Down Payment Assistance Now A Memory
Well, it seems that all of the funds for Down Payment Assistance (DPA) programs have dried up. Even though the deadline is near for the government aid to officially come to an end, it appears that local banks are applying the 30-day rule. Meaning that buyers who are approved for a mortgage utilitizing a DPA, like Nehemiah or AmeriDream, are encouraged to find a home quickly and reach a written agreement (contract ratification or acceptance) with the seller and close within the next 30 days.
Alexandria VA homebuyers can still purchase a home with the help of the Virginia Housing Development Authority (VHDA). One program that stills offers home buyers to purchase with a minimal down payment is the VHDA FHA Plus loan. Borrowers need only a 1% down payment, and the seller can still pay up to 6% of the sales price toward the closing costs. There is no adjustable mortage, the FHA Plus loan is a 30-year fixed loan.
Applicants must meet eligibility requirements and attend a free course offered by the VHDA.
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September 9th, 2008 at 7:53 pm
State of legislation
H.R. 3221
The ban on downpayment assistance programs was written into law by President Bush when he signed H.R. 3221 Housing and Economic Recovery Act of 2008 on July 30, 2008. Borrowers who are credit approved prior to October 1, 2008 can receive downpayment assistance and have their loan FHA-insured.
While H.R. 3221 was intended to “rescue” the housing industry, the elimination of the DPA program will have the exact opposite effect of its intended purpose. Not only did it eliminate DPA programs, it also instituted a downpayment requirement increase from 3 percent to 3.5 percent. This combination is a recipe for disaster and will further hurt the already crippled housing market.
September 11th, 2008 at 8:06 pm
I agree that if these programs are not available, the pool of buyers will indeed get smaller. However, I can also understand that if these programs have a high rate of default that the government would want to eliminate them. It’s all about mitigating the losses right now, and the government is looking at everything…including the down payment assistance programs. What escapes me is why there is no push to make financial education mandatory is high school, and especially in college where credit card companies can easily entice college students with credit cards. When they get out of school, they are riddled with debt and the cycle of high debt and no savings has already begun.