FHA Loan Rate

[Anonymous]

Hello, I am ready to make a move in the real estate market and was pre-approved for a FHA loan at 6.5% with a mid score fico of 665 through Ameridream with zero down. My loan guy ran our credit and called us back five minutes later and said it was appoved the first time through..not sure what that means? He said the next step is to connect with a realtor and find a home. He also said this program ends October 1st for the zero down. Does this sound right? I was expecting this to be a more difficult process. We have no baddies in past 24 months and steady jobs.

[ShanetheMortgageMan]

If you got an automated approval through FHA Total Scorecard then as long as the information your loan officer used to get the approval is accurate, you should be good to go on the loan.  And yes, right now Ameridream (as well as all other seller funded down payment assistance programs) is slated to be discontinued after the end of this month.  You can still close in October but your final approval has to be done by the end of September.  Were you explained on how Ameridream works?

[Anonymous]

Shane, thanks for the response I am not clear on how the Ameridream program works? Does my rate at 6.5 sound right?

[ShanetheMortgageMan]

The AmeriDream program works by the seller essentially paying your down payment for you + a processing fee (AmeriDream's is $750 and Nehemiah's is $499, other non-profit organizations are less).  It's basically legalized money laundering.

AmeriDream (Nehemiah, etc.) actually gives you the down payment, however the seller enters an agreement with them that at the closing of the transaction, from the sellers sales proceeds, the seller will send AmeriDream the same amount (plus a processing fee) that AmeriDream sent you for the down payment.  Basically the seller reimburses AmeriDream so that AmeriDream can help future homebuyers with down payments down the road.  With Nehemiah, the buyer or seller can pay the processing fee, AmeriDream only permits the seller to pay for it.

Did you get a good faith estimate (GFE)?  The details on that form is needed to say if 6.500% is a good rate or not.

[Anonymous]

Not sure if this helps but yesterday I locked in my FHA interest rate. It was 5.875%.

However, with the SPARC program I'm using (had to qualify through the county I live in), I'm locked in at 4.875%.

[BrianB_The_Loan_Professor]

apples to oranges