How much do you really need for a downpayment to purchase a home in the Sacramento area?

How much do you really need for a downpayment to purchase a home in the Sacramento area? It seems like I get this question a lot, so let’s clear this up right away because this is one of the biggest misconceptions I hear from buyers: You do NOT need 20% down to buy a home. 

I can’t tell you how many people wait years longer than they need to because they think that’s the rule. It’s not.

So…what do you actually need? It depends on the loan type, but here’s the practical real-world breakdown: 

• Conventional loans: as little as 3% to 5% down 
• FHA loans: typically 3.5% down 
• VA loans (if eligible): 0% down 
• Down payment assistance programs: In some cases, this can significantly reduce what you need out of pocket 

For example, if you are purchasing a $500,000 home: 

• 3% down = $15,000 
• 3.5% down = $17,500
• 5% down = $25,000 
• 20% down = $100,000 

That’s a big difference and for most buyers! These lower downpayment amounts are often far more realistic options for buyers than saving 20%. And Downpayments could come from places like your savings, a gift from a family member, a retirement account, or a special downpayment assistance program.

Let’s talk about down payment assistance...this is something a lot of buyers either don’t know about or assume they won’t qualify for. There are state and local programs that can help cover part of your down payment and/or closing costs. Some are structured as deferred loans, some as grants, and many are designed specifically for first-time buyers. Not everyone will qualify, and there are income limits and guidelines but it’s absolutely worth exploring. I’ve had clients who were able to get into a home much sooner because of these programs. The California Association of Realtors has a super handy downpayment assistance locator tool that you can check to see if you qualify for any programs: CLICK HERE.

What other costs should you plan for? The downpayment is just one piece. You’ll also want to budget for: 

• Transaction costs: these are negotiable, and usually in the neighborhood of 2% - 3% of the purchase price;
• Inspections: I usually recommend things like a whole house inspection, termite inspection, HVAC inspection, roof inspection, and sewer camera inspection as a baseline -- and others may be necessary depending on the property. You will want to budget $1000 - $2000 to thoroughly inspect a home;
• Appraisal: Your lender will order this, and I see these range from $700 - $1000...this is commonly lumped into your closing costs

The good news: in some situations, we can negotiate with the property seller to help offset closing costs to defray your out of pocket expenses. 

The question you should really be asking instead of “How do I get to 20% down?” is: “What’s the smartest way for me to get into a home based on my financial situation?” Because the answer is different for everyone. Some buyers should put more down. Some are better off putting less down and keeping cash on hand. Some qualify for assistance programs they didn’t even realize were available. 

So if you’re waiting because you think you don’t have enough saved yet, reach out -- it’s worth having a conversation and a real look at your numbers and your options. You might be closer than you think.

Aspiring to be a homeowner in Sacramento? Here are 6 things to start doing to prepare...

Lately I have been chatting with several folks who are thinking about taking the plunge into homeownership -- some sooner than later -- and for many of them it is a little overwhelming as far as what to do to get started. I help buyers of all shapes and sizes, price ranges, and experience levels, and what I recognize is that whether this is your first time or your 5th time, many of the steps are the same or they significantly overlap! What is another day at the office for me is a life-changing event for you. So here are some things to think about as you contemplate your future home purchase.

(1) Check your credit score. Lenders use your FICO score to determine your mortgage interest rate...higher FICO scores lead to better interest rates, which can save you tens of thousands of dollars over the life of your mortgage. I cannot emphasize how important it is check your credit. For one, sometimes credit reports have errors, and they take a little time and effort to correct. NOTHING is more frustrating than finding a home you want to buy, and then trying to qualify for a mortgage only to discover some issue on your credit report that you could have proactively resolved -- sometimes this will cost you getting the house you love, or you will have to spend more to purchase it. Second, there are ways to improve your FICO score like paying down credit card balances, avoiding opening new lines of credit, having a solid history of on-time payments, etc. Pro tip: my bank offers free credit score monitoring, which I personally take full advantage of...I would highly recommend this as well. According to the Federal Trade Commission, federal law gives you the right to get a free copy of your credit report every 12 months from each of the three credit bureaus. In addition, the three bureaus have permanently extended a program that lets you check your credit report from each once a week for free at AnnualCreditReport.com. If you do not want to order your credit report online, they offer two other alternatives: call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You can always ask a mortgage lender to run your credit as well for a fee.

