First-Time Home Buyers' Few Options

O.K. folks you have to read these articles and digest the information just for the sake of having the information. Then you must understand that lending, just like real estate is not just regional, but it's also local. If you are looking to purchase real estate in the Tucson AZ, there are still some good options for first time buyers. BofA has a great program called the Acorn program. So if you are interested in the Tucson area, please e-mail me so that I can introduce you to a professional that knows the market and understands what financial options are out there that fit your needs and situation. Don't let what the talking heads at the national papers say get you down or mis-inform you. Seek out a local expert, in the market you are looking in, and get the skinny from them. Remember, real estate is sight specific, what's happening in your neighborhood, may not be happening in another, or even across the street for that matter.

Peace.


By JEFF D. OPDYKE
April 26, 2008; Page B1

Homeownership, the bedrock of the American Dream, is a bit of a nightmare these days for many first-time home buyers.

Lenders are demanding higher credit scores, mandating private-mortgage insurance on many more loans, and requiring larger down payments. Fewer first-timers qualify for the house they want, or they're paying a larger monthly amount to own it.

DISCUSS YOUR FIRST HOME PURCHASE

Associated Press

• Tell us about your experiences buying a first home. What sort of home did you buy? Where was it? How easy or difficult was it for you to procure a mortgage? And how much time and money did you invest in repairs? If you're looking for a first-home, tell us about the hunt. Join the discussion.

There are still some programs for first-time buyers that offer slightly more lenient underwriting standards that make it easier to get into a home, or discounted interest rates that make homeownership more affordable. But even these are tougher to qualify for.

Freddie Mac requires a solid credit score of at least 700 for a low- or no-down-payment mortgage through its Home Possible first-time buyer program. Previously, it imposed no minimum. Freddie saw "an influx of business" amid the subprime bust, says Patricia McClune, a vice president, because it's the only way to obtain 100% financing. Loan volumes are still up, but the tightened standards mean fewer first-timers qualify.

Volumes at the Federal Housing Administration are up, too. The agency hasn't changed its underwriting standards, but does impose income-verification and debt thresholds. Moreover, FHA loans require that a mortgage-insurance premium of 1.5% of the loan value be financed into the mortgage; and borrowers must pay an additional 0.5% mortgage-insurance premium every year. Together, that adds $75 a month on a $150,000 loan.

"Every borrower faces a steeper hill" now, particularly first-timers, says Pete Ogilvie, president of the California Association of Mortgage Brokers.

Many programs for first-timers carry restrictions, so shop around. Connecticut's Homebuyer Mortgage Program offers a 5.625% interest rate fixed for 30 years, half percentage point below the area average. That can save $60 a month on that $150,000 mortgage. The problem: Reduced funding means the agency is doing only 2,750 mortgages this year, down from roughly 4,000 previously.

The catch: The loan is subject to a federal recapture tax. If you sell within nine years, you could be required to give up as much as 50% of the profits, depending on various factors.

"That's the problem" you need to be aware of with some first-time buyer programs, says Michael Menatian, president of Sanborn Mortgage, a mortgage bank in West Hartford, Conn. "You get the lower rate, but you're potentially robbed of a big part of the equity to buy your second house. But in this market, it's better than nothing."