- BUYERS - This may be your last chance to buy with no down deposit, low fixed interest rate and closing costs wrapped into the loan.
- SELLERS - Gain more traffic and a quicker sale
Here are the reasons why Nehemiah is an industry leader:
- Reputation - Oldest and largest privately funded down payment assistance program in the nation.
- Reliability - Unwavering financial strength to meet our funding obligations and charitable mission. The money is there on time, every time!
- Regulatory Compliance - Unparalleled "best practices" provides peace of mind in selecting your down payment assistance provider. Strict adherence to government regulations and HUD approved.
Ever since the mortgage meltdown last fall, it’s been harder and harder to qualify for a loan to buy a house. Even worse, the days of 100% financing and second mortgages are gone. I don’t know too many people who have enough cash lying around they could afford to put 10-20% down on a house, even if they could get approved for a mortgage. Prices have come down a little, but not that much.This is where The Nehemiah Program comes in. The Federal Housing Administration (FHA) allows home sellers to provide your down payment for you in the form of a gift - if it is funneled through the Nehemiah Program.
Before you and your agent go shopping for a house, sit down with a lender to determine your price range. Ask your lender how much you can expect to pay in closing costs and how much will be required for your down payment. These two items together will often be 6% of the purchase price of your house.
If you don’t have enough money to cover the closing costs and down payment, ask your lender if the Nehemiah program is right for you. There is some additional paperwork involved when you make your offer on a house, but your real estate agent will help you navigate through all of that.
Some loan assistance programs have income or geographical requirements, but not this one - which is why it’s such a great opportunity for people who dream of home ownership in this market and economy. Visit The Nehemiah Program Web site.
There are several non-profit programs out there that allow for some type of assistance to the buyer. Nehemiah is one of the largest non-profit organizations that allows the seller to give money for the down payment and closing costs.
This program is approved by FHA which is part of HUD. Nehemiah can basically get a consumer into their dream home with no money out of pocket. FHA states that you must have 3% of your own money into the deal. And FHA typically asks for 2.25% as your down payment, which is included in the 3% total. This means that you would need to pay an additional 3/4%. But FHA also allows you to receive a 100% gift that can be used for both your down payment and closing costs. This gift can come from either a family member and or a non-profit organization.
Nehemiah allows for the seller to contribute up to 6% of the purchase price which can be applied towards the buyer's down payment and closing costs as mentioned above. They charge a $499 flat fee for this service. This fee can be paid by the seller, buyer, or even the lender. You can also combine that 6% with the seller contributing another 6% as seller contribution.
What takes place is that the seller gives Nehemiah the money which turns around and gives that money to the buyer as a gift. These gift funds can be for first time home buyers and even repeat buyers. There is no income limitations or geographical restrictions. And the thing is that you don't even have to repay the money, hence the reason why it's called a gift.
Overall, the only thing that needs to happen is to be approved by your lender for the FHA mortgage and for the seller to contribute the funds. And what is great about FHA is that they allow for 6% seller contribution. Another reason on how you can get into your dream home with no money out of your pocket. Between Nehemiah and the seller contribution, you could be in that house with as little as zero money.
- No credit score requirements
- Minimum down payment of 2.25% (this can slightly vary depending on your loan amount)
- If the loan doesn't get approved in the system, it can easily be manually underwritten.
- You don't need standard trade lines of credit on your report. You can have 3 to 4 pieces of non-traditional credit. i.e., *if you could show 6 months worth of car insurance payments. *show utility payments *cell phone payments (anything that you can show 6 to 12 months worth of payments, but on time.Case by case, but closer to 12 months.
Monthly mortgage insurance. No matter how much you put down, it's a standard .5% monthly amount across the board. Conventional loans have different increments depending on your down payments.
FHA has raised their cash-out LTV to 95% in the last year. Conventional will only go to 90% of your value.
Higher qualifying ratios of 31/43. With compensating factors, they can be manually underwritten up to a 50% back end ratio. Conventional is typically 28/36. Unless approved within the system, sometimes higher.
The rates are the same as conventional programs. When using the Nehemiah program or any other non-profit companies in conjunction with FHA financing. Underwriters discretion -- they will usually want to see a little cleaner file because you usually won't be investing any of your money into the transaction. They usually want to see little better credit scores, closer to 600. Now, you can have lower credit scores, as long as your credit history has been in good status in the last 1 to 2 years. The reason for this is because there have been more foreclosures recorded who have used these types of programs.
