Here’s some information on a potential major change in the FHA program taken from my HomeSmart brokerage newsletter (bold emphasis is mine):
ALL SELLER FUNDED DOWN PAYMENT ASSISTANCE PROGRAMS WILL LIKELY END IN THE VERY NEAR FUTURE.
One of the most popular loans of late was an FHA loan utilizing a program such as AmeriDream. This allowed the seller to contribute to pay for the buyers required 3% down payment as well as closing costs and prepaids (making it essentially a zero down loan). It now appears very likely that the Mortgage “Rescue” Bill that is about to be approved in Congress will end that program. Sellers will still be allowed to pay for closing costs and prepaids but all borrowers would need to come up with a minimum of a 3.5% down payment from their own funds or a gift from a family member (the 3.5% down payment is an increase from the old 3% requirement for FHA). The end date for the program seems like it will be October 1. It is unclear whether that means that you would need a signed contract before that date or whether that means that you would need a completed, closed transaction by that date or even earlier. In any case, you and your potential buyers will want to move quickly in order to utilize this program since this will eliminate a lot of potential buyers from our market. Here is a link to cnn.com that has some details about everything in this Mortgage “Rescue” Bill.
So, as noted above, if you’ve been considering a purchase using seller down-payment assistance, you should move quickly before this benefit is gone. Or convince a relative to kick in towards your down-payment.
Update 7/26: The Senate has passed the mortgage rescue bill, and now goes to the President for final approval.
Update 7/30: President Bush signed the bill into law.
Copyright © 2008 Rod Rebello
www.TempeAgentNews.com
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