It is the opinion of many people that the government, despite what the President may say, will in fact bail out mortgage high players Fannie Mae and Freddie Mac. For these companies to fold would be detrimental to the economy. But what exactly are Fannie Mae and Freddie Mac and what do they do? Simply put, a home buyer achieves a mortgage from a lending institute and Fannie Mae or Freddie Mac purchase the mortgage to then resell it again to investors. They receive money from the sale to the first lender to continue lending.
In the last decade Freddie Mac handled nearly $164 billion in New York mortgages alone; serving over 1,325,000 families. If Freddie Mac and Fannie Mae have serious financial problems then credit will tighten and it will become increasingly difficult for any consumer to get a mortgage; but particularly for the first time home buyer. At this point it is speculated that these companies will not need to borrow money from federal reserves, the government or the treasury; however, the government has stated that if they do need it they can come for it. With the potential for government bailouts confidence is building.
When push comes to shove, impact from national news or news on a local level does not change the rules in applying for a first mortgage; make sure you have your finances in order before shopping for a home, make sure your credit is in line and be aware of your credit score. The first time home buyer needs to educate themselves more than ever as lenders begin to tighten their belts. Knowing what your credit score is, how to increase that score and look favorable to the lenders will increase your chances of obtaining a mortgage regardless of what is happening in the financial world; these are basic rules.
Before a lender will grant a loan for a home he will first run a credit report on the buyer to help them get a picture of the buyer’s ability to pay the loan. The last thing a lending institute wants is for a buyer to get in over their head and default on their mortgage. It is therefore recommended that before shopping for a home or showing up at the lending institute to apply for a first mortgage you run a credit report of your own. This will help you figure out any areas that need to be corrected and what areas could be improved. Once you are satisfied and your lender runs the report he will be able to help you understand what you can afford. If you have discovered your credit is in shambles or your credit score is low there are ways to bring up your credit score and you will have the time to do so.
Freddie Mac and Fannie Mae having financial problems is just the reflection of what is happening in the economy today; we are all feeling the pinch. This is a time, more than any to tighten our own belts, avoid using credit excessively and manage your credit well; doing these things will allow you to be among the few buyers that the lenders extend a first time mortgage to.
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The subprime mortgage real estate fiasco has created a glut of residential real estate in the real estate market. Foreclosures are on the rise and it doesn’t look like the end is in sight for at least another year. Thousands of home owners are losing their homes because adjustable mortgage rates have adjusted upward and caused increases of monthly mortgage payments so high that the affected home owners just can’t make the payments. It is inevitable, under these circumstances that many homes go into foreclosure and banks have to take them back.
While it is unfortunate that many home owners are losing their homes, the opposite and upside effect is that the real estate market is now a boom for the first time home buyer.
Mortgage interest rates are still low and banks and real estate lending institutions have 30-40 year fixed loans for home buyers. With home values in many areas around the country, such as California, plummeting anywhere from 30-50 percent of what they were a year ago, the market is wide open for buyers who have never owed a home and would like to do so now.
Lending institutions and sellers are very motivated now and are readily lending their ears to home buyers saying “lets make a deal” and deal they will. Here are some of the innovative and sensible ways home buyers can now acquire a home of their own when they are armed with some real estate homebuyer education.
1. Use government grants and loans for down payment assistance.
The federal government in 2003 established the American Dream Down Payment Act. This federal law has allocated $200 Million a year since 2003 to assist with arranging down payments for first time home buyers. This is a good indication of just how serious the government is about helping Americans make the American dream of home ownership come true.
Fannie Mae, one of the many federally supported programs for home buyers has programs such as the MyCommunity Fixed Rate Mortgage. This unique program is ideally suited for the first time home buyer. It provides for low down payment, high loan to value with broad flexibility, including nontraditional credit considerations allowing for the buyer to qualify for the loan. It also has special financial options to serve public servant professions such as teachers, police officers, firefighters and health care workers, and people with disabilities.100% financing is available with 30-40 year fixed rates. Check out the details at http://www.efannie.com.
These funds, in addition to other government funding sources, are made available through federal, state and local government agencies that provide down payment assistance to their citizens on a case by case basis.
Every major city and county has one of these programs. One need only exercise a little initiative and these funds can be acquired. Contact your local housing authority, city managers office or county administration department to find out about them and how to apply.
