Borrowers Balk At Lifetime Of Debt
The 35 year loan program from the California Housing Finance Agency has been out for a while and the ModBee checks to see how it's going. "'For anyone who can fit into this program, this is the way to go. You can't beat it,' Neal said of the loan to finance up to 100 percent of a home's price. It can be combined with other options for a loan value of 103 percent."
"Yet, the loan is little used. Neal has issued five of the loans since the program started in March. Statewide, 127 of the loans have been approved."
With so much use of interest-only and adjustable rate loans, policy makers must be scratching their heads as to why this program isn't being adopted.
"Neal used the state program to help Davis and her family buy a $211,000 house. 'They put more money down on their car.'"
Mercury News informs us that the state will help out "low" income households. "CalHFA-backed loans in Santa Clara County are available to one or two person households with incomes up to $122,168 a year."
In California, they even have a different measure for debt. "Lenders traditionally limited borrowers' housing costs to 28 percent of their incomes, and total debt payments to 36 percent. In California's high-cost housing markets, however, lenders have stretched their limits for a borrower's total debt load. For a well-qualified borrower, '45 percent is very doable.'"