Georgia Dream Homeownership Program
Georgia Dream "Plus Offers More Options for First Time Home Buyers"
The Georgia Department of Community Affairs announced a new down payment assistance option to its Georgia Dream HOwmewonership Program. The Georgia Dream "Plus" option offers down payment and closing cost assistance for first time home buyers with incomes up to 100 percent of their Area Median Incomes(AMI). Georgia Dream's downpayment assistance options are normally restricted to borrowers whose incomes are at or below 80% AMI. This assistance comes in the form of a second mortgage ban with a zero percent interest rate and requires no repayment until the home is sold,refinanced, or no longer used as the principal residence of the borrowwer.
The Georgia Dream "Plus" option provides $5,000 for down payment and closing costs to borrowers whose total annual household income does not exceed the following:
In the Atlanta MSA:
One to two person household $71,000
Three or more person household $82,000
In all counties outside the Atlanta MSA:
One to two person household $61,000
Three or more person household $70,000
We are excited about the Georgia Dream "Plus" option. We hope this additional incentive for Georgia's home buyers will help continue the current momentum n the home buying market,"says DCA Commisioner Mike Beatty.
Georgia Dream's "Plus" option can be used in conjunction with the Federal & State tax credit for the first time homebuyers. The "Plus" option is available to eligible borrowers through Georgia Dream participating lenders and must be used in conjunction with a Georgia Dream first mortgage loan.
There is limited fundraising for Georgia Dream Plus,"therefore all interest borrowers encouraged to check with a Georgia Dream participating lender soon.
Wednesday, November 11, 2009
Tuesday, October 6, 2009
Freddie Mac's Primary Mortgage Survey for the week of October 1, 2009 shows an interest rate of 4.94 percent for a 30 year fixed rate loan. This is down from 5.04 percent from the week before.
Now is a great time to purchase your first home! The following article from move.com by Chris Rose chronicles a First time buyer success story!
"Determination vs. Intimidation" by Chris Rose.
First time home buying can be an intimidating situation especially when home prices have headed to a point where a quarter of a million dollars would get you a run-down leaky, filthy mess in a bad neighborhood, or a tiny one bedroom studio condo far away from the city-Washington D.C.
Neither of these options interested me, so I needed to plan on spending much more especially when the housing market is generally favorable to the sellers. After my buyer's agent explained to me" their asking price will usually be the starting point of the their negotiations" I felt I was buying in their playground.
To add to my intimidation, I was also single, 26 year old, soon to be law student, with mediocre credit, eminent unemployment(because of school) and only one month at my current summer job.
In spite of all this, I did have what is probably the most important asset for successfully purchasing a new home. I was determined to see it through. I rejected the idea of paying someone else rent during by next three years in school, and knew that purchasing my own home would be the best financial decision I could make. In addition to that I would just feel great.
My scheme for financing my house, while being an unemployed student was based on a bit of serious number crunching. I had about 85,000 in cash to use as a down payment, which is highly unusual for someone in my position.
But, I was also buying in one of the hottest markets in the country, where prices for decent houses were around $400,000. Most lenders like to see a down-payment of at least 20 percent of the purchase price(this helps get the best loan rates.) which meant I could afford a house with about $375, 000.
I was looking at an interest rate of about six percent so I know my payments would be around $1800 a month after factoring insurance and taxes. I would not have that kind of cash without implementing part two of my plan, that is I would be come a landlord myself.
The rise in home prices had also led to the rise in average rent, with simple bedrooms in homes going for $500 to $800. I planned on cashing in on that trend by having tenants live with me in my house. It could work out quite nicely.
While a mediocre two-bedroom condo would have cost me just under $300,000 it would have brought me only $700 in rental income, leaving me to pay about the same myself toward the mortgage.
Instead I bought a four-bedroom home for $378,000, got a much nicer place, and combined rent from a basement apartment type bedroom, and one upstairs bedroom equal to $1650. . . all but $100 of my mortgage payment ended up being. Thus, I was living there for free, while my house continued to rise in value and my loan was getting paid off (albeit slowly.)
Those numbers were as good as they were in part, because I had found a savvy loan officer to help me get an interest rate even better than I imagined. Knowing I would likely sell after graduation, I opted for an adjustable rate mortgage with a rate at just above five percent, instead of the traditional 30 year fixed with a higher rate. I purchased the house literally, the day before I started school,and my first tenant moved in a few days later.
So far being a homeowner has been rewarding, both mentally and financially. I have learned an enormous amount about everything from plumbing to financial management and I continue to benefit from those first few months of really hard work.
While purchasing a new home can be intimidating and it is not a decision to be taken lightly, it is not nearly as frighting as one might think. Getting started is the hardest part. Once the ball gets rolling, however, a determined home buyer will not stop until they pluck the "For Sale" sign from their front lawn. . .and what a sweet sensation that is.
Now is a great time to purchase your first home! The following article from move.com by Chris Rose chronicles a First time buyer success story!
