Archive for March 19, 2012

Down Payment Assistance Programs

Down payment assistance programs are generally SECOND LOANS against the home you are purchasing.  These programs are set up to loan an amount of money to the home buyer that will be paid back with interest over a period of time.  The interest and monthly repayment amounts for these programs tend to be fairly low.

This will have an effect on what your total mortgage payment will be.  In most cases the mortgage payment will consist of: your first loan (principal and interest), your second Down payment assistance loan (principal and interest), property taxes, homeowners insurance and your monthly mortgage insurance premium.

Down payment assistance programs can be a great fit for many would be homeowners, who wouldn’t otherwise be able to purchase a home on their own.  After educating yourself on how different down payment assistance programs function, you may well discover that it is the perfect way to turn you from a renter into a homeowner.

There are many different types of down payment assistance programs available.  We have programs fit for different geographic regions as well as different personal situations.  There are general programs offering $1,000 to $10,000 in assistance, as well as more specific programs offering up to $45,000.

The amount of down payment assistance a person is eligible for will depend on their financial situation.  A needs assessment form will take several factors into consideration to determine the amount of assistance alloted.  The amount will depend on such things as a person’s income, liquid assets (not including retirement accounts or 401Ks) and the purchase price of the home.

You must attend one of our Home Buyer workshops to be eligible for our programs.  The Washington State Housing Finance Commission requires that you attend one of our workshops in order to apply for down payment assistance.  The workshop is FREE, and there is no obligation to move forward in the process if you decide the programs are not a good fit for you.  If you would like to  learn more about the programs, or gather more information on the home buying process in general, go to our Calendar/Reservations page and sign up for one of our free Home buyer workshops.


Homes Will Cost 2% More for FHA Buyers Starting April 1st

On April 1st there will be an increase to upfront FHA Mortgage insurance and FHA monthly mortgage insuranance.  On a $250,000 purchase price the increase to upfront insurance premiums would increase by $1,810.  In addition, the monthly insurance premium would increase by $17.

An FHA loan on that $250,000 purchase scenario would also effectively increase the down-payment by $151(to produce the same result).  That may be somewhat of an insignificant number as far as your bank account balance is concerned, but can still make a difference when it comes to the minimum assets required for the loan.

With these increases, where does the figure of a 2% increase to effective purchase price come into play?  Well, if you have an accepted contract with an FHA case number assigned to the purchase of the home by March 31st, the new rules are not in place yet and you will pay the current Mortgage Insurance Premiums.  But if you make an offer and have it accepted then place an FHA case number pulled after March 31st, the same mortgage will cost you more money.

If you were to purchase a $250,000 home with an FHA case assigned before March 31st, it will have the same monthly payment as if you were to buy a house at approximately $255,000 after March 31st.  There have been several increases over the past few years which have increased the mortgage insurance premiums considerably.  However, with interest rates at an amazingly low point in history and prices of homes at a considerably low level, many consumers have been unaware of these increases.

MyFirstPlaceNW is here to make sure prospective homebuyers have information that is not always shared with all consumers.  If you are thinking of becoming a First Time Home Buyer in the Greater Seattle area and want to learn more about the process, please go to our Calendar/Reservations page and sign up for one of our FREE home buyer workshops.

If you would like more information on the increase to FHA Mortgage Insurance, please vist the HUD website.


Seattle Home Prices at Lowest Level Since Housing Crisis

Komo News recently published an article called, “Seattle Home Prices at Lowest Level Since Housing Crisis”.  The article explains that housing prices fell in Seattle year over year by a little over 5%.  Home prices also fell across the country in most other cities surveyed.

This fall in prices has brought values to an all time low since the housing crisis started.  We’ve seen a total loss of about 34% on average, which has returned us to roughly 2002 values.

This has made housing the most affordable it’s been since 1987 (accounting for inflation).  The article does state that values may continue to fall due to the volume of foreclosures and short-sale properties on the market.  But it appears to be talking on a national basis, as opposed to Seattle specifically.  At the moment, North Seattle’s available inventory is about 18% short-sales and 9% foreclosures (bank-owned).  These percentages are a lot lower than some other distressed areas across the nation.

Even if values do fall another 5% in the next 12 months, you may not care if you’re planning on living in the home for 10+ years.  Also, if prices do fall another 5% but interest rates inch up just 1%, you’d still be looking at roughly the same mortgage payment.  So you would still pay about the same amount for the home in the long run.

BUT if you’re only planning on being in the home for a couple of years, a 5% decrease in value could be devastating.  Especially considering that even if prices stabalize tomorrow, we may not see any appreciation for another year or two.  Generally speaking, you probably don’t want to buy a house unless you can stay in the property for at least 5-7 years, regardless of the type of existing economic environment.

There are many factors to consider when buying a home.  If you would like to gather more information, go to our Calendar/Reservations page and sign up for one of our FREE Home Buyer workshops.