(2) Where is your downpayment coming from? Often people assume you need 20% down to purchase a home, however that is not true. Many mortgage loan programs only require 3% - 5% down, or even 0% for qualified buyers like veterans who qualify for VA home loan financing. Most people who call me do not realize that they may already have enough in savings to qualify for a mortgage. Or, your downpayment may not already be in hand, and could be coming from the future sale of another property, or often my clients will receive downpayment "gift" funds from a family member -- and you probably need less of a gift than you think. In California, downpayment assistance help is available through a variety of state and local programs. Keep in mind that funding for these programs ebbs and flows. Here are a few available in our area to those who qualify (usually based on things like income, family size, and where the home is located):

• California Housing Finance Agency (CalHFA) Downpayment Assistance Programs – Offers several different types of conventional and FHA loans, and a couple forms of downpayment and closing cost assistance programs. 
• City of Citrus Heights Downpayment Assistance – Offers a low interest loan of up to $40,000 with no monthly payments (a "silent second" loan) for purchase of a home in Citrus Heights.
• City of Elk Grove Homebuyer Assistance Program – Offers a silent second, deferred-payment loans to first-time homebuyers meeting certain income and eligibility requirements
• Golden State Finance Authority (GSFA) Golden Opportunities Program – Helps low-to-moderate income homebuyers in California purchase a home with little-to-no money out of pocket by providing down payment and/or closing cost assistance (DPA) with an FHA, VA or USDA Mortgage Loan. You do not need to be a first time buyer.

(3) Talk to a Lender...please do this before you start sign up for online listing notifications and stalking open houses! Before falling in love with a listing, you really need to know what you can afford. A mortgage lender will help you...they will run your credit (and hopefully you followed step 1 and already have a sense of what your FICO score is and have worked to optimize it). The lender will take a look at your income, assets for a downpayment (or from step 2, downpayment assistance, proceeds from a future sale, gift funds, etc). They will run through different financing scenarios with you to help you understand what you can afford versus what you want to spend -- these are often very different! Perhaps the lender can qualify you for a $750,000 purchase but your comfort level with your monthly payment really lands at a $600,000 purchase. These are very important distinctions to make. ALSO, be sure you are taking all of the factors of the monthly payment into consideration. If your lender is not providing you clarity on the loan principal and interest, property taxes, homeowners insurance, and (if applicable) mortgage insurance then you are talking to the wrong person. Also while you may see lots of online ads for lenders, I would strongly recommend working with someone who is local, and who can sit with you and explain things. I can refer you to some great ones.

(4) What neighborhoods are you interested in? Location. Location. Location! The old adage in real estate is true. You can change a lot about a home's condition but you can't change the location. What vibe best suits you? Whether you want to live near the action of downtown or midtown Sacramento, or in a suburb like Elk Grove or Carmichael, or a charming vintage neighborhood like Land Park or East Sac, take time to do a little research. Common themes I tend to discuss with my clients are:

• School boundaries, and school district boundaries. I have resources to help you research school ratings, and everyone seems to value different things or programs in different schools. Got a particular school in mind where you really want to enroll the kiddos...? You should CALL THE DISTRICT and ensure that the school does not have an impacted enrollment and that your kiddos can actually go there. It can be a rude awakening buying a home down the street from the school where you want your kids to attend only to find out that the school does not have room, and the kiddos get enrolled elsewhere.
• Public amenities like parks, trails, community centers, etc. Sacramento has lots of wonderful recreation opportunities...some folks MUST be near an aquatic center. Or near the river. Or near William Land Park. Or in a secluded area. Being near those amenities may come with trade-offs -- like a higher price. Like traffic. Like noise. Like higher homeowners insurance costs. Like a long commute. Again, explore the areas and make sure living near those amenities (rather than visiting) actually makes sense.
• Safety. I often get asked if "fill-in-the-blank" is a good neighborhood?...well, for one my definition and your definition may differ, and I must emphasize that while realtors can give you certain insight and resources, we legally and ethically CANNOT “steer” buyers to or away from specific neighborhoods for any reason. That’s why doing your own research and visiting areas that interest you is so important. I have resources for clients who want to research crime rates. And drive by the area at different times of the day to get a sense for what the activity level and type is. 
• Demographics. Remember what I just said above? If demographics are important, the US Census has some great info for your perusal. 

