For months now I’ve been hearing that the CHF Platinum Grant is coming back.
Initially, I was all excited about the CHF grant. I mean, what’s not to love about free money, right? Except that it’s not exactly free – you pay for by taking a higher interest rate on the first mortgage.
You see, in order to use the CHF Grant, you HAVE to use a first mortgage at a higher interest rate offered by the lender. The rate used to be posted right on the website, but now it’s not even public…not sure if that’s a good thing?
You can’t shop for the best rate or lender if you want “free”….and THAT alone could cost you.
So let’s say you’re cool with the higher rate and the lender. If you plan to only stay in the home for 5 years or less, it’s a great buyer assistance program to help you get into a home with less of your own money.
The cost of free starts to come into play the longer you stay in the home though.
This is really just a simple math problem. Figure out what the cost of the the higher interest rate will come out to in terms of a higher monthly payment, multiply that by how many years you plan to stay in the home…and that should tell you how much free will cost you, right? Right….except that you have to also factor in the fact that it might take longer than what’s historically expected for you to gain enough equity to have the ability to refinance.
Home prices continue to decline in many areas, and when they do begin to recover, expect slower than normal rates of increase. The 20% year to year increased in equity from the toxic loan days is a thing of the past. Historically, equity should increase at a rate of 4-6% a year in a normal market. But what’s normal? I just don’t know. To be on the safe side, if considering using the CHF Platinum Grant, I would use a 2-3% year to year calculation just to be safe….starting in a couple of years.
The other concern I have about this program is that since Bank of America stopped being the servicer for the program, it’s been handed over to another investor to manage the program.
I personally have not had a great experience with this investor and would am cautious about doing business with them again. Their response times, customer service and communication caused me to run as fast as I could in the opposite direction – and actually landed me here at Broadview Mortgage Corp….so, for that – I thank you from the bottom of my heart 🙂
So here’s where i’m being extra cautious about getting buyer’s hopes up about this program. This new servicer has been sending me emails for MONTHS now announcing that they will be rolling out the Platinum Grant any day now….the actual availability of the program, relative to how long they’ve been saying it’s going to be available any day now, is consistent with my previous experiences with the company. Not so hot.
Now, I go to the CHF site and see that the program is only available through the lender that gives me the shivers when I think about them….so this is a tough one for me. It seems like it’s more about making them money than making the program widely available to consumers as it was when Bank of America was in charge (wow, did I really just say I miss Bank of America?).
Don’t let my experience deter you from looking into this though. Go ahead and check it out – If you have a great experience with them, I say AWESOME! Please leave positive feedback below so that others looking for the program feel good about it. I hope they’ve turned over a new leaf and i’m wrong about them.
My personal advice? Seriously consider the CalHFA CHDAP down payment and closing cost assistance program offered by the State of California.
It’s not free money, but damn near – the interest rate is only 3.25% and there no payments on the loan until you sell or refinance your home.
CalHFA CHDAP can be used with any Conventional, FHA or VA loan program at today’s crazy low interest rates and you can shop for a lender you trust.
To add to this, I say compare the CHF Grant and CalHFA CHDAP side by side and make sure you’re not just falling for the “free money” part when there are other, maybe better options you should consider.