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First-Time Homebuyers Discounts through FHA
People in the market for their first home can take advantage of a new offer from FHA. This new initiative aims to provide more information to buyers though classroom education and will reward them with a reduction in the premiums paid towards mortgage insurance.
HAWK to the Rescue
The name of the new initiative is called Homeowners Armed with Knowledge (HAWK). The borrowers are asked to complete a series of classes prior to buying the home as well as a few courses scheduled after the home has been purchased. At the time of this writing the classes are broken down in the following ways
* 1st class to be completed before the buyer completes a purchase contract
* 2nd class will be completed after a contract is signed and before the loan is finalized
* 3rd class will be completed within 12 months after the loan is finalized
Goals of the Program
Simply put, the HAWK initiative is hoping that people buying their first home will have a better understanding of the overall process thanks to the counseling and will be in a better position to make wise financial decisions in the future not only in regards to their housing but also to their other needs.
Once the customer has completed the necessary classes their upfront mortgage insurance premium will be reduced along with the monthly premium that is paid as part of the mortgage payments. In addition, if the customer has no delinquent mortgage payments within the first 2 years of the loan the monthly premium will be reduced again.
Some Limits and Expiration Dates
Since this is a new program with no history to review the FHA is rolling this out with limits. The program is currently scheduled to only last for 4 years. In addition, not all FHA loans are going to be accepted under this program. At this time there is no news about how many loans will be allowed to use HAWK but FHA has stated that there will be a maximum number each year.
Class Time Requirement
For the class completed before the contract signing the prospective buyers will need to finish at least 6 hours of counseling and education.
The class that is conducted after the contract signing is a one hour class as well as the class that comes after the loan is closed.
Each class will issue a certificate to the students indicating that the course has been successfully completed. These certificates will be necessary in order to get the reduction in mortgage insurance premium.
In general, this is a great program that FHA is offering. It provides critical information to potential home buyers in order to better prepare them for a prosperous future and it rewards them by reducing the amount paid on their mortgage.