"Determination vs. Intimidation" by Chris Rose.
First time home buying can be an intimidating situation especially when home prices have headed to a point where a quarter of a million dollars would get you a run-down leaky, filthy mess in a bad neighborhood, or a tiny one bedroom studio condo far away from the city-Washington D.C.
Neither of these options interested me, so I needed to plan on spending much more especially when the housing market is generally favorable to the sellers. After my buyer's agent explained to me" their asking price will usually be the starting point of the their negotiations" I felt I was buying in their playground.
To add to my intimidation, I was also single, 26 year old, soon to be law student, with mediocre credit, eminent unemployment(because of school) and only one month at my current summer job.
In spite of all this, I did have what is probably the most important asset for successfully purchasing a new home. I was determined to see it through. I rejected the idea of paying someone else rent during by next three years in school, and knew that purchasing my own home would be the best financial decision I could make. In addition to that I would just feel great.
My scheme for financing my house, while being an unemployed student was based on a bit of serious number crunching. I had about 85,000 in cash to use as a down payment, which is highly unusual for someone in my position.
But, I was also buying in one of the hottest markets in the country, where prices for decent houses were around $400,000. Most lenders like to see a down-payment of at least 20 percent of the purchase price(this helps get the best loan rates.) which meant I could afford a house with about $375, 000.
I was looking at an interest rate of about six percent so I know my payments would be around $1800 a month after factoring insurance and taxes. I would not have that kind of cash without implementing part two of my plan, that is I would be come a landlord myself.
The rise in home prices had also led to the rise in average rent, with simple bedrooms in homes going for $500 to $800. I planned on cashing in on that trend by having tenants live with me in my house. It could work out quite nicely.
While a mediocre two-bedroom condo would have cost me just under $300,000 it would have brought me only $700 in rental income, leaving me to pay about the same myself toward the mortgage.
Instead I bought a four-bedroom home for $378,000, got a much nicer place, and combined rent from a basement apartment type bedroom, and one upstairs bedroom equal to $1650. . . all but $100 of my mortgage payment ended up being. Thus, I was living there for free, while my house continued to rise in value and my loan was getting paid off (albeit slowly.)
Those numbers were as good as they were in part, because I had found a savvy loan officer to help me get an interest rate even better than I imagined. Knowing I would likely sell after graduation, I opted for an adjustable rate mortgage with a rate at just above five percent, instead of the traditional 30 year fixed with a higher rate. I purchased the house literally, the day before I started school,and my first tenant moved in a few days later.
So far being a homeowner has been rewarding, both mentally and financially. I have learned an enormous amount about everything from plumbing to financial management and I continue to benefit from those first few months of really hard work.
While purchasing a new home can be intimidating and it is not a decision to be taken lightly, it is not nearly as frighting as one might think. Getting started is the hardest part. Once the ball gets rolling, however, a determined home buyer will not stop until they pluck the "For Sale" sign from their front lawn. . .and what a sweet sensation that is.
Wednesday, September 2, 2009
Buy vs. Rent Comparison
BUY VS. RENT: COST COMPARISON
The chart above shows a cost comparison for a renter and a homeowner over a seven year period. The renter starts out paying $800 per month with annual increases of 5%.
The homeowner purchases a home for $110,000 and pays a monthly mortgage of $1,000. After 6 years, the payment is lower than the renter's monthly payment. With the tax savings of home ownership, the home owner's payment is less than the rental payment after 3 years.
Is now the right time for you to buy a home? You have many options and choices to make. Buying a home is a big responsibility, financially and emotionally, but most people want to own a home.
Wednesday, August 5, 2009
How Much Home Can You Afford?
The single most important part of buying a home is figuring out how much you can realistically afford to pay. You'll have to take a good look at your budget, debts,credit reports, and credit score. Once you have a good picture of your financial status, start saving as much money as you can for a down payment, closing costs and other extra expenses that come along with buying a house. Extra expenses could include paying for a home inspection (around $300-$500 depending on where you live) or hiring a moving company after the sale is final.
Depending on the condition of your finances--if you have a lot of debt, errors on your credit report, or a low credit score--getting ready financially could take six to 12 months or more! If your credit score falls below 620 lenders may see you as a risky borrower. This might mean you can only qualify for a sub prime mortgage (one with a higher interest rate). It might be worth your time to take a year and work on building a better credit report before taking on the responsibility of a mortgage. Also, if you qualify for a lower interest rate you could save thousands of dollars over the life of the loan. Be wary of companies that offer to repair your credit for a fee.
Determining a Mortgage You Can Live With
There are a few basic formaulas commonly used by lenders to determine how much of a mortgage you can reasonably afford. These formulas are called qualifying ratios because they estimate the amount of money you should spend on mortgage payments in relation to your income and other expenses. It is important to remember that these ratios may vary from lender to lender and each application is handled on an individual basis, so the guidelines are just that-guidelines.
