Here's an interesting twist. 
Yesterday I wrote about what might very well be the very best First Time Buyers Program in California. I got a call almost immediately from a reader who was a first time buyer and was looking at buying a short sale property in bay area.
Buying a short sale is an exercise in patience. From the Listing Agent's perspective it's often an exercise in frustration.
Once the offer is made, the numbers are submitted to the Lender and everyone waits for them to accept or deny. This often takes a considerable amount of time. The buyer often has a couple of other properties they are considering and in the meantime moves on to one of those instead, hence the frustrated Listing Agent. Pre-Approvals and interest rate locks go stale very quickly.
That brings us to CalHFA (the first time buyer program I mentioned). The absolute beauty of this program is that it moves slowly, (well that and it will do 100% financing plus cover a certain amount of closing costs). Normally that would be a bad thing. We want lightning quick approvals and locks right? Speed is a double edged sword. With the speed that quick approval comes with, it also means that rates can adjust, guidelines can change, equally quick. That's a bad thing if you are waiting on a short sale. I have seen entire deals fall out just because a simple little guideline changed making the buyer ineligible.
CalHFA rates change very slowly. While we saw rates for traditional programs change twice today for some lenders, CalHFA rates have not changed since August 9th! Not at all. That's no change in rates in a month! Their guidelines change very slowly as well.
That leads me to believe that if you have not owned property in the last 3 years (that you have lived in), and you are looking to buy a Short Sale Property soon, this may be
The Very Best First Time Buyer Program For Short Sales Ever!
I mentioned on the previous post there's one catch. You need to work with a mortgage professional that is certified to complete these special programs. Unfortunately very few mortgage originators are certified for CalHFA loans.
I am - Just give me a call. (925) 288-9977 Ext. 104
Technorati Tags: CalHFA, Cal HFA, 100% Financing, No Money Down, Short Sale Purchase
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Great post....very helpful...thank you! I wasn't able to read from your web site the post about the truth about Di-tech? If you could possibly reprint that post or email it to me at MDLomas@gmail.com that would be great!
Also, you may or may not know that in SF right now in a Multiple Offer, most agents won't even look at an online prequal or preapproval letter...not in the current "Mortgage Maze".
All the best,
Mark Danforth Lomas www.MarinRealEstateBlog.com
Mike... Thanks for the article.. I didn't realize the limits were this high.. I will have to look into this program..
Mark - the truth about Di-tech is in my coming soon department. You can always subscribe to the RSS feed and get it when it's published. Oh and as for the Pre-Approval Letter - Maybe they read You Only THINK You Were Approved Smart Agents!
Shaun - Thanks for the comment - You do have something like this in FL, See the comment stream in my original post, The Best First Time Buyer Program in California?
Kaye - for LA county you are looking at a Max purchase price for existing home of $596,217 for most areas. Max Income for a normal family would be $98,420 - Let me know if I can help.
great info Mike... as usual
I have had so many requests for short sale info recently... gotta get to work on a few deals
We've got to convince the buyers out there that NOW is the time to get a good deal. Seller credits can help them overcome this down market and you're right Cal HFA is a good program, I've had clients use it successfully and were very happy. I even had one close in 30 days and a 14 day contingency! Miracles do happen.
David - Thanks. I hadn't thought about the short sale ramifications until this reader called.
Catherine - You continually amaze me at the breadth of your knowledge. If you cross all the T's and dot all the I's they are fast. It's the rates and the guidelines that change slowly. Turn around times are around 24 hours usually for approvals. You can't argue with that. The problems I see are the ones that originate with the originator.
Lisa - You are welcome! There's so much more that goes on with a short sale. But the primary ingredient - Patience! Want to have a little fun? Do a search here for Agents who are frustrated because their short sale fell thru. 9 out of 10 times it's due to a lack of patience.
Mike thanks... lol.. but where are the buyers? Everyone I have talked to lately said "but all the loans are gone." NO THEY'RE NOT... so how do we convince them? How do we reach them?
