From the category archives:

Managing Money

Buying a home can be both difficult and stressful. The day I took the money out of the bank for a down payment on my first house was probably the most nerve wracking day of my life. I can’t think of a time when I have ever written such a large check for anything. Though I was fortunate to live in a mid-west city where real estate was affordable and priced to sell. It didn’t hurt to buy during the recession either. Fast forward several years later and real estate is starting to climb back to the values of the old days. The redeeming factor is that interest rates are still at an all time low and waiting to buy a house could cost you more down the road. If you have been renting the last few years and waiting to pull the trigger on buying a new house then now is the time.

Hands down, the hottest real estate market outside of New York is probably up and down the west coast. Living the California dream is what it’s all about. Unfortunately, it can be quite costly to live in the sunshine state. I saved money and stuck to a strict budget and probably still wouldn’t have the funds to put down on a conventional loan for a piece of property in California. That doesn’t mean it isn’t possible though. Consider a new loan program, the CalPLUS Conventional Loan with Zip Extra. This loan program is designed with the potential homeowner in mind.

So here’s the deal. You get a 30 year fixed conventional mortgage and down payment assistance to boot. Consider that many of you might be holding off on buying a new house because you simply don’t have the funds to put down. Why miss out on favorable interest rates because you don’t have all the money you need right now? The “Zip Extra” portion of this program allows you to receive $6,500 plus up to an additional 3% of the original mortgage that can be used on the down payment or even the closing costs. Trust me, the closing costs and escrow fees can add up to be a significant amount and often times buyers forget that aspect of the mortgage. The best part of these additional funds is that they are interest free and do not require payback until the loan is fully retired. That means if yon don’t move or retire through the life of the loan you could potentially receive an interest free loan for the full 30 year life of the mortgage. That isn’t a bad deal if you ask me. The catch is that you pay a little extra with the initial upfront interest rate, but over a 30 year period it more than pays itself back due to the mortgage interest deduction.

You simply need to make sure you are eligible for the loan. If you want a detailed video illustrating your eligibility you can view it here. The requirements are actually pretty simple and easy to understand. Depending on the area you live within you are restricted to a certain income limit which also depends on the number of people in your household. The restrictions are fairly generous as most counties allow the assistance even with families of four earning over $100k per year. The main requirements is that the property is your first home and that you use the house as your primary residence. Basically, they don’t want to fund loans for people who are trying to utilize the property as rental. You are also required to attend and satisfactorily complete an eligible home buyer counseling class. This is to ensure that you can afford and maintain payments on the mortgage. Lastly, the home price has to be within reason. This also depends on the county that you are buying within, but a general acceptable price is anything below $600k.

As you can see this program has many benefits for potential homeowners who simply can’t afford the 20% down payment on a typical conventional loan. This isn’t necessarily a bad thing, it just offers additional options to someone who wants to take advantage of the favorable interest rates available to them right now. You only need to make sure that after you are provided the down payment assistance you can comfortably afford the monthly mortgage payments without any hardship. For those of you that have been renting a house or apartment this program allows you to purchase a home and start building equity for the future. The recession has long passed up and home prices as well as interest rates are starting to climb. It might sound cliche but this is truly one of the best times to buy a home. So if you have been delaying the inevitable then this is the time to pull the trigger.



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