Monthly Archives: June 2014

Grant Programs for First Time Homebuyers

ID-10033148CalHFA has launched three new programs, and each may be combined with CalHFA’s various down payment assistance programs for first time homebuyers in the housing market.

Two of the CalHFA’s new programs are first mortgage loans, the CalPLUS Conventional and the CalHFA Conventional, offering a maximum LTV of 97%. The third new program is CalHFA’s Energy Efficient Mortgage combined with an additional Energy Efficient Mortgage Grant to allow for energy efficient improvements.  All three of the programs are available to first time homebuyers, with exceptions if the borrower is purchasing a home located in a Federally Designated Targeted Area*.

Each of the programs can be combined with CalHFA down payment assistance programs and other assistance programs including the California Homebuyer’s Down Payment Assistance Program (CHDAP), the Extra Credit Teacher Program (ECTP), and the Mortgage Certificate Credit (MCC) program.

The CalPLUS Conventional Loan Program is already combined with the Zero Intererst Program (ZIP), which is a deferred second loan with zero interest.  The maximum amount of the ZIP loan is 3% of the CalPLUS first mortgage.

The CalHFA EEM Grant may be a maximum of 4% the first mortgage total loan amount and includes the Up Front Mortgage Premium (UFMIP).

All three of the programs require a minimum credit score of 640, and debt-to-income (DTI) not to exceed 45%.  With the assistance of other down payment assistance programs or grants, all programs may have a maximum combined loan-to-value (CLTV) of 103%. Source: prweb.com   photo by photostock

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How Interest Rate News Affects You

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It’s a good idea to keep an eye on interest rates, no matter where you are in the loan process. Here’s why.

If you haven’t applied for a mortgage yet.
Watching interest rate trends before you apply will help you determine what kind of loan to get. If rates are rising, you may want to stick with a fixed-rate mortgage to lock in a lower rate for the life of a loan. If rates are falling, an adjustable-rate mortgage might be the way to go. If you don’t plan to be in the house for an extended length of time, a hybrid ARM could be an option for you. These loans have a fixed rate for a period of time before converting into an adjustable-rate, usually after 1, 3, 5 or 7 years.

If you have applied, but haven’t closed.
Since it can take up to four weeks from application to closing, watch interest rates closely. If rates are rising, you may want to “lock-in”, and have the lender guarantee that day’s rate for your loan. If rates are falling, you may want to hold off locking in for as long as possible. Some lenders will even allow you to “float down” your rate if you’ve already locked, allowing you to take a lower rate if rates fall. (There may be a fee for this service.)

If you have an adjustable rate mortgage.
If rates are rising and your adjustable-rate mortgage is about to reset, crunch the numbers and see how much your payment is likely to go up. If you are going to feel the pinch, consider refinancing into a fixed rate mortgage.

If you have a fixed rate mortgage.
Just because you got a fixed-rate mortgage doesn’t mean you should fix it and forget it. When interest rates fall, you could save yourself significant amounts on your monthly payment by refinancing. Use our refinance calculator to ensure that the savings exceed the cost to refinance. Source: getsmart.com

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