(5) What type of property is best for you? Buying a single-family home isn’t your only option. Condos and PUDs can sometimes be more affordable and lower maintenance. Think realistically about your lifestyle, budget, and long-term goals. My first place was a condo before I moved on to a single family home. Each type of property comes with trade-offs: 

• Condos: When you buy a condo, you essentially own the interior of your unit, but not the land or exterior structure. Common areas like landscaping, pools, and roofs are typically managed by a homeowners association (HOA), and you'll pay monthly dues to cover maintaining those. Dues are subject to increase, and HOAs have rules that not everyone enjoys (like to limit the number or size of pets, or to govern the types of decoration you can put in your windows, for example). Not every HOA is the same -- some have deferred maintenance that can lead to sharp dues increases if the HOA governing board is not carefully planning for future expenses.
• Townhomes/Planned Unit Developments (PUDs): these may have many similarities to condos with shared walls and HOAs, however with a townhome/PUD you typically own the structure (interior and exterior walls) and the land it sits on (including the front and backyard, if any). Again, the governing boards of the HOA may be more proactive or reactive when it comes to maintenance.
• Single family homes: these offer more privacy and land space, fewer rules (though single family homes can be in HOAs too) but usually require more upkeep and maintenance as the expenses are not shared with other property owners.
• Side note: if you are interested in HOAs or have questions, I wrote my masters thesis about HOAs and would be happy to nerd out with you. 

(6) Did I mention talk to a REALTOR? Aspiring home buyers tend to reach out to me at different times during their exploration of purchasing a home...I come into the fray often as the first call -- and if that is the case I will help you navigate these steps in whatever order makes sense. Sometimes I am contacted as the last step as someone really wants to dive into their home search. All good either way. I am ready when you are. We will talk through what it means to enter into a Buyer Representation Agreement (the scope of the agreement, timeframe, compensation terms, geographic areas covered, type of property, my fiduciary duty to you) for professional representation, and how I advocate on your behalf, etc.

If you’re thinking about buying your first or 20th home in the Sacramento area, I’d be honored to help and welcome your call to see if we are a fit to work together.

California Dream For All Downpayment Assistance Shared Appreciation Loan - administered through the California Housing Finance Agency (CalHFA)

The "California Dream For All" Downpayment Assistance Shared Appreciation Loan was released this week via the California Housing Finance Agency (CalHFA) to a lot of excitement and fanfare. Candidly, this is a super unique state-funded program and I think it may be the first of its kind in the US. Funded by a state budget allocation, California is going all in to help first time buyers afford homes. I should say that funding for this program is limited and will likely run out, so if this interests you DO NOT wait.

Buyers who qualify may receive up to 20% of the purchase price of the home (or appraised value, whichever is less) to use as downpayment or closing costs. The 20% is a "silent second" -- meaning you borrow the funds however payments on this second mortgage are deferred for the life of the first mortgage loan. If you were to refinance the loan or sell the home at a later time, the funds must be repaid and a 15% or 20% share of the home's appreciation must be paid as well. The share of the home's appreciation that is due at the time of sale or refinance depends on the income level of the borrower.

Borrower Requirements 

• Be a first-time homebuyer. (CalHFA defines this as someone who has not owned and occupied their own home in the last three years)
• Occupy the property as a primary residence; non-occupant co-borrowers are not allowed. 
• CalHFA borrowers must complete two levels of homebuyer education and homebuyer counseling and obtain a certificate of completion through an eligible homebuyer counseling organization. 
• Meet CalHFA income limits for this program. (In Sacramento County, Placer County, and El Dorado County, the income limit is currently $202,000. In Yolo County, the limit is currently $211,000)

Property Requirements

• Be a single-family, one-unit residence, including approved condominium/PUDs 
• Guest houses, granny units and in-law quarters may be eligible 
• Manufactured housing is permitted 
• Condominiums must meet the guidelines of the first mortgage

There may be other requirements as well. To apply, since CalHFA is not a direct lender, their programs are offered through private loan officers who have been approved & trained by CalHFA. I know and have worked with several lenders who are approved to provide this program -- feel free to reach out to me at erin@erinstumpf.com or 916-342-1372 and I can connect you with one, or you can search CalHFA's lender directory here.

CalHFA offers NUMEROUS homebuyer downpayment and closing costs assistance programs, so they have a variety of programs if this one is not the best one for you. 

Once you are pre-approved for your purchase, we can start the fun part -- shopping for your home.

