I wanted to update any buyer or seller who may be thinking of making a purchase or selling a house in the very near future. Over the past several months there has been much debate over the use of non-profit organizations contributing funds to a buyer’s closing expenses. There two thoughts that are shared on the use of these programs to get buyers additional funds to make a purchase. One thought is that it is a great tool and gives those, who might not otherwise been able to buy, the chance to buy a home. The other side of the argument is that the process of having the seller contribute funds to the non-profit and then the non-profit gifting them to the buyer is merely money laundering. While I see both sides, it doesn't take away from the fact that this is a legal method of getting buyers, who qualify for a purchase but just don't have the cash needed for closing costs/down payments, the resources to buy a home. Effective Oct. 1, 2008 the several down payment assistance programs that have been used for many, many years (much more frequently in the past 18 months) will be no longer allowed.
Now, FHA loan changes. The tightening guidelines of conventional loans and the increasing down payment requirement has allowed the lower required cash to close of the FHA program to become a great alternative. Well, as of Oct. 1, 2008 FHA loans will now require a 3.5% buyer investment into the purchase of a property; the previous amount was 3%. While this doesn't sound like a huge change, you must also consider that the way a lot of buyers were getting their cash for closing costs and down payment was from the non-profit grant programs. While this is not the best news for buyers, it is also not good for sellers who are looking to sell their homes.
There is still time to make a purchase and get into a home under the existing parameters; it just has to be underwritten by the lender by Sept. 30, 2008. So, if you have been thinking of buying or you have a house to sell, give me a call and I'd be happy to help you use this window of opportunity to maximize your buying or selling power.
