Properties With CHFA Mortgages Always Have To Be The Borrowers Primary Residence. The Connecticut Housing Finace Authorty (CHFA) is a excellent Mortgage Program, especially for First Time Homebuyers who do not have enough money for a downpayment and/or closing cost. We at McCue Mortgage have been the largest Lender, and Servicer of CHFA Mortgages for many years, and are recognized in Connecticut by both Realtors and Borrowers as the experts on CHFA Loan Programs. As a result we have Realtors and Borrowers contacting us regularly with questions on CHFA Mortgages.
One of the questions that we are asked repeatedly is and I recently blogged about is "What Is The Federal Recapture Tax On CHFA Mortgages?" Borrowers are concerned that they will have to pay this tax, which basically is a penalty when they go to sell their house. But the Federal Recapture Tax should not be what Borrowers should be most concerned about with CHFA Mortgages. What they need to be concerned about is that Properties With CHFA Mortgages Always Have To Be The Borrowers Primary Residence as long as the Borrower has a CHFA Mortgage on the property.
In a market in which Real Estate is booming, and properties increasing in price, that is not much of a concern. But when properties are going down in value, and homeowners owe more on their property than they can sell it for it is a big concern. In a down Real Estate Market, the homeowner may not be in a position to sell their property, and if they have a CHFA Mortgage on the property, they cannot rent out the property and purchase another primary residence.
That is the position that many CHFA Borrowers are in today, they want to purchase another property, but are underwater on the present one. If they rent out the present property that has a CHFA Mortgage, and CHFA finds out about it, they will call the loan in full. That is not a comfortable position to be in.
I make sure that when I do a CHFA Mortgage for a Borrower that they thoroughly understand this. That they realize that if they plan on only being in the property for a short time, that they consider the present market, and their situation carefully, so that they are able to follow through on their plans later. Especially if their plan is to use the present property as an investment property later. If that is the case, then CHFA is not the right Loan Product to be in.
Having said that, I still feel that CHFA Mortgages are an excellent Loan Product for First Time Homebuyers. But like all Loan Products they are not a one size fits all. Properties With CHFA Mortgages Always Have To Be The Borrowers Primary Residence as long as the Borrower has a CHFA Mortgage on the property. Borrowers considering doing a CHFA Mortgage need to be fully informed about the Pros & Cons of the CHFA Mortgage Program just like they need to be on all other Loan Programs. The decision needs to be an informed one so that there are no surprises later on, and this would be a very bad, and unpleasant surprise.
*******************************************************************************
Info about the author:
George Souto 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 or gsouto@mccuemortgage.com
Comments(9)