I’m disregarding other important [...]]]>

A follow-up to Al-info’s post…Al-info, here is what I would consider on the IHDA Down Payment Assistance (DPA) program:  At roughly $160,000 or a +/- $157,000 loan, how much do I gain or lose per year on the basis of the DPA?

I’m disregarding other important payment items like mortgage insurance and property taxes right now.  What we need to compare is the cost of the higher interest rate versus the value of the down payment assistance.

The DPA is a second mortgage that is “forgiven” 1/120th at a time, monthly, for ten years.  The rate also increases from 4.75% to 5.25%.  Higher rates have higher payments, but they also have more interest per year.I am using these assumptions:

The IHDA Home Start Loan is a 30 Year Fixed FHA [...]]]> The state of Illinois recently revised some of their first time home buyer programs. These are great examples of what you’ll see from state-to-state.

The IHDA Home Start Loan is a 30 Year Fixed FHA loan with a pretty low rate. It’s 4.75% which is comparable to the rate that you would get on a normal FHA loan.

There are the typical caveats:

• Buyer must be first time home buyer (no ownership for 3 years) OR Veteran (not a VA loan)
• Minimum Credit Score of 640
• Maximum DTI of 43%
• Cannot use other programs like the MCC – Tax Smart
• Borrower must complete Home Buyer Education
• Borrower must bring 1% of purchase price into the deal and show proof it was paid
• Regular IHDA income limits apply as do purchase price limits

This is a good safe program, but the real value is in some of the other options they’ve added.  There are two that are pretty interesting:

Tax Advance Loan

This is a second loan for 3% of the price, up to $6,000.  It carries a really nice interest rate – 0% – through June of next year.  At that point, it would turn into a 10 Year Fixed loan with a rate .5% above that 4.75% rate on the first mortgage.  There are fees of $300 for the program, but $100 is reimbursed if you pay off your loan with your tax return.  This date due may be adjusted based on the extension of the government tax credit.

Down Payment Assistance Loan

This is also a pretty neat program.  It is a forgivable second mortgage that can cover 3% of the down payment, up to $6,000.  The loan then forgives at a rate of 1/120 per month.  There is one huge downside to this loan:  It increases the rate of the first mortgage by .5%.   It is very important to review the numbers on this loan.

If someone had a $200,000 home and the full $6,000 assistance available, it would look like this.  Roughly speaking, the first mortgage costs about $60/month more.  The state forgives the second mortgage at the rate of $50/month.  If you’re in your home for quite some time and you don’t need the DPA to close, you may not wish to pursue this since your entire loan amount is .5% higher forever.

How to apply for Illinois first time home buyer programs

Like most states, Illinois only offers these programs through a certain number of banks.  You can find links to the IHDA site and the official lenders through the Illinois First Time Home Programs page.

Only 148 shopping days until Christmas, only 60 shopping days left under the $8,000 First-Time Homebuyer Tax Credit. With that in mind, a few posts from my blog history.

The first one is [...]]]> The end of the $8000 Homebuyer Tax Credit is getting closer

Only 148 shopping days until Christmas, only 60 shopping days left under the $8,000 First-Time Homebuyer Tax Credit. With that in mind, a few posts from my blog history.

The first one is funny. With all the changes in the homebuyer tax credit, you can’t blame anyone for being confused.

The latter, about the $8,000 Tax Credit up-front explains some general terms. We’ll be announcing some information about our participation with the IHDA $8,000 Tax Crediteither before the weekend or on Monday.

• $8000 Home Buyers Tax Credit: What We Currently Know – “It’s $15000. No wait, it’s $8000. Or is it $7500? It has to be paid back. No it doesn’t! Yes, it does! It’s only for first time home buyers. Nuh uh!” That’s about what the conversation sounds like if you are trying to figure out what …

• Using the $8000 First Time Homebuyers Tax Credit as a Down Payment … – I was going to write about the recent changes announced by the FHA that allow the $8000 first time homebuyers tax credit to be used to offset some costs in a home purchase (as opposed to waiting to get the $8K at tax refund time). …

Program Highlights: The federal government allows each homeowner to claim an itemized income tax [...]]]> Illinois Housing Development Authority has added $12 million to the statewide mortgage credit certificate pool allocation effective July 7, 2009. This is from the Veterans’ program. This is only a portion of the Veterans’ allocation. The Veterans’ program is still active.

Program Highlights: The federal government allows each homeowner to claim an itemized income tax deduction for the amount of interest paid each year on a mortgage loan. The Mortgage Credit Certificate enhances this benefit. Homeowners with a MCC are allowed to use 20% of their annual mortgage interest as direct federal tax credit, resulting in a dollar for dollar reduction of their annual federal income tax liability. The remaining 80% of their annual mortgage interest will continue to qualify as an itemized tax deduction.

Great news–In the next few weeks, the Illinois Housing Development Authority will be releasing [...]]]> The real estate web community has been buzzing following announcements at a federal level that would create vehicles to allow homebuyers to access the $8,000 Tax Credit as part of their closing.

Great news–In the next few weeks, the Illinois Housing Development Authority will be releasing the procedural details for making this possible.  Early whispers are that they’ll leverage the same income limits as before and have some sort of limitation on the loan size.

As always, when this is official, we’ll be among the first to roll it out.  We are a Full Eagle FHA lender which means we have the ability to directly approve an FHA Condominium Approval.

There’s been an interesting switch on the Federal Government’s $700 billion rescue plan and, frankly, it’s a good plan.  [...]]]> The financial markets have opened the week with a long-awaited rally.  Stocks are surging; however, this money is coming out of Treasuries.  So far, mortgage bonds are actually trading slightly higher by 3 basis points.

There’s been an interesting switch on the Federal Government’s $700 billion rescue plan and, frankly, it’s a good plan.  The intent is to use $250 billion as a direct investment in the financial institutions.  Investments appear to target Bank of America, Wells Fargo, Citigroup, JPMorgan Chase, Goldman Sachs, Morgan Stanley and Bank of New York.  Early media reports also appear to be indicating that State Street Corp and Merrill Lynch will be receiving direct investments.

This should add stability and, although unthinkable just a year ago that the government would need to be buying into the banks, it does add a capital infusion.

Due to the lagging market for Mortgage Revenue Bonds, the IHDA program is temporarily suspended.

This is good news for mortgage rates that money is moving through the markets again.

Stay tuned on all the IHDA News in our site.