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CHAPA HOMEBUYER GIFT PROGRAM (KS & MO)
HIGHLIGHTS: CHAPA is one of the largest 501(c) (3) non-profit housing organizations in the United States. CHAPA has created and currently operates 54 properties totaling 6,417 units of affordable housing in three states. CHAPA has been authorized by the U.S. Department of Housing and Urban Development to provide down payment and closing cost assistance to homebuyers since 1993. Seller Participation: To maintain the program and make it possible for CHAPA to continue providing gifts to deserving homebuyers in the future, CHAPA receives a fee from the seller. The fee is equal to 1% of the purchase price, plus the amount of the gift. The fee is simply deducted from the seller's proceeds at closing. Participation in CHAPA increases the number of eligible buyers for the seller's home. CASH ASSIST: The amount of the gift is based on individual needs, typically 3-5% of the purchase price for down payment and / or closing costs. The gifts are made from CHAPA's own funds that pre-exist the transactions. PRODUCT TYPE: FHA 30-Year Fixed and FHA 1-Year Adjustable Rate Loans. ELIGIBLE PROPERTY: A participating property is a property that meets or exceeds FHA guidelines and requirements. The buyer can purchase a single family home, a condo, PUD unit, or up a to four unit property. (Single family up to 4-unit attached.) PREVIOUS OWNERSHIP REQUIREMENTS: None. MAXIMUM LOAN AMOUNT: Maximum FHA mortgage limit. (Currently $173,375 in Johnson, Jackson and Miami Counties.) MAXIMUM INCOME LIMITS: None. MINIMUM BORROWER CONTRIBUTION: Buyer must have a 3% vested interest in the transaction (including downpayment and closing costs), which can come from a gift or grant from a non-profit. CREDIT HISTORY GUIDELINES: FHA loans are not credit score driven and there are no minimum credit scores. Many FHA loans are underwritten through automatic desktop underwriting, Loan Prospector. QUALIFYING RATIOS (Housing Expense / Total Debt Obligations): 29 / 41%. CASH RESERVE REQUIREMENTS: None. MORTGAGE INSURANCE: The upfront FHA mortgage insurance of 1.5% of the loan amount is usually financed in the loan. There is also a .5% monthly mortgage insurance premium. If the home is sold and the loan is paid off in the first 5 years, a portion of this upfront fee may be refunded to the buyer. EDUCATION / COUNSELING: Buyers are encouraged to complete the lender's Homebuyer Training Course. RECAPTURE TAX: No repayment of the gift is required and there are no lien or resale restrictions. The program may be used for 1 to 4 unit properties and condominiums. CHAPA prepares the forms and faxes them to the closing agent, lender and real estate agent to obtain appropriate signatures. There is no delay by CHAPA for approval of the buyer. PARTICIPATING LENDERS: Countrywide Home Mortgage (Jon Platz), Wells Fargo Home Mortgage (Cindy Laffey) WEB LINK: QUESTIONS: jon_platz@countrywide.com, 913.438.8020, ext. 224, cynthia.laffey@mortgage.wellsfargo.com, 913.752.4152 CONNIE'S COMMENTS: In theory, this program and other cash assist programs like CHAPA (2001B Revenue Bond Program, AmeriDream, Nehemiah, the MHDC Bond, etc.) help first time buyers overcome their biggest obstacle in buying a home… coming up with a downpayment. The challenge in using this program is finding a seller willing to pay the 4-6% CHAPA fees to sell their home. Of course it is possible to increase the selling price of the home to cover some or all of the CHAPA fees, effectively allowing the borrower to "finance" his/her downpayment and closing costs, IF THE PROPERTY WILL APPRAISE higher than the original asking price. If the buyer "adds" these costs to the selling price to entice the seller to participate in the program, it may take a several years for the actual market value to catch up to the appraised value for the loan, thus the buyer would want to live in the home several years before attempting to sell it. (The costs to sell a home typically range between 8-10% of the home's value.)
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