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HUD TO ALLOW DOWN PAYMENT ASSISTANCE PROGRAM TO CONTINUE

• Allow down payment assistance for a mortgage where the mortgagor has a credit score equivalent to a           FICO score of 680 or greater.

• Allows down payment assistance where the mortgagor has a credit score equivalent to a FICO score of 620 to 679 and the mortgage insurance premium charged would be based upon the score and risk involved.

For credit repair go to: www.htdimortgage.net/zagreb

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Anyone who planned on using the down payment assitance programs of AmeriDream, etc... had better move quick!

All FHA loans requiring the down payment assistance of a variety of programs better plan on closing prior to September 30th, 2008. 

As of October 1st, no down payment assitance programs will qualify for FHA financing.  All FHA financing down payment assistance will have to come in the form of a gift via an immediate family member. No matter when the contract was written, all offer must close before September 30th to qualify for the down payment assistance.  NO EXCEPTIONS!!!

I have been working with a buyer that will immediately be disqualified if we aren't able to write a qualifying offer by this Friday, August 29th...  disappointing to say the least.

If you require down payment assitance, don't delay... you will need to be under contract no later than Friday Sept. 29th to close on your property!

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On July 22nd, the House of Representatives passed a housing bill that is expected to be soon passed by the Senate, and signed by President Bush. There are many provisions to the bill, but the significant provision that will affect buyers is below. It comes directly from the Chairman of the Mortgage Bankers Association of America's opinion on the legislation:

• 

  FHA Modernization: Authorizes a $25 million appropriation to improve technology, processes, program performance, eliminate fraud and provide appropriate staffing. Effective January 1, 2009, it also increases the FHA loan limit to the lesser of 115 percent of the local median home price or $625,500 with a floor for lower priced markets of $271,000, establishes a 12-month stay on FHA's proposal for risk-based premiums, sets the down payment requirement at 3.5 percent and prohibits seller-funded down payment assistance (both direct or through a third party).

Okay, so what does this mean to buyers?

Potentially significantly higher loan limits for FHA financing.... which is actually great for buyers!  A down payment requirement of 3.5% instead of the current 3% down requirement, which is a  ½ %  increase over current FHA requirements, which isn't so bad, and  the elimination of seller assisted down payment assistance programs, i.e.; AmeriDream, Nehemiah, etc...   Well, that's HUGE, especially for first time home buyers!

In reading the full article, the proposed changes should take place Jan. 1, 2009, assuming no changes are made by the Senate or President Bush. If you been waiting for prices to come down further, but are in need of down payment assistance, and don't have a cash gift from your parents for the down payment, it would probably be in your best interest to close on your new home before the new year
!
As with all new guidelines, once the new ones are in effect, there will be NO exceptions made. 

If you wait until after the new FHA guidelines to take effect, you might be too late to take advantage of some very beneficial seller incentives in this buyers market.  3% seller paid closing costs equal $6,000 in seller incentives on a $200,000 loan, which in this market can break the lending criteria for certain buyers. 

If you want to know more about the amount and type of loan you can qualify for give one of my loan officers a call.  Dale Noble from Wells Fargo will be happy to answer any of your lending and mortgage questions:

Dale Noble
Home Mortgage Consultant
Wells Fargo Home Mortgage  M2968-012
4332 Fox Valley Center Drive
Aurora, Il. 60504      

630.428.0317 Tel
630.820.5221 Tel
630.878.5012 Cell
866.359.5903 Fax

dale.noble@wellsfargo.com
http://www.ilendfast.com

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Over the last 8 years, not only was owning a home part of the American Dream... it seemed to be a privilege bestowed upon the general public at epidemic proportions.

Unfortunately for the next generation of home buyers, those days are fading fast. 

The way that first time home-buyers qualify for their first home will soon be changing.  Gone are the days of 100% financing and 80/20 loans...  or at the very least, they are in extremely short supply.

Buyers are losing their options to refinance their adjustable rate ARM mortgages for lower conventional rate mortgages because of a decline in anticipated appreciation.

