Options for Buyers with no money down

Seller Assisted home buying
Sellers helping home buyers cover down payment and closing costs
Potential home buyers who can make a house payment with no difficulty sometimes can't buy a house because they don't have the funds required for a downpayment and closing costs. One solution to the problem--use a downpayment gift assistance program, sometimes called a downpayment grant program.
How Downpayment Gift Assistance Programs Work
A little bit of background first. Home sellers can help buyers pay closing costs by giving a portion of their proceeds back to the buyer at closing. The amount of seller assistance that's allowed depends on the type of loan the buyer is getting.
Sellers are not allowed to give home buyers downpayment funds. That's where gift assistance programs step in, providing a "work around" of those laws.

The seller enrolls their house in a suitable program and contributes an amount equal to the assistance their buyer will receive at closing--plus a fee. (Most Web sites that disclosed the fee stated that it's 0.75% of the home's sales price.)
When the transaction closes, the downpayment funds are wired from the gift assistance program to the closing agent. The seller has no part in the transfer of funds.
Does HUD Approve Gift Assistance Companies?
Yes and no. Here's what HUD says about the programs:

"HUD does not approve gift programs administered by charitable organizations and, thus, will not offer a formal approval of your program. Mortgage lenders are responsible for assuring that the gift to the homebuyer from the charitable organization meets the instructions described in HUD Handbook 4155.1 REV-4, CHG-1 Paragraph 2-10(C) (e.g., no repayment implied, etc.). Those charitable organizations that comply with existing regulations and policy guidelines are permitted to give cash gifts to eligible homebuyers and do not need prior FHA approval to do so."
So HUD does not issue formal approvals for gift programs--it puts the burden of working with a legitimate program on the lender. The major programs all appear to comply with HUD's requirements. Your lender can verify that the program you choose is one that is acceptable.
FAQ About Downpayment Gift Assistance Programs Program guidelines may differ slightly, but they all offer the same basic services.

Home buyers must qualify for a loan that allows gift funds.

There are no minimum or maximum income requirements for buyers, but there may be top limits set on the sales price of homes.

Typical assistance seems to range from 1% to 7%.

Funds can be used for the downpayment and for closing costs.

Gift funds can be used for new or existing homes.

Unused funds must be returned to the gift program.

Assistance programs cannot be used to refinance a house or to make home improvements.

Sellers cannot use the gift as a charitable contribution, but it may be deductible as a selling expense. Talk to a tax professional.
Why Would a Seller Want to Participate
Home sellers usually price their homes to include some negotiation space. What matters to a seller is his bottom-line--how much money he takes away from the closing table. A buyer who has the funds to close may get a better deal on the house, while a buyer who needs help will pay closer to (or more than) the asking price, but in return can negotiate help from the seller.
One thing you must keep in mind is the home's appraisal value. The lender will not allow gift funds that result in a loan that exceeds the appraised value of the home. If you're working with a real estate agent, she can help you determine if the home is realistically priced and will appraise where it should.
Your lender can help you choose a downpayment assistance program and explain how your offer to purchase should be worded to ensure compliance with its underwriting guidelines.

Community Home Buyer Programs: ACORN

Many homeowners are struggling to keep up with escalating payments on their mortgage loans, and feel as if they have fallen over the edge of a financial abyss.
I have written about this program before, but failed to stress it as a refinancing vehicle that might rescue many homeowners from financial ruin. At the same time, it might also help ease some of the strain on the financial markets.
Though loan limits vary from state to state, the basic guidelines for Acorn Loan program qualification remain much the same. In California, for example, maximum qualifying income is $92,000 and mortgage loan cannot exceed $500,000. To see what your state guidelines are, check with either Chase Mortgage or Bank of America Mortgage directly. It is my understanding they are the only two mortgage lenders funding these loans--and that they cannot be brokered.


The California qualifiers:
Applicant’s adjusted gross income less than $92,000 per year
Home loan must be less than $500,000
Applicant can only own one parcel of real estate.
An excellent tool for refinancing (out of riskier mortgages, perhaps?)
The California home can be purchased for more than $500,000, but the mortgage loan amount cannot exceed that amount.
Potential borrower(s) must attend a one day home ownership class, where a certificate of eligibility will be issued after having met with an Acorn counselor.
The benefits?
Below-market rate with no points.
No PMI (private mortgage insurance)
Very liberal debt-to-income ratios.
Very low down payment required (0-5%)
Underwriting will credit some “cash” income and alternative sources of credit.
Credit and FICO scores are not as important with the ACORN Loan as they might be with other financing.
No pre-payment penalties.
No loan points
100% financing available.
One program offers 10-year interest-only loan that automatically converts at same rate to fully amortized 30 year loan.

