FHA Downpayment Assistance Soon To Be Gone

Now that both the House and Senate passed the Housing and Economic Recovery Act of 2008, and with President Bush likely to sign the Bill, you can wave goodbye to Downpayment Assistance Programs (DAP) like Nehemiah and AmeriDream for FHA loans. This law will go into effect Oct 1 2008.

If your a Buyer thinking of using a FHA loan, now is the time to buy! Along with baring the use of a DAP, the Buyer now will have to put 3.5% down.

Below is an excerpt from the H.R. 3221 Housing and Economic Recovery Act of 2008 (highlighted text done by me):

SEC. 2113. CASH INVESTMENT REQUIREMENT AND PROHIBITION OF SELLER-FUNDED DOWN PAYMENT ASSISTANCE.Paragraph (9) of section 203(b) of the National Housing Act (12 U.S.C. 1709(b)(9)) is amended to read as follows:
(9) CASH INVESTMENT REQUIREMENT-(A) IN GENERAL - mortgage insured under this section shall be executed by a mortgagor who shall have paid, in cash or its equivalent, on account of the property an amount equal to not less than 3.5 percent of the appraised value of the property or such larger amount as the Secretary may determine.

(C) PROHIBITED SOURCES.—In no case shall the funds required by subparagraph (A) consist, in whole or in part, of funds provided by any of the following parties before, during, or after closing of the property sale:
(i) The seller or any other person or entity that financially benefits from the transaction.(ii) Any third party or entity that is reimbursed, directly or indirectly, by any of the parties described in clause (i). This subparagraph shall apply only to mortgages for which the mortgagee has issued credit approval for the borrower on or after October 1, 2008.’’

VA Home Loan Program

The Bellingham VFW Post 1585 had their monthly meeting tonight. Elections of new officers were held and you are looking at (so to speak), at the new Junior Vice President. Thank you... Thank you... yes with my cup of Mt. Dew in hand I was elected! But this blog isn't about self congratulations. I want to talk about VA Loans.

With the number of 100% mortgage loans diminishing, Veterans might want to look into using the VA Loans. You served or are serving our Country honorably so why not take advantage of the benefits offered.

Let's touch upon a couple of points.

1) It's possible to get a 100% mortgage loan because of the VA Guaranteed Home Loan. What this basically does, is guarantee the 20% down payment that banks would of required of you. What does this mean for you? Drum roll please...............Your down payment, to get into a home, comes to Zero Dollars! Normally you would get something like a 80/20 loan, giving you two different interest rates, which would raise your monthly mortgage payment.

2) Funding Fees. This is the cost of getting the VA loan. It is a part of your closing cost. If you are using the VA loan for the very first time, the fee is 2.15%. This is a one-time cost. The fee is reduced if you put some down payment down. Click here to see the Funding Fee Table.

To get started you need to apply with any mortgage lender that participates in the VA home loan program. You will need to get a Certificate of Eligibility. If your lender has access to ACE (automated certificate of eligibility), this can be done in a couple of seconds. Otherwise, you can apply for a Certificate of Eligibility by submitting a completed VA Form 26-1880, Request For A Certificate of Eligibility For Home Loan Benefits, to the Winston-Salem Eligibility Center, along with proof of military service.

For more information about the VA Home Loan Program Click here

Players in the Home Buying Process

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The Loan Officer – Consults with the Buyer about their needs and financial situation and suggest what loan amount and loan program is most suited to them. When the Buyer has made an offer, the loan officer then coordinates with the appraiser, the underwriter, the title company, the real estate agents and the escrow officer to get the purchase approved and funded on the closing date. A good loan officer has skills and knowledge about how to best “package” and present the deal to the underwriters to secure approval.

The Appraiser – Is sent out by the lender to look at the house and determine if it is worth the money that is being paid for it. A lender does not want to loan more than the house is worth, since this would put them at high risk to lose money in the even of foreclosure. The appraiser’s analysis is primarily based on recent sales of comparable properties. The appraiser also looks for conditions that would cause the house to lose value, such as a leaking roof or rotting foundation, and they may call for further inspections if these are suspected.