Acceptable forms of providing an escrow company your initial deposit funds or downpayment for a real estate purchase...

So there is a first time for everything, and this week a client asked me something I have never before been asked: if he can send his downpayment funds via Venmo. In the age of money transfer apps, that is a totally legit question.

For those of you who don't know, Venmo is a popular money sending/transferring app. My husband and I have a Venmo account...and our most frequent use for Venmo? Loaning his 20 and 23-year old sons gas money every once in a while, or occasionally reimbursing a friend or colleague for a meal. There are other money sending apps -- PayPal is sort of the "old school" one, and some banks offer a feature called Zelle that essentially does the same thing. There are probably other ones too. 

These apps can be super convenient obviously, but will escrow companies (the neutral 3rd party that facilitates the transfer of title and handles the funds) accept funds transfers from them for initial deposits and downpayments for real estate purchases? The answer is -- NO. They will not.

And you might wonder why...well for one, you cannot just walk a bag of cash into an escrow company either. Escrow companies are themselves financial institutions, which in California at least are heavily regulated, usually by the California Department of Business Oversight. Venmo by its own admission is not set up for business transactions. Additionally, the amounts typically involved in real estate transactions to purchase homes or investment properties tend to be pretty large. Most of these apps have daily or weekly limits that prevent transfers in excess of a few hundred or a few thousand dollars. And with that, while I believe Venmo transactions may be free if linked directly to a bank account, many of these accounts charge significant transaction fees -- up to a few percent. If you were to send your $75,000 downpayment via one of these apps, the sender or recipient might be charged a couple thousand dollars in these fees alone.

These accounts are often linked with credit cards, so I am not sure it is advisable to "charge" your downpayment. In fact I am sure your lender would not like this at all as it could significantly change your loan debt-to-income ratio. Security of these transactions is potentially also a concern. While transactions are probably encrypted, it is not difficult for hackers to hijack a phone where the app lives, or what if you physically lose your phone logged into your app's account with a large fund balance awaiting transfer? Additionally, when sending or receiving funds via Venmo, your transaction history is public. Do you want the world to know you just sent a large sum of money to an escrow company? Also, funds on deposit at banks are FDIC insured and funds that live in these apps are not. 

Your best bet -- physically walk into your local bank or credit union branch and arrange for a wire transfer of your funds to the escrow company. Depending on your account type, these wire transfers may be free, or you may be charged a small fee of perhaps $25-$35. You may also obtain a cashier's check from your bank and walk that into an escrow company. 

While these bugs with money transfer apps may be worked out sometime in the future, for now I do not anticipate escrow companies to rush out and create Venmo, PayPal, Zelle, or other accounts. But perhaps this is something to consider as attitudes and culture shifts.

My clients and I featured in a Sacramento Bee article about millennial home buyers...

I think my clients Farrah and Andrew said it best as they were quoted in the Sacramento Bee article - that millennials aren't different from other generations. They have the same goals, and they want to buy houses.

Duh.

I work with a lot of millennial buyers (and sellers, since after all they have been buying homes for a while now). The fact is there are a lot of millennials. And you know what, the bulk of that generation is turning the corner of their 20's into their 30's. Not all of them want or have traditional households, but once those student loans are paid down or off, and they settle into a career, and they meet someone and maybe want to co-habitate or get married or have kids - SURPRISE! They buy homes.

These mortgage interest rates tho...

When I bought my first house in 1998, I was absolutely elated to get 7.125% interest on my 30-year fixed conventional loan. That was a super great interest rate at the time...during the 11 years I have been a Realtor in Sacramento, rates have bounced around quite a bit...I'd say during my tenure as an agent, on average they have been in the 5% range with times they have bounced up to the high 6% range, and times they sank into the 4% and high 3% range. There have been a handful of times where rates were in the mid-3% range. RIGHT NOW is one of those times where rates are in the mid-3% range. Holy crap!!

Even in January of this year, when my husband and I bought our current house, we were super excited to get 4.125% for a 30-year fixed conventional loan.

So when I say today's mortgage interest rates are amazing -- I mean it. Lower interest rates means lower mortgage payment. For example, if my husband and I could have gotten 3.625% instead of the 4.125% rate, our monthly payment would be approximately $85 lower. That's significant!

