How Rates Change First Time Home Buyer Programs
January 7, 2010
A really good example of that now is the Illinois Home Start program. This loan is a 30 Year Fixed at 4.75%. This was where rates were for conventional and FHA loans were back in Thanksgiving, but now those “normal” rates are almost .50% higher. What this means is that the Illinois first time home buyer program is .5% “too low.” Can a mortgage rate really ever be “too low?”
This is a pretty big difference. For a home buyer with a $200,000 loan, a .5% difference means $1,043 at 4.75% versus $1,104 at 5.25%. That’s $60 per month cheaper on the state program or almost 6% cheaper per month. When rates are rising, these state programs can sometimes be a great deal.
Currently, the Illinois first time home buyer program has a 5.25% interest rate option on a down payment assistance program. The HOME START Down Payment Assistance Loan. The second loan under the Home Start program is the Home Start Down Payment Assistance (DPA) Loan which allows Illinois first time home buyers to access additional funds upfront to help with the down payment. The DPA Loan is a 10 year, 0 percent, non-amortizing, forgivable loan in the amount of 3 percent of the purchase price up to $6,000.
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