2. Use non-profit agency down payment assistance
Another little known, but long existing opportunity for first time home buyers to acquire help with down payment assistance is the numerous numbers of non-profit agencies around the country that provide free down payment assistance to home buyers. The Community Reinvestment Act of 1977, enacted by Congress in 1977 and revised in 1995, requires banks located within identified communities to make loans and reinvest the depositors’ deposits within that community.
For decades now and continuing into the future banks have been making huge amounts of funds available to invest in targeted communities. However, the availability of the funds was not publicized in a significant way and many people did not and still do not know about these funds. Many non-profit agencies became aware that they could help in the community revitalization effort by creating a means whereby the banks could channel the funds through various home assistance programs that non-profits created. The non-profits that specialize in this type of program have grown over the years. Some are very large and are nation wide such as the Nehemiah Corporation – www.nehemiahcorp.org.
They get funding from the banks via the Community Reinvestment Act and other funding sources and then provide for down payment assistance and other housing assistance to persons desiring to own a home.
One of the high points of these programs is that the funding is often times not limited to first time home buyers and certainly is not limited to only low income home buyers. This creates yet another source of down payment assistance for the prospective home buyer. Given the numerous avenues of funding to assist in buying a home and the present market swing in favor of home buyers, buyers are now firmly in the driver’s seat.
Roy Landers is a California attorney and real estate broker with over twenty years of real investing experience. He is also a licensed real estate broker in the country of Mexico. He teaches real estate investment strategies through seminars and some conducts free home buyer education courses for first time home buyers. For information visit the website at http://www.housingamericans.com or contact roylanders@housingamericans.com
“In order to promote the production of more affordable new housing units for very low, low and moderate income individuals and families in the state, to promote the preservation and rehabilitation of existing housing units for such persons, and to bring greater stability to the residential construction industry and related industries so as to assure a steady flow of production of new housing units…”
Many times, people have heard of THDA and are confused, thinking that THDA is a certain loan type. In fact, it’s lending agency. All THDA mortgages must be insured by private mortgage insurance, FHA, VA or RECD And as these loans are intended for low to moderate income families or individuals, there is a income limit and acquisition cost limit. Also, you must be a first time homebuyer unless your home is in a targeted area.
Why is THDA so fantastic for a first time homebuyer? Well, it comes down to money. THDA offers a below market rate and will allow up to 100% financing. Have you been reading the papers lately? It’s not so easy to find 100% financing these days. Unless, that is, you’re a first time homebuyer. It also has programs that allow for down payment assistance via grants from certain approved agencies (if your loan type requires a down payment). If you have satisfactory credit and the home you wish to buy meets THDA’s standards, then you’re in business.
All THDA mortgages are 30 year fixed rate loans, so you needn’t worry about finding yourself with an ARM loan (adjustable rate mortgage) and a new payment you can’t afford in 3 years. And THDA allows lenders to only charge customers a standard 1% origination and .25% discount fee. It also closely monitors fees associated with the loan. THDA really looks out for the best interest of the first time homebuyer. If you are eligible for a THDA loan, you can feel pretty certain that an unscrupulous lender can’t take advantage of you because THDA won’t let them. For so many people, buying a home is pretty intimidating. THDA takes away the uncertainties a buyer faces with its guidelines and lending practices.
If you do apply for a THDA loan, be prepared to document your credit worthiness. THDA loans require slightly more documentation than your average loans because of the uniqueness of its product. In order to offer more, THDA asks for more – ensuring you qualify for its pretty awesome program. Sounds like a fair trade, if you ask me.
What are the disadvantages of a THDA loan? Not many. They do have a federal recapture tax if you sell your home within the first nine years of owning it. But it sounds scarier than it really is. I’ve heard that only about 1% of THDA customers actually pay this tax. That’s because a bunch of really great things have to happen to you in order for it to actually apply to you. And if those great things happen to you, paying the recapture tax won’t matter much to you anyway. I’ve been in the business for 16 years and have only heard of one person actually having to pay one. He graduated from medical school and his income when through the roof. His property was sold above market value than for the area because it was adjacent to some property that a huge retailer wanted to purchase. Again, good things have to happen to pay the recapture tax. So, you shouldn’t be afraid of it.