Andrew - I know you've done almost every single facet of the industry - any experience working the short sale desk at a lender?
Catherine - It's funny you should ask, so far the original post has generated 6 leads. I have a couple of ideas for you and I to work in our area if you would like.
Rosemary - I'm going to disagree with the better rate. I know the buyer you are talking about, I did some poking around and checking, if it's 100% financing, there's no way she is getting better than this: CalHFA Rates. Add to that 3% possible seller credit towards NRCC, add another 3% in a deferred payment loan to add more down payment, and we can add an additional $7,500 to apply either towards down or NRCC if you are in the right county. Give me a call when you get back from vacation!
Chrissy - I'm sure CO has programs such as these. Try this for a start: www.chfainfo.com
Mike - OK went back to the buyer to see exactly what was her motivation for changing to conventional instead of CALhfa - she said the rate changed with CALhfa from 6 1/4 to 6 3/4 which is the SAME as the conventional rate with no lock-in possible. Plus the restrictions: Can't rent, and if you want to sale it later, you have to resale to another CALhfa qualified buyer, plus with the conventional she was told they could fund in a couple of weeks as opposed to possible 4/5 weeks with CALhfa.
Now she had already went through the approval process with CALhfa on another unit in the same complex and her loan officer "felt" it would take less than 4/5 weeks this time around but there was no guarantee on that time span.
Since the short sale approval will expire at end of this month, there is no guarantee that CALhfa will come through in time to keep in with the short sale lender deadline.
Other than that, she said the CALhfa assistance would have helped her a great deal. She is anxious to get this particular unit and since the rate changed to the same as conventional rate, she was not willing to wait and go through the process again.
Now that came straight from the horses mouth. Before, I was just glad that we did not have to deal with the non allowable fees that the buyer cannot pay per FHA, but of course, I explained that -- title had misinformed me of the rules for CALhfa by thinking as I did that it was FHA. Before this transaction, I knew nothing of CALhfa and still need training on it.
What I would love to know is what are the other restrictions for CALhfa and I will definitely get in touch with you to learn more about this program for any other potential buyers that I encounter. Shoots you're the expert, I'll just refer them to you and I can concentrate on selling them a house!
Thank you for your assistance.
Thanks for the clarification Rosemary. The rates haven't changed since August 9th. The only way I can see a rate change is if she was originally quoted as a Low Income buyer (that would get her 6.25) and then she turned out not to be.
As Catherine pointed out she had one close in 30 days with a 14 day contingency.
Here's an important factor to understand - This can, but doesn't need to be an FHA loan. It can also be a conventional, it can be a VA, it can be a Jumbo.
Now, she is absolutely correct. This is a first time buyers program for principal residences only. You cannot rent it out. Speaking of which, you also cannot have any potential income producing aspect as well. That means no duplexes. It also means no mother in law units.
Here's a sneak peek at an upcoming post - I have a Down Payment Assistance Program available.
and...
That's really cool stuff!
Perhaps I'll get that together tomorrow.
Rosemary - Thanks. Here's some breaking news... But don't tell your client, rates just went down today for CalHFA. She'd be at 6.5 I bet. But the other reasons will not change.
Oh well.
Mike - She just called me to day to say they will be ready to close on either Wed or Thurs next week. She was concerned that the loan close commitment be kept. So it looks like it will. We are all ready to close this one. Been on the books since Nov/Dec last year!!!!! And the buyer want this property more than life itself. Makes you feel good all the way around.
I will keep the CALhfa information close for the next one. Thanks
I think things are going to change somewhere around the 18th when the Fed announce another cut. You think?
I have a CALHFA loan. Great rates but only if you can say that you will live there FOREVER! They won't work with you at all. They would rather have you foreclose than let you rent it out or even do a short sale. They drag their feet. They are rude and its a government agency so that means they aren't ever in the office. CALHFA is good but only if you can live there FOREVER!!!!!