Wow! This was quite the week for Home Lending in California
First the good news: CalHFA (the California Housing Finance Agency) announced today that they are eliminating their requirement that borrowers need a 1% cash investment into the transaction – and the requirement that it be from the borrower’s own funds. What this means is that now you will only have to put down ½% (yep that’s .5%) AND that ½% can be a gift. CalHFA also eliminated their overlay on “flipped properties” and now will accept whatever the primary lender requires. What that means to buyers is that you can now use the CalHFA down payment assistance program, the CHDAP, to purchase ‘flipped properties” (fixed up but not owned for very long) as long as the property meets the guidelines established by the first lender. For you first time buyers – now you can get an updated property, likely purchased at a foreclosure auction by an investor, with as little as ½% down. That’s only $500 on a $100K property if you need help with the math.
OK, so it wasn’t all good news. HUD (that’s the folks who control the FHA loan) sent out a memo that indicated that effective April 1st (no fooling) the up-front MIP (mortgage insurance premium) is going from 1.00% to 1.75%. That means come April you will be financing .75% more (about $750 more on a $100,000 sales price) so your payment will be higher. Also the monthly MMI will increase from 1.15% to 1.25%, and is scheduled to go up by more for higher loan amounts on June 1st.
Plus the feds are working on lowering the maxim seller contribution from the 6% it is now to 3%. Thanks to the work of the National Association of Realtors®, the new proposal is a reduction of the seller concessions to a maximum of 3% or $6,000 whichever is greater.
So – I’m a buyer – what does all this mean? If you are looking to take advantage of the great distressed property deals and low rates now is the time to really get motivated. Why? Because in California there’s down payment assistance that wasn’t available before and if you wait on that FHA loan too long you’ll pay more and have to ask the seller for less contribution towards your costs. TMI? You can contact me through my profile with additional questions.