Just received a note from one of the lenders that I work with on a regular basis. It appears there may be life for seller-assisted down payment programs such as Ameridream after all.

A cynical person would ask why the bill was passed with the provision killing off these programs in the first place, but that’s another story for another time.

From Ameridream …

Last night, Congress introduced bipartisan legislation, H.R. 6694 that would reauthorize and reform charitable downpayment assistance. This bill would remedy a harmful provision in the new housing law which limits homeownership opportunities for low and middle-income Americans. The legislation, sponsored by U.S. Reps. Al Green (D-TX), Gary Miller (R-CA), Maxine Waters (D-CA), and Christopher Shays (R-CT) reauthorizes and reforms charitable downpayment assistance funded in part by sellers, which has helped over one million families and individuals become homeowners since 1999. The program was eliminated by legislation signed by President Bush on July 30, 2008.

The Green-Miller-Waters-Shays plan would re-authorize and reform non-profit downpayment assistance and secure it as an allowable source for FHA borrowers. The bill seeks to ensure that providers of the downpayment assistance operate in a transparent manner to guard against conflicts of interest. The bill also includes language to ensure that FHA maintains its financial stability by permanently authorizing the Secretary to assess higher premiums to higher risk borrowers.

It is important that you contact your elected officials in Congress and tell them that you support downpayment assistance and urge them to support H. R. 6694. To reach your elected officials, please call the US Capitol Switchboard at 202.224.3121.

You also can read more at SupportHomeOwnership.com.

Let’s see if House Speaker Nancy Pelosi will leave the lights on for this bill or if Congress really is willing to leave a pool of viable homebuyers in the dark.

Technorati Tags: Phoenix real estate, Ameridream

Popularity: 7% [?]

Share This

Tags: Real Estate Financing, General Real Estate, Tips for Buyers by Jonathan Dalton
No Comments »

President Bush signed H.R. 3221, otherwise known as the Housing Stimulus Bill, into law. NAR is rather excited about the bill … but I’m not so sure.

One of the more talked-about provisions is the $7,500 tax credit for homebuyers … except it’s not really a pure tax credit. Rather, it’s essentially a 10-year tax-free loan available only on qualifying purchases (foreclosed or “recently built” homes) and available only to qualifying buyers (like anything tax related, there are some income limits built into the process.)

I guess the mere fact that the credit is less robust than first suggested leaves me less sanguin than I was yesterday at the thought of incentives only being offered on the purchase of foreclosed homes. The last thing your average home owner needs is for there to be additional incentive for buyers to ignore their homes for sale in favor of a bank-owned “deal.” (Note to Congress, et al: REOs are selling at a much faster rate than the rest of the real estate market.)

Another provision in the bill does away with down-payment assistance programs such as Ameridream and Nehemiah. Through these programs, sellers could help buyers with their down payments in addition to closing costs by making a contribution to the non-profit (with a nominal processing fee attached.) As of October 1, those go away.

I understand the concern about the percentage of FHA purchases being made through these programs, or at least I try to. For the most part, people qualifying for FHA loans legitimately are qualified to buy. You’re not seeing the shell games played with an FHA loan that you saw with sub-prime loans.

The only thing these buyers lack is sufficient money for a down payment. Having been in that situation myself, I can empathize with their plight … they have the credit, they can afford the payment and all they need is a helping hand to get them into their home.

Now that opportunity is gone (or will be shortly) in favor of tax credits that do next to nothing when all is said and done.

NAR can celebrate the “victory.” Me? I’ll take a pass.

Others opine:

• Livingston Living Online
• Bargaineering.com - the Housing Stimulus Bill Explained
• Steve Hoffacker - Housing Stimulus Package - NOT
• Dr. Housing Bubble - Crony Capitalism for Dummies

Technorati Tags: Phoenix real estate, Ameridream, Housing Stimulus Bill

Popularity: 7% [?]

Share This

Tags: Real Estate Financing, General Real Estate, Tips for Sellers, Tips for Buyers by Jonathan Dalton
5 Comments »

It’s the second most common question I hear, trailing only “why do you use your photo instead of letting Tobey roll solo” - “how much should I offer for this house?”

In truth, there’s no one right answer. If a home already is priced at the lower end of the current market, there may be less flexibility than if it’s priced higher. At the same time, it might be more difficult to get a home seller who has overpriced their home to come down to a reasonable level because they’re often convinced of their property’s inflated value.

