First Time Home Buyer

The program launched by California’s Governor reduces the interest rate on 30 year fixed mortgages to a below market rate. This is aimed to help the first time home buyer purchase targeted foreclosed homes in certain areas of California that has been hit hard by the foreclosure crisis. These homes are reduced to bargain prices to make them more attractive to the first time home buyer. First time home buyers purchasing a home to live in as their primary residence are eligible for the program. Additionally they must be a U.S. citizen or legal resident and meet the credit, income and loan requirements of the program.

The program is run by the California Housing Finance Agency. The program has estimated $200 million to aid from 800 to 1,000 families looking to buy homes. Income limits apply as couples are allowed to earn up to $67,800 in some counties and up to $73, 560 in others; the limits to qualify increase for families with three or more persons.

Certain credit requirements apply as well as borrowers must have a credit score of at least 660 for a loan up to 95 percent of the value of the home. For homes that exceed 95 percent of the homes value the credit score must be over 680 to qualify.

Not every foreclosed home in the specific areas of California is eligible for this program. Foreclosed homes that are selected by Fannie Mae, CitiMortgage, HomEq Servicing and Wells Fargo Premier Asset Services are the only homes eligible for this program. Additionally the homes must meet all CalHFA and Fannie Mae inspections, health and safety codes and repairs requirements to qualify. There are currently almost 100 homes that are on the list of eligibility now in the counties of Stanislaus, San Joaquin and Merced and more are being added every week. All of the homes listed are priced at least 12 percent below their estimated value helping the first time buyer reach the dream of homeownership.

Potential buyers must be aware that they are required to complete a home buyer education counseling program. These programs are available over the Internet, in person or over the phone; however, a certificate of completion must be issued through Fannie Mae or Freddie Mac identified counseling administration agencies, mortgage insures or HUD approved buyer counselors to be valid. The lenders themselves also are subject to certain requirements including being CalHFA approved lenders.

Despite the qualifications and requirements both the potential first time home buyer as well as the neighborhoods of the eligible homes are thrilled with the program. Buyers in need are being united with homes in need and offering revitalization for many neighborhoods in the counties that have been hit hard by the foreclosure crisis in California.

It is the opinion of many people that the government, despite what the President may say, will in fact bail out mortgage high players Fannie Mae and Freddie Mac. For these companies to fold would be detrimental to the economy. But what exactly are Fannie Mae and Freddie Mac and what do they do? Simply put, a home buyer achieves a mortgage from a lending institute and Fannie Mae or Freddie Mac purchase the mortgage to then resell it again to investors. They receive money from the sale to the first lender to continue lending. In the last decade Freddie Mac handled nearly $164 billion in New York mortgages alone; serving over 1,325,000 families. If Freddie Mac and Fannie Mae have serious financial problems then credit will tighten and it will become increasingly difficult for any consumer to get a mortgage; but particularly for the first time home buyer. At this point it is unknown how much money these companies will need to borrow from the Federal Reserve, the government or the public treasury; however, the government has stated that if they do need it they can come for it. With the potential for government bailouts confidence is building.

When push comes to shove, impact from national news or news on a local level does not change the rules in applying for a first mortgage; make sure you have your finances in order before shopping for a home, make sure your credit is in line and be aware of your credit score. The first time home buyer needs to educate themselves more than ever as lenders begin to tighten their belts. Knowing what your credit score is, how to increase that score and look favorable to the lenders will increase your chances of obtaining a mortgage regardless of what is happening in the financial world; these are basic rules.

Before a lender will grant a loan for a home he will first run a credit report on the buyer to help them get a picture of the buyer’s ability to pay the loan. The last thing a lending institute wants is for a buyer to get in over their head and default on their mortgage. It is therefore recommended that before shopping for a home or showing up at the lending institute to apply for a first mortgage you run a credit report of your own. You can do this for free once per year by going to annualcreditreport.com. This will help you figure out any areas that need to be corrected and what areas could be improved. Once you are satisfied and your lender runs the report he will be able to help you understand what you can afford. If you have discovered your credit is in shambles or your credit score is low there are ways to bring up your credit score and you will have the time to do so.

Freddie Mac and Fannie Mae having financial problems is just the reflection of what is happening in the economy today; we are all feeling the pinch. This is a time, more than any to tighten our own belts, avoid using credit excessively and manage your credit well; doing these things will allow you to be among the few people that the lenders extend a first time home buyers loan to.

The media was flush with stories about the virtues of home ownership aas well as the availability of easy financing terms during the housing boom of a few years ago. Fast-forward to today. Real estate values continue to fall nationwide and foreclosures, gas prices, unemployment, and inflation are on the rise. Widespread doom and gloom permeates the media. The subprime mortgage crisis is widely publicized.

With all the negative press covering the economy and particularly real estate, it is easy to come to the wrong conclusion about getting a first time home buyer’s loan. The picture painted far too often in the national news makes it appear that loans for first time buyers are now difficult, if not impossible to obtain.

However, the fact is that owning a home is an intregal part of the American Dream. Society believes so strongly that home ownership is good for Americans that we have built it into our national policies and tax code. Interest on a home mortgage is deductible from your income taxes, and the government backs a number of mortgages to make first time home ownership possible for many people. There are a number of loan options available from Federal, State, and Local Municipalities that can be customized to your specific situation. The most populat include FHA, VA and loans backed by Fannie Mae and Freddie Mac.

Virginia Hays, the association executive for the Central West Tennessee Association of Realtors, states, “The basic loans that homeowners rely on most often are readily available.”

If you invest a fair amount of time to become informed about the loan options, down payment assistance programs, as well as outright grants available to first time home buyers, you can both save money and put your home ownership plans on a very firm foundation. Armed with this knowledge, you will be in the best position to take advantage of the current buyers market while it lasts.