If you are in the market for a home purchase, these rates fluctuate on a daily basis...I'm not sure if this is a blip, or if global anxiety about Brexit will keep these interest rates low for a while. So talk to your lender and come up with a good strategy for locking your interest rate. FYI you can not lock your rate until you are actually in contract to purchase a home. And of course keep in mind, the rate you qualify for will largely depend on the type of loan you are getting, your downpayment, and credit score, etc.

And if you own your home already, it may be an opportune time to refinance. If you need to be connected to a great lender, I can refer you to someone...

Downpayment Assistance: not just for low income buyers...

It is a common misconception that downpayment assistance is only available to home buyers who are low income. While it is true that most downpayment assistance programs are based on a buyer's income and family size, the income limits are much higher than most people think. This is the perfect example. I attended a presentation by the California Housing and Finance Agency (CalHFA) where they discussed their available programs. For a family of four, the annual income limit is $91,300 for a conventional loan program, and $87,500 for an FHA loan program. And for their Mortgage Credit Certificate (MCC) program, the income limit is $100,100! The photo shows the sliding scale based on income and family size for Sacramento. There are some great programs and great homes available!

How to properly give or receive a downpayment gift for your home purchase...

A few years ago I was quoted in a USA Today article about parents who provide their adult children downpayment "gifts" for their home purchases. This is extremely common, and financial gifts are generally permissible with FHA loans, VA loans, and Conventional loans, though usually my clients do not understand the process in order to give or receive a financial gift. Lenders and loan underwriters have very specific processes in order to document the "source and seasoning" of financial downpayment gifts...

If you are a home buyer looking to give or receive a financial gift, I would NOT recommend just writing the recipient a check or transferring funds into that person's account. Generally, it is much easier for the person giving the gift to hang on to their own funds, and then deposit them on the recipient's behalf directly into the escrow for the transaction when that time comes. This is much cleaner and there are fewer steps to trace and document.

Just what do I mean by "source and seasoning" you may wonder? Well for one thing, lenders will not let just anyone give a buyer a financial gift. Generally gift funds needs to come from a family member, such as a parent, grandparent, sibling, child or even a spouse, if that spouse is not on the loan. In addition to this, the gift funds must be "sourced" directly from this family member's bank account. The family member will need to provide the lender bank statements and a trail of where the money came from. Seasoning refers to the fact that lenders want to see that these funds were not recently acquired -- they prefer to see funds that have been "seasoned" in an account for at least a few months.

The lender will require that the financial gift giver write a letter stating a few things; (a) the amount of the gift being given, (b) the property address of the home being purchased, (c) your relationship to the person receiving the gift, and (d) that the money is NOT a loan and that it is a gift that does not have to be repaid.

All lenders will have their own specific requirements, however these generally are the most common when giving or receiving a financial gift. Many of my transactions with first time home buyers involve the use of gift funds -- this is extremely common and it is pretty cool to see! I have had clients give and receive financial gifts anywhere from $1,000 to augment a buyer's downpayment, to a full 20% downpayment, and everything in the middle.

Sacramento Real Estate Statistics for September 2015

Wanna know what I love about this median price trend graph for Sacramento County? It's relatively flat with a slight appreciation. Wanna know what else I love about this? It looks a lot like the graph from one year ago in September 2014. In the last twelve months, Sacramento County's median home price has increased approximately 5.5%. This is nice, steady, healthy, and sustainable price appreciation. No crazy spikes one way or the other! This is SO nice compared to trends from a few years ago when the Sacramento real estate market was super frenzied and chaotic. I have been a Realtor for over a decade now and this sort of market is enjoyable to say the least.

What is really nice to know is that the market is still way below the market peak in 2005 when the median price was nearly $400,000. With current home lending standards being such that buyers have to qualify for home purchases based on current income, assets, credit scores and employment and no artificial lending criteria, I think this nice steady price appreciation is here to stay. Nothing funky about the availability of lending exists -- like 10 years ago when buyers routinely claimed income on a loan application whether true or not. Or when the irresponsible "pick-a-payment" loans were available that created this fake low house payment. That's all gone and I don't foresee it returning.

In my own transactions, I am seeing many folks who purchased a home during the bust take this opportunity to sell their current homes and move-up into a larger home, downsize, or move into a different neighborhood. I am also seeing a lot of downpayment gifts from parents to their kids, allowing them to purchase their first homes. Interest rates are still low, hovering just around 4%. Generally as we approach the end of the year, the market slows a bit and the median price tapers a bit...my business volume has not slowed in the least, so I will be interested to see if the low interest rates motivate buyers to remain motivated to buy through the holiday season.

