Originally Posted by issodhos
It doesn't have anything to do with the buyer's classification, california rick. It has to do with government induced misallocation of 'money' resulting in an artificially created higher demand for whatever the government is pushing at the time. Politicians hype real estate and legislate incentives at all levels because it is a basic industry that creates tons of jobs, provides mucho tax pickings, mega votes, mega campaign contributions, sweetheart deals for themselves (ask Obama;-)), lotsa profitable corruption opportunities, etc. Everybody wins -- until it comes time to pay the piper.

Unfortunately, the downside of these government-induced distortions inevitably result in a bubble that does nasty things to a lot of people when it pops and deflates.

You, as a prospective buyer, are a current beneficiary of that cyle by dint of getting in after the "pop" when prices began to fall (and may continue to fall). Please do not misconstrue what I am saying. If there are legitimate programs being offered for which you qualify and which would benefit you, it simply makes since for you to use them because that is the way the gaming table for home purchasing is currently arranged.
Yours,
Issodhos

I don't think you know how these "bond" programs work judging by your mis-informed post.

"Bonds" taken out by states are sold to investors and have a fixed rate priced by the market at the date of issuance. Investor's buy those "bonds" and they receive interest while they hold the bond and at the end of the term (usually 30 years) they receive back the investment. (That is a basic bond and there are others like 'zero cupon' bond that work a bit different).

Once the states auctions off the 'bond issue' then they allocate the money to whatever they want: there are bonds out there to build schools, prisons, maintain roads and some are out there to help first time homebuyers buy their homes. The people that use the state, county or city bond program do not get the money for free. They pay an interest rate which is higher than the 'bond issue' rate and thus the investors get paid plus the locality recoups the cost of the 'bond issue'. The benefit of using such programs is that you get a fixed rate and often you get down payment assistance to either pay for closing costs or to lower the loan amount. There are rules to obtaining such grants such 'recapture tax' which means that if you sell the home in the first 9 years than you have to pay back part of the grant (depending on when you sell the house or refinance and it can be up to the full amount of the grant) if you make a profit on the house. To qualify for these kind of programs there are income limits and they depend on the county you live in. In California, on average I believe the income limit for 1-2 people families is 88k per year and for 3 or more person families is around 100k. There are also house price limits thus you don't buy a mansion with these kind of programs but starter homes.

Programs like the one Rick mentioned, Nehemiah, is a program in which the seller provides the funds. NOT the state, not the lender, not the buyer, not a third party. Nobody is forcing the seller to put up the money. It is their choice.

Side note Rick - Nehemiah doesn't have an expiration period. Maybe your approval for the gift as it but you can re-apply. Nehemiah can also be used on conventional loan but only if you do a MyCommunity 97 Mortgage loan. The Max LTV is 97% but it doesn't have to be that high. Also there are certain requirements for that loan program and might include a home ownership course. The limit for Nehemiah is 6% of the sales price.

Also I kinda gathered that you live in San Francisco and there is a program in that area that also helps first time homebuyers. It is called Downpayment Assistance Loan Program and is offered by Mayor's Office of Housing of the city and County of San Francisco. They provide a 2nd lien that has 0% interest and can be up to 150k and is deferred for 40 years (if you keep that house that long).

Quote
Repayment of the Downpayment Assistance Loan is deferred for forty (40) years from the date of the initial purchase or until the sale of the property or the rental of the property without the prior approval of the City. As of the closing date of the sale or rental occurs, the loan is due and payable. The payoff amount due by Borrower is (i) the principal amount of the loan plus (ii) the proportional share of the net appreciation of the property.

The proportional share shall be based on the ratio of the original downpayment assistance loan amount to the Purchase Price of the property or the fair market value of the property at the time of purchase;whichever is higher (both called hereafter the "Purchase Price").

BTW, there are programs like this one throught out the country.. you just have to know where to look... most lenders don't want to go into that kind of assistance since it greatly increases the paperwork grin


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