The Underwriter – Looks at both the borrower and the property to be bought and determines whether or not the lending institution will make the loan. They try to make loans that create as little risk as possible for the lending institution. A high loan to value ratio increases risk. They generally have guidelines that they must follow which state what kind of job history, credit history, and financial assets the borrower must have for a certain type of loan and loan amount. The loan will be refused or the interest rate increased if guidelines are not met. They also use the appraiser’s report to help them evaluate the property.

The Home Inspector – Is hired (usually by the Buyer) to do an inspection of the home before the purchase. In Whatcom County, the inspection typically last 3 to 4 hours, cost $250-$450, and generates a lengthy and detailed written report. A so-called pest inspection, which looks at the foundation and checks for wood-destroying organisms, is usually part of this inspection report, and a clear pest inspection is often required by the underwriter.

Your done!
Johnny Howes

Players in the Home Buying Process

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The Title Company – Investigates to be sure that the person selling the property is the legal owner and that there are no defects to the title or outstanding liens against the property when it closes. They do research and generate a report that also details any other claims that others have on the property, such as easements, mineral rights, or assessments. The Buyer and Selling’s agents are given a title report to look over soon after escrow opened. The Seller typically pays for title insurance for the Buyer.



The Escrow Officer – Has the job of coordinating to make sure that the transaction actually closes on the closing date, that the terms written into the purchase and sale agreement are followed, and that everyone is paid what is due them at closing. They communicate with the other “players” as needed to make sure this happens. They call the Buyer and Seller in to sign final documents a day or so before the closing. Then on the closing date they release money to the appropriate people and have the new ownership recorded at the courthouse by the title company.



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Players in the Home Buying Process

(continued from previous blog)

The Buyer’s Agent – Consults with the Buyer about needs and wants, informs about and shows properties currently on the market that might meet those needs, advises the Buyers as they write up their offer to purchase, and represents the Buyer’s best interest in negotiations, then coordinates with others to make sure the sale closes. The Buyer’s agent is usually not paid by the Buyer; their brokerage is paid by the listing agency if they write an offer on the listing that closes. Their brokerage then gives part of that money to the Buyer’s agent.

The Listing Agent – Has signed a listing agreement with the seller. In this contract the seller promises to pay the listing agency a commission if the house sells in a certain time period; the agent promises to market the property and try to secure the best possible price and terms for the Seller, represent the Seller’s interests, and keep the Seller’s secrets. When an offer is presented, the listing agent looks it over along with the Seller and advises them whether to accept it as written or make a counter-offer that modifies it. The listing agent tries to obtain an agreement which will meet the Seller’s needs and desires as closely as possible and which will be the most likely to get funded and close.

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Players in the Home Buying Process

This being my very first blog, I thought I would write something for the first-time homebuyers. However, this information is useful for anyone looking to buy or sell real estate.

So have you ever wondered who, exactly, is involved in a typical real estate transaction? Well if you have, google no farther! Grab that cup of Mt. Dew, have a seat, and 'Just sit right back and you'll hear a tale, a tale of a fateful trip...'


Below is my list of 9 players that are involved in your typical transaction. Why only 9 you ask? Why not! Maybe it's because there are 9 U.S. Supreme Court Justices or that 10 reminds me of Pearl Jam's first album, which reminds me how I missed them rocking out in a local bar in Bellingham WA, under a different name, back in the early 90's.


So drum roll please, preferably in the key of E!

The Buyer and Seller (Yes I know that this is actually two players)– Typically have different interests, since the buyers usually wants to pay the minimum price and the seller usually wants to receive the maximum price. However, there has to be a “meeting of the minds” and in most cases the sale ends up as a “win-win” situation in which both parties benefit and get their needs met.

Continue on the next blog...