6 reasons why down payment assistance matters

 

Down payment assistance helps make buying a home as affordable as possible. We believe it can make a significant impact for many buyers, and it’s never been truer than in today’s market.

According to the latestCampbell/Inside Mortgage Finance HousingPulse Tracking Survey results, the percentage of first-time homebuyer purchase transactions are increasing in recent months, after hitting an all-time low at the end of 2012. And, market indicators of future home purchases hit a four-year survey high in February. However, access to a down payment still remains the number one obstacle for homebuyers.

We review six key reasons why down payment assistance matters to today’s homebuyers:

1. Helps homebuyers purchase a home sooner: Instead of waiting on the sidelines, down payment assistance can help a buyer get into a home faster. It immediately builds their buying power and can help them take action on a purchase more quickly. Many buyers have remained on the sidelines, saving money, watching interest rates and seeking desirable inventory. Down payment assistance can be a valuable tool to help move those buyers off the sidelines and get them into a home.

2. Makes the purchase as affordable as possible: Homebuyers of all income levels have seen the housing crisis up close and want to ensure their purchase is an affordable and sustainable one. However, since the downturn, down payments for fixed rate mortgages have significantly increased. Even with lower interest rates and home prices, the cost of buying a home was out of reach for many moderate-income families. Homebuyer programs can help more families take advantage of these record low interest rates.

3. Helps offset increases in FHA premiums: First-time homebuyers are dependent on low-down payment financing. Over the years, FHA has been the primary place for many first-time homebuyers to get a low-cost, low down payment loan. In fact, FHA sustained housing markets nationwide during the economic and housing downturn. However, FHA recently took steps to stabilize the fund, including increases to premiums, increased down payments for some borrowers, and greater risk controls. Many don’t know that FHA loans can be combined with a down payment assistance program, helping offset increases in the down payment requirement and premiums.

4. Makes it possible for working families to live close to their work: All communities need public service employees. These are the police officers, firefighters and teachers who, especially in high-cost areas, often live far from the community where they work. There are several targeted down payment assistance programs for these employees to help keep them in the community, in turn helping reduce their commuter costs.

5. Gives homebuyers an important cash cushion: In the National Association of REALTORS® 2012 Profile of Homebuyers, 76 percent of buyers used savings to fund their down payment. And, only one percent used any type of program or assistance, even with billions of dollars available in programs across the country. Many buyers don’t take into consideration the need to keep some savings and reserve funds available for home maintenance and other unexpected emergencies. Down payment assistance allows buyers to do just that.

6. Provides valuable homeownership education: In order to qualify for an assistance program, most require homebuyers to complete homeownership education. It typically covers the logistics and steps of buying a home as well as financing basics, homeownership responsibilities and contract obligations. This valuable, upfront education helps prepare buyers for the home buying process and sets them up for long-term homeownership success.

 
Image courtesy of Elwood W. McKay III at FreeDigitalPhotos.net
Courtesy of http://www.workforce-resource.com/
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How to Find a Great Agent Podcast

Click here to listen to podcast.

I hope this gives you a little insight in what to consider when choosing an agent that is right for you.

Prudential Select Properties

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Expect Unexpected Costs, Chores When Selling to Move Up

April 9, 2013 — Realty Times Feature Article by Julie Wyss

Selling a home can come with unexpected chores and costs but taking some key steps can help keep you under budget on costs and on target for the best return on your investment.

1. First, get pre-approved for a home loan.

Sign a contract to sell your old home before you know if you are qualified to buy another and you could get stuck.

If your financial circumstances changed since your last home purchase you might no longer qualify for a loan or could become unable to sell at a price that allows you to buy your replacement home.

Along with getting pre-approved, research your next home’s housing market to determine how much you’ll need to buy the replacement home.

2. Determine how much the house you want to sell is really worth.

A real estate agent can help you determine your home’s fair market value, but consider taking the agent’s finding further and order an appraisal.

3. Estimate what it will cost to sell your home.

Your real estate agent can also help here, but be sure to include:

The real estate commission, if you use an agency to sell.

  • Advertising and staging costs, signs, other fees if you plan to sell it yourself.
  • Contractor (or repair costs) fees, legal fees, closing/escrow agent costs and other professional fees.
  • Excise or transfer taxes.
  • Prorated costs for your share of annual expenses, such as property taxes, homeowner association fees, homeowners insurance, fuel tank rentals, etc.
  • Other fees typically paid by the seller in your area including surveys and inspections.

4. Determine what it will cost to acquire a new home.

Costs for a new home can include moving expenses, loan costs, down payment money, home inspections, title work, homeowners insurance – any expense related to buying a home. Your lender should give you a disclosure of estimated costs when you apply for pre-approval.

5. Calculate your estimated proceeds from the sale of your existing home.

Deduct your mortgage payoff from your home’s fair market value. Your lender can give you the pay off figure.

