The party is officially over. A few weeks ago Congress and the Senate passed a big housing bill to help the flailing housing market. Some of what they did helped, some of it could hurt.
The biggest news: last $0 down "program" in the mortgage world is kaput as of October.
It was a funny deal -- called a Downpayment Assistance Program, it allowed a home seller to give a "gift" to a nonprofit who would turn around and give a buyer that money to use as a downpayment on the house purchase. My lawyer client called it legalized money laundering, but it is (was) legal. And now it is almost gone.
Sooo.... if there is anyone out there that wants to buy a house -- they can use this program now (and I mean, like, today, time is ticking) or they can save up 3.5% for a downpayment next month.
The difference is more than dramatic, to be frank.
Think of it in these terms:
You are a renter. You want to buy a house. You make, say, $50,000 a year. Or you're a couple and make $80,000 or so a year.
You can buy a house NOW for $0 down (well, you do need a few hundred dollars for the inspection and whatnot)
Next month, you will be required to put down 3.5% of the purchase price. On a $200,000 house, that would be $7,000.
All I know is when you are 25 years old and buying your first house, it is not an easy thing to scrape up $7,000.
But you protest:
I already own a house! Why would I care?
Because housing is a trickle down (trickle up?) kind of situation.
People sell $200,000 houses to buy $350,000 houses.
People sell $350,000 houses to buy $500,000 houses.
So if there are no buyers for a $200,000 house, that seller can't turn into a buyer for the next bracket up.
It's really tough out there and it just got tougher.
And -- if you are renting and want to buy something relatively soon and don't have $10,000 sitting in your bank account -- call me today. For reals, today. The house needs to be found, the offers need to be written and at the mortgage office by Friday August 29.