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December 16th, 2008 8:47 AM by David W. Welch
There is a federal plan gaining some momentum to effectively buy down mortgage rates to something in the 4.5% range. I was asked to complete a very short survey yesterday from the National Association of Realtors regarding this issue. I would love to hear your thoughts on it. Basically, have you heard about this? If you have heard about it, does it make you more likely to make a home purchase? The other thing I would like to know is if you think down payment assistance would have a greater impact on you making a purchase.
Here is my two cents on the question or low rate -vs- down payment assistance. I cannot speak for every market, but here in Orlando affordability is not the issue it was over the last few years. We hit an affordability index around 135 last month, and lowering the interest rate basically improves affordability. The issue I find with most buyers is coming up with the cash for the down payment and closing costs. In many, if not most cases, sellers are willing to come up with some or all of the buyers closing costs. That leaves the down payment. When the housing and economic recovery act and the FHA modernization act were being pushed through this summer, my biggest concern was the prohibition of seller funded down payment assistance. If that portion of the law could be repealed, sellers could provide the 3% or 3.5% starting next month to fund an FHA buyer's down payment. This costs the government and tax payers at large nothing. The home seller would be able to offer this incentive to home buyers, in lieu of investors or going into a short sale.
David Welch, Remax 200 Realty, Orlando Real Estate