After reading all of this, you might ask, what's the catch. All of this sounds too good. One negative aspect of FHA financing is that there is a maximum loan amount allowed in each county. Those loan amounts can be found here. (Essex County (Lynn, Saugus, Salem, etc.) Massachusetts is about $523,000 maximum for a single family)
https://entp.hud.gov/idapp/html/hicostlook.cfm
Founded in 1994, Nehemiah Corporation of America, http://www.nehemiahcorp.org, is a Sacramento-based nonprofit organization committed to empowering lives and enriching communities nationwide. Nehemiah transforms lives by increasing homeownership opportunities for diverse populations, while maintaining its commitment to successful, responsible homeownership. Nehemiah transforms communities by expanding its faith-based, charitable and community development initiatives into underserved neighborhoods across America. In 1997, Nehemiah launched its flagship program, The Nehemiah Program(R), to provide down payment assistance to homebuyers. To date, Nehemiah has provided more than $650 million in down payment assistance gifts, resulting in $20 billion in real estate transactions and has helped over 175,000 families and individuals achieve their dream of homeownership. Committed to comprehensive community reinvestment, Nehemiah has fostered partnerships with Habitat for Humanity, HomeAid America and the US Conference of Mayors. In addition to providing down payment gift assistance, Nehemiah has created other programs that work to enrich communities including: Nehemiah Community Reinvestment Fund, Nehemiah Community Foundation and Nehemiah Urban Ministry Initiatives (NUMI).
What is The Nehemiah Program and how does it work?
The Nehemiah Program provides gift funds for down payment and closing costs to qualified homebuyers who use an eligible loan product such as an FHA insured mortgage or conventional loan. Gift funds up to 6% of the final contract sales price are available for the purchase of a participating home. These gift funds never have to be repaid. There are no buyer income limitations and no area restrictions. For the buyer to be eligible for the gift, the seller must make a contribution to Nehemiah Corporation of America that is equal to the gift amount, plus pay a small processing fee.
How can The Nehemiah Program help me sell my home?
The Nehemiah Program will provide your property with INCREASED EXPOSURE! It's that simple! You will be exposing your property to a much larger pool of buyers who can now purchase your home because they have money for a down payment and closing costs.
Does it cost a SELLER more money to use The Nehemiah Program?
No. When you review transactions that use The Nehemiah Program you will usually find that sellers' net proceeds are equal to or greater than proceeds from traditionally negotiated offers. If a seller's net proceeds are not satisfactory, they will usually not sign the purchase agreement.
Sellers choose The Nehemiah Program to dramatically increase the number of qualified candidates that would be eligible to purchase their home. The simple factor of "supply and demand" goes to work for participating sellers to help increase their home's market value.
Don't Reduce the Price...Introduce The Nehemiah Program. Participating with The Nehemiah Program is much preferred to costly price reductions. If your home has been on the market for a while and you are considering reducing your price to generate some new buyer interest, you may want to enroll your home in The Nehemiah Program® instead.
LATEST UPDATE ON APPLICATION FEE INCREASE
For those of us that have been using Nehemiah down payment assistance we got some bad news.
Many of us that have been using the program for several years have had premium pricing as low as $199 per transaction. Nehemiah just released 5/22/08 that the processing fee for lenders will be $499 for previous lender clients and $599 for new lender relationships.
Here is what they say is the reason for the pricing change...
- 1) "As our business has increased over the last few months, our cost of capital has actually increased. Therefore, we need to charge more per deal to cover this increase in cost. Although we are a non-profit; we do need to make a certain average dollar amount per deal to continue our business. This increase not only takes care of our cost of doing business, but also covers the cost of the marketing materials we make available to you and allows us as a 501c3 non-profit to give back to the housing community.
- 2) Over the last few months Nehemiah has been fighting to keep the industry alive; most of my competitors cannot say that. Nehemiah's fight continues even now as we attempt to get our message across to our Congress. This battle with HUD and Congress to keep the industry going takes financial resources. This increase in fees will assist Nehemiah in continuing our fight, and hopefully allows Nehemiah and the Down Payment Assistance Industry to continue providing gift funds to home buyers across the Midwest and the entire country for years to come."
This change will take place at midnight on June 6th. Therefore, if you have purchase agreements written at the old fee structure, PLEASE BE SURE TO ENTER THEM INTO THEIR GIFT REQUEST SYSTEM BY MIDNIGHT ON JUNE 6th (even if it means changing the title company and closing date later). As of June 7th, the new fee structure will be in place, and they will not be able to make any exceptions.
HELPFUL LINKS
http://www.fha.com/program_nehemiah.cfm
http://www.getdownpayment.com/index.asp
June 9, 2008
