Home Buying in San Jose>Question Details

tsaem415, Home Buyer in Mountain View, CA

PLEASE HELP. I am getting close to getting into contract w/ a BMR home purchasing program with Down Payment Assistance & having second thoughts...

Asked by tsaem415, Mountain View, CA Mon Oct 8, 2012

Hello. My wife & I presently qualify (Barely) to purchase a nice condo/town house in SJ which is a BMR unit w/ Down Payment Assistance.

We don't really care about the BMR b/c w/ our own assets & credit, we can do a traditional mortgage w/ a downpayment of 10% of our own funds. The DPA is what we find as the real opportunity b/c it will give us flexibility of not having to liquidate almost all our assets for a down payment.

Given this is a BMR, it is very restrictive. The selling agent said he sold it 4 times but no one could qualify & it's taken almost 250 days until he met us. So we're afraid we won't be able to sell it in a reasonable time frame in the future. And we don't have the flexibility to rent it out.

My question: What path should we take? We love the home, but the trade off seems to be the lack (or no) participation in equity growth (as the price is dictated by a small pool of eligibile buyers & the % increase of their wages NOT supply/demand) Am I correct?

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BEST ANSWER
What I suggest you consider is how long do you plan on living in your home? Does your situation give rise to changes in job and location?

BMR is designed to help people who wound not otherwise qualify or be able to purchase a home. It appears that you have other options. You know the risk and only you can determine what amount of risk you are willing to accept vs the benefit of keeping some funds. You may want to discuss this further with a financial planner.

I've had three clients purchase BMR and to date they are very happy. They fully understood the criteria of the program. They elected the BMR because the competition and what was available to them to purchase didn't compare to the new construction. It's not for everyone.

Have an amazing day!
Web Reference: http://www.terrivellios.com
0 votes Thank Flag Link Mon Oct 8, 2012
Hi Terry - Thank you for your respose & extending your time. I think my wife & I agreed we'll be staying approximately 5 years or more. We're a young couple, so we feel that our earnings power by the end of the 5 years will be (hopefully) higher than where we are today. As such, by then we might have more saved & can buy in a traditional sale, but worry by then interest rates will be higher & therefore we should hedge our bets by choosing a property we can hang onto for a long time at current prevaling rates. Our work is in the south bay & do not expect that to change.

It is VERY comforting to know your clients who bought a BMR are happy. Should they call you to sell their properties in a few years, do you think this would be a long sales cycle for you to sell it? If housing demand increases pressuring prices upward by then, but BMR eligible candidate wages do not increase in the same manner, would your clients not participate in equity growth potential?
Flag Mon Oct 8, 2012
If you can buy with traditional financing, that would be the way to go. BMR is great for the right buyer. You do not seem to me to be the right buyer. You are already aware of the rental and resale restrictions that would run with your ownership of a BMR home. BMR ownership if for those who cannot qualify for conventional financing and plan to live in the home long enough to overcome the BMR resale restrictions…if that is possible.
1 vote Thank Flag Link Mon Oct 8, 2012
Thx John. I think we got too emotionally caught up in the unit since it was indeed the last unit in the entire community. And the fact that the home is great & we don't see another one like it in the area& in our price range. Having said that, is there anything else you think I should consider? As an agent, do you think it would be a challenge for you to sell a bmr?
Flag Mon Oct 8, 2012
You are correct. In my area, the owner must sell the unit as a BMR unit until he has lived in it for 15 years. That is a continuous 15 years, no renting. If you sell it before the 15 years, you cannot sell it for more than what the BMR restrictions allow. This means that you will not participate in the growth of real estate values.

There is a lot to consider when buying a BMR unit. Your real estate agent should have gone over all the furure consequences with you.
1 vote Thank Flag Link Mon Oct 8, 2012
Hi Eric. I'm not sure if you got my 1st mssg as it might have not posted. Either way, this property does not require me to stay at the unit for any period of time & I was told that I can sell the home at "the market". The sale price I'm told is not dicated by the city or tied to an index. So my initial reaction was this was a great proposal... until I had time to let it sink it.

My thought process is that the price can be sold at the market, however, the market price is determined by the short list of eligible buyers credit obtaining ability & their wages. Does this hold more true? Or, can you make a case that I'm wrong if I sell this in a few years & the market rebounds & that "a rising tide lifts up all boats."
Flag Mon Oct 8, 2012
We can go over other loan programs that you qualify for right now? I specialize in Under 640 Fico Score Loans. I also offer CHF Access half percent down payment program with a minimum 580 fico score. Let's go over your options of conventional, FHA and BMR. Here is a needs list and brochure of the half percent down program. These loan programs have no pre-payment penalties and you could rent out your home in 6 months if you wanted to.

CHF Access half percent down brochure, pdf
http://tinyurl.com/9fak6ho

Sheryl Arndt, standard needs list checked
http://tinyurl.com/8p3792f

CHF Access income limits http://tinyurl.com/8lzf8he

http://www.Under640FicoScoreLoans.com
http://www.FrankandSheryl.com
http://www.under640ficoscoreloans.com/Pages/ContactSheryl.aspx
Sheryl Arndt, Broker – Loan Officer
DRE# 01440252
NMLS# 297251
760-486-4225
0 votes Thank Flag Link Mon Oct 8, 2012
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