All you money people, Help a College Student!!

[MrsPete]

Just to note: there are many programs out there for people who do not have the money for a down payment. Many are 0 or 1% down - Nehemiah is one such program. You are "gifted" money paid to the mortgage company at closing - and it does not have to be repaid. There isn't any catch. It's awesome!

Interesting. Do you know who Nehemiah was in the Bible? He was an Old Testament Jew who was distressed because the walls of Jerusalem had fallen into disrepair -- the whole place was a ruin. So he took it upon himself to begin rebuilding. He recruited others to help rebuild, and because of his vision the whole place was eventually rebuilt.

As for no catch, I didn't believe it, so I did a google search and I found a huge catch -- here's a quote from their website:

"Any residential property can be purchased using The Nehemiah Program as long as the seller agrees to the Nehemiah participation requirements. Both new and existing homes can be purchased using this program. In exchange for helping the seller find a qualified homebuyer, the seller agrees to make a contribution to Nehemiah of 1-6% of the final contract sales price, plus pay a service fee of no more than 1% of the final contract sales price."

If I were the seller, I would not agree to pay up to 6% of the final contract price UNLESS I could adjust the total cost of the house upward to offset this very large cost (or unless the buyer agreed to pay my asking price, which would've already been bumped up a bit so I could negotiate down and still get what I wanted originally). After all, the seller bought the house as an investment; he's not going to give away his profit. So, while the buyer may get the house without a visible downpayment, that cost is actually going to be built into the cost of the house and -- eventually -- into the mortgage. And that means that you'll pay it back over 30 years -- with interest.

Searching for a seller who'd agree to be part of the program would also limit your choice of houses. Without knowing for certain, I would guess that people who had difficult-to-sell houses would be willing to go for this program.

It's an interesting program, and you could argue that it might be better to go ahead and buy rather than continuing to pay rent while the cost of housing goes up. That would depend upon the individual's other housing options, the cost of rent vs. mortgage, and other highly variable details. However, I think the facts bear out my original opinion: it's still best to have a good downpayment.

 

[MrsPete]

"Would you like to save 15% today by signing up for a J Crew card?"

This must be a HUGE money maker for the stores 'cause everyone does it. Think about it: Because you're going to get a deal, you pick up a couple extra items that you otherwise wouldn't have chosen. After all, this 15% is a one-time deal -- better make it count! The mark-up is so high that the store still makes a good profit from your purchase. Then in the future you choose to shop at J Crew because you have the card. And since most people don't pay off their cards every month, the store makes money hand-over-fist on this deal.

And doesn't just about everything go on sale every month or so anyway? Just say no to the "save X amount today".

 

[robinb]

With my sign on bonus from the hospital I am working at, I could put that towards my student loan.

I just wanted to comment on this. AFAIK, Student Loans do not "count" against you as much as other debt. Plus, the interest rate on a Student Loan these days is pretty darn low. It would be better for you to pay off the Student Loans on schedule rather than pay them off early. Save that $$ for your down-payment instead.

 

[raven3517]

Should I pay it off and cancel the card or will it not hurt me to have it??? Would it hurt to cancel the card?

Don't cancel it. Opening and closing accounts can hurt your credit, as can applying for multiple cards when you've already been turned down.

Make a small purchase once a month, and pay it off on time (use free online banking that allows you to schedule your payments to auto-pay to make sure not to miss a payment). This will help you build credit.

 

[KarenAylwood]

This must be a HUGE money maker for the stores 'cause everyone does it. Think about it: Because you're going to get a deal, you pick up a couple extra items that you otherwise wouldn't have chosen. After all, this 15% is a one-time deal -- better make it count! The mark-up is so high that the store still makes a good profit from your purchase. Then in the future you choose to shop at J Crew because you have the card. And since most people don't pay off their cards every month, the store makes money hand-over-fist on this deal.

And doesn't just about everything go on sale every month or so anyway? Just say no to the "save X amount today".

