Tom and Catherine,

Thanks for the links. So basically, the state is doing little more than re-announcing HUD Mortgagee Letter 9-15 with their own funds if I understand correctly. I just scanned it all a bit as I'm about to run out the door. But if that's the case, then I stand by not really being an advocate for this. I'd like to see a analysis of taking the loan and putting it towards your down payment (above and beyond 3.5% that you provide) and just waiting to get it from the IRS and using it to reduce your principal.

I'd be curious to see it laid out much like a rent vs. own comparison.

I'll have to call my lender and see if he can run some numbers for me. Could be interesting to see the difference between the two ideas.

Tom - I think them re-releasing Mortgagee Letter 9-15 was more about saving face than anything else. I have yet to hear anyone that understood it all say much positive about it.

Matt Stigliano, Realtor®
210.240.6222
http://www.RErockstar.com
"Your all access pass to San Antonio real estate."

Catherine - Sorry I missed your phone call. Crazy day today of zipping back and forth.

Sorry, everyone I have been out of computer range and I couldn't get this posted. Here is a quick and dirty posting copied from some e-mail correspondence I have had with the state. The Program fee is only $250 so it is very affordable. Anyone who has questions, please call me directly at 210-412-3953 as my computer access will be spotty today. I will be glad to take all calls.

From: Cathy Gutierrez [mailto:cathy.gutierrez@tdhca.state.tx.us]
Sent: Wednesday, June 10, 2009 11:31 AM
To: Catherine McIver
Subject: RE: Federal Tax Credit Advance

Here are some of the program details on the 2 programs that we will release on June 22nd. Please call me if you have any questions. Homebuyer education is required for both programs.
Thanks.

* 2009 TDHCA Mortgage Advantage Program -
§ Developed to monetize the First-Time Homebuyer Tax Credit by providing down-payment assistance to eligible first-time homebuyers.
§ Program will be available in conjunction with the TDHCA First-Time Homebuyer (Bond) Program or the MCC Program ONLY.
- $1 Million available in DPA under 2009 MCC Program;
- $1.75 Million available in DPA with Bond Program 70
§ Borrower must meet Bond or MCC program guidelines;
§ Must be within program income limits (tax credit limits may be higher) - use more restrictive limits
§ Amount of Assistance - 5% of the mortgage amount up to $6,000;
§ Borrower pays $250 Administrative Fee;
§ First 120 days, 0% interest to encourage borrowers to repay loan amount; thereafter, 5 year term at 7% interest rate



* TDHCA 90-Day DPA Program -
§ Stand-alone DPA program to monetize the federal first-time homebuyer tax credit.
§ $5 Million in DPA loans
§ 2nd Lien Loans up to $7,000
§ 0% interest for 90 days; if not paid in full loan term would be 2 years (24 months) at 10% interest.
§ Income Guidelines would be the same as required by the federal first time homebuyer tax credit; single taxpayers up to $75k; married taxpayers filing a joint return up to $150k.


Cathy Gutierrez
Texas Dept. of Housing & Community Affairs (TDHCA)
221 E. 11th Street
Austin, Texas 78701
Phone: (512) 475-0277
Email: cathy.gutierrez@tdhca.state.tx.us
Website: http://www.MyFirstTexasHome.com

Matt

The administrative costs associated with this program doesn't make it worth it for a lender to do this..... especially with such a short window to get these deals done.
I am glad the Great State of Texas has decided to monetize the credit.... But people are starting to get confused. They need to understand that the initial 3.5% down payment is the responsibility of the borrower. The tax credit can pay closing costs and additional down payment only.

http://www.tdhca.state.tx.us/homeownership/fthb/down-payment…
http://www.tdhca.state.tx.us/homeownership/fthb/docs/dpa-inf…

I, too, have been trying to clear up the misconceptions by the general public.

Since this can't satisfy the borrower commitment of 3.5% of the purchase price with their own funds.... this will not do too much 'stimulating' imo.

Tom,

I assume you just saw my last comment to Catherine and replied to that, but if you read my other comments you'll see that I have posted that exact info. If there's one issue I've been very up to date on and working hard to correct any misinformation out there on, it's this one.

