Lenders continue to come up with new twists to stimulate demand for mortgages.

In Clearwater, Fla., Market Street Mortgage is aiming a new product at homebuyers in older, more established neighborhoods. In addition to purchase money, the loan provides funds for major renovations.

Applicants need bring in only the real estate contract and a bid for the renovation work from the contractor. Market Street, an affiliate of Republic Bancorp, Ann Arbor, Mich., will finance 95% of the purchase price and renovation cost, or 95% of the appraised value of the improved property, whichever is less.

Market Street says the loan has benefits for the seller of the home, the buyer, and the real estate agent. Neal B. Saxon Jr., assistant vice president for construction lending, said the loan requires only one set of closing costs.

"Homeowners who want to stay in their home can use the Plus Mortgage to refinance their mortgage and add rooms, remodel their kitchen or bath, or complete other work needed," he said. Market Street will lend up to 90% for such refinancings.

Randall C. Johnson, chairman and chief executive of Market Street, says the loan has been well received in the 10 states in which the company has branch offices.

"This gives our loan officers a home equity-type product to compete with those offered by banks and other lenders," he said.

In Seattle, a credit union is offering home loans with just 1% down. Credit Union of the Pacific is innovating within Fannie Mae's 3%-down program by lending borrowers 2% toward the down payment.

That and low closing costs means people can buy a $125,000 home with a cash outlay of as little as $3,800. The loans are available to anyone making no more than the median income in the region, $50,600 a year. Borrowers must attend a homeowners workshop.

For households over the income limit, the credit union still offers reduced closing costs.

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