgage payments as well as car payments, student loans and paying of credit cards.

In the conventional market, Ihrig said that 28 percent of the income can go toward paying off home loans and 36 percent should be the total amount of debt a buyer should take on. In reality, Ihrig admits the debt to income ratio can go as high as 45, but that would be hard to acquire if homebuyers were only willing to put down 3 percent of the loan.

"In reality it goes to 45 all the time. But at 3 percent they are more likely to stick to the rates like glue," Ihrig said.

A hard qualification for Steamboat residents, Ihrig said, is the common requirement that homebuyers must be in the same line of work for two years. That means homebuyers could get the loan if they were receptionists but changed companies. It would be harder to get the loan if they went from being a waiter to a receptionist.

"That is really a sticking point in Steamboat," Ihrig said.

Ihrig said there are quite a few programs for those without a downpayment and a low income.

Krotz said the program Alpine Bank offers through the Rural Development government loan provides 100-percent financing.

The loan is income restrictive requiring families of two to make $56,600 or less and families of four to make $70,750 or less.

It also requires that the mortgage be no more than 29 percent of total income and all debt be no more than 41 percent, which could be higher if homebuyers have a good credit rating.

Krotz said the loans are about a quarter percent higher than the going interest rate, but with no mortgage insurance required the homebuyers usually make out better than they would on a loan with 5 percent down.

The program has been around for about six years and Krotz estimates it helps about 20 to 25 homebuyers a year.

Community First's National Home Ownership Program began in June and has served one person in Routt County. Ihrig expects to help more.

"Our intention is to offer more opportunities for people needing help getting into homes," Ihrig said. "It is still not easy to buy a home in Steamboat if you do this. But you can do it with a condo, maybe even Steamboat II and definitely be able to do it in out lying towns."

The program will work for people unable to meet the required downpayment on a home, but financially stable enough to make the monthly mortgage payments. It will not work, Ihrig said, for those people who have taken on a lot of credit with large student loans, credit card bills, payments on mountain bikes and cars.

He recommends if people are interested in buying a home to hold off on getting a car.

With the special offers through the program, Ihrig said the interest rate is higher for the 30-year loans. But with the loan he helped finance for a duplex in Hayden, he said it is just about a half a point higher than the going interest rate.

"It was pretty competitive compared to other loan programs. Had (the homebuyer) not had to take part in this type of program, I don't think it would have been far below where he was," Ihrig said.