CalHFA offers new low interest 30-year fixed mortgage aimed at first-time buyers

The California Housing Finance Agency announced Tuesday the launch of a new fixed rate, 30-year FHA-insured mortgage to help low and moderate income California families purchase their first home.

The mortgage, done in partnership with the Federal Housing Administration, provides low and moderate income, first-time homebuyers access to mortgages with below market interest rates, affordable down payments and other benefits, the agency says.


“This new program will help open the door to first-time homeownership for many California families,” says Steven Spears, executive director of CalHFA. “With this program, CalHFA will return to being a significant provider of financing for first-time homebuyers and build on our 35-year track record on behalf of more than 155,000 California families.”


Mr. Spears says that while California real estate prices today are attractive for first-time homebuyers, many cannot meet the loan requirements that conventional lenders are imposing.


“With the disruption in the credit markets over the last two years, we have been limited in our ability to help finance home purchases. This new program offers California families another way to purchase their first home with reliable, fixed rate financing,” he says.


Under federal law, first-time homebuyers are defined as not having owned and occupied a home for the past three years. In addition to first-time homebuyers, qualified veterans under the Heroes Earnings Assistance and Relief Tax Act are also eligible.


The CalHFA FHA program includes upfront mortgage insurance. Borrowers are eligible to use the California Homebuyer’s Downpayment Assistance Program, which can provide up to 3 percent of the purchase price of the home for down payment or closing cost assistance.


Borrowers must meet a number of eligibility requirements to qualify for this CalHFA program including:


• CalHFA’s income limits, which vary by county and family size. For a family of four in Los Angeles County, for example, income must be less than $111,020 per year.

• Purchasing homes that are within FHA’s loan limits and CalHFA’s sales price limits. Mortgage loans are limited to $417,000 under FHA guidelines. CalHFA’s sales price limits vary by county.

• Meeting the minimum credit score requirements with maximum debt-to-income ratios.

• Completion of a HUD-approved homebuyer education program.


“California’s real estate market remains fragile as our state faces high unemployment and a continued disruption in housing prices,” says Mr. Spears. “This new, 30-year fixed rate FHA mortgage is one piece of a broader effort to address California’s housing needs.”

“Is a Property or Home Inspection Report a repair list?”

There is a common misunderstanding by buyers about the purpose of a home inspection report. They often view it as a list of items the seller is obligated to fix, rather than as a list of items which may need immediate or future attention. The fact is sellers are not required to deliver a perfect home, either by law, or by contract.

With a termite report, the requirements are different. Real estate contracts customarily obligate the seller to repair conditions classified as “Section One” items in a termite inspection report. Section One includes the problem of active infestation, i.e. termites, fungus, dry-rot, etc. Other “Section Two” types of conditions, which may lead to active
infestation, such as earth-to-wood contact, are not required to be fixed by the seller.

With a home inspection, most items noted for attention are subject to negotiation between the parties. Typically, buyers will request that various conditions be repaired before the close of escrow, and sellers in many cases will agree to fix some of these items in order to preserve the sale and/or foster good will. However, there is no obligation for the seller to do so, unless these items are required by state law, local ordinances, or set forth specifically in the purchase contract. These “obligations” include things like earthquake strapping for
water heaters and smoke detectors. Standard purchase contracts further provide that all fixtures and appliances, plumbing, electrical and mechanical systems be in good working order, that windows not be broken, and that the roof does not leak.

Before you make any demands of the seller, try to carefully evaluate the inspection report with an eye toward the problems of greatest significance and those items that may compromise health and safety. Routine maintenance items warrant a lesser degree of concern. Unless a home is brand new, it is unreasonable to insist upon the correction of every defect. Such demands can alienate the seller and kill the deal. On the other hand
your willingness to accept minor problems may persuade the seller to correct more serious conditions, even though he may not be obligated to do so.

The purpose of a home inspection is not to “corner” the seller with a repair list. The real objective is to know what you are buying before you buy it – and what you may need to fixin the near future. All homes have defects. “It does not matter if your boat has few small
leaks, as long as you know it is leaking.”

New York Times Article worth sharing

When someone writes a good article, I want to share it but also give credit where it belongs. So many times we Realtors and agents understand these premise(s) but fail to share them with our clients, So here goes....

5 Reasons Homeownership Trumps Renting

The seemingly endless run of bad housing news is discouraging some potential home buyers from considering a purchase. But the truth is that the advantages of homeownership have very little to do with investment gains. The best things about owning a home have a lot more to do with personal comfort and satisfaction.

Here are five of them:

· Be your own landlord. The bank can only kick you out if you don’t pay; a landlord can be much less dependable – deciding to sell the property or choosing to live there themselves.
· Paying the principal is forced savings. Yes, it’s possible that home prices will fall further. It is also possible that your 401(k) will lose value. But over the long haul, both are likely to enjoy modest gains in value.
· Fixed-rate mortgages never rise – and eventually you pay them off. With mortgage rates at record lows, people who buy now are locking in real bargains.
· Good schools. Family-sized rentals are harder to come by in areas with excellent public schools.
· Spacious properties in pleasant neighborhoods. Sizable homes in attractive communities are almost always owned – not rented.

Source: The New York Times, Ron Lieber (08/27/2010)