Days on market are a less useful indicator than many believe. A high Days on Market count has an equal chance of being indicative of increased motivation (the seller is getting anxious which will lead to desperation) or a lack of motivation (the seller is convinced that “they know what the home is worth”) and isn’t inclined to budge.

What I can tell you is in reviewing my own numbers for this year, my buyers have ended up paying around 95% of sales price on properties ranging from starter homes to near-acre properties in Desert Hills. Add in the seller incentives we’ve been able to negotiate and the net price paid drops to around 94%.

These are the numbers you’re not likely to hear at a cocktail party, though. No one will brag about buying a house for five or six percent below list even if that’s what they really did. What you’ll hear is you shouldn’t offer more than 75 cents on the dollar and that real estate here in Phoenix can be had for pennies on the dollar.

Good stories. Entertaining. But not close to true.

Technorati Tags: Phoenix real estate, real estate negotiating

Popularity: 9% [?]

Share This

Tags: Canadian Buyers, General Real Estate, Tips for Buyers by Jonathan Dalton
No Comments »

And as we continue our tour of mainstream media, along comes an article entitled “Need a Mortgage Now? Bring Loads of Cash” from CNN/Money.com.

Here’s an excerpt from the article:

These days, home buyers almost always have to make a substantial down payment, at least 5% these days, according to Rich Wordman, president of the Florida Association of Mortgage Brokers. The days of no-down loans are over.

In deeply declining markets, lenders are now reluctant to issue loans unless borrowers put at least 10% down, he said.

Zero down financing isn’t dead, dear readers. What has disappeared are the 80/20 loans, where buyers would take out a second mortgage for 20% of the purchase price to get around the requirement for mortgage insurance being included in their payment.

(And no one thought this would be a bad idea, huh?)

But zero down still is possible with FHA financing through Ameridream, a non-profit group which serves as an intermediary allowing sellers to assist buyers with their up-front costs to a greater-than-normal degree.

It’s not uncommon for a buyer to ask the seller to contribute up to 3% of the purchase price toward closing costs, prepaid items and the like - that 3% nearly always will cover all of the ancillary costs that goes with a purchase.

Ancillary costs aside, FHA loans require a 3% down payment. Through Ameridream, buyers can ask sellers to pay that 3% on their behalf. What happens is the seller makes a gift equal to 3% of the loan value to the Ameridream program, and Ameridream then passes that 3% on to the buyer. The cost? A $375 administrative fee paid by the seller to Ameridream.

HUD, in its eminent wisdom, already has tried to stop such programs in the past without success and keeps rattling its collective saber to say these programs may be stopped in the future. Why? Who knows. If sellers are willing to contribute a portion of their own equity toward the buyers’ costs in order to facilitate a sale, what is the issue?

That aside, when you see articles such as this telling you how expensive it is to purchase a home, take a step back. Zero down financing is possible if you know how and if the seller is willing to help.

Technorati Tags: Phoenix real estate, Ameridream

Popularity: 10% [?]

Share This

Tags: General Real Estate, Tips for Buyers by Jonathan Dalton
4 Comments »

“How fast can we close?”

There are different answers to that question here in the Phoenix real estate market. From the perspective of the title company, a transaction can be completed in about a week. From a lender, the answer might be three weeks to 30 days. From the standpoint of an agent staring at the AAR Purchase Contract … well …

Cash buyers can close as fast as the title company allows. Still, I usually recommend giving at least a three-week window between offer acceptance and the closing date. This allows for a full 10-day inspection period, plus the five-day windows for the sellers to decide what they are going to fix and for the buyer to decide whether to accept the sellers’ decision on the repairs.

Three weeks also gives the buyer the full five days to review the Sellers Property Disclosure Statement, the title commitment and the CLUE report (the CLUE report details the insurance history of the home for the lesser of five years or the amount of time the seller owned the home.)

Three weeks also gives time for all of the repairs to be completed, so you don’t have a termite treatment and a roofer comingto the house on the closing date hours ahead of an inspector coming for a final walkthrough … not that such a thing happened this morning.

Closings can be accomplished in less than three weeks but unless there’s an incredibly compelling reason to do so, take the 21 days … it moves much faster than you would imagine.

Technorati Tags: Phoenix real estate, AAR Purchase Contract

Popularity: 7% [?]

Share This

Tags: Canadian Buyers, General Real Estate, Tips for Buyers by Jonathan Dalton
No Comments »