HOUSING
New Financing Tools and Homebuyer Help
It ’ s a mean world out there for bidders using a mortgage loan to buy a house , which is most everyone . All else equal , sellers prefer an all-cash offer , which usually means an investor . In third-quarter 2020 , one of every five homes sold in the Sacramento region was bought by an investor , up 60 percent compared with a year earlier , says Brandon Haefele , CEO and president at Catalyst Mortgage in Roseville , citing data from real estate brokerage Redfin . ( Data from the Sacramento Association of Realtors show cash offers made up about 10 to 15 percent of single-family home sales over the last five years .)
That ’ s a market opportunity for cash-offer companies , which put up cash on the buyer ’ s behalf and then turn around and sell the house back to them for the same price . In another version , the company lends the buyer the cash for the purchase .
Are these deals smart ? “ It depends on your long-term goals ,” Haefele says . You pay a flat fee that ’ s often from 1 to 3 percent of the purchase price — say , $ 15,000 on a $ 500,000 sale . That might sound like a lot , but buyers often are beaten out by a rival offer that ’ s well above that or don ’ t win a bid until months later when prices have risen , he says . Depending on the type of deal , the buyer could roll the fee into the company ’ s loan .
Still , there are ways to make a non-cash offer more competitive , like agreeing to a 21-day instead of 30-day closing , Haefele says . Work with a local real estate agent and lender who know the market inside out to find out which bid terms you might change to improve your chances , and come to the table with a loan preapproval letter in hand , he says .
Buyers who need gap financing — a bridge loan that lets them buy a house before their own house is sold — are at a disadvantage in this market , as are those who buy with FHA or VA loans because of their strict requirements .
What might help home shoppers most has little to do with new financing tools : On Dec . 15 , the Federal Reserve predicted there will be three interest-rate hikes in 2022 and three more in 2023 , which could stabilize the home market . If so , buyers will pay more for their loans , but the extra cost might be worth an end to 30-percent annual price inflation , proliferating escalation clauses and lines of bidders out the door .
Below are local organizations that provide affordable housing options and homebuying assistance . A number of federal and state programs also offer help to buyers .
Habitat for Humanity of Greater Sacramento operates a zero interest , no down payment homebuying program under which qualified buyers complete “ sweat equity ” hours to build their home in lieu of a down payment .
Mutual Housing California owns and operates 19 affordable housing communities in Sacramento and Yolo counties .
The Nehemiah Companies renovate and sell homes to qualified buyers and offer down payment assistance .
The NeighborWorks HomeOwnership Center Sacramento Region offers homebuyer education and affordable lending services to potential homeowners .
Pacific Housing , Inc . develops affordable housing programs and projects for purchase by low- and moderate-income families , develops and rehabs affordable rental housing for families and seniors , and more .
The Sacramento Housing and Redevelopment Agency runs the Community Homeownership Initiative , which offers homebuyer and financial literacy education , flexible mortgage products and programs , and down payment and closing cost assistance programs and grants in partnership with banks .
The Sierra Business Council ’ s Martis Fund Homebuyer Assistance Program provides down payment assistance to help income-qualified working families purchase homes in Placer County east of Donner Summit or in the town of Truckee .
USA Properties Fund based in Roseville develops , builds and manages multifamily affordable housing communities .
Visionary Home Builders of California builds homes for sale to qualified families , develops and manages multifamily affordable housing , offers classes and counseling to potential homebuyers , and provides financial and homebuyer education and counseling .
Many area jurisdictions also offer homebuyer assistance programs to help with down payments and more , including El Dorado County , Placer County and Citrus Heights .
The Capitol Area Development Authority manages 720 rental housing units , about a quarter of which are affordable for low-income households .
46 comstocksmag . com | February 2022