From what’s left, deduct your costs to sell and you’ll have an estimate of the proceeds you will be paid at closing.

Determine if your closing proceeds will cover your costs to acquire a new home. If not, you’ll have to come up with cash or other funding to make up any difference.

6. Complete repairs on your existing home.

Unless you are selling your home as-is as a fixer-upper, make the necessary repairs to bring your home’s condition up to a ready-to-go level. These are cosmetic repairs or staging steps, but items in need of real repair.

Leave something inoperable and you risk buyers submitting offers that are lower than you’d like.

7. Get the house ready to show to prospective buyers.

Most homes need at least a little spiffing up before they go on the market. Curb appeal, fresh paint indoors (and sometimes out), organized closets and cabinets, sparkling clean windows and appliances, and a clutter-free atmosphere are all essential for home to appeal to the greatest number of potential buyers.

8. Get psyched up to let potential buyers in, and then leave.

If you’re listing with a real estate agent, he or she will likely ask you to leave during open house events and individual tours. Lurking sellers make buyers feel like they are intruding and you could get a little protective of your first dream home.

Unless there’s a very good reason, don’t ask your agent to be present during showings. It’s the kiss of death for showing activity.

Buyers’ agents also want privacy with their clients and they don’t have time to work around your agent’s schedule.


© Copyright 2013 Realty Times. All Rights Reserved.
Republication or redistribution of Realty Times content is expressly prohibited without the prior written consent of Realty Times . Realty Times shall not be liable for any errors or delays in the content or for any actions taken in reliance thereon.

 

 

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4 Common Down Payment Assistance Program Myths Debunked

4 Common Down Payment Assistance Program Myths Debunked

Today’s homebuyers are doing significant online research before beginning their home buying search, yet there are still many misconceptions about home financing and down payment assistance programs. Home prices, along with down payments, are increasing, and assistance programs can help make buying a home as affordable as possible.

Are these common myths keeping you from investigating homebuyer assistance options?

Myth #1: Down payment assistance programs are only for first-time homebuyers.

First-time homebuyers are defined as someone who has not owned a home in three years. And, not all programs specify that you must be a first-time homebuyer. It’s important to know that assistance programs are for homebuyers, not investors. Most housing agencies will require that the home is occupied as a primary residence in order to qualify.

In addition, homebuyers purchasing a home in a designated target area (typically for revitalization efforts)  may receive special benefits such as higher assistance amounts, more lenient income requirements and the first-time homebuyer requirement may be waived. Veterans are often eligible for a first-time homebuyer waiver, too!

Myth #2: Assistance programs are no longer funded.

There are many public and private-funded programs available. In fact, there are hundreds of millions of dollars in down payment assistance, tax credits, affordable fixed-rate mortgages and rehab loans available throughout the country.

Each program has a different funding schedule. Some programs are government-funded and are provided through municipal or quasi-government agencies or non-profits. Others are privately funded, and some are even sponsored by employers. Every state has a collection of programs at the state-level, and hundreds of markets around the country offer local assistance as well.

Watch this four-minute video to learn about the three most common types of homebuyer programs.

Myth #3: It’s difficult to qualify for homebuyer programs.

There are many options and opportunities. The key is doing research early in the home buying process as well as reviewing the application criteria.

To qualify for an assistance program, the homebuyer and the property will have to meet certain criteria, which vary by program. Standard criteria include property location, type of home, sales price limits, household income thresholds, and homebuyer education certifications. There are often additional benefits, or even entirely separate programs, for educators, protectors, health care workers, veterans of the armed forces, and households with disabled members.

Down Payment Resource gives homebuyers the opportunity to answer a few simple questions to determine if they may meet the basic qualifications for a program.

Homebuyers must also demonstrate that they are financially responsible. Assistance programs  have  credit score thresholds and cash reserve requirements. Most programs will require a little money down from the homebuyer, as well as homebuyer education, especially for first-time homebuyers, to ensure the long-term homeownership success of each new buyer.

Myth #4: Using a down payment assistance program makes home financing more difficult.

Homebuyer program administrators often train “participating lenders.” These are lenders who are qualified to write the loans associated with the programs and understand how to incorporate this special financing into the home loan without complicating or prolonging the real estate transaction. This is why it’s important for homebuyers to seek information about available programs prior to touring homes or even getting prequalified. A little homework upfront ensures a smooth, successful transaction down the road.

You can begin by visiting your state’s Housing Finance Agency website to discover available programs. You can also use Down Payment Resource to access the participating lenders for specific programs.

Down payment assistance can help boost homebuyers’ purchasing power, help buyers retain a solid cash reserve for home improvements and other moving costs, and revitalize our communities with more homeowners.

