Over the past couple of weeks we successfully closed our last remaining DPA (Down Payment Assistance) transactions and thus the last 100% financing loans.... Possibly for ever? My last two DPA transactions were first-time home buyers, who "needed" the program. They didn't have enough money for a down payment, and these programs allowed them to get into their first home.
After closing these loans I have actually felt a slight sigh of relief....actually feeling quite well knowing that for now, and possibly for a long time to come, my customers will need to put some money down when they buy a home. This is in great contrast to the way I felt when I heard FHA was stamping out all DPA programs (for good). I was angry. I sent emails. I signed petitions. I may have even emailed my congressman, in hopes that he would actually read my message. I "rallied the troops" in the office to do the same.
However, that feeling of relief was still there, and I couldn't ignore it. After my last DPA transaction, I left the closing feeling like I had not done anyone any favors. Sure, my clients were happy....ecstatic even. My Realtor was happy....a nice smooth closing without any issues. But I still felt as though something was amiss. After I pondered things for a while, the reason behind my uneasy-ness became apparent.... I realized that I felt the customers had no "stake" in the game whatsoever. And I didn't like it. I felt very confident they will have no issues making their payments for many, many years to come. But, what if something happens? What if there's trouble in paradise and this young couple decide to go their separate ways? Besides a knock on their credit, what would keep them from mailing the keys to the lender and saying "c'est la vie?"
I have closed several, maybe even hundreds of 100% financing transactions. I am young, having only been in the business for 7 years. I haven't really known any different, or even had a chance to think about what the consequences are of "investment-less" homes. I feel good about the future. I feel good knowing that from now on, when the clients come to closing they will have a check in hand. A check that they worked hard for, a check that they aren't going to just give up on, should things get tough down the road. Before I went to college I worked for two years to purchase a farily decent, reliable set of wheels that would last through those next four years and not give me too many problems. It was a small Mazda with a stick shift, with absolutely power nothing. But it was mine, and I worked hard for the money to buy it. A friend commented it was the "cleanest, newest looking 12 year old car he'd ever seen." Why did I take such good care of it? Because I worked hard for the money to buy it. I acquired it through no other means than via blood, sweat and tears (a lot of long, hot days performing manual labor).
I'm fairly confident now that people have to put forth that type of effort to aquire their first home, we'll see them want to keep them. Even if there's trouble in paradise, and it's a 12 year old home....
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