City of Citrus Heights Downpayment Assistance Available

If you are looking to purchase a home within the City of Citrus Heights in Sacramento County, then you may want to find out if you qualify for their Home Buying Assistance Program. If you want to purchase a home but need assistance with coming up with the down payment, you may be able to apply for a low-interest loan for up to $40,000 through this program so that you can essentially finance your downpayment. The basic qualifications for this program are

1. The home must be located within the Citrus Heights city limits. Generally, if you are searching online this would be homes located in 95610 or 95621.
2. The property must be a single family home, condo, or half-plex. Unfortunately, duplexes and such are not eligible.
3. You must be an owner-occupant. No investors can use this program.
4. This program is for First-Time Home Buyers - so the buyer must not have owned a home within the last 3 years.
5. Your household income must fall within the income guidelines. For example, for a household of 1 (that's a solo person, no spouse, no kids), the max allowable annual income is $38,550. For a household of 4 (so for example, a married couple with 2 kids), the max allowable annual income is $55,050. The max allowable income for a household of 8 is $72,700.
6. You also must complete home buyer education.

Sounds great, right? If you would like me to connect you to the program administrator to see if you qualify for this program, I am happy to assist. You will also need to qualify for your loan as well, and I can point you in the right director for that as well...and then let the house hunting begin!

Every home owner starts as a first time home buyer at some point...myself included!

I vividly remember when I purchased my first home in 1998. I was young; a full-time college student, working a full-time job, and I had a small chunk of money that my parents told me I should use as a downpayment on a home. Homes were not really advertised on the internet at that point, and I looked through the newspaper for homes that looked interesting. I found my Realtor by calling about one of his listings. He was the only agent who took my inquiry seriously...others had blown me off. I didn't know where to start in the process. I just knew I wanted to buy a house.

Sound familiar?

This Realtor had the patience of a saint. I was not a big time client looking to spend lots of money but he still took time to work with me. He walked me through the home buying process from start to finish, and answered all of my questions. I had no idea what I was doing, and figured I might only go through the process a couple times in my entire life. He matched me to a great loan officer and helped me get pre-approved for a loan, listened to what I wanted, and showed me properties that matched my criteria. My Mom tagged along as we looked at property and helped me ask questions. After a couple months, and looking at a dozen or so properties, I ended up buying a bank-repo condo in Fair Oaks. It wasn't perfect - I immediately repainted many of the walls, and replaced the HIDEOUSLY UGLY electric blue laminate kitchen counters with white tile. But it was all mine.

That's me in the photo up top, the day I closed escrow, standing in front of my unit holding a housewarming gift. The other photo is at my housewarming party when my friends helped me break in my new BBQ. I was SO excited! Little did I know at that time -- years later -- I would get my real estate license and help first time buyers on a daily basis. Remembering my first home buying experience, I vowed to be like the agent who so patiently helped me with my first purchase.

So, if you are reading this -- know you are on the right track. The first steps involve reaching out to a Realtor and finding someone who is a good fit to help you with your home search. In conjunction with connecting with a Realtor, you will need to find a great lender to get pre-approved for a mortgage loan. I work with several outstanding loan officers I can refer you to who also work with lots of first time home buyers in Sacramento. The loan officer will help you establish your home purchase budget based on your income, explain all of the different loan programs available to you, see if you qualify for any downpayment assistnance, let you know how much your downpayment, closing costs, and monthly payment will be. Your Realtor will help you establish which neighborhoods you are interested in, what kind of home you are looking for, and what features are important to you.

Once you have laid the ground work for your purchase, the fun begins and you can start house hunting...there's a lot more from there that your Realtor and loan officer can review with you in person.

Just remember -- have fun, ask questions, get advice when you need it, and know that your home is out there. You just have to go find it. =)

Want to see if you qualify for any Downpayment Assistance or Grant Programs? Search here...

I am frequently asked by buyers -- what Sacramento downpayment assistance programs or grants are available? Well, that's a loaded question! The short answer is that there are NUMEROUS programs out there. The longer answer is that each program has different qualifying criteria generally based on three main things -- (a) where the home is located, (b) the number of people who will live in the house, and (c) thee total household income. So without knowing a lot about a potential buyer's home and financial situation, it's difficult to give someone a fast answer about the programs available to them.

