First Time Home Buyer

In my previous 2 Blogs on DPA, I discussed and tried to dispel some of the myths surrounding down payment assistance. In addition, I highlighted some of the key factors in determining what it takes to qualify for DPA. Today, I will address who are the agencies out there who offer DPA and how doing a little research can help in deciding which program you should consider and how to find out if your lender works with that agency.

If you go to HUD’s website and search for down payment assistance, you will find that there are over 30 different state, county, and city agencies out there offering DPA programs out there for first time home buyers (http://www.hud.gov/local/co/homeownership/buyingprgms.cfm). Most of them are geographic specific (city and county) with a few of them being statewide. So understanding where you believe you want to live is absolutely critical determining what agency and program you should use. Let’s say for example you want to purchase a home in Denver that happens to be in Adams County. In this scenario, you could potentially use the following three different agencies/programs (CHFA, CHAC, and Adams County). Working with a lender that knows the subtle differences between the programs is paramount and will save you a small fortune in interest payments over the life of the loan.

Once of the best ALL AROUND programs is Colorado Housing and Finance Authority (CHFA). It is a statewide program that offers a multiple programs and options for first time home buyers. It serves the entire State of Colorado and never runs out of money. It has the highest income limits for first time buyers and some very accommodating credit requirements (FICO scores down to 580). They offer home buyer education (both online and class room) and the administrators to the Mortgage Credit Certificate Program (MCC) where first time buyers can “super charge” their federal tax savings by taking a 20% “interest tax credit” on their tax return.

Check out CHFA’s website at www.chfainfo.com. Great programs offer by CHFA and you can find a list of approved CHFA lenders on the website as well.

In my last post, I discussed that the MAJORITY of first time home buyers are eligible for DPA here in Colorado. In this post, I am going to talk about what are the qualifications for DPA. You will be surprised how easy it is to qualify and it is not that restrictive in order to get your piece of the DPA pie.

The first factor that has to be considered for DPA is HOUSEHOLD INCOME.  Household income is defined as “everyone” in the household (that will live in the home) that earns an income. That total income has to be counted towards the income limits for that agency’s guidelines. For example, if a parent is going to live with a young couple, then that parent’s income has to be counted in the total income household income calculation. Different agencies/programs have different income limits and depending on which one you use you are subject to the income limitations.

The second factor that you have to consider when analyzing DPA is the GEOGRAPHIC AREA in which you are looking to purchase. There are agencies that lend and cover the entire State of Colorado and others that only cover very specific areas. In many cases there are several options for assistance for the buyer. Understanding this and knowing which is best for the buyer is critical. The last thing you want to do is get stuck with assistance that does not work into your financial goals. You as the buyer should choose only one program over the other just because the lender does not offer both programs. Shop around, find a lender who can do both and provide direction and guidance for the program that best suits your individual needs.

The last factor to consider when evaluating DPA is the TYPE of ASSISTANCE. Is a 2nd mortgage loan or is it an actual Grant from the agency? Assistance where there is a “repayment” of the assistance is becoming a very popular and common.

Grants for assistance are becoming less prevalent and generally have lower income limits that assistance that is repaid. Your Lender should be able to compare and contrast the different options and guide you the best option.

Ok, here we go again. We are roughly 45 days away from the Federal Tax credit expiring for would-be home buyers. It seems like we just went through this the other day and in fact, it was just last October when we were writing articles just like this. It’s mid-March and at the end of April, the tax credit for home buyers and first-time home buyers will expire. The question is did you take advantage of it?

I hope you did and if you didn’t, there is still time, but a word of warning to all the procrastinators out there. I do not feel confident this time around that it will be extended. Am I sure about this? No, and I reserve the right to be wrong, but there are just too many things in play right now to lead me to believe that it won’t be extended. I don’t have enough room in this column to express all of my thoughts on the subject, but I will share a few things that lead me to this conclusion. First, it’s an election year and all bets are off on how a Senator or Congressman will vote once they are up for re-election. Second, the economy shows signs of improvement, but that could be a double edge sword. If it continues to improve, Washington will make an argument that there is no need to continue the program. If the economy falters, Washington could make the argument that the money needs to be better spent elsewhere to stimulate jobs. Third, since the deficit seems to be a hot topic among lawmakers, I have a hard time believing that there will be a lot of support to spend more money on this program, but then again, I could be wrong.

So where does that leave the home buyer…about 45 days from missing out on $8,000 or $6,500 in cash. There is still time to find a house, get under contract, and close. Remember, you don’t have to close until the end of June; you just need to be under contract by the end of April to get the money. Getting the loan in place, finding an agent, a house, and getting it under contract can be done in the next 45 days; but you have to start now. To find out how, check out www.taxcreditforeveryone.com or www.firsttimehomebuyerdenverco.com.

Dan Polimino is a Realtor with Fuller Sotheby’s International Realty. He can be reached at DPolimino@fullerproperties.com and www.coloradodreamhouse.com/denverpost