For years, there have been programs that buyers with no savings could use to buy a house with cooperation from the seller. These programs allowed the seller to pay the money into a charitible organization and then the money would be used to assist the buyer with closing costs and down payment funds needed to close the sale.
These programs had names like Nehemiah, Quickdown, AmeriDream, etc. and owners would have to sign a couple of extra forms during the underwriting of the loan. Then needed funds would go from the owner's side of the closing statement to one of these organizations and then back to the buyer's side as funding assistance.
At present these programs are still available and work great with FHA financing, but you are running out of time very quickly. Some lenders are saying they need the loan in underwriting before the deadline - others are saying they will only do these if the loan closes by September 30, 2008. Either way, there is no time to spare. So you better find a house fast, if you need such assistance.
Effective October 1, 2008 all of these programs will disappear. They are going, going, and will soon be gone.
© 2008 UpwardRealty.com
4 comments:
The loss of seller assisted down payment assistance will be detrimental. This is a program that has helped sustain the real estate industry by making it possible for qualified home buyers to purchase homes! Without it, many home builders, real estate agents & mortgage lenders will see a dramitic decline in business. Also, many homeowners will see a decrease in the market value of their home as many homes remain on the market and unsold.
Shelly,
You are so right about the impact on the real estate industry. This is an overreaction by the legislators to what was mainly stupid lending decisions. But, those stupid underwriting practices were largely encouraged by the same legislators who wanted to greatly increase homeownership. The Chattanooga area has at present about an 11 month inventory on the market - it would be worse but some owners have taken houses off the market or never made them available to start.
A new bill has been introduced to congress that will save DPA. Check out www.dpagroundswell.org for up to date information. It also has great suggestions on ways to voice your support for this bill! Now more than ever we need to voice our support and let Washington know how important DPA is!
Michelle,
Thanks for your comments. As you noted, a bill was introduced on July 31, 2008 (HR 6694)but at this time, that bill has not been marked up for consideration. There is no reason to believe it or something similar will not be passed by Congress, but so far we are still waiting. DPAs have been popular for years and have become even more popular as the 100% conventional programs disappeared. Many buyers have used these programs and could not have bought a home any other way. However, there is opposition to DPA programs - there is a school of thought that such plans actually artificially drive prices up. Do you feel prices are pushed higher by the use of DPAs?
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