In 1994, we set our sights on a house located in a pleasant, quiet suburban enclave called Bixby Knolls in Long Beach, CA. Although we could barely afford the home’s $230,000 purchase price – a fortune for us at the time - it was a small, neat, modest home situated in a good neighborhood with appreciation potential. So, we dove into the home buying market. It was a perfectly manageable house located in a perfectly acceptable neighborhood.
We did not have a clue at the time that home prices would slowly begin to climb and climb and climb thanks to an extended period of historically low interest rates. Low interest rates spurred consumer demand, which soon grew to overwhelming consumer demand for homes to call their own. Consequently, home prices reached stratospheric levels in our neighborhood as well as in most major metropolitan markets (Texas, Oklahoma, the Dakotas and a few other affordable markets being the exception).
Ten years later, in the middle of April 2004, a devastatingly tragic electrical fire took the lives of our beloved Italian Greyhounds, Ben and Rusty. Although we rebuilt our home better than it was before, it was still a sad time for us; we ultimately sold our first, “first home”. The offers made for our modest 1,600 square foot home were obscene - obscene amounts, that is. It was undeniably the most profitable yet most heartbreaking investment of our lives.
In retrospect, recalling the loan application process and qualifying for the mortgage in order to buy our perfect little house, well, we recollect that process was NOT so perfect.
In 1994, when we were struggling to qualify for the mortgage, we were not aware of available first time home buyer programs created for folks of low to moderate income.
Furthermore, our loan officer did not introduce us to these options, either because he was as clueless as we were about the existence of such programs or, the bank with whom he was employed at the time elected not to participate in specialty programs for first time home buyers.
Neither we nor our loan officer had any idea the city of Long Beach, county of Los Angeles and yes, even the State of California all had available specialty loan programs designed specifically for folks like us: first time home buyers, short on cash for a 20%, 10% or even 5% down payment, not to mention funds to cover closing costs.
We were wholly unfamiliar with mortgage credit certificate programs, below market interest rate programs, mortgage revenue bond programs, and we would have given our left arm for help with no-strings-attached gift money and forgivable grant money provided through city, county and state housing agencies.
If we only knew . . . the home buying process would have been so much easier and much less stressful. Driving our decision to buy a home we could barely afford was exacerbated by our landlord's demand we vacate the house, which was once rented by my husband and his former wife (the landlord's daughter), within 30 days. Great – no pressure there. . .
Fortunately, with the generous help of parents and with a loan borrowed from our 401K, we were finally able to produce a minimal down payment. Our motivated home seller, an 80 year old retiree who wanted to move closer to her daughter in another town, helped us pay some of our closing costs through seller concessions. Then after all that, we SOMEHOW managed to scrape up sufficient funds to substantiate cash reserves to satisfy our lender and cover our personal moving expenses after escrow closed.
Did we consider buying new furnishings and/or major appliances to update our 50 year old new house? Fuggedaboutit! And THEN we had to take into account recurring costs associated with debt servicing the new mortgage and maintaining our new home like water, electricity, property taxes, etc.
If your borrowers are anything like we were back in the day, the sticker shock associated with a new home purchase and maintenance costs can discourage even the most motivated buyers.
Timely solutions to the above-described challenges may not be easily found or forthcoming at all. Notwithstanding the charity of parents, other relatives and/or through the liquidation of assets in order to meet most lenders’ minimum mandatory requirements for down payment and cash reserves, a substantial number of first time home buying hopefuls will consequently shelve their Dream of Homeownership.
This is the sad, sad shelf upon which dust will gather, accumulate and ultimately completely obscure the light-filled Dream of Home Ownership which once burned brightly in their mind’s eye – snuffed out, extinguished.
What you must know is it doesn't have to end this way.
Be the Hero. With new information provided through the OFFICIAL LOAN OFFICER GUIDE, solutions to the above-described challenges are placed at your fingertips.
In most real estate markets today, it remains virtually impossible for the average consumer of low to moderate income to qualify for a modestly sized mortgage without benefit of a substantial out-of-pocket investment. Depending on a variety of qualifying factors, we’re talking a down payment investment equal to 10, 15, 20 or 25% of the home's sales price plus closing costs (points, title, insurance, etc.).
Be the Hero. Be the “Go to Guy” for information about down payment assistance programs and products.
Programs like those that are the focus of the Official Loan Officer Guide will well serve your marginally qualified borrowers and help support the real estate industry overall by providing another way to shore up buyer qualifying and loan viability.
Be the Hero. Reserve first time home buyer program funds on behalf of your borrower before your competition does. When I worked for a major national mortgage bank (a bank heavily vested in first time home buyer loan programs), I observed first hand fierce competition between loan officers and competing lenders for the right to secure programs funds on behalf of their constituencies – first time home buyers.
I observed borrowers anxiously await word from their loan officer for assurances that they too would get their piece of the first time home buyer mortgage assistance pie. Anything less could, and often did, jeopardize the borrower’s ability to qualify for a mortgage and close escrow on time (if ever).
A growing number of city, county and state housing finance agencies/authorities/corporations are creating new and/or fully funding existing programs to assist first time home buyers with cash money for down payment and closing costs. Monetary assistance can be quite substantial, ranging in amounts from $5,000 to $100,000+ (amounts vary by city, county and state) or calculated as a percentage of the home’s sales price or a percentage of the first mortgage loan amount.
Be the Hero. Be the first in line to procure program information, educate your customer and secure funds for your stressed out client base – first time home buyers.
Please note, programs addressed in the OFFICIAL LOAN OFFICER GUIDE are primarily used exclusively in conjunction with purchase money first mortgage loans with 30 year fixed loan terms. Alt-A, sub-prime and non-traditional hybrid loan first mortgage loans types are strictly prohibited.
Bottom line? There is hope, and it begins with this quick read, bare-bones approach to assisting the neophyte loan officer and veteran loan officer to better understand how such first time home buyer programs work in tandem with step-by-step processes and procedures and ways to pinpoint available programs in your borrower’s selected subject property city, town and/or surrounds. Some first time home buyers may elect to buy (or not to buy) in a particular city or county based on the availability (or lack thereof) of first time home buyer programs.
The OFFICIAL LOAN OFFICER GUIDE provides a fast track to inside knowledge regarding useful specialty programs created specifically to assist first time home buyers of low to moderate income on a NATIONWIDE scale.
There is a dearth of information available to educate loan officers on a nationwide scale about the many beneficial programs that are the focus of this guide. As I complete the writing of my first book on this topic, it is my hope, desire and intention that the OFFICIAL LOAN OFFICER GUIDE: Below Market Interest Rate Programs – Down Payment Assistance Programs, First Edition, will serve to educate and empower you to help cash strapped first time home buyers produce tangible results in the form of new, affordable housing that falls within the budgetary means of all eligible citizens nationwide.
To you guys and gals in the mortgage finance trenches, you are amazing! This book was written for you. May you make many a first time home buyer and real estate agent happy, satisified clients by your effective utilization of the information contained within this book.
Best of luck to you all and happy down payment assistance hunting!
