In today's home buying market, it's getting harder and harder to get a home loan. As I see it in my day to day business, it's particularly hard for the first time home buyer who may have the funds to make the monthly payment, but may not have the money for the required down payment. I have recently been researching programs to help just this type of buyer.
What I have found is two types of programs both that very easy to do and worthwhile and both geared to go hand in hand with FHA loans.
The first will gift fund the 3% down required of FHA loans for the buyer. The catch is that you have to find a motivated seller that is willing to pay all the closing costs including the 3% down (that will ultimately go back to the gift funder) plus a $395 for using the program. If you have a seller willing to participate, this is an easy way to get a first time home buyer into their home. This program is offered to single family detached home and manufactured home buyers.
The other program that I have just discovered offers down payment assistance to first time home buyers who's property meets FHA requirements and is a single family detached home, manufactured home, townhouse, condominium and one to four owner occupied units. There is no purchase price limits, however, FHA will have limits in your area. The gift funds are not limited to the required 3% but will also go to fund your closing costs. The fee for the program is $295 plus the seller will incur certain agreed upon closing costs to permit the participation of their property in thee program that are equal to the amount that was gifted to the buyer, similar to the first program. Even if a buyer has funds, this program can come in handy to keep your cash on hand for improvements, furnishings and just emergency funding. Imagine getting into your home and coming the closing table with nothing. I can be done!
Now the catch. The House and Senate have recently passed bills to ban DPA's (Down Payment Assistance Programs). It's on it's way to the President's desk as we speak to be signed. If the ban is signed by President Bush it will NOT go into effect until October 1st. This bill will not effect any loan for which the mortgagee has issued credit approval for the borrower prior to October 1, 2008. In speaking directly to a representative of the second program mentioned, she stated to me that they will accept applications for their program until September 30, 2008.
If you live in Oregon or Washington and are interested in learning more about this type of loan, please call me as soon as possible at 541.786.1613 in order to get your application in. If you are an real estate agent with a client that could benefit from the program, call or email me at CBarber@PrimeRes.com or visit http://www.nwesthomeloans.com/. Things are changing fast and this could be the last opportunity to take advantage of such a program.
If you are interested, below are some quotes from Nancy Pelosi, Maxine Waters, and Barney Franks made yesterday afternoon in support of DPA and reported on C-Span as well as the text from the bill the eliminates seller funded DPA.
· Nancy Pelosi: Regretted that seller funded down payment was not in this bill but would support new legislation to include it.
· Maxine Waters (Congress woman from California) : Applauded the Fannie and Freddie Bailouts and said, "We did not get the Seller Funded DPA program but my Subcommittee on Housing will start immediately to work on this legislation that we can come back in a few months with a stand alone piece of legislation to do what needs to be done. This is an important Program. This program has helped over 730,000 homeowners between 2000-2007. It is extremely important to helping those who can afford to pay the mortgage every month that cannot afford the down payment to get into the home. It works! it works well and it needs to be understood. We need to put in the Law and do it correctly!
· Barney Franks Committee Chairman (who issued the compromise to get downpayment assistance removed from HR 3221): Immediately followed Maxine and said, "We were able to postpone the deadline for DPA until Oct. 1, there was also an issue on Risk Based Pricing. I believe we will have both of those resolved in a more flexible way before Oct. 1st so that Seller Financing and risk based pricing appropriately done will not go out of existence".