You got it Mrs Pete! They make tons on it. But there are some people who come in and are going to buy a ton of clothes anyway (school shopping, just lost weight, etc) and would save a good amount by opening the card. It's not uncommon to see someone come in and buy $500 or $800 in clothing (and I work at an outlet- where the prices are about 60-50% of the retail prices). They would save $75-$120- probably worth it at the time to them, and most don't even put the first purchase ON the card (nothing to pay off) and I think most people cancel when they get the card anyway.

I ask because it's my job as a lowly-part-time-retail-working graduate student, but I agree- just say no unless it's a big purchase!

I heard on one of those shows (Suze Orman or something) that student loans are "good debt" and credit card debt is "bad debt." I agree w/ Robinb on paying them off slowly. They won't hurt you that much.

 

[WDWBetsy]

Interesting. Do you know who Nehemiah was in the Bible? He was an Old Testament Jew who was distressed because the walls of Jerusalem had fallen into disrepair -- the whole place was a ruin. So he took it upon himself to begin rebuilding. He recruited others to help rebuild, and because of his vision the whole place was eventually rebuilt.

As for no catch, I didn't believe it, so I did a google search and I found a huge catch -- here's a quote from their website:

"Any residential property can be purchased using The Nehemiah Program as long as the seller agrees to the Nehemiah participation requirements. Both new and existing homes can be purchased using this program. In exchange for helping the seller find a qualified homebuyer, the seller agrees to make a contribution to Nehemiah of 1-6% of the final contract sales price, plus pay a service fee of no more than 1% of the final contract sales price."

If I were the seller, I would not agree to pay up to 6% of the final contract price UNLESS I could adjust the total cost of the house upward to offset this very large cost (or unless the buyer agreed to pay my asking price, which would've already been bumped up a bit so I could negotiate down and still get what I wanted originally). After all, the seller bought the house as an investment; he's not going to give away his profit. So, while the buyer may get the house without a visible downpayment, that cost is actually going to be built into the cost of the house and -- eventually -- into the mortgage. And that means that you'll pay it back over 30 years -- with interest.

Searching for a seller who'd agree to be part of the program would also limit your choice of houses. Without knowing for certain, I would guess that people who had difficult-to-sell houses would be willing to go for this program.

It's an interesting program, and you could argue that it might be better to go ahead and buy rather than continuing to pay rent while the cost of housing goes up. That would depend upon the individual's other housing options, the cost of rent vs. mortgage, and other highly variable details. However, I think the facts bear out my original opinion: it's still best to have a good downpayment.

The point I was trying to make is that you do NOT have to have a down payment as you stated. There are programs out there that will allow someone without the funds for a downpayment to purchase a new home.

I think the majority of people who use programs such as Nehemiah are buying a newly built home. Homebuilders in our area strongly promote them and are willing to pay the contribution fee in order to sell houses and build diverse neighborhoods. Yes - there is a catch to the seller. But we did not have the homebuilder's fee built into the home price or our mortage.

I really do not feel there is a catch for most homebuyers in this situation - and that is who I was trying to inform. Actually if you end up using Nehemiah, you might have to take a home ownership class - it was very informative. We had to take one at a local downtown hotel for our first house, and didn't have to do anything for the 2nd as it was a different program. I believe there is an online course at the Nehemiah and you can get the full details at their website.

Yes - it is a wonderful thing to have a down payment. But many do not - and many do not have the amount that would eliminate PMI. I was just offering an alternative for people to look into. It really bothers me when people say you can't get a mortgage without a down payment. Of course, everyone should do their homework and decide if renting or buying a home is best for them.

Bottom line, we used these programs after paying 1% down to get into two houses since we didn't have a down payment. We now live in a 4 bedroom spacious house on a prime lot for a little more than we were paying in rent for a 2 bedroom apartment. We are also able to deduct the interest and property taxes. To me, that's worth it.

 

[MrsPete]

The point I was trying to make is that you do NOT have to have a down payment as you stated . . . I really do not feel there is a catch for most homebuyers in this situation - and that is who I was trying to inform. Actually if you end up using Nehemiah, you might have to take a home ownership class - it was very informative.

