Ameridream

[Joe]

Is Ameridream a reputable company? I ask because we are about to seriously consider making an offer on our first home and this company was recommended by our broker! If they are a reputable company, is there any disadvantage to the seller or, in other words, do we loose any bargaining power by asking the seller to use this company?

Thanks in advance.

[David Oxhandler]

See

FHA Down Payment Grants -- AmeriDream Program

and on the othere hand also see

A CONFIDENTIALWITNESS BEFORE THE SENATE FINANCE COMMITTEE

[rmurray]

This is certainly a legal process..From my experience most down payment assistance buyers also allow the "seller" to pay up to 6 % in closing costs..Just remember Ameridream and seller paid closing is NOT a gift..The seller will be raising the price to cover the Ameridream 3.75% fee AND the 6% "seller" paid closing costs. In addition the FHA will finance its 1.75 % fee..This means you will be financing nearly 112% of the original selling price..Plus you will be paying interest on that extra 12% for all 30 years...

It is exactly this kind mortgages that are the ones in the worse trouble in the current mortgage crisis. Folks that started this way and HAD to sell because of some large financial change have not been able to sell in this soft real estate market and cover the balances of their mortgage..

Just remember if you chose to move forward with this kind of program you will have NO equity for a number of years. Ideally you would pay the closing costs and down payment yourself (about 10% of the total purchase price) and finance some less than the selling price..Ameridream exists to give options to those who cannot find the 10% cash. It will allow you to own a home but guarantee you are in a negative equity position from day 1..This is for you to decide. Good Luck

[AZRealtor]

In my last 10 years experience in resale Real Estate,I have dealt with a handful of buyers using the Ameridream program. In most of those cases, the seller made a legitimate contribution of 6% toward the buyer's closing costs. I understand why rmurray would make the statement above, since many of us have not had a clear understanding of many of the programs that have become available to consumers today...we tend to take the approach that "if it sounds too good...." and look for the negative side. I have seen some positive results from down payment assistance programs recently that have caused me to reevaluate.
The Governor's office in the State of Arizona has a program for first time home buyers that allows up to 15% in down payment assistance. Many times these loans are FHA loans, which also require a 6% seller contribution. These 2 items are not directly tied together, just a common denominator in many of these transactions.

[rmurray]

As a real estate pro you know if the seller was willing to pay these costs he could and would have sold the home conventional for a lower price..American Dream was commonly used by new home sellers which drove up the mortgage amounts so the seller could get back all his costs..This was possible because of liberal appraisers..

A new home seller will raise the price of the purchase to cover these additional 10% in costs...The next buyer might well be a cash buyer with no additional cost that he sells for his regular asking price and still make the same money this home will sell 10% lower than the American dream home and create comps that drive down the future appraisals in the neighborhood..