There are some fabulous buying opportunities out there for home buyers, from foreclosure homes that are priced under market to short sales and private party home sales. Add to that the range fixed interest rates have been hovering at and incentives like the first time home buyer $8,000 tax credit, and it's been a pretty busy summer selling season.
There are people who although they have good credit, stable employment and income and WANT to buy, but because of a high cost of living saving the down payment and closing costs to purchase a home have gotten in the way of purchasing a home. Maybe you sold a home, but did so by the skin of your teeth, leaving no funds to buy another one with, and now you wonder if they are going to be renters for the long haul. Possibly, you have managed to save a down payment, but find offers are not being accepted because you are asking the seller for help with closing costs.
GOOD NEWS California homebuyers! A new program was released this week to help bridge the gap and help you cover 3% of the minimum FHA down payment and/or closing costs. This program mirrors FHA guidelines, and is a second mortgage with a fixed interest rate of 8.25% with fully amortized payments paid back over a 15 year term. Here's how it will work on say a $250,000 purchase in Siskiyou County, California:
Purchase Price $250,000
First FHA Mortgage $241,250
Second Down Payment/Closing Costs Mortgage $ 7,500
Seller may contribute up to 6% ($15,000) toward your closing costs and prepaid expenses, so you bring in $1,250 of your own funds which may be a gift from family or a grant!
Say under the above scenario you qualify for an interest rate of 6% (6.951 a.p.r.), here is what your payments would look like:
First Mortgage $1471.72
Second Mortgage $ 72.76
Hazard Insurance $ 65.00
Property Taxes $ 260.42
Mortgage Insurance $ 110.57
Total Monthly Payment $1,980.47
If you are eligible for a USDA Guaranteed Rural Housing program, that loan would work better for you since it currently is offering better terms including no monthly ongoing mortgage insurance, but if you are not and need down payment/closing costs assistance, this would be an alternative for you to consider.
You need to be making less than 120% of the HUD area median income in order to qualify, and you need to be able to qualify for these FHA guidelines, but these guidelines are geared toward the needs of buyers entering the real estate market for the first time and struggling with affordability. Here are some general parameters:
- Must reside in home
- No Units (single family home, condo, manufactured home built after June 15, 1976 on a permanent foundation to code
- Debt-to-income ratio cannot exceed 43%
- No reserves required after closing
- Must attend approved Homebuyer Education
Got $1,250 + or - and want to buy a home? Call or e-mail for more information.
See you at the closing table!
Karen Cooper - OR/CA Mortgage Consultant - www/Quality4Loans.com