The Labor Day holiday has now passed and it’s now officially the end of summer. No more late nights in front of the TV because of the Beijing Olympics. The kids are all back in school and Presidential elections are rounding the corner. But, things are just getting started.
Come October 1st, there are going to be many changes made because of the recent Rescue Housing Bill. One of the biggest changes is that September will be the last month FHA will offer homeowners down payment assistance. In addition, they are also increasing the current 3% required down payment to 3.5%.
With over 40 percent of FHA borrowers facing foreclosure utilizing DPA, the government has acknowledged this pattern and hopes to now change this. Subprime lenders went first, Alt-A felt the crunch, and now FHA is doing its part to eliminate this risky lending practice.
Analysts have hinted that it will be first-time home buyers who will cure this housing market. But with legislation like this, it almost seems counterintuitive. The fact is that home buyers are less likely to default if they invest a significant amount of money into their homes.
Unfortunately, FHA down payment assistance is all too similar to the exotic loans we are now paying for. It should be interesting to see how September and subsequent month’s home activity is reported; expect noticeable spikes. There is definitely going to be a significant amount of pressured home buyers hoping to beat this buzzer before October 1st.
Interested in more information? Read more about qualifying for a home loan in today’s tough market. Bottom Line: If you want to buy a home, expect to Bring Cash.
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