More people need to hear about and take advantage of the THDA loan programs. It’s such a great product and really helps the community and the housing industry. If you’re a first time homebuyer or think you’re in a targeted area, make sure you ask about THDA to see if you would qualify for a loan. You won’t regret it!
Let my experience work for you! Email your home loan financing questions to Kristin Abouelata, Home Loan Specialist, at question@kristinmortgage.com or call (865) 567-0113. Kristin will try to answer all questions on her website Home Loans Plain Talk.
Every Florida home buyers should know the many advantages that come with an FHA mortgage loan. FHA loans were created during the great depression to help increase home ownership. For the Florida mortgage applicant the FHA program can simplify the purchase of a Florida home, making financing easier and less expensive than a conventional or subprime mortgage loan. Some highlights of the Florida FHA loan program include:
Minimal Down Payment and Closing costs.
Down payment less than 3% of Sales Price Gifts are allowed Seller can credit up to 6% of sales price towards closing and prepaid costs. 100% Financing available No reserves required. FHA regulated closing costs.
Easier Credit Qualifying Guidelines such as:
No minimum FICO score or credit score requirements. FHA will allow a home purchase 2 year after a Bankruptcy. FHA will allow a home purchase 3 years after a Foreclosure.
To take advantage of the FHA program in Florida, give us a call 1-800-570-0448 or visit http://www.fhamortgageprograms.com/florida/ to find out more about the FHA mortgage program in Florida
FHA mortgage Loans insured by the Federal Housing Authority and are designed to help Florida homebuyers realize the dream of owning a Florida home. And they’re ideal for Florida first-time home buyers! Because the FHA insures these Florida home loan mortgages, Florida FHA mortgage lenders can offer Florida mortgage applicants a better deal and work with Florida applicants to qualify regardless of past credit problems, collections, past bankruptcy filings, or higher than average debt-to-income ratios
Applying for an Florida FHA loan
Applying for a Florida FHA home loan through www.FHAmortgagePrograms.com is easy. As a Florida mortgage lender we have combined the speed and ease of the Internet with a hands on approach help Florida mortgage applicants qualify for FHA financing.. Once you apply online, we enter your information into our FHA mortgage database and quickly approve your Florida home loan request. And, Within hours we will contact you for your Florida FHA home loan approval.
During the FHA loan consolation and phone interview, your Florida FHA mortgage consultant will go through your application to determine your eligibility. If you don’t pre today for an FHA home loan we will make recommendations, and provide you with a road map to FHA loan approval. So as some point you will be approved for a home loan. The FHA loan interview is also a great chance to get acquainted with your Florida FHA loan officer, who plays an important role guiding your towards approval. . Good communication with your Florida FHA loan officer will increase your chances of get pre-approved for an FHA home loan in Florida.
FHA Loan Processing
We provide in-house processing for Florida FHA loan applicants so we know where you loan is throughout the entire approval process. with one phone call all Florida applicants will know how close they are towards obtaining the home of their dream. Processing an FHA home loan involves gathering documents to verify the information in your application. Documents may include (but are not limited to) W-2 forms, pay stubs, credit reports, and bank statements. After your phone interview, you’ll receive an FHA pre-qualification letter that includes a checklist of FHA documentation needed to submit your home loan request. This checklist will itemize all of the necessary items the Florida FHA mortgage lender will need to finalize and close your FHA loan request.
Closing your FHA mortgage loan
The closing is the “end of the line” in obtaining an FHA mortgage. At the FHA mortgage closing, you will sign all of the required FHA mortgage documents. If it’s a new FHA mortgage loan, you’ll then take possession of your new home. If it’s an FHA refinance, you’ll start to enjoy the benefits of a low FHA mortgage rate, cash out, or both..
My wife and I live in California and have to do a stated income loan because we both work for tips for a living. We both have credit scores above 750. Our loan officer said that first time home buyer programs are only for buyers that go full doc. Does anybody know of any local or federal government grants or buyer programs for stated income first time home buyers?
Can someone explain in lay man terms as what exactly is this 8k tax credit for first time home buyer.
If I am a first time buyer , salaried with 60K/year,planning to buy 190K home for the first time in my life
Does it mean that government is giving me 8K from there end to buy home which I don’t have to repay ? Is that 8K like a gift to me from govt which I don’t have to repay ?
Jim Gillespie, President & CEO of Coldwell Banker Real Estate LLC, covers the basics that first time home buyers need when getting ready to buy a home.
