Fair Shmair. If life were fair, my favorite candy (Red Vines licorice, for the record) would have the same nutritional content as kale. Life isn’t fair. I had to remind my grown-up children of this, for the one millionth and first time last weekend. My children, who are all five years apart, like to keep up on their sibling rivalry every time they get together. My youngest, 16, likes to play show and tell. She will bring up the latest article of clothing that was purchased for her to show her sisters. They will then comment on how spoiled she is and how, “mom never bought stuff like that for us.” I remind them, once again, that I actually did, but that life isn’t fair anyway (although I know my youngest sister got a way sweeter deal than I did because she was the favorite). Either way, the point is futile.
This comes up repeatedly in the mortgage loan arena. Just yesterday, I was with a local mortgage lender discussing our current roadblocks in the industry and how to overcome them. She told me about a recent phone call she received. The caller was interested in purchasing a home and wanted to take care of the preliminary loan qualification step before beginning the search. As a side note, this is ALWAYS the first step that should be taken before going house hunting, unless you have a substantial stash of cash and plan to use it to pay for a home without a mortgage (and no, you are not going to win the lottery, so you cannot count that potential windfall as income).
As this potential buyer began explaining his situation, this lender became quite hopeful. He was pulling in well over six figures and had been on the job for at least two years. He had some debt, but nothing substantial and his credit score was stellar. He wanted to use the Utah Housing down payment assistance program. This program is great for first time homebuyers because it provides 100% financing. This means the buyer doesn’t have to come in with a down payment. A required down payment on an FHA type loan is 3.5% of the purchase price of the home. Fannie Mae requires 3%. Utah Housing lends that 3 or 3.5% so the buyer can purchase a home without a down payment. It is a very popular program. They also have a program called, “Home Again.” This provides 100% financing to buyers who have previously owned a home.
Unfortunately, this particular buyer didn’t qualify. It’s not fair. His ratios are good, his credit is good, he makes plenty of money…and there it is. There’s the part that isn’t fair. This buyer makes plenty of money. In fact, he makes so much money that he is priced right out of the down payment assistance program. There are income limitations.
The income restrictions vary from county to county but suffice it to say that it caps at $107,200; with the exception of Summit County, where you can’t buy a roll of toilet paper for less than the price of a small car. This county caps it at $144,700. No one can afford to live in that county for any less.
There is also a limitation on the maximum purchase price of the property. That was the other glitch for this particular potential buyer. He wanted a $500,000 home. Although this, too, is county dependent; it caps at $384,300 (this of course, being Summit County). For us normal folk in Davis and Weber counties, the cap is $358,900. A person can get into a pretty decent home for that. The problem is, they have to qualify for it on an income of less than $96,000 in Davis and Weber counties for a family of three and over. Then you have to be able to make the payment. It’s just not fair.
In hindsight, even though my baby sister got way cooler stuff than I ever did, I have to admit, I’m glad life isn’t fair. If it were, I would probably not even be here right now. I’ve done some pretty stupid stuff (bobsledding, bungee jumping, freebase rock climbing, rappelling, auto racing, bike racing, riding with teenage drivers, and skydiving—which I am doing again this weekend), and I’m still alive. No, life is not fair. Thank goodness.