Studying history can be a great way to deterine the future, especially when it comes to economics.  As our data bases grow over time I believe the information will be a great tool to deterrmine the buy and sell cycles of real estate.  If you were to study our economic cycles it is difficult to determine the exact year of the top or bottom of a market cycle but it is possible to see one coming.   In a study of today's market and Fannie Mae's recent report of future loan activity, it appears that we are at our near our bottom of the market.  As builder inventory shrinks, the existing inventory in the market, will be where buyers will need to look to buy a new home.  Demand will slowly build over time, as long as employment and consumer confidence in the market stays positive.  Based on the previous two economic cycles the bottoms were about 1996 and 1985.  In this last cycle the peak of the market was 2005 - 2006 and the market corrections usually last 2-3 years, then a bottom and slowly recover over the next 2-4 years.  In our capitalistic society our greed driven agenda's will .again push our markets to greatness.  Millionaires are made at the bottom of a cycle.  We are in the vortex of the bottom of the market, the best Buyers market we have seen since the last one in 1995 - 1996.

It is common today for motivated sellers to pay up to 3.0 % for closing costs for either a FHA or Conventional Loan.
FHA allows up to 6 % for Closing costs and Conventional loans vary based on the down payment.    For down payments less than or equal to 5 %, the maximum credit is 3.0 %  A 10 %  or more down payment allows up to 6.0 % and a down payment of 20 % or more will allow up to 9 %.   Closing costs consist of Lender, escrow and reserves for property tax and home insurance (impounds).  

As of Jan 1st, 2009 FHA has changed its down payment requirement for the first time in more than a decade.  The new down payment is slightly higher than previously.  It has increase from 2.85% to 3.50%.  FHA still allows 100% or a portion of the down payment and closing costs to be a gift from a relative. 

Cal Housing Finance Authority
California's Down Payment Assistance program is put on hold as of December, 2008.  This bond program is put on hold due to a very weak bond market and declining values.   This program allowed buyers to borrower the down payment for FHA's , minimum down payment and closing costs.

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