I watched at the whole May 13 debacle unfolded at NAR Mid-Year and have been reporting on the rumors, false info, etc. about the First Time Home Buyer Tax Credit and trying to deliver solid information to consumers, because I fear this is going to cause a lot of people a lot of headaches (about to write a post about how worried I am about some of the things I'm seeing in Google Analytics regarding this) down the road.

Catherine had mentioned the state was going to step up to be a part of this and I haven't seen this yet, I was hoping she would comment with a link to somewhere, so I could get to reading, analyzing, and reporting back to everyone.

As a Dallas based lender are you doing the bridge loans? We haven't seen much in the way of our lenders being willing to do this and in most cases, I'm not an advocate for this idea anyway. It doesn't really give you much bang for your buck in my opinion.

Matt Stigliano, Realtor®
210.240.6222
Exit Realty North-San Antonio
http://www.RErockstar.com
"Your all access pass to San Antonio real estate."

Matt
The borrower still has to come up with the initial 3.5%
The monetizing of the tax credit will just allow a borrower to add to the 3.5% down or pay some closing costs.

Catherine,

I didn't see this yet. Care to provide a link? It would be nice to see the state step up as many states have done.

Matt Stigliano
210.240.6222
Exit Realty North-San Antonio
http://www.RErockstar.com
"Your all access pass to San Antonio real estate."

New Downpayment Assistance Program will begin June 22nd.

The State of Texas has announced that it has made $5 million dollars in down payment assistance available to be used in conjunction with FHA first lien mortgage loans originated by the lender. This allows first time home buyers to utilize the $8,000 first time tax credit for their down payment and closing costs! They do not have to wait until after the property closes to receive the refund. This is an enormous benefit that will allow cash strapped buyers to take advantage of the $8,000 stimulus tax credit.

Please contact me if you need any details.

FHA requires 3.5% down. This can come from a family member in the form of a gift(not a loan).

Right, Matt. I don't know of any lenders here actually doing bridge loans and/or using the Mortgagee Letter to utilize the tax credit, but it might be a possibility in the near future.

Thanks for all of your useful information!

Amanda P. Herring
Realtor-Broker
Accredited Buyer Representative
(210) 771-8608

Amanda - So far none of the lenders I've used have implemented Mortgagee Letter 9-15 in order to monetize the $8,000 First Time Home Buyer Tax Credit as additional (above and beyond the 3.5% FHA requirement) down payment or to cover closing costs. Curious to see if you have seen any lenders doing it in town? Most lenders I have spoken to have seen it as a poor attempt by HUD to cover itself after mistakenly announcing that it could be used as a down payment (and not just to add to the 3.5% or take care of closing costs) at NAR Mid-Year.

I have written extensively on the topic of both the debacle that was the announcement and the First Time Home Buyers Tax Credit in order to try and maintain updated information on the topic as there was so much misinformation coming from it at one point, that I heard cases where lenders and CPAs were advising their clients to put a date in the future on IRS Form 5405, claim the credit, then go shopping for a house. The IRS makes it VERY clear that that can't be done, but there were "experts" telling people to go ahead and do it.

This is a "compendium" post I wrote in order to bring together all the posts I wrote about it:

http://sanantoniorealestaterockstar.com/post/1096517/first-t…

One more thing I'd like to add to my answer below for clarification:
Even if you were able to use the $8000 tax credit towards your home purchase, you would still have to make the minimum down payment from funds of your own. In other words, the tax credit money could only be used towards your closing costs and/or increasing the amount of your down payment. If you have any questions, let me know!

Amanda P. Herring
Realtor-Broker
Accredited Buyer Representative
(210) 771-8608

Hi Zoctopus0,

Yes, Matt below is right on target on the down payment amounts here in the San Antonio area! However, if you are going to use the property as your primary residence and you have good credit, then you might be able to get a Conventional loan with less than 20% down.