 

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5 Tips for a Green Home

By Lisa Matteson

Prudential Select Properties

 

Eco-friendly. Carbon footprint. Global warming. Energy-efficient. These catch phrases have become part of our lexicon as we’ve become more aware of our impact on the environment and our role in protecting it. As a homeowner, there are some simple, inexpensive steps you can take to make your home energy-efficient. Get started on the road to being “green” with these five tips:

 

Change Your Light Bulbs

By replacing just five incandescent light bulbs with compact fluorescent (CFL) bulbs, you can save $100 per year on electric bills while using up to 75 percent less energy and removing greenhouse gases from the environment.

 

Buy ENERGY STAR® Appliances

ENERGY STAR qualified appliances, such as refrigerators, washers and air conditioners, meet a higher level of energy efficiency set by the Environmental Protection Agency and U.S. Department of Energy than standard models.  According to ENERGY STAR, if just one in 10 homes used ENERGY STAR-qualified appliances, the impact could be compared to planting 1.7 million new acres of trees. And, switching to these appliances is not only good for the environment, but easy on your pocketbook. Although these appliances may costs more, you can reduce your energy bill by $80 per year.

 

Seal Up

Cracks and air leaks represent cash seeping from your doors and windows. Get rid of air leaks in doors, windows and other areas by caulking gaps and cracks. This will help decrease your heating and air conditioning bill. But make sure you use silicone sealants. Acrylic caulk tends to shrink, while silicone sealants are waterproof and won’t shrink or crack, creating less waste.

 

Use Less Water

Did you know that roughly 60 percent of a home’s water consumption takes place in the bathroom, according to the California Urban Water Conservation Council? The largest culprit is the toilet, which accounts for 27 percent of your household supply every year. By installing low-flow toilets, shower heads and faucets, you can save thousands of gallons of water each year. In addition, replace leaky fixtures. That slow-dripping faucet can waste as much as 2,400 gallons of water per year.

 

Adjust the Thermostat

When adjusting your home’s thermostat, the rule of thumb should be: turn up the dial in the summer and down in the winter. Lowering the temperature by just one degree will reduce your electrical costs. And if you use a programmable thermostat, you can program your air-conditioning and heating systems to reduce output while no one is at home or at night while you sleep. Ceiling fans are also helpful in circulating the air to keep the room cool in the summer and warm in the winter.

 

Going green doesn’t have to be overwhelming or costly. By making just a few small changes within your home, you can help decrease energy consumption and help make the world a “greener” place.

 

Lisa Matteson can be reached at 314.662.4022. Prudential Select Properties is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. Equal Housing Opportunity

 

 

 

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Costs for First-Time Buyer

 

 

By Lisa Matteson

Prudential Select ProperiesImage

 

 

            Buying a new home can be a huge, complex undertaking, especially when it’s your first time. That’s why it’s important to have an experienced real estate agent guiding you along the way.

            In a survey conducted earlier this year by Prudential Real Estate and Relocation Services (PRERS),  a Prudential Financial, Inc. [NYSE:PRU] company, 75% of respondents highlighted the importance of real estate agents in the process of buying or selling their home, with only 24% saying agents are helpful but not imperative.

            “Americans continue to see real estate agents as having a very important role in helping them price, buy and sell their homes,” said James Mallozzi, PRERS’ chairman and chief executive officer. “Although the data underscores the value real estate agents provide, it also shows that the industry needs to continue to work hard to meet clients’ unique needs.”

            First-time buyers need to look at their financial situation and crunch the numbers to see if this is the right time to buy. Chances are the numbers they see today will be the best they will see for some time, which is why so many are considering homeownership.  

            Still, understanding the money that goes into a home purchase is important. The biggest mistake new buyers make is underestimating the costs of buying a house and maintaining it over time.

            Homebuying requires more than a down payment as closing costs and future expenses will figure prominently. Many experts agree that homeowners should have 1%-3% of their homes’ purchase price in savings for improvements and surprise expenses. Mortgage experts also say it’s wise to have at least six mortgage payments in the bank after a closing.

            While those numbers may not be feasible for everyone, if you are spending above your means on a new home, you may find yourself in financial trouble fast.

            Inspections are important for the first-time buyer, as they list repairs that will be needed for the home. A buyer should put together a short-term and long-term plan based on the inspection so they know how much money they will need in the months and years ahead.

            As renters, people are accustomed to paying rent and basic utilities. As homeowners, you’ll also pay for water, sewer and trash collection. Then there are property taxes, homeowner’s insurance and homeowner’s association dues, plus yard care, snow removal and other expenses unique to your location.

            To be sure, buying a home is one of the largest investments you’ll make and when done wisely, it can be one of the best decisions of your life. Your real estate agent will help each step of the way, first helping you establish a realistic price point for your home purchase and a clear understanding of your monthly expenses.

Lisa Matteson can be reached at 314-662-4022. Prudential Select Properties is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential company. Equal Housing Opportunity.

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