Generally speaking, to qualify for conventional loans, housing expenses should not exceed 26 to 28 percent of your gross monthly income. Monthly housing costs include the mortgage principal, interest, taxes and insurance. For example, if your annual income is $30,000, your gross monthly income is $2500, and $2,500 x 28 percent=$700. So you would probably qualify for a conventional home loan that requires monthly payments of $700.
When budgeting to buy a home, it is important to allow enough money for additional expenses such as maintenance and utilities. If you are purchasing an existing home, gather utility cost averages and maintenance costs from previous owners or tenants to help you better prepare for homeownership.
If your finances are in decent shape, you could look for a home prices at two to three times your gross yearly salary. And while using mortgage calculators can give you a rough idea of how large of a mortgage you might qualify for, talking to a lender or mortgage broker in person will give you a more accurate figure.
Don't be discouraged
If your loan application is rejected, find out what the problem is and how it can be resolved. Maybe you need to look for a less expensive house, or save more money. Check to see if there are any affordable housing and community programs you might be eligible for to help you through your home buying process.
The single most important part of buying a home is figuring out how much you can realistically afford to pay. You'll have to take a good look at your budget, debts,credit reports, and credit score. Once you have a good picture of your financial status, start saving as much money as you can for a down payment, closing costs and other extra expenses that come along with buying a house. Extra expenses could include paying for a home inspection (around $300-$500 depending on where you live) or hiring a moving company after the sale is final.
Depending on the condition of your finances--if you have a lot of debt, errors on your credit report, or a low credit score--getting ready financially could take six to 12 months or more! If your credit score falls below 620 lenders may see you as a risky borrower. This might mean you can only qualify for a sub prime mortgage (one with a higher interest rate). It might be worth your time to take a year and work on building a better credit report before taking on the responsibility of a mortgage. Also, if you qualify for a lower interest rate you could save thousands of dollars over the life of the loan. Be wary of companies that offer to repair your credit for a fee.
Determining a Mortgage You Can Live With
There are a few basic formaulas commonly used by lenders to determine how much of a mortgage you can reasonably afford. These formulas are called qualifying ratios because they estimate the amount of money you should spend on mortgage payments in relation to your income and other expenses. It is important to remember that these ratios may vary from lender to lender and each application is handled on an individual basis, so the guidelines are just that-guidelines.
Generally speaking, to qualify for conventional loans, housing expenses should not exceed 26 to 28 percent of your gross monthly income. Monthly housing costs include the mortgage principal, interest, taxes and insurance. For example, if your annual income is $30,000, your gross monthly income is $2500, and $2,500 x 28 percent=$700. So you would probably qualify for a conventional home loan that requires monthly payments of $700.
When budgeting to buy a home, it is important to allow enough money for additional expenses such as maintenance and utilities. If you are purchasing an existing home, gather utility cost averages and maintenance costs from previous owners or tenants to help you better prepare for homeownership.
If your finances are in decent shape, you could look for a home prices at two to three times your gross yearly salary. And while using mortgage calculators can give you a rough idea of how large of a mortgage you might qualify for, talking to a lender or mortgage broker in person will give you a more accurate figure.
Don't be discouraged
If your loan application is rejected, find out what the problem is and how it can be resolved. Maybe you need to look for a less expensive house, or save more money. Check to see if there are any affordable housing and community programs you might be eligible for to help you through your home buying process.
Wednesday, June 24, 2009
First Time Homebuyer $8000 Tax Credit can be used for Down Payment!
FHA has announced a first time home buyer may now amend their 2008 Federal tax filing and apply for the $8,000 tax credit. They go to http://www.irs.gov/ and fill out form 5405 to request the refund. A check will be sent and these funds may be used in conjunction with the purchase of a property. The borrower needs to use FHA financing for the new financing. This program would not make sense for a borrower with a down payment of 20% or more.
The minimum down payment is 3.5% Here is the change. It was first reported the tax credit could be used for the down payment but FHA changed the intitial release now saying the credit cannot be used for the 3.5% down payment. If the borrower wants to use it as additional down payment, that's fine. However, the down payment may be a gift from relatives. The tax credit may be used for closing costs and buying the interest rate down. Note, there is a section that says a non-profit agency or a state housing program can advance the credit in the form of a second.
An important fact to keep in mind is the deadline to receive the tax credit is 11-30-2009. The close of escrow must be on or before this date for the first time buyer to be eligible to have the tax deduction of $8,000.
The minimum down payment is 3.5% Here is the change. It was first reported the tax credit could be used for the down payment but FHA changed the intitial release now saying the credit cannot be used for the 3.5% down payment. If the borrower wants to use it as additional down payment, that's fine. However, the down payment may be a gift from relatives. The tax credit may be used for closing costs and buying the interest rate down. Note, there is a section that says a non-profit agency or a state housing program can advance the credit in the form of a second.
An important fact to keep in mind is the deadline to receive the tax credit is 11-30-2009. The close of escrow must be on or before this date for the first time buyer to be eligible to have the tax deduction of $8,000.
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