Monday, September 01, 2008

CHICAGO DEVELOPERS TURN TO UNCLE SAM’S FHA TO BUOY THE MARKET

Chicago developers are resurrecting the financial power of Uncle Sam’s nearly forgotten Federal Housing Administration-insured mortgage program to help home buyers across the threshold of a new home, real estate experts say.

Developer Ray Franczak, president of R. Franczak & Associates, said he is in the process of securing FHA-insured loan approval for the new Heritage of Palatine development which will allow down payments as low as 3.5 percent to qualified buyers.

Several other Chicago-area developers are expected to tap into FHA loans to generate sales and kick start the slumping new home market.

Since its inception in 1934, Federal Housing Administration has helped almost 35 million people become homeowners, making it the largest insurer of mortgages in the world.

However, FHA loans fell out of favor in recent years when banks and mortgage companies started to push low-rate, no-money-down adjustable-rate mortgages (ARMs). Experts say these so called “subprime loans” caused much of the current housing foreclosure crisis.

Under Uncle Sam’s new liberal FHA terms, qualified home buyers and homeowners seeking to refinance from a risky ARM can lock in a 30-year fixed-rate government insured mortgage with the low down payment feature and an interest rate of 6.5 percent.

FHA borrowers also will be required to pay private mortgage insurance (PMI) as part of the monthly payment. Property taxes and insurance also are escrowed monthly as part of the payment.

Under the Housing and Economic Recovery Act of 2008 recently passed by Congress, FHA maximum loan limits in high-cost areas have been increased to $625,000.

Franczak also is offering other financing incentives to attract condo buyers to the September 6th grand opening of six luxury models at Heritage of Palatine, a new 48-unit luxury condominium development at 50 South Greeley Street in downtown Palatine.

Under Franczak’s Preferred Builder Discount Program a qualified buyer at the Heritage of Palatine can receive a mortgage rate buy-down of one-half of 1 percentage point for the first 12 months. If the buyer has secured his or her own financing, Franczak will pay closing costs and/or up to one year assessments on select residences.

“We can customize the financing to the individual by providing special builder programs where buyers can lock in an interest rate for one year and have the ability to switch to a lower rate before closing,” Franczak said. “That way, you can watch your condo go up without worrying about whether the interest rate also is going up.”

The 1-bedroom, 2-bedroom, and 2-bedroom-plus-dens condominium residences have 1.5 or 2 baths and 1,126 to 1,716 square feet of living space. Prices range from $246,900 to $374,900. The development is more than one-third sold and first occupancies are scheduled for October 1st. Call 847-705-6238 for more information.