Thanks to the great folks at the California Association of Realtors, we now have a consolidated directory and search tool for these programs! The California Mortgage Resource Directory will take you through a questionnaire to help you determine what downpayment assistance or grant programs may be available to you.

I did a sample search for one of my Sacramento listings and found a total of six programs available to prospective buyers who qualify! Here is a link to the California Mortgage Resource Directory. Try it!

Wells Fargo and NeighborWorks introduce the NeighborhoodLIFT! $15,000 downpayment assistance for eligible Sacramento home buyers...

The folks at Wells Fargo, Wells Fargo Foundation and NeighborWorks have introduced a new downpayment assistance program! For a limited time eligible home buyers may receive $15,000 for down payment assistance for the purchase of a primary, owner-occupied residence in the City of Sacramento. This amount you receive from the program is fully forgivable after you live in the home for five years. The program is available if you are approved for home financing and your household income is equal to or less than 120% of the area median income. See the NeighborhoodLIFT eligibility requirements here.

The program will launch in Sacramento, California on November 16 and 17, 2012 with an educational event where buyers can be pre-approved for the program. RSVP to come to the NeighborhoodLIFT launch event where you'll be able to:

• Find out if you are eligible for up to $15,000 of down payment assistance on qualified properties.
• Sign up for education programs that can prepare you for finding and financing a home and managing the financial responsibilities of homeownership.
• Make an appointment for one-on-one counseling session to set up an individualized plan to work towards homeownership.
• Go on a neighborhood home tour featuring homes for sale.

To register for the launch event or to learn more about NeighborhoodLIFT, click here. All attendees MUST bring the required documents to the event. Required documents include things like your last month's paystubs, last two years of tax returns and W-2's, bank statements, etc. To see the checklist of required documents, click here.

Not able to attend the launch event on November 16 & 17? You may still have an opportunity to become eligible for up to $15,000 in down payment assistance if funds are still available after the event. AND although Wells Fargo is the sponsor of the NeighborhoodLIFT program, you may seek financing for the remaining balance of the home purchase from any lender who accepts the NeighborhoodLIFT down payment assistance program.

If you are interested in receiving email notifications of new listings within the City of Sacramento, visit SacHomeList.com and fill out your home search criteria.

Quoted in USA Today article -- about buyers who receive downpayment "gift" funds from family members...

If you follow me on Twitter or Facebook, you will already know that a couple weeks ago I was interviewed by a USA Today reporter about my experiences with buyers who receive monetary "gifts" from family members toward a home purchase -- usually for a mortgage downpayment or closing costs.

Well the article was on the front page of today's edition of USA Today! Kinda neat...the couple that I refer to in the article bought a nicely remodeled 4 bedroom house in Sacramento in a revitalized area. They were married a few years ago, the husband had just graduated from law school, they just had their first child, and relocated here from San Diego for employment. They were paying $1200 per month in rent for a 2 bedroom house just a few miles away from the home they purchased. Their total mortgage payment is about $250 less than the rent they were paying.

I would estimate that 1 out of 4 of the buyers I work with receives gift funds, usually from a parent. These financial gifts generally do not constitute the entire downpayment, or all of the cash needed to make the home purchase. What I typically see is mom and dad (or a sister, uncle, grandparent, etc.) will gift a few thousand dollars to augment the downpayment from the buyer.

If you are giving or receiving a financial gift to make a purchase, there are a few things you should do BEFORE any money changes hands. I would highly suggest NOT just writing your kids a check...the funds must be "sourced and seasoned." This essentially means that the lender must be able to verify who the funds came from, what their relationship with the buyer is, from what account the money came from, how long the money had been in the account, and how the funds were earned. There are some easy ways to do this, but speak with a loan officer first...you might make a well-intentioned gift but delay or adversely affect the buyer's loan underwriting. If you have any questions about this, or need to speak with a good loan officer, just contact me and I can assist.

Is the CalPERS Home Loan Program going away?

Yikes...per an article that appeared in today's Sacramento Bee, the CalPERS Investment Committee will vote at their meeting in December whether or not to suspend their CalPERS Home Loan Program.

The CalPERS Home Loan Program is one offered to members of the retirement system (made up largely of State of California employees) as a benefit. I have worked with several home buyers who have used this program. One of the perks of the program is a long interest rate lock period, and the fact the buyer can borrow part of all of their down payment from their existing CalPERS retirement account.

