FHA Ban on Downpayment Assistance put on Hold?
You can imagine my surprise when I saw the above title because I believed everyone was in the business of helping people obtain the American dream. Hold on before you make any assumptions based on that title and continue reading. I was that person that was about to do that very thing and decided to continue reading this news before I made any conclusion. Why you might ask? Because I am familiar with several organizations that assist people with downpayment assistance and they are necessary. Not seen as optional but for many they are necessary.
From what I surmised reading this news is federal regulators take a step to shut down programs providing down payment assistance utilizing money from home sellers because the assistance ends up added to the purchase price. I recall when my husband and I were preparing to sell our first home, we were prepared to kick back some money towards the sell of our home, whether it was closing costs or downpayment assistance. We knew our market and how difficult it could be to get a home loan if you have a few items of discrepancy on your credit report. We didn’t find anyone when we attempted to sell it on our own. However, when we worked with a realtor, we had a buyer in less than a week.
The story I read says at the end of the day, the buyer financed the down payment. In that regard, they did not get assistance. They paid for it at the end of the day. Let me share what ended up happening when we did sell our first home. We were at the closing table with our realtor and the buyers, had their realtor and of course the lender was there. My husband and I had agreed to give a certain amount towards their closing costs. As everyone was sitting there running the numbers, the lender said the buyer can only receive x amount of dollars back nothing above that number. Next thing my husband and I experience is we were receiving more back than what we were originally told from the sale of our house.
Did the buyers need assistance? I am sure they did. I believe the buyers should benefit and not be punished in some fashion. It almost seems as if that lender was penalizing them for their situation. That was soooo many years ago, that I would not even be able to say if it was a FHA loan or not. However, FHA requires buyers using the loans it backs to put down at least 3 percent of a home’s purchase price. I remember my husband and I had already discussed what we needed to put down before even purchasing a house. We wanted to make sure we had money set aside that we could afford and not be in a situation because it was all going towards down payment. They require some family members and some charities to contribute to the down payment but sellers may only contribute to closing costs.
Once again, before you get that FHA loan do your homework. Make sure you aware of all the parameters so you can make an informed decision. Not everyone is in agreement with the ban, understandably so. Research, research is key and preventative.
Dr. Taffy Wagner
