The Connecticut Housing Finance Authority (CHFA) is one of the few Mortgage Programs around today that is able to provide 100% financing to First Time Homebuyers. CHFA is able to provide 100% financing by providing the option to do a second mortgage loan through their Downpayment & Closing Cost Assistance Program (DAP).
Under CHFA’s current DAP policy, CHFA requires applicants to contribute all liquid assets in excess of $5,000.00 towards the cost of purchasing a 1-4 family unit property or condominium. This means that rretirement savings accounts like 401K's, IRA's, as well as employer retirement plans are counted toward the $5,000, if the Retirement Plan allows the borrower to borrow or withdraw funds for the purpose of purchasing a home.
In the past this has some times presented a hardship for those that do not want to borrow from their Retirement Plan, but do not have enough money for downpayment and/or Closing Costs without utilization of a DAP Program. Because of this CHFA has determined to revise their current asset contribution policy for
DAP eligibility as of November 1, 2011 as follows:
- Only the amount of funds in any retirement plan, including but not limited to IRA
Accounts and 401k Plans in excess of ten-thousand dollars ($10,000.00) will be included
in the asset test calculation - Retirement accounts with $10,000.00 or less will be excluded from the asset
calculation even if the plan allows for borrowing or withdrawing funds for the purchase of
a new home. - Borrowers with more than $10,000.00 in an eligible retirement account will be required to
contribute that portion that is over the $10,000.00 threshold towards the cost of
acquisition of the property. The borrower will be allowed to retain $10,000.00 in the
retirement account.
The above revision even though it just became effective on November 1, 2011, will apply to all outstanding CHFA loan reservations in the pipeline that have not received committed yet.
This change is a positive move, and acknowledges the need to further assist First Time Homebuyers, as well as an assist to a sluggish Real Estate Market. This is the type of change that that government needs to do more of. One that has real benefit to it, and not the smoke and mirrors that we have seen so much of lately.
CHFA has been a tremendous program for First Time Homebuyers in the past, and this change will make it even more valuable to First Time Homebuyers in the future.
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Who To Call For Your Mortgage Needs In Connecticut:
George Souto NMLS# 65149 is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 gsouto@mccuemortgage.com, or visit my McCue Mortgage Homepage.
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