2008 is the should, would of, could of market that your grandparents told you about

As an investor, have you ever thought to yourself: Gee, I wish I had bought that stock a couple of years ago, when it was so cheap? With fire-sale prices at auctions in southern California -- and banks begging buyers to take defaulted houses off their books -- is this one of the best times in 30 years to begin assembling a rental real estate portfolio?
Read the full story (below)

http://realtytimes.com/rtpages/20080222_investorreport.htm

Real Estate Outlook: Positives Taking Shape

If you're looking at housing statistics over the past quarter or year, there's no question you're going to come up with a lot of negatives.

But if you look ahead -- there definitely are some positives taking shape.
No one is predicting any quick turnarounds or sudden bursts in sales, but think about these facts:

• Thirty-year mortgage rates continue to be in the mid to upper 5 percent range -- among the lowest in half a century. If they stay low, most economists agree they will stimulate home sales.
  
• Federal Reserve chairman Ben Bernanke told Congress last week that he is committed to lowering short-term rates even further to help stimulate the economy -- and hinted that the Fed could cut rates another half point in mid March.
  
• The new, higher mortgage maximums for Fannie Mae, Freddie Mac and FHA will kick in by mid-March and should help thousands of first-time buyers in high-cost markets like California and the Northeast and ultimately help clear out some of the unsold inventory clogging those areas.
  
• Combine low-cost money with sharply lower prices and at some point, you hit bottom -- flatten out -- and sales begin to pick up.
  Downcycles aren't forever, nor are upcycles.

http://realtytimes.com/rtpages/20080221_realestateoutlook.htm

The Real Risk Is in Waiting to Buy a Home

Commentary by Sherman D. Harmer of the San Diego Business Journal
Remember not that long ago when home sellers were calling the shots — dictating prices and terms to multiple bidders who were knocking down their doors in many markets?
Well, today, with the slowdown and changes in San Diego’s real estate market, all the market fundamentals show that buyers are now in the driver’s seat.
Consider the facts: Prices are competitive, interest rates are very affordable, there are plenty of homes in all price ranges to choose from and sellers are ready to bargain.....(Read the full article here) http://www.sdbj.com/article.asp?aID=43025513.6689875.1583244.2056042.8754781.464&aID2=121779

CASH ON SALE!

When you purchase real estate using a mortgage you are buying not only the home, but the money to buy the home as well.
When rates are down money is technically on SALE. Here is a quick example of what this means in terms of payments and purchasing power.

-Interest Rates at 6.5% on $400,000 equal a payment of $2,528
-When rates drop to 5.5% on that $400,000 loan your payment is now $2,271
-The difference in the rates is like getting a $41,000 price concession on the home, (your payment at 6.5% would be $2,271 on a $359,296 Purchase, a $41,000 effective savings)

More loan servicers agree to put foreclosures on hold

Loan servicers and lenders who handle about nine out of 10 subprime loans have agreed to participate in an initiative to help delinquent borrowers by putting foreclosure proceedings on hold for up to 30 days to evaluate alternatives. Click on the link below for the full article
http://www.inman.com/hstory.aspx?ID=66147

President signs economic stimulus bill, which includes raising conforming loan limits

President Bush today signed off on the $168 billion stimulus packaged approved by Congress last week, which, in addition to tax rebates for millions of working Americans and business owners, includes a vital, but temporary increase in the conforming loan limits up to $729,000 in higher cost areas (here link for more info) http://www.car.org/index.php?id=MzgyNTI=
This is very helpful to the market... loans over $417,000 were considered jumbo prior to this, automatically increasing the interest rate by roughly 1%. On a $600,000 loan that lowers a payment by $500+ per month! It may take a little while for the effects of it to be seen in the market but it’s a boost we really needed.
The stimulus package also will deliver tax rebates of $600 to $1,200 to taxpayers, and $300 checks to disabled veterans, the elderly, and other low-income people.

Best of Bay Park!

Incredible Bay Park living with sprawling Bay views, situated on a quiet & desirable cul-de-sac location. Large home with over 2,000 square feet, 3 bedrooms plus large den/office, 2.5 baths. Upgraded throughout; Verde Marinachi granite kitchen with exceptionally designed cabinetry. Travertine baths, maple hardwood floors throughout, and newer dual pane windows. Open living space, large family room with fireplace and a wall of french doors opening up to the lower level terrace. Enjoy Sea World fireworks nightly from the over-sized master bedroom featuring panoramic bay views and the just recently built spacious sun deck. Newly painted exterior, professionally landscaped front and rear yard, spa, and quality built Lily pond with a tranquil waterfall surrounded by mature palm trees. Several recent upgrades. Very private location, yet close to all! Offered At $860,000 http://www.3642lloydterrace.com/

Property Tax Relief

Property tax relief process offered by assessor’s office
Homeowners whose property’s market value has fallen below its assessed value can seek property tax relief, according to the San Diego County Assessor’s Office. This generally only affects those property owners who purchased their property at the height of the current real estate market. Owners should file an Application for Review of Assessment as soon as possible, but no later than May 30, 2008