If you are a CalPERS member and want to see this program continue, you may want to make it a priority to contact your CalPERS member representative immediately.

City of Elk Grove Homebuyer Downpayment Assistance Program

Are you a first time home buyer seeking to purchase a home within the City of Elk Grove limits? Well you are in luck! The City of Elk Grove has received grant money from the US Department of Housing & Urban Development (HUD) "Neighborhood Stabilization Program." The program affords eligible first time home buyers up to $60k in the form of low interest, payment-deferred loan toward their downpayment and closing costs!!

Of course there are several buyer eligibility requirements...among the requirements are that the home must be a bank-owned/foreclosed single family home, within the city limits, and the buyer's income must be within the 2009 "moderate income limits."

Think you may qualify? Get more info by downloading the City of Elk Grove's brochure or check out their program fact sheet.

HR 600 - The Potential Economic Impact of Seller-Funded Downpayment Assistance

Read Nehemiah's Fact Sheet and Nehemiah's Press Release regarding the Economic Impact of Seller-Funded Downpayment Assistance.

To contact your elected official regarding your thoughts on HR 600, click here.

HR 600 - New Seller-Funded Downpayment Assistance Legislation Surfaces!!

This evening I received an email from the Nehemiah Corporation that new legistation was introduced in Congress this week that is intended to reform and re-introduce seller-funded downpayment assistance programs (Nehemiah, Ameridream, etc.).

HR 600 apparently replaces last year's HR 6694. Seller funded downpayment assistance programs were eliminated by provisions in HR 3221. If you would like to express support for HR 600 to your local lawmakers, you can visit DPAGroundswell.org.

100% Financing in Sacramento...is it feasible once again?

Well...perhaps happy days are here again if you are a buyer looking for 100% (zero down) financing in Sacramento, and basically most of the state of California, for that matter.

A downpayment assistance program resurfaced roughly a month ago. This is not a seller-funded downpayment assistance program a la Nehemiah or Ameridream - those are still banned per provisions in HR 3221, and it does not look like they will be coming back any time soon (no sooner than when HR 6694 passes, if it ever does).

I am pleased to introduce the National Homebuyer's Fund Program. I briefly mentioned this in a blog about first time buyer programs a couple weeks ago...

I am not a loan officer and do not know every in and out of this program, but I do know how some current clients of mine are using it to purchase a home in Fair Oaks. They are using an FHA loan for 92% of their purchase, and are getting a small second loan for 8% of their purchase. The seller is paying $11,000 toward recurring and non-recurring closing costs. The buyer is only going to come out of pocket about $500 when it is all said and done.

I attended the Real Estate Finance Forum this morning at the Sacramento Association of Realtors, and the CalPERS Program Home Loan representative from CitiMortgage mentioned this program as well! It apparently can be used for both purchase and refinance transactions. It is a "risk" based program and does not run out of money, like other bond-financed programs.

Contact me if you would like more info, and I can put you in touch with an approved loan officer who can evaluate your situation and see if this program is a fit.

Ask Erin: VA Loans

With 100% Financing programs disappearing, VA Loans are making a comeback. Over the last few years, the conventional 100% Financing programs offered by banks and other lenders had better terms than most VA Loans...

In the last couple weeks, I have had many prospective clients ask me about VA programs. A few pointers:

-Make sure you are indeed eligible! Here is a link to the general eligibility guidelines per the Department of Veterans Affairs: http://www.homeloans.va.gov/elig2.htm. Many people do not know that you may be eligible if you served with Allied US Forces, if you are the spouse of a POW, the un-remarried spouse of a veteran who died in service, etc.
-Make sure you obtain a Certificate of Eligibility from the Department of Veterans Affairs by completing form 26-1880. This can be done at http://www.homeloans.va.gov/eligibility.htm.
-Obtain or locate any paperwork in regard to your most recent discharge or separation papers covering active military duty since September 16, 1940.
-Make contact with a local loan officer who works with VA Loans...if you are a regular reader of this blog, you will know that I recommend Marlena Olson with the Vitek Mortgage Group. She has worked with my clients who have used VA Loans, and she can be reached at 916-486-6900.

Links:
http://www.homeloans.va.gov/eligibility.htm
http://www.homeloans.va.gov/faqelig.htm
http://www.homeloans.va.gov/elig1.htm
http://www.va.gov/vaforms/
http://www.erinattardi.com/financing.htm