Is this happening in all states or just Arkansas?
How will this affect those of us who are investors?
FHA Payment Assistance Ends October, May Hurt Buyers
A major piece of the federal mortgage loan program is coming to an end and it could affect the way you buy or sell your next home.
On October 1st the federal program that allows home sellers to assist buyers with closing costs and down payments will end and would- be- borrowers looking to cover their down payments will have to look at other options.
"It's definitely going away and it's definitely going to have an affect on the market," broker Maurice Taylor says realtors are working to close deals with clients before the FHA program comes to an end.
He adds, "About 50% of my business is through the down payment assistance program where a seller makes a contribution towards the buyers down payment and it's worked well for me throughout my career."
This is how down payment assistance works, once a buyer qualifies for the FHA mortgage program, the seller can pay the required 3% down for the buyer, but after October 1st, that stops.
"January 1st it is going up to three and a half percent and now the buyer has to be able to come up with at least three and a half percent of the purchase price of the home," Taylor says.
Real estate agents and mortgage brokers worry the change will lead to more uncertainty to already weak home sales, but Taylor says one positive is borrowers will learn how to budget and save.
A new option is the housing and recovery act of 2008 giving a first time home buyer a refundable house credit, not exceeding $7,500. It will also phases out the credit for taxpayers with incomes over $75,000.
Taylor adds, "The catch is you have to pay back $500 a year over a 15-year-period out of your income tax. It's a good program, but buyers have to be weary that that money does have to be paid back."
Taylor says the FHA down payment assistance program is being eliminated in an attempt to decrease loan defaults and inflated property values to provide long term stability in the housing market.
There are still plenty of ways to get into a home.
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