What does this mean for someone who wants to purchase their first home?

• Start saving now.  Conventional mortgages require a 20% down-payment in order to avoid PMI insurance.  This can save you about $100-200 a month on your mortgage payment.

• Clean up your credit.  The lending industry is going through a MAJOR shakedown.  Underwriting criteria is becoming more and more difficult to bypass, and squeaky clean credit is a deciding factor in the loan approval process.

• Understand the process, know what you are getting yourself into.  
  

• Try-on your pre-approved loan payment before you commit. (use the extra money you save toward the down payment.   A great way to save a lot of money fast!)

Learn the language.  Talk to your parents, friend who are homeowners, or a real estate professional... learn what these mortgage terms mean: 

• PMI
• escrow account
• property taxes
• conventional mortgage, VA mortgage, FHA mortgage
• Title insurance
• closing costs
• points (and what they mean)
• pre-payment penalties
• ARM or adjustable rate mortgages
• Foreclosure
• FICO scores
• rate buy-downs and lock-ins

Knowing what you need to do to prepare for owning your first home, will eliminate any surprises that can turn your dream of owning a home into a nightmare.  Many homeowners that were floating along in the real estate bubble fell hard when the bubble finally burst.

$600 billion dollars in adjustable rate mortgages are set to adjust this year all over the country.  $900 million are expected to adjust next year.  Many of these homeowners have no idea how those rate adjustments will affect their mortgage payment, and many will only find out after it's too late!  Read the fine print and ask questions!

If you want to know more about what the recent changes in the real estate climate mean for you, call me to discuss your situation at 630-673-6233.

Read also: Plainfield Property Values and How They Compare Against the Housing Bubble

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When you are in the market for a new Plainfield or Naperville home, don't let the fear of the unknown keep you from the owning a piece of the American Dream! Here are some answers to these common questions.  "Who does what... and when?"

• Your Plainfield or Naperville Realtor® will probably ask you to contact a mortgage lender or broker to get pre-approved.  This is important because the lender/broker will help determine the price range you can  afford based on your income.  A pre-approval letter will help validate your offer when you are ready to make one.  Contacting  an attorney and home inspector even before you are ready to make an offer will save you time later.

• You've taken a tour of several homes Plainfield and Naperville with your Realtor® and you've found your dream home.  Now it's time to make an offer!

• After your offer is accepted, you'll need to contact both your attorney and the home inspector to over-see the transaction.  The cost of the services of both professionals is anywhere from $250-$400 for an attorney and $250-$350 for a licensed home inspector.  The cost of the attorney can be included in the closing costs, but the home inspector will need to be paid for at the time that the services are rendered.

• After the attorney and and lender have the signed contract in hand, they will both "get to work" on your file.  The attorney will review the contract within the time allowed on the contract for attorney review (usually 5 days) and the lender will begin the process that leads up to underwriting your loan and have it approved on or before the loan commitment date.

• A copy of the home inspection report will be supplied to both you and your attorney, and any repairs or requests will be negotiated by the attorney's on both sides of the transaction.  Necessary repairs will either be made or compensated for, or the buyer will have recourse to back out of the transaction provided that the inspection took place within the time-frame alloted by the contract.  It is then at the buyers discretion whether or not to proceed with the transaction, if the seller refuses to make any necessary
  repairs.

• A loan commitment must be provided by the date in the contract.  Providing timely financial information to your lender will ensure the execution of  a timely approval process in accordance with the contract for purchase.

• Once you have your loan commitment... Pack your bags!  It should be smooth sailing from here.  It looks like you've got yourself a new home!
  

I have worked with countless buyers over the last few years and this post answers the timeless questions regarding the responsibilities and obligations of both the buyers and sellers in any given transaction.  I love working with buyers because the excitement that comes from owning a new home is contageous!  Buyers looking for new home have an energy that can't be beat.

If you're looking for a new home in Plainfield or Naperville, IL I can help you find it!  Call me at 630-673-6233 to reserve you time with me to preview properties this weekend.

Read also: How to pay your Plainfield or Naperville House off Sooner!