First Time Home buyer Program

If you have not owned a home for the past 3 years, you may qualify for a first time home buyer program.  Each loan program has several qualifying criteria.  Most consider income and family status/size.  Some first time home buyer programs consider employment and occupation. 

Over the years I have done many of these first time home buyer programs successfully.  To navigate them, I recommend using a lender that has experience processing these programs.  The tricky thing about them is that they typically take longer to process as multiple government agencies can be involved.  This is the part that can be disastrous if not expertly handled.  As you know, most escrows have a defined time period, quite commonly 30 days.  When escrow is held over, it can cause hundreds and thousands of dollars in damages to the seller, buyer, or both.  In a worst case scenario, it can even cause the buyer to loose his deposit and his or her new home.

When handled by a professional this risk can be managed and greatly minimized .  I have a team of expert lenders that can guide you through the process.  In case you are wondering, its hard to find a competent lender that will do these government loan programs.  They are a great deal for the buyer, but lenders often make far less and work much harder to get them done.  Therefore, you won't find many lenders that push these loan programs.  They just don't want to spend time and money advertising to their least profitable customers.   Fees are often caped by the government.  So without a doubt, these first time home buyer products are usually the best and least expensive way to buy your first home.

Links to Common First Time Home buyer programs

Below you will find links and a brief description of common first time home buyer programs in Southern California.  Each of the programs has different limits in each County where they are offered.  In order to determine which program is right for you, your lender can help.  He will need to run your credit report to find your fico score.  Even though these government loan programs are usually pretty liberal, your score may change the options available.  Some of these programs are backed by FHA programs; however, conventionally backed loan programs may offer you more flexibility and possibly save you from having to prepay the mortgage insurance with a large non refundable fee.  In addition, your debt structure and income will be calculated to conform to the program guidelines.  Finally, your future plans for the property may also affect which first time home buyer program you choose.  There are good reasons to choose long term stable loans or other reasons to choose shorter term loans.  Some programs will also help with cash flow issues during the first 5 years.  This is especially helpful when you expect your income to grow substantially.  Once again, make sure you are working with the right professional looking who is looking out for your interests.  What you don't know, can hurt you.  A great team will put all the details together in a way that will save you thousands of dollars and a lot of grief.

CalHFA

The California Housing Finance Agency raises money through tax exempt bonds and loans the money to home buyers at below market rates.  This is a terrific program that I have done with my buyers many many times.  CalHFA has several options available.

Some of CalHFA's most popular products is their interest only plus loan.  This first time home buyer loan is a fixed rate conventional loan paid over 35 years.  The first five years has an interest only option.  This loan is one of my favorites for lowering the buyer’s payment but still offering the stability of a fixed rate loan at below market interest rates. I have never seen any loan better than this one.

CalHFA also has a 40 year fixed mortgage.  Although I have not favored these longer term loans as there is usually a rate premium that raises the cost of the loan just enough to negate a lot of the gain of the lower payment over time.  Before you rule it out, make sure you check the current rate.  If there is no rate premium then you might want to consider it.

I have also done a lot of 30 year fixed mortgages at below market rates with CalHFA.  These are also really great loans.  They allow for 100% financing and can be done with a silent second. (See California Homebuyer's Down payment Assistance Program (CHDAP) on the CalHFA website

CalHFA's program can work with FHA, VA, and USDA loans.  However these government loan programs have fallen out of favor.  Why?  Because the FHA allowable loan amount and sales price has a lower cap than the conventional program.  Since most condos and single family residences in Orange County are well above the limit, finding homes that fit the programs guidelines have been difficult.

CalHFA's income limits are as low as $45,450 for a single person and as high as $68,800 for a single person.  As you add family members the income limits go up substantially.

Sales price limits n Orange County may be as high as $564,264 non targeted or $689,656 for targeted.

Current interest rates for Orange County California are: effective Jan 1, 2007

Interest only plus 35 yr. fixed 6.250%

40 year fixed 6.000%

Moderate income 30 yr. fixed  5.625%

Low income 30 yr. fixed 5.125%

For more details, click on the link below.

http://www.calhfa.ca.gov/