The Louisiana Housing Finance Agency, or LHFA, just released information on their housing assistance programs which also includes no closing cost mortgages options. The LHFA is funded just like other state and local housing agencies in the fact that their programs are usually funded via offering bonds, then taking that money and funding their programs. As expected, with the current financial situation our country finds ourselves in, LHFA was unable to raise as much money as they have in the past, in this case, only $25 million. While a large sum of money, if you consider the average asking price of a Louisiana home right now per zillow.com is $179,900. That will purchase almost 139 homes which also does not include the administration of the programs.
The program I am specifically looking at is the “Assisted Program Loans” which currently charges 6.1% on the mortgage loan, but will also provide a grant of up to four percent of the purchase price of the house. If we take that average asking price in Louisiana, the grant will provide $7,196 towards your closing costs, down payment, or prepaid items. If we take the average closing cost expense for Louisiana of $2,851 per Bankrate, then that leaves $4,345 that you can apply elsewhere, making your mortgage through LHFA a no closing cost mortgage.
You can then apply the $4,345 towards your prepaid costs such as your home owners insurance and property taxes which would obviously help out. You could also use it to help out with your down payment if you don’t have enough, which would equal approximately 2.5%. If the purchase mortgage requires 3% down, then you only need to come up with 0.5% for your down payment, or $899.50 to purchase the house. You can mix and match to fit your needs.
The numbers I am throwing out there though is only applicable for the average home asking price that I got from zillow.com. If the home purchase price is less, then obviously the dollar numbers will change, but the percentages don’t change.
There are income limits to this program which depends on the size of your family. Looking on LHFA’s website however, it appears that the numbers have not been adjusted for the latest time period because it does not line up with the numbers quoted on an article on WBRZ’s website article.
If you haven’t been living under a rock recently, you probably know about the $8,000 tax credit that is currently being offered for first time home purchasers. The definition of a first time home buyer is someone who has not purchased a home in the past three years and who does not own a house. Well, under the “Low Rate Homebuyer Tax Credit Program” offered through LHFA, they will front you $5,000 of that tax credit to use as a down payment or as closing costs for the purchase of your house. Again, making the program a no closing cost mortgage program. You will however have to pay the $5,000 back, probably once you’ve filed your taxes and received the money back. It appears that the loan would be a 0% interest no payment type of loan. If you don’t pay it back by June 30th 2010 however, the loan will start charging interest at 7.6% and it will appear as a second mortgage with the recorders office.
The great thing about this however is that you get to use other people’s money at 0% interest which is awesome because that is cheap money. One drawback to the tax credit however is it is only good until December 1st 2009. You have to have already purchased your house. Well, home purchases can take up to three months. If that is the case, then you need to have your offer accepted and mortgage started here in a couple days so that you can meet the December 1st deadline.
The $8,000 credit is also based on 10% of the purchase price of your house. If the purchase price of the house is $65,000 for example, your credit will only be $6,500. Still enough to take advantage of the credit, but some money is being left on the table. I’m not advocating you stretch yourself to get the rest of that credit, but if you are stable and can support a larger payment, you may want to look into taking advantage of the full tax credit. With the average price of Louisiana home prices being $179,900 however, the full $8,000 credit will be applicable to most Louisiana home purchasers.
You can of course also call LHFA and see what the requirements would be with the current plan. Their phone number is 225-763-8700. Remember, cash in your pocket is important so try and finagle yourself into a position so that you can take advantage of the LHFA programs to get yourself into a no closing cost mortgage.
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