2202 Hermosa Street

Interest rates are the talk of the real estate town, and few have experienced more rate fluctuation than award-winning Steadfast Mortgage Company senior mortgage loan advisor Connie Eddy, who has been loaning money to buyers for 25 years.

Eddy notes “rates continue to hover around 7% for conventional 30-year loans, whereas Federal Housing Authority (FHA) rates are slightly lower at approximately 6.875%.”

There is a caveat to the FHA and that is that the rate is lower with an FHA loan, but it requires a mortgage insurance premium, or MIP. According to Eddy, there is a premium of 1.75% that may be either paid at closing or rolled into the loan.

So, when is 6.875% more than 7%? When it is an FHA loan.

In years past, if the borrowers invested 20% of their own cash, or even a gift from parents, there was no MIP, or if the loan – through payments or market appreciation – dropped below 20% of its loan-to-value, the MIP vanished.

If someone needed an FHA for some reason, it should be refinanced when the LTV hit 80 percent or below.

In the current market, “this type of financing requires monthly (MIP) payments regardless of the down payment,” Eddy explains. “With a down payment of 10% or less, the MIP is for the entire term of the loan; with a down payment over 10%, the MIP will drop off after 11 years.”

With conventional loans, she continues, “Mortgage insurance is not required with a down payment of 20%. In cases where less than 20% down payment is made, the mortgage insurance will drop off a conventional loan once the loan naturally reaches 78% of the original purchase price and can be requested to be removed once the home has 20% equity in value.”

Perhaps the rate on the conventional is in fact lower than FHA after all; however, there are some benefits to the FHA loan.

Under the auspices of FHA is the Tennessee Housing Development Agency. Eddy says this program offers down payment assistance of 6% of the sales price of the home for first time homebuyers who qualify. The rate as of Monday the rate is 6.375% for the FHA based THDA program.

On a positive note, Eddy describes a helpful THDA program called the “Homeownership for Heroes Program,” which has a rate of 5.875% as of Monday.

This program is specifically designed for veterans, police, firefighters, and emergency workers, and this one is a good deal in the opinion of Connie Eddy.

There are restrictions on the sales prices on the two programs and those prices vary from county to county. Recently the price for an FHA loan could not exceed $720,000 in Davidson County and the THDA set the bar at $400,000 maximum price.

Sale of the Week

The sale at 2202 Hermosa was not financed through FHA even though the sales price was low enough to allow the house to be financed through FHA.

Not to be lost in the narrative is that conventional loans are backed by the Federal National Mortgage Association, which is classified as a government sponsored entity. If the loans go into default, you as a taxpayer pay from them.

(If FHA makes its programs any more unattractive, that should erase some red ink from the nation’s financial statement as fewer borrowers will go that route.)

The house at 2202 Hermosa Street is an interesting transaction on a number of fronts. First, it was purchased in 2021 for $435,000 by Home Network Partners and Revision Homes, LLC based on information in the Metro tax records, and sold last week for $600,000.

The house has 2,324 square feet, has four bedrooms, two full bathrooms and one half bath. Listing agent Dustin Marcellino – who has no knowledge of the Home Network involvement – describes the house as having an “open floor plan, with master craftsman finishes and a master bathroom with a custom walk-in shower and whirlpool tub.” Marcellino also noted the house has a downtown view.

For those that read liner notes on albums, specifically early ’70s pop R&B, the name Marcellino should be familiar. Dustin’s grandfather, Jerry Marcellino, worked with recording artists such as Lionel Richie, Smokey Robinson, Al Jarreau, and was credited as a co-writer on the title track of Michael Jackson’s third solo album, “Music & Me.”

Dustin himself is no creative slouch, as he produced and directed the film “The Identical’ which starred the late Ray Liotta, Ashley Judd, and Blake Rayne in 2014. The film won the Nashville Film Festival’s “Audience Best Choice Award.”

Dustin Marcellino says he entered the real estate field in order to raise capital to fund his creative enterprises, but soon developed the same passion for real estate as he had for film making and other video endeavors. Based on his opening a company he calls Dreamstate Films, the fire for the visual medium still burns. In either case, he is a winner.

Richard Courtney is a licensed real estate broker with Fridrich & Clark Realty, LLC and can be reached at [email protected].