The Wall Street Journal and CNN Money published today December 9, 2014 under the caption: The 3% down payment mortgage makes a comeback, allows more lending to first time and low-income home buyers. Read the article here.
We believe this will be a significant catalyst in 2015 for a resurgence in the affordable home market which has been impacted previously by the tight underwriting requirements of both Fannie Mae and Freddie Mac. Now, families will be able to get low-interest rate, long-term fixed loans. This opportunity is compelling in that it gives first-time and low-income homebuyers the ability to end up with lower mortgage payments than they are currently paying in rent.
Three Arch Investors has been buying and refurbishing homes for 6 years, and welcomes the opportunity to now modify our acquisition criteria, and focus on providing affordable homes to first-time homebuyers. Here is a real, working example of why we are excited about the new program:
A home in Las Vegas is being sold this week, and the bids to buy the home will be under $85,000. There is a family that has been renting the home for 7 years, and are now paying $1,170 monthly. We can now offer them the ability to buy their home at auction, complete minor repairs, and sell the home to this family for under $120,000, which will allow them to substantially cut their overall costs. With $5,000 down, and reserves required of $3,000, they can obtain a new loan for $115,000 at 4.5% for 30 years with the following approximate monthly expenses:
Mortgage Payment: $555.83
Property Taxes: $110.00
Gardener and Water: $75
Total Monthly Expenses: $825.83 as Owners -VS- $1,170 as Renters
In addition, as owners, they will benefit by interest deductions and normal depreciation offered to encourage homeownership. This family benefits significantly by this new program. They have been employed for 7 years by the same employer and have $3,000 a month in take-home income with a mid-600 FICO score.
We at Three Arch Investors believe many families will benefit in a similar way now that the program has been modified. We expect the first time home market will do exceptionally well in the second half of 2015. Our 2015 Fund will devote significant resources toward focusing on providing quality affordable homes that meet the new guidelines. Our investors will be able to join us in creating the opportunity for new families to become homeowners, while at the same time earning a respectable return that is projected to exceed 10% annualized.
We invite you to visit our web page and see our past history and track record. Investors may contact our office for more details. The Subscription Agreements for this fund will be available after January 15th, 2015.
We hope you all have a wonderful holiday and we look forward to working together in the New Year.