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Buyers offered new loan program
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More from BusinessA loan program introduced this month in Ventura County might give some first-time homebuyers new hope.
"Welcome Home" FirstHome is a national program backed by the National Homebuyers Fund Inc. in Sacramento. It offers 100 percent financing with a fixed rate on loans of up to $450,000.
The program also offers a grant up to $16,680, which the borrower never has to repay. Applicants can have a household income of up to $111,300, with a debt-to-income ratio not exceeding 60 percent. No minimum FICO score is required.
Only people who have not owned a home for the past three years are eligible, with the exception of veterans.
Funds are raised by selling tax-free bonds, and the program provides those with low to moderate income the chance to get into a home with minimal closing costs and below-market interest rates.
Steve Carrigan of the Home Buying School outlined the loan in three seminars for real estate professionals Tuesday.
Program due in December
About 13 to 15 lenders in Ventura County plan to offer the FirstHome program, which is expected to be available beginning in December, said Doug Tapking, executive director of the Area Housing Authority in Newbury Park.
For the past year, Tapking has worked with Carrigan and Supervisor Kathy Long to bring the FirstHome program to Ventura County.
"With homeownership issues affecting a record number residents in Ventura County, it is essential that low- and moderate-income citizens are offered as many safe and secure home financing alternatives as possible," Tapking said. "All of the programs provided by NHF are safe, conservative, fixed-rate loans."
Realtors and brokers who attended the seminars were excited about the possibility of providing their clients with another option.
Perla Esqueda, a real estate agent in Oxnard, has had to turn away at least seven potential homebuyers in the past week and a half because they didn't have enough money to qualify for home loans.
"In times like these, these are the programs that will fill in the gaps for the stricter guidelines," she said.
Lenders nationwide have tightened qualifying standards because of the tremendous losses in subprime lending this year. In many cases, people can no longer obtain hybrid loans, such as 100 percent financing, to buy a home.
The FirstHome loan and other programs make qualifying for financing somewhat easier. During his presentation, Carrigan compared the FirstHome program to the CalHFA program, also sometimes referred to as the Access program, which is funded by the state and has been available since 1975.
Many families may qualify
The FirstHome program provides a little more flexibility and faster closing, generally within three to four weeks.
Many families likely could qualify in Ventura County, where the median family household income was estimated at $79,500 in 2006, according to the U.S. Department of Housing and Urban Development.
The CalHFA program requires a minimum 620 FICO score and maximum income level of $113,981. There also is a $596,000 purchase price limit. To qualify, the borrower's debt-to-income ratio cannot exceed 55 percent.
Duane L. DeSalvo, a Realtor and president of Somerset International Properties in Fillmore, was thrilled when he learned about the FirstHome program.
"This loan is going to turn the market around," DeSalvo said. "In this market, we need everything that will give buyers an incentive to buy. So many are sitting on the fence."
There aren't resale restrictions on either loan program, so borrowers can sell without a prepayment penalty.
"There's a lot of people who need a house right now and have had the door shut," Esqueda said. "This will open the door for them."
On the Net:
National Homebuyers Fund: www.nhfloan.org
Home Buying School: www.ahahomebuyingschool.com
California Housing Finance Agency: www.calhfa.org
Area Housing Authority: www.ahacv.org
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Posted by tekema on November 15, 2007 at 7:24 a.m. (Suggest removal)
How can you be a potential home buyer but not have enough money to qualify for a loan...That is the reason why the market is the way it is.
Posted by jh530811 on November 15, 2007 at 8:14 a.m. (Suggest removal)
This program is not for people who can't afford the loan. It's to make borrowing affordable in a time when conventional lending restrictions are leaving good borrowers high and dry. This is a lot different than sub-prime loans that were made to people who shouldn't had been offered loans because they "stated" that they made a lot more money than they really did.
I was at the seminar. This is a good thing for potential first time home buyers who have decent credit, good jobs and need help in an area where the average "Condo" is $400K or more.
Posted by JeannetteMedrano on November 15, 2007 at 9:40 a.m. (Suggest removal)
Thank you for that jh530811.
Posted by desdave on November 15, 2007 at 11:46 a.m. (Suggest removal)
Great idea, but what home will 450,000 buy around here? Only thing in that price range are small or undesirable area condos. And then you have the HOA of 250+. Big issue here is that virtually all homes are over the 417,000 jumbo loan cut off with much tougher qualifying etc for loans over that amount. That's what got us into the current foreclosure mess today.
Posted by jdcard80 on November 15, 2007 at 11:57 a.m. (Suggest removal)
There are actually over 2,000 properties listed in Ventura County listed for under $500,000.
I was at the seminar as well, and the speaker said that they have done 400 of these loans in the last 5 years and none have been foreclosed upon.