My estimate is that your closing costs will be closer to the 6% figure as Frank stated, so to be on the safe side you might figure on somewhere between 6-7%. If you are a first time homebuyer, then you will probably qualify for the $8000 tax credit which Congress is now trying to put things in place so that you would be able to use that money towards your down payment and closing costs. That is in the works, but who knows how long it will be until they can get that implemented! :-) Your best bet is to get with a loan officer and discuss your options!

Good Luck!

Amanda P. Herring
Realtor-Broker
Accredited Buyer Representative
(210) 771-8608

Zoctopus0,

Frank down below gave you a great answer. FHA will require 3.5%. Conventional 20%. ($3,115 and $17,800 respectively). VA (if you're a veteran) can be $0 down. There's a few other things to consider. If it meets USDA Rural Development guidelines, you may be able to get in with 0% down. If it's a HUD home (owned by the Department Of Housing And Urban Development) you may be able to buy it with $100 down (certain HUD houses qualify for this program).

There's two factors at play. The home and the loan. If you have a specific home in mind, your best bet is to talk specifics with your agent and lender on that home. If you're just window shopping right now with the intention of buying soon, you should sit down with a lender and get pre-approved. The lender will look at your credit and finances and a) determine how much of a home you can afford, b) give you an idea of what your monthly payment (including taxes and insurance) will be, as well as show you your estimated down payment, closing costs, and a break down of what these all mean. If you don't know a reliable lender, call your agent. We work with lenders every day and we know who's good, who can get the transaction done smoothly, and who will work hard for you to get it all done and give you the best loan they can find.

With all that being said, FHA is a pretty common route here in San Antonio these days, so we usually expect around 3.5% down plus closing costs. Frank's 6% estimate is good, but I tend to err on the high side to be safe, so I like 7-8%. Closing costs have a lot of factors to them to - the day of the month you close can determine a payment shift one way or the other (up or down) as well as how far we are into the year, etc.

Finding the right loan for you is what it's all about. Definitely speak with a lender as there are lots of things to consider. Even if your credit is rough around the edges a good lender should be able to get you on track to bring it up some (although they can't work miracles) and they can also show you the various ways you can get the down payment if you don't have quite enough cash reserves (although I advise everyone to be careful of these methods...you really need to know what you're comfortable with).

Hope that helps!

Matt Stigliano, Realtor®
210.240.6222
Exit Realty North-San Antonio
http://www.RErockstar.com
"Your all access pass to San Antonio real estate."

Most down payments are 20% or about $18,000, however some banks may insist on more if the buyer has a low credit score.
Dorothy Erickson
http://daerickson.com

Hello Zoctopus0,

What type of loan are you going to use? with FHA it will require 3.5% down and for the price of 89k it will be about $3115. For conventional it will be higher. What you should take note of is that you should consider closing costs on top of any down payment that you need to have. If you’re going FHA it will be about 6% of the loan. You can ask the seller to contribute but don't bank on them doing the who closing costs.
Even though this is a "buyers market" sellers still are resistant to pay all or most of the closing costs.

Even thought the down payment assistance programs are gone, there are still other avenues and revenues you can visit. Give me a call or email and I'll gladly share them with you.

It depends.. If the buyer is a low income/good credit borrower and if there is Community Reinvestment loan program available in the area..,, then the downpayment and closing costs can be 100% financed and Mortgage insurance can be avoided too. If the borowers income is greater than 80% of the median income for the area then the best loan may be a standard FHA loan. That typically requires a 3% down payment. If the buyer is an investor then the minimum dowm payment probably will be 30% of the purchase price. Like I said - it depends. Lenders reward low income borrowers who have good credit by grouping them into loans that are considered Community Reinvestment. That allow the lenders to seek a tax break. Responsible lenders use the tax break for their profit and set strict guideline for borrowers to reduce default rates. That allows them to offer really reduced rates and avoid Mortgage Insurance. These loans are not resold in the secondary market so they are only done by portfolio lenders. Check out Neighborhood Housing Services and Key Bank's Community loan for examples of these loan products. Also some cities have Community reinvestment monet available via loacal housing authoritys. Please let me know if this helps.