First Time Home Buyers offered Discounted Loans

Posted by Steph Kaye on Monday, December 29th, 2014 at 2:49pm.

                 Birmingham Realtor
 First-time home buyers that are willing to spend a few hours attending a class will be offered a discount on their home loan. The class is to help people learn the ropes of home-ownership, from applying for a mortgage to choosing a contractor for a kitchen remodel.

The Homeowners Armed with Knowledge program, or HAWK, was announced by the Federal Housing Administration last month as a way for homebuyers to cut their mortgage insurance premium costs by attending housing counseling classes. The idea is that the more borrowers understand about home-ownership, the less likely they are to default on their loans, reducing the risk for FHA.

After two years with no delinquent payments, the homeowner qualifies for another discount. Borrowers who take the classes, which include several courses before and after closing, can save an average of $325-a-year, or nearly $10,000 over the life of the loan. "It may not seem like it, but $10,000 is a lot of savings for a $30,000-a-year household," said Kimber White, state government affairs chairman for the Florida Association of Mortgage Professionals. "It can make the difference between qualifying or not qualifying to buy a home."

A public comment period on the program will end in mid-August, and White believes borrowers will be able to begin applying by year's end. FHA doesn't write loans, it ensures them, and typically targets under-served populations. Borrowers can get an FHA-backed loan with as little as a 3.5% down payment and a credit score of 560. Conventional loans can require 20% down and a minimum credit score of 620, White said.

Credit scores from the Fair Isaac Corporation, or FICO, range from 300 to 850. The average FICO credit score in Floridais about 635, according to a survey by CreditKarma.com of its customers. "Most people who are buying a home don't know anything," White said. "They have a little bit of money in the bank and a decent credit score and want a house."

Under the program, borrowers who take housing counseling class before signing a contract to buy a home, and who complete additional counseling before finalizing the sale, can earn a 50 basis point reduction in upfront mortgage insurance and a 10 basis point reduction in the annual premium cost. Upfront mortgage insurance premiums are 1.75% of the total loan amount, while annual monthly premium costs are 1.35%. An additional 15-basis point reduction will be awarded after two years with no delinquencies.

"If you talk about the long-term impact and how much it will save homeowners, this will absolutely help," said Kevin Maher, who teaches first-time homebuyer classes and is the community outreach director for West Palm Beach-basedDebtHelper.com. "I think this will bring more people to the homebuyer classes, which will help them make better decisions."

If you would like information on your local real estate market, or are first time home buyer not working with a Realtor and would like to schedule a consultation with a qualified Oakland County and Macomb County Realtor, please complete the Lang Premier Properties contact form to have a real estate agent contact you.

Lang Premier Properties are Birmingham Realtors specializing in Oakland County Real Estate. Stephanie is an agent with Max Broock in Birmingham, Michigan. See what past clients have to say about Stephanie Lang.  Lang Premier Properties looks out for your best interests when you purchase a new custom luxury home. We always recommend working with an experienced luxury real estate agent when buying a new luxury estate. you would like information on homes for sale, or are first time home buyer not working with a Realtor and would like to schedule a consultation with a qualified Oakland County and Macomb County Realtor, please complete the Lang Premier Properties contact form to have a real estate agent contact you.

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