Posted by ecarson1958 on November 15, 2007 at 10:19 p.m. (Suggest removal)
I don't think it matters what kind of loan is available to first time buyers. Any person who is going to purchase a condo or home as a "starter" is throwing money away. At the very minimum, very minimum, all homes and condos are easily 30% too expensive. What is the big deal about wanting to purchase something that is 100% more expensive than it was just 6 years ago? How can a cracker jack 800 sq. ft. apartment condo conversion be worth $320K when in 2002 it was an affordable $160K? Economics, and the inability to understand standard inflationary rates versus wild speculative borrow, buy, sell, buy again, sell again, buy again, and then suddenly a person is sitting on a house with $275K in equity in just 5 years. Some people just bought a house in '98 or '99 and just stayed put. And now they have a few hundred K in equity. Now there's the people who don't own a home, and couldn't possibly own one unless they became suddenly rich. And then there's the people who are sitting in Hog Heaven with hundreds of thousands of dollars in equity. As is everybody else just about that owns a house. And now they can't sell it. Who would want to buy it now? And so, I close this story with the year late '09 and those hundreds of thousands of dollars in equity have evaporated. The price of the guys house is back to the same level as '01. Now finally it is a good time to buy again.
Posted by Fred on November 16, 2007 at 12:47 p.m. (Suggest removal)
read ecarson1958 - take note of
"How can a cracker jack 800 sq. ft. apartment condo conversion be worth $320K when in 2002 it was an affordable $160K?"
add in a whole bunch of fraud pumping up prices.
the scam is over
Posted by tsu.lee on November 16, 2007 at 3:02 p.m. (Suggest removal)
2000 Properties under 500K
30 Year loan 6% interest would make a payment of ~$3000/month (according to Bankrate) on $500K
Going by California Building Industry Association wanting no more that 28% of your gross income you need to make $129K/year
Going by California Association of REALTORS wanting no more that ~30% of your gross income you need to make $120K/Year
In both cases you make to much to qualify for this program
Posted by tsu.lee on November 16, 2007 at 3:12 p.m. (Suggest removal)
More fun with numbers
$400K home
30 Year loan 6% interest would make a payment of ~$2400/month
CBIA 28% - 102K/year income
CAR 30% - 96K/year
300K Home $1800/month mortgage
CBIA 28% - $77K/year
CAR 30% - $72k/year
So the Median Family can afford a $300K home. So riddle me this how many $300K homes are in the VTA that dont require HOA's (with the HOA you can afford even less home)?
Posted by ShelleyCam on November 16, 2007 at 3:21 p.m. (Suggest removal)
Thank you tsu.lee. That is a great point. Hopefully those would would take advantage of this program have some cash saved up and would not need to finance 500k at 100%. Our society is convinced that the only way to purchase anyting is on credit. That is just one problem!
Posted by tsu.lee on November 16, 2007 at 5:12 p.m. (Suggest removal)
Thanks this is a hobby I like to keep track of ... But there is something else people should ask about when they buy a home (I learned about it this weekend)
Mello-Roos - it is a little "fee" cities are allowed to charge
so depending where you buy you can be paying 3%+ in taxes (Mello-Roos, HOA, Property Tax, Insurance, etc ...) a month
Posted by insideedge on November 18, 2007 at 7:10 a.m. (Suggest removal)
Sure sounds like a sub-prime loan to me!
Posted by ravensnest13 on November 26, 2007 at 1:06 p.m. (Suggest removal)
Well it's my understanding that the non-repayable grants are used for a down payment, so you're not actually financing for 100%, which is what we're hoping to do.
Posted by meblondie138 on November 27, 2007 at 1:48 p.m. (Suggest removal)
If anyone with absolutely no money can go out and buy a house at any price with no money down, that does not teach the person to be able to save enough up for such occurences that come up as prop taxes, household repairs, etc etc. My opinion is that one should have to learn how to save a bit of money first to be able to put a down payment at least a little bit on a house, instead of just moving right in. Then when there are needed repairs they will have learned how to save the $$$ for it and be able to take care of it, instead of the house going to the wayside because that person can not afford to make the repairs. It then brings down the value of the neighborhood they started in due to the run down condition of the home they can not afford.
Posted by ravensnest13 on November 30, 2007 at 10:41 a.m. (Suggest removal)
Speaking from experience, I find it almost impossible to save hardly any money, as most of my income disappears paying off debt inherited from my ex, plus things like a large dental bill, car payment/insurance, high rent, gas.....and while I've been paying down the bills for 5 years, the cost of living/gas/rent keeps going up as well. This area is rediculously too overpriced in the housing market for me to forsee buying here. I'll be 60 by the time I can afford to buy a house (in my thirties), and then I might as well not bother. I make good money here, but the overpriced housing is gonna chase me out of Ventura to buy, which I'm sure many ppl have already done. Ventura needs to stop trying to be Santa Barbara South! That's WHY I don't live there anymore!
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