Let me explain:

You have to believe this: No one is going to lose money to help someone else buy a house (okay, maybe your parents or grandparents would help you with a downpayment, but no business person will lose money to help a stranger buy a house). So the money has to come from somewhere.

Let's look at an example with nice round numbers: Suppose you choose a house that's worth 100,000 (that's possible in my area -- it may not be possible everywhere). The website says that to be part of this Nehemiah program, the seller must pay 1-6% of the house's cost plus 1% in fees. To make the numbers easy, let's say that the seller is paying 5% total; that'd be $5000.

Since the seller isn't going to lose that money, he sells you the house for 105,000 instead of 100,000. It may not be evident that this cost is built into the price of the house, but it is. You, the buyer, are paying the downpayment -- you've just financed it into the cost of your mortgage. You said that you know of a builder who's really pushing this program. Everyone likes to think they're getting a bargain; he probably prices the houses at 105,000 to start with, then gives a "discount" to those who don't use this program. Everyone's happy.

So you really are paying the downpayment -- there's simply no way around it -- you're just financing it over 30 years instead of paying it upfront. That's "the catch".

As I said in my earlier post, this may or may not be a good deal. It will cost the buyer more in the long run, but it might be better than paying rent while the cost of houses increases; it would allow the new buyer to start building equity and to take advantage of the miniscule tax deduction that home ownership provides.

Changing the subject slightly, a new home owner's class sounds like a great idea. I bet it could help new homeowners avoid many pitfalls.

 

[cbrfan]

I'm all for saving up money for a larger down payment. My DD just bought a house last year. She got a mortgage for around $100,000. Her PMI payments account for over $70 a month of the house payment! Ouch!

 

[WDWBetsy]

I suggest anyone interested in this read the following articles - decide for yourself. I'm not going to debate anymore about this subject. I am just passing along my experience and how we were able to benefit from down payment assistance programs.

FCIC article
Quicken article
CNN Money article
About.com article
Lending Tree article

 

[2angelsinheaven]

I found this book to be helpful when dregging through the complicated world of finance... try http://www.suzeorman.com/, her book Young, Fab and Broke it goes over getting a good score and many other issues. Check it out, I think there are even some online tools.

 

[MrsPete]

These programs are known as zero-down or no down payment mortgages. This means that you are financing 100% of the value of the home . . . While no down payment mortgages can be a little more difficult for lenders, they are able to finance 100% of the purchase price.


I'll make one more comment: This quote, taken from one of WDWBetsy's articles, says exactly what I've been saying: You are not actually having your downpayment made by someone else -- you are financing 100% of the house.

Again, I'm not saying it's a bad program. I'm saying that you need to realize what's really happening. You, the buyer, are paying the downpayment -- you're just financing it along with the rest of the house (probably over 30 years).

 

[drakethib]

Okay, so here's my deal. I am wanting to get another credit card, I really want the Disney Visa, I have been turned down twice by them. Right now, I have 1 credit card, it's a student card with a $750.00 limit, with about $700.00 on it right now, and an APR of 18.99%. I've been having the card for almost 3 years and no increase on my credit limit. I also have a $2000.00 loan cosigned by my dad I pay on monthly. When I got the loan my credit score was in the mid 600's. I think that's good. I also have about $10,000.00 in student loans.

My question is what should I do to get another card or have my limit increased? It's not that I want another card to buy more stuff, but I graduate in December, and I will be looking into buying a house. I just want the best credit score I could possibly have. This credit stuff is so confusing, they should teach you this in school. Any tips or comments will help.

Thanks everyone

Take if from a fellow Cajun (from Thibodaux, LA)

Forget about the credit cards. They can and will cause you grief.

There are too many people in the world right now just coming out of college with a ton of credit card balances.

Pay the balance off as well as your loan.

By that time of you realy want a Disney Visa, you can get one then.

Also, FYI, the more times